Exhibit 99.2
FORM OF
PATENT LICENSE AGREEMENT
This Patent License Agreement ("Agreement") is effective as of ______________,
by and between Star Scientific, Inc., a Delaware corporation ("Star
Scientific"), and North Atlantic Trading Company, Inc., a Delaware corporation
("NATC").
WHEREAS, NATC, STAR SCIENTIFIC, and Star Tobacco, Inc., a Delaware corporation
and wholly owned subsidiary of STAR SCIENTIFIC ("STAR TOBACCO"), entered into an
Asset Purchase Agreement, dated as of ________________, 2003 (the "PURCHASE
AGREEMENT"), pursuant to which NATC agreed to purchase the assets, and assume
the liabilities, of STAR SCIENTIFIC and STAR TOBACCO related to their discount
cigarette business (as those assets and liabilities are described in the
PURCHASE AGREEMENT) (the "SALE TRANSACTION");
WHEREAS, effective as of the date hereof, NATC, STAR SCIENTIFIC, and STAR
TOBACCO are consummating the SALE TRANSACTION;
WHEREAS, STAR SCIENTIFIC is the exclusive licensee of U.S. Patent No. 6,202,649,
U.S. Patent No. 6,135,121, and U.S. Patent No. 6,425,401, and may obtain future
patents pertaining to processes for substantially preventing the formation of
tobacco-specific nitrosamines ("TSNAs") during tobacco curing and to products
made from low-TSNA tobacco ("PATENTS" as defined in Section 1.1 below);
WHEREAS, STAR SCIENTIFIC warrants that it has or will have the right to grant
licenses or sublicenses to the PATENTS; and
WHEREAS, in connection with the consummation of the SALE TRANSACTION, NATC
wishes to acquire a nonexclusive and nontransferable license from STAR
SCIENTIFIC to make, have made, use, or import tobacco claimed by the PATENTS or
cured using processes claimed by the PATENTS for use in NATC's own manufacture
and sale of cigarettes, roll your own tobacco and smokeless products;
NOW, THEREFORE, in consideration of the promises and agreements set forth
herein, and with intent to be legally bound hereby, the parties agree as
follows:
1 Definitions.
1.1 "PATENTS" shall mean patents and patent applications that are owned by
or licensed to STAR Scientific that (i) relate to processes for
substantially preventing the formation of TSNAs during tobacco curing;
or (ii) otherwise relate to low-TSNA tobacco, including, without
limitation, U.S. Patent Nos. 6,202,649, U.S. Patent No. 6,135,121, and
U.S. Patent No. 6,425,401.
1.2 "PRODUCT" shall mean low-TSNA tobacco whose manufacture, use or
import, absent rights granted hereunder, would infringe the PATENTS,
or low-TSNA tobacco made by any process that absent rights granted
hereunder would infringe the PATENTS.
1.3 "CIGARETTES" shall mean cigarettes manufactured by or on behalf of
NATC or its AFFILIATES and sold by NATC or its AFFILIATES, which
contain some quantity of the PRODUCT.
1.4 "OTHER TOBACCO PRODUCTS" shall mean roll your own tobacco and
smokeless tobacco products manufactured by or on behalf of NATC or its
AFFILIATES and sold by NATC or its AFFILIATES, which contain some
quantity of the PRODUCT.
1.5 "NET SALES" shall mean the gross sales of CIGARETTES and OTHER TOBACCO
PRODUCTS, less, (i) any rebates actually paid in connection with a
sale to a wholesaler, (ii) discounts and allowances actually given or
taken in connection with a sale to a wholesaler, and (iii) returns to
the extent credit is given or paid. There shall be no deduction from
NET SALES of any federal excise or sales tax payable on account of the
sale of CIGARETTES or OTHER TOBACCO PRODUCTS or otherwise, including
without limitation tobacco product excise taxes. All the foregoing
deductions from the gross sales shall be determined in accordance with
the generally accepted accounting practices used by NATC and its
AFFILIATES in the ordinary course of business. It is the intent of the
parties that NET SALES shall be based on arms- length sales
transactions by NATC or its AFFILIATES to independent third parties
and not based on sales between or among NATC and its AFFILIATES. In
the case of any sale or other disposal for value of the CIGARETTES or
OTHER TOBACCO PRODUCTS other than in an arm's length transaction
exclusively for money, NET SALES shall be calculated on the value of
the consideration received or the fair market price (if higher) of the
CIGARETTES or OTHER TOBACCO PRODUCTS in the country of sale or
disposal.
