Document:

Exhibit 10.3

ESCROW AGREEMENT

This ESCROW AGREEMENT (as the same may be amended or modified from time to time pursuant hereto, this “Agreement”) is made and entered into as of March 25, 2011, by and among OCZ Technology Group, Inc., a Delaware corporation (“Purchaser”) and DLS Law Firm (“Sellers’ Representative”) and together with Purchaser, sometimes referred to individually as “Party” or collectively as the “Parties”) as agent and representative for the shareholders (the “Sellers”) of Indilinx Co., Ltd. (the “Company”), and Computershare Trust Company, N.A. (the “Escrow Agent”).

WHEREAS, the Parties have agreed to deposit in escrow certain securities and wish such deposit to be subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.           Appointment.  The Parties hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

2.           Escrow Asset.

 

(a)         Purchaser agrees to deposit with the Escrow Agent 369,783 shares of Purchaser’s Common Stock (the “Escrow Asset”) on the date hereof.  The Escrow Agent shall hold the Escrow Asset as a book position registered in the name of Computershare Trust Company, N.A. as Escrow Agent for the benefit of Sellers’ Representative.

 

(b)         Escrow Shares.

 

i.           During the term of this Agreement, each Seller shall have the right to exercise any voting rights with respect to any of the Escrow Shares attributable to such Seller pursuant to the terms of the Underlying Agreement (as defined below). The Sellers' Representative shall direct the Escrow Agent in writing as to the exercise of any such voting rights, and the Escrow Agent shall comply, to the extent it is able to do so, with any such directions of the Sellers’ Representative. In the absence of such directions, the Escrow Agent shall not vote any of the shares comprising the Escrow Shares.

 

ii.          Any dividends paid with respect to the Escrow Asset shall be deemed part of the Escrow Asset and be delivered to the Escrow Agent to be held in a bank account and be deposited in one or more interest-bearing accounts to be maintained by the Escrow Agent in the name of the Escrow Agent at one or more of the banks jointly approved by Purchaser and Sellers’ Representative.  The deposit of dividends in any of the Approved Banks shall be deemed to be at the direction of the Parties.  At any time and from time to time, the Parties may direct Escrow Agent by written notice (i) to deposit the dividends with a specific Approved Bank, (ii) not to deposit any new dividend amount in any Approved Bank specified in the notice and/or (iii) to withdraw all or any of the dividends that may then be deposited with any Approved Bank specified in the notice.  With respect to any withdrawal notice, the Escrow Agent will endeavor to withdraw such amount specified in the notice as soon as reasonably practicable and the Parties acknowledge and agree that such specified amount remains at the sole risk of the Parties prior to and after such withdrawal.  Such withdrawn amounts shall be deposited with any other Approved Bank or any Approved Bank specified by the Parties in the notice.

 

  

  

  

 

iii.         In the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of the common stock of the Purchaser, other than a regular cash dividend, the Escrow Asset under Section 2(a) above shall be appropriately adjusted on a pro rata basis.

 

3.           Disposition and Termination.  (a)      As soon as practicable (but no later than three business days) after the date that is 12 months following the date of this Agreement (the “Initial Escrow Distribution Date”), the Escrow Agent shall release 50% of the Escrow Asset (less any amounts previously deducted pursuant to a Claims Notice), less any Reserved Portion (as defined herein) as provided in a joint written instruction to the Escrow Agent from the Parties or, if no such instruction is provided, to the Sellers’ Representative, to be distributed in accordance with the Escrow Distribution Schedule set forth in the Underlying Agreement.  As soon as practicable (but no later than three business days) after the date that is 24 months following the date of this Agreement (the “Escrow Termination Date”), the Escrow Agent shall release the remaining portion of the Escrow Asset less any Reserved Portion (as defined herein) as provided in a joint written instruction to the Escrow Agent from the Parties or, if no such instruction is provided, to the Sellers’ Representative, to be distributed in accordance with the Escrow Distribution Schedule set forth in the Underlying Agreement.  Any Reserved Portion shall continue to be held in escrow under this Agreement by the Escrow Agent until the claims contained in any Claim Notice(s) described in Section 3(b) below become resolved, even if such claims have not been finally resolved prior to the Escrow Termination Date.  After the Escrow Termination Date, the Escrow Agent shall only release all or any amount of the Reserved Portion to Purchaser or Sellers’ Representative from the Escrow Asset pursuant to a written instruction delivered in accordance with Section 3(f) hereof.

