ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of this
28th day of March, 1994, between V TECHNOLOGY HOLDINGS CORP., a Delaware
corporation ("V Tech Holdings"), GOLDSTAR TELECOMMUNICATION CO., LTD., a
corporation organized under the laws of the Republic of Korea ("GST"), STEVEN
SHERMAN ("Sherman"), GLENN R. FITCHET ("Fitchet") and STKK Service Company, as
Escrow Agent ("Escrow Agent").
RECITALS:
A. Effective as of the date hereof, V Tech Holdings, V Tech Acquisition,
GST, The Opportunity Fund, a limited partnership, and The Sherman Group, a
participant in The Opportunity Fund, Sherman and Fitchet entered into a
Stockholders Agreement.
B. The Stockholders Agreement contemplated that Sherman and Fitchet would
acquire (in addition to shares being acquired through The Opportunity Fund or
The Sherman Group) one million (1,000,000) shares (representing 25% of all
outstanding shares) of the outstanding common stock of V Tech Holdings.
C. The Stockholders Agreement further provided that six hundred thousand
(600,000) of the one million (1,000,000) shares of common stock to be acquired
by Sherman and Fitchet were to be held in escrow pursuant to an Escrow Agreement
and released at such times as certain conditions were met.
D. The parties desire to provide for the escrow of six hundred thousand
(600,000) shares of the common stock to be acquired by Sherman and Fitchet as
contemplated by the Stockholders Agreement.
NOW, THEREFORE, in consideration of mutual covenants and agreements
hereinafter set forth, the parties hereto understand and agree as follows:
1. DEPOSIT INTO ESCROW. V Tech Holdings herein deposits with the Escrow
Agent six hundred thousand (600,000) of the shares of common stock to be
acquired by Sherman and Fitchet in V Tech Holdings (the "Escrowed Stock").
Sherman and Fitchet herein acknowledge and consent to the escrow of the Escrowed
Stock.
2. HOLDING OF ESCROWED STOCK. The Escrow Agent is hereby instructed to hold
the stock certificates evidencing the Escrowed Stock until it is notified to
release such certificates pursuant to the terms hereof. The Escrow Agent agrees
that it will use its best efforts to safeguard and protect the stock
certificates.
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3. CONDITION FOR RELEASE OF ESCROWED STOCK FROM ESCROW, The Escrowed Stock
will be released from escrow as follows:
A. Two hundred thousand (200,000) shares of Escrowed Stock will be
returned to Sherman and Fitchet upon payment of the document against
acceptance 360-day usance of $3.5 Million Dollars within twelve (12)
months from the date hereof.
B. An additional two hundred thousand (200,000) shares of Escrowed Stock
will be returned to Sherman and Fitchet upon achieving the Business
Case of the first year.
C. One hundred thousand (100,000) shares of Escrowed Stock will be
returned to Sherman and Fitchet upon payment of the $1.2 Million
Dollar standby letter of credit guaranteed by GST within 18 months of
the date hereof.
D. One hundred thousand (100,000) shares of Escrowed Stock will be
returned to Sherman and Fitchet upon achieving the Business Case for
the second year.
E. Business Case, as used herein, means such sales targets and before tax
operating income as shall be agreed to by GST, Sherman and Fitchet
after the execution hereof.
4. FAILURE TO MEET CONDITION OF RELEASE. In the event that any of the
conditions set forth in the preceding paragraph are not met, then the number of
shares allocated to the performance of that condition shall be released to and
become the property of GST.
5. MECHANICS OF DISTRIBUTION OF ESCROWED STOCK.
a. At such time that Fitchet or Sherman desire to have any of the
Escrowed Stock released from the escrow, they shall present the Escrow Agent
with written notice indicating the specific event that has occurred giving rise
to a release of such Escrowed Stock, with a copy of such written notice to GST.
If within twenty (20) days following delivery of the notice to the Escrow Agent
and GST, the Escrow Agent is not in receipt of a written notice from GST
disputing the disposition of the Escrow Stock as set forth in the written
notice, the Escrow Agent shall distribute the escrowed stock as requested in the
written notice.