1.6 "EARNED ROYALTIES" shall mean the royalties payable by NATC to STAR
SCIENTIFIC as set out in Sections 3 and 4 of this Agreement.
1.7 "AFFILIATES" shall mean any corporation or limited liability company
that is controlled by the party in question, including, without
limitation, National Tobacco Company. For this purpose, "control"
shall mean the
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ownership, whether direct or indirect, of one hundred-percent (100%)
of the securities or ownership interests of or in the entity. STAR
SCIENTIFIC agrees that it will entertain requests by NATC to designate
an entity who does not conform to this definition as an "AFFILIATE" of
NATC. If STAR SCIENTIFIC so agrees in writing, then such entity shall
be deemed an "AFFILIATE" of NATC hereunder.
2 License Grant and Limitations.
2.1 License Grant. Subject to the terms of this Agreement, STAR SCIENTIFIC
hereby grants to NATC and its AFFILIATES for the term of this
Agreement a nonexclusive and nontransferable right and license under
the PATENTS to:
2.1.1 Make, have made, use, or import the PRODUCT only for use in
the manufacture of CIGARETTES or OTHER TOBACCO PRODUCTS and for no
other purpose including the resale of the PRODUCT to other
purchasers of bulk tobacco;
2.1.2 Use the PRODUCT upon termination of this Agreement as provided
by Section 10; and
2.1.3 Make, have made, use, offer to sell, sell, or import
CIGARETTES or OTHER TOBACCO PRODUCTS.
The license granted to each of NATC's AFFILIATES hereunder shall
continue in force and effect with respect to each such AFFILIATE
only so long as such entity is an AFFILIATE of NATC. Neither NATC or
any of its AFFILIATES has been granted hereunder any right or
license under the PATENTS to manufacture or sell CIGARETTES or OTHER
TOBACCO PRODUCTS for the benefit of or on behalf of any third party.
2.2 Limitations on Grant.
2.2.1 No Implied Licenses. Except as expressly granted herein, there
are no implied licenses under the PATENTS, including the right to
make, use, sell, offer for sale, or import any tobacco product other
than CIGARETTES or OTHER TOBACCO PRODUCTS.
2.2.2 No Right to Grant Sublicenses or Assign. This license does not
include the right to grant sublicenses. STAR SCIENTIFIC agrees that
NATC and its AFFILIATES may use third-party manufacturers to
manufacture the PRODUCT or CIGARETTES or OTHER
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TOBACCO PRODUCTS, on their behalf, as provided in Section 2.1.1 and
Section 2.1.3. Without the express written consent of STAR SCIENTIFIC,
this license is not assignable or otherwise transferable by NATC or its
AFFILIATES, including without limitation any transfer in connection with
an acquisition in whole or in part of NATC or its AFFILIATES (or any of
their assets) or a merger, consolidation or other reorganization
involving NATC or its AFFILIATES. Any purported assignment or transfer
made without STAR SCIENTIFIC'S consent shall be void and shall constitute
a material breach of this Agreement.
2.3 Nonsuit. So long as NATC is not in default under this Agreement, STAR
SCIENTIFIC will agree not to bring any legal action seeking to enjoin or
otherwise restrict (i) the use, manufacture, or import of the PRODUCT by
NATC or its AFFILIATES for the manufacture of CIGARETTES or OTHER TOBACCO
PRODUCTS,(ii) the manufacture of NATC's or its AFFILIATES' PRODUCT or
NATC's or its AFFILIATES' CIGARETTES or other TOBACCO PRODUCTS on behalf
of NATC or its AFFILIATES by third-party manufacturers, or (iii) the use,
manufacture, import, or sale by NATC or its AFFILIATES of CIGARETTES or
OTHER TOBACCO PRODUCTS.
