Document:

exv10w8

Exhibit 10.8

STANDBY PURCHASER AGREEMENT

__, 2010

____________________

____________________

____________________

Dear ____________:

     This letter confirms our agreement with respect to the intention of Farmers National Banc
Corp., an Ohio corporation (the “Company”), to raise additional capital through a rights offering,
with oversubscription privileges, of up to [___________](the “Underlying Shares”) of the Company’s
common shares, no par value per share (the “Common Shares”), to its shareholders of record as of
date to be determined (“Rights Offering”) with the participation of standby purchasers for any
unsubscribed shares in the Rights Offering (The Rights Offering and the offering to standby
purchasers are hereinafter referred to as the “Offering”). Capitalized terms used herein and not
defined herein shall have the meanings set forth in the Prospectus (as hereinafter defined).

     A REGISTRATION STATEMENT ON FORM S-1 (THE “REGISTRATION STATEMENT”) RELATING TO THE COMPANY’S
COMMON SHARES WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) ON [____]. NO OFFER TO
BUY SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL THE
REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED,
WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN
AFTER THE EFFECTIVE DATE.

1. Purchase and Sale of Unsubscribed Shares.

     (a) Subject to the terms and conditions and in reliance upon the representations and
warranties herein set forth, the Company agrees to issue and sell to you as a standby purchaser
(the “Standby Purchaser”), and the Standby Purchaser agrees to purchase from the Company, at the
subscription price set forth in the Prospectus (the “Subscription Price”) up to [__________]Common
Shares (the “Standby Shares”) which remain available for issuance in accordance with the Rights
Offering after the issuance of all Common Shares validly subscribed for through the exercise of
rights (the “Rights”), including the exercise of all oversubscription privileges, in the Rights
Offering (such remaining shares being hereinafter referred to as the “Unsubscribed Shares”).

     (b) The Standby Purchaser and the Company acknowledge and agree that the Company has entered
into, or contemplates entering into, one or more other Standby Purchase
Agreements with certain other parties (collectively, the “Standby Purchasers”) on terms
substantially similar to this Agreement, except that they may provide for the purchase of a
different maximum number of Standby Shares in Section 1(a) and a different number of Minimum Shares
(as defined in Section 1(c)). The Unsubscribed Shares available for issuance to

 

 

Standby Purchasers
and any additional shares which the Company shall have elected to issue shall be allocated (to the
extent any allocation thereof is necessary) as nearly as possible on a pro rata basis among the
Standby Purchasers based upon the number of Standby Shares subscribed for by each Standby
Purchaser, after giving effect to the limitation set forth in Section 2.

     (c) In the event there is not a sufficient number of Unsubscribed Shares remaining upon
completion of the Rights Offering (including the exercise of all oversubscription privileges) to
allow you to purchase pursuant to Section l(a) at least [__________] shares (the “Minimum Shares”),
subject to the maximum number of Common Shares being offered for sale in the Offering as set forth
in the Registration Statement, the Company agrees to issue and sell to the Standby Purchaser, and
the Standby Purchaser agrees to purchase from the Company, at the Subscription Price and otherwise
in accordance with this Agreement, sufficient additional shares so that the Standby Purchaser shall
have purchased the Minimum Shares, provided that the Company may reduce the Minimum Shares
committed to by the Standby Purchaser (on a pro rata basis with all other Standby Purchasers) in
order to ensure that the number of shares issued by the Company in the Offering does not exceed the
maximum number of Common Shares being offered for sale in the Offering. The shares to be issued and
sold to the Standby Purchaser (other than the Unsubscribed Shares) in order that the Standby
Purchaser may purchase the Minimum Shares are hereinafter referred to as the “Additional Shares.”

2. Limitations on Issuance of Standby Shares.

     The Standby Purchaser hereby acknowledges and agrees that the Company may decline to issue
Common Shares to the Standby Purchaser hereunder if, in the opinion of the Company, the Standby
Purchaser is required to obtain prior clearance or approval of such purchase from any state or
federal bank regulatory authority and if such approval or clearance has not been obtained or if
satisfactory evidence thereof has not been presented to the Company prior to the expiration of the
Offering.

3. The Closing.

     As soon as practicable following its determination of the number of Unsubscribed Shares, the
Company shall notify the Standby Purchaser of the number of Standby Shares, if any, to be purchased
by the Standby Purchaser pursuant to Section l(a) and the number of Additional Shares, if any, to
be purchased by the Standby Purchaser pursuant to Section 1(c). The delivery of and payment for the
Standby Shares and the Additional Shares shall take place at the offices of [____], at [10:00 a.m.,
Eastern time], immediately after the closing of the sale of Common Shares pursuant to the Rights
Offering, such time and date to be not more than five (5) business days after the foregoing
notification and to be specified therein (such time and date being referred to as the “Closing
Time,” the date of the Closing Time being referred to as the “Closing Date” and the consummation of
the transaction being referred to as the “Closing”).

4. Delivery of Standby Shares and Additional Shares.

     At the Closing, the Standby Shares and Additional Shares to be purchased by the Standby
Purchaser hereunder, registered in the name of the Standby Purchaser or its nominee(s), as the
Standby Purchaser may specify in writing at least three (3) days prior to the Closing Date, shall

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be delivered by or on behalf of the Company to the Standby Purchaser, for the Standby Purchaser’s
account, against delivery by the Standby Purchaser of the Subscription Price therefor in
immediately available funds in the form of one or more federal funds checks or a wire transfer to
an account designated by the Company.

5. Representations and Warranties.

     The Company and the Standby Purchaser hereby confirm their agreement as follows:

     (a) The Company represents and warrants to, and covenants with, the Standby Purchaser as
follows:

          (i) The Company has filed a Registration Statement on Form S-1 with the SEC and all amendments
thereto. Such Registration Statement as amended at the time it becomes effective (the “Effective
Date”), including all exhibits, is herein called the “Registration Statement.” The prospectus filed
with the SEC pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the
regulations promulgated thereunder (“Regulations”), and which constitutes a part of the
Registration Statement, is herein called the “Prospectus.”

          (ii) The Underlying Shares, the Standby Shares and the Additional Shares have been duly
authorized by the Company, and when issued and delivered by the Company against payment therefor,
will be duly and validly issued, fully paid and non-assessable. The Rights have been duly
authorized by the Company, and when issued and delivered by the Company, will constitute valid and
legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.

          (iii) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Ohio, with corporate power and authority to perform its
obligations under this Agreement.

          (iv) The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action of the Company, and this Agreement, when duly executed and delivered
by the Standby Purchaser, will constitute a valid and legally binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity principles.

          (v) On the Closing Date and at the time when the Registration Statement was first filed with
the SEC pursuant to the Securities Act and the Regulations, the Registration Statement and the
Prospectus complied and will comply in all material respects with the requirements of the
Securities Act and the Regulations and on the Closing Date, neither the Registration Statement nor
the Prospectus will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
except that the foregoing does not apply to statements or omissions in the Registration Statement
or the

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Prospectus made in reliance upon and in conformity with information furnished by the Standby
Purchaser to the Company expressly for use therein.

          (vi) Neither the Company nor any of its direct or indirect subsidiaries (“Subsidiaries”) is in
violation of its articles of incorporation, articles of organization, code of regulations or
operating agreement, or in default under any agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, the effect of which violation or default would be
material to the business, properties, financial condition or results of operations of the Company
and its Subsidiaries, taken as a whole, and the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated hereby will not
conflict with, or constitute a breach of, or default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company or its Subsidiaries
pursuant to the terms of any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of the certificate of incorporation, articles of
association, certificate of trust or code of regulations of the Company or any of its Subsidiaries
or any order, rule or regulation of any court or governmental agency having jurisdiction over the
Company, any of its Subsidiaries or any of their property; and, except as required by the
Regulations, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and applicable
state securities law, no consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the execution, delivery and performance of this
Agreement.

     (b) The Standby Purchaser represents and warrants to, and covenants with, the Company as
follows:

          (i) (A) If the Standby Purchaser is an individual, he or she has full power and authority to
perform his or her obligations under this Agreement.

               (B) If the Standby Purchaser is a corporation, the Standby Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to perform its obligations under this Agreement.

               (C) If the Standby Purchaser is a trust, the Trustee has been duly appointed as trustee of the
Standby Purchaser with full power and authority to act on behalf of the Standby Purchaser and to
perform the obligations of the Standby Purchaser under this Agreement.

               (D) If the Standby Purchaser is a partnership or limited liability company, the Standby
Purchaser is a partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or organization, with full power
and authority to perform its obligations under this Agreement.

