-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TEdHLDT29/9f1OADNM71zVdkYEdyYhsy4RHCa07D/Vr7U/bF7wdgGaC5kLO69ou6 pvYjiOnoFlvhh8TevJ14gA== /in/edgar/work/20000802/0000950147-00-001133/0000950147-00-001133.txt : 20000921 0000950147-00-001133.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950147-00-001133 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000802 GROUP MEMBERS: SHERMAN CAPITAL GROUP L.L.C. GROUP MEMBERS: SHERMAN CAPITAL PARTNERS L.L.C. GROUP MEMBERS: SHERMAN STEVEN A SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VODAVI TECHNOLOGY INC CENTRAL INDEX KEY: 0000949491 STANDARD INDUSTRIAL CLASSIFICATION: [3661 ] IRS NUMBER: 860789350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-48541 FILM NUMBER: 684321 BUSINESS ADDRESS: STREET 1: 8300 E RAINTREE DR CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6024436000 MAIL ADDRESS: STREET 2: 8300 E. RAINTREE DRIVE CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SHERMAN STEVEN A CENTRAL INDEX KEY: 0000908625 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 210 S. 4TH AVENUE CITY: PHOENIX STATE: AZ ZIP: 85003 BUSINESS PHONE: 6024938869 MAIL ADDRESS: STREET 1: 210 S. 4TH AVENUE CITY: PHOENIX STATE: AZ ZIP: 850003 SC 13D/A 1 0001.txt AMENDMENT 4 TO SCHEDULE 13D ------------------------------------ OMB APPROVAL ------------------------------------ OMB Number: 3235-0145 Expires: October 31, 2002 Estimated average burden hours to perform............ 14.90 ------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 4)* VODAVI TECHNOLOGY, INC. ------------------------------ (Name of Issuer) Common Stock ------------------------------ (Title of Class of Securities) 92857V 10 2 -------------- (CUSIP Number) Steven A. Sherman 509 Vista Grande Drive, Colorado Springs, Colorado 80906 ------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 1, 1999 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 2 of 8 Pages - --------------------- ----------------- 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Steven A. Sherman ###-##-#### ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] ---------------------------------------------------------------------------- 3 SEC USE ONLY ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] ---------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION United States ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 330,830 (Includes 86,830 shares held by Sherman Capital Group L.L.C. of which Mr. Sherman is the managing member.) ----------------------------------------------------------- 8 SHARED VOTING POWER NUMBER OF SHARES 137,500 (Includes 137,500 shares held by Sherman Capital BENEFICIALLY Partners L.L.C. of which Mr. Sherman is the OWNED BY managing member.) EACH ----------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 330,830 (Includes 86,830 shares held by Sherman Capital Group L.L.C. of which Mr. Sherman is the managing member.) ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 137,500 (Includes 137,500 shares held by Sherman Capital Partners L.L.C. of which Mr. Sherman is the managing member.) ----------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 468,330 (Includes 86,830 shares held by Sherman Capital Group L.L.C. of which Mr. Sherman is the managing member and 137,500 shares held by Sherman Capital Partners L.L.C. of which Mr. Sherman is the managing member.) ---------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ---------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.6% ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ---------------------------------------------------------------------------- SCHEDULE 13D - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 3 of 8 Pages - --------------------- ----------------- 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sherman Capital Group L.L.C. ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] ---------------------------------------------------------------------------- 3 SEC USE ONLY ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] ---------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION Arizona ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 86,830 NUMBER OF ----------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH ----------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 86,830 ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 ----------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 86,830 ---------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ---------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.0% ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO (Limited Liability Company) ---------------------------------------------------------------------------- SCHEDULE 13D - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 4 of 8 Pages - --------------------- ----------------- 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sherman Capital Partners L.L.C. ---------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] ---------------------------------------------------------------------------- 3 SEC USE ONLY ---------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A ---------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] ---------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION Arizona ---------------------------------------------------------------------------- 7 SOLE VOTING POWER 137,500 NUMBER OF ----------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH ----------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 137,500 ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 ----------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 137,500 ---------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ---------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.2% ---------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO (Limited Liability Company) ---------------------------------------------------------------------------- SCHEDULE 13D - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 5 of 8 Pages - --------------------- ----------------- ITEM 1. SECURITY AND ISSUER This statement relates to shares of common stock (the "Common Stock") of Vodavi Technology, Inc., a Delaware corporation, with principal executive offices located at 8300 East Raintree Drive, Scottsdale, Arizona 85260. All securities reported in this Schedule 13D reflect the 1-for-2 reverse stock split effected by the Issuer on July 18, 1995. ITEM 2. IDENTITY AND BACKGROUND (a)-(c) and (f). This statement is filed jointly pursuant to Rule 13d-(1)(k) by Steven A. Sherman ("Sherman"), Sherman Capital Group L.L.C. ("Sherman Capital Group") and Sherman Capital Partners, L.L.C. ("Sherman Capital Partners") collectively hereinafter referred to as the "Reporting Persons." A copy of the joint filing agreement among the Reporting Persons is attached as Annex A. The business address of Sherman is as follows: 509 Vista Grande Drive Colorado Springs, Colorado 80906 Sherman's principal occupation and the name and address where such employment is conducted is as follows: Non-Executive Chairman and Chief Executive Officer Novatel Wireless, Inc., 509 Vista Grande Drive Colorado Springs, Colorado 80906 Sherman is a citizen of the United States. Sherman Capital Group and Sherman Capital Partners are both Arizona limited liability companies with their principal places of business located at 509 Vista Grande Drive, Colorado Springs, Colorado 80906. Sherman is the managing member and a principal of both Sherman Capital Group and Sherman Capital Partners. Information with respect to Sherman's principal occupation and business address is set forth above. (d) and (e) During the last five years, each Reporting Person and, to the knowledge of Sherman Capital Group and Sherman Capital Partners, their respective executive officers and managing members have not (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Other than as set forth herein, there has been no material change in the information set forth in response to this Item 3 of the Schedule 13D, as amended, with respect to the Reporting Persons. ITEM 4. PURPOSE OF TRANSACTION Each of the Reporting Persons is a previous shareholder of the Issuer. Their respective acquisitions of Common Stock were originally made for investment purposes. This Amendment No. 4 to Schedule 13D is being filed to report the termination of the Voting Agreement dated March 31, 1999, by and among Sherman, Fereydoun Taslimi, Nahid Loudermilk, Michael Mittel and Noor Research Corp (the "Voting Agreement"). The Voting Agreement was previously filed by the Reporting Persons with the Securities and Exchange Commission as Exhibit 3 to the Reporting Persons" Amendment No. 3 to Schedule 13D. By its terms, the Voting Agreement terminated on October 1, 1999. Except for Sherman, each of the other - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 6 of 8 Pages - --------------------- ----------------- Reporting Persons ceased to be the beneficial owner of more than five percent of the Common Stock of the Issuer upon the termination of the Voting Agreement. Except as described in this Item 4, there are no plans or proposals required to be described in sub-sections (a) through (j) of this Item 4 to which the Reporting Persons are a party. However, each Reporting Person intends to individually and continually review such Reporting Person's position in the securities of the Issuer and may, depending upon an evaluation of the Issuer's business and prospects as well as upon future developments and upon price, availability of shares and other factors, individually determine to increase, decrease or eliminate such Reporting Person's position in the Issuer's securities. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) The aggregate number of shares and the percentage of all shares owned by each of the Reporting Persons is as follows: Reporting Person Number of Shares Percent of Class ---------------- ---------------- ---------------- Sherman 468,330(1) 10.6% Sherman Capital Group 86,830 2.0% Sherman Capital Partners 137,500 3.2% ------- ----- Total 468,330 10.6% (1) The number of shares and percentage shown includes (i) an aggregate of 4,000 shares held by Sherman as custodian for certain of his minor children, (ii) 75,000 shares of Common Stock underlying a currently exercisable option which vested on October 20, 1998, (iii) 86,830 shares of Common Stock held by Sherman Capital Group, of which Sherman is the managing member and (iv) 137,500 shares of Common Stock held by Sherman Capital Partners, of which Sherman is the managing member. Sherman disclaims beneficial ownership of all shares held by Sherman Capital Group and Sherman Capital Partners except to the extent that his individual interest in such shares arises from his interest in such entities. (b) Number Percent of Shares of Class --------- -------- Sole Power to Vote Securities: 330,830(1) 7.5% Shared Power to Vote Securities: 137,500(2) 3.2% Sole Power to Dispose of Securities: 330,830(1) 7.5% Shared Power to Dispose of Securities: 137,500(2) 3.2% (1) The number of shares and percentage shown includes (i) an aggregate of 4,000 shares held by Sherman as custodian for certain of his minor children, (ii) 75,000 shares of Common Stock underlying a currently exercisable option which vested on October 20, 1998, and, (iii) 86,830 shares of Common Stock held by Sherman Capital Group, of which Sherman is the managing member. Sherman disclaims beneficial ownership of all shares held by Sherman Capital Group except to the extent that his individual interest in such shares arises from his interest in such entity. (2) Sherman is a managing member of Sherman Capital Partners, which holds 137,500 shares of Common Stock. Sherman disclaims beneficial ownership of all shares held by Sherman Capital Partners except to the extent that his individual interest in such shares arises from his interest in such entity. - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 7 of 8 Pages - --------------------- ----------------- (c) Except as described