 

(b)         Notwithstanding anything in this Agreement to the contrary, if on or before the Escrow Termination Date, the Escrow Agent has received from Purchaser a notice (a “Claim Notice”) specifying in reasonable detail the nature and basis for a claim for indemnification pursuant to the Underlying Agreement (as defined below) and the dollar amount of the claim, or if such amount is unknown, Purchaser’s good faith reasonable estimate of the dollar amount of such claim, in each case also expressed as a number of shares of Purchaser common stock calculated by dividing such dollar amount by $8.50 (the “Claimed Amount”), then the Escrow Agent shall continue to keep in escrow an amount of shares equal to the Claimed Amount set forth in such Claim Notice(s) (the “Reserved Portion”) until such Claimed Amount is resolved as provided herein.  For the avoidance of doubt, the preceding sentence shall survive the Escrow Termination Date.  In any Claim Notice, Purchaser shall, in reasonable detail to the extent possible, cite the nature of the claim, the section(s) of the Underlying Agreement supporting its claim, and facts and circumstances supporting its claim.

 

(c)         At the time of delivery of any Claim Notice to the Escrow Agent, a duplicate copy of such Claim Notice shall be delivered by the Purchaser to the Sellers’ Representative in accordance with the notice provisions contained in the Underlying Agreement.

 

(d)         Unless the Sellers’ Representative delivers to the Escrow Agent a notice objecting in good faith to the creation of the Reserved Portion (or any amount thereof), or the claim contained in the Claim Notice (the “Contest Notice”) within twenty (20) calendar days of Sellers’ Representative receiving the relevant Claim Notice pursuant to Section 3(c) hereof, the Escrow Agent shall, without further instructions, promptly liquidate that portion of the Escrow Asset equal to the Claimed Amount as set forth in such Claim Notice and deliver such amount to Purchaser after prior written notice to the Sellers’ Representative.  Escrow Agent shall continue to hold in escrow any contested Claimed Amount until release is otherwise authorized pursuant to Section 3(e) hereof.  If any Contest Notice includes an objection to only a portion of a Claimed Amount, the Escrow Agent shall promptly release to Purchaser an amount from the Escrow Asset equal to the portion of the Claimed Amount in relation to which there is no objection after prior written notice to the Sellers’ Representative.

 

  

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(e)         In the event that Sellers’ Representative shall deliver a Contest Notice in accordance with Section 3(d) hereof, Sellers’ Representative and Purchaser shall negotiate in good faith for a period of thirty (30) days after delivery of the Contest Notice to Purchaser in an effort to settle the claim contained in the relevant Claim Notice or agree on the appropriate Reserved Portion, if any, to be applied against the Escrow Asset pursuant to the relevant Claim Notice.  The Escrow Agent shall make payment with respect any Claimed Amount subject to such Contest Notice only in accordance with: (i) any joint written instructions executed by both Sellers’ Representative and Purchaser; or (ii) a written notification from Purchaser of a final and non-appealable decision, order, judgment or decree of a court of competition jurisdiction or an arbitrator, which notification shall attach a copy of such final and non-appealable decision, order, judgment or decree (a “Final Order”).  The Escrow Agent shall be entitled to rely on any such joint written instructions or Final Order and upon receipt thereof shall promptly liquidate and distribute that portion of the remaining Escrow Asset as instructed in such joint written instructions or Final Order.

 

(f)          Notwithstanding anything to the contrary in this Agreement, if the Escrow Agent receives joint written instructions from Sellers’ Representative and Purchaser, or their respective successors or assigns, as to the disbursement of the Escrow Asset, the Escrow Agent shall disburse the Escrow Asset pursuant to such joint written instructions.  The Escrow Agent shall have no obligation to follow any directions set forth in any joint written instructions unless and until the Escrow Agent is satisfied, in its reasonable discretion, that the persons executing said joint written instructions are authorized to do so.

 

(g)         Notwithstanding anything to the contrary in this Agreement, if any amount to be released at any time or under any circumstances exceeds the then current market value of the remaining Escrow Asset, the Escrow Agent shall release the remaining portion of the Escrow Asset and shall have no liability or responsibility to the Parties for any deficiency.

 

(h)         Upon delivery of any and all remaining Escrow Asset by the Escrow Agent, this Agreement shall terminate, subject to the provisions of Section 7.

