ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is made and entered into as of
July 1, 2005 (the "EFFECTIVE DATE"), by and among Wireless Telecom Group, Inc.,
a New Jersey corporation ("PURCHASER"), Damany Holding GmbH, a private limited
liability company organized under the laws of Germany and registered with the
commercial register of the local court (Amtsgericht) of Munich under Xx. XXX 000
000 ("XXXXXX"), Xxxxxxxxxx Technology Ventures LP, a limited partnership
organized under the laws of the Cayman Islands ("INVESTCORP" and, together with
Damany, the "SHAREHOLDERS"), which Shareholders immediately prior to the closing
and consummation of the Acquisition (as defined below) are the holders of all of
the outstanding shares of capital stock of Willtek Communications GmbH, a
private limited liability company organized under the laws of Germany and
registered with the commercial register of the local court (Amtsgericht) of
Munich under No. HRB 46 733 (the "COMPANY"), and American Stock Transfer & Trust
Company, as Escrow Agent (the "ESCROW AGENT").
RECITALS
A. Purchaser, the Company and the Shareholders have entered into an Amended
and Restated Stock Purchase Agreement, dated as of March 29, 2005 (the "STOCK
PURCHASE AGREEMENT"), pursuant to which Purchaser shall purchase from the
Shareholders, and the Shareholders shall sell to Purchaser, all of the issued
and outstanding shares of capital stock of the Company (the "ACQUISITION").
Capitalized terms used in this Agreement and not otherwise defined herein shall
have the meanings given them in the Stock Purchase Agreement, a copy of which is
attached hereto.
B. Section 1.03(c) of the Stock Purchase Agreement provides that the
Indemnification Shares are to be deducted and withheld from the Wireless Shares
and placed in an escrow account (the "ESCROW ACCOUNT") to secure the
indemnification obligations of the Shareholders to Purchaser and all other
Purchaser Indemnitees as set forth in Article VII of the Stock Purchase
Agreement on the terms and conditions set forth in this Agreement. The number of
Indemnification Shares required to be deposited in the Escrow Account by each
Shareholder pursuant to this Agreement, the taxpayer identification number (or
foreign equivalent) of each Shareholder, and the percentage interest of each
Shareholder in the Indemnification Shares are set forth on Exhibit A attached
hereto.
C. Each Shareholder is entering into this Agreement as a material
inducement and consideration for Purchaser to enter into the Stock Purchase
Agreement and to consummate the Acquisition and as a condition precedent to
consummation of the Acquisition, and the parties desire to set forth in this
Agreement the terms and conditions pursuant to which the Indemnification Shares
shall be deposited, held in, and disbursed from the Escrow Account.
NOW, THEREFORE, the parties hereto hereby agree as follows;
1. ESCROW AND INDEMNIFICATION
(a) ESCROW OF SHARES. At the Closing, Purchaser or its transfer agent
shall deposit the Indemnification Shares with the Escrow Agent in the manner
contemplated by Section 2(a) of this Agreement, accompanied by the required
stock powers and a written notice making reference to this Agreement and
identifying the shares so deposited as the Indemnification Shares. The Escrow
Agent shall hold the Indemnification Shares in escrow as collateral for the
indemnification obligations of the Shareholders under Article VII of the Stock
Purchase Agreement until the Escrow Agent is required to release such
Indemnification Shares in accordance with the terms of this Agreement. As used
in this Agreement, the term "INDEMNIFICATION SHARES" shall include all
"ADDITIONAL INDEMNIFICATION SHARES" as that term is defined in Section 2(b) of
this Agreement. The Escrow Agent agrees to accept delivery of the
Indemnification Shares and to hold such Indemnification Shares (and stock
powers) in escrow subject to the terms and conditions of this Agreement.
(b) INDEMNIFICATION. Purchaser and all other Purchaser Indemnitees are
indemnified pursuant to the terms of Article VII of the Stock Purchase Agreement
(which terms are incorporated herein by reference) from and against any Losses,
subject to the limitations set forth in Section 7.05 of the Stock Purchase
Agreement and in this Agreement (excluding any indemnification amounts payable
under Section 7.06 of the Stock Purchase Agreement, which shall not be subject
to any such limitations contained in Section 7.05 and shall only be subject to
the limitations expressly set forth in Section 7.06 of the Stock Purchase
Agreement). The Indemnification Shares shall be security for these
indemnification obligations, subject to the terms and conditions of Article VII
of the Stock Purchase Agreement and this Agreement. With respect to monetary
remedies for valid claims, during the Escrow Period, Purchaser Indemnitees shall
first seek recourse against the Indemnification Shares, pursuant to the terms of
this Agreement, and shall be entitled to pursue other monetary remedies, subject
to the limitations set forth in Section 7.05 of the Stock Purchase Agreement,
only to the extent that the Indemnification Shares are not sufficient to
compensate all Purchaser Indemnitees' Losses. The Indemnification Shares and the
provisions of this Agreement shall not limit any Purchaser Indemnitee's other
rights of recovery expressly set forth in the Stock Purchase Agreement
(including, without limitation, any and all rights to indemnification thereunder
from and after the expiration of the Escrow Period).
