Exhibit 5.02
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of January 1, 2004, by and between Startech Environmental Corporation, a
Colorado corporation (the "Company") and Xxxxxx X. Xxxxx (the "Executive").
RECITALS
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto hereby agree as follows:
1. Employment. The Company hereby engages the Executive, and the Executive
hereby accepts such engagement, to render such services and assume such duties
and responsibilities as provided in Section 3 hereof. The Executive shall devote
his entire working time, attention and energies (except for vacation as
permitted hereunder and absence for illness) to the business of the Company; and
shall not, during the Employment Term (as defined below), engage in any other
business activities; provided, however, that the Executive shall be permitted to
make passive investments in any entity (i) whose capital stock is traded on an
established national securities exchange or is listed on NASDAQ or another
established "over the counter" market or (ii) whose business is not competitive
with the business of the Company, which investments are not in excess of five
percent (5%) of the outstanding equity securities of any such entity.
2. Term. The term of this Agreement shall be for a three-year period
commencing on January 1, 2004 and ending on December 31, 2006 (the "Initial
Term"), unless sooner terminated as provided in Section 5 herein; provided that
the Initial Term shall be automatically extended for successive additional
one-year renewal periods (each a "Renewal Term"), unless either party provides
written notice of non-renewal at least 90 days prior to the end of the Initial
Term or any Renewal Term, as the case may be (the Initial Term and each Renewal
Term, the "Employment Term").
3. Title; Performance of Duties. The Company hereby engages the Executive,
and the Executive hereby accepts such engagement, as Chief Operating Officer of
the Company; provided that upon the termination of the employment agreement
between the Company and Xxxxxx Xxxxxx, and the approval of the Board, the
Executive shall immediately cease serving as Chief Operating Officer and shall
become the Chief Executive Officer and President of the Company. In addition,
the Executive agrees to perform such further duties and responsibilities for the
Company as may be assigned to him, from time to time, by the Board of Directors
of the Company (the "Board"), so long as such duties are consistent with the
duties of the position in which the Executive is then serving. In addition,
during the Employment Term and following the Date of Termination (other than by
reason of termination as a result of the Executive's death, disability or for
"Cause" and until the Executive's resignation or removal), the Company agrees to
nominate the Executive to serve on the Board and to place the Executive on the
slate of directors to be voted upon by the shareholders at each meeting of
shareholders of the Company
at which directors are elected. The Executive shall report to the Board and
shall comply with and implement the policies and procedures of the Company from
time to time promulgated by the Board.
4. Compensation and Benefits.
(a) Base Salary. The Company shall pay the Executive a base salary (the
"Base Salary") at the rate of $157,500 per year, during the Employment Term,
while the Executive serves as Chief Operating Officer, which base salary shall
be increased to $185,000 per year, during the Employment Term, upon the
Executive becoming Chief Executive Officer and President of the Company, in each
case, payable in accordance with the Company's normal payroll practices, which
salary rate shall be reviewed at least annually and may be increased (but not
decreased) at the discretion of the Compensation Committee of the Board or, if
there is no such committee, the Board, from time to time.
(b) Bonus. The Executive shall be eligible to receive a discretionary
bonus (a "Bonus") for each fiscal year during the Employment Term as determined
by the Compensation Committee of the Board or, in the absence thereof, the
Board, based on the Executive's duties, responsibilities, and performance,
consistent with past practice.
(c) Equity Consideration. The Executive shall be eligible to receive
grants of options to purchase shares of Common Stock or other forms of equity
consideration as may be determined by the Compensation Committee of the Board
or, in the absence thereof, the Board.
(d) Benefit Programs. In addition to the other benefits provided to the
Executive hereunder, the Executive shall be eligible to participate, to the
extent the Executive qualifies under the terms thereof, in the benefit programs
now or hereafter maintained by the Company and offered by the Company to its
employees and/or its executives, on terms that are no less favorable than those
offered to all other senior executive officers. Such benefit programs may
include, but shall not be limited to, pension, profit sharing, option, savings,
bonus, disability, life insurance, health insurance, hospitalization, dental and
other plans and policies in effect from time to time.
(e) Expense Reimbursement. The Company shall reimburse the Executive for
all reasonable out-of-pocket expenses incurred and paid by him in the course of
the performance of his duties pursuant to this Agreement and consistent with the
Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the Company's
requirements with respect to the manner of reporting such expenses.
(f) Vacation; Sick Days. During the Employment Term, the Executive shall
be entitled to paid vacation consisting of not less than twenty (20) days per
calendar year (prorated for any partial calendar year during the Employment
Term) and a number of sick days to the maximum extent permitted under the
Company's policies applicable to executive officers with respect to sick days,
but in no event less than twenty (20) sick days per calendar year.
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5. Termination.
