Document:

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                       DIRECTOR INDEMNIFICATION AGREEMENT

         THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this _____
day of _________, 2000, between Star Scientific, Inc., a Delaware corporation
(the "Company"), and ______________ ("Director").

                                WITNESSETH THAT:

         WHEREAS, Director is a member of the Board of Directors of the Company
and in such capacity is performing a valuable service for the Company; and

         WHEREAS, the by-laws of The Company (the "By-laws") provide for the
indemnification of its directors and executive officers to the maximum extent
authorized by law; and

         WHEREAS, Section 145 of the Delaware General Corporation Law (the
"DGCL") specifically provides that it shall not be deemed exclusive of any other
rights to indemnification or advancement of expenses to which directors or
officers may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise; and

         WHEREAS, the number of lawsuits and shareholders' derivative lawsuits
against corporations, their directors and officers has increased in recent
years, such lawsuits frequently are without merit and seek damages in amounts
having no reasonable relationship to the amount of compensation received by the
directors and officers from the corporation, and such lawsuits whether or not
meritorious are expensive and time-consuming to defend; and

         WHEREAS, recent developments with respect to the application and
interpretation of the business judgment rule and statutory and by-law
indemnification provisions have created uncertainty regarding the adequacy and
reliability of the protections afforded to directors and officers thereby; and

         WHEREAS, adequate directors and officers liability insurance may not be
available at a reasonable cost; and

         WHEREAS, the Company wishes to have Director continue to serve as a
member of the Company's Board of Directors free from undue concern for
unpredictable or unreasonable claims for damages by reason of Director's status
as a director of the Company, by reason of Director's decisions or actions on
its behalf or by reason of Director's decisions or actions in another capacity
while serving as a director of the Company; and

         WHEREAS, Director has expressed reluctance to continue to serve as a
member of the Company's Board of Directors without assurances that adequate
insurance and indemnification is and will continue to be provided; and

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         WHEREAS, in order to induce Director to continue to serve as a member
of the Board of Directors of the Company, the Company has determined and agreed
to enter into this Agreement with Director;

         NOW, THEREFORE, in consideration of Director's continued service as a
member of the Board of Directors of the Company, the parties agree as follows:

         1. Directors and Officers Liability Insurance.

               (a) Except as provided in (b) below, the Company hereby agrees to
use its best efforts to obtain and maintain directors and officers liability
insurance for Director for so long as Director shall continue to serve as a
director of the Company and thereafter so long as Director shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that Director was a director of the Company.

               (b) The Company shall have no obligation hereunder to obtain or
maintain directors and officers liability insurance if, in the reasonable
business judgment of the Board of Directors of the Company, such insurance is
not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, or the coverage provided by
such insurance is limited, by exclusions or otherwise, so as to provide an
insufficient benefit.

               (c) In all policies of directors and officers liability
insurance, Director shall be covered as an insured party in such a manner as to
provide Director the same rights and benefits, subject to the same limitations,
as are accorded to the Company's director most favorably insured by such
policies.

               (d) The Company shall give prompt written notice to Director of
any amendment or other change or modification, or any proposed amendment, change
or modification, to any policy of directors and officers liability insurance
maintained by the Company and covering Director.

         2. Indemnification of Director. Subject only to the exclusions set
forth in this Agreement, the Company hereby agrees to hold harmless and
indemnify Director to the full extent authorized or permitted by Section 145 of
the DGCL, including any amendment thereof, or any other statutory provisions
authorizing or permitting such indemnification which are adopted after the date
hereof. Notwithstanding the foregoing, the Company shall not be required to
indemnify Director for any losses to the extent that such losses are covered by
directors and officers liability insurance as described in Section 1 above.
Without limiting the generality of the foregoing:

               (a) Third Party Actions. The Company shall indemnify Director if
Director was or is a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that Director is or was or had agreed to serve as (so long as Director actually
is serving or did so serve) a director of the Company, or is or was serving or
had agreed to serve as a director (so long as Director actually is serving or
did so serve) at the request of the Company as a director, officer,

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employee or agent of another corporation, limited liability company,
partnership, joint venture, trust or other enterprise, against any and all
expenses (including attorneys' fees), liabilities, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by Director or
on Director's behalf in connection with such action, suit or proceeding, and any
appeal therefrom, if Director acted in good faith and in a manner Director
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Director's conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that Director did not satisfy the foregoing standard of conduct to
the extent applicable thereto.

