Document:

<PAGE>

                                                                   EXHIBIT 10.43

                          RESTATED SECURITY AGREEMENT
                          ---------------------------

     This RESTATED SECURITY AGREEMENT (this "Agreement") is dated as of August
21, 2000 between STAR SCIENTIFIC, INC., a Delaware corporation ("Debtor"), and
BROWN & WILLIAMSON TOBACCO CORPORATION, a Delaware corporation ("Lender").

                             W I T N E S S E T H :

     WHEREAS, Debtor has entered into a Loan Agreement dated October 12, 1999
(the "Loan Agreement") with Lender providing for a loan in the amount of
$13,200,000 under Credit Facility A, and subject to the fulfillment of certain
conditions, a subsequent loan in the amount of $8,800,000 under Credit Facility
B to be made to Debtor by Lender;

     WHEREAS, Debtor and Lender executed and delivered a Security Agreement
dated December 16, 1999 (the "Security Agreement") to secure the repayment of
obligations arising under the Loan Agreement.

     WHEREAS, Debtor, Lender and Star Tobacco and Pharmaceuticals, Inc. ("Star
Tobacco") have entered into a Restated Loan Agreement of like date as this
Agreement (the "Restated Loan Agreement") pursuant to which, inter alia, Lender
                                                             ----- ----
will make a $4,950,000 loan to Star Tobacco which is denoted herein as Credit
Facility C and which also documents monies previously advanced by Lender to
Debtor as a Leaf Purchase Advance as Credit Facility D.  Debtor has executed and
delivered to Lender a guaranty of like date of this agreement pursuant to which
Debtor has guaranteed the payment of Lender's loan to Star Tobacco;

     WHEREAS, it is a condition precedent to the obligations of the Lender under
the Restated Loan Agreement that Debtor enter into this Restated Security
Agreement which amends, modifies and restates in its entirety the Security
Agreement; and

     WHEREAS, Debtor and Lender have agreed that Star will grant Lender a
security interest in certain of its assets.

     NOW, THEREFORE, in consideration of the loan contemplated by the Loan
Agreement and in order to induce Lender to enter into the Restated Loan
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby agrees with Lender
as follows:

SECTION 1.  Definitions
            -----------

     1.1  Certain Defined Terms. Unless otherwise defined herein, all
          ---------------------
capitalized terms used herein shall have the respective meanings given to such
terms in the Restated Loan Agreement or in Exhibit A annexed hereto.
                                           ---------
<PAGE>

     1.2  Other Definition Provisions.  References to "Sections", "subsections",
          ---------------------------
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Exhibit A may, unless the context
                                      ---------
otherwise requires, be used in the singular or the plural depending on the
reference. All references to statutes and related regulations shall include
(unless otherwise specifically provided herein) any amendments of same and any
successor statutes and regulations.

SECTION 2.  Grant of Security Interests
            ---------------------------

     In order to secure the prompt and complete payment and performance of the
Secured Obligations in accordance with the terms thereof, Debtor hereby grants
to Lender, a purchase money continuing first priority security interest in and
to all right, title and interest of Debtor in the following property, whether
now owned or existing or hereafter acquired or arising and regardless of where
located (all being collectively referred to as the "Collateral"):

     (A)  Barns;

     (B)  Leaf Inventory;

     [***]

     (F)  Proceeds of all or any of the property described in subparts (A) - (E)
          above.

SECTION 3.  Security for Secured Obligations
            --------------------------------

     This Agreement secures the prompt and complete payment and performance of
the obligations of Debtor hereunder and under the Restated Loan Agreement, the
Star Guaranty, and Other Loan Documents to which it is a party, now or hereafter
existing, and all renewals, extensions and restructurings of any of the above
(all such debts, obligations and liabilities of Debtor being collectively
referred to herein as the "Secured Obligations".

SECTION 4.  Representations and Warranties
            ------------------------------

     Debtor represents and warrants as follows:

     4.1  Binding Obligation. This Agreement constitutes the legal, valid and
          ------------------
binding obligation of Debtor, enforceable against Debtor in accordance with its
terms.

