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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
AUGUST 21, 2000
(Date of earliest event reported)
STAR SCIENTIFIC, 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.)
801 LIBERTY WAY
CHESTER, VA 23836
(Address of Principal Executive Offices, Including Zip Code)
(804) 530-0535
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(Registrant's telephone number,
including area code)
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ITEM 5. OTHER EVENTS.
On August 21, 2000, Star Scientific Inc. ("Star") and its subsidiary, Star
Tobacco and Pharmaceuticals, Inc. ("Star Tobacco") entered into a Restated Loan
Agreement (the "Restated Loan Agreement") with Brown & Williamson Tobacco
Corporation ("B&W"). The Restated Loan Agreement restates the Loan Agreement
dated October 12, 1999 between Star and B&W (the "Prior Loan Agreement") in
which B&W agreed to lend Star capital necessary to finance the purchase of
tobacco curing barns, up to an aggregate of $22,000,000 (the "Prior Loan"). As
of August 20, 2000 Star borrowed $13,200,000 under the Prior Loan Agreement, and
Star may borrow up to an additional $8,800,000 subject to B&W acknowledging the
successful completion of certain test marketing. In addition, as of August 20,
2000, B&W advanced $11,000,000 (the "Advance") to Star against delivery of
StarCure/TM/ flue-cured tobacco from the year 2000 flue-cured tobacco crop.
Under the Restated Loan Agreement, (i) B&W has agreed to make a one-year
term loan to Star Tobacco of an additional $4,950,000 for working capital
purposes, at a fluctuating interest rate per annum equal to prime plus 1% (the
"New Loan"), and to defer repayment of the Advance for one year and (ii) B&W and
Star have agreed to collapse into one restated agreement the terms of the Prior
Loan, the Advance and the New Loan (together, the Prior Loan, the Advance and
the New Loan are referred to as the "Loan"). The Advance is evidenced by a
promissory note the principal of which shall be reduced by deliveries by Star to
B&W of StarCure/TM/ flue-cured tobacco from the year 2001 flue-cured tobacco
crop. If the required StarCure/TM/ flue-cured tobacco deliveries are not made by
December 31, 2001, then the outstanding principal will be payable on demand. Any
outstanding principal after December 31, 2001 shall bear interest at a
fluctuating interest rate per annum equal to prime plus 1%.
Star and Star Tobacco have granted B&W a first priority security interest
in the intellectual property of Star and Star Tobacco, respectively, as
collateral for the Loan. In addition, Star and Star Tobacco have each guaranteed
the payment of the other's obligations under the Loan. The Loan is also secured
by tobacco leaf inventory and the barns which were the original collateral under
the Prior Loan Agreement.
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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: September 6, 2000 STAR SCIENTIFIC, INC.
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By: /s/ Paul L. Perito
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Paul L. Perito
Chairman, President and Chief Operating Officer
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