               (b) Suits By or in the Right of the Company. The Company shall
indemnify Director if Director is or was a party or is threatened to be made a
party to any action or suit by or in the right of the Company by reason of the
fact that Director is or was or had agreed to be (so long as Director actually
is or did become) a director of the Company, or is or was serving or had agreed
to serve (so long as Director actually is or did so serve) at the request of the
Company as a director, officer, employee or agent of another corporation,
limited liability company, partnership, joint venture, trust or other
enterprise, against any and all expenses (including attorneys' fees) and, to the
extent permitted by law, amounts paid in settlement actually and reasonably
incurred by Director or on Director's behalf in connection with the defense or
settlement of such action or suit or any appeal therefrom provided that Director
acted in good faith and in a manner Director reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue or matter as to which Director
shall have been adjudged to be liable to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, Director is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.

               (c) Successful Defense. To the extent that Director has been
successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) of this Section 2, or in the
defense of any claim, issue or matter therein, the Company shall indemnify
Director against any and all expenses (including attorneys' fees) actually and
reasonably incurred by Director or on Director's behalf in connection therewith.
Dismissal of any action with prejudice, or a settlement not involving any
payment or assumption of liability, shall be deemed a successful defense.

               (d) Partial Indemnification. If Director is entitled to
indemnification under any provision of this Agreement for a portion of the
expenses (including attorneys' fees), liabilities, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by Director or
on Director's behalf in the investigation, defense, appeal or settlement of such
suit, action or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Director for the portion thereof to which
Director is entitled.

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               (e) Advancement of Expenses. All expenses (including attorney and
other expert and professional fees and expenses) incurred by Director or on
Director's behalf in defending a civil or criminal action, suit or proceeding,
or in enforcing Director's rights under any provisions of this Agreement, shall
be paid by the Company in advance of the final disposition of such action, suit
or proceeding in the manner prescribed by Section 4 hereof.

               (f) Amendments to Indemnification Rights. The Company shall not
adopt any amendment to its Restated Certificate of Incorporation, as amended
(the "Certificate") or By-Laws the effect of which would be to deny, diminish or
encumber Director's rights to indemnity pursuant to the Certificate, By-Laws,
the DGCL or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Company's Board of Directors or
stockholders, as the case may be. In the event that the Company shall adopt any
amendment to the Certificate or By-Laws the effect of which is to change
Director's rights to indemnity under such instruments, such amendment shall
apply only to acts or failures to act occurring entirely after the Effective
Date thereof. The Company shall give written notice to Director of any proposal
with respect to any such amendment no later than the date such amendment is
first presented to the Board of Directors (or any committee thereof) for
consideration, and shall provide a copy of any such amendment to Director
promptly after its adoption.

               (g) Indemnification for Expenses as a Witness. To the extent
Director is, by reason of Director's status as a director of the Company, a
witness in any proceeding, the Company shall indemnify Director against all
expenses in connection therewith.

         3. Limitations on Indemnification. No indemnity pursuant to Section 2
hereof shall be paid by the Company:

               (a) on account of Director's conduct which is finally adjudged in
a non-appealable decision to have been fraudulent, dishonest or willful
misconduct, or a knowing violation of law;

               (b) on account of any suit in which judgment in a final, non-
appealable decision is rendered against Director for an accounting of profits
made from the purchase or sale by Director of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or similar provisions of federal or state law;

               (c) on account of the receipt by Director of any personal profit
or advantage to which Director is adjudged in a final, non-appealable decision
not to be entitled;

               (d) for expenses incurred by Director, as a plaintiff, in suits
against the Company or against other directors of the Company (other than suits
brought by Director to enforce Director's rights under any provisions of this
Agreement), unless such suit is authorized by the Board of Directors or such
indemnification is required by law;

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               (e) if a final, non-appealable decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful; or

               (f) for amounts paid by Director in settlement of any action or
proceeding without the Company's written consent.