2.4 Retention of Rights. STAR SCIENTIFIC retains all rights not expressly
granted by this Agreement. Nothing in this Agreement shall grant any
rights, directly or indirectly, to any other party, including any tobacco
company or cigarette manufacturer other than NATC or its AFFILIATES. If
NATC or its AFFILIATES acquires a tobacco company or cigarette
manufacturer that has entered into a license agreement with STAR
SCIENTIFIC with respect to the PATENTS that requires the payment of a
higher royalty rate than that required under this Agreement, then such
entity shall not be treated as an AFFILIATE of NATC for purposes of this
Agreement without the express written consent of STAR SCIENTIFIC and with
respect to entities that have entered into a license agreement with STAR
SCIENTIFIC with respect to the PATENTS, the agreement between such entity
and STAR SCIENTIFIC shall remain in full force and effect.
3 Consideration and Royalties. In consideration for the license granted
hereunder, NATC agrees to pay EARNED ROYALTIES to STAR SCIENTIFIC, as follows:
3.1 Royalty Base. EARNED ROYALTIES shall be based on the NET SALES of
CIGARETTES and OTHER TOBACCO PRODUCTS. EARNED ROYALTIES shall accrue at
the time the CIGARETTES and
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OTHER TOBACCO PRODUCTS either are shipped or are exported from the
United States.
3.2 Royalty Commencement Date. EARNED ROYALTIES shall commence on the
earlier of (a) the date that one or more of the PATENTS is enforced
by a United States trial court having jurisdiction over the matter
against any of the four largest United States tobacco companies (as
of the date of this Agreement, the four largest U.S. tobacco
companies are: Xxxxxx Xxxxxx, X.X. Xxxxxxxx, Xxxxx & Xxxxxxxxxx and
Lorillard) in a manner that results in one or more of those companies
being enjoined from violating the PATENTS or being required to make
payments to STAR SCIENTIFIC for past or future use, purchase,
production, import, export or sale of the PRODUCT or of CIGARETTES or
OTHER TOBACCO PRODUCTS, or (b) such date as any United States tobacco
company, excluding Xxxxx & Xxxxxxxxxx Tobacco Corporation, makes a
royalty payment to STAR SCIENTIFIC for rights under the PATENTS (the
date described in clause (a) or (b) above, the "Royalty Commencement
Date"). No royalty obligation shall be incurred to STAR SCIENTIFIC by
NATC for its exercise of any rights granted by this Agreement prior
to the Royalty Commencement Date. NATC's obligation to pay royalties
terminates if all of the PATENTS become unenforceable or are found
invalid for any reason.
3.3 Royalty Rate. The EARNED ROYALTY rate shall be equal to one-half the
lowest royalty rate STAR SCIENTIFIC receives from any United States
tobacco company other than NATC (excluding the royalty rate paid by
Xxxxx & Xxxxxxxxxx Tobacco Corporation pursuant to the currently
existing royalty arrangement under the April 25, 2001 agreement with
STAR SCIENTIFIC and by Golden Leaf Tobacco Company, Inc. pursuant to
its arrangements with STAR SCIENTIFIC in effect on the date hereof).
If STAR SCIENTIFIC receives royalties from more than one such United
States tobacco company then the EARNED ROYALTY rate shall be equal to
one-half of the lowest royalty rate received from such United States
tobacco company, but in no event more than two and one-half percent
(2.5%) of the NET SALES. The EARNED ROYALTY rate may be established
from time to time as STAR SCIENTIFIC enters into royalty arrangements
or agreements with other United States tobacco companies and shall
apply from the effective date of such arrangement or agreement. If a
judgment is entered by a United States trial court against one of the
four largest United States tobacco companies that does not result in
the setting of a royalty rate, then a presumed EARNED ROYALTY rate of
two and one-half percent (2.5%) shall apply from the date of judgment
until a royalty rate is established. The EARNED ROYALTIES provided
herein shall be
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the entire compensation due STAR SCIENTIFIC in respect of any PRODUCT
provided by a third-party manufacturer to NATC or its AFFILIATES pursuant
to the rights granted under Sections 2.1.1 and 2.1.3 permitting such
third-party manufacturer to produce such PRODUCT, CIGARETTES and OTHER
TOBACCO PRODUCTS.
3.4 EARNED ROYALTY Rate Notice. STAR SCIENTIFIC shall furnish notice to NATC
within thirty (30) days following the effective date of any royalty
arrangement or agreements with other United States tobacco companies and
shall provide NATC with information relating to non-confidential terms of
any such agreement, including at a minimum information sufficient to
allow NATC to determine such royalty terms, arrangements or agreements
and redacted copies, as necessary.