 

4.           Escrow Agent.  (a)  The Escrow Agent shall have only those duties as are specifically and expressly provided herein, which shall be deemed purely ministerial in nature, and no other duties shall be implied.  The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements to comply with, the terms and conditions of any other agreement, instrument or document between the Parties, in connection herewith, if any, including without limitation the Share Purchase Agreement, dated as of the date hereof, by and among the Company, the shareholders of the Company, Sellers’ Representative and Purchaser, (the “Underlying Agreement”), nor shall the Escrow Agent be required to determine if any person or entity has complied with any such  agreements, nor shall any additional obligations of the Escrow Agent be inferred from the terms of such agreements, even though reference thereto may be made in this Agreement.  In the event of any conflict between the terms and provisions of this Agreement, those of the Underlying Agreement, any schedule or exhibit attached to this Agreement, or any other agreement among the Parties, the terms and conditions of this Agreement shall control only in connection with any matter related to the Escrow Agent. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper Party or Parties without inquiry and without requiring substantiating evidence of any kind.  The Escrow Agent shall not be liable to any Party, any beneficiary or other person for refraining from acting upon any instruction setting forth, claiming, containing, objecting to, or related to the transfer or distribution of the Escrow Asset, or any portion thereof, unless such instruction shall have been delivered to the Escrow Agent in accordance with Section 10 below and the Escrow Agent has been able to satisfy any applicable security procedures as may be required hereunder and as set forth in Section 10.  The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request.  The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Asset nor shall the Escrow Agent have any duty or obligation to confirm or verify the accuracy or correctness of any amounts deposited with it hereunder.

 

  

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(b)           The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it except to the extent that a final adjudication of a court of competent jurisdiction determines that the Escrow Agent's gross negligence or willful misconduct was the primary cause of any loss to either Party.  The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through affiliates or agents.  The Escrow Agent may consult with counsel, accountants and other skilled persons to be selected and retained by it.  The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with, or in reasonable reliance upon, the advice or opinion of any such counsel, accountants or other skilled persons.  In the event that the Escrow Agent shall be uncertain or believe there is some ambiguity as to its duties or rights hereunder or shall receive instructions, claims or demands from any Party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be given a direction in writing by the Parties which eliminates such ambiguity or uncertainty to the satisfaction of Escrow Agent or by a final and non-appealable order or judgment of a court of competent jurisdiction.  The Parties agree to pursue any redress or recourse in connection with any dispute without making the Escrow Agent a party to the same.  Anything in this Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, incidental, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), unless such loss or damage is incurred due to the gross negligence or willful misconduct of the Escrow Agent.

 

5.           Succession.  (a) The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving thirty (30) days advance notice in writing of such resignation to the Parties specifying a date when such resignation shall take effect.  If the Parties have failed to appoint a successor escrow agent prior to the expiration of thirty (30) days following receipt of the notice of resignation, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor escrow agent within relevant jurisdiction or for other appropriate relief, and any such resulting appointment shall be binding upon all of the Parties hereto.  Escrow Agent’s sole responsibility after such thirty (30) day notice period expires shall be to hold the Escrow Asset (without any obligation to reinvest the same) and to deliver the same to a designated substitute escrow agent, if any, or in accordance with the directions of a final order or judgment of a court of competent jurisdiction, at which time of delivery Escrow Agent’s obligations hereunder shall cease and terminate, subject to the provisions of Section 7 hereunder.  In accordance with Section 7 below, the Escrow Agent shall have the right to withhold an amount of shares equal to any dollar amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of the Agreement divided by the closing price per share on the Nasdaq Global Market for Purchaser’s common stock on the immediately preceding trading day.

 

(b)         Any entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any entity to which all or substantially all the escrow business may be transferred, shall be the Escrow Agent under this Agreement without further act.

 

6.           Compensation and Reimbursement.  The Parties each agree to (a) pay the Escrow Agent upon execution of this Agreement and from time to time thereafter one-half of all reasonable compensation for the services to be rendered hereunder as described in Schedule 2 attached hereto, and (b) pay or reimburse one-half of the Escrow Agent upon request for all expenses, disbursements and advances, including, without limitation reasonable attorney's fees and expenses, incurred or made by it in connection with the performance, modification and termination of this Agreement.