(c) NOTICE OF CLAIM. As used herein, the term "CLAIM" means a claim for
indemnification under Article VII of the Stock Purchase Agreement made by
Purchaser or any other Purchaser Indemnitee. Purchaser is authorized to make
Claims on behalf of any other Purchaser Indemnitee. A Purchaser Indemnitee shall
give written notice of a Claim (a "NOTICE OF CLAIM") to the Shareholders and the
Escrow Agent in the manner set forth in Section 7.04 of the Stock Purchase
Agreement. No delay on the part of any Purchaser Indemnitee in giving the
Shareholders notice of a Claim shall relieve any Shareholder from any of its
obligations under Article VII of the Stock Purchase Agreement or this Agreement,
except to the extent any Shareholder shall have been actually prejudiced as a
result of such failure (except that any Shareholder shall not
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be liable for any expenses incurred during the period in which the Purchaser
Indemnitee failed to give such notice).
(d) ESCROW PERIOD. As used herein, the term "ESCROW PERIOD" means that
time period beginning on the Closing Date and ending on the first anniversary of
the Closing Date. Purchaser shall deliver to Escrow Agent written notice of the
Closing Date (with a copy to the Shareholders), on which Escrow Agent may rely
without inquiry.
(e) ESCROW DEDUCTIONS. Payments for finally determined Claims shall be
deducted ratably from the Indemnification Shares of the Shareholders in
proportion to their respective percentage interests in the Indemnification
Shares set forth on Exhibit A.
(f) NO ELECTION OF REMEDIES. Purchaser and any other Purchaser
Indemnitee may obtain satisfaction of any valid Claims against the Shareholders
pursuant to Article VII of the Stock Purchase Agreement in accordance with this
Agreement without first seeking satisfaction of such Claims directly against the
Company or any Shareholder and without rescinding or attempting to rescind the
transactions consummated pursuant to the Stock Purchase Agreement. The assertion
of a right to satisfy any single Claim hereunder (or the satisfaction thereof in
accordance with this Agreement) will not bar Purchaser or any other Purchaser
Indemnitee from seeking or obtaining satisfaction of any other Claims hereunder.
Purchaser and any other Purchaser Indemnitee need not exhaust any other remedies
that may be available to it, but rather may proceed directly in accordance with
the provisions of this Agreement.
2. DEPOSIT OF INDEMNIFICATION SHARES; RELEASE FROM ESCROW.
(a) DELIVERY OF INDEMNIFICATION SHARES. At the Closing: (i) the
Indemnification Shares allocable to each Shareholder as shown on Exhibit A (the
"INITIAL INDEMNIFICATION SHARES") shall be delivered by Purchaser or Purchaser's
transfer agent to the Escrow Agent in the form of duly authorized stock
certificates for such shares issued in the respective names of the Shareholders;
and (ii) each of the Shareholders shall deliver to the Escrow Agent three (3)
stock powers in the form of Exhibit B attached hereto covering such Initial
Indemnification Shares, each duly endorsed and bearing a medallion signature
guarantee. Each Shareholder agrees to execute and deliver to the Escrow Agent
such additional stock powers relating to the Indemnification Shares as may be
necessary, in the Escrow Agent's opinion, to carry out its responsibilities
under this Agreement. In the event Purchaser issues any Additional
Indemnification Shares (as defined below), Purchaser shall instruct its transfer
agent to deliver such Additional Indemnification Shares to the Escrow Agent, and
each Shareholder shall deliver stock powers for such Shareholder's Additional
Indemnification Shares to the Escrow Agent, in the same manner as the Initial
Indemnification Shares and stock powers therefor were delivered to the Escrow
Agent hereunder. Unless and until stock certificates representing Additional
Indemnification Shares are received by the Escrow Agent, the Escrow Agent may
assume that none have been issued.