4 Payment.
4.1 Calendar Quarter Report. Within thirty (30) days after the end of each
calendar quarter following the Royalty Commencement Date during the term
of this Agreement, NATC shall furnish to STAR SCIENTIFIC a written report
setting forth the aggregate NET SALES during such calendar quarter and
clearly describing how the EARNED ROYALTIES payable thereon were
calculated.
4.2 Payment. NATC shall pay the EARNED ROYALTIES to STAR SCIENTIFIC in cash,
which shall accompany each written calendar quarter report.
4.3 Conversion Rate. EARNED ROYALTIES shall be payable in U.S. dollars. In
the event that conversion of the NET SALES from a foreign currency is
necessary, the exchange rate used shall be the rate in effect for the
purchase of United States dollars with such currency at the end of the
last business day of the applicable calendar quarter as published in the
Wall Street Journal.
4.4 Reporting in the Event of Termination. In the event that this Agreement
is terminated at any time other than at the end of a calendar quarter, an
EARNED ROYALTIES report and payment shall be made within thirty (30) days
following the termination of this Agreement, with a final EARNED
ROYALTIES report and payment due thirty (30) days after the expiration of
the ninety (90) day extension period provided under Section 10, below.
4.5 Taxes Withheld. If any EARNED ROYALTIES are subject to withholding or
similar tax, NATC shall pay such additional amounts as
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shall be required to ensure that the net amounts received by STAR
SCIENTIFIC hereunder (including any applicable tax credits used by STAR
SCIENTIFIC) will equal the full EARNED ROYALTIES amounts due under
Section 3 hereof. The parties shall do all such lawful acts and things
and sign all such lawful deeds and documents as either party may
reasonably request of the other party to enable NATC or its AFFILIATES to
take advantage of any applicable legal provision or any double taxation
treaties which may prevent or limit any tax being imposed or withheld by
taxing authorities with respect to EARNED ROYALTIES payable by NATC
hereunder.
4.6 Interest. In the event that any EARNED ROYALTIES due STAR SCIENTIFIC
under this Agreement are not paid within five (5) business days of the
date due, the amount due shall accrue interest annually calculated at the
prime rate (as reported in the Wall Street Journal on the due date or, if
the due date is not a business day, the first business day thereafter)
plus four percent (4.0%), but in no event less than ten percent (10%);
provided, however, that in no event shall said annual rate exceed the
maximum legal interest rate under Maryland law. Such EARNED ROYALTIES
when paid shall be accompanied by all interest so accrued.
5 Books and Records.
5.1 Obligation to Keep Books and Records. NATC must keep, and cause its
AFFILIATES to keep, accurate books and records of the manufacture, use,
import, or sale of CIGARETTES and OTHER TOBACCO PRODUCTS. NATC must
preserve, and cause its AFFILIATES to preserve, these books and records
for at least five (5) years from the date of the EARNED ROYALTIES to
which they pertain.
5.2 Right of Inspection. STAR SCIENTIFIC'S representatives or agents are
entitled to inspect the books and records described in Section 5.1 not
more than once per year. STAR SCIENTIFIC will pay the fees and expenses
of these inspections. If an under-reporting of more than five percent
(5%) of the EARNED ROYALTIES for the period subject to inspection is
discovered, then NATC will pay the reasonable fees and expenses of that
inspection. NATC shall promptly pay to STAR SCIENTIFIC the amount of any
underpayment discovered together with interest at the rate set forth in
Section 4.6, above from the date such payment was originally due until
paid.
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6 Patent Marking; Use of Names and Trademarks.
6.1 Patent Marking. NATC shall place, and shall cause its AFFILIATES to
place, all appropriate patent and intellectual property notices,
markings, and indicia on the packaging materials for all CIGARETTES and
OTHER TOBACCO PRODUCTS and marketing literature for the CIGARETTES and
OTHER TOBACCO PRODUCTS to protect the patent and other intellectual
property rights of STAR SCIENTIFIC, including STAR SCIENTIFIC'S right to
damages for infringement thereof. Notwithstanding the foregoing, NATC has
no obligation to xxxx any of its packaging materials and marketing
literature with any notice concerning PATENTS for manufacturing or
production processes for producing low-TSNA tobacco.