         4. Indemnification Procedures.

               (a) Notice to the Company. Promptly after receipt by Director of
notice of the commencement of any action, suit or proceeding, Director shall, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof. Such notice shall set
forth in reasonable detail the events giving rise to such claim and the amount
requested, if known. Failure of Director to provide such notice shall not
relieve the Company of its obligations under this Agreement except to the extent
such failure has a material and adverse effect on the ability of the Company to
meet such obligations.

               (b) Notice to Insurers. If, at the time of receipt of such
notice, the Company has directors and officers liability insurance in effect,
the Company shall give prompt notice of the commencement of such action, suit or
proceeding to the insurers in accordance with the procedures set forth in the
respective policies in favor of Director. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Director, all losses and expenses payable as a result of such action, suit or
proceeding in accordance with the terms of such policies.

               (c) Advancement of Expenses. Subject to subsections (d) and (e)
below, the costs and expenses reasonably incurred by Director or on Director's
behalf in investigating, defending or appealing any action, suit or proceeding,
whether civil, criminal, administrative or investigative, or in enforcing
Director's rights under any provisions of this Agreement, covered by Section 2
above shall be paid by the Company within 20 days of Director's written request
therefor even if there has been no final disposition of such action, suit or
proceeding. Director's written request shall state the amount requested and
shall be accompanied by copies of the invoices or other relevant documentation.

               (d) Undertaking to Repay Advances. Director agrees that Director
will reimburse the Company for all advances paid by the Company to Director
under this Agreement in the event and only to the extent that it shall
ultimately be determined that Director was not entitled to be indemnified under
this Agreement.

               (e) Assumption of Defense by the Company. Except as otherwise
provided below, the Company, jointly with any other indemnifying party similarly
notified, will be entitled to assume the defense of any action, suit or
proceeding of which it has been notified by Director pursuant to subsection (a)
above, with counsel reasonably satisfactory to Director. After notice from the
Company to Director of its election to assume the defense thereof, the Company
will not be liable to Director under this Agreement for any legal or other
expenses subsequently incurred by Director; provided, however, that Director
shall have the right to employ Director's own counsel in such action, suit or
proceeding at the expense of the Company if, at any time after such notice

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from the Company, (i) the employment of counsel by Director has been authorized
by the Company, (ii) Director shall have reasonably concluded that there may be
a conflict of interest between the Company and Director in the conduct of such
defense, or (iii) the Company shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
Director's counsel shall be subject to reimbursement in accordance with the
terms of this Agreement. The Company shall not be entitled to assume Director's
defense of any action, suit or proceeding brought by the Company or as to which
Director shall have made the conclusion provided for in clause (ii) above.

               (f) Determination of Right to Entitlement. (i) In the event that
Director incurs liability for any fines, judgments, liabilities, penalties or
amounts paid in settlement, and indemnification is sought under this Agreement,
the Company shall pay (or provide for payment if so required by the terms of any
judgment or settlement) such amounts within 30 business days of Director's
written request therefor unless a determination is made within such 30 business
days that the claims giving rise to such request are excluded or indemnification
is otherwise not due under this Agreement. Such determination, and any
determination required by applicable law as to whether Director has met the
standard of conduct required to qualify and entitle Director, partially or
fully, to indemnification under Section 2 of this Agreement, shall be made, at
the Company's discretion, (1) by the Board of Directors of the Company by a
majority vote of the directors who were not parties to such action, suit or
proceeding even though less than a quorum, or (2) if such a majority is not
obtainable, or even if obtainable a majority of the disinterested directors so
directs, by written opinion of independent legal counsel selected by the Company
and reasonably satisfactory to Director, or (3) by the Company's stockholders;
provided, however, that if a change of control has occurred such determination
shall be made by written opinion of independent legal counsel selected by
Director or, if requested by Director, by the Company. The term "independent
legal counsel" shall mean for this purpose an attorney or firm of attorneys
experienced in matters of corporation law that is not now nor has within the
previous three years been retained to represent Director, the Company or any
other party to the proceeding giving rise to the claim for indemnification
hereunder; provided that "independent legal counsel" shall not include any
person who under applicable standards of professional conduct would have a
conflict of interest in representing Director or the Company in an action to
determine Director's rights under this Agreement. The term "change of control"
shall mean: (1) the consummation of any transaction after which any "person" or
"group" (as such terms are used in Sections 3(a)(9), 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities, or possesses the power to vote or control the vote
of securities, of the Company representing 30% or more of the combined voting
power of either the Common Stock or all outstanding securities of the Company;
or (2) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation or entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the

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Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.

                    (ii) Notwithstanding the foregoing, Director may within 60
days after a determination adverse to Director has been made as provided above,
or if no determination has been made within 30 business days of Director's
written request for payment, petition the Court of Chancery of the State of
Delaware or any other court of competent jurisdiction, or may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association, which award shall be deemed final,
unappealable and binding, to determine whether Director is entitled to
indemnification under this Agreement, and such court or arbitrator, as the case
may be, shall thereupon have the exclusive authority to make such determination
unless and until such court or arbitrator dismisses or otherwise terminates such
action without having made a determination. The court or arbitrator, as the case
may be, shall make an independent determination of entitlement irrespective of
any prior determination made by the Board of Directors, independent legal
counsel or stockholders. In any such action before the court or arbitrator,
Director shall be presumed to be entitled to indemnification and the Company
shall have the burden of proving that indemnification is not required under this
Agreement. All fees and expenses of any arbitrator pursuant to this provision
shall be paid by the Company.

               (g) Enforcement Expenses. In the event that Director brings suit
or takes any other action to enforce Director's rights or to collect monies due
under this Agreement, and if Director is successful therein, the Company shall
reimburse (to the extent not previously advanced) Director for all of Director's
reasonable expenses, including attorneys' fees, in any such suit or action.

         5. Continuation of Indemnification. The Company's obligations to
indemnify Director hereunder shall continue throughout the period Director is a
director of the Company (or is serving at the Company's request in the
capacities described in sub sections 2(a) and 2(b) above) and thereafter so long
as Director shall be subject to any possible claim, action, suit or proceeding
by reason of the fact that Director was a director of the Company (or was
serving in such other capacities).

         6. Successors and Assigns. This Agreement shall be binding upon the
Company, its successors and assigns (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of Director and Director's
heirs, personal representatives, executors and administrators and shall be
binding upon Director and Director's successors in interest under this
Agreement.

         7. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which Director may be entitled under any
provision of law, Certificate of Incorporation, By-law, other agreement, vote of
stockholders or of disinterested directors or otherwise, both as to action in
Director's official capacity and as to action in any other capacity while
occupying any of the positions referred to in Section 2 of this Agreement.

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<PAGE>   8

         8. Subrogation. Upon payment of any amount under this Agreement, the
Company shall be subrogated to the extent of such payment to all of Director's
rights of recovery therefor and Director shall take all reasonable actions
requested by the Company to secure such rights, including, without limitation,
execution of all documents necessary to enable the Company to enforce such
rights.

         9. Severability. In the event that any provision of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason, such
provision shall be limited or modified in its application to the minimum extent
necessary to avoid a violation of law, and, as so limited or modified, such
provision and the balance of this Agreement shall be enforceable in accordance
with their terms.

         10. Integration. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.

         11. Modification. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

         12. Notices. All notices given under this Agreement shall be in writing
and delivered either (i) personally, (ii) by registered or certified mail
(postage prepaid, return receipt requested), (iii) by recognized overnight
courier service or (iv) by telecopy (if promptly followed by a copy delivered as
provided in clauses (i), (ii) or (iii) above), as follows:

         If to Director:      [NAME]
                              [ADDRESS]
                              [ADDRESS]

         If to the Company:   16 South Market Street
                              Petersburg, Virginia 23803

Notices hereunder given as provided above shall be deemed to be duly given upon
delivery if delivered personally, three business days after mailing if by
registered or certified mail, one business day after mailing if by overnight
courier service and upon confirmation of transmission if by telecopy.

         13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

                                   STAR SCIENTIFIC, INC.

                                   By:
                                      ----------------------------------------
                                      Name:
                                      Title:

                                      ----------------------------------------
                                      Director

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

                                   STAR SCIENTIFIC, INC.

                                   By:
                                      ----------------------------------------
                                      Name:
                                      Title:

                                      ----------------------------------------
                                      Director<PAGE>   1
                        OFFICER INDEMNIFICATION AGREEMENT

         THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this ___ day
of _________, 2000, between Star Scientific, Inc., a Delaware corporation (the
"Company"), and __________________ ("Indemnitee").

                                WITNESSETH THAT:

         WHEREAS, Indemnitee is an executive officer of the Company and in such
capacity is performing a valuable service for the Company; and

         WHEREAS, the by-laws of the Company (the "By-laws") provide for the
indemnification of its directors and executive officers to the maximum extent
authorized by law; and

         WHEREAS, Section 145 of the Delaware General Corporation Law (the
"DGCL") specifically provides that it shall not be deemed exclusive of any other
rights to indemnification or advancement of expenses to which directors or
officers may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise; and

         WHEREAS, the number of lawsuits and shareholders' derivative lawsuits
against corporations, their directors and officers has increased in recent
years, such lawsuits frequently are without merit and seek damages in amounts
having no reasonable relationship to the amount of compensation received by the
directors and officers from the corporation, and such lawsuits whether or not
meritorious are expensive and time-consuming to defend; and

         WHEREAS, recent developments with respect to the application and
interpretation of the business judgment rule and statutory and by-law
indemnification provisions have created uncertainty regarding the adequacy and
reliability of the protections afforded to directors and officers thereby; and

         WHEREAS, adequate directors and officers liability insurance may not be
available at a reasonable cost; and

         WHEREAS, the Company wishes to have Indemnitee continue to serve as an
executive officer of the Company free from undue concern for unpredictable or
unreasonable claims for damages by reason of Indemnitee's status as an officer
of the Company, by

<PAGE>   2

reason of Indemnitee's decisions or actions on its behalf or by reason of
Indemnitee's decisions or actions in another capacity while serving as an
officer of the Company; and

         WHEREAS, Indemnitee has expressed reluctance to continue to serve as an
executive officer of the Company without assurances that adequate insurance and
indemnification is and will continue to be provided; and

         WHEREAS, in order to induce Indemnitee to continue to serve as an
executive officer of the Company, the Company has determined and agreed to enter
into this Agreement with Indemnitee;

         NOW, THEREFORE, in consideration of Indemnitee's continued service as
an executive officer of the Company, the parties agree as follows:

         1. Directors and Officers Liability Insurance.

               (a) Except as provided in (b) below, the Company hereby agrees to
use its best efforts to obtain and maintain directors and officers liability
insurance for Indemnitee for so long as Indemnitee shall continue to serve as an
executive officer of the Company and thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that Indemnitee was an executive officer of the Company.

               (b) The Company shall have no obligation hereunder to obtain or
maintain directors and officers liability insurance if, in the reasonable
business judgment of the Board of Directors of the Company, such insurance is
not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, or the coverage provided by
such insurance is limited, by exclusions or otherwise, so as to provide an
insufficient benefit.

               (c) In all policies of directors and officers liability
insurance, Indemnitee shall be covered as an insured party in such a manner as
to provide Indemnitee the same rights and benefits, subject to the same
limitations, as are accorded to the Company's executive officer most favorably
insured by such policies.

               (d) The Company shall give prompt written notice to Indemnitee of
any amendment or other change or modification, or any proposed amendment, change
or modification, to any policy of directors and officers liability insurance
maintained by the Company and covering Indemnitee.

         2. Indemnification. Subject only to the exclusions set forth in this
Agreement, the Company hereby agrees to hold harmless and indemnify Indemnitee
to the full extent authorized or permitted by Section 145 of the DGCL, including
any amendment thereof, or any other statutory provisions authorizing or
permitting such indemnification which are adopted after the date hereof.
Notwithstanding the foregoing, the Company shall not be required to indemnify
Indemnitee for any losses to the extent that such losses are covered by
directors and officers liability insurance as described in Section 1 above.
Without limiting the generality of the foregoing:

                                       -2-

<PAGE>   3

               (a) Third Party Actions. The Company shall indemnify Indemnitee
if Indemnitee was or is a party or is threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was or had agreed to serve (so long as
Indemnitee actually is serving or did so serve) as an executive officer of the
Company, or is or was serving or had agreed to serve (so long as Indemnitee
actually is serving or did so serve) at the request of the Company as an
executive officer, employee or agent of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, against any and
all expenses (including attorneys' fees), liabilities, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection with such action, suit or
proceeding, and any appeal therefrom, if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that Indemnitee did not satisfy the
foregoing standard of conduct to the extent applicable thereto.