 

  

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7.           Indemnity.  The Parties shall jointly but not severally indemnify, defend and save harmless the Escrow Agent and its affiliates and their respective successors, agents, assigns, directors, officers, managers, attorneys, accountants, experts, and employees (the “Indemnitees”) from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, actions, suits, proceedings, litigation, investigations, costs or expenses (including, without limitation, the fees and expenses of outside counsel and experts and their staffs and all expense of document location, duplication and shipment) (collectively “Losses”) arising out of or in connection with (i) the Escrow Agent's execution and performance of this Agreement, tax reporting or withholding, the enforcement of any rights or remedies under or in connection with this Agreement, or as may arise by reason of any act, omission or error of the indemnitee, except in the case of any Indemnitee to the extent that such Losses are finally adjudicated by a court of competent jurisdiction to have been primarily caused by the gross negligence or willful misconduct of such Indemnitee, or (ii) its following any instructions or other directions, whether joint or singular, from the Parties, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. No party shall be liable for any incidental, indirect, special or consequential damages of any nature whatsoever, including, but not limited to, loss of anticipated profits, occasioned by a breach of any provision of this Agreement even if apprised of the possibility of such damages.   The Parties hereto acknowledge that their indemnity obligations set forth in this Section 7 shall survive the resignation, replacement or removal of the Escrow Agent or the termination of this Agreement.

 

8.           Patriot Act Disclosure/Taxpayer Identification Numbers/Tax Reporting.

 

(a)         Patriot Act Disclosure.  Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Escrow Agent to implement reasonable procedures to verify the identity of any person that opens a new account with it.  Accordingly, the Parties acknowledge that Section 326 of the USA PATRIOT Act and the Escrow Agent’s identity verification procedures require the Escrow Agent to obtain information which may be used to confirm the Parties identity including without limitation name, address and organizational documents (“identifying information”). The Parties agree to provide the Escrow Agent with and consent to the Escrow Agent obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Escrow Agent.

 

(b)         Certification and Tax Reporting. The Parties, if applicable, have provided the Escrow Agent with their respective fully executed Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other required documentation.  All interest or other income earned under this Agreement shall be allocated to Purchaser and reported, as and to the extent required by law, by the Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned from the Escrow Asset by Purchaser whether or not said income has been distributed during such year. Escrow Agent shall withhold any taxes it deems appropriate in the absence of proper tax documentation or as required by law, and shall remit such taxes to the appropriate authorities. The Parties hereby represent and warrant to the Escrow Agent that (i) there is no sale or transfer of an United States Real Property Interest as defined under IRC Section 897(c) in the underlying transaction giving rise to this Agreement; and (ii) such underlying transaction does not constitute an installment sale requiring any tax reporting or withholding of imputed interest or original issue discount to the IRS or other taxing authority.

 

  

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9.           Notices. All communications hereunder shall be in writing and except for communications from the Parties setting forth, claiming, containing, objecting to, or in any way related to the full or partial transfer or distribution of the Escrow Asset, including but not limited to  transfer instructions (all of which shall be specifically governed by Section 10 below), shall be deemed to be duly given after it has been received and the receiving party has had a reasonable time to act upon such communication if it is sent or served:

 

(a) by facsimile or other electronic transmission (including e-mail);

(b) by overnight courier; or

(c) by prepaid registered mail, return receipt requested;

to the appropriate notice address set forth below or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested.

   

	
If to Sellers’ Representative:

	
DLS Law Firm

#509 E&C Venture Dream Tower 3,

197-33 Guro-dong, Guro-ku, Seoul, Republic of Korea

Facsimile No. 82-2-6330-8670

Attention:  Tae-Hyun Lee

E-mail: lth@dlalaw.co.kr

With a copy to:

 

Kim, Chang & Lee

Wonseo Building, 171 Wonseo-dong

Chongro-ku, Seoul, 110-280 Republic of Korea

Facsimile No.: 82-2-725-8727/8

Attention: Kang-Ho Jhe

 

E-mail: jhe@kimchanglee.co.kr

	
If to Purchaser: 

	
OCZ Technology Group, Inc.

6373 San Ignacio Ave.

San Jose, CA 91159

Facsimile No. (408) 904-6907

Attention:  Arthur F. Knapp, Jr., CFO

E-mail:  art@ocztechnology.com

	
With a copy to:

	
DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, CA 94303

Facsimile No. 1 (650) 687-1106

	
  

	
Attention:

	
Edward Batts

	
  

	
Andrew Ledbetter

	
  

	
E-mail:

	
Edward.Batts@dlapiper.com

Andrew.Ledbetter@dlapiper.com

	
If to the Escrow Agent:

	
Computershare Trust Company, N.A.

	
  

	
350 Indiana Street, Suite 750

	
  

	
Golden, CO  80401

Facsimile No. (303) 262-0608

Attention:  John Wahl / Rose Stroud

E-mail:  Rose.Stroud@computershare.com

 

  

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Notwithstanding the above, in the case of communications delivered to the Escrow Agent, such communications shall be deemed to have been given on the date received by an officer of the Escrow Agent or any employee of the Escrow Agent who reports directly to any such officer at the above-referenced office.  In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate.  For purposes of this Agreement, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth above is authorized or required by law or executive order to remain closed.