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(b) DIVIDENDS, VOTING AND RIGHTS OF OWNERSHIP. Except for dividends paid
in shares of Purchaser stock that are declared and paid with respect to the
Indemnification Shares or shares of Purchaser Common Stock issued with respect
to Indemnification Shares and resulting from a stock split or subdivision
("ADDITIONAL INDEMNIFICATION SHARES"), and except for cash dividends declared or
set aside by Purchaser, during the period beginning on the Closing Date and
ending on December 31, 2005, in respect of all of the shares of Purchaser Common
Stock that Investcorp may be deemed to beneficially own during the period
beginning on the Closing Date and ending on December 31, 2005, which Investcorp
has waived and permanently forfeited under the terms of the Stock Purchase
Agreement, any cash dividends, dividends payable in securities or other
distributions of any kind made or paid in respect of the Indemnification Shares
shall be distributed currently by Purchaser to each Shareholder. Each
Shareholder shall have the right to vote the Indemnification Shares deposited in
the Escrow Account for the account of such Shareholder so long as such
Indemnification Shares are held in escrow, and Purchaser shall take all
reasonable steps necessary to allow the exercise of such rights. So long as the
Indemnification Shares remain in the Escrow Agent's possession pursuant to this
Agreement and have not been canceled as provided herein or repurchased by
Purchaser, the Shareholders shall retain and shall be able to exercise voting
rights with respect to such Indemnification Shares and all other incidents of
ownership of said Indemnification Shares that are not inconsistent with the
terms and conditions of this Agreement. Purchaser and the Shareholders will
arrange for the payment of dividends, subject to the limitations set forth
herein and in the Stock Purchase Agreement, and the delivery of proxies and
other notices among themselves, and the Escrow Agent need not be involved.
(c) DISTRIBUTIONS TO SHAREHOLDERS. On the date upon which the Escrow
Period expires (the "FINAL RELEASE DATE"), upon receipt by the Escrow Agent of
the written notice referred to in Section 2(d), the Escrow Agent shall release
from escrow to each Shareholder such Shareholder's Indemnification Shares (as
defined below) other than any of such Shareholder's Indemnification Shares that
have previously been delivered to a Purchaser Indemnitee or that are owed to
Purchaser Indemnitee and are to be canceled and forfeited in accordance with
Section 4 in satisfaction of Claims by a Purchaser Indemnitee or that are
otherwise subject to a pending Claim by a Purchaser Indemnitee (whether a
Contested Claim or an Uncontested Claim as such terms are defined in Section 4).
As used in this Agreement, a "SHAREHOLDER'S INDEMNIFICATION SHARES" refers to
and means the Initial Indemnification Shares allocable to such Shareholder and
the Additional Indemnification Shares allocable to such Shareholder, if any.
(d) RELEASE OF INDEMNIFICATION SHARES. The Indemnification Shares shall
be held by the Escrow Agent until such Indemnification Shares are required to be
released pursuant to either; (i) Section 2(c) of this Agreement; or (ii) when
required under applicable provisions of Section 4 of this Agreement. The Escrow
Agent shall deliver to the Shareholders or to Purchaser (who is authorized to
accept delivery of Indemnification Shares on behalf of any Purchaser
Indemnitee), via courier to the address set forth for such party in Section 6 of
this Agreement, as applicable hereunder, the requisite number of Indemnification
Shares to be released on
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such applicable date as is called for by this Agreement. Such delivery of
Indemnification Shares shall be in the form of stock certificate(s) registered
in the name of such Shareholders or Purchaser, as applicable, in accordance with
this Agreement. The Escrow Agent shall coordinate with Purchaser's transfer
agent who shall cause such stock certificates to be registered in the
appropriate names as determined by the Escrow Agent in accordance with this
Agreement. Purchaser shall give the Escrow Agent prompt written notice of the
name and address of any new transfer agent for Purchaser Common Stock. Purchaser
and the Shareholders shall deliver a prompt written notice to the Escrow Agent
identifying the number of Indemnification Shares to be released to each of the
Shareholders and/or Purchaser, as applicable, in accordance with this Agreement.
Unless the Escrow Agent is instructed otherwise by Purchaser and the
Shareholders, Indemnification Shares released to the Shareholders shall be
released to them in proportion to their respective percentage interests in the
Indemnification Shares as set forth in Exhibit A hereto. The Escrow Agent shall
use good faith efforts (with Purchaser's assistance) to have such stock
certificates in its possession by delivery from Purchaser's transfer agent no
later than two (2) Business Days prior to the day on which the Escrow Agent is
to deliver such certificates to the Shareholders. Cash shall be paid in lieu of
any fraction of an Indemnification Share held by any Shareholder (computed for
each Shareholder by aggregating all Indemnification Shares held by such
Shareholder) in an amount equal to the applicable fraction of an Indemnification
Share multiplied by the closing price of Purchaser Common Stock on the AMEX on
the trading day immediately preceding the date such Indemnification Shares are
to be released to the Shareholders, as adjusted to reflect any stock dividend,
stock split, reverse stock split, combination of shares, reclassification,
recapitalization or other similar event affecting Purchaser Common Stock (each a
"CAPITAL CHANGE"), whether occurring at or after the Closing Date. Purchaser
shall distribute, or Purchaser shall provide to the Escrow Agent and Escrow
Agent shall distribute, cash in lieu of fractional Indemnification Shares;
provided, neither Purchaser nor Escrow Agent shall be obligated to disburse such
cash amount to any Significant Shareholder until such Significant Shareholder
delivers an IRS Form W-9 (or Form W-8 in the case of a foreign person) for tax
reporting purposes, duly completed and executed by such Shareholder. Purchaser
shall be deemed to have purchased the fractional shares for which it has
provided cash-in-lieu payments.