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b. If within twenty (20) days after receipt of the written notice, the
Escrow Agent shall have received a notice from GST contesting the payment of the
Escrowed Stock, the Escrow Agent shall retain possession of the disputed stock
until the controversy has been settled by Fitchet, Sherman and GST, and the
Escrow Agent will take further action with respect to such portion of the
Escrowed Stock only in accordance with the terms of an agreement signed by
Sherman, Fitchet, and GST dated subsequent to the date of the Escrow Agent's
receipt of the applicable notice of dispute, or, in the alternative, upon the
order of a court of competent jurisdiction.
6. DUTIES OF THE ESCROW AGENT. The Escrow Agent shall perform only such
duties as are expressly set forth in this Agreement. The Escrow Agent may resign
from its duties or obligations hereunder by giving at least 10 days prior
written notice of such resignation to Sherman, Fitchet and GST, specifying the
date when such resignation will take effect (which shall not, in any case, be
prior to the appointment of its successor Escrow Agent). GST shall, upon receipt
of such notice, designate a successor Escrow Agent, which successor Escrow Agent
shall be acceptable to Sherman and Fitchet.
7. ESCROW FEES. GST shall be responsible for the payment of escrow fees
required by the Escrow Agent hereunder, if any.
8. CONDITIONS OF ESCROW: The Escrow Agent shall:
a. Be under no duty or responsibility to bring action to enforce
any of the terms or conditions of this Agreement;
b. Have no responsibility for and make no representation as to
the validity, authenticity or sufficiency of this Agreement or the value,
validity or genuineness of any instrument deposited with it hereunder;
c. Not be liable for acting upon any notice, request,
certificate, approval, consent, confirmation slip or other paper believed by it
to be genuine and to be signed by the proper party;
d. Be entitled to consult with counsel and shall not be liable
for any action, suffered or omitted by it in good faith and believed by it to be
authorized under this Agreement; and
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e. Sherman and Fitchet on the one hand, and GST on the other
hand, shall each be responsible for reimbursing the Escrow Agent one-half of all
attorneys' fees and costs actually and reasonably incurred by the Escrow Agent
in connection with any claim made against the Escrow Agent resulting from any
action taken by the Escrow Agent for which the Escrow Agent is relieved from
liability pursuant to this paragraph, except for any claim, charge or liability
arising as a result of gross negligence or willful misconduct on the part of the
Escrow Agent.
9. STOCK OR CASH DIVIDENDS. In the event that any stock or cash dividend is
paid relating to the Escrowed Stock, Escrow Agent shall retain such cash or
stock dividend as part of the escrow and make the distributions of such stock or
cash at such time and to the person or entity so entitled.
10. TERMINATION OF AGREEMENT. This Agreement and the escrow established
hereby shall terminate upon the delivery of all of the Escrowed Stock to Sherman
and Fitchet or GST, as the case may be, pursuant to the terms of this Agreement.
11. BINDING NATURE; SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and permitted assigns, provided, however, that
no party hereto may assign its rights hereunder, or delegate its obligations
hereunder without the consent of the other parties hereto.
12. FURTHER ASSISTANCE. Each party to this Agreement agrees that on the
written request of any other party hereto, it will execute and deliver from time
to time any additional instruments or documents reasonably considered necessary
by a party or its counsel to effectuate the transactions contemplated hereunder.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Arizona, regardless of any
conflict-of-law rules to the contrary.
14. SEVERABILITY. If any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
15. LEGAL EXPENSES. If any action is brought to enforce or interpret any
part of this Agreement, the prevailing party in such action shall be entitled to
recover as an element of such party's costs of suit, and not as damages,
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reasonable attorneys' fees and costs and expenses of suit or arbitration to be
fixed by the court or arbitration panel. The prevailing party shall be the party
that is entitled to recover its costs of suit as ordered by the court,
applicable law, court rules or the arbitration panel. A party not entitled to
recover its costs shall not recover attorneys' fees.
16. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
V TECHNOLOGY HOLDINGS CORP., a
Delaware Corporation
By: /s/ Steve Sherman
-------------------------------------
Its: President
GOLDSTAR TELECOMMUNICATION CO.,
LTD. a corporation organized under
the laws of the Republic of Korea
By: /s/ S.H. Oh
-------------------------------------
Its: President
[ESCROW AGENT]
STKK Service Company
an Arizona Corporation
By: /s/ Michael R. Rooney
-------------------------------------
Its: Vice President
/s/ Steven Sherman
-----------------------------------------
Steven Sherman
/s/ Glenn R. Fitchet
-----------------------------------------
Glenn Fitchet
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