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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FEBRUARY 16, 1999
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(Date of earliest event reported)
STAR SCIENTIFIC, INC.
(formerly known as Eye Technology, Inc.)
(Exact Name of Registrant as Specified in Charter)
DELAWARE 000-15324 52-1402131
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
16 SOUTH MARKET STREET
PETERSBURG, VIRGINIA 23803
(Address of Principal Executive Offices, Including Zip Code)
(804) 861-0681
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(Registrant's telephone number,
including area code)
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STAR SCIENTIFIC, INC.
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Star Scientific, Inc. (the "Company") has sold to Eyetech, LLC
(the "Purchaser") substantially all of its assets relating to its ophthalmic
business, except the capital stock of Kerametrics Corporation and certain assets
related to that corporation . In consideration for these assets, the Purchaser
assumed the liabilities of the Company's ophthalmic business, except liabilities
for certain accounting services, unpaid taxes for tax periods ending on or after
February 6, 1998, and liabilities relating to the Company's tobacco business and
its status as a public corporation on or after December 31, 1998. Mooers &
Associates Incorporated rendered a fairness opinion to the Board of Directors of
the Company.
The payment of these liabilities was guaranteed by Robert J.
Fitzsimmons, the chief manager of the Purchaser and the former manager of the
Company's opthalmic business. Mr. Fitzsimmons deposited into escrow 250,000
shares of the Company's Common Stock to secure the payment of these liabilities.
The closing occurred on February 16, 1999 and was effective as of
December 30, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
The Company is not filing the required financial statements
at this time due to impracticability. The Company shall file such
financial statements as an amendment to this Form 8-K within 60
days of the date of this filing, pursuant to Item 7(1)(a)(4)(i) of
Form 8-K.
(c) Exhibits.
The exhibits filed as a part of this report are listed on
the Index to Exhibits on page 4 of this report, which index is
incorporated in this Item 7(c) by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 2, 1999 STAR SCIENTIFIC, INC.
By: /s/ DR. ROBERT DELORENZO
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Dr. Robert DeLorenzo
Chairman of the Board and
Chief Executive Officer
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INDEX TO EXHIBITS
The following exhibits to this report are incorporated herein by
reference.
10.1 Asset Purchase Agreement, dated as of December 30, 1998, between
Star Scientific, Inc. f/k/a Eye Technology, Inc., a Delaware
corporation and Eyetech, LLC, a Minnesota limited liability
company by Robert J. Fitzsimmons, an individual residing in St.
Paul, Minnesota
10.2 Escrow Agreement between Star Scientific, Inc., a Delaware
corporation, Eyetech, LLC, a Minnesota limited liability company
and Robert J. Fitzsimmons, an individual residing in St. Paul,
Minnesota, and Vincent Ella and Jonnie R. Williams as Escrow
Agents.
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
STAR SCIENTIFIC, INC.
F/K/A EYE TECHNOLOGY, INC.,
a Delaware corporation
AND
EYETECH, LLC
a Minnesota limited liability company
ROBERT J. FITZSIMMONS,
an individual residing in St. Paul, Minnesota
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December 30, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
<S> <C>
PURCHASE AND SALE............................................................................. 1
1.01 Sale of Assets....................................................................... 2
1.02 Consideration........................................................................ 3
1.03 Payment of Consideration............................................................. 3
1.04 Escrow of Shares..................................................................... 3
ARTICLE II
CLOSING....................................................................................... 3
2.01 Place and Time....................................................................... 3
2.02 Delivery of Documents................................................................ 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER...................................................... 3
3.01 Organization and Authorization....................................................... 3
3.02 No Conflict.......................................................................... 3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................... 4
4.01 Organization and Authorization....................................................... 4
4.02 No Conflict.......................................................................... 4
4.03 Information.......................................................................... 4
ARTICLE V
COVENANTS..................................................................................... 5
5.01 Confidential Information............................................................. 5
5.02 Brokerage Fees....................................................................... 5
5.03 Costs and Expenses................................................................... 5
5.04 Access and Information............................................................... 5
5.05 Fairness Opinion..................................................................... 5
5.06 Income Tax Returns................................................................... 5
5.07 Expenses for Sam Sears............................................................... 5
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS......................................................... 5
6.01 Obligations of Purchaser............................................................. 5
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS............................................................ 6
7.01 Obligations of Seller................................................................ 6
ARTICLE VIII
TERMINATION PRIOR TO THE CLOSING.............................................................. 7
8.01 Termination of Agreement............................................................. 7
8.02 Termination of Obligations........................................................... 7
ARTICLE IX
MISCELLANEOUS................................................................................. 7
9.01 Entire Agreement..................................................................... 7
9.02 Parties Bound by Agreement; Successors and Assigns................................... 7
9.03 Counterparts......................................................................... 7
9.04 Headings............................................................................. 7
9.05 Knowledge............................................................................ 8
9.06 Sales and Use or Transfer Taxes...................................................... 8
9.07 Bulk Sales Law....................................................................... 8
9.08 Notices.............................................................................. 8
9.09 Public Disclosure................................................................... 8
9.10 Governing Law....................................................................... 9
SCHEDULES
3.02 ....................................................................................