below, there have been no transactions by any of the Reporting Persons with respect to the Common Stock during the 60 days preceding the date of this Amendment No. 4 to Schedule 13D. Sherman made the following open market sales of Common Stock: Date No. of Shares Sold Price per Share ------- ------------------ --------------- 8/23/99 1,000 $2.50 8/26/99 1,100 $2.50 8/30/99 8,900 $2.18 9/15/99 10,000 $2.14 9/30/99 10,000 $2.14 10/14/99 8,250 $2.14 In addition, on May 9, 2000, 50,000 shares of Common Stock were transferred from Sherman to LG Electronics, Inc., ("LGE") as successor in interest to Goldstar Telecommunication Co., Ltd ("Goldstar") pursuant to the terms of an Escrow Agreement dated March 28, 1994, among V Technology Holdings Corp., Goldstar, Sherman, Glen R. Fitchet and STKK Service Company (the "Escrow Agreement"). The 50,000 shares of Common Stock owned by Sherman were transferred to LGE in accordance with the terms of the Escrow Agreement because the Issuer did not meet certain agreed upon sales targets and before tax operating income levels. The description of the Escrow Agreement set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the Escrow Agreement which is filed herewith as Exhibit 1 and incorporated herein by reference. (d) Certain shares beneficially owned by Sherman are held in the name of Steven A. Sherman as custodian for certain of his minor children and in the name of Sherman Capital Group and Sherman Capital Partners. As a result, such persons have the right to receive dividends from their respective shares or proceeds from the sales of their respective shares. (e) Except for Sherman, each of the other Reporting Persons ceased to be a beneficial owner of more than five percent of the Common Stock of the Issuer on October 1, 1999. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Other than the contracts, arrangements, understandings or relationships described below or previously reported by any of the Reporting Persons on a Schedule 13D or any amendments thereto, there are no contracts, arrangements, understandings or relationships between any of the Reporting Persons and any other person, or, to the knowledge of Sherman Capital Group and Sherman Capital Partners, among any of their respective executive officers and managing members, or between any of their executive officers and managing members and any other person, with respect to any securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1 Escrow Agreement Exhibit 2 Stockholder's Agreement between V Technology Holdings Corp., V Technology Acquisition Corp., Goldstar Telecommunication Co. Ltd., The Sherman Group and The Opportunity Fund, Steven A. Sherman, and Glenn R. Fitchet dated March 28, 1994. - --------------------- ----------------- CUSIP NO. 92857V 10 2 Page 8 of 8 Pages - --------------------- ----------------- Signature After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Date: August 2, 2000 /s/ Steven A. Sherman --------------------------------------- Steven A. Sherman Date: August 2, 2000 SHERMAN CAPITAL GROUP L.L.C. /s/ Steven A. Sherman --------------------------------------- By: Steven A. Sherman Its: Managing Member Date: August 2, 2000 SHERMAN CAPITAL PARTNERS L.L.C. /s/ Steven A. Sherman --------------------------------------- By: Steven A. Sherman Its: Managing Member ANNEX A JOINT FILING AGREEMENT Steven A. Sherman, Sherman Capital Group L.L.C. and Sherman Capital Partners L.L.C., each hereby agrees that this Amendment No. 4 to Schedule 13D filed herewith relating to the securities of Vodavi Technology, Inc. is filed jointly on behalf of such person. Date: August 2, 2000 /s/ Steven A. Sherman --------------------------------------- Steven A. Sherman Date: August 2, 2000 SHERMAN CAPITAL GROUP L.L.C. /s/ Steven A. Sherman --------------------------------------- By: Steven A. Sherman Its: Managing Member Date: August 2, 2000 SHERMAN CAPITAL PARTNERS L.L.C. /s/ Steven A. Sherman --------------------------------------- By: Steven A. Sherman Its: Managing Member EX-1 2 0002.txt ESCROW AGREEMENT 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. 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. 2 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 3 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, 4 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 5 EX-2 3 0003.txt STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT between V TECHNOLOGY HOLDINGS CORP., V TECHNOLOGY ACQUISITION CORP., GOLDSTAR TELECOMMUNICATION CO. LTD., THE SHERMAN GROUP AND THE OPPORTUNITY FUND, STEVEN A. SHERMAN, AND GLENN R. FITCHET DATED: MARCH 28, 1994 This Stockholders' Agreement ("Agreement") made and entered into as of this 28th day of March, 1994, between V TECHNOLOGY HOLDINGS CORP., a Delaware corporation ("V Tech Holding"), and V TECHNOLOGY ACQUISITION CORP, an Arizona corporation ("V Tech Acquisition") with its executive offices at 8700 East Via de Ventura, Suite 305, Scottsdale, Arizona 85259, GOLDSTAR TELECOMMUNICATION CO., LTD., a corporation organized under the laws of the Republic of Korea ("GST"), with its executive offices at Lucky GoldStar Twin Tower, West Tower 20F, #20, Yoido-dong, Youngdungpo-gu, Seoul 150-721, Korea, THE OPPORTUNITY FUND, a limited partnership (the "Opportunity Fund"), and THE SHERMAN GROUP, a participant in the Opportunity Fund (collectively with the Opportunity Fund, the "FUND") both with their executive offices located at 8700 E. Via de Ventura, Suite 305, Scottsdale, Arizona 85259, Steven Sherman ("Sherman"), and Glenn R. Fitchet ("Fitchet"). WHEREAS, V Tech Holding owns 100% of the outstanding capital stock of V Tech Acquisition. WHEREAS, V Tech Acquisition, Executone Information Systems, Inc. and Vodavi Communication Systems, Inc. (collectively, "Executone"), are parties to a certain Asset Purchase Agreement, dated November 5, 1993 (the "Asset Purchase Agreement"), pursuant to which V Tech Acquisition has agreed to purchase and acquire from Executone certain of the assets of Executone used in Executone's