6.2 Use of Names and Trademarks. Neither NATC nor any of its AFFILIATES are
permitted to use any name, trade name, trademark, or other designation of
STAR SCIENTIFIC or any of its AFFILIATES, including the marks
StarCure(TM) Inside and StarCured(TM) Inside, in advertising, publicity,
promotional activity, or for any other purpose, without the express
written consent of STAR SCIENTIFIC.
6.3 Sponsorship. Neither NATC nor any of its AFFILIATES shall include any
statements on the packaging materials or in any advertising or
information accompanying the CIGARETTES and OTHER TOBACCO PRODUCTS that
expressly or implicitly represent or suggest that STAR SCIENTIFIC has
sponsored, endorsed, or approved the PRODUCT or the CIGARETTES and OTHER
TOBACCO PRODUCTS, or that STAR SCIENTIFIC is affiliated, connected, or
associated with the PRODUCT or the CIGARETTES and OTHER TOBACCO PRODUCTS.
7 Patent Infringement. Upon discovery by NATC of any infringement of the
PATENTS, or the possibility thereof, NATC shall promptly notify STAR SCIENTIFIC.
STAR SCIENTIFIC shall have the exclusive right, but not the obligation, to take
appropriate legal action in connection with the actual or potential
infringement. NATC shall use its reasonable efforts to cooperate with and assist
STAR SCIENTIFIC in any action pertaining to the PATENTS by providing documentary
evidence, employee testimony or the like. In the event STAR SCIENTIFIC shall
elect to take such action, the conduct of the action shall be entirely directed
and controlled by STAR SCIENTIFIC, and STAR SCIENTIFIC shall enjoy the benefits
of all recoveries from such action.
8 Term of the Agreement. Subject to prior termination by operation of law, or
by acts of the parties in accordance with the provisions of Section 9, the
license
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granted by this Agreement shall commence on the date first set forth above and
shall continue until the expiration of the last to expire of the PATENTS.
9 Termination.
9.1 STAR SCIENTIFIC shall have the right to immediately terminate this
Agreement if NATC shall at any time be in default in the payment of
EARNED ROYALTIES hereunder or NATC or its AFFILIATES shall commit any
other material breach of this Agreement and shall fail to remedy such
default or material breach within thirty (30) days after receipt of
written notice thereof by STAR SCIENTIFIC. If during the term of this
Agreement, NATC or any of its AFFILIATES makes, files, or maintains any
claim, suit, cause or other action alleging that any claim of a PATENT
is invalid or unenforceable or is not infringed by the manufacture, use,
sale, offer to sell, or import of the PRODUCT or of CIGARETTES or OTHER
TOBACCO PRODUCTS, STAR SCIENTIFIC may immediately upon notice to NATC
terminate this Agreement. In the event that either NATC or any of its
AFFILIATES, on the one hand, or STAR SCIENTIFIC, on the other hand
shall, (i) admit in writing its inability to, or be generally unable to,
pay its debts as such debts become due, or (ii) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its property or assets, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary
case under any applicable bankruptcy laws, (v) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (vi) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under any applicable bankruptcy
laws or (vii) take any corporate action for the purpose of effecting any
of the foregoing; then the other party may, by giving notice thereof to
such party, terminate this Agreement as of the date specified in such
termination notice. In the event of a termination of this Agreement, all
rights with respect to the PATENTS shall automatically revert to STAR
SCIENTIFIC. Termination of this Agreement shall be without prejudice to
any moneys already paid or then due or to become due from NATC to STAR
SCIENTIFIC and without prejudice to any rights of either party accrued
prior to the effective date of termination or that this Agreement
indicates shall survive termination.
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9.2 The Parties acknowledge and agree that it is their intention that only
NATC and its AFFILIATES shall be the beneficiaries of the rights and
license granted hereunder.
10 Disposition of the Cigarettes and OTHER TOBACCO PRODUCTS on Hand Upon
Termination. Upon termination of this Agreement, NATC and its AFFILIATES will
have the right, for a period of up to ninety (90) days, to use all PRODUCT on
hand and sell previously made or partially made CIGARETTES and OTHER TOBACCO
PRODUCTS. NATC must submit EARNED ROYALTIES reports on all post-termination NET
SALES, and must pay EARNED ROYALTIES at the rate and at the time provided in
this Agreement.