4.02 ....................................................................................
</TABLE>
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of December 30, 1998, between
Star Scientific, Inc., f/k/a Eye Technology, Inc., a Delaware corporation
("Seller"), EYETECH, LLC, a Minnesota limited liability company ("Purchaser"),
and Robert J. Fitzsimmons, an individual residing in St. Paul, Minnesota
("Guarantor").
WHEREAS, Seller, together with one or more subsidiary corporations,
owns and operates an ophthalmic product business under the names "Eye
Technology" and "Eye Tech", primarily involved in the manufacture and sale of
intraocular lens with physical facilities in St. Paul, Minnesota and Mexicoli,
Mexico (the "Ophthalmic Business");
WHEREAS, Seller, together with one or more subsidiary corporations,
also operates a tobacco products business under the names "Star Tobacco" and
"Star Tobacco Pharmaceuticals", primarily involved in the manufacture and sale
of cigarettes and the research, development and sale of tobacco leaf, with
physical facilities in Petersburg, Virginia, Chase City, Virginia, and Richmond,
Virginia (collectively the "Tobacco Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase, substantially all of its assets which comprise or are related
exclusively to the Ophthalmic Business but not to the Tobacco Business;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 SALE OF ASSETS. Subject to the terms and conditions set forth
below, Purchaser shall purchase from Seller at Closing all of the "Seller
Assets". As used in this Agreement, "Seller Assets" shall mean all assets of
Seller which comprise or are exclusively related to the Ophthalmic Business,
including, without limitation, intellectual property rights, inventory, accounts
receivable, equipment, machinery, fixtures, furniture, leasehold interests,
contracts, choses in action, records, documents, and including without
limitation the following:
(a) All assets of Seller reflected in its audited balance
sheet as at December 31, 1997 (and in the case of inventory and
accounts receivable, as the same may have been changed in the ordinary
course of business or otherwise from December 31, 1997 to the Closing
Date) to the extent still owned by Seller as of the Closing Date;
(b) All of Seller's right, title and interest in and to the
capital stock and assets of Bionica, S.A. and Eye Technology
International, Inc. (the "Ophthalmic Subsidiaries"); and
(c) All of Seller's right, title and interest, including
without limitation all intellectual property rights, in and to the
names "Eye Technology", "Eye Tech" and "Bionica", and names similar
thereto;
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Specifically excluded from Seller Assets are each of the following:
(i) All of Seller's right, title and interest in and to the
capital stock of Kerametrics Corporation and any other assets related
to Kerametrics Corporation, including without limitation, any amounts
due to Seller and any claims and choses in action of Seller against
Kerametrics Corporation and/or any of its stockholders;
(ii) All assets of Seller which comprise or are exclusively
related to the Tobacco Business;
(iii) Corporate minute books, capital stock records, financial
records and other corporate documentation which is not specific to
either the Ophthalmic Business or the Tobacco Business; and
(iv) The value, if any, of any corporate tax loss
carryforward.