Vodavi Communications Systems Division. WHEREAS, following the consummation of the transactions contemplated by the Asset Purchase Agreement, V Tech Acquisition will change its name to Vodavi Communications Systems, Inc., and will own the acquired-assets and operate the related business under such name. WHEREAS, GST has agreed to take an ownership interest in V Tech Holding in exchange for contributing $ 1,500,000 in cash and an eighteen month standby Letter of Credit in the amount of $1,200,000 and usance in the amount of $3,500,000 for twelve months. For this contribution, GST will receive 1,500,000 (37.5%) of the outstanding shares of common stock of V Tech Holding upon consummation of the transactions contemplated by the Asset Purchase Agreement. WHEREAS, the Fund has agreed to take an ownership interest in V Tech Holding in exchange for a cash contribution to V Tech Holding of $1,500,000.00. For this contribution, the Fund will receive 1,500,000 (37.5%) of the outstanding shares of common stock of V Tech Holding upon consummation of the transactions contemplated by the Asset Purchase Agreement. 2 WHEREAS, The Sherman Group, Sherman and Fitchet were formerly the sole stockholders of V Tech Acquisition and, upon consummation of the transactions contemplated in the Asset Purchase Agreement, Sherman and Fitchet will acquire in the aggregate, 1,000,000 (25%) shares of the outstanding common stock of V Tech Holding. WHEREAS, V Tech Acquisition and all stockholders acknowledge that GST's primary purpose in obtaining an ownership interest in V Tech Holding is to grow with V Tech Holding on a long-term business basis, not simply investing in expectation of the potential appreciation of the price of its shares held in V Tech Holding. WHEREAS, V Tech Acquisition and all Stockholders agree that the short term business strategy will be to address the small to medium size business communication market by utilizing telephony-based products to provide productivity tools to the fastest growing segments of these markets. In the longer term, as the business evolves and continues to grow, Vodavi Communications Systems, Inc. will be positioned to take advantage of the emerging wireless markets, energy management for both small business and residential, and opportunities created through changes to the telephony network. WHEREAS, V Tech Acquisition will provide specific market expertise and new product development directions, and GST will provide hardware development and manufacturing and the products developed will be marketed in North America by V Tech Acquisition and internationally by GST. WHEREAS, the parties hereto desire to provide for certain rights and restrictions pertaining to the shares of common stock of V Tech Holding. NOW, THEREFORE, in consideration of mutual covenants and agreements set forth herein and other good and valuable consideration, the parties hereto hereby agree as follows: 1. CERTAIN DEFINITIONS. The following terms, wherever used in this Agreement. shall have the meaning ascribed below. Other terms defined in the body of the Agreement shall have the meaning assigned therein. (a) "Affiliate" means, with respect to a specified person, a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified person, but shall not include any person less than 50% of the ordinary voting power of which is not directly or indirectly held by the specified person and its affiliates. (b) "Common Stock" means the common stock of V Tech Holding, par value $.001 per share. (c) "GST Affiliates" means GST or any company within the Lucky GoldStar Group. (d) "Maintenance Right" means the right of GST to maintain its proportionate equity interest in V Tech Holding as provided in Section 4 hereof. 3 (e) "Person" or "Persons" means an individual, a corporation, a partnership, an association, a joint stock company, a joint, venture, an unincorporated organization, a trust or other entity, including, without limitation, employee pension, profit sharing and other benefit plans and trusts. (f) "Stockholders" means collectively GST, the Fund, Sherman and Fitchet at such time as shares of Common Stock are actually issued to such parties, together with any other person that may subsequently become an owner of record of Common Stock. 2. WARRANTS FOR COMMON STOCK. Following consummation of the transactions contemplated by the Asset Purchase Agreement and issuance of shares of common stock as contemplated by the Recitals to this Agreement, V Tech Holding will also issue warrants to purchase additional shares of Common Stock (the "Warrants") to the Persons, and in the respective amounts, specified on SCHEDULE A hereto. The purchase price for each Warrant shall be Zero Dollars ($0.00). Each Warrant will entitle a Person to purchase the number of shares of Common Stock represented thereby at a price of $2.00 per share. The Warrants wi1 be exercisable by any Person at any time during the period commencing on the closing date of the transactions contemplated by the Asset Purchase Agreement (the "Closing Date") and ending on, the date which is eighteen (18) months following the Closing Date. The Warrants will set forth additional terms and conditions of exercise. 