10.         Security Procedures.   Notwithstanding anything to the contrary as set forth in Section 9, any instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution, including but not limited to any transfer instructions that may otherwise be set forth in a written instruction permitted pursuant to Section 3 of this Agreement, may be given to the Escrow Agent only by confirmed facsimile or other electronic transmission (including e-mail) and no instruction for or related to the transfer or distribution of the Escrow Asset, or any portion thereof, shall be deemed delivered and effective unless the Escrow Agent actually shall have received such instruction by facsimile or other electronic transmission (including e-mail) at the number or e-mail address provided to the Parties by the Escrow Agent in accordance with Section 9 and as further evidenced by a confirmed transmittal to that number.

 

(a)         In the event transfer instructions are so received by the Escrow Agent by facsimile or other electronic transmission (including e-mail), the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule 1 hereto, and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated.  The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any of the authorized representatives identified in Schedule 1, the Escrow Agent is hereby authorized both to receive written instructions from and seek confirmation of such instructions by telephone call-back to any one or more of Purchaser’s executive officers, (“Executive Officers”), as the case may be, which shall include the titles of President, Chief Executive Officer, Controller, General Counsel and Chief Financial Officer, as the Escrow Agent may select.  Such Executive Officer shall deliver to the Escrow Agent a fully executed incumbency certificate, and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such officer.

 

(b)         Sellers’ Representative acknowledges that the Escrow Agent is authorized to deliver the Escrow Asset to the custodian account or recipient designated by the Sellers’ Representative in written.

 

Purchaser acknowledges that the Escrow Agent is authorized to deliver the Escrow Asset to the address provided for notice to Purchaser or any address provided in a Claims Notice.

11.         Compliance with Court Orders.  In the event that any escrow property shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the property deposited under this Agreement, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction, and in the event that the Escrow Agent reasonably obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, entity, firm or corporation, by reason of such compliance notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

 

  

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12.         Miscellaneous.  Except for transfer instructions as provided in Section 10, the provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by the Escrow Agent and the Parties.  Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by the Escrow Agent or any Party, except as provided in Section 5, without the prior consent of the Escrow Agent and the other parties.  This Agreement shall be governed by and construed under the laws of the State of California.  Each Party and the Escrow Agent irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of any court of the State of California or United States federal court, in each case, sitting in Santa Clara County, California. The Parties and the Escrow Agent further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Agreement.  No party to this Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the parties to this Agreement may be transmitted by facsimile or other electronic transmission (including e-mail), and such facsimile or other electronic transmission (including e-mail) will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party. If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction.  A person who is not a party to this Agreement shall have no right to enforce any term of this Agreement. The Parties represent, warrant and covenant that each document, notice, instruction or request provided by such Party to Escrow Agent shall comply with applicable laws and regulations.  Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written.  Except as expressly provided in Section 7 above, nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than the Escrow Agent and the Parties any legal or equitable right, remedy, interest or claim under or in respect of this Agreement or the Escrow Asset escrowed hereunder.

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date set forth above.

	
SELLERS’ REPRESENTATIVE

	  
	  	  
	
By:

	
/s/ Lee Seung -Han

	  
	  	  	  
	
Name: 

	
Lee Seung –Han

	  

	
Telephone:

	  	  
	  	  
	
OCZ TECHNOLOGY GROUP, INC.

	  

	
By:

	
/s/ Arthur F. Knapp, Jr.

	  
	  	  	  
	
Name: 

	
Arthur F. Knapp, Jr.

	  
	  	  	  
	
Title:

	
Chief Financial Officer

	  

	
Telephone:

	  	  

	
COMPUTERSHARE TRUST COMPANY, N.A.

	  	  
	
as Escrow Agent

	  
	  	  
	
By:

	
/s/ John M. Wahl

	  
	  	  	  
	
Name: 

	
John M. Wahl

	  
	  	  	  
	
Title:

	
Corporate Trust Officer

	  

 

  

9Exhibit 10.4

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of March 25, 2011, by and between OCZ Technology Group, Inc. (the “Company”), the parent company of Indilinx Co., Ltd. (“Indilinx”), and Bumsoo Kim (“Employee”).  The effective date of this Agreement (the “Effective Date”) shall be the Closing Date, as defined in that certain Share Purchase Agreement by and among the Company, Indilinx, and the other parties thereto (the “Purchase Agreement”).

 

The parties agree as follows:

 

1.                        Employment.  Company hereby employs Employee, and Employee hereby accepts such employment, upon the terms and conditions set forth herein.  The Company shall treat Employee’s years of service or employment recognized by Indilinx as service years with the Company for all employment matters, including, without limitation to, promotion, compensation and paid leave.

 

2.           Duties.

 

2.1      Position.  Employee is employed as CEO and President of Indilinx and President of OCZ’s Semiconductor Division and shall have the duties and responsibilities assigned by Company’s Board of Directors (the “Board”) both upon initial hire and as may be reasonably assigned from time to time.  Employee shall perform faithfully and diligently all duties assigned to Employee.  Company reserves the right to modify Employee’s position and duties at any time in its sole and absolute discretion within the Company including its affiliates and subsidiaries.

 

2.2         Best Efforts/Full-time.  Employee will expend Employee’s best efforts on behalf of Company, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances.  Employee will act in the best interest of Company at all times.  Employee shall devote Employee’s full business time and efforts to the performance of Employee’s assigned duties for Company, unless Employee notifies the Board in advance of Employee’s intent to engage in other paid work and receives the Board’s express written consent to do so.

 

3.          Term.  The employment relationship pursuant to this Agreement shall be for an initial term commencing on the Effective Date and continuing for a period of two (2) years, provided Employee has and maintains the required work authorization to be and remain employed by the Company, and unless terminated in accordance with Section 7 below.  In addition, the Company reserves the right to modify Employee’s compensation, position, duties or reporting relationship to meet business needs and to decide on appropriate discipline.

 

4.           Compensation.

 

4.1      Base Salary.  As compensation for Employee’s performance of Employee’s duties hereunder, Company shall pay to Employee an initial Base Salary of $250,000 per year, payable in accordance with the normal payroll practices of Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions.  In the event Employee’s employment under this Agreement is terminated by either party, for any reason, Employee will earn the Base Salary prorated to the date of termination.

 

  

  

  

 

4.2       Incentive Compensation.  Employee will be eligible to earn incentive compensation of up to 10% of Base Salary in accordance with the Company’s Executive Bonus Plan, the terms, amount and payment of which shall be determined by Company in its sole and absolute discretion.

 

4.3         Stock Options.  Subject to the Board’s approval, Employee will be granted a stock option to purchase 170,000 shares of Company’s Common Stock under Company’s 2004 Stock Incentive Plan (the “Plan”) at an exercise price equal to the fair market value of that stock on the date of the grant (the “Option”) .  The Option will be subject to the terms and conditions of the Plan and the standard stock option agreement provided pursuant to the Plan, which Employee will be required to sign as a condition of receiving the Option. The Option will become fully vested if there is a “Change of Control” (defined below) after which Employee terminates such Employee’s employment because of a material reduction in duties or is terminated within one year of such Change of Control other than for “Cause” (defined below).  For purposes of this Agreement, The term “Change of Control” shall mean (i) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets or (ii) the consummation of a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) directly or indirectly at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

4.4         Performance and Salary Review.  The Board will periodically review Employee’s performance.  Adjustments to salary or other compensation, if any, will be made by the Board in its sole and absolute discretion.

 

5.           Customary Fringe Benefits.  Employee will be eligible for all customary and usual fringe benefits generally available to employees of Company subject to the terms and conditions of Company’s benefit plan documents.  Company reserves the right to change or eliminate the fringe benefits on a prospective basis, at any time, effective upon notice to Employee.

 

6.           Business Expenses.  Employee will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Employee’s duties on behalf of Company.  To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation in accordance with Company’s policies.

 

  

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7.           Termination of Employee’s Employment.

 

7.1      Termination for Cause.  Notwithstanding any term stated in Section 3, Company may terminate Employee’s employment immediately at any time for Cause.  In the event Employee’s employment is terminated for Cause, Employee shall be entitled to receive only the Base Salary then in effect, prorated to the date of termination, as well as any accrued but unused vacation or paid time off (“PTO”).  All other Company obligations to Employee pursuant to this Agreement will become automatically terminated and completely extinguished.  For purposes of this Agreement, Cause shall mean (a) Employee’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Company documents or records; (b) Employee’s material failure to abide by the Company’s written policies relating to confidentiality and reasonable workplace conduct; (c) Employee’s unauthorized use, misappropriation, destruction or diversion of any material asset or corporate opportunity of the Company (including, without limitation, Employee’s improper use or disclosure of the Company’s confidential or proprietary information); (d) any intentional act by Employee which has a material detrimental effect on the Company’s reputation or business, (e) any material breach by Employee of this Agreement and any other agreement between the Company and Employee, including without limitation, the Purchase Agreement, the Company’s Employee Nondisclosure and Assignment Agreement, any Restrictive Covenant Agreement and stock option agreement, which breach is not cured within 15 days after Employee receives notice from the Board specifying said breach; or (f) Employee’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs Employee’s ability to perform such Employee’s duties with the Company.  For the avoidance of doubt, the Company acknowledges that Employee must obtain a proper work visa or other required governmental consent to commence employment with the Company.  Failure to obtain the required work visa or other required governmental consent shall not constitute Cause hereunder.  In case of such failure, the Company shall arrange for the Employee to be hired by Indilinx or another affiliate of the Company upon the same terms as set forth in Sections 3 and 4 of this Agreement.

 

7.2      Voluntary Termination.  Notwithstanding any term stated in Section 3, Employee may voluntarily resign Employee’s position with Company, at any time, on thirty (30) days’ advance written notice.  Except as otherwise provided in Section 4.3, in the event Employee terminates such Employee’s employment for any reason, Employee shall be entitled to receive only the Base Salary then in effect for the thirty-day notice period, prorated to the date of termination, as well as any accrued but unused vacation or PTO.  Company may elect to waive the thirty-day notice period and accept Employee’s earlier resignation or to relieve Employee of such Employee’s duties at any time after notice of resignation.  All other Company obligations to Employee pursuant to this Agreement will become automatically terminated and completely extinguished.

 

7.3    Termination Without Cause by the Company.  Notwithstanding any term stated in Section 3, Company may terminate Employee’s employment under this Agreement without Cause at any time.  In the event of such termination prior to the second anniversary of this Agreement, in addition to receiving Base Salary then in effect, prorated to the date of termination, along with any accrued but unused vacation, PTO or statutory severance payments, the Company shall also pay Employee the Employee’s Base Salary for the remainder of the initial term of this Agreement payable in accordance with Company’s standard payroll cycle or in a lump sum occurring 60 days following the termination date but only if Employee signs a confidential general release of all claims in favor of the Company which must become effective on or before the 60th day following the termination.  If Employee is terminated on and after the second anniversary of this Agreement, no additional payment shall be owed or made.  In the event Employee was terminated without Cause and covered under the Company’s group health plan at the time of Employee’s termination of employment and such Employee timely elects to continue such Employee’s group health coverage under federal/state law (COBRA), if applicable, the Company will reimburse Employee for such COBRA premiums until the earlier of (i) Employee’s coverage under another employer’s group health plan or (ii) until the last day of the Severance Period (defined below).  All payments referred to in this Section 7.3, shall be paid in equal monthly installments beginning on the first payday following the effective date of the general of claims noted above and thereafter, in accordance with Company’s regular payroll cycle until all such amounts are paid in full (the “Severance Period”).  All payments referred to in this Section 7.3 shall be reduced by applicable withholding.

 

  

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8.           No Conflict of Interest.  During the term of Employee’s employment with the Company and during the Severance Period, Employee must not engage in any work, paid or unpaid, that creates an actual conflict of interest with Company.  Such work shall include, but is not limited to, directly or indirectly competing with Company in any way, or acting as an officer, director, employee, consultant, stockholder, volunteer, lender, or agent of any business enterprise of the same nature as, or which is in direct competition with, the business in which Company is now engaged or in which Company becomes engaged during the term of Employee’s employment with Company, as may be determined by the Board in its sole discretion.  If the Board believes such a conflict exists during the term of this Agreement, the Board may ask Employee to choose to discontinue the other work or resign employment with Company.  If the Board believes such a conflict exists during any period in which Employee is receiving payments pursuant to this Agreement, the Board may ask Employee to choose to discontinue the other work.  In addition, Employee agrees not to refer any client or potential client of Company to competitors of Company, without obtaining Company’s prior written consent, during the term of Employee’s employment and during the Severance Period.

 

9.           Confidentiality and Proprietary Rights.  Employee agrees to read, sign and abide by Company’s Employee Nondisclosure and Assignment Agreement, which is provided with this Agreement and incorporated herein by reference.

 

10.         Injunctive Relief.  Employee acknowledges that Employee’s breach of the covenants contained in Sections 8 and 9 (collectively, “Covenants”) would cause irreparable injury to Company and agrees that in the event of any such breach, Company shall be entitled to seek temporary, preliminary and permanent injunctive relief in compliance with the relevant procedural laws without the necessity of proving actual damages or posting any bond or other security.