1.02 CONSIDERATION. In consideration of the transfer and sale of
the Seller Assets, Purchaser shall assume, agree to pay or otherwise satisfy and
indemnify Seller against the following (the "Assumed Liabilities/Obligations"):
(a) All obligations and liabilities of Seller and/or the
Ophthalmic Subsidiaries as at December 30, 1998, and thereafter, which
in any case arise out of, result from, or relate specifically to, the
Ophthalmic Business;
(b) All obligations and liabilities of Seller and/or the
Ophthalmic Subsidiaries to Robert J. Fitzsimmons, his children and any
entity controlled by Robert J. Fitzsimmons and/or his children;
(c) All unpaid taxes and assessments, and interest thereon or
penalties related thereto, with respect to payroll, sales/use and/or
personal property, arising out of the Ophthalmic Business or relating
to employees or personnel used in the Ophthalmic Business, including
without limitation, Robert J. Fitzsimmons; and
(d) Corporate, federal and state income and excise taxes for
any tax period ended prior to February 6, 1998.
Specifically excluded from the Assumed Liabilities/Obligations are each of the
following:
(i) Liabilities owed by the Seller to the accounting firm of
Olsen, Thielen & Co., to ProStaff and to Accountants on Call for
accounting services;
(ii) All obligations and liabilities of Seller as at December
31, 1998, and thereafter, which in any case arise out of, result from,
or relate (A) specially to the Tobacco Business or (B) to Seller's
status as a publicly-owned corporation;
(iii) All unpaid taxes and assessments, and interest thereon
or penalties related thereto, with respect to payroll, sales/use and/or
personal property, arising out of the Tobacco Business or relating to
employees or personnel used in the Tobacco Business, including without
limitation all corporate officers and Directors who are or were at any
time since February 6, 1998, an officer or Director of Seller, except
for Robert J. Fitzsimmons;
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(iv) Corporate, federal and state income and excise taxes for
any tax period ended or ending on or after February 6, 1998; and
(v) Liabilities owed by Seller to, or with respect to the
affairs of Kerametrics Corporation or its stockholders (other than
liabilities that may be reflected on the books of Seller as of the
Closing Date.
1.03 PAYMENT OF CONSIDERATION. The consideration to be paid by
Purchaser in accordance with Section 1.02 above shall be satisfied at the
Closing by the delivery of an Assumption and Escrow Agreement, duly executed by
Purchaser and Robert J. Fitzsimmons, in the form attached hereto as Exhibit A.
1.04 ESCROW OF SHARES. At the Closing (as defined herein),
Purchaser shall escrow 250,000 shares of Guarantor's Common Stock owned by him
pursuant to the aforesaid Assumption and Escrow Agreement.
ARTICLE II
CLOSING
2.01 PLACE AND TIME. The closing (the "Closing") shall take place
at 10:00 a.m., local time, at the offices of Seller on Tuesday, February 16,
1999 and shall be effective as of December 30, 1998.
2.02 DELIVERY OF DOCUMENTS. At the Closing, Seller and Purchaser
shall deliver the Assumption and Escrow Agreement and Seller shall execute and
deliver to Purchaser all bills of sale, assignments of contracts and assignments
of intellectual property necessary to vest in Purchaser good and marketable
title to the Seller Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.01 ORGANIZATION AND AUTHORIZATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to carry on and conduct its
business as it is now being conducted and to own or lease its properties and
assets. Seller has the right, power and capacity to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. At the
Closing, the execution, delivery and performance of this Agreement by Seller and
the consummation of the transactions contemplated hereby will have been duly
authorized by all necessary corporate action on the part of Seller. At the
Closing, this Agreement will have been duly and validly executed and delivered
by Seller and will constitute the legal, valid and binding obligation of Seller,
enforceable in accordance with its terms.