               (b) Suits By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made
a party to any action or suit by or in the right of the Company by reason of the
fact that Indemnitee is or was or had agreed to be (so long as Indemnitee
actually is or did become) an executive officer of the Company, or is or was
serving or had agreed to serve (so long as Indemnitee actually is or did so
serve) at the request of the Company as an executive officer, officer, employee
or agent of another corporation, limited liability company, partnership, joint
venture, trust or other enterprise, against any and all expenses (including
attorneys' fees) and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with the defense or settlement of such action or suit or any appeal
therefrom provided that Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company and except that no indemnification shall be made in respect of any
claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable to the Company unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.

               (c) Successful Defense. To the extent that Indemnitee has been
successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) of this Section 2, or in the
defense of any claim, issue or matter therein, the Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
therewith. Dismissal of any action with prejudice, or a settlement not involving
any payment or assumption of liability, shall be deemed a successful defense.

               (d) Partial Indemnification. If Indemnitee is entitled to
indemnification under any provision of this Agreement for a portion of the
expenses

                                       -3-

<PAGE>   4

(including attorneys' fees), liabilities, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in the investigation, defense, appeal or settlement of such
suit, action or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.

               (e) Advancement of Expenses. All expenses (including attorney and
other expert and professional fees and expenses) incurred by Indemnitee or on
Indemnitee's behalf in defending a civil or criminal action, suit or proceeding,
or in enforcing Indemnitee's rights under any provisions of this Agreement,
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding in the manner prescribed by Section 4 hereof.

               (f) Amendments to Indemnification Rights. The Company shall not
adopt any amendment to its Restated Certificate of Incorporation, as amended
(the "Certificate") or By-Laws the effect of which would be to deny, diminish or
encumber Indemnitee's rights to indemnity pursuant to the Certificate, By-Laws,
the DGCL or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Company's Board of Directors or
stockholders, as the case may be. In the event that the Company shall adopt any
amendment to the Certificate or By-Laws the effect of which is to change
Indemnitee's rights to indemnity under such instruments, such amendment shall
apply only to acts or failures to act occurring entirely after the Effective
Date thereof. The Company shall give written notice to Indemnitee of any
proposal with respect to any such amendment no later than the date such
amendment is first presented to the Board of Directors (or any committee
thereof) for consideration, and shall provide a copy of any such amendment to
Indemnitee promptly after its adoption.

               (g) Indemnification for Expenses as a Witness. To the extent
Indemnitee is, by reason of Indemnitee's status as an executive officer of the
Company, a witness in any proceeding, the Company shall indemnify Indemnitee
against all expenses in connection therewith.

         3. Limitations on Indemnification. No indemnity pursuant to Section 2
hereof shall be paid by the Company:

               (a) on account of Indemnitee's conduct which is finally adjudged
in a non-appealable decision to have been fraudulent, dishonest or willful
misconduct, or a knowing violation of law;

               (b) on account of any suit in which judgment in a final, non-
appealable decision is rendered against Indemnitee for an accounting of profits
made from the purchase or sale by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or similar provisions of federal or state law;

               (c) on account of the receipt by Indemnitee of any personal
profit or advantage to which Indemnitee is adjudged in a final, non-appealable
decision not to be entitled;

                                       -4-

<PAGE>   5

               (d) for expenses incurred by Indemnitee, as a plaintiff, in suits
against the Company or against directors or other officers of the Company (other
than suits brought by Indemnitee to enforce Indemnitee's rights under any
provisions of this Agreement), unless such suit is authorized by the Board of
Directors or such indemnification is required by law;

               (e) if a final, non-appealable decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful; or

               (f) for amounts paid by Indemnitee in settlement of any action or
proceeding without the Company's written consent.

         4. Indemnification Procedures.

               (a) Notice to the Company. Promptly after receipt by Indemnitee
of notice of the commencement of any action, suit or proceeding, Indemnitee
shall, if a claim in respect thereof is to be made against the Company under
this Agreement, notify the Company of the commencement thereof. Such notice
shall set forth in reasonable detail the events giving rise to such claim and
the amount requested, if known. Failure of Indemnitee to provide such notice
shall not relieve the Company of its obligations under this Agreement except to
the extent such failure has a material and adverse effect on the ability of the
Company to meet such obligations.

               (b) Notice to Insurers. If, at the time of receipt of such
notice, the Company has directors and officers liability insurance in effect,
the Company shall give prompt notice of the commencement of such action, suit or
proceeding to the insurers in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. the Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all losses and expenses payable as a result of such action, suit or
proceeding in accordance with the terms of such policies.

               (c) Advancement of Expenses. Subject to subsections (d) and (e)
below, the costs and expenses reasonably incurred by Indemnitee or on
Indemnitee's behalf in investigating, defending or appealing any action, suit or
proceeding, whether civil, criminal, administrative or investigative, or in
enforcing Indemnitee's rights under any provisions of this Agreement, covered by
Section 2 above shall be paid by the Company within 20 days of Indemnitee's
written request therefor even if there has been no final disposition of such
action, suit or proceeding. Indemnitee's written request shall state the amount
requested and shall be accompanied by copies of the invoices or other relevant
documentation.

               (d) Undertaking to Repay Advances. Indemnitee agrees that
Indemnitee will reimburse the Company for all advances paid by the Company to
Indemnitee under this Agreement in the event and only to the extent that it
shall ultimately be determined that Indemnitee was not entitled to be
indemnified under this Agreement.

               (e) Assumption of Defense by the Company. Except as otherwise
provided below, the Company, jointly with any other indemnifying party similarly
notified, will be entitled to assume the defense of any action, suit or
proceeding of which it has been notified by Indemnitee pursuant to subsection
(a) above, with counsel

                                       -5-

<PAGE>   6

reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee; provided, however, that Indemnitee shall
have the right to employ Indemnitee's own counsel in such action, suit or
proceeding at the expense of the Company if, at any time after such notice from
the Company, (i) the employment of counsel by Indemnitee has been authorized by
the Company, (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of such
defense, or (iii) the Company shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
Indemnitee's counsel shall be subject to reimbursement in accordance with the
terms of this Agreement. The Company shall not be entitled to assume
Indemnitee's defense of any action, suit or proceeding brought by the Company or
as to which Indemnitee shall have made the conclusion provided for in clause
(ii) above.

               (f) Determination of Right to Entitlement. (i) In the event that
Indemnitee incurs liability for any fines, judgments, liabilities, penalties or
amounts paid in settlement, and indemnification is sought under this Agreement,
the Company shall pay (or provide for payment if so required by the terms of any
judgment or settlement) such amounts within 30 business days of Indemnitee's
written request therefor unless a determination is made within such 30 business
days that the claims giving rise to such request are excluded or indemnification
is otherwise not due under this Agreement. Such determination, and any
determination required by applicable law as to whether Indemnitee has met the
standard of conduct required to qualify and entitle Indemnitee, partially or
fully, to indemnification under Section 2 of this Agreement, shall be made, at
the Company's discretion, (1) by the Board of Directors of the Company by a
majority vote of the directors who were not parties to such action, suit or
proceeding even though less than a quorum, or (2) if such a majority is not
obtainable, or even if obtainable a majority of the disinterested directors so
directs, by written opinion of independent legal counsel selected by the Company
and reasonably satisfactory to Indemnitee, or (3) by the Company's stockholders;
provided, however, that if a change of control has occurred such determination
shall be made by written opinion of independent legal counsel selected by
Indemnitee or, if requested by Indemnitee, by the Company. The term "independent
legal counsel" shall mean for this purpose an attorney or firm of attorneys
experienced in matters of corporation law that is not now nor has within the
previous three years been retained to represent Indemnitee, the Company or any
other party to the proceeding giving rise to the claim for indemnification
hereunder; provided that "independent legal counsel" shall not include any
person who under applicable standards of professional conduct would have a
conflict of interest in representing Indemnitee or the Company in an action to
determine Indemnitee's rights under this Agreement. The term "change of control"
shall mean: (1) the consummation of any transaction after which any "person" or
"group" (as such terms are used in Sections 3(a)(9), 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities, or possesses the power to vote or control the vote
of securities, of the Company representing 30% or more of the combined voting
power of either the Common Stock or all outstanding securities of the Company;
or (2) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation or entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted

                                       -6-

<PAGE>   7

into voting securities of the surviving entity) at least 66 2/3% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.