(a) The Executive's employment with the Company and the Employment Term
shall terminate upon occurrence of the first of the following events:
(i) On the date of the Executive's death;
(ii) Upon written notice by the Company to the Executive (or the
Executive's legal representative, as the case may be) of a
termination for Disability. For purposes of this Agreement,
"Disability" shall mean the inability of the Executive to
perform all or a substantial part of his services as a
result of mental or physical defect or illness for a period
of 90 consecutive days or 120 non-consecutive days during
any 12 month period as determined by the Board in good
faith, which determination shall be made by the members of
the Board other than the Executive; or
(iii) Upon termination of the Executive by a unanimous vote of
all members of the Board (other than the Executive) (the
"Board Termination");
(iv) Upon termination of the Executive for "Cause," which, for
purposes of this Agreement, shall only mean: (A) the
Executive's conviction of or plea of nolo contendere with
respect to a crime constituting a felony in the
jurisdiction involved during the Employment Term, excluding
traffic offenses or other incidents that individually, or
in the aggregate, do not have a material adverse effect on
the Company's business; or (B) the Executive's willful and
material misconduct or gross negligence during the
Employment Term in direct connection with the performance
of his services as an executive officer of the Company, but
only to the extent that such willful and material
misconduct or gross negligence has a material adverse
effect on the Company's business; provided that any action,
or inaction, shall not be treated as "willful and material
misconduct" if authorized by the Board or taken by the
Executive in the good faith belief that it was in, or not
opposed to, the best interests of the Company; or
(v) At the Executive's election, upon written notice to the
Company, which written notice shall be given not less than
thirty (30) days prior to the date on which the Executive
elects to terminate the Employment Term.
(b) As used in this Agreement, "Date of Termination" means, if the
Executive's employment is terminated:
(i) for Disability, or the Executive resigns, the date on which
the Company or the Executive notified the Executive or the
Company, respectively, of such termination or, if later,
the effective date of termination;
(ii) by reason of death, the date of death of the Executive;
(iii) by reason of a Board Termination, the date the Company
informs the Executive, in writing, of his termination;
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(iv) for Cause, the date the Company informs the Executive, in
writing, of his termination; and
(v) by reason of the Executive's election to terminate his
employment with the Company, the date on which the
Executive indicates in a written notice delivered to the
Company, or if no such date is provided, the date that is
thirty (30) days after the date on which such notice was
provided to the Company.
6. Consequences of Termination of Employment.
(a) In addition to the rights set forth in Section 6(b) hereof, upon
termination of this Agreement pursuant to Section 5 hereof, the Company shall
pay and provide Executive (or, if applicable, his surviving spouse or, if none,
his estate or other legal representative) the following amounts and benefits:
(i) all amounts of Base Salary accrued but unpaid as of the Date of Termination;
(ii) any Bonus awarded but not paid prior to the Date of Termination; (iii) all
reasonable business-related expenses unreimbursed as of the Date of Termination;
and (iv) any benefits or payments, to the extent due under any Company benefit,
fringe benefit or arrangement in accordance with the terms of said plan or
arrangement for the period prior to such Date of Termination, including, but not
limited to, accrued but unused vacation days. The foregoing notwithstanding, in
the event that the Executive's employment is terminated for any reason (other
than as a result of death), for a period of six (6) months following the Date of
Termination (the "Severance Period"), the Executive (or the Executive's spouse,
in the event of the Executive's death) shall receive: (i) the Base Salary; and
(ii) any benefits or payments, to the extent due under any Company benefit,
fringe benefit or arrangement in accordance with the terms of said plan or
arrangement.
(b) In addition to the rights set forth in Section 6(a) above, upon the
expiration of the Severance Period, the Company agrees: (i) to pay to the
Executive an unfunded retirement benefit equal to $97,500 per annum (the
"Unfunded Retirement Amount"), until the Executive's death, and after the death
of the Executive, to the Executive's spouse, an amount equal to one-half of the
Unfunded Retirement Amount per annum; and (ii) to provide lifetime gap medical
insurance premiums for the Executive and the Executive's spouse to cover
expenses not covered by Medicare or Medicaid, to the extent such coverage is
commercially available.
7. Noncompetition; Nonsolicitation; Surrender of Records.
(a) No Competition. The Executive recognizes the highly competitive nature
of the Company's business and that the Executive's position with the Company and
access to and use of the Company's confidential records and proprietary
information renders the Executive special and unique. During the term of
employment and for a period of two (2) years after the Employment Term, the
Executive shall not, directly or indirectly, own, manage, operate, join,
control, participate in, invest in or otherwise be connected or associated with,
in any manner, including as an officer, director, employee, independent
contractor, stockholder, member, partner, consultant, advisor, agent,
proprietor, trustee or investor, any Competing Business (as defined below)
located in the United States or Canada; provided, however, that ownership of
five percent (5%) or less of the stock or other securities of a corporation, the
stock of which is listed on a national securities exchange or is quoted on The
Nasdaq Stock Market, shall not constitute a
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breach of this Section 7(a), so long as the Executive does not in fact have the
power to control, or direct the management of, or is not otherwise associated
with, such corporation. For purposes of this Agreement, the term "Competing
Business" shall mean any business or venture engaged in the manufacturing,
marketing and sale of the Company's entire product line, which includes, without
limitation, waste remediation equipment using plasma-based technology.
(b) No Solicitation of Employment. During the Employment Term and for a
period of one (1) year thereafter, the Executive shall not solicit or encourage
any other employee to leave the Company for any reason, nor assist any business
in doing so, nor hire in any business any individual who was an employee of the
Company within one (1) year of such hire.
(c) Confidentiality and Surrender of Records. The Executive shall not
during the Employment Term or at any time thereafter (irrespective of the
circumstances under which the Executive's employment by the Company terminates),
except as required by law or as is necessary for the performance of the
Executive's duties, directly or indirectly publish, make known, or in any
fashion disclose any Confidential Information (as defined below) to, or permit
any inspection or copying of Confidential Information by any individual or
entity, nor shall he retain, and will deliver promptly to the Company, any of
the same following termination of his employment hereunder for any reason or
upon request by the Company. For purposes of this Section 7, "Confidential
Information" means all correspondence, memoranda, files, manuals, books, lists,
financial, operating, or marketing records, magnetic tape, or electronic or
other media or equipment of any kind which may be in the Executive's possession
or under his control or accessible to him which contain any proprietary
information; provided that the term Confidential Information shall not apply to
any such records which: (i) is or becomes publicly available through no fault of
the Executive; (ii) is obtained lawfully and in good faith by the Executive from
a third party who the Executive reasonably believes did not derive it from the
Company and who is not known by the Executive to be under any confidentiality
obligation with respect thereto; or (iii) is required to be disclosed by a court
or other governmental authority after reasonable notice is given to the Company
so that it may have the opportunity to seek a protective order with respect to
such disclosure. All confidential records shall be and remain the sole property
of the Company during the term of employment and thereafter. This provision does
not prohibit the Executive from providing this information to his attorneys or
accountants for purposes of obtaining legal or tax advice or as otherwise
required by law. Neither the Executive nor the Company shall not disclose the
terms of this Agreement except as necessary in the ordinary course of its
business or as required by law.
(f) Enforcement. The Executive acknowledges and agrees that, by virtue of
his position, his services, and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 7 would cause the Company immediate, substantial, and
irreparable injury for which it has no adequate remedy at law. Accordingly, the
Executive agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Section 7, without any
requirement of posting of bond. Rights and remedies provided for in this Section
7 are cumulative and shall be in addition to rights and remedies otherwise
available to the parties hereunder or under any other agreement or applicable
law.
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(g) The Executive understands that the provisions of this Section 7 may
limit his ability to earn a livelihood in a business that competes with the
business of the Company but nevertheless agrees and hereby acknowledges that the
consideration provided under this Agreement is sufficient to justify the
restrictions contained in such provisions. In consideration thereof and in light
of the Executive's education, skills and abilities, the Executive agrees that he
will not assert in any forum that such provisions prevent him from earning a
living or otherwise are void or unenforceable or should be held void or
unenforceable.
8. Notices. Any notice, consent, request or other communication made or
given in accordance with this Agreement, shall be in writing and shall be sent
by (i) personal delivery to the party entitled thereto, (ii) facsimile with
confirmation of receipt, (iii) registered or certified mail, return receipt
requested, or (iv) Federal Express or similar courier service. The notice,
consent request or other communication shall be deemed to have been received
upon personal delivery, upon confirmation of receipt of facsimile transmission
or courier service, or, if mailed, three (3) days after mailing. Any notice,
consent, request or other communication made or given in accordance with the
Agreement shall be made to those listed below at their following respective
addresses or at such other address as each may specify by notice to the other:
To the Company:
Startech Environmental Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Facsimile No. (000) 000-0000
To the Executive:
Xxxxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
9. Sales of Securities by the Executive. In the event the Executive
desires to sell securities of the Company, regardless of whether a sale is made
during or after the Employment Term, so long as any such sale is made in
compliance with applicable securities laws, including, without limitation, Rule
144 of the Securities Act of 1933, as amended, the Company agrees that it will
not interfere with or otherwise take any action, or omit to take any action,
that would prevent the Executive from making such sale, and shall use its best
efforts to assist the Executive in making such sale.
10. Assignability; Binding Effect. This Agreement shall not be assignable
by the Executive. This Agreement shall be assignable by the Company only in
connection with a sale or other transfer of all or substantially all of the
assets of the Company or the portion of such assets of the Company with which
the Executive is primarily employed. This Agreement shall inure to the benefit
and be binding upon the personal or legal representatives, executors,
administrator, successors, heirs, distributees, devisees, legatees and permitted
assignees of the parties hereto.
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11. Complete Understanding; Amendment; Waiver. This Agreement constitutes
the complete understanding between the parties with respect to the employment of
the Executive and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and no statement, representation, warranty, or covenant has been made by either
party with respect thereto except as expressly set forth herein. This Agreement
shall not be altered, modified, amended, or terminated except by a written
instrument signed by each of the parties hereto. Any waiver of any term or
provision hereof, or of the application of any such term or provision to any
circumstances, shall be in writing signed by the party charged with giving such
waiver. Waiver by either party hereto of any breach hereunder by the other party
shall not operate as a waiver of any other breach, whether similar to or
different from the breach waived. No delay on the part of the Company or the
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company or
the Executive of any such right or remedy shall preclude other or further
exercise thereof.
12. Non-disparagement.
(a) The Executive shall not make or publish any statement (orally or in
writing), or instigate, assist or participate in the making or publication of
any statement, which would libel, slander or disparage (whether or not such
disparagement legally constitutes libel or slander) or expose to hatred,
contempt or ridicule: (a) the Company; (b) any of its products, services,
affairs or operations; or (c) any of its past or present directors, officers,
employees or agents; provided, however, that this Section 12 shall not prevent
the Executive from making any truthful statement pursuant to a valid subpoena or
as otherwise compelled by law; provided that if subpoenaed or otherwise
compelled by law to make statements concerning the Company, its products,
services, affairs or operations, or any of its past or present directors,
officers, employees or agents, the Executive shall provide the Company with
advance notice and cooperate with any effort by the Company to prevent such
statements or limit the disclosure thereof, at the Company's sole cost and
expense.
(b) The Company, by the Board, shall advise each of its directors,
executive officers, employees and agents not to make or publish any statement
(orally or in writing), or instigate, assist or participate in the making or
publication of any statement, which would libel, slander or disparage (whether
or not such disparagement legally constitutes libel or slander) or expose to
hatred, contempt or ridicule the Executive; provided, however, that this Section
12 shall not prevent the Company from making any truthful statement pursuant to
a valid subpoena or as otherwise compelled by law; provided that if subpoenaed
or otherwise compelled by law to make statements concerning the Executive, the
Company shall provide the Executive advance notice and cooperate with any effort
by the Executive to prevent such statements or limit the disclosure thereof, at
the Executive's sole cost and expense.
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13. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. To the extent
that a court of competent jurisdiction determines that Executive breached any
undertaking in Section 7, the Company's obligations to make payments hereunder
shall immediately cease, provided that the Company shall be liable for such
payments in the event that the determination of such court is overturned or
reversed by any higher court.
14. Survivability. The provisions of this Agreement which by their terms
call for performance subsequent to termination of the Executive's employment
hereunder, or of this Agreement, shall so survive such termination.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut applicable to agreements
made and to be wholly performed within that State, without regard to its
conflict of laws provisions.
16. Titles and Captions. All paragraph titles or captions in this
Agreement are for convenience only and in no way define, limit, extend, or
describe the scope or intent of any provision hereof.
17. Withholding Taxes. The Company may withhold from any and all amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation. The
Company agrees to use its reasonable best efforts to withhold any such amount at
the lowest rate allowed under applicable law; provided that so doing will not
result in any detriment to the Company.
18. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
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19. Indemnification. The Executive will be entitled to full
indemnification with respect to any and all claims and liabilities (and all
related legal fees and expenses reasonably incurred by you or on your behalf)
asserted or threatened against the Executive during the term of this Agreement
or thereafter in his capacity as an officer or director of the Company to the
maximum extent provided in the Company's articles of incorporation and bylaws,
as amended from time to time and in accordance the laws of the Company's state
of incorporation. In addition, the Executive shall be entitled to coverage as an
director and officer of the Company pursuant to director and officer liability
insurance coverage obtained by the Company on the same basis as such coverage is
made available to executive officers of the Company. Furthermore, the Company
agrees to reimburse the Executive for expenses actually and reasonably incurred
in defending a third party proceeding in advance of the final disposition of
such third party proceeding; provided that the Executive agrees to repay such
amounts if it shall ultimately be determined that the Executive is not entitled
to be indemnified by the Company. The financial ability of the Executive to make
a repayment contemplated by this Section 19 shall not be a prerequisite to the
making of an advance.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
STARTECH ENVIRONMENTAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
Chief Financial Officer, Treasurer and
Secretary
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, the Executive
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