          (ii) The Standby Purchaser has received from the Company and has reviewed carefully a copy of
the Prospectus as well as the public documents filed in connection therewith
through the date hereof, and except as set forth in this Agreement and in the Prospectus, the
Standby Purchaser is not relying on any information other than information contained in this
Agreement or the Prospectus.

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          (iii) The Standby Purchaser is acquiring the Common Shares pursuant to this Agreement for its
own account for investment only and not with a view to any resale, distribution or other
disposition thereof.

          (iv) The execution, delivery and performance of this Agreement by the Standby Purchaser and
the consummation by the Standby Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary action of the Standby Purchaser; and this Agreement, when duly executed
and delivered by the Standby Purchaser, will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors’ fights and to general equity principles.

          (v) The Standby Purchaser is not insolvent and has sufficient cash funds on hand to purchase
the Standby Shares and Additional Shares on the terms and conditions contained in this Agreement
and will have such funds on the Closing Date. The Standby Purchaser has simultaneously with the
execution and delivery of this Agreement or prior thereto provided the Company with evidence or
substantiated that such Standby Purchaser has the financial means to satisfy its financial
obligations under this Agreement and the foregoing evidence and substantiation is a true and
accurate representation of such means.

          (vi) No state, federal or foreign regulatory approvals, permits, licenses or consents or other
contractual or legal obligations are required with respect to the Standby Purchaser in order for
the Standby Purchaser to enter into this Agreement or purchase the Standby Shares and the
Additional Shares.

          (vii) The execution and delivery of this Agreement, the consummation by the Standby Purchaser
of the transactions herein contemplated and the compliance by the Standby Purchaser with the terms
hereof do not and will not conflict with, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Standby Purchaser is a party or by which
any of the Standby Purchaser’s properties or assets are bound, or any applicable law, rule,
regulation, judgment, order or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Standby Purchaser or any of the Standby
Purchaser’s properties or assets; and no consent, approval, authorization, order, registration or
qualification of or with any such government, governmental instrumentality or court, domestic or
foreign, is required for the valid authorization, execution, delivery and performance by the
Standby Purchaser of this Agreement or the consummation by the Standby Purchaser of the
transactions contemplated by this Agreement that will not have been obtained prior to the Closing.

          (viii) The Standby Purchaser has not entered into any contracts, arrangements, understandings
or relationships (legal or otherwise) with any other person or persons with
respect to the transactions contemplated by this Agreement or any securities of the Company,
including but not limited to transfer or voting of any of the securities, finder’s fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies; and the Standby Purchaser does not own any

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securities of the Company which are pledged or otherwise subject to a contingency, the occurrence
of which would give another person voting power or investment power of such securities.

6. Conditions.

     The respective obligations of the Company and the Standby Purchaser to purchase Common Shares
as set forth in this Agreement are subject to the following conditions:

     (a) No order suspending the effectiveness of the Registration Statement or any amendment or
supplement thereto shall have been issued and no proceedings for such purpose shall be pending
before or, to the knowledge of the Company or the Standby Purchaser, threatened by the SEC and any
requests for additional information by the SEC (to be included in the Registration Statement, in
the Prospectus or otherwise) shall have been complied with in all material respects.

     (b) The representations and warranties of the Company and the Standby Purchaser contained
herein shall be true and correct in all material respects as of the Closing Date, and the Company
and the Standby Purchaser shall have performed all covenants and agreements herein required to be
performed on its part at or prior to the Closing Date.

     (c) The Company shall have conducted the Rights Offering substantially in the manner described
in the Prospectus.

7. Termination.

     (a) The Standby Purchaser may terminate this Agreement (i) upon the occurrence of a suspension
of trading in the Common Shares, the establishment of limited or minimum prices for the Common
Shares or a general suspension of trading in or the establishment of limited or minimum prices on
the New York Stock Exchange or the Nasdaq National Market, any banking moratorium, any suspension
of payments with respect to banks in the United States or a declaration of war or national
emergency in the United States, (ii) under any circumstances which would result in the Standby
Purchaser, individually or together with any other person or entity, being required to register as
a depository institution holding company under federal or state laws or regulations, or to submit
an application, or notice, to acquire or retain control of a depository institution or depository
institution holding company, to a federal bank regulatory authority, or (iii) prior to the
expiration of the Offering, if the Company experiences a material adverse change in its financial
condition from its financial condition at [_______].

     (b) In the event (x) the Company, in its reasonable judgment, determines that it is not in the
best interests of the Company and its shareholders to go forward with the Rights Offering or (y)
consummation of the Rights Offering is prohibited by law, rule or regulation and the Company
terminates the Rights Offering, in each case, the Company may terminate this Agreement without
liability.

     (c) Either of the parties hereto may terminate this Agreement (i) if the transactions
contemplated hereby are not consummated by [_______], through no fault of the Standby Purchaser or
(ii) in the event that the Company is unable to obtain any required federal or state

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approvals for
the transactions contemplated hereby on conditions reasonably satisfactory to it despite its
reasonable efforts to obtain such approvals. In addition, this Agreement shall terminate upon
mutual consent of the parties hereto.

     (d) The Company and the Standby Purchaser hereby agree that any termination of this Agreement
pursuant to Section 7(a), (b) or (c) (other than termination by one party in the event of a breach
of this Agreement by the other party or misrepresentation of any of the statements made hereby by
the other party), shall be without liability of the Company or the Standby Purchaser.

8. Continuing Provisions.

     The representations and warranties of the Company and the Standby Purchaser set forth in this
Agreement shall be true and correct in all material respects only as of the date of this Agreement
and as of the Closing Date. All of the covenants, agreements and obligations of each of the Company
and the Standby Purchaser required to be performed by the Closing Date shall have been duly
performed and complied with by the Closing Date unless such performance shall have been waived in
writing by the Company or the Standby Purchaser, as the case may be. The respective
representations, warranties, covenants, agreements and obligations of the parties to this Agreement
shall survive the Closing Date.

	9.	 	Recapitalization, etc.

     Other than as disclosed in the Prospectus, prior to Closing, the Company shall not split,
combine, reclassify or repurchase any of its capital stock or declare or pay any extraordinary
dividends on any of its capital stock.

	10.	 	Miscellaneous.

     This Agreement is made solely for the benefit of the Standby Purchaser and the Company, and
their respective personal representatives and successors, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of this Agreement.

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11. Assignment.

     Neither the Company nor the Standby Purchaser may assign any of its rights under this
Agreement without the prior written consent of the other party hereto.

12. Entire Agreement.

     This Agreement constitutes the entire agreement and understanding between the Standby
Purchaser and the Company, and supersedes all prior agreements and understandings relating to the
subject matter hereof. In case any one or more of the provisions contained in this Agreement, or
the application thereof in any circumstance, is held invalid, illegal or unenforceable in any
respect under the laws of any jurisdiction, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained herein shall not be in
any way affected or impaired thereby or under the laws of any other jurisdiction.

13. Counterparts.

     This Agreement may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original, and all such counterparts together constitute but one and the
same instrument.

14. Amendments.

     This Agreement may not be amended, modified or changed, in whole or in part, except by an
instrument in writing signed by the Company and the Standby Purchaser.

15. Notices.

     Except as otherwise provided in this Agreement, and unless otherwise notified by the
respective addressee, all notices and communications hereunder shall be in writing and mailed or
delivered or by facsimile or telephone if subsequently confirmed in writing, to:

	 	 	 

	 

	 	If to the Company:
	 
	 	 
	 

	 	Farmers National Banc Corp.
	 

	 	20 South Broad Street
	 

	 	Canfield, Ohio 44406
	 

	 	Attention: John S. Gulas
	 

	 	President and Chief Executive Officer
	 

	 	Telephone: 330-533-3341

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	 	With a copy to:
	 
	 	 
	 

	 	Vorys, Sater, Seymour and Pease LLP
	 

	 	106 South Main Street, Suite 1100
	 

	 	Akron, Ohio 44308
	 

	 	Attention: J. Bret Treier
	 

	 	Telephone: 330-208-1015
	 

	 	Facsimile: 330-208-1066
	 
	 	 
	 

	 	If to the Standby Purchaser:
	 
	 	 
	 

	 	[____________________]
	 

	 	[____________________]
	 

	 	[____________________]
	 

	 	Attention: [__]
	 

	 	Telephone: [__]
	 

	 	Facsimile: [__]

16. Applicable Law.

     This Agreement shall be governed by and construed in accordance with the laws of the State of
Ohio, without regard to the conflict of laws rules thereof.

17. Business Day.

     The term “business day” shall mean a day on which banking institutions are open generally in
New York.