11 Injunctive Relief. In the event that NATC or one of its AFFILIATES
materially breaches this Agreement, the parties agree that monetary damages may
not provide an adequate remedy for STAR SCIENTIFIC. Therefore, in the event of a
material breach or threat of material breach, STAR SCIENTIFIC shall be entitled
to seek, in addition to any other relief available at law or in equity,
injunctive relief to restrain NATC or one of its AFFILIATES from committing or
continuing any violation of this Agreement, without the need for posting any
bond or any other undertaking.
12 Disclaimer of Warranties. Nothing in this Agreement shall be construed as:
12.1 a warranty or representation by STAR SCIENTIFIC as to the validity,
enforceability, or scope of any of the PATENTS;
12.2 a warranty or representation by STAR SCIENTIFIC that any PRODUCT or
CIGARETTE and OTHER TOBACCO PRODUCTS made, used, imported, sold, or
otherwise disposed of pursuant to this Agreement will not infringe
patents, copyrights, trademarks, or other proprietary rights of third
parties;
12.3 an obligation of STAR SCIENTIFIC to bring or prosecute actions or suits
against third parties for infringement of the PATENTS; or
12.4 an obligation of STAR SCIENTIFIC to license any other patents or any
other intellectual property rights not specifically licensed hereunder.
NATC EXPRESSLY ACKNOWLEDGES AND AGREES THAT ITS AND ITS AFFILIATES' PERFORMANCE
OF THE RIGHTS GRANTED IN THIS AGREEMENT IS AT THEIR OWN RISK. STAR SCIENTIFIC
EXPRESSLY DISCLAIMS AND EXCLUDES ALL WARRANTIES (INCLUDING WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE) AND
REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, IN RELATION TO NATC'S
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OR ITS AFFILIATES' MANUFACTURE, USE, OR IMPORT OF THE PRODUCT OR MANUFACTURE,
USE, IMPORT, SALE OR OTHER DISPOSITION OF CIGARETTES AND OTHER TOBACCO PRODUCTS.
13 Limitation of Remedies. STAR SCIENTIFIC WILL NOT BE LIABLE TO NATC OR ANY OF
ITS AFFILIATES, OR ANY THIRD PARTY, FOR LOSS OF PROFITS, LOSS OF USE OR FOR ANY
INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES WHETHER BASED UPON A CLAIM OR ACTION
OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, EVEN IF IT IS
AWARE OF THE POSSIBILITY THEREOF. NATC AGREES THAT THE ENTIRE LIABILITY OF STAR
SCIENTIFIC ARISING IN CONNECTION WITH THIS AGREEMENT WILL IN NO EVENT EXCEED AN
AMOUNT EQUAL TO THE EARNED ROYALTIES PAID BY NATC HEREUNDER.
14 Indemnification. NATC shall defend, indemnify, and hold harmless STAR
SCIENTIFIC, its affiliates (including Regent Court Technologies, LLC.) and the
directors, officers, employees, agents, successors and assigns of each of them,
from and against all liability, obligations, costs, expenses (including
reasonably attorneys' fees), losses, damages, penalties, judgments, claims,
demands, actions, and suits, brought by or through any third party (hereinafter
collectively called "liabilities") imposed on, incurred by or asserted against
any one or more of them in connection with NATC'S or its AFFILIATES'
manufacture, import, or use of the PRODUCT or manufacture, use, import, sale,
resale, or other distribution of CIGARETTES or OTHER TOBACCO PRODUCTS, including
but not limited to any liabilities arising out of actions in the form of tort,
warranty, or strict liability, for death, personal injury, illness, or property
damage. NATC or its AFFILIATES shall not settle or compromise any such claim,
demand, lawsuit or other action in a manner that imposes any restrictions or
obligations on STAR SCIENTIFIC or grants any rights to the PATENTS without STAR
SCIENTIFIC'S prior written consent.
15 Notices. Any notice or payment required to be given to either party must be
sent to the respective addresses given below and is effective: (a) on the date
of delivery if delivered in person, (b) five (5) days after mailing if mailed by
first-class certified mail, postage paid, or (c) on the next business day if
sent by overnight delivery. Either party may change its designated address by
written notice given in accordance with this Section:
FOR STAR SCIENTIFIC: Star Scientific, Inc.