3. ESCROW. (a) ESCROW AGREEMENT. The Stockholders acknowledge and agree that 600,000 of the shares of Common Stock to be acquired by Sherman and Fitchet will be held in escrow pursuant to an Escrow Agreement (the "Escrow Agreement") between V Tech Holding, GST, the Fund, Sherman, and Fitchet. GST will select the escrow agent, provided, however, that such agent shall be reasonably acceptable to Sherman and Fitchet. Any escrow fees payable pursuant to the Escrow Agreement will be paid by GST. (b) RELEASES OF STOCK FROM ESCROW. The Escrow Agreement will provide that the six hundred thousand (600,000) shares of Common Stock owned by Sherman and Fitchet will be released from escrow as follows: (1) 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. In the event that the condition set forth in the preceding sentence is not met, then the two hundred thousand (200,000) shares shall be retained by and become the property of GST. 4 (2) An additional two hundred thousand (200,000) shares of escrow stock will be returned to Sherman and Fitchet upon achieving the business case of the first year. In the event that the conditions set forth in the preceding sentence is not met, then the two hundred thousand (200,000) shares of escrowed stock shall be retained by and become the property of GST. (3) 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 closing. In the event that the condition set forth in the preceding sentence is not met, then the one hundred thousand (100,000) shares of escrowed stock shall be retained by and become the property of GST. (4) 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. In the event that the conditions set forth in the preceding sentence are not met, then the one hundred thousand (100,000) shares shall be retained by and shall become the property of GST. (5) Notwithstanding the escrowed shares shall become the property of GST in accordance with the above, it shall not mean that the V Tech acquisition shall be relieved form the relevant responsibility and liability under this Agreement. Criteria for achieving the business case in year one and year two will be sales target and operating income before tax. The business case goals will be finalized by GST, Sherman and Fitchet after the execution of this Stockholders Agreement 4. GST'S RIGHT TO MAINTAIN EQUITY INTEREST. The Stockholders and V Tech Holding acknowledge and agree that GST shall be entitled in its discretion to make the following additional purchases of Common Stock, and V Tech Holding will reasonably cooperate with GST in order to effectuate such of these purchases as GST shall elect to make. (a) COMMON STOCK MAINTENANCE RIGHT. If at any time during the term of this Agreement, V Tech Holding shall sell or issue shares of Common Stock in a public offering or private placement, which securities, when issued, amount in the aggregate to 1% or more of V Tech Holding's then issued and outstanding Common Stock, (the "New Shares") V Tech Holding shall in each such instance promptly give written notice of such sale or issuance of New Shares to GST including the number of shares subject thereto and the price per share to be paid therefor. GST shall thereupon have the right (the "Maintenance Right"), exercisable for a period of sixty (60) days after receipt of such written notice, to irrevocably offer to purchase from V Tech Holding such portion of the New Shares as would be required to maintain GST's percentage interest of Common Stock at the level of ownership held by GST immediately 5 prior to the offering of New Shares (the "Maintenance Amount"). GST shall not have any rights under this Section 4 to purchase additional shares of Common Stock in excess of the Maintenance Amount. (b) If GST desires to exercise its Maintenance Right, it shall give notice of exercise to V Tech Holding, specifying the Maintenance Amount with respect to the offering of New Shares giving rise to the Maintenance Right. Such notice shall constitute an irrevocable offer to purchase the number of shares of Common Stock set forth therein on the terms provided in this Section 4. Following receipt of a notice of exercise from GST, V Tech Holding shall, prior to the expiration of such sixty (60) day period notify GST that it intends to sell to GST the Maintenance Amount specified in GST's exercise notice. (c) The purchase price for the shares of Common Stock to be purchased by GST in accordance with this Section 4 shall be, in the case of a public offering of New Shares, the public offering price per share, and in the case of a private placement of New Shares, the price per share paid by the purchaser(s) in such transaction. (d) Within five (5) days following receipt of a notice from V Tech Holding agreeing to sell shares of Common Stock to GST under this Section 4, GST shall deliver to V Tech Holding the purchase price payable on account thereof of immediately available funds against delivery of the certificates, registered in GST's name, evidencing the additional shares of Common Stock so purchased by GST. All such shares of Common Stock, will, upon payment therefore, be validly issued, fully paid and nonassessable and any necessary approvals to the sale shall have been obtained. 5. SALE OF COMMON STOCK BY GST & OTHER SHAREHOLDERS. All sales of Common Stock by GST and other shareholders must be in accordance with the laws of the United States. In the event GST chooses to sell its shares, it must give Sherman and Fitchet a right of first refusal to purchase GST's shares, and likewise, Sherman and Fitchet shall give GST a right of first refusal to purchase its shares at fair market value. This reciprocal right of first refusal shall be for a limited time with terms and conditions to be mutually agreed upon. 6. REPRESENTATIONS AND WARRANTIES OF V TECH HOLDING AND V TECH ACQUISITION.V Tech Holding and V Tech Acquisition hereby represent and warrant to GST as follows: (a) ORGANIZATION AND GOOD STANDING -- V TECH HOLDING. V Tech Holding is a corporation duly organized, validly existing and in good standing under the laws of Delaware with power to enter into and carry out this 6 Agreement. V Tech Holding has power and authority (corporate and other) to own its properties and conduct its business, as now being conducted and as presently proposed to be conducted; and V Tech Holding is duly qualified and in good standing as a foreign corporation in all jurisdictions in which its ownership or leasing or material properties or the conduct of its material business requires such qualification. (b) ORGANIZATION AND GOOD STANDING -- V TECH ACQUISITION. V Tech Acquisition is a corporation duly organized, validly existing and in good standing under the laws of Arizona with power to enter into and carry out this Agreement. V Tech Acquisition has power and authority (corporate and other) to own its properties and conduct its business, as now