Exhibit 10.54

 

AMENDMENT TO MASTER LEASE AGREEMENT

AND SCHEDULE

 

Whereas General Electric Corporation (“GECC”), as Lessor, and Star Scientific,
Inc. (“Scientific”), as Lessee, entered into that certain Master Lease Agreement
dated as of June 29, 2001 (the “Master Lease”); and

 

Whereas GECC assigned its interest in the Master Lease to Southern Pacific
Bancapital under that certain Master Assignment Agreement between GECC, as
assignor, and Southern Pacific Bancapital, as assignee, dated August 15, 2001;
and

 

Whereas Southern Pacific Bancapital, as Lessor, and Scientific, as Lessee,
entered into that certain Equipment Schedule No. S-1 dated August 17, 2001 (the
“Schedule”) which was attached to and became a part of the Master Lease; and

 

Whereas the Schedule was amended by that certain Amendment No. 1 to Equipment
Schedule No. S-1 dated January 4, 2002 by and between Southern Pacific
Bancapital, Scientific and Star Tobacco, Inc. (“Tobacco”), whereby Tobacco was
added as a Co-Lessee under the Schedule; and

 

Whereas the Lease and the Schedule, as amended, will hereafter be referred to
collectively as the “Complete Lease;” and

 

Whereas Southern Pacific Bancapital was a name under which Southern Pacific Bank
did business; and

 

Whereas Southern Pacific Bank was placed in receivership on February 7, 2003,
and the Federal Deposit Insurance Corporation was appointed as receiver for
Southern Pacific Bank (“FDIC/Receiver”); and

 

Whereas by letter dated October 13, 2003, Quantum/G&A Joint Venture (“Quantum”),
as agent for the FDIC/Receiver, requested Scientific and Tobacco to provide a
formal certification of compliance with all the terms of the Complete Lease; and

 

Whereas neither Scientific nor Tobacco provided such certification to Quantum
within 30 days of the request; and

 

Whereas Scientific and Tobacco are currently in default of several of their
covenants in the Master Lease, among them, (1) Paragraph G(8) of the Schedule
regarding (a) the ratio of Adjusted Cash Flow to be Fixed Charges and (b)
evidence of the maintenance of the contract between Brown and Williamson Tobacco
Corp and Scientific and Tobacco; (2) Paragraph 9 of the Master Lease regarding
insurance and proof of insurance; and (3) Paragraph 13 of the Master Lease re
providing the certification requested within 30 days of written notice from the
FDIC/Receiver, and

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Whereas Scientific and Tobacco wish to avert having the Complete Lease declared
in default; and

 

Whereas FDIC Receiver wishes to have Scientific and Tobacco perform more closely
in accordance with the terms of the Complete Lease.

 

NOW THEREFORE, in consideration of the reciprocal benefits to be realized from
this Agreement, the parties hereto agree to amend the Complete Lease as follows:

 

  1. FDIC/Receiver waives for the Basic Term of the Complete Lease that portion
of Section G(8) of the Schedule which requires Scientific and Tobacco to
maintain a ratio of 1.25 or greater between their Adjusted Cash Flow and Fixed
Charges.

 

  2. Scientific and Tobacco will bring themselves into compliance with all the
requirements of the Complete Lease, other than the provision waived herein, by
January 15, 2004, and will provide as certificate to such effect to
FDIC/Receiver by January 13, 2004.

 

  3. Section 2(b) of the Master Lease is amended to read that Scientific and
Tobacco will continue to pay their monthly lease payments on the first day of
each month via ACH payment mechanism.

 

  4. Scientific and Tobacco waive their right to put back the equipment to
FDIC/Receiver at the end of the Basic Term (i.e., August 31, 2005), as provided
in Sections 10, 17 and 18 of the Master Lease and Sections 5 and 17 of the
Schedule. The only option remaining to Scientific and Tobacco at the end of the
Basic Term as regards the equipment is to purchase all of the equipment at ten
percent (10%) of the Capitalized Lessor’s Cost, subject to a $27,365.97 credit
described in Item No. 5 below.

 

  5. Scientific and Tobacco will make two cash payments to FDIC/Receiver over
and above their monthly lease payments, as follows: $9,121.99 by January 12,
2004, and $18,243.98 by February 28, 2004. Both payments will be applied as a
credit to the purchase price of the equipment at the end of the Basic Term,
i.e., $299,114.41 (10% of the Capitalized Lessor’s Cost) less $27,365.97 (credit
for 2 payments) = $271,748.44.

 

  6. In the event Scientific and Tobacco fail to comply with (1) any terms of
the Complete Lease, other than that provision waived herein, and (2) this
Agreement, the FDIC/Receiver may declare the Complete Lease in default and may
exercise all remedies granted under the Complete Lease and at law or equity.

 

  7. In the event any provision of the Complete Lease conflicts with the terms
of this Agreement, this Agreement shall control. All terms of the Complete Lease
not amended by this Agreement remain in full force and effect.

 

Executed this the 16 day of January, 2004.

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FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER OF
SOUTHERN PACIFIC BANK By:   /s/    Victor M. Robert            

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Name:   Victor M. Robert Title:   Attorney-in Fact STAR SCIENTIFIC, INC. By:  
/s/    Jonnie Williams            

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Name:   Jonnie Williams     Chief Executive Officer STAR TOBACCO, INC. By:  
/s/    Paul H. Lamb III            

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Name:   Paul H. Lamb III     President