(e) NO ENCUMBRANCE. No Indemnification Shares or any beneficial interest
therein may be pledged, encumbered, sold, assigned or transferred (including any
transfer by operation of law), by a Shareholder or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of
such Shareholder, prior to the delivery to such Shareholder of such
Indemnification Shares by the Escrow Agent in accordance with this Agreement.
Notwithstanding anything herein to the contrary, from and after the date hereof
through and including the Final Release Date, each of the parties hereto hereby
grants to the Escrow Agent a lien upon, and security interest in, all of its
right, title and interest in and to all of the Indemnification Shares as
security for the payment and performance of its obligations owing to the Escrow
Agent hereunder, including, without limitation, its obligations of payment,
indemnity and reimbursement provided for hereunder, which lien and security
interest may be enforced by the Escrow Agent without notice by charging and
setting-off and paying from, the Indemnification Shares any and all amounts then
owing to it pursuant to
5
this Agreement or by appropriate foreclosure proceedings. The Escrow Agent shall
have no responsibility for determining or enforcing compliance with this Section
2(e), except that the Escrow Agent shall retain possession of the stock
certificates evidencing the Indemnification Shares as required by this
Agreement.
(f) POWER TO TRANSFER INDEMNIFICATION SHARES. The Escrow Agent is hereby
granted the power to effect any transfer of Indemnification Shares contemplated
by this Agreement. Purchaser shall cooperate with the Escrow Agent in causing
Purchaser's transfer agent to promptly issue stock certificates to effect such
transfers.
(g) LEGEND. In addition to appropriate restrictive legends, stock
certificates representing Indemnification Shares will (until they are released
to the Shareholders or Purchaser in accordance with this Agreement) bear the
following legend indicating that they are subject to this Agreement:
"THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED ONLY IN ACCORDANCE WITH THE TERMS OF
AN ESCROW AGREEMENT AMONG THE ISSUER, THE HOLDER THEREOF, AND AMERICAN
STOCK TRANSFER & TRUST COMPANY, AS ESCROW AGENT. A COPY OF SUCH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER."
(h) UPDATING. Purchaser and the Shareholders shall promptly deliver to
the Escrow Agent a revised Exhibit A to update the information contained therein
following the occurrence of any of the following events; (i) a Capital Change,
(ii) any issuance of Additional Indemnification Shares; or (iii) any change in
the information set forth in Exhibit A regarding the Shareholders. Unless and
until the Escrow Agent receives such revised Exhibit A, the Escrow Agent may
assume without inquiry that the last Exhibit A it received remains in effect and
that such exhibit has not been, and is not required to be, modified.
3. CONTENTS OF NOTICE OF CLAIM. Each Notice of Claim given pursuant to
Section 1(c) of this Agreement shall be in writing and shall contain the
information set forth in Section 7.04(a) of the Stock Purchase Agreement.
4. RESOLUTION OF CLAIMS AND TRANSFERS OF INDEMNIFICATION SHARES. Any Notice
of Claim received by the Shareholders and the Escrow Agent pursuant to Sections
1(c) and 3 of this Agreement shall be resolved as follows:
(a) UNCONTESTED CLAIMS. If, within ten (10) Business Days after a Notice
of Claim containing a statement of claimed Losses has been received by, or is
deemed to have been delivered by Purchaser or any other Purchaser Indemnitee to,
the Shareholders and the Escrow Agent pursuant to Section 6 of this Agreement,
the Shareholders have not contested such Notice of Claim in a written notice
received by
6
Escrow Agent as provided in Section 4(b) of this Agreement (an "UNCONTESTED
CLAIM") and the Escrow Agent has not received written confirmation from
Purchaser that the Shareholders have paid Purchaser in full the amount demanded
in such Notice of Claim, then the Escrow Agent shall: (i) immediately release
from escrow and transfer to Purchaser for cancellation and forfeiture that
number of Indemnification Shares having a value (as determined in accordance
with Section 4(c) of this Agreement) equal to the amount of Losses specified in
such Notice of Claim, which transferred and forfeited Indemnification Shares
shall be taken from and forfeited by the Shareholders in the manner set forth in
Section 1(e) of this Agreement; and (ii) notify the Shareholders in writing of
such transfer and forfeiture of Indemnification Shares as promptly as reasonably
practicable.
