EXHIBIT 2
CO-SALE AGREEMENT ("Agreement"), dated as of January 4, 2006, among
Xxxxxx X. Xxxxxxxxx, not individually but solely in his capacity as receiver
(the "Northshore Receiver") of Northshore Asset Management, LLC, a Delaware
limited liability company ("Northshore") and certain related entities, including
NSCT, LLC, and the Connecticut Banking Commissioner Xxxx X. Xxxxx, not
individually but solely in his capacity as receiver (the "Circle Receiver") of
Circle Trust Company, a Connecticut state chartered trust bank ("Circle").
WHEREAS, each of the Northshore Receiver and the Circle Receiver purport
to beneficially own (as determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) certain shares of common stock, no
par value, of Startech Environmental Corporation ("Startech Shares").
WHEREAS, the Northshore Receiver has asserted that the Northshore Receiver
is entitled to the Startech Shares purported by the Circle Receiver to be
beneficially owned thereby, and the Circle Receiver disputes that assertion.
WHEREAS, the parties hereto wish to enter into certain agreements with
respect to the disposition of the Startech Shares.
NOW, THEREFORE, for good and valuable consideration, including the mutual
promises and agreements herein made, receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. The Northshore Receiver shall be permitted to explore sales of Startech
Shares on behalf of both the Northshore Receiver and the Circle Receiver.
2. During the term of this Agreement, the Circle Receiver shall not, and
shall cause Circle not to, sell, assign, pledge, hypothecate, encumber or
otherwise transfer or dispose of (collectively, "Transfer") any Startech Shares,
without the prior written consent of the Northshore Receiver.
3. During the term of this Agreement, the Northshore Receiver shall not
Transfer any Startech Shares without the prior written consent of the Circle
Receiver; provided, however, that the Northshore Receiver may sell Startech
Shares in a private sale without the prior written consent of the Circle
Receiver if the Northshore Receiver complies with the following provisions of
this paragraph. In the event the Northshore Receiver proposes to sell any
Startech Shares in a private sale (a "Proposed Sale"), the Northshore Receiver
shall deliver a written notice (a "Proposed Sale Notice") to the Circle Receiver
setting forth the number of Startech Shares proposed to be sold by the
Northshore Receiver, the price per share to be paid in the Proposed Sale and the
other principal terms of the transaction. The Circle Receiver shall be permitted
to sell 20.80563% of the Startech Shares proposed to be sold in the Proposed
Sale (which for this purpose shall include the Startech Shares proposed to be
sold by the Circle Receiver), on substantially the same terms and conditions
applicable to the Northshore Receiver, if the Circle Receiver delivers written
notice to the Northshore Receiver electing to do so within three (3) days
following delivery of the Proposed Sale Notice by the Northshore Receiver. To
the extent the terms of any Proposed Sale permit the sellers to elect to defer
the sale of some amount of
Startech Shares to a later time or elect to have a "put right" with respect to
some amount of the Startech Shares, the Circle Receiver and the Northshore
Receiver shall not be required to exercise such election on a pro rata basis in
order for the sale by the Circle Receiver to be deemed made on substantially the
same terms and conditions applicable to the Northshore Receiver. In the event
the Circle Receiver does not deliver written notice to the Northshore Receiver
electing to participate in the Proposed Sale within three (3) days following
delivery of the Proposed Sale Notice by the Northshore Receiver, the Circle
Receiver shall be deemed to have waived all of its rights with respect to such
Proposed Sale, and the Northshore Receiver shall thereafter be entitled to
effect the Proposed Sale on terms no more favorable to the Northshore Receiver
than those set forth in the Proposed Sale Notice, without any obligation to the
Circle Receiver. Nothing contained herein shall obligate the Northshore Receiver
to consummate a Proposed Sale following delivery of a Proposed Sale Notice.
4. In the event the Circle Receiver elects to participate in a Proposed
Sale in accordance with paragraph 3, it shall take all actions necessary to
consummate the sale of its Startech Shares in the Proposed Sale, including,
without limitation, using its best efforts to obtain any court or other approval
required for the Proposed Sale as promptly as practicable, promptly delivering
certificates representing such shares and executing and delivering such
documents and instruments necessary to consummate the Proposed Sale.
5. In the event the Circle Receiver participates in a Proposed Sale, the
proceeds for the Startech Shares purported to be sold by the Circle Receiver in
such Proposed Sale shall be placed into escrow with an escrow agent to be agreed
upon by the parties, to be held in escrow pending determination as to who is
entitled to such proceeds, either by settlement of the parties, judicial
determination or otherwise.
6. The Circle Receiver represents and warrants that the Circle Receiver
believes that the Circle Receiver owns 1,000,000 Startech Shares, and (subject
to the receipt of an order of the Superior Court of the Judicial District of
Hartford County in Connecticut) has the power to dispose of such shares.
7. The Northshore Receiver represents and warrants that the Northshore
Receiver beneficially owns (as determined pursuant to Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) 3,806,391 Startech Shares
(excluding the Startech Shares described in the immediately following sentence)
and (subject to the receipt of an order of the United States District Court for
the Southern District of New York) has the power to dispose of such shares. The
Northshore Receiver also believes that the Northshore Receiver has warrants (the
"Northshore Warrants") to purchase 132,744 Startech Shares (the "Northshore
Warrant Shares") pursuant to the Warrant Agreement attached as Exhibit 3 to
Amendment No. 5 to the Schedule 13D to be filed by the Northshore Receiver and
the Circle Receiver with respect to this Agreement; the Northshore Receiver is
currently in the process of confirming whether the Northshore Warrants have been
exercised and whether the Northshore Receiver beneficially owns the Startech
Shares purchaseable thereunder. The Northshore Receiver also believes that the
Northshore Receiver is entitled to the 1,000,000 Startech Shares referenced in
paragraph 6.
8. Notwithstanding anything contained herein to the contrary, the
Northshore Receiver and the Circle Receiver agree and acknowledge that the
Northshore Warrants and the Northshore Warrant Shares are not subject to the
terms of this Agreement.
9. This Agreement shall terminate on January 31, 2006, unless extended by
written agreement of the parties hereto; provided, however, that in the event
the Northshore Receiver has entered into an agreement to sell Startech Shares in
which the Circle Receiver has elected to participate pursuant to paragraph 3
prior to January 31, 2006, but the sale has not been consummated by that date
because the requisite court or other approvals have not yet been obtained, this
Agreement shall be extended until the earlier of (i) the date such sale is
consummated or the agreement covering such sale is terminated and (ii) February
28, 2006; provided, further, that paragraphs 4 and 5 hereof shall survive the
termination of this Agreement. Following the termination of this Agreement,
neither the Circle Receiver nor the Northshore
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Receiver shall thereafter be subject to the restrictions on Transfer contained,
respectively, in paragraphs 2 and 3 hereof.
10. This Agreement may be executed in one or more counterparts, each of
which when executed shall be deemed an original but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first written above.
/s/ Xxxxxx X. Xxxxxxxxx
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XXXXXX X. XXXXXXXXX, NOT
INDIVIDUALLY BUT SOLELY IN HIS
CAPACITY AS RECEIVER OF NORTHSHORE
ASSET MANAGEMENT, LLC AND RELATED
ENTITIES
/s/ Xxxx X. Xxxxx
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CONNECTICUT BANKING COMMISSIONER
XXXX X. XXXXX, NOT INDIVIDUALLY BUT
SOLELY IN HIS CAPACITY AS RECEIVER
OF CIRCLE TRUST COMPANY