3.02 NO CONFLICT. Except as set forth on Schedule 3.02, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein except for the contracts and lease for which
consents or approvals to the assignment are to be delivered at the Closing, will
(a) result in the breach, violation or contravention of, or constitute a default
under, or conflict with, or give rise to a right of termination of, or
accelerate any obligation under any of the provisions of (i) any agreement,
lease, note, bond, debenture or other evidence of indebtedness or any mortgage,
deed of trust, indenture or other
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instrument to which Seller is a party or by which any of them is bound or to
which any of their assets is subject, (ii) any judgment, decree, order or award
of any court, regulatory agency or other governmental body or arbitrator to
which Seller or any of their assets is subject or by which Seller is bound or
(iii) any statute, rule or regulation or other law applicable to Seller, (b)
result in the creation of any pledge, lien, encumbrance or security interest
upon any of their assets, or (c) require the authorization, approval, consent or
order of, or filing with, or other action by any court, regulatory agency or
other governmental body.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
4.01 ORGANIZATION AND AUTHORIZATION. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Minnesota and has all requisite power and authority to
carry on and conduct its business as it is now being conducted and to own or
lease its properties and assets, and is duly qualified and in good standing in
every state in which the conduct of its businesses or the ownership of its
properties and assets requires it to be so qualified. Purchaser has the right,
power and capacity to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. At Closing, the execution,
delivery and performance of this Agreement by Purchaser and its affiliate and
the consummation of the transactions contemplated hereby will have been duly
authorized by all necessary corporate action on the part of Purchaser. At
Closing, this Agreement will have been duly and validly executed and delivered
by Purchaser and will constitute the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
4.02 NO CONFLICT. Except as set forth on Schedule 4.02, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein except for the contracts and lease for which
consents or approvals to the assignment are to be delivered at the Closing, will
(a) result in the breach, violation or contravention of, or constitute a default
under, or conflict with, or give rise to a right of termination of, or
accelerate any obligation under any of the provisions of (i) any agreement,
lease, note, bond, debenture or other evidence of indebtedness or any mortgage,
deed of trust, indenture or other instrument to which Purchaser or its affiliate
is a party or by which any of them is bound or to which any of their assets is
subject, (ii) any judgment, decree, order or award of any court, regulatory
agency or other governmental body or arbitrator to which Purchaser or its
affiliate or any of their assets is subject or by which Purchaser or its
affiliate is bound or (iii) any statute, rule or regulation or other law
applicable to Purchaser, (b) result in the creation of any pledge, lien,
encumbrance or security interest upon any of their assets, or (c) require the
authorization, approval, consent or order of, or filing with, or other action by
any court, regulatory agency or other governmental body.
4.03 INFORMATION. Purchaser has consulted with his counsel and has
been provided with all information and materials which its counsel has requested
and is entering into this transaction after reviewing such information and
materials and conducting all due diligence it deems appropriate.
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ARTICLE V
COVENANTS
5.01 CONFIDENTIAL INFORMATION. Purchaser will use its best efforts
to hold in strict confidence and not disclose to third parties any data and
information obtained from Seller, except to its sources of financing, lawyers
and accountants and except as may be required by law.
5.02 BROKERAGE FEES. Seller shall indemnify Purchaser, its
officers, directors and shareholders against any other fee or commission payable
to any broker, agent or finder retained by Seller in connection with the sale of
the Seller Assets to Purchaser. Purchaser shall indemnify Seller against any fee
or commission payable to any broker, agent or finder retained by Purchaser in
connection with the purchase of the Seller Assets by Purchaser.
5.03 COSTS AND EXPENSES. Purchaser and Seller shall each bear the
fees and expenses of their respective legal counsel, accountants and advisors.
5.04 ACCESS AND INFORMATION. Seller shall cooperate with Purchaser
and shall supply such information and data relating to the Ophthalmic Business
as Purchaser may reasonably request.
5.05 FAIRNESS OPINION. Purchaser agrees to cooperate with Seller in
facilitating the completion and delivery of the fairness opinion (the "Fairness
Opinion") to be prepared by Mooers & Associates. Seller agrees to pay for the
cost of the Fairness Opinion, currently estimated to be $10,000 to $15,000, plus
out-of-pocket expenses.
5.06 INCOME TAX RETURNS. Purchaser will cooperate and assist Seller
in the preparation and filing of all federal and state income tax returns for
the years ended December 31, 1995, 1996, 1997 and 1998.
5.07 EXPENSES FOR SAM SEARS. Seller agrees to pay the expenses of
Samuel Sears to spend two days with Robert Fitzsimmons in Phoenix, Arizona to
negotiate a settlement with Auer Precision Co., Inc. Mr. Fitzsimmons will pay
his own expenses in this matter.
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
6.01 OBLIGATIONS OF PURCHASER. The obligations of Purchaser are
subject to the satisfaction or waiver at the Closing of each of the following
conditions:
(a) Representations and Warranties True at the Closing.
Seller's representations and warranties contained in this Agreement
shall be true in all material respects on and as of the Closing with
the same force and effect as though made on and as of such date; and
Seller shall have complied in all material respects with its covenants
and agreements in this Agreement on or before the Closing.
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(b) Litigation. No suit, investigation, action or other
proceeding shall be overtly threatened or pending against Seller before
any court or governmental agency which (i) could result in the
restraint or prohibition of Seller, or the obtaining of damages or
other relief from any such party, in connection with this Agreement or
the consummation of the transactions contemplated here or (ii) an order
restricting Seller from conducting its business as now being conducted.
(c) No Material Adverse Changes. Seller shall not have
suffered any material adverse change in its businesses, prospects,
financial condition, working capital, assets, liabilities (absolute,
accrued, contingent, or otherwise) or operations.
(d) Documents and Schedules Satisfactory. All bills of sale,
assignments, certificates, and other documents delivered by Seller to
Purchaser at the Closing will be in form and substance reasonably
satisfactory to Purchaser and its counsel.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
7.01 OBLIGATIONS OF SELLER. The obligations of Seller are subject
to the satisfaction or waiver at the Closing of each of the following
conditions:
(a) Representations and Warranties True at the Closing.
Purchaser's representations and warranties contained in this Agreement
shall be true in all material respects on and as of the Closing with
the same force and effect as though made on and as of such date; and
Purchaser will have complied in all material respects with its
covenants and agreements in this Agreement on or before the Closing.
(b) Litigation. No suit, investigation, action or other
proceeding shall be overtly threatened or pending against Purchaser
before any court or governmental agency which (i) could result in the
restraint or prohibition of Purchaser, or the obtaining of damages or
other relief from any such party, in connection with this Agreement or
the consummation of the transactions contemplated here or (ii) an order
restricting Purchaser from conducting its business as now being
conducted.
(c) Documents Satisfactory. All assumptions, indemnification,
certificates and other documents delivered by Purchaser to Seller at
the Closing shall be in form and substance satisfactory to Seller and
its counsel.
(d) Fairness Opinion. Seller shall have received the Fairness
Opinion, which shall be in form and substance satisfactory to Seller
and its counsel.
(e) Required Governmental Approvals. All governmental
authorizations, consents, and approvals necessary to consummate the
transactions contemplated herein shall have been obtained by Seller or
Purchaser and shall be in full force and effect.
(f) Other Necessary Consents. Seller shall have obtained all
other consents and approvals necessary for it to consummate the
transactions contemplated herein.
(g) Board Approval. This Agreement and the transactions
contemplated herein shall have been approved by the Board of Directors
of Seller.
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ARTICLE VIII
TERMINATION PRIOR TO THE CLOSING
8.01 TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written consent of the parties;
(b) By Seller in writing, without liability, if Purchaser (i)
fails to perform in any material respect any act required at or prior
to the Closing, or (ii) materially breaches any representation,
warranty or covenant of Purchaser in this Agreement;
(c) By Purchaser in writing, without liability, if Seller (i)
fails to perform in any material respect any act required at or prior
to the Closing, or (ii) materially breaches any representation,
warranty or covenant of Seller in this Agreement; or
(d) By any party in writing, without liability, if any court
or governmental or regulatory agency order, writ, injunction, or decree
prohibits or restrains any party from consummating the transactions
contemplated here.
8.02 TERMINATION OF OBLIGATIONS. Termination of this Agreement
pursuant to this article will terminate all of the parties' obligations, except
for the obligations of the parties hereto under Article V hereof. However,
termination pursuant to Sections 8.01(b) or (c) hereof will not relieve a
defaulting or breaching party from any liability to any other party. Within
fifteen (15) days after this Agreement is terminated, each party will, upon
written request from any other party, return all documents and copies previously
delivered to it or made in connection with this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 ENTIRE AGREEMENT. This Agreement constitutes the sole
understanding of the parties with respect to the subject matter hereof. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly executed
by the parties hereto. Any of the terms or conditions of this Agreement may be
waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver of any of the provisions of this Agreement shall be deemed to
or shall constitute a waiver of any other provision hereof (whether or not
similar).
9.02 PARTIES BOUND BY AGREEMENT; SUCCESSORS AND ASSIGNS. The terms,
conditions and obligations of the Agreement shall inure to the benefit of and be
binding upon the parties hereto and the respective successors and assigns
thereof. Without the prior written consent of the other party, neither party may
assign its rights, duties, or obligations hereunder or any part hereof to any
other person or entity.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will for all purposes be deemed to be an original
and all of which will constitute the same instrument.
9.04 HEADINGS. The headings of the Articles, Sections and Schedules
of this Agreement are inserted in convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
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9.05 KNOWLEDGE. As used in this Agreement, "knowledge" and "to the
knowledge of" means actual knowledge of a party or any executive or key employee
or officer of the party.
9.06 SALES AND USE OR TRANSFER TAXES. Any and all sales and use or
transfer tax due or to become due as a result of the consummation of the
transactions contemplated hereby shall be borne solely by, and paid to the
appropriate taxing body by Purchaser.
9.07 BULK SALES LAW. Purchaser shall indemnify Seller against any
bulk sale liability.
9.08 NOTICES. Any notice, request, instruction, or other document
to be given must be in writing and delivered personally or sent by certified
mail or by United States Express Mail, postage or fees prepaid, or by Federal
Express as follows:
If to Seller to: Star Scientific, Inc.
Attn: Chief Financial Officer
16 South Market Street
Petersburg, Virginia 23803
Telecopy No.: (804) 861-6215
with a copy to: Wolin, Ridley & Miller LLP
Attn: Norman R. Miller
3100 Bank One Center
1717 Main Street
Dallas, Texas 75201
Telecopy No.: (214) 939-4949
If to Purchaser to: Robert J. Fitzsimmons
EYETECH, LLC
Acorn Park
7016 6th Street, N.
Oakdale, Minnesota 55128
Telecopy No.: (651) 774-6271
with a copy to: Vincent G. Ella, Esq.
Messerli & Kramer P.A.
150 South Fifth Street, Suite 1800
Minneapolis, Minnesota 55402
Telecopy No.: (612) 672-3777
Any notice delivered personally in the manner provided here will be
deemed given to the party to whom it is directed upon the party's (or
its agent's) actual receipt. Any notice addressed and mailed in the
manner provided here will be deemed given to the party to whom it is
addressed at the close of business, local time of the recipient, on the
fourth (4th) business day after the day it is place din the mail or, if
earlier, the time of actual receipt.
9.09 PUBLIC DISCLOSURE. Purchaser shall not issue any press release
or make other public statement or disclosure concerning the transaction
contemplated hereby, without the consent of Seller as to the content and the
manner of presentation and publication thereof.
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9.10 GOVERNING LAW. This Agreement will be construed in accordance
with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date hereof.
SELLER:
STAR SCIENTIFIC, INC.
f/k/a Eye Technology, Inc., a Delaware corporation
By:
-----------------------------------------------
BUYER:
EYETECH, LLC
By:
-----------------------------------------------
Robert J. Fitzsimmons, Chief Manager
GUARANTOR:
By:
-----------------------------------------------
Robert J. Fitzsimmons, Individually
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EXHIBIT 10.2
ASSUMPTION AND ESCROW AGREEMENT
AGREEMENT made this 16th day of February, 1999, by and among Star
Scientific, Inc., a Delaware corporation ("Seller"), EYETECH, LLC, a Minnesota
limited liability company ("Purchaser"), and Robert J. Fitzsimmons, an
individual residing in Minnesota ("Fitzsimmons").
WHEREAS, the Seller and Purchaser have entered into an Asset Purchase
Agreement dated as of December 30, 1998, (the "Purchase Agreement"), by which
the Seller is selling, the Purchaser is purchasing certain assets of Seller in
consideration of the assumption by Purchaser of certain liabilities of Seller,
and Purchaser's assumption covenants are to be secured by certain assets of
Fitzsimmons;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agrees as
follows:
1. Definitions. All capitalized terms used in this Agreement and not
otherwise defined herein shall have the same meaning as set forth in the
Purchase Agreement.
2. Assumption of Liabilities and Obligations. Purchaser hereby agrees
to assume and to pay or otherwise satisfy all of the Assumed
Liabilities/Obligations, and to hold Seller harmless from and to indemnify
Seller against, any and all claims, losses, damages, obligations and
liabilities, arising out of or resulting from any breach of Purchaser's covenant
herein to assume and to pay or otherwise satisfy any or all of the Assumed
Liabilities/Obligations.