(b) CONTESTED CLAIMS. In the event that the Shareholders deliver to
Purchaser and the Escrow Agent a written notice contesting all, or a portion of,
a Notice of Claim (a "CONTESTED CLAIM") and such written notice has been
received by, or is deemed, under the provisions of Section 6 of this Agreement,
to have been delivered to, Purchaser and the Escrow Agent within the ten (10)
Business Day period described in Section 4(a) of this Agreement, then: (i) such
Contested Claim shall be resolved prior to the expiration of the Escrow Period,
to the extent such timing is reasonably practicable, by either (A) a written
settlement agreement executed by Purchaser and the Shareholders or (B) in the
absence of such a written settlement agreement, by final nonappealable order of
a court of competent jurisdiction directing delivery of the Indemnification
Shares, in which event the Escrow Agent shall disburse the Indemnification
Shares in accordance with such agreement or order. The Escrow Agent shall act on
any such order or agreement without further question. Any portion of the Notice
of Claim that is not contested by the Shareholders in accordance with the
foregoing provisions of this Section 4(b) shall be resolved as an Uncontested
Claim in accordance with Section 4(a) of this Agreement. Upon its receipt of a
copy of such order or agreement, the Escrow Agent shall first permit the
Shareholders, at the Shareholders' option, the opportunity to pay to Purchaser
the amount of Losses (if any) that are owed to Purchaser in full in cash on or
before the fifth (5th) Business Day after the Escrow Agent's receipt of a copy
of such agreement or order. Immediately following Purchaser's receipt of payment
of Losses from the Shareholders, Purchaser shall notify the Escrow Agent of such
payment. If the Escrow Agent does not receive written confirmation from
Purchaser that such owed Losses have been paid in full in cash to Purchaser
prior to the fifth (5th) Business Day after the Escrow Agent's receipt of a copy
of such agreement or order, then the Escrow Agent will (i) immediately release
from escrow and transfer to Purchaser for cancellation that number of
Indemnification Shares having a value (determined in accordance with Section
4(c) of this Agreement) equal to the amount of Losses (if any) owed to
Purchaser, which transferred and forfeited Indemnification Shares shall be taken
from and forfeited by each of the Shareholders in the manner set forth in
Section 1(e) of this Agreement, and (ii) notify the Shareholders in writing of
such transfer and forfeiture of Indemnification Shares as promptly as reasonably
practicable.
(c) DETERMINATION OF NUMBER OF INDEMNIFICATION SHARES FORFEITED. Any
amount of Losses owed to Purchaser or any Purchaser Indemnitee hereunder,
determined pursuant to the foregoing provisions of this Section 4
7
and not paid in cash by the Shareholders in accordance with the above provisions
of this Section 4, shall be immediately payable to Purchaser out of the
Indemnification Shares then held by the Escrow Agent, and the forfeited
Indemnification Shares shall be taken from and forfeited by the Shareholders in
the manner set forth in Section 1(e) of this Agreement. For purposes of this
Agreement, Indemnification Shares shall be deemed to have a per share value
equal to the Average Stock Price (as defined in Section 4.13 of the Stock
Purchase Agreement). Thus, the number of Indemnification Shares to be released
from escrow, forfeited by the Shareholders and transferred to Purchaser in
satisfaction of a Claim for Losses (whether an Uncontested Claim or a Contested
Claim) not paid in cash as provided above shall be the amount of such Losses
divided by the Average Stock Price applicable to such Claim.
(d) MULTIPLE CLAIMS PERMITTED. The assertion of any single Claim for
indemnification pursuant to Article VII of the Stock Purchase Agreement and the
assertion of a right to satisfaction (or the actual satisfaction) of any single
Claim pursuant to this Agreement shall not bar Purchaser from asserting any
other Claims for indemnification pursuant to Article VII of the Stock Purchase
Agreement or from asserting or obtaining satisfaction of any other Claims
pursuant to this Agreement.
5. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) LIMITATION OF LIABILITY. The Escrow Agent shall incur no liability
with respect to any action taken or suffered by it in reliance upon any notice,
direction, instruction, consent, statement or other document believed by it to
be genuine and duly authorized, nor for any other action or inaction, except its
own willful misconduct, fraud or gross negligence. The Escrow Agent shall have
no duty to inquire into or investigate the validity, accuracy or content of any
document delivered to it. The Escrow Agent shall not be responsible for the
validity or sufficiency of this Agreement. In all questions arising under this
Agreement, the Escrow Agent may rely on the advice or opinion of counsel, and
for anything done, omitted or suffered in good faith by the Escrow Agent based
on such advice, the Escrow Agent shall not be liable to anyone. The Escrow Agent
shall not be required to take any action hereunder involving any expense unless
the payment of such expense is made or provided for in a manner satisfactory to
it. The Escrow Agent shall have no duties or responsibilities other than those
expressly set forth in this Agreement and the implied duty of good faith and
fair dealing.
(b) RESOLUTION OF CONFLICTING DEMANDS. In the event conflicting demands
are made or conflicting notices are served upon the Escrow Agent with respect to
the Escrow Account, the Escrow Agent shall have the absolute right, at the
Escrow Agent's election, to do any or all of the following: (i) resign so a
successor can be appointed pursuant to Section 9 of this Agreement; (ii) file a
suit in interpleader and obtain an order from a court of competent jurisdiction
requiring the parties to interplead and litigate in such court their several
claims and rights among themselves; or (iii) give written notice to the other
parties that it has received conflicting instructions from Purchaser, on the one
hand, and the Shareholders, on the other hand, and is refraining from taking
action until it receives instructions consented to in writing by each of
Purchaser and the Shareholders. In the event an interpleader suit as described
in clause
8
(ii) above is brought, the Escrow Agent shall thereby be fully released and
discharged from all further obligations imposed upon it under this Agreement
with respect to the matters that are the subject of such interpleader suit, and
Purchaser shall pay the Escrow Agent all costs, expenses and reasonable
attorneys' fees expended or incurred by the Escrow Agent pursuant to the
exercise of Escrow Agent's rights under this Section 5(b) (such costs, fees and
expenses shall be treated as extraordinary fees and expenses for the purposes of
Section 8 of this Agreement). Purchaser shall be entitled to reimbursement from
the Shareholders of any extraordinary fees and expenses of Escrow Agent in the
event Purchaser prevails in such dispute pursuant to Section 8 of this
Agreement.
(c) INDEMNIFICATION. Each party to this Agreement other than the Escrow
Agent (each an "INDEMNIFYING PARTY" and together the "INDEMNIFYING PARTIES"),
hereby jointly and severally covenants and agrees to reimburse, indemnify and
hold harmless Escrow Agent, the Escrow Agent's officers, directors, employees,
counsel and agents (severally and collectively, "ESCROW AGENT"), from and
against any loss, damage, liability or loss suffered, incurred by, or asserted
against Escrow Agent (including amounts paid in settlement of any action, suit,
proceeding, or claim brought or threatened to be brought and including
reasonable expenses of legal counsel) arising out of, in connection with or
based upon, any act or omission by Escrow Agent (not involving gross negligence,
willful misconduct or fraud on Escrow Agent's part) relating in any way to this
Agreement or the Escrow Agent's services hereunder. Anything in this Agreement
to the contrary notwithstanding, in no event shall the Escrow Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. Any Indemnifying Party who reimburses or indemnifies the Escrow Agent
pursuant to this Section 5(c) shall have a right to seek contribution from any
and all other Indemnifying Parties according to their relative fault.
(d) DEFENSE. Each Indemnifying Party may participate at its own expense
in the defense of any claim or action that may be asserted against Escrow Agent,
and if the Indemnifying Parties so elect, the Indemnifying Parties may assume
the defense of such claim action; provided, however, that if there exists a
conflict of interest that would make it inappropriate, in the sole discretion of
the Escrow Agent, for the same counsel to represent both Escrow Agent and the
Indemnifying Parties, Escrow Agent's retention of separate counsel shall be
reimbursable as hereinabove provided. Escrow Agent's right to indemnification
hereunder shall survive Escrow Agent's resignation or removal as Escrow Agent
and shall survive the termination of this Agreement by lapse of time or
otherwise.
(e) NOTICE TO INDEMNIFYING PARTIES. The Escrow Agent shall notify each
Indemnifying Party by letter, or by telephone or telecopy confirmed by letter,
of any receipt by Escrow Agent of a written assertion of a claim against Escrow
Agent, or any action commenced against Escrow Agent, for which indemnification
is required under Section 5(c) of this Agreement, within ten (10) Business Days
after Escrow Agent's receipt of written notice of such claim. The Indemnifying
Parties will be relieved of their indemnification obligations under this Section
5 if Escrow Agent fails to
9
timely give such notice and such failure adversely affects the Indemnifying
Parties' ability to defend such claim. However, Escrow Agent's failure to so
notify each Indemnifying Party shall not operate in any manner whatsoever to
relieve an Indemnifying Party from any liability that it may have otherwise than
on account of this Section 5.