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     IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the Standby Purchaser
and the Company has signed or caused to be signed its name as of the day and year first above
written.

	 	 	 	 	 	 	 

	 	 	FARMERS NATIONAL BANC CORP.
	 
	 	 	 	 	 	 
	 

	 	By:	 
	 	 
	 

	 	Name: John S. Gulas	 	 
	 

	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Agreed and Accepted as of the day of 

the
___ day of [___] 2010:
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 
	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

10exv4w2

Exhibit 4.2

 

SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT

Between

STAR SCIENTIFIC, INC.,

as Issuer,

And

The Investors Set Forth on Schedule I hereto

November 5, 2010

 

 

 

     This SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is
entered into and effective as of November 5, 2010, between Star Scientific, Inc., a Delaware
corporation (the “Company”), and the several investors set forth on Schedule I
hereto (each an “Investor” and collectively, the “Investors”).

     WHEREAS, the Company and each Investor desire that Investor will purchase from the Company and
the Company will issue and sell to each Investor (or an individual retirement account behalf of the
Investor), upon the terms and conditions set forth in this Agreement: (a) the aggregate amount of
shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), set
forth opposite to each Investor’s name under the heading “Shares” on Schedule I hereto (in
each case, the “Shares”); and (b) a warrant substantially in the form attached hereto as
Exhibit A (the “Warrant”), to purchase the amount of shares of the Company’s Common
Stock set forth opposite the Investor’s name under the heading “Warrants” on Schedule I
hereto (in each case, the “Warrant Shares”), having an exercise price of $1.80 per Warrant
Share (the “Exercise Price”) (a Share and Warrant Share purchasable under a Warrant,
collectively a “Unit”);

     WHEREAS, the purchase price paid by an Investor for each Unit shall be the price set forth
opposite such Investor’s name under the heading “Purchase Price Per Unit” on Schedule I
hereto, and

     WHEREAS, each Investor will have registration rights with respect to the Shares, Warrant
Shares and other Registrable Securities (as defined herein) pursuant to the terms of this
Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and the covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1. Agreement to Sell and Purchase the Shares and Warrant. At the Closing (as defined
in Section 2), the Company will sell to each Investor, and each Investor will purchase from the
Company, upon the terms and subject to the conditions hereinafter set forth, the Shares and the
Warrant for the aggregate purchase price set forth opposite each Investor’s name under the heading
“Aggregate Purchase Price” on Schedule I hereto.

     2. Delivery of the Shares and Warrant at Closing. The completion of the purchase,
sale and issuance of the Shares and the Warrant (the “Closing”) shall occur on the date of
this Agreement (the “Closing Date”) (or upon such other date as the Company and each
Investor shall agree), at the offices of the Company’s counsel. At the Closing, the Company shall
issue to each Investor as indicated on Schedule I hereto (i) one or more stock
certificates, registered in the Investor’s name and address as set forth on Schedule I
hereto, representing the Shares and (ii) the Warrant issued in the name of the Investor. The
Company’s obligation to issue the Shares and the Warrant to each Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company: (i) receipt by the
Company of a wire transfer of immediately available funds to an account designated in writing by
the Company, in the full amount of the total purchase price payable by the Investor for the Shares
and Warrant that the Investor is hereby agreeing to purchase set forth opposite the name of such
Investor under the

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heading “Aggregate Purchase Price” on Schedule I hereto; (ii) the accuracy, in all
material respects, of the representations and warranties made by the Investor and the fulfillment,
in all material respects, of those undertakings of the Investor to be fulfilled prior to the
Closing. Each Investor’s obligation to purchase the Shares and Warrant shall be subject to the
following conditions, any one or more of which may be waived by an Investor (provided that no such
waiver shall be deemed given unless in writing and executed by the Investor): (i) receipt by the
Investor of a counter-signed copy of this Agreement executed by the Company; (ii) receipt by the
Investor of a copy of the Warrant; and (iii) the accuracy, in all material respects, of the
representations and warranties made by the Company and the fulfillment, in all material respects,
of those undertakings of the Company to be fulfilled prior to the Closing.

     3. Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants to, and covenants with each Investor, as follows:

          3.1 Organization. Each of the Company and its Subsidiaries (as defined in Rule 405
under the Securities Act of 1933, as amended (the “Securities Act”)) is duly organized and
validly existing in good standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered or qualified to do
business and in good standing in each jurisdiction in which it owns or leases property or transacts
business and where the failure to be so qualified would have a material adverse effect upon the
financial condition or business, operations, assets or prospects of the Company and its
Subsidiaries, taken as a whole (a “Material Adverse Effect”).

          3.2 Due Authorization. The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Warrant, and has taken all
necessary corporate action to enter into and perform this Agreement, to issue the Shares in
accordance with the terms of this Agreement, to enter into and perform the Warrant, and to issue
the Warrant Shares in accordance with the terms of the Warrant. This Agreement has been, and upon
the Closing in accordance with the terms of the Agreement, the Warrant will be, duly authorized,
validly executed and delivered by the Company and constitutes, or will constitute, a legal, valid
and binding agreement of the Company enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law). Upon their
issuance in accordance with the terms of this Agreement, the Shares will be duly authorized,
validly issued, fully paid and non-assessable, the Warrant will be duly authorized and validly
issued, and the Warrant Shares, upon exercise of the Warrant in accordance with its terms, will be
duly authorized.

          3.3 Non-Contravention. Except as would not reasonably be expected to have a Material
Adverse Effect, the execution and delivery of this Agreement, the issuance and sale of the Shares
and the Warrant under this Agreement, the fulfillment of the terms of this Agreement and the
consummation of the transactions contemplated hereby will not (i) conflict with or constitute a
violation of, or default (with or without the giving of notice or the passage of time or both)
under, (A) any material bond, debenture, note or other evidence of indebtedness, or under

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any material lease, indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary is a party or by which it or any of
its Subsidiaries or their respective properties are bound, (B) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (C) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority
applicable to the Company or any Subsidiary or their respective properties, or (ii) result in the
creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever
upon any of the material properties or assets of the Company or any Subsidiary or an acceleration
of indebtedness pursuant to any obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any Subsidiary is a party or by
which any of them is bound or to which any of the property or assets of the Company or any
Subsidiary is subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, self-regulatory
organization, stock exchange or market, or other governmental body in the United States is required
for the execution and delivery of this Agreement, the valid issuance and sale of the Shares and
Warrant pursuant to this Agreement, other than such as have been or will be made or obtained prior
to the Closing Date, and except for any securities filings required to be made under federal or
state securities laws.

          3.4 SEC Filings. Since January 1, 2010, the Company and its Subsidiaries have filed
all reports, schedules, forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the “Commission”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (such
reports, including exhibits thereto and documents incorporated by reference therein collectively,
the “SEC Documents”). To the best of the Company’s knowledge, as of their respective
filing dates, none of the SEC Documents contained an untrue statement of material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements
made therein, in the light and circumstances under which they were made, not misleading, except to
the extent corrected by subsequently filed SEC Documents.

          3.5 Absence of Certain Change. Except as disclosed in the SEC Documents, since June
30, 2010, there has been no adverse change or adverse development in the business, properties,
assets, operations, financial condition, prospects, liabilities or results of operations of the
Company or its Subsidiaries which to the knowledge of the Company would reasonably be expected to
have a Material Adverse Effect.

          3.6 Capitalization. As of November 1, 2010, the authorized capital stock of the
Company consists of (i) 170,000,000 shares of Common Stock, of which 119,503,888 shares are issued
and outstanding and 31,517,816 shares are issuable and reserved for issuance pursuant to the
Company’s stock option plans or securities exercisable or exchangeable for, or convertible into,
shares of Common Stock, and (ii) 100,000 shares of preferred stock, of which as of the date hereof
no shares are issued. All of such outstanding shares have been, or upon issuance will be, validly
issued, fully paid and nonassessable. Except as disclosed in the SEC Documents, as of the date
hereof, (i) no shares of the Company’s capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of

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any character whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iii) there are no outstanding securities of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, and (iv) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement. The Company disclosed in its SEC Documents or has furnished to Investor true and
correct copies of the Company’s Certificate of Incorporation, as amended and as in effect on the
date hereof (the “Certificate of Incorporation”), and the Company’s By-laws, as in effect
on the date hereof (the “By-laws”).

     4. Representations, Warranties and Covenants of Investor. Each Investor severally for
itself, and not jointly with the other Investors, represents and warrants to, and covenants with
the Company, as follows:

          4.1 Due Authorization; Organization. Investor has all requisite power, authority and
capacity to execute, deliver and perform its obligations under this Agreement, and has taken all
necessary corporate, company, partnership or individual action as the case may be to enter and
perform this Agreement. This Agreement has been duly authorized and validly executed and delivered
by Investor and constitutes a legal, valid and binding agreement of Investor enforceable against
Investor in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). Any individual retirement account (“IRA”) to which the Shares, the
Warrant or Warrant Shares may be issued and delivered on behalf of the Investor, if applicable, is
duly organized and validly existing in good standing under the laws of the jurisdiction of its
organization. Such IRA has full power and authority to own, operate and occupy its properties and
to conduct its business as presently conducted and is registered or qualified to do business and in
good standing in each jurisdiction in which it owns or leases property or transacts business and
where the failure to be so qualified would have a material adverse effect on the financial
condition of Investor or such IRA.

          4.2 Non-Contravention. The execution and delivery of this Agreement, the purchase of
the Shares and the Warrant under this Agreement, the fulfillment of the terms of this Agreement and
the consummation of the transactions contemplated hereby will not (i) conflict with or constitute a
violation of, or default (with or without the giving of notice or the passage of time or both)
under, (A) any material bond, debenture, note or other evidence of indebtedness, or under any
material lease, indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which Investor is a party, (B) the charter, by-laws or other
organizational documents of Investor, as applicable, or (C) any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or authority applicable

4

 

to Investor or its property, or (ii) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the material properties
or assets of Investor or an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in any material bond, debenture, note or any other evidence of indebtedness or
any material indenture, mortgage, deed of trust or any other agreement or instrument to which
Investor is a party or by which any of them is bound or to which any of the property or assets of
Investor is subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, self-regulatory
organization, stock exchange or market, or other governmental body in the United States is required
for the execution and delivery of this Agreement and the purchase of the Shares and the Warrant by
Investor, other than such as have been made or obtained.

          4.3 Private Placement. Investor represents and warrants to, and covenants with, the
Company that Investor is acquiring the Shares and the Warrant for its own account for investment
only and with no present intention of distributing any of the Shares, the Warrant or the Warrant
Shares in violation of the applicable securities laws, or any arrangement or understanding with any
other persons regarding the distribution of the Shares, Warrant or Warrant Shares. Investor has
been advised and understands that neither the Shares, the Warrant nor the Warrant Shares have been
registered under the Securities Act or under the “blue sky” or similar laws of any jurisdiction and
may be resold only if registered pursuant to the provisions of the Securities Act and such other
laws, if applicable, or, subject to the terms and conditions of this Agreement, if an exemption
from registration is available. Investor has been advised and understands that the Company, in
issuing the Shares and the Warrant, is relying upon, among other things, the representations and
warranties of Investor herein in concluding that such issuance is a “private offering” and is
exempt from the registration provisions of the Securities Act.

          4.4 Certain Trading Activities. Neither Investor nor any of its affiliates has
directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding
with such Investor, engaged in any purchase or sale of Common Stock (including, without limitation,
any Short Sales (as defined below) involving the Company’s securities) since the date that such
Investor was presented with draft documentation relating to the transactions proposed hereby. For
the purposes of this Section 4.4, “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 of Regulation SHO adopted under the Exchange Act and all types of
direct and indirect stock pledges, forward sales contracts, options, puts, calls, short sales and
other transaction through non-US broker-dealers or foreign regulated brokers having the effect of
hedging the securities of the Company or the investment contemplated under this Agreement. Such
Investor covenants that neither it, nor any person acting on its behalf or pursuant to any
understanding with it, will engage in any transaction in the securities of the Company (including
short sales) prior to the filing of a Current Report on Form 8-K, Annual Report on Form 10-K,
press release, or other applicable Exchange Act report reporting this transaction.

          4.5 No Advice. Investor understands that nothing in this Agreement or any other
materials presented to Investor in connection with the purchase and sale of the Shares and the
Warrant constitutes legal, tax or investment advice. Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares and the Warrant.

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          4.6 Accredited Investor. Investor is an “accredited investor” as that term is defined
in Rule 501(a) of Regulation D under the Securities Act and is able to bear the risk of its
investment in the Shares, Warrant and Warrant Shares. Investor has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits and risks of the
purchase of the Shares, Warrant and Warrant Shares.

          4.7 Limited Representations. Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the Company and its
Subsidiaries which have been requested and materials relating to the offer and sale of the Shares,
Warrant and Warrant Shares, which have been requested by Investor. Investor and its advisors, if
any, have been afforded the opportunity to ask such questions of the Company as they deem
appropriate for purposes of the investment contemplated hereby. Investor acknowledges and agrees
that the most recent disclosure of the Company’s results is for the three and six month periods
ended on, and the most recent disclosure of the Company’s financial condition is at, June 30, 2010,
as reported on the Company’s quarterly report on Form 10-Q, filed with the Commission on August 9,
2010, and that, except as disclosed in the SEC documents, no information more recent than such date
has been provided to Investor as to the Company’s results, operations, financial condition,
business or prospects. Investor understands that its purchase of the Shares, Warrant and, if
applicable, Warrant Shares involves a high degree of risk and that Investor may lose its entire
investment in the Shares, Warrant and, if applicable, Warrant Shares, and that Investor can afford
to do so without material adverse consequences to its financial condition. Investor is not relying
on any information provided by the Company and its Subsidiaries, except to the extent provided in
Section 3 herein.

          4.8 No Recommendation. Investor understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any recommendation or
endorsement of the Shares, Warrant or Warrant Shares or the fairness or suitability of an
investment in the Shares, Warrant or Warrant Shares nor have such authorities passed upon or
endorsed the merits thereof.

          4.9 Restrictive Legend. The Company shall issue the Warrant and certificates for the
Shares and, if applicable, Warrant Shares to Investor with a legend as described in Section 6
below. Investor covenants that, in connection with any transfer of any Shares or Warrant Shares
pursuant to the registration statement contemplated by Section 5 hereof, as applicable, including
the prospectuses contained therein, Investor will comply with the applicable prospectus delivery
requirements of the Securities Act, provided that copies of a current prospectus relating to such
effective registration statement are available to Investor.

          4.10 Residence. Investor is a resident or organized under the laws of the
jurisdiction set forth under Investor’s name on Schedule I hereto.

          4.11 No Market. Investor understands that the Shares are and, upon exercise of the
Warrant, the Warrant Shares will be restricted securities and that there is no public trading
market for the Warrant, that none is expected to develop, and that the Shares, Warrant and Warrant
Shares must be held indefinitely unless and until the resale of such Shares, Warrant or Warrant
Shares is registered under the Securities Act or subject to the terms and conditions of this
Agreement and the applicable securities laws, an exemption from registration is available.

6

 

Investor has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act.

          4.12 No Commissions. Investor has taken no action which would give rise to any claim
by any person for brokerage commissions, finder’s fees or similar payments by the Company or
Investor relating to this Agreement or the transactions contemplated hereby.

          4.13 Transactional Exemption. Investor understands that the Shares, Warrant and
Warrant Shares are being offered and sold in reliance on a transactional exemption from the
registration requirements of federal and state securities laws and that the Company is relying upon
the truth and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of Investor set forth herein in order to determine the applicability of such
exemptions and the suitability of Investor to acquire the Shares, Warrant and Warrant Shares.

          4.14 Investor Undertaking. Investor covenants that it will not sell, transfer,
assign, hypothecate or pledge in any way any of the Shares or the Warrant Shares unless the resale
of the Shares or Warrant Shares, as applicable, have been registered for resale under the
Securities Act and in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements of an available exemption from registration under the
Securities Act and the rules and regulations promulgated thereunder. Investor further agrees to
indemnify the Company against any loss, cost or expenses, including reasonable expenses, incurred
as a result of such legend removal on Investor’s behalf.

     5. Registration Rights.

          5.1 Certain Definitions

          “Holder” and “Holders” shall include Investor and any transferee or transferees of Registrable
Securities to whom the registration rights conferred by this Agreement have been transferred in
compliance with this Agreement.

          The terms “register,” “registered” and “registration” shall refer to a registration effected
by preparing and filing a registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness
of such registration statement.

          “Registrable Securities” shall mean: (i) the Shares and Warrant Shares issued or issuable to
each Holder (A) with respect to the Warrant Shares, upon exercise of the Warrant, (B) upon any
distribution with respect to, any exchange for or any replacement of such Shares or Warrant, or (C)
upon any conversion, exercise or exchange of any securities issued in connection with any such
distribution, exchange or replacement; (ii) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing; and (iii) any
other security issued as a dividend or other distribution with respect to, in exchange for or in
replacement of the securities referred to in the preceding clauses, except that any such Shares,
Warrant Shares or other securities shall cease to be Registrable Securities when (D) they have been
sold to the public or (E) they may be sold by the Holder thereof without restriction pursuant to
Rule 144.

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          “Registration Expenses” shall mean all expenses to be incurred by the Company in connection
with each Holder’s registration rights under this Agreement (such amount not to exceed $5,000 in
the aggregate), including, without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, and blue sky fees and expenses, reasonable fees
and disbursements of counsel to Holders (using a single counsel selected by a majority in interest
of the Holders) for a review of the Registration Statement (as defined herein) and related
documents, and the expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall be paid in any
event by the Company).

          “Selling Expenses” shall mean all underwriting discounts, selling commissions and transfer
taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel
for Holders not included within “Registration Expenses.”

          5.2 Registration Requirements. The Company shall use its reasonable best efforts to
effect the registration of the resale of the Registrable Securities (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or facilitate the resale of all the
Registrable Securities in the manner (including manner of sale) and in all states reasonably
requested by the Holder. Such reasonable best efforts by the Company shall include, without
limitation, the following:

          (a) The Company shall, as expeditiously as possible:

     (i) But in any event within 60 days of the Closing, prepare and file a
registration statement with the Commission pursuant to Rule 415 under the Securities
Act on Form S-3 under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is eligible to use under
the Securities Act provided that such other form shall be converted into a Form S-3
promptly after Form S-3 becomes available to the Company) covering resales by the
Holders as selling stockholders (not underwriters) of the sum of (A) the Shares and
(B) Warrant Shares issuable upon full exercise of the Warrants (the
“Registration Statement”). The Company shall use its reasonable best
efforts to cause such Registration Statement and other filings to be declared
effective as soon as possible, and in any event prior to 120 days (or, if the
Commission elects to review the Registration Statement, 180 days) following the
Closing.

     (ii) Without limiting the foregoing, the Company will promptly respond to all
Commission comments, inquiries and requests, and shall request acceleration of
effectiveness of the Registration Statement at the earliest possible date. The
Company shall provide the Holders reasonable opportunity to review the portions of
any such Registration Statement or amendment or supplement thereto containing
disclosure regarding the Holders prior to filing.

8

 

     (iv) Prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement and notify the Holders of the filing and effectiveness of
such Registration Statement and any amendments or supplements.

     (v) Furnish or otherwise make available to each Holder copies of a current
prospectus included in the Registration Statement conforming with the requirements
of the Securities Act, copies of the Registration Statement, any amendment or
supplement thereto and any documents incorporated by reference therein and such
other documents as such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.

     (vi) Register and qualify the securities covered by the Registration Statement
under the securities or “blue sky” laws of all domestic jurisdictions, to the extent
required; provided that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

     (vii) Notify each Holder immediately of the happening of any event (but not the
substance or details of any such events unless specifically requested by a Holder)
as a result of which the prospectus (including any supplements thereto or thereof)
included in such Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its reasonable best efforts to promptly update
and/or correct such prospectus.

     (viii) Notify each Holder immediately of the issuance by the Commission or any
state securities commission or agency of any stop order suspending the effectiveness
of the Registration Statement or the threat or initiation of any proceedings for
that purpose. The Company shall use its reasonable best efforts to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.

     (ix) Upon request, permit counsel to the Holders to review the Registration
Statement and all amendments and supplements thereto within a reasonable period of
time (but not less than two (2) full days on which there is trading on the Nasdaq
Global Market (the “Principal Market”) or such other market or exchange on
which the Common Stock is then principally traded) prior to each filing and will not
request acceleration of the Registration Statement without prior notice to such
counsel, provided, however, that the Company shall not be obligated to comply with
this Section 5.2(a)(ix) if compliance would cause the Company to fail to
comply with any other provisions hereunder.

9

 

     (x) Qualify the Registrable Securities covered by such Registration Statement
for listing on the Principal Market or the principal securities exchange and/or
market on which the Common Stock is then listed, including the preparation and
filing of any required filings with such principal market or exchange.

          (b) In the event that the Registration Statement has been declared effective by the Commission
and, afterwards, any Holder’s ability to sell Registrable Securities registered for resale under
the Registration Statement is suspended for more than (i) 45 days in any 90-day period or (ii) 90
days in any calendar year, including without limitation by reason of any suspension or stop order
with respect to the Registration Statement or the fact that an event has occurred as a result of
which the prospectus (including any supplements thereto) included in the Registration Statement
then in effect includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, then the Company shall take such action as may be necessary to
amend or supplement the Registration Statement or the prospectus (including any supplements
thereto) included in the Registration Statement, such that the Registration Statement or the
prospectus, as so amended, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements not
misleading.

          (c) If the Holder(s) intend to distribute the Registrable Securities by means of an
underwriting, the Holder(s) shall so advise the Company. Any such underwriting may only be
administered by nationally or regionally recognized investment bankers reasonably satisfactory to
the Company.

          (d) Subject to Section 5.2(c) above, the Company shall enter into such customary
agreements (including an underwriting agreement containing such representations and warranties by
the Company and such other terms and provisions, as are customarily contained in underwriting
agreements for comparable offerings and are reasonably satisfactory to the Company) and take all
such other actions as the Holder or the underwriters participating in such offering and sale may
reasonably request in order to expedite or facilitate such offering and sale other than such
actions which are disruptive to the Company or require significant management availability.

          (e) The Company shall make available for inspection by the Holders, representative(s) of all
the Holders together, any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders’ due diligence examination of the Company and
review of the Registration Statement, all documents filed with the Commission subsequent to the
Closing, pertinent corporate documents and properties of the Company, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the Registration Statement,
provided that such parties agree to keep such information confidential. Notwithstanding the
foregoing, the foregoing right shall not extend to any Holder (i) who is not a financial investor
or entity or (ii) who, itself or through any affiliate,

10

 

has any strategic business interest that would reasonably be expected to be in conflict with
any business of the Company or its Subsidiaries.

          (f) The Company may suspend the use of any prospectus used in connection with the Registration
Statement only in the event, and for such period of time as, (i) such a suspension is required by
the rules and regulations of the Commission or (ii) it is determined in good faith by the Board of
Directors of the Company that because of valid business reasons (not including the avoidance of the
Company’s obligations hereunder), it is in the best interests of the Company to suspend such use,
and prior to suspending such use in accordance with this clause (f)(ii) the Company provides the
Holders with written notice of such suspension, which notice need not specify the nature of the
event giving rise to such suspension. The Company will use reasonable best efforts to cause such
suspension to terminate at the earliest possible date.

          (g) The Company shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement
effective at all times during the Registration Period (as defined below), and, during such period,
comply with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement. In the case of amendments and
supplements to the Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 5.2(g)) by reason of the Company filing a report on Form 10-K,
Form 10-Q or Form 8-K or any analogous report under the Exchange Act, the Company shall have
incorporated such report by reference into the Registration Statement, if applicable, or shall file
such amendments or supplements with the Commission on the same day on which the Exchange Act report
is filed which created the requirement for the Company to amend or supplement the Registration
Statement.

          (h) Each Holder agrees by its acquisition of the Registrable Securities that, upon receipt of
a notice from the Company of the occurrence of any event of the kind described in Sections
5.2(a)(vii) or 5.2(a)(viii), and upon notice of any suspension under Section 5.2(f),
such Holder will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the supplemented prospectus
and/or amendment to the Registration Statement contemplated by this Section 5.2, or until
it is advised in writing by the Company that the use of the applicable prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such prospectus or the Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

          (i) If requested by a Holder, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as a Holder reasonably requests
to be included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering, (ii) as soon as

11

 

practicable make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment, and (iii) as soon as practicable, supplement or make amendments to the
Registration Statement if reasonably requested by a Holder holding any Registrable Securities.

          5.3 Expenses of Registration. All Registration Expenses in connection with any
registration, qualification or compliance with registration pursuant to this Agreement shall be
borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder.

          5.4 Registration on Form S-3. The Company shall use its reasonable best efforts to
remain qualified for registration on Form S-3 or any comparable or successor form or forms, or in
the event that the Company is ineligible to use such form, such form as the Company is eligible to
use under the Securities Act, provided that if such other form is used, the Company shall convert
such other form to a Form S-3 promptly after the Company becomes so eligible, provided that the
Company shall maintain the effectiveness of the Registration Statement then in effect until such
time as the Registration Statement covering the Registrable Securities has been declared effective
by the Commission.

          5.5 Registration Period. In the case of the registration effected by the Company
pursuant to this Agreement, the Company shall keep such registration effective from the date on
which the Registration Statement initially became effective until the earlier of (i) the date on
which all the Holders have completed the sales or distribution described in the Registration
Statement relating to the Registrable Securities registered for resale thereunder or, (ii) until
such Registrable Securities may be sold by the Holders without restriction pursuant to Rule 144 (or
any successor thereto) (provided that the Company’s transfer agent has accepted an instruction from
the Company to such effect) (the “Registration Period”). Thereafter, the Company shall be
entitled to withdraw such Registration Statement and the Holders shall have no further right to
offer or sell any of the Registrable Securities registered for resale thereon pursuant to the
Registration Statement (or any prospectus relating thereto).

          5.6 Indemnification.

          (a) Company Indemnity. The Company will indemnify and hold harmless each Holder, each
of its officers, directors, agents and partners, and each person controlling each of the foregoing,
within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder
with respect to which registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any underwriter, against
all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the circumstances
under which they were made, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in

12

 

connection with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors, agents and partners, and each person controlling each of
the foregoing, each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability or expense arises
out of or is based (i) on any untrue statement or omission based upon written information furnished
to the Company by a Holder or the underwriter (if any) therefore, (ii) the failure of a Holder to
deliver at or prior to the written confirmation of sale, the most recent prospectus, as amended or
supplemented, or (iii) the failure of a Holder otherwise to comply with this Agreement. The
indemnity agreement contained in this Section 5.6(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably withheld).

          (b) Holder Indemnity. Each Holder will, severally and not jointly, if Registrable
Securities held by it are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify and hold harmless the Company, each of its directors,
officers, agents and partners, and each underwriter, if any, of the Company’s securities covered by
such a registration statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each other
Holder (if any), and each of their officers, directors and partners, and each person controlling
such other Holder(s) against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make a statement therein not misleading in light of the
circumstances under which they were made, and will reimburse the Company and such other Holder(s)
and their directors, officers and partners, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating and defending any such claim,
loss, damage, liability or action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and stated to be
specifically for use therein, and provided that the maximum amount for which such Holder shall be
liable under this indemnity shall not exceed the net proceeds received by such Holder from the sale
of the Registrable Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 5.6(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected without the consent
of such Holder (which consent shall not be unreasonably withheld).

          (c) Procedure. Each party entitled to indemnification under this Section 5.6
(the “Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim in any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation
resulting

13

 

therefrom, shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this Section 5.6
except to the extent that the Indemnifying Party is materially and adversely affected by such
failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such non-privileged information
regarding itself or the claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.

          5.7 Contribution. If the indemnification provided for in Section 5.6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities
referred to herein (other than by reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company and of such Holder in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the Company or by such Holder.

     In no event shall the obligation of any Indemnifying Party to contribute under this
Section 5.7 exceed the amount that such Indemnifying Party would have been obligated to pay
by way of indemnification if the indemnification provided for under Sections 5.6(a) or
5.6(b) hereof had been available under the circumstances.

     The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5.7 were determined by pro rata allocation (even if the Holders or
the underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding paragraphs shall
be deemed to include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this section, no Holder or underwriter
shall be required to contribute any amount in excess of the amount by which (i) in the case of any
Holder, the net proceeds received by such Holder from the sale of Registrable Securities pursuant
to the registration statement in question or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such

14

 

Holder or underwriter has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

          5.8 Survival. The indemnity and contribution agreements contained in Sections 5.6
and 5.7 and the representations and warranties of the Company referred to in Section
5.2(d) shall remain operative and in full force and effect regardless of (i) any termination of
this Agreement or any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation of the sale or
successive resales of the Registrable Securities.

          5.9 Information by Holders. Each Holder shall promptly furnish to the Company such
information regarding such Holder and the distribution and/or sale proposed by such Holder as the
Company may from time to time reasonably request in writing in connection with any registration,
qualification or compliance referred to in this Agreement, and the Company may exclude from such
registration the Registrable Securities of any Holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request. The intended method or methods
of disposition and/or sale of such securities as so provided by such purchaser shall be included
without alteration in the Registration Statement covering the Registrable Securities and shall not
be changed without written consent of such Holder. Each Holder agrees that, other than ordinary
course brokerage arrangements, in the event it enters into any arrangement with a broker dealer for
the sale of any Registrable Securities through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, such Holder shall
promptly deliver to the Company in writing all applicable information required in order for the
Company to be able to timely file a supplement to the Prospectus pursuant to Rule 424(b), or take
any other action, under the Securities Act, to the extent that such supplement or other action is
legally required. Such information shall include a description of (i) the name of such Holder and
of the participating broker dealer(s), (ii) the number of Registrable Securities involved, (iii)
the price at which such Registrable Securities were or are to be sold, and (iv) the commissions
paid or to be paid or discounts or concessions allowed or to be allowed to such broker dealer(s),
where applicable.

     6. Stock Legend.

          6.1 Upon payment therefor as provided in this Agreement, the Company will issue the Shares and
the Warrant Shares in the name of each Investor.

     Any certificate representing Share or Warrant Shares shall be stamped or otherwise imprinted
with a legend in substantially the following form:

     THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION AND MAY
NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND AFTER

15

 

RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR THAT THE PROSPECTUS DELIVERY REQUIREMENTS
HAVE BEEN MET.

     Any certificate representing the Warrant Shares issued by the Company shall also be stamped or
otherwise imprinted with a legend in substantially the following form:

     THESE SECURITIES REPRESENTED HEREBY ARE ALSO SUBJECT TO RIGHTS AND OBLIGATIONS AS SET FORTH IN
A SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 5, 2010 BY AND AMONG
STAR SCIENTIFIC, INC. AND THE SEVERAL INVESTORS PARTY THERETO AS SUCH MAY BE AMENDED FROM TIME TO
TIME.

     The Warrant shall be imprinted with the legends set forth in the Warrant on Exhibit A hereto.

     The Company agrees to issue the Shares or Warrant Shares, issued upon exercise of the Warrant
without the legends set forth above at such time as the Holder thereof is (i) permitted to transfer
such Shares or Warrant Shares, as applicable, without restriction pursuant to an available
exemption from registration under the Securities Act, and upon such transfer after delivery to the
Company of a customary representation satisfactory to the Company that such exemption has been met,
or (ii) at such time the Shares or Warrant Shares, as applicable, have been registered for resale
under the Securities Act, and upon such resale after delivery to the Company of a customary
representation that the Holder has complied with the plan of distribution in the applicable
prospectus contained in the Registration Statement and that the prospectus delivery requirements
have been met, if any.

     7. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements, representations and
warranties made by the Company and Investor herein shall survive the execution of this Agreement,
the delivery to Investor of the Shares and the Warrant being purchased and the payment therefor.

     8. Notices. All notices, requests, consents and other communications hereunder shall
be in writing, shall be mailed (i) if within domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (ii) if delivered from outside the United States, by International Federal Express or
facsimile, and shall be deemed given (A) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (B) if delivered by nationally recognized overnight
carrier, one business day after so mailed, (C) if delivered by International Federal Express, two
business days after so mailed, and (D) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows:

16

 

          (a) if to the Company, to:

Star Scientific, Inc.

4470 Cox Road

Glen Allen, Virginia 23060

Telephone: (804) 527-1970

Facsimile: (804) 527-1976

Attention: Chief Financial Officer

with copies to:

Star Scientific, Inc.

7475 Wisconsin Ave.

Bethesda, MD 20814

Attn: Robert E. Pokusa

General Counsel

Phone: (301) 654-8300

Telecopy: (301) 654-9308; and

Latham & Watkins LLP

555 Eleventh Street, N.W.

Suite 1000

Washington, DC 20004

Attn: William P. O’Neill

Phone: (202) 637-2200

Telecopy: (202) 637-2201.

          (b) if to Investor, at its address set forth under its name on Schedule I hereto, or
at such other address or addresses as may have been furnished to the Company in writing.

     9. Changes. This Agreement may not be modified or amended by the Company or any
Investor except pursuant to an instrument in writing signed by the Company and such Investor.

     10. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

     11. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby.

     12. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without giving effect to the principles of
conflicts of law.

     13. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to such subject matter are expressly cancelled.

17

 

     14. Finders Fees. Neither the Company nor Investor nor any affiliate thereof has
incurred any obligation which will result in the obligation of the other party to pay any finder’s
fee or commission in connection with this transaction.

     15. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

     16. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company and Investor. Investor shall not
assign any rights or obligations under this Agreement other than, solely with respect to any Shares
or Warrant Shares transferred in accordance with this Agreement, including the legends described
herein, to any permitted transferee of such Shares or Warrant Shares, provided,
however, that no such assignment shall relieve Investor of its obligations under this
Agreement.