being conducted and as presently proposed to be conducted; and V Tech Acquisition is duly qualified and in good standing as a foreign corporation in all jurisdictions in which its ownership or leasing or material properties or the conduct of its material business requires such qualification. (c) AUTHORITY. V Tech Holding and V Tech Acquisition have the corporate power and authority to execute and delivery of this Agreement and to consummate the transactions to be performed by them as contemplated herein. The execution, delivery and performance of this Agreement has each been duly authorized by the Board of Directors of V Tech Holding and V Tech Acquisition and no other corporate approvals are necessary therefor. This Agreement constitutes a valid and binding agreement of V Tech Holding and V Tech Acquisition. (d) AGREEMENT WILL NOT VIOLATE OTHER RESTRICTIONS. The execution and delivery of this Agreement will not (i) conflict with or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default or could give rise to a right of termination) under any of the terms, conditions or provisions of, the charter or by-laws of V Tech Holding or V Tech Acquisition, or under any other material note, bond, mortgage, indenture, license agreement or other instrument or obligation to which V Tech Holding or V Tech Acquisition is a party, or by which it or any of its properties or assets may be bound, or (ii) violate any material order, writ, injunction, decree, statute, rule or regulation applicable to V Tech Holding or V Tech Acquisition, or to any of its properties or assets. (e) GOVERNMENT APPROVAL. No authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by V Tech Holding or V Tech Acquisition with any governmental authority, domestic or foreign, is required in connection with the execution, delivery and performance by V Tech Holding or V Tech Acquisition of this Agreement. 7 (f) COMPLIANCE WITH APPLICABLE LAWS. V Tech Holding and V Tech Acquisition are in substantial compliance with all laws and regulations and all order and decrees applicable to it, the violation of which might have a material adverse effect on the financial position or business of V Tech Holding or V Tech Acquisition. (g) LITIGATION. There are no actions or proceedings before or by any court or governmental agency or body pending, or to the knowledge of V Tech Holding or V Tech Acquisition threatened, which might individually or in the aggregate result in any material adverse change in the condition (financial or otherwise), business or prospects of V Tech Holding, or which would materially and adversely affect its properties or assets. (h) NO PRIOR BUSINESS ACTIVITY. Except for the Asset Purchase Agreement and except for this Agreement and the companion agreements contemplated herein, neither V Tech Holding or V Tech Acquisition has engaged in any prior business activity and neither has any contacts, debts or contingent liabilities. 7. REPRESENTATIONS AND WARRANTIES OF GST. GST hereby represents and warrants to V Tech Holding as follows; (a) ORGANIZATION AND GOOD STANDING. GST is a corporation duly organized, validly existing and in good standing under the laws of the Republic of Korea with power and authority (corporate and other) to own its properties and conduct its business, as now being conducted and as presently proposed to be conducted. (b) AUTHORITY. GST has the corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement has each been duly authorized by the Board of Directors of GST and no other corporate approvals are necessary therefor, and there are no charter documents, controls or agreements to which GST is subject which would prohibit GST's performance under this Agreement. This Agreement has been duly executed and delivered by GST and constitutes a valid and binding agreement of GST. (c) GOVERNMENT APPROVAL. Except for the approval of the Korean Government, if necessary, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by GST with any governmental authority, domestic or foreign, is required in connection with the execution, delivery and performance of this Agreement. 8 8. ELECTION OF DIRECTORS VOTING -- V TECH HOLDING. (a) NUMBER OF DIRECTORS WHILE PRIVATE COMPANY. For such period of time that V Tech Holding shall be a privately held company, then the Board of Directors of V Tech Holding shall consist of four (4) members. Each of the Stockholders covenants and agrees that upon the consummation of the transactions contemplated by the Asset Purchase Agreement and issuance of shares of Common Sock as contemplated by the Recitals to this Agreement, such Stockholder will vote his or its shares of Common Stock in such a way as to cause two (2) persons designated by GST to be elected as directors of V Tech Holding. (b) NUMBER OF DIRECTORS AFTER PUBLIC OFFERING OF COMMON STOCK. At such time as there is a public offering of the Common Stock of V Tech Holding, the number of members on the Board of Directors of V Tech Holding may be expanded. Notwithstanding the preceding, for the first 12 months after closing, or until the $3.5 Million Dollars usance is repaid, GST will, regardless of its percentage ownership of stock, be entitled to a minimum of 34% of the directors. Thereafter, GST shall be entitled to Elect as directors of V Tech Holding, that number of directors equal to GST's then percentage of ownership of Common Stock, provide, however, each Stockholder covenants and agrees that so long as GST shall own eight percent (8%) or more of the outstanding Common Stock of V Tech Holding, such Stockholder will vote his or its shares of Common Stock in favor of the election of at least one (1) designee of GST to be elected as director of V Tech Holding. (c) OPPORTUNITY TO RESTORE. In the event that an issuance of Common Stock by V Tech Holding shall reduce GST's proportion of ownership of Common Stock and thereby eliminate the designee to which it is entitled, no change in GST's designee shall be made until GST shall have a reasonable opportunity to restore its proportionate ownership in accordance with Section 4 hereof. (d) GST DESIGNEE. All designees of GST to the Board of Directors shall be executive officers or directors of GST or directors of any GST Affiliate or other person reasonably acceptable to V Tech Holding and the Stockholders. Each of the Stockholders hereby further agrees that, during the term of this Agreement, no person designated by GST to serve on V Tech Holding's Board of Directors may be removed as a director of V Tech Holding without cause, unless GST consents to such removal in writing. (e) GST DIRECTOR EMPLOYED BY V TECH ACQUISITION. One of GST's directors shall be employed by V Tech Acquisition in a job and at such salary mutually acceptable to GST and to V Tech Acquisition. 