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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
XXXXXX X. XXXXXXXXXXX,
an individual residing in St. Xxxx, Minnesota
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December 30, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
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 Xxx Xxxxx............................................................... 5
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS......................................................... 5
6.01 Obligations of Purchaser............................................................. 5
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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 ....................................................................................
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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 Xxxxxx X. Xxxxxxxxxxx, an individual residing in St. Xxxx, 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. Xxxx, 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 Xxxxxx X. Xxxxxxxxxxx, his children and any
entity controlled by Xxxxxx X. Xxxxxxxxxxx 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, Xxxxxx X. Xxxxxxxxxxx; 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
Xxxxx, Xxxxxxx & 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 Xxxxxx X. Xxxxxxxxxxx;
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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 Xxxxxx X. Xxxxxxxxxxx, 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 Xxxxxx & 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 XXX XXXXX. Seller agrees to pay the expenses of
Xxxxxx Xxxxx to spend two days with Xxxxxx Xxxxxxxxxxx in Phoenix, Arizona to
negotiate a settlement with Xxxx Precision Co., Inc. Xx. Xxxxxxxxxxx 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
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Xxxxx, Xxxxxx & Xxxxxx LLP
Attn: Xxxxxx X. Xxxxxx
3100 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to Purchaser to: Xxxxxx X. Xxxxxxxxxxx
EYETECH, LLC
Acorn Park
0000 0xx Xxxxxx, X.
Xxxxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx & Xxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
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:
-----------------------------------------------
Xxxxxx X. Xxxxxxxxxxx, Chief Manager
GUARANTOR:
By:
-----------------------------------------------
Xxxxxx X. Xxxxxxxxxxx, Individually
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