     17. Expenses. Each of the Company and Investor shall bear its own expenses in
connection with the preparation and negotiation of the Agreement.

     18. Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under this Agreement are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the obligations of any other
Investor under this Agreement. Nothing contained herein, and no action taken by any Investor
pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement and the Company acknowledges that the Investors are not acting in
concert or as a group with respect to such obligations or the transactions contemplated by this
Agreement. Each Investor confirms that it has independently participated in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors. Each Investor
shall be entitled to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose.

     19. Pronouns. All pronouns or any variation thereof shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity
or entities may require.

[Signature pages follow.]

18

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	STAR SCIENTIFIC, INC.

 	 
	 	By:  	/s/ Jonnie R. Williams
 	 
	 	 	Name:  	Jonnie R. Williams 	 
	 	 	Title:  	CEO 	 

 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 	 	 

	 	 	STAR SCIENTIFIC, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul L. Perito	 	 
	 

	 	Name:
	 	 

Paul L. Perito
	 	 
	 

	 	Title:
	 	Chairman, President and

Chief Operating Officer	 	 

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first above written.

	 	 	 	 	 
	 	Starwood Trust

 	 
	 	By:  	/s/ Donnie O. Williams
 	 
	 	Name:  	Donnie O. Williams 	 
	 	Title:  	Trustee 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Jonnie R. Williams

 	 
	 	By:  	/s/ Jonnie R. Williams
 	 
	 	 	 	 
	 	 	 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Paul L. Perito

 	 
	 	By:  	/s/ Paul L. Perito
 	 
	 	 	 	 
	 	 	 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	

Burton J. Haynes

 	 
	 	By:  	/s/ Burton J. Haynes
 	 
	 	 	 	 
	 	 	 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Neil L. Chayet

 	 
	 	By:  	/s/ Neil L. Chayet
 	 
	 	 	 	 
	 	 	 	 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	AMERICAN CAPITAL MANAGEMENT, LLC

 	 
	 	By:  	/s/ Philip W. Mirabelli
 	 
	 	Name:  	Philip W. Mirabelli 	 
	 	Title:  	Managing Member 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	IROQUOIS MASTER FUND LTD

 	 
	 	By:  	/s/ Joshua Silverman
 	 
	 	Name:  	Joshua Silverman 	 
	 	Title:  	Authorized Signatory 	 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Scot Cohen

 	 
	 	By:  	/s/ Scot Cohen
 	 
	 	Name:  	Scot Cohen 	 
	 	Title:  	 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Joshua Silverman

 	 
	 	By:  	/s/ Joshua Silverman
 	 
	 	Name:  	Joshua Silverman 	 
	 	Title:  	 	 
	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Merav Abbe Irrevocable Trust

 	 
	 	By:  	/s/ Abbe Trustee
 	 
	 	Name:  	Merav Abbe Irrevocable Trust 	 
	 	Title:  	Trustee 	 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	John Orlando

 	 
	 	By:  	/s/ John Orlando
 	 
	 	Name:  	John Orlando 	 
	 	Title:  	 	 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Philip Mirabelli

 	 
	 	By:  	/s/ Philip W. Mirabelli
 	 
	 	Name:  	Philip W. Mirabelli 	 
	 	Title:  	 	 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	Feehan Partners, LP

 	 
	 	By:  	/s/
 Scott P. Peters	 
	 	 	 	 
	 	PV Partners, LP

 	 
	 	By:  	/s/ Scott P. Peters
 	 
	 	 	 	 
	 	 	 	 
	 

 

SCHEDULE I

SCHEDULE OF INVESTORS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Purchase Price	 	 
	Name and Address:	 	Shares	 	Warrants	 	Per Unit	 	Aggregate Purchase Price
	Jonnie R. Williams

	 	 	717,220	 	 	 	717,220	 	 	$	1.925	 	 	$	1,380,650	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Starwood Trust

	 	 	1,558,441	 	 	 	1,558,441	 	 	$	1.925	 	 	$	3,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Paul L. Perito

	 	 	50,000	 	 	 	50,000	 	 	$	1.925	 	 	$	96,250	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Burton J. Haynes

	 	 	10,000	 	 	 	10,000	 	 	$	1.925	 	 	$	19,250	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Neil L. Chayet

	 	 	2,000	 	 	 	2,000	 	 	$	1.925	 	 	$	3,850	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	American Capital Management, LLC

	 	 	2,388,888	 	 	 	2,388,888	 	 	$	1.80	 	 	$	4,300,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Iroquois Master Fund Ltd

	 	 	888,888	 	 	 	888,888	 	 	$	1.80	 	 	$	1,600,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Scot Cohen

	 	 	111,111	 	 	 	111,111	 	 	$	1.80	 	 	$	200,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Joshua Silverman

	 	 	100,000	 	 	 	100,000	 	 	$	1.80	 	 	$	180,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Merav Abbe Irrevocable Trust

	 	 	100,000	 	 	 	100,000	 	 	$	1.80	 	 	$	180,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	John Orlando

	 	 	16,666	 	 	 	16,666	 	 	$	1.80	 	 	$	30,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Philip Mirabelli

	 	 	5,555	 	 	 	5,555	 	 	$	1.80	 	 	$	10,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Feehan Partners, LP

	 	 	833,333	 	 	 	833,333	 	 	$	1.80	 	 	$	1,500,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PV Partners, LP

	 	 	833,333	 	 	 	833,333	 	 	$	1.80	 	 	$	1,500,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	Total:
	 	 	7,615,435	 	 	 	7,615,435	 	 	 	 	 	 	$	14,000,000	 
	 	 	 

 

Exhibit A

THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, AND UPON DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE
PROPOSED TRANSFER IS EXEMPT FROM THE SECURITIES ACT OR THAT THE PROSPECTUS DELIVERY REQUIREMENTS
HAVE BEEN MET.

COMMON STOCK PURCHASE WARRANT

     To purchase common stock shares of common stock, $0.0001 par value, of

Star Scientific, Inc.

     THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
[INVESTOR] (the “Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after May 5, 2011 (the
“Initial Exercise Date”) and on or prior to the close of business on May 5, 2016 (the
“Termination Date”) but not thereafter (the “Exercise Period”), to subscribe for
and purchase from Star Scientific, Inc., a Delaware corporation (the “Company”), up to [•] shares
(the “Warrant Shares”) of common stock, par value $0.0001 per share, of the Company (the
“Common Stock”). The purchase price of one share of Common Stock (the “Exercise
Price”) under this Warrant shall be $1.80, subject to adjustment hereunder. The Exercise Price
and the number of Warrant Shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. The term “Holder” shall refer to the Holder identified above or any
subsequent transferee of this Warrant. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Securities Purchase and Registration Rights Agreement,
dated November 5, 2010, between the Company and Holder (the “Purchase Agreement”).

     1. Authorization of Warrant Shares. The Company represents and warrants that all
Warrant Shares which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized,
validly issued, fully paid and nonassessable.

     2. Exercise of Warrant.

          (a) Except as provided in Section 3 herein, exercise of the purchase rights represented by
this Warrant may be made at any time or times on or after the Initial Exercise Date and before or
on the Termination Date by (i) surrendering this Warrant, with the Notice of Exercise Form annexed
hereto completed and duly executed, to the offices of the Company (or such other office or agency
(including the transfer agent, if applicable) of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the books of the
Company) and (ii) delivering payment of the Exercise Price of the shares thereby purchased by wire
transfer of immediately available funds or cashier’s check drawn on a

1

 

United States bank. The Holder exercising his purchase rights in accordance with the
preceding sentence shall be entitled to receive a certificate for the number of Warrant Shares so
purchased, which certificate will bear a legend substantially similar to the legend set forth on
this Warrant. Certificates for shares purchased hereunder shall be issued and delivered to the
Holder within five (5) Trading Days (as defined below) after the date on which this Warrant shall
have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder shall be deemed to
no longer hold this Warrant with respect to such shares and to have become a holder of record of
such shares for all purposes, in each case as of the date the Warrant has been exercised by payment
to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any,
pursuant to Section 4 prior to the issuance of such shares, have been paid.

          (b) In the event that the Warrant is not exercised in full, the number of Warrant Shares shall
be reduced by the number of such Warrant Shares for which this Warrant is exercised and/or
surrendered, and the Company, if requested by Holder and at his expense, shall within ten (10)
Trading Days issue and deliver to the Holder a new Warrant of like tenor in the name of the Holder
or as the Holder (upon payment by Holder of any applicable transfer taxes) may request, reflecting
such adjusted Warrant Shares.