(f) USE OF AGENTS. The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys and shall be entitled to consult with its
legal counsel, including in-house legal counsel, as to any questions or matters
arising hereunder and the reasonable, good faith written opinion of such legal
counsel shall be full and complete authorization and protection to Escrow Agent
in respect of any act or omission by Escrow Agent undertaken in good faith and
in accordance with the opinion of such legal counsel. Nothing in this Agreement
shall be deemed to impose upon Escrow Agent any duty to qualify to do business
or to act as a fiduciary or otherwise in any jurisdiction other than the State
of New York, U.S.A.
6. NOTICES. All notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) five business days following sending by registered or certified
mail, postage prepaid, (b) when sent, if sent by facsimile; provided that the
facsimile transmission is promptly confirmed by telephone, (c) when delivered,
if delivered personally to the intended recipient and (d) one business day
following sending by overnight delivery via a national or international courier
service and, in each case, addressed to a party at the following address for
such party:
(i) if to the Shareholders,
Investcorp International Ltd.
Xxxxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
x00 (0)00 0000 0000 (phone)
x00 (0)00 0000 0000 (facsimile)
Attention: Xx. Xxxxx Xxx-Xxxxx
and
Damany Holding GmbH
Xxxxxxxxxxxxxxxx 0-0
00000 Xxxxxxxx
Xxxxxxx
x00 (0) 00 000 00 - 110 (phone)
x00 (0) 00 000 00 - 442 (facsimile)
Attention: Xx. Xxxxxxx Xxxxxx
10
with a copy to:
Linklaters Oppenhoff & Xxxxxx
Xxxxxxxxxxx 0
00000 Xxxxxxx
Xxxxxxx
+(49-221) 20 91 0 (phone)
x(00-000) 00 00 000 (facsimile)
Attention: Xxxxxxx X. Xxxxxx and
Carsten Flasshoff
(ii) if to Purchaser,
Wireless Telecom Group Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to:
Xxxxxxxxx Traurig, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000 (phone)
Facsimile: (000) 000-0000 (facsimile)
Attention: Xxxxxx X. Xxxxx, Esq. and
Xxxxxxx X. Xxxxxxx, Esq.
(iii) if to Escrow Agent,
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
or to such other address(es) as shall be furnished in writing by any such party
to each of the other parties hereto in accordance with the provisions of this
Section 6. Notwithstanding the foregoing, notices and the like addressed to the
Escrow Agent shall be effective only upon receipt. The Escrow Agent may assume
without inquiry (unless the Escrow Agent has written notice to the contrary)
that notices received by it which are also required to be delivered to another
party have, in fact, been delivered to such other party.
11
7. GENERAL.
(a) GOVERNING LAW; ASSIGNS. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, U.S.A.,
without regard to conflicts of law principles and shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as provided in Section 9 hereof, neither this
Agreement nor any of the rights and obligations of the parties hereunder may be
assigned or delegated by any of the parties hereto without the prior written
consent of each of the other parties hereto. Each party irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (a) any Court of the State of New York sitting in New York County and
(b) any United States Federal Court sitting in New York County, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. Each party irrevocably agrees
that any legal action, suit or proceeding against them arising out of or in
connection with this Agreement or the transactions contemplated hereby or
disputes relating hereto (whether for breach of contract, tortuous conduct or
otherwise) shall be brought in the United States District Court for the Southern
District of New York, or, if such court does not have subject matter
jurisdiction, the state courts of New York located in New York County and hereby
irrevocably accepts and submits to the exclusive jurisdiction and venue of the
aforesaid courts IN PERSONAM, with respect to any such action, suit or
proceeding. Each of the parties agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters for which it has submitted to
jurisdiction pursuant to this Section 7(a). Each party hereby waives to the
fullest extent permitted by Applicable Law, any right it may have to a trial by
jury in respect to any litigation directly or indirectly arising out of, under
or in connection with this Agreement or the transactions contemplated hereby or
disputes relating hereto. Each party (a) certifies that no representative, agent
or attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 7(a).
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) ENTIRE AGREEMENT. As between Company and the Shareholders, this
Agreement, together with the Stock Purchase Agreement, constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof. As between
the Escrow Agent and the other parties hereto, all such parties agree that, as
set forth in Section 10 of
12
this Agreement, the Escrow Agent's duties are defined only in this Agreement,
any contrary provisions of the Stock Purchase Agreement notwithstanding.
(d) WAIVERS. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.
(e) TAX IDENTIFICATION NUMBERS. If applicable, each party hereto, other
than the Escrow Agent, shall provide the Escrow Agent with its Tax
Identification Number (TIN) as assigned by the Internal Revenue Service prior to
the execution of this Agreement.