                    (ii) Notwithstanding the foregoing, Indemnitee may within 60
days after a determination adverse to Indemnitee has been made as provided
above, or if no determination has been made within 30 business days of
Indemnitee's written request for payment, petition the Court of Chancery of the
State of Delaware or any other court of competent jurisdiction, or may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association, which award shall be deemed
final, unappealable and binding, to determine whether Indemnitee is entitled to
indemnification under this Agreement, and such court or arbitrator, as the case
may be, shall thereupon have the exclusive authority to make such determination
unless and until such court or arbitrator dismisses or otherwise terminates such
action without having made a determination. The court or arbitrator, as the case
may be, shall make an independent determination of entitlement irrespective of
any prior determination made by the Board of Directors, independent legal
counsel or stockholders. In any such action before the court or arbitrator,
Indemnitee shall be presumed to be entitled to indemnification and the Company
shall have the burden of proving that indemnification is not required under this
Agreement. All fees and expenses of any arbitrator pursuant to this provision
shall be paid by the Company.

               (g) Enforcement Expenses. In the event that Indemnitee brings
suit or takes any other action to enforce Indemnitee's rights or to collect
monies due under this Agreement, and if Indemnitee is successful therein, the
Company shall reimburse (to the extent not previously advanced) Indemnitee for
all of Indemnitee's reasonable expenses, including attorneys' fees, in any such
suit or action.

         5. Continuation of Indemnification. The Company's obligations to
indemnify Indemnitee hereunder shall continue throughout the period Indemnitee
is an executive officer of the Company (or is serving at the Company's request
in the capacities described in subsections 2(a) and 2(b) above) and thereafter
so long as Indemnitee shall be subject to any possible claim, action, suit or
proceeding by reason of the fact that Indemnitee was an executive officer of the
Company (or was serving in such other capacities).

         6. Successors and Assigns. This Agreement shall be binding upon the
Company, its successors and assigns (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of Indemnitee and Indemnitee's
heirs, personal representatives, executors and administrators and shall be
binding upon Indemnitee and Indemnitee's successors in interest under this
Agreement.

         7. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which Indemnitee may be entitled under
any provision of law, Certificate of Incorporation, By-law, other agreement,
vote of stockholders or of disinterested directors or otherwise, both as to
action in Indemnitee's official capacity and as to action in any other capacity
while occupying any of the positions referred to in Section 2 of this Agreement.

                                       -7-

<PAGE>   8

         8. Subrogation. Upon payment of any amount under this Agreement, the
Company shall be subrogated to the extent of such payment to all of Indemnitee's
rights of recovery therefor and Indemnitee shall take all reasonable actions
requested by the Company to secure such rights, including, without limitation,
execution of all documents necessary to enable the Company to enforce such
rights.

         9. Severability. In the event that any provision of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason, such
provision shall be limited or modified in its application to the minimum extent
necessary to avoid a violation of law, and, as so limited or modified, such
provision and the balance of this Agreement shall be enforceable in accordance
with their terms.

         10. Integration. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.

         11. Modification. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

         12. Notices. All notices given under this Agreement shall be in writing
and delivered either (i) personally, (ii) by registered or certified mail
(postage prepaid, return receipt requested), (iii) by recognized overnight
courier service or (iv) by telecopy (if promptly followed by a copy delivered as
provided in clauses (i), (ii) or (iii) above), as follows:

                  If to Indemnitee:     [NAME]
                                        [ADDRESS]
                                        [ADDRESS]

                  If to the Company:    16 South Market Street
                                        Petersburg, Virginia 23803

Notices hereunder given as provided above shall be deemed to be duly given upon
delivery if delivered personally, three business days after mailing if by
registered or certified mail, one business day after mailing if by overnight
courier service and upon confirmation of transmission if by telecopy.

         13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.

                                       -8-

<PAGE>   9

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

                                         STAR SCIENTIFIC, INC.

                                         By:
                                            ----------------------------------
                                            Name:
                                            Title:

                                            ----------------------------------
                                            Indemnitee

                                      -9-

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