                                      -2-

Note: Redacted portions have been marked with [***]. The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

<PAGE>

     4.2  Location of Equipment and Inventory. All of the Equipment and
          -----------------------------------
Inventory is located at the places specified on Schedule I.  The Barns
                                                ----------
comprising a part of the Equipment are mobile and will be located in one or more
of the following states:  Virginia, North Carolina, South Carolina, Georgia and
Florida.  Debtor will annually and, upon request from Lender, promptly within
ten (10) Business Days inventory the Collateral and provide Lender with the
current location and serial numbers of the Barns.  Upon the occurrence of an
Event of Default, Debtor will within ten (10) Business Days assemble the
Collateral at a location designated by Lender.

     4.3  Ownership of Collateral. Debtor owns the Collateral free and clear of
          ------------------------
any Lien.

     4.4  Office Locations; Fictitious Names. The principal place of business,
          ----------------------------------
the chief executive office and the office where Debtor keeps its books and
records are located at the places specified in subpart A of Schedule I. All
other locations of Collateral are specified in subpart B of Schedule I.  If any
location specified on Schedule I is not owned by Debtor, the name and address of
the owner of such property is set forth opposite such location. Debtor does not
do business and has not done business during the past five years under any
corporate name, trade-name or fictitious business name except as disclosed on
Schedule II.

     4.5  Perfection. This Agreement creates a valid first priority security
          ----------
interest in the Collateral, securing the payment of the Secured Obligations.

SECTION 5.  Further Assurances; Covenants
            -----------------------------

     5.1  Other Documents and Actions.  Debtor will, from time to time,
          ---------------------------
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary, or that Lender may reasonably request, in
order to perfect and protect the Security Interests granted or purported to be
granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Debtor will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as Lender may reasonably request, in order to
perfect and preserve the Security Interests granted or purported to be granted
hereby; (b) during normal business hours and, prior to the occurrence of an
Event of Default, upon two (2) Business Days' prior notice from Lender, allow
inspection of the Collateral other than the Patents and Know-How by Lender or
persons designated by Lender, and (c) upon Lender's request, appear in and
defend any action or proceeding that may affect Debtor's title to, or the
Security Interests of the Lender in, the Collateral.

     5.2  Lender Authorized. Debtor hereby authorizes Lender to file one or more
          -----------------
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral and reflecting the terms of this Agreement without
the signature of Debtor to the extent permitted by law.

                                      -3-
<PAGE>

     5.3  Corporate or Name Change.  Without the prior written consent of
          ------------------------
Lender, Debtor will not change Debtor's name.

     5.4  Business Locations.  Debtor will give Lender thirty (30) days prior
          ------------------
written notice of any change in Debtor's chief place of business, of any new
location of business, and of any new location for any of the Collateral. With
respect to any new location (which in any event shall be within the continental
United States), Debtor will execute such documents and take such actions as
Lender deems necessary to perfect and protect the Security Interests.

     5.5  Instruments.  Upon the occurrence and during the continuance of an
          -----------
Event of Default (i) Debtor will deliver and pledge to Lender all Instruments
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Lender and (ii) Debtor
will mark conspicuously all chattel paper with a legend, in form and substance
reasonably satisfactory to Lender, indicating that such chattel paper is subject
to the Security Interests and will, upon Lender's request from time to time,
deliver possession thereof to Lender.

     5.6  Certificates of Title. Upon Lender's request, Debtor shall promptly
          ---------------------
deliver to Lender any and all certificates of title, applications for title or
similar evidence of ownership of all Equipment and shall cause Lender to be
named as lienholder on any such certificate of title or other evidence of
ownership. Debtor shall not permit any Equipment to become a fixture to real
estate.

     5.7  Collateral Description. Debtor will furnish to Lender, from time to
          ----------------------
time, statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Lender may
reasonably request, all in reasonable detail.