(f) AGENTS. Unless expressly provided otherwise herein, any actions to
be taken by Purchaser hereunder may also be taken by Purchaser's attorneys or
agents.
8. COMPENSATION AND EXPENSES OF ESCROW AGENT. All fees and expenses of the
Escrow Agent, which shall include a yearly fee of US$5,000, incurred in the
ordinary course of performing its responsibilities hereunder shall be paid by
Purchaser at the Closing upon receipt of a written invoice by Escrow Agent. Any
extraordinary fees and expenses, including without limitation any fees or
expenses (including the fees or expenses of outside counsel to the Escrow Agent)
incurred by the Escrow Agent in connection with a dispute over the distribution
of Indemnification Shares or the validity of a Notice of Claim, shall be paid by
Purchaser upon receipt of a written invoice by Escrow Agent; provided, however,
that notwithstanding the foregoing, the Shareholders shall be liable for any
extraordinary fees and expenses of the Escrow Agent arising in connection with a
dispute hereunder, in the event that Purchaser prevails in such dispute. The
Escrow Agent shall have no duty to solicit any payments which may be due it
hereunder.
9. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
notice of its resignation to the parties to this Agreement, specifying a date
not less than thirty (30) days following such notice date of when such
resignation shall take effect. Purchaser shall designate a successor Escrow
Agent, which shall be reasonably acceptable to the Shareholders, prior to the
expiration of such thirty (30) day period by giving written notice to the Escrow
Agent and the Shareholders. If no successor escrow agent is named by Purchaser,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent. The Escrow Agent shall promptly
transfer the Indemnification Shares to such designated successor.
10. LIMITATION OF RESPONSIBILITY. The Escrow Agent's duties are limited to
those set forth in this Agreement, and Escrow Agent, acting as such under this
Agreement, is not charged with knowledge of or any duties or responsibilities
under any other document or agreement, including without limitation the Stock
Purchase
13
Agreement. Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder either directly or by or through its
agents or attorneys. Nothing in this Escrow Agreement shall be deemed to impose
upon the Escrow Agent any duty to qualify to do business or to act as a
fiduciary or otherwise in any jurisdiction other than the State of New York,
U.S.A. Escrow Agent shall not be responsible for and shall not be under a duty
to examine into or pass upon the validity, binding effect, execution or
sufficiency of this Escrow Agreement or of any agreement amendatory or
supplemental hereto. In no event shall the Escrow Agent have any duty or
obligation to determine or enforce compliance with the requirements of any
agreement or instrument other than this Agreement (including without limitation
the Stock Purchase Agreement).
11. FORCE MAJEURE. Neither Purchaser nor the Shareholders nor Escrow Agent
shall be responsible for any delays or failures in performance resulting from
acts beyond its control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations
superimposed after the fact, fire, communication line failures, computer
viruses, power failures, earthquakes or other disasters.
12. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and modifications
which may hereafter be executed, and (b) certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, optical disk, micro-card, miniature photographic or
other similar process. The parties hereto agree that any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further reproduction shall
likewise be admissible in evidence.
13. AMENDMENT. This Agreement may be amended by the written agreement of
Purchaser, the Escrow Agent and the Shareholders, provided that, if the Escrow
Agent does not agree to an amendment agreed upon by Purchaser and the
Shareholders, the Escrow Agent shall resign and Purchaser shall appoint a
successor Escrow Agent in accordance with Section 9 above. No amendment of the
Stock Purchase Agreement shall increase Escrow Agent's responsibilities or
liability hereunder without Escrow Agent's written agreement.
14. SEVERABILITY. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, each party agrees that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by
law, and each party hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction. The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions and other equitable
14
remedies to prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in the court set forth in Section 7(a) hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity. Any requirements for the securing or posting of any bond with respect to
such remedy are hereby waived by each of the parties hereto. Each party further
agrees that, in the event of any action for an injunction or other equitable
remedy in respect of such breach or enforcement of specific performance, it will
not assert the defense that a remedy at law would be adequate.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
PURCHASER:
WIRELESS TELECOM GROUP, INC.
By: /s/ Xxxx Xxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive
Officer
ESCROW AGENT:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxx Xxxxxx
---------------
Authorized Signatory
SHAREHOLDERS:
INVESTCORP TECHNOLOGY VENTURES, L.P.
by ITV Limited, as General Partner of Investcorp
Technology Fund Limited Partnership, its General Partner
By: /s/ Xxxxxxxx Xxxxx
------------------
Name: Xxxxxxxx Xxxxx
Title: Director
DAMANY HOLDING GMBH
By: /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title:
