vnc: unable to get a shell prompt with the default opened terminal application

i am setting up a vnc server (vnc4server on mint) and i have a default xstartup file in ~/.vnc. i am using twm window manager. when i connect to the vnc server, i can authenticate successfully and see the terminal but i don't get a prompt. i can open a new tab in the terminal using mouse but none of the keys pressed are acted on by the Terminal application. when I press few random keys and on packet capture, those keys are received as 'Client key event' on the vnc server box. it looks like, the vnc client can pass keyboard and mouse events and can receive frame buffer updates but for some reason the application running on the server does not seem to process keyboard events.

xstartup file

~/.vnc$ ls   
passwd  rag-tos-laptop:1.log  rag-tos-laptop:1.pid  xstartup*  xstartup.bak*

~/.vnc$ cat xstartup 
#!/bin/sh

# Uncomment the following two lines for normal desktop:
# unset SESSION_MANAGER
# exec /etc/X11/xinit/xinitrc

[ -x /etc/vnc/xstartup ] && exec /etc/vnc/xstartup
[ -r $HOME/.Xresources ] && xrdb $HOME/.Xresources
xsetroot -solid grey
vncconfig -iconic &
x-terminal-emulator -geometry 80x24+10+10 -ls -title "$VNCDESKTOP Desktop" &
#x-window-manager &
twm &