Item
1.01. Entry into a Material Definitive Agreement.
Membership
Interest Purchase Agreement
On
December 16, 2021, Wireless Telecom Group, Inc., a New Jersey corporation (the “Company”) and its wholly owned subsidiary
Microlab/FXR LLC, a New Jersey limited liability company (“Microlab”) entered into a Membership Interest Purchase Agreement
(the “Purchase Agreement”) with RF Industries, Ltd., a Nevada corporation (the “Buyer”). Microlab designs and
manufactures high-performance RF and microwave products such as dividers, directional couplers and filters enabling signal distribution
and deployment of in-building DAS (distributed antenna systems), wireless base stations and small cell networks. The Purchase Agreement
provides for the purchase by the Buyer of 100% of the issued and outstanding membership interests of Microlab (the “Interests”)
from the Company. The board of directors of each of the Company and the Buyer has unanimously approved the Purchase Agreement and the
transactions contemplated thereby (collectively, the “Transaction”).
Upon
the closing of the Transaction (the “Closing”), under the terms of the Purchase Agreement, the purchase price for the Interests
is estimated to be $24,250,000, subject to certain closing adjustments as set forth in the Purchase Agreement. The Buyer intends to pay
the purchase price using a combination of cash on hand and borrowings from a credit facility.
The
Closing is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, and approval
by the holders of a majority of the voting power of the outstanding voting shares of the Company.
The
Purchase Agreement contains customary restrictions on the Company’s ability to solicit alternative acquisition proposals from third
parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding
alternative acquisition proposals. The Purchase Agreement also contains customary covenants requiring the board of directors of the Company,
subject to certain exceptions, to recommend that the Company’s shareholders approve the Transaction. Concurrently with the execution
of the Purchase Agreement, the Company delivered voting and support agreements for the holders of approximately 11% of the outstanding
shares of Company’s common stock. Prior to the approval of the Transaction by the Company’s shareholders, the board of directors
of the Company may (i) withhold, withdraw, qualify, or modify its recommendation that the Company’s shareholders approve the Transaction
because of a material intervening event or (ii) adopt, approve or recommend an alternative transaction if such alternative transaction
is materially superior, subject to complying with notice and other specified conditions. The Company is expected to solicit the consent
of its shareholders at a shareholder meeting to be held during the first quarter of 2022.
The
Purchase Agreement contains certain termination rights for both the Buyer and the Company, including that, subject to certain limitations,
(i) the Company or the Buyer may terminate the Purchase Agreement if the Transaction is not consummated by April 30, 2022, subject to
a 30 day extension in the event certain customary conditions are satisfied, (ii) the Buyer and the Company may mutually agree to terminate
the Purchase Agreement, (iii) the Company may terminate the Purchase Agreement to accept a materially superior proposal, (iv) the Buyer
or the Company may terminate the Purchase Agreement if requisite approval of the shareholders of the Company has not been obtained upon
a vote taken at the shareholder meeting, (v) the Buyer or the Company may terminate the Purchase Agreement if certain other closing conditions
are not met or waived, and (vi) the Buyer may terminate the Purchase Agreement if the Company changes its recommendation to its shareholders
with respect to approval of the Transaction.
If
the Company terminates the Agreement to accept a superior proposal, then the Company will pay the Buyer a termination fee of $900,000.
If the Buyer terminates the Agreement because the Company fails to include the Company’s board recommendation in the proxy statement
or the Company’s board has effected an adverse recommendation change, among other reasons described in the Purchase Agreement,
then the Company will pay the Buyer $900,000. If the Purchase Agreement is terminated by either party because Company shareholder approval
is not obtained at the shareholder meeting, then the Company will pay Buyer its reasonable fees and expenses up to a cap of $500,000.
In addition, if the Company terminates the agreement because (i) the closing has not occurred by the termination date due to no fault
of the Company, or (ii) due to the Buyer’s breach of its representations or covenants, the closing conditions would not be satisfied,
the Buyer will pay the Company its reasonable fees and expenses up to a cap of $500,000.
The
Purchase Agreement contemplates that Buyer will obtain representation and warranty insurance to cover any breach of the Company’s
representations. The maximum aggregate liability of the Company for indemnification claims for breaches of the Company’s or Microlab’s
representations (other than certain fundamental representations) is capped at $150,000. The maximum aggregate liability of the Company
for indemnification claims is capped at the final purchase price.
The
Company also agreed not to, directly or indirectly, (i) engage in any activities that compete with Microlab’s business and (ii)
hire or solicit any employee, independent contractor, or consultant of Microlab’s business for a period of five years from the
closing date, subject to certain carve-outs.
The
foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is attached as Exhibit 10.1 and is
incorporated herein by reference.
The
Purchase Agreement contains representations and warranties by each of the Buyer, the Company and Microlab. These representations and
warranties were made solely for the benefit of the parties to the Purchase Agreement and:
|
●
|
should
not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements
prove to be inaccurate;
|
|
|
|
|
●
|
may
have been qualified in the Purchase Agreement by disclosures that were made to the other party in connection with the negotiation
of the Purchase Agreement;
|
|
|
|
|
●
|
may
apply contractual standards of “materiality” that are different from “materiality” under applicable securities
laws; and
|
|
|
|
|
●
|
were
made only as of the date of the Purchase Agreement or such other date or dates as may be specified in the Purchase Agreement.
|