          [(c) Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall
not be exercisable by the Holder hereof to the extent (but only to the extent) that the Holder or
any of its affiliates would beneficially own in excess of [4.99%][9.99%][19.99%] (the “Maximum
Percentage”) of the Common Stock. To the extent the above limitation applies, the
determination of whether this Warrant shall be exercisable (vis-à-vis other convertible,
exercisable or exchangeable securities owned by the Holder) and of which such securities shall be
exercisable (as among all such securities owned by the Holder) shall, subject to such Maximum
Percentage limitation, be determined on the basis of the first submission to the Company for
conversion, exercise or exchange (as the case may be). No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of exercisability. For the purposes of this
paragraph, beneficial ownership and all determinations and calculations (including, without
limitation, with respect to calculations of percentage ownership) shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a
manner otherwise than in strict conformity with the terms of this paragraph to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Maximum Percentage limitation. The
limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The
holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may
not waive this paragraph without the consent of holders of a majority of its Common Stock. Upon
the written or oral request of the Holder, the Company shall as soon as practicable confirm orally
and in writing to the Holder the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable securities into Common
Stock. [In the event the Company exercises its rights under Section 15 hereof, “4.99%” in the
first sentence of this Section shall be replaced with “9.99%”.]]

2

 

     “Trading Day” shall mean a day on which there is trading on the Principal Market or such other
market or exchange on which the Common Stock is then principally traded.

     3. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

     4. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder; provided, however, that the Holder
shall pay any applicable transfer taxes.

     5. Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

     6. Division and Combination.

          (a) This Warrant may be divided or combined with other Warrants upon presentation hereof at
the aforesaid office of the Company, together with a written notice specifying the denominations in
which new Warrants are to be issued, signed by the Holder or his agent or attorney. The Company
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice

          (b) The Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 6.

     7. No Rights as Stockholder until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant
Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or payment and this
Warrant shall no longer be issuable with respect to such Warrant Shares.

     8. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will
make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.

3

 

     10. Adjustments of Exercise Price and Number of Warrant Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject
to adjustment from time to time upon the happening of any of the following. In case the Company
shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock
to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company which he would
have owned or have been entitled to receive had such Warrant been exercised in advance thereof.
Upon each such adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the
number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price
per Warrant Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company purchasable pursuant hereto as a result of such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event.

     11. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.
If, at any time while this Warrant is outstanding (i) the Company effects any merger or
consolidation of the Company with or into another individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability company, joint stock
company or other entity of any kind (each a “Person”), in which the Company is not the
survivor and the stockholders of the Company immediately prior to such merger or consolidation do
not own, directly or indirectly, at least fifty percent (50%) of the voting securities of the
surviving entity, (ii) the Company effects any sale of all or substantially all of its assets or a
majority of its Common Stock is acquired by a third party, in each case, in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which all or substantially all of the holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or property, or (iv) the
Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other securities, cash or
property (other than as a result of a subdivision or combination of shares of Common Stock covered
by Section 10 above) (in any such case, a “Fundamental Transaction”), then the Holder shall
have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of
securities, cash or property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the
holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant without
regard to any limitations on exercise contained herein (the “Alternate Consideration”).
The Company shall not effect any such Fundamental Transaction unless prior to or simultaneously
with the consummation thereof, any successor to the Company, surviving entity or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall
assume the obligation to deliver to the Holder,

4

 

such Alternate Consideration as, in accordance with the foregoing provisions, the Holder may
be entitled to purchase and/or receive (as the case may be), and the other obligations under this
Warrant. The foregoing provisions of this Section 11 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations, spin-offs, or dispositions of assets.

     12. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice
shall state the number of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or
property) after such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.

     13. Notice of Corporate Action. If at any time:

          (a) the Company shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or

          (b) there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or

          (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least five
Business Days’ prior written notice of the date on which a record date shall be selected for such
dividend, distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation
or winding up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least five
Business Days’ prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, the date on which the holders of
Common Stock shall be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property deliverable upon such
disposition, dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder appearing on the books of
the Company and delivered in accordance with Section 16(d).

     14. Authorized Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number

5

 

of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation.

     Except and to the extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value and (b)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant.

     15. Call. At any time and from time to time following May 5, 2011, the Company shall
have the right, upon 20 Business Days’ prior written notice to the Holder (“Call Notice”),
to call (require Holder to exercise) all or any portion of this Warrant at the Exercise Price
provided that (i) the Warrant Shares are registered for resale pursuant to the Securities Act and
have been for at least the 20-Trading Day period preceding the Call Notice, (ii) the Prospectus has
not been suspended at any time during the 20-Trading Day period preceding the Call Notice, (iii)
the Common Stock is currently listed (and is not suspended from trading) on the Principal Market as
of the date the Call Notice is delivered to the Holder through the effective date of such call,
(iv) the Company is not in default (or taken any action or failure to act which through the passage
of time would result in a default) under the Purchase Agreement, (v) exercise of the Warrant in
whole will not cause the Holder to exceed the Section 3(c) limitations, (vi) the VWAP of the Common
Stock on the Principal Market is equal to or greater than $10.00 (subject to adjustment to reflect
forward or reverse stock splits, stock dividends, recapitalizations and the like) (the
“Threshold Price”) for at least 20 consecutive Trading Days, and (vii) the Call Notice is
delivered within 3 Business Days’ of the most recent day in the previous clause and that the Common
Stock reached the Threshold Price. At any time prior to the effective date of such call, the
Holder shall have the right to exercise this Warrant in accordance with its terms.

     “VWAP” shall mean for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on an the Principal Market or the
New York Stock Exchange, the American Stock Exchange or the Nasdaq Small Cap Market (each an
“Approved Market”), the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the primary Approved Market on which the Common Stock is
then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30
a.m. ET to 4:02 p.m. Eastern Time) using the HP function; (b) if the Common Stock is not then
listed or quoted on an Approved Market and if prices for the Common Stock are then quoted on the
OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or
quoted on the OTC Bulletin Board and if prices for

6

 

the Common Stock are then reported in the “Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as determined by the Company and Holder in
good faith.

     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in the City of New York are authorized or required by law or executive order to remain
closed.

     16. Miscellaneous.

          (a) Jurisdiction. This Warrant shall constitute a contract under the laws of the
State of New York, without regard to its conflict of law, principles or rules.

          (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant will have restrictions upon resale imposed by state and federal securities
laws and/or as set forth in the Purchase Agreement.

          (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holder’s rights, powers or remedies, provided, however, that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of his rights,
powers or remedies hereunder.

          (d) Notices. All notices, requests, consents and other communications provided for
herein shall be in writing and shall be effective upon delivery in person, when faxed and received,
or five Business Days after being mailed by certified or registered mail, return receipt requested,
postage pre-paid, addressed as follows:

               (i) If to the Holder:

[NAME]

[ADDRESS]

Phone:

Fax:

or to the address of the Holder as shown on the books of the Company; or

7

 

               (ii) If to the Company:

Star Scientific, Inc.

4470 Cox Road

Glen Allen, Virginia 23060

Telephone: (804) 527-1970

Facsimile: (804) 527-1976

Attention: Chief Financial Officer

                     
 with a copy to:

Star Scientific, Inc.

7475 Wisconsin Avenue

Bethesda, MD 20814

Telephone: (301) 654-8300

Facsimile: (301) 654-9308

Attention: General Counsel

or at such other address as the Holder or the Company, as applicable, may hereafter have advised
the other in accordance with the provisions of this paragraph.

          (e) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.

          (f) Successors and Assigns; No Assignment. This Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of
the Company, provided that neither the Company (except pursuant to a transaction subject to Section
11 herein) nor the Holder may assign this Warrant without the prior written consent of the other
party.

          (g) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

          (h) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.

          (i) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.

8

 

Exhibit A

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto
duly authorized.

Dated: November [•], 2010

	 	 	 	 	 
	 	STAR SCIENTIFIC, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Paul L. Perito 	 
	 	 	Title:  	Chairman, President and Chief

Operating Officer 	 
	 

Signature Page to Warrant

 

NOTICE OF EXERCISE

To: Star Scientific, Inc.

          (1) The undersigned hereby elects to purchase                      Warrant Shares of Star Scientific, Inc.
pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

          (2) Payment shall take the form of in lawful money of the United States.

          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned. The Warrant Shares shall be delivered to the following:

 

 

 

          (4) Accredited Investor/Qualified Institutional Buyer. The undersigned is an “accredited
investor” as defined in Regulation D under the Securities Act of 1933, as amended.

	 	 	 	 	 	 	 

	 	 	[PURCHASER]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 

	 	Dated:

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