9 9. ELECTION OF DIRECTORS; VOTING--V TECH ACQUISITION. (a) NUMBER OF DIRECTORS. The Board of Directors of V Tech Acquisition shall consist of four members. Each of the Stockholders covenants and agrees that upon the consummation of the transactions contemplated by the Asset Purchase Agreement, an issuance of shares of Common Stock as contemplated by the Recitals to this Agreement, such Stockholder shall vote his or her shares of Common Stock in such a way to cause two persons designated by GST to be elected as Directors of V Tech Acquisition. (b) GST DESIGNEES. All designees of GST to the Board of Directors shall be executive officers or directors of GST or directors of any GST affiliate or other person reasonably acceptable to V Tech Acquisition and the Stockholders. Each of the Stockholders hereby further agrees that, during the term of this Agreement, no person designated by GST to serve on V Tech Holding's Board of Directors may be removed as a director of V Tech Acquisition without cause, unless GST consents to such removal in writing. (c) If and when V Tech Holding exercises its right of resolution at the V Tech Acquisition's Shareholder's Meeting, the person who exercises its voting right shall get first authorization from V Tech Holding's Board of Directors for the delegated scope and directing of the resolution. 10. MAJOR DECISIONS -- FIRST THREE YEARS. Notwithstanding anything to the contrary contained herein, for a period of three years from closing, V Tech Acquisition and V Tech Holding will not make any Major Decision without GST's approval. 11. SPECIFIC ENFORCEMENT. The Stockholders acknowledge and agree that each party hereto would be irreparably damaged in the event any of the provisions of Sections 2, 3, 4 and 8 hereof are not performed by the parties in accordance with their terms or are otherwise breached, and that no adequate remedy exists at law for such breach or failure to perform. It is accordingly agreed that the parties shall be entitled to injunctive relief (including, without (limitation, a temporary restraining order or a preliminary injunction) to prevent breaches of any of such Sections and to specifically enforce any of such Sections and the terms and provisions thereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction, in addition to any other remedy to which any of the parties may be entitled, at law or in equity. 12. MAJOR DECISIONS. The Bylaws of V Tech Holding and V Tech Acquisition shall contain the following paragraph: MAJOR DECISIONS. Major Decisions of the Board of Directors shall require a vote of two-thirds of the entire Board of Directors then in office, rather than a majority vote. The Major Decisions shall include the following: a public issuance of stock (but not including the initial public issuance of 10 stock), the merger with or the acquisition of another business or the acquisition of a significant amount of the assets of another business, the sale of a significant amount of the assets of the company, the entering into contracts with Stockholders or directors, the assumption of, or the acquisition of major debt which is defined as debt in excess of $1 Million Dollars and amendment of the Articles of Incorporation and By-Laws of the V-Tech Holding and /or V-Tech Acquisition. 13. TERMINATION. This Agreement shall terminate and be of no further force and effect upon the unanimous consent of the Stockholders. 14. LIEN ON INVENTORY AND RECEIVABLES. GST shall be entitled to receive a first position security interest in the inventory and receivables of V Tech Acquisition, provided that G E Capital has released its lien on the inventory and receivables of V Tech Acquisition and, provided further, that: (a) The $3.5 Million Dollar usance is in effect and V Tech Acquisition has not provided GST with a satisfactory letter of credit to secure the purchase of inventory; or (b) The $1.2 Million Dollar standby letter of credit provided by GST is still in effect and V Tech Acquisition has not provided GST with a satisfactory letter of credit to secure the purchase of inventory; or (c) V Tech Acquisition has requested and is receiving 45-day payment terms on its inventory purchases and V Tech Acquisition has not provided GST with a satisfactory letter of credit to secure the purchases of inventory. For purposes of this paragraph, the term "satisfactory letter of credit" means letter of credit mutually acceptable to GST and V Tech Holding. 15. CONTINGENCY. The obligations of all of the parties under this Agreement are contingent upon the closing of the Asset Purchase Agreement. 