3. Guaranty and Indemnification/Escrow. Fitzsimmons hereby guarantees
to Seller the full and prompt performance by Purchaser of each and all of its
obligations and liabilities under this Agreement, and further agrees to hold
Seller harmless from, and indemnify Seller against, any losses, claims, damages
and liabilities arising out of or resulting from any failure of Purchaser to so
perform under this Agreement. As security for Fitzsimmons' covenants and
obligations under this Agreement, he has simultaneously deposited with the
Escrow Agents (as hereinafter defined) certificates for 250,000 shares of Common
Stock of Seller (the "Shares"), together with duly executed stock powers
endorsed in blank. The Shares shall be held in escrow pursuant to the provisions
of Sections 5 and 6 of this Agreement.
4. Processing of Claims. All invoices, demands, claims and notices of
third parties, howsoever communicated, which may be received by Seller, and
constituting a claim for satisfaction of an obligation or liability of Seller
which is one of the Assumed Liabilities/Obligations (hereinafter a "Claim"),
shall be promptly forwarded to Purchaser. Purchaser shall, in turn, promptly
notify Seller if it does not intend to pay or otherwise satisfy a Claim, setting
forth in writing the reasons therefore (a "Contested Claim"). The absence of a
notification from Purchaser to Seller as described above shall be deemed to
constitute Purchaser's agreement that the subject claim is not contested by
Purchaser and will be paid or otherwise satisfied by Purchaser (an "Uncontested
Claim"). If at any time Purchaser acknowledges in writing to Seller that it no
longer desires to contest a Contested Claim, then such Claim shall be deemed to
be converted into an "Uncontested Claim."
<PAGE> 2
5. Delivery of Shares to Seller. If, with respect to any Contested
Claim, any of the following occur: (a) a judgement is entered in any court of
competent jurisdiction against either the Purchaser or Seller; (b) any lien,
attachment or other encumbrance is effected against any of the assets of Seller;
or (c) Purchaser is in default of a lawsuit against Purchaser; then Seller shall
have the right, to be exercised if at all by written notice to Purchaser that it
intends to pay the subject Contested Claim, to pay the Contested Claim ten (10)
days after its notice to Purchaser if Purchaser has not within that ten-day
period paid or otherwise satisfied the Contested Claim. If with respect to any
Uncontested Claim, Purchaser shall fail to pay or otherwise satisfy such
Uncontested Claim within thirty (30) days after Seller shall have given
Purchaser written notice that it intends to pay the Uncontested Claim, then
Seller may pay the Uncontested Claim. If Seller elects to pay any Claim in
accordance with the terms of this Section 5, then it shall have the right to
receive out of escrow an amount of Shares which is equal in Market Value to the
amount of money paid by Seller. "Market Value" of one Share shall mean the
closing highest bid price on the NASDAQ listing on which the Common Stock of
Seller is then traded or, if such stock is then traded on a national stock
exchange, the closing sales price on such exchange, in each case on the trading
day next preceding the date on which Seller made such payment. The Shares to be
released from escrow hereunder shall be released to Seller by the Escrow Agents
promptly upon receipt of a written notice from Seller and signed by one of its
executive officers certifying as to the right of Seller to receive Shares
hereunder and its compliance with the terms of this Section 5. The receipt of
Shares by Seller hereunder shall be deemed reimbursement to Seller for monies
paid with respect to the subject Claims and satisfaction by Purchaser and
Fitzsimmons of their respective indemnification covenants hereunder. The right
to receive Shares shall be deemed Seller's exclusive remedy so long as their are
a sufficient number of Shares in escrow for such purpose. If there are no longer
any Shares in escrow hereunder, then Seller may proceed directly against
Purchaser and/or Fitzsimmons with respect to any breach of their obligations
hereunder.
6. Release of Shares to Fitzsimmons. On each of the first four
anniversary dates of the Closing Date, the Escrow Agents shall deliver to
Fitzsimmons, free and clear of any escrow, an amount of Shares equal to the
following: fifty thousand (50,000) less (a) the number of Shares which may have
been previously released to Seller pursuant to the terms of Section 5 and which
have not been previously calculated in the determination of a release of Shares
pursuant to this Section 6, and (b) a number of Shares which has on such
anniversary date a Market Value equal to the total of Claims for which Seller
has then given notice to Purchaser that Seller intends to pay, and which have
not been previously calculated in the determination of a release of Shares
pursuant to this Section 6. On the fifth anniversary date of the Closing Date,
all remaining Shares, less an amount which calculated pursuant to (b) above,
shall be released from escrow to Fitzsimmons. Any Shares retained in escrow
after the fifth anniversary date shall be held in escrow until final resolution
of any Claims which were the basis of retention of Shares.
7. Escrow Agents. Vincent Ella, Esq., and Jonnie R. Williams shall
initially be the Escrow Agents and all action to be taken by them shall require
their joint signatures. In the event of the resignation or death of Vincent
Ella, his successor shall be an attorney designated by Fitzsimmons. In the event
of the resignation or death of Jonnie R. Williams, his successor shall be an
attorney designated by Seller.
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<PAGE> 3
8. Substitution of Money for Shares. Fitzsimmons shall have the right
at any time, and from time to time, to deposit money into escrow with the Escrow
Agents and to receive back, free and clear of escrow, an amount of Shares equal
to one-half of the money so deposited; e.g., if Fitzsimmons deposits $50,000, he
may receive out of escrow 25,000 Shares. Any money held in escrow hereunder
shall be subject to release pursuant to Section 5 as if the money were
equivalent to the Market Value of Shares, and shall be subject to release
pursuant to Section 6 on the basis of $2.00 per Share.
9. Limitation of Liability of Escrow Agents. The Escrow Agents shall
have no personal liability for acting in such capacity and shall be entitled to
rely upon such written communications which he or they believe in good faith to
be genuine and to be executed by the party purporting to send such
communications, and may refuse to take action until such time that he or they,
acting in good faith, receive such assurances and/or confirmations as he to they
deem appropriate in the circumstances. In no event shall any Escrow Agent be
liable for incidental or consequential damages of any kind or for any monetary
damages, except for the wrongful and intentional conversion for personal benefit
of any Shares or money held in escrow.
10. Term of Agreement. This agreement shall remain in effect until the
last to occur of (a) all Assumed Liabilities/Obligations have been paid in full
or (b) all Shares and money have been released from escrow pursuant to the terms
of this Agreement.
11. Additions to Escrow. If at any time any Shares are held in escrow
hereunder, any and all dividends and distributions payable with respect to any
such Shares, whether in cash, stock or other property of any kind, and any
payments, whether in cash, stock or other property of any kind, payable in
partial or total exchange of such Shares or otherwise in respect of such Shares,
shall be promptly deposited in escrow to be held in escrow pursuant to the terms
hereof. Equitable adjustments under this agreement for the calculation of the
number of Shares to be released hereunder shall be made in the event of a stock
dividend, stock split or reclassification with respect to the Shares.
12. Notices, etc. Any and all notices, demands, requests and other
communications to be given hereunder shall be deemed to be validly given if made
by actual hand delivery, or by recognized overnight delivery service such as
Federal Express or DHL, or by confirmed facsimile transmission, if given to the
party for which such notice, etc. is intended, to the following:
If to Seller: Star Scientific, Inc.
16 South Market Street
Petersburg, VA 23803
Attn: Chief Financial Officer
Fax: 804-861-6215
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<PAGE> 4
If to Purchaser Robert J. Fitzsimmons
and Fitzsimmons: EYETECH, LLC
7016 6th Street, N.
Acorn Park
Oakdale, MN 55128
If to Escrow Agents: Vincent Ella, Esq.
Messerli & Kramer
1800 Fifth Street Towers
150 South Fifth Street
Minneapolis, MN 55402-4218
Fax # 612-672-3777, and
Jonnie R. Williams
16 South Market Street
Petersburg, VA 23803
Fax #804-861-6215
or to such other address as such party may designate by notice to all other
parties in the manner provided herein.
13. Miscellaneous.
(a) This Agreement shall be binding upon and shall inure to
the benefit of, the parties hereto and their respective successors, assigns,
heirs and representatives.
(b) This Agreement shall be governed in all respects under the
laws of the State of Delaware.
Executed on this the 16th day of February, 1999.
Seller: Star Scientific, Inc.
by:
-------------------------
Purchaser:
by:
-------------------------
Fitzsimmons:
----------------------------
Robert J. Fitzsimmons
The undersigned hereby agree to the escrow provisions of the written
agreement, subject to the limitations set forth in Section 9.
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<PAGE> 5
----------------------------
Vincent Ella
----------------------------
Jonnie R. Williams
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