 

11.         Agreement to Arbitrate.  To the fullest extent permitted by law, Employee and Company agree to arbitrate any controversy, claim or dispute between them arising out of or in any way related to this Agreement, the employment relationship between Company and Employee and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any applicable local, state or federal law, statute, regulation or ordinance or common law.  Claims for workers’ compensation, unemployment insurance benefits, breach of Company’s Employee Nondisclosure and Assignment Agreement and Company’s right to obtain injunctive relief pursuant to Section 10 above are excluded.  For the purpose of this agreement to arbitrate, references to the “Company” include all parent, subsidiary or related entities and their employees, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement shall apply to them to the extent Employee’s claims arise out of or relate to their actions on behalf of Company.

 

  

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11.1       Consideration.  The mutual promise by Company and Employee to arbitrate any and all disputes between them (except for those referenced above) rather than litigate them before the courts or other bodies, provides the consideration for this agreement to arbitrate.

 

11.2       Initiation of Arbitration.  Either party may exercise the right to arbitrate by providing the other party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other party of the substance of such claims.  In no event shall the request for arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations.

 

11.3       Arbitration Procedure.  The arbitration will be conducted in Santa Clara County, California by a single neutral arbitrator and in accordance with the then current rules for resolution of employment disputes of the American Arbitration Association (AAA) (available on-line at www.adr.org).  The parties are entitled to representation by an attorney or other representative of their choosing.  The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of California, and only such power, and shall follow the law.  The parties agree to abide by and perform any award rendered by the arbitrator.  The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based.  Judgment on the award may be entered in any court having jurisdiction thereof.

 

	
  

	
13.

	
Restrictive Covenant Agreement.  Employee shall have entered into a Restrictive Covenant Agreement in substantially the form of attached hereto as Exhibit General Provisions.

 

13.1       Successors and Assigns.  The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company.  Employee shall not be entitled to assign any of Employee’s rights or obligations under this Agreement.

 

13.2       Waiver.  Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

13.3       Attorneys’ Fees.  Each side will bear its own attorneys’ fees in any dispute unless a statutory section at issue, if any, authorizes the award of attorneys’ fees to the prevailing party.

 

13.4         Severability.  In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law.  If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

  

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13.5       Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement.  Employee acknowledges that this Agreement has been drafted by legal counsel representing Company only and not Employee, but Employee has participated in the negotiation of its terms.  Furthermore, Employee acknowledges that Employee has had an opportunity to review and revise this Agreement and have it reviewed by legal counsel, if desired, and, therefore, any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

13.6       Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the United States and the State of California.  Each party consents to the jurisdiction and venue of the state or federal courts in Sunnyvale, California, if applicable, in any action, suit, or proceeding arising out of or relating to this Agreement.

 

13.7       Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:  (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy, facsimile or other electronic transmission (including e-mail) upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 

13.8       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.  Execution and delivery of this Agreement by facsimile or other electronic transmission in PDF format shall constitute due execution and delivery for all purposes.

 

13.9       Survival.  Sections 8 (“No Conflict of Interest”), 9 (“Confidentiality and Proprietary Rights”), 10 (“Injunctive Relief”), 11 (“Arbitration”), 13 (“General Provisions”) and 14 (“Entire Agreement”) of this Agreement shall survive Employee’s employment by Company.

 

14.   Entire Agreement.  This Agreement, including the Restrictive Covenant Agreement described in Section 12 of this Agreement, the Company Employee Nondisclosure and Assignment Agreement incorporated herein by reference and Company’s 2004 Stock Incentive Plan and related option documents described in Section 4.3 of this Agreement, constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral.  This Agreement may be amended or modified only with the written consent of Employee and the Board of Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

(Remainder of Page Intentionally Left Blank; Signature Page Follows)

 

  

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

	  	
EMPLOYEE

	  	  
	
Dated: ________________________

	
By:

	
/s/ Bumsoo Kim

	  	
Name:     Bumsoo Kim

	  	
Address:

	  
	  	  	  

 

	  	
OCZ TECHNOLOGY GROUP, INC.

	  	  
	
Dated: ________________________

	
By:

	
/s. Arthur F. Knapp, Jr.

	  	
Name: Arthur F. Knapp, Jr.

	  	
Its: Chief Financial Officer

	  	
Address:  

	
6373 San Ignacio Avenue

	  	  	
San Jose, California 95119

 

[Signature Page to Employment Agreement]

  

7

  

 

Exhibit A

 

Form of Restrictive Covenant Agreement (California Employees)

 

  

1

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