Attention: Xxxxxx X. Xxxxxx, Esq.
General Counsel
0000 Xxxxxxxxx Xxxxxx
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Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
COPY TO: Xxxxxx & Xxxxxxx
Attention: Xxxxx X. Xxxxxxx
000 Xxxxxxxx Xx., X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
FOR NATC: North Atlantic Trading Company, Inc.
Attention: Xxxxx Xxxxxxx, President
Chief Financial Officer
000 Xxxx Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
COPY TO: Weil, Gotshal & Xxxxxx LLP
Attention: Xxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
16 Entire Agreement. This Agreement represents the entire understanding and
agreement between the parties hereto relating to the subject matter hereof, and
supersedes all prior and contemporaneous negotiations, agreements, and
understandings with respect thereto. This Agreement may be modified or waived
only by a separate writing signed by both parties expressly so modifying or
waiving this Agreement.
17 Severability. If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law: (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as is possible; and (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, STAR SCIENTIFIC and NATC hereby waive their
right to enforce any provision of law that would render any provision hereof
prohibited or unenforceable in any
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respect. If the terms and conditions of this Agreement are materially altered as
a result of this Section, the parties shall attempt to renegotiate the terms and
conditions of this Agreement, in good faith, to resolve any inequities.
18 Governing Law. This Agreement shall be deemed to be executed and to be
performed in the State of Maryland, and shall be construed under and in
accordance with the laws of the State of Maryland, including but not limited to
matters of validity, construction, effect, and performance. In the event of a
controversy, claim, or dispute between the parties hereto arising out of or
relating to this Agreement, such controversy, claim, or dispute may be tried
exclusively in the courts of the State of Maryland or in the United States
Federal District Court located in, or closest to, Bethesda, Maryland, as either
party may elect. Each of the parties hereby waives any defense of lack of in
personam jurisdiction, improper venue, and forum non conveniens, and agrees that
service of process of such court may be made upon each of them by personal
delivery or by mailing certified or registered mail, return receipt requested,
to the other party at the address provided for in Section 15 hereof. Both
parties hereby submit to the jurisdiction of the court so selected, to the
exclusion of any other courts which may have had jurisdiction apart from this
Section 18.
19 Counterparts. This Agreement may be executed in one or more counterparts
(including facsimile copies), each of which, when so executed, constitutes one
original and all of which, when taken together, constitute one and the same
Agreement.
20 Press Releases And Other Public Disclosures. Except as provided in the ASSET
PURCHASE AGREEMENT, or during the course of formal discovery or trial
proceedings in any litigation or as otherwise legally required, no other public
announcement or other disclosure to third parties concerning the existence or
terms of this Agreement shall be made, either directly or indirectly, by either
party hereto, without first obtaining the written approval of the other party,
which shall include agreement upon the nature and text of such announcement or
disclosure. The party desiring to make any such public announcement or other
disclosure shall inform the other party of the proposed announcement or
disclosure by providing the other party with a written copy thereof, and
allowing reasonably sufficient time prior to public release to permit such other
party to comment upon such announcement or disclosure. Once any such public
announcement or disclosure has been made in accordance with this Section, then
either party may appropriately communicate information contained in such
permitted announcement or disclosure. Each party agrees that it shall reasonably
cooperate with the other with respect to all disclosures regarding this
Agreement to the Securities and Exchange Commission and any other governmental
or regulatory agencies, including requests for confidential treatment of
proprietary information of either party included in any
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such disclosure, but neither party shall be prevented by this Section 20 from
making any disclosures to such agencies required under applicable law.
21 No Waiver. No failure on the part of a party to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall any single or
partial exercise by a party of any right preclude any other future exercise
thereof or the exercise of any other right.
22 Independent Contractors. No agency, partnership or joint venture is hereby
established; each party shall act hereunder as an independent contractor.
Neither STAR SCIENTIFIC nor NATC shall enter into, or incur, or hold itself out
to third parties as having authority to enter into or incur on behalf of the
other party any contractual obligations, expenses or liabilities whatsoever.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed this
___ day of _________________, ______ by their duly authorized representatives.
STAR SCIENTIFIC, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
Date:____________________________
NORTH ATLANTIC TRADING
COMPANY, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
Date: ___________________________
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