16. ACCESS TO FINANCIAL INFORMATION. V Tech Holding and V Tech Acquisition shall: (i) provide access during normal business hours to GST and any of its officers, employees and agents, upon reasonable prior notice, to the properties and facilities of V Tech Holding and V Tech Acquisition; (ii) permit GST and any of its officers, employees and agents to inspect, audit and make extracts from all V Tech Holding and V Tech Acquisition records, files and books of account, and (iii) permit GST to inspect, review and evaluate V Tech Holding and V Tech Acquisition accounts and other records (excluding attorney-client privileged documents), at V Tech Holding and V Tech Acquisition locations and at premises not owned by or leased to V Tech Holding and V Tech Acquisition. V Tech Holding and V Tech Acquisition shall make available to GST and its counsel, as quickly as practicable under the circumstances, copies of all books, records, board minutes, contracts, insurance policies, environmental audits, business plans, files, financial 11 statements (actual and pro forma), filings with federal, state and local regulatory agencies, and other instruments and documents (excluding attorney-client privileged documents) that GST may request. V Tech Holding and V Tech Acquisition shall deliver any document or instrument reasonably necessary for GST, as it may from time to time request, to obtain records from any service bureau or other Person which maintains records for V Tech Holding and V Tech Acquisition. Upon request of GST, V Tech Holding and V Tech Acquisition shall instruct its certified public accountants and its banking and other financial institutions to make available to GST such information and records as GST may reasonably request. It is the intent of all of the parties hereto that each party to this Agreement shall pay its own expenses related thereto. 17. MISCELLANEOUS (a) SEVERABILITY. If any term or provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way to be affected, impaired or invalidated. (b) SUCCESSORS ASSIGNMENT. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the successors of the parties hereto. Except as otherwise provided herein, this Agreement shall not be assignable. GST shall have the right to transfer all or any of the shares of Common Stock owned by it to any GST Affiliate; provided, however, that such GST Affiliate shall agree in advance in writing to be bound by all the terms of this Agreement. In such case, such GST Affiliate shall be entitled to enforce all of the terms and conditions of this Agreement to the same extent as this Agreement could be enforced by GST. (c) AMENDMENT. This Agreement may not be modified, amended, altered or supplemented except by a written agreement signed by each of the Stockholders which shall be authorized by all necessary corporate or other action of each party. (d) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement, the issuance of Common Stock pursuant hereto and the payment therefor. (e) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to 12 have been duly given if given) by delivery, cable, telegram or telex, or by mail (registered or certified mail, postage prepaid, return receipt requested) to the respective parties as follows: If to V Tech Holding: Steven A. Sherman, Chairman V Technology Holdings Corp. 8700 E. Via de Ventura, Suite 305 Scottsdale, Arizona 85259 with a copy to: Robert Kant, Esq. O'Connor Cavanagh One East Camelback Road Suite 1100 Phoenix, Arizona 85012-1656 If to GST: President S.H. Oh GoldStar Telecommunication Co., Ltd. Lucky GoldStar Twin Tower, West Tower 20F #20, Yoido-dong Youngdungpo-gu, Seoul 150-721, Korea If to the Fund: THE OPPORTUNITY FUND 8700 E. Via de Ventura, Suite 305 Scottsdale, Arizona 85259 THE SHERMAN GROUP 8700 E. Via de Ventura, Suite 305 Scottsdale, Arizona 85259 If to Sherman: Steven A. Sherman 8700 E. Via de Ventura, Suite 305 Scottsdale, Arizona 85259 If to Fitchet: Glenn R. Fitchet 8300 E. Raintree Drive Scottsdale, AZ 85260 13 or to such address as any party, may have furnished to the other parties in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt. (f) CONTROLLING LAW; EXCLUSIVE JURISDICTION AND VENUE. THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF ARIZONA, NOTWITHSTANDING ANY ARIZONA OR OTHER CONFLICT-OF-LAWS PROVISIONS TO THE CONTRARY. THE PARTIES AGREE THAT ANY ACTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY IN CONNECTION WITH ANY RIGHTS OR OBLIGATIONS ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL BE INSTITUTED PROPERLY IN A UNITED STATES FEDERAL COURT OR STATE COURT OF COMPETENT JURISDICTION WITH VENUE ONLY IN THE COUNTY OF MARICOPA, STATE OF ARIZONA, OR IN THE FEDERAL DISTRICT COURT OF ARIZONA. GST HEREBY AGREES TO SUBMIT PERSONALLY TO THE JURISDICTION OF A COURT OF COMPETENT SUBJECT MATTER JURISDICTION LOCATED IN SUCH COUNTY OR FEDERAL DISTRICT. (g) COUNTERPARTS; HEADINGS. This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. The headings contained in this Agreement are solely to the convenience of the parties, and are not intended to and do not limit, construe or modify any of the terms and conditions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. V TECHNOLOGY HOLDINGS CORP. By: Steven Sherman Attest: ----------------------------------- Title: Chairman, President /s/ Glenn R. Fitchet - ------------------------------------- V TECHNOLOGY ACQUISITION CORP. By: Steven Sherman Attest: ----------------------------------- Title: President /s/ Glenn R. Fitchet - ------------------------------------- GOLDSTAR TELECOMMUNICATION CO. LTD. By: S.H. Oh Attest: ----------------------------------- Title: President /s/ D. H. Kim - ------------------------------------- THE OPPORTUNITY FUND By: Steven Sherman Attest: ----------------------------------- Title: President /s/ Glenn R. Fitchet - ------------------------------------- THE SHERMAN GROUP By: Steven Sherman Attest: ----------------------------------- Title: President /s/ Glenn R. Fitchet - ------------------------------------- STEVEN A. SHERMAN By: Steven Sherman Attest: ----------------------------------- /s/ Glenn R. Fitchet - ------------------------------------- GLENN R. FITCHET By: Glenn R. Fitchet Attest: ----------------------------------- /s/ Steven Sherman - ------------------------------------- 15 SCHEDULE A Warrants Each of the following persons or entities will be issued warrants giving them an option to purchase the respective number of shares of Common Stock set forth below at $2.00 per share at anytime during the 18 months after the date on which the closing of the transactions contemplated by the Asset Purchase Agreement occurs. - The Fund 750,000 shares - GST 750,000 shares - Sherman 750,000 shares -----END PRIVACY-ENHANCED MESSAGE-----