Document:

EXHIBIT 10.3

 Exhibit 10.3 
 ATTACHMENT A 
 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AFTER RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT . 
 COMMON STOCK PURCHASE WARRANT 
 To
Purchase 750,000 Shares of $0.0001 par value Common Stock of 
 Star Scientific, Inc. 
 THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value received, Pershing LLC, FBO Joseph L. Schwarz, Roth IRA
(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 June 29, 2007 (the “Initial Exercise Date”) and on or
prior to the close of business on July 14, 2011 (the “Termination Date”) but not thereafter (the “Exercise Period”), to subscribe for and purchase from Star Scientific, Inc., a corporation incorporated in
Delaware (the “Company”), up to 750,000 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 $1.00, 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 June [29], 2007, 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 United States bank. The Holder exercising its 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, Joseph L. Schwarz, or
to an individual retirement account personal to Joseph L. Schwarz 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 its 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. 
 “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. 
  

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 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 its 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. 
 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 it 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 

  

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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. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive upon exercise of this Warrant, the number of
shares of common stock of the successor or acquiring corporation or Common Stock of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets,
the successor or acquiring corporation (if other than the Company) shall expressly assume all the obligations and liabilities of the Company hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by
resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this
Section 11. For purposes of this Section 11, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of
stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. 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 

  

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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 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. 
  

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 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 the Effective Date of the Registration Statement, 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 $5.00 (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 the Common Stock are then reported in the “Pink Sheets” published by the National 

  

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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
its 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: 
 or to the address of the Holder as shown on the books of the Company; or 
 (ii) If to the Company: 
 Star Scientific, Inc. 
 16 South Market Street 
  

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 Petersburg, Virginia 23803 
 Telephone: (804) 530-0535 
 Facsimile: (804) 530-8474 
 Attention: Chief Financial Officer 
 with a copy to: 
 Star Scientific, Inc. 
 7475 Wisconsin Avenue 
 Suite 850 
 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. 
  

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

  

							
	Dated: June 29, 2007	 		 	
		 		 	STAR SCIENTIFIC, INC.
				
		 		 	By:	 	/s/ Paul L. Perito
		 		 	Name:	 	Paul L. Perito
		 		 	Title:	 	Chairman, President & C.O.O.

 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:EXHIBIT 10.4

 Exhibit 10.4 

 SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT 
 Between 
 STAR SCIENTIFIC, INC., 
 as Issuer, 
 And 
 Joseph Rice 
 as Investor 
 June 29, 2007 
  

 This SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered
into effective as of June 29, 2007 between Star Scientific, Inc., a Delaware corporation (the “Company”), and Joseph Rice (“Investor”). 
 WHEREAS, the Company and Investor desire that Investor will purchase from the Company and the Company will issue and sell to Investor, upon the terms and
conditions set forth in this Agreement: (a) an aggregate of 200,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), for a per share purchase price of
$1.00 per share; and (b) a warrant substantially in the form attached hereto as Exhibit A (the “Warrant”), to purchase an additional 200,000 shares (the “Warrant Shares”) of Common Stock at a per share
price equal to $1.00 (the “Exercise Price”); and 
 WHEREAS, 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 Investor, and
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 on the signature page 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 Investor shall agree), at the offices of the Company’s counsel. At the Closing, the Company
shall issue to Investor (a) one or more stock certificates, registered in Investor’s name and address as set forth on the signature page hereto, representing the Shares and (b) the Warrant issued in the name of Investor. The
Company’s obligation to issue the Shares and the Warrant to Investor shall be subject to the following conditions, any one or more of which may be waived by the Company: (a) 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 purchase price for the Shares and Warrant as set forth on the signature page hereto; and (b) the accuracy, in all material respects, of the
representations and warranties made by Investor and the fulfillment, in all material respects, of those undertakings of Investor to be fulfilled prior to the Closing. 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 Investor (provided that no such waiver shall be deemed given unless in writing and executed by Investor): (a) receipt by Investor of a counter-signed copy of this Agreement
executed by the Company; (b) receipt by Investor of a copy of the Warrant and (c) 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, 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, validly issued, fully paid and non-assessable. 
 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 (A) conflict with or constitute a
violation of, or default (with or without the giving of notice or the passage of time or both) under, (i) 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 the Company or any Subsidiary is a party or by which it or any of its Subsidiaries or their respective properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) 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 (B) 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 

  

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of this Agreement, the valid issuance and sale of the Shares and Warrant pursuant to this Agreement, other than such as have been made or obtained, and
except for any securities filings required to be made under federal or state securities laws. 
 3.4 SEC Filings. Since
January 1, 2007, 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 “SEC” or
“Commission”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (collectively, the “SEC Documents”). 
 3.5 Absence of Certain Change. Except as disclosed in the SEC Documents, since March 31, 2007 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 the date hereof, the authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock, of which 79,287,715 shares are issued and outstanding and 10,325,161 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 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. 
 4.1 Due Authorization. Investor has all requisite
power, authority and capacity to execute, deliver and perform his 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 

  

 3 

 
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). 
 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 (A) conflict with or constitute a violation of, or default (with or without the giving of notice or the passage of time or both) under, (i) 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, (ii) the charter, by-laws or other organizational documents of Investor, as applicable, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to Investor or his property, or (B) 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, 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 No Short Sales. Investor represents, warrants and covenants that neither Investor nor any of his affiliates has sold at any
time, prior to the Closing, any shares of Common Stock unless Investor or such of his affiliates owned such shares of Common Stock at the time of such sale and promptly delivered such shares of Common Stock against such sale. 
  

 4 

 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. 
 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 his 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 that the Company has not disclosed its results for the quarterly period ending
on, or its financial condition at, June 30, 2007, and that the Company has no plans to do so until the completion of its audit for such period and the filing of its quarterly report on Form 10-Q with the SEC, which may be delayed or extended in
accordance with the SEC rules. Investor acknowledges that the most recent disclosure of the Company’s results is for the three month period ending on, and the most recent disclosure of the Company’s financial condition is at,
March 31, 2007, as reported on the Company’s quarterly report on Form 10-Q, and that 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 his purchase of the Shares, Warrant and, if applicable, Warrant Shares involves a high degree of risk and that Investor may lose his entire investment in the Shares, the Warrant and if applicable the 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 Shares or Warrant Shares pursuant to the registration
statement contemplated by Section 5 hereto, he 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 or have
been supplied to Investor. 
 4.10 Residence. Investor is a resident of the State of South Carolina. 
  

 5 

 4.11 No Market. Investor understands 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 sale of such Shares, Warrant or Warrant Shares are registered under the Securities Act or subject to the
terms and conditions of this Agreement, an exemption from registration is available. 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 he will not sell, transfer, assign, hypothecate or pledge in any way any of the Shares, Exercised March Warrant Shares or the Warrant Shares issued without a Securities Legend in accordance with
Section 6 hereof except for sales (A) in accordance with the terms of the Plan of Distribution section of the prospectus contained in the Registration Statement and in compliance with prospectus delivery requirements or (B) in
accordance with the requirements of Rule 144 under the 1933 Act. Investor further agrees to indemnify the Company against any loss, cost or expense, 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, 

  

 6 

 
Warrant Shares or other securities shall cease to be Registrable Securities when (x) they have been sold to the public or (y) they may be sold by
the Holder thereof under Rule 144(k). 
 “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
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 an S-3 promptly after Form S-3 becomes available to the Company) covering resales by the Holders as selling stockholders (not underwriters) of the Registrable Securities (the “Registration Statement”). The number of
shares of Common Stock initially included in such Registration Statement shall be no less than the sum of (A) the Shares and (B) the Warrant Shares issuable upon full exercise of the Warrant. Thereafter 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 SEC elects to review the Registration Statement, 180 days) following the Closing (the
“Effectiveness Deadline”). Without limiting the foregoing, the Company will promptly respond to all SEC comments, inquiries and requests, and shall request acceleration of effectiveness 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. 
  

 7 

 (ii) Prepare and file with the SEC 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 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. 
 (iii) Furnish to
each Holder such numbers of copies of a current prospectus conforming with the requirements of the 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. 
 (iv) Register and qualify the securities covered by such 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. 
 (v) 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. 
 (vi) 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. 
 (vii) 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 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. 
 (viii) List the Registrable Securities covered by such Registration Statement on the principal securities exchange and/or market on which the Common Stock is then listed and prepare and file any required filings with
such principal market or exchange. 
  

 8 

 (b) In the event the Registration Statement has become effective and, afterwards, any
Holder’s ability to sell Registrable Securities 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 such 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 such Registration Statement or prospectus such that such Registration Statement or 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) 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 a 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 any Registration Statement, all documents filed with the SEC 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 such 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, 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 (ii) the Company provides the Holders with written notice of such suspension, which notice need not 

  

 9 

 
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 SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep
such 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 such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 5(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 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such 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)(v) or 5.2(a)(vi), 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 amended Registration Statement contemplated by 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 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
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 any 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 

  

 10 

 
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 a Registration Statement or Form S-3 covering the Registrable Securities has been declared effective by the SEC. 
 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 (a) the date on which all the Holders have completed the sales or distribution described in the Registration Statement
relating thereto or, (b) until such Registrable Securities may be sold by the Holders under Rule 144(k) (provided that the Company’s transfer agent has accepted an instruction from the Company to such effect) (the “Registration
Period”). 
 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 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 

  

 11 

 
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 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 

  

 12 

 
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 Section 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 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 

  

 13 

 
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 Investor shall not sell, transfer, assign, hypothecate or
pledge in any way any Shares or Warrant Shares except for sales (A) in accordance with the terms of the Plan of Distribution section of the prospectus contained in the Registration Statement and in compliance with prospectus delivery
requirements or (B) in compliance with the requirements of Rule 144 under the Securities Act. 
 6.2 Upon payment
therefor as provided in this Agreement, the Company will issue the Shares and the Warrant in the name of Investor. Any certificate representing Shares or Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the
following form: 
 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AFTER RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT. 
 Additionally, any certificate representing the Warrant Shares 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 AGREEMENT DATED
AS OF JUNE 29, 2007 BY AND AMONG STAR SCIENTIFIC, INC. AND JOSEPH RICE AS SUCH MAY BE AMENDED FROM TIME TO TIME. 
 The Company agrees to
issue Shares or Warrant Shares, issued upon exercise of the Warrant, without the legend set forth above at such time as the holder thereof is permitted to dispose of such Shares or Warrant Shares pursuant to Rule 144(k) under the Securities Act.

 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 legend set forth above at such time as the
holder thereof is (i) permitted to 

  

 14 

 
dispose of such Shares or Warrant Shares pursuant to Rule 144(k) under the Securities Act, and upon such disposal, or (ii) such securities have been
registered for resale under the 1933 Act, subject to the undertaking in Section 4.14 hereof by the Investor. 
 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 (A) if within domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage
prepaid, or by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, three business
days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, and (iv) if delivered by
facsimile, upon electric confirmation of receipt and shall be delivered as addressed as follows: 
 (a) if to the Company,
to: 
 Star Scientific, Inc. 
 16 South Market Street 
 Petersburg, Virginia 23803 
 Telephone: (804) 530-0535 
 Facsimile: (804) 530-8474 
 Attention: Chief Financial Officer 
      with copies to: 
 Star Scientific, Inc. 
 7475 Wisconsin Ave. 
 Suite 850 
 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 
  

 15 

 (b) if to Investor, at his address on the signature page 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 except
pursuant to an instrument in writing signed by the Company and 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. 
 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, 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.

 [Signature pages follow.] 
  

 16 

 IN WITNESS WHEREOF, the parties hereto have cause 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 COO

  

			
	JOSEPH RICE
		
	By:    	 	/s/ Joseph Rice

			
	Address:	 	
	Telephone:	 	
	Fax:	 	
	Purchase Price:	 	 $200,000.00

 Signature Page to Securities Purchase and Registration Rights Agreement 

 Exhibit A 
 Form of Warrant

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