     5.8  No Transfer/Assignment.  Debtor shall not sell, assign, transfer,
          ----------------------
convey or otherwise dispose of any of the Collateral other than immaterial
dispositions in the ordinary course of business of items replaced with items of
equal or greater value, nor create, incur or permit to exist any pledge,
mortgage, lien, charge, encumbrance or security interest in or upon any of the
Collateral except in favor of the Lender. Notwithstanding the foregoing, so long
as no Event of Default (which when used herein shall have the meaning ascribed
to such term in the Loan Agreement) has occurred and is continuing, Debtor shall
have the exclusive, nontransferable right and license to use the Intellectual
Property and the exclusive right to grant to other Persons licenses and
sublicenses with respect to the Intellectual Property.

     5.9  Taxes.  Debtor shall, at its cost and expense, pay when due all taxes,
          -----
charges and assessments against any of the Collateral, except those contested in
good faith by appropriate proceedings with timely payment of any amounts due
prior to delinquency, and all rent due on any and all premises where the
Collateral may be located.

     5.10 Defense of Claims.  Debtor shall, at its cost and expense, defend
          -----------------
against all actions, claims and demands affecting the Collateral, the Security
Interest or Debtors' or

                                      -4-
<PAGE>

Lender's right, title, interest or benefit in or to the Collateral; Debtors
shall give Lender notice of any such action, claim or demand promptly and in any
event within five (5) days;

     5.11 Maintenance.  Debtor shall maintain the Collateral in good condition,
          -----------
ordinary wear and tear resulting from its intended use excepted.

SECTION 6.  Lender Appointed Attorney-in-Fact
            ---------------------------------

     Debtor hereby irrevocably appoints Lender as Debtor's attorney-in-fact,
with full authority in the place and stead of Debtor and in the name of Debtor,
Lender or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default in Lender's discretion to take any action and
to execute any instrument that Lender may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

     (a)  to obtain and adjust insurance required to be paid to Lender;

     (b)  to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

     (c)  to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above;

     (d)  to file any claims or take any action or institute any proceedings
that Lender may reasonably deem necessary for the collection of any of the
Collateral or otherwise to enforce the rights of Lender with respect to any of
the Collateral;

     (e)  to pay or discharge taxes or Liens, levied or placed upon or
threatened in writing against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by Lender in
its sole discretion;

     (f)  to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other documents (including without limitation
financing statements, continuation statements and other documents necessary or
advisable to perfect the Security Interests) relating to the Collateral; and

     (g)  generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, and to do, at
Lender's option and Debtor's expense, at any time or from time to time, all acts
and things that Lender reasonably deems necessary to protect, preserve or
realize upon the Collateral.

                                      -5-
<PAGE>

Debtor hereby ratifies and approves all acts of Lender made or taken pursuant to
this Section 7. Neither Lender nor any person designated by Lender shall be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law excluding gross negligence and willful misconduct.  This power, being
coupled with an interest, is irrevocable so long as this Agreement shall remain
in force.

SECTION 7.  Remedies
            --------

     If any Event of Default shall have occurred and be continuing, Lender may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require Debtor to, and
Debtor hereby agrees that it will, at its expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed by Lender and make
it available to Lender at a place to be designated by Lender; (b) without notice
or demand or legal process, except as otherwise required by law, enter upon any
premises of Debtor and take possession of the Collateral; and (c) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at the Lender's offices or elsewhere, at
such time or times, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Debtor agrees that, to the extent notice of sale shall be required
by law, at least ten (10) days notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute commercially reasonable notification. At any sale of the Collateral,
if permitted by law, Lender may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral or
any portion thereof for the account of Lender. Lender shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.  To
the extent permitted by law, Debtor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted.  The information contained in Exhibit B is
confidential information of the Debtor and is subject to the provisions of: (i)
a Confidentiality Agreement between Lender and Star Scientific, Inc. and (ii)
confidentiality provisions of the Master Agreement (collectively, the
"Confidentiality Provisions") but none of such Confidentiality Provisions shall
be applicable to the Intellectual Property Collateral in the event Lender is
entitled to foreclose upon or sell the Intellectual Property Collateral pursuant
to the provisions of this Agreement.

SECTION 8.  Limitation on Duty of Lender with Respect to Collateral
            -------------------------------------------------------

     Lender shall have no duty with respect to any Collateral in its possession
or control (or in the possession or control of any agent or bailee of Lender) or
with respect to any income thereon or the preservation of rights against prior
parties or any other rights pertaining thereto except for Lender's gross
negligence or willful misconduct.  Lender shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by Lender in good
faith.

                                      -6-
<PAGE>

SECTION 9.   Application of Proceeds
             -----------------------

     Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in any of Debtor's accounts shall be applied as set
forth in Section 7.01 of the Restated Loan Agreement: first, to all fees, costs
and expenses incurred by Lender with respect to the Loan Agreement, the Other
Loan Documents or the Collateral; second, to accrued and unpaid interest on the
Secured Obligations (including any interest which but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); third, to the principal
amounts of the Secured Obligations outstanding; and fourth, the surplus, if any,
to Debtor.

SECTION 10.  Expenses
             --------

     Upon the occurrence and during the continuance of any Event of Default, all
costs and expenses (including attorneys' fees, legal expenses and court costs)
incurred by Lender in enforcing or protecting the Security Interests or any of
its remedies under this Agreement shall be payable by Debtor on demand, shall
constitute Secured Obligations, shall bear interest until paid at the highest
rate provided in the Loan Agreement and shall be secured by the Collateral.

SECTION 11.  Termination of Security Interests: Release of Collateral
             ---------------------------------  ---------------------

     Upon payment in full of all Secured Obligations, the Security Interests
shall terminate and all rights to the Collateral shall revert to Debtor. Upon
such termination of the Security Interests or release of any Collateral, Lender
will, execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.

SECTION 12.  Reinstatement.
             -------------

     Notwithstanding the provisions of Section 11, this Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any amount
received by Lender in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Debtor or upon the appointment
of any intervenor or conservator of, or trustee or similar official for any
Debtor or any substantial part of its properties, or otherwise, all as though
such payments had not been made.

SECTION 13.  Notices
             -------

     All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Loan
Agreement.

                                      -7-
<PAGE>

SECTION 14.  Successors and Assigns
             ----------------------

     This Agreement is for the benefit of Lender and its successors and assigns,
and in the event of an assignment of all or any of the Secured Obligations as
permitted under the Loan Agreement, the rights hereunder, to the extent
applicable to the Secured Obligations so assigned, may be transferred with such
Secured Obligations. This Agreement shall be binding on Debtor and its
successors and assigns.

SECTION 15.  Changes in Writing
             ------------------

     No amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by Debtor therefrom, shall in any event be
effective without the written concurrence of Lender and Debtor.

SECTION 16.  Applicable Law
             --------------

     Except as otherwise provided for herein, this Agreement shall be governed
by, and shall be construed and enforced in accordance with, the internal laws of
the Commonwealth of Virginia, without regard to conflicts of laws principles.

SECTION 17.  Failure or Indulgence Not Waiver: Remedies Cumulative
             -----------------------------------------------------

     No failure or delay on the part of Lender in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or any other right, power or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.

SECTION 18.  Headings
             --------

     Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

SECTION 19.  Counterparts
             ------------

     This Restated Security Agreement and any amendments, waivers, consents, or
supplements may be executed in counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.

SECTION 20.  Amendment and Ratification
             --------------------------

                                      -8-
<PAGE>

     The Security Agreement as hereby modified and amended by this Agreement is
confirmed, ratified and remains in full force and affect.

                           [SIGNATURE PAGE FOLLOWS]

                                      -9-
<PAGE>

                SIGNATURE PAGE FOR RESTATED SECURITY AGREEMENT
                ----------------------------------------------

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day first written above.

STAR SCIENTIFIC, INC.                        BROWN & WILLIAMSON TOBACCO
                                             CORPORATION

By: ______________________________           By:_____________________________
Name:                                        Name:
Title:                                       Title:<PAGE>

                                                                   Exhibit 10.44

                              SECURITY AGREEMENT
                              -------------------

     This SECURITY AGREEMENT (this "Agreement") is dated as of August 21, 2000
between STAR TOBACCO AND PHARMACEUTICALS, INC., a Virginia corporation
("Debtor"), and BROWN & WILLIAMSON TOBACCO CORPORATION, a Delaware corporation
("Lender").

                             W I T N E S S E T H :

     WHEREAS, Debtor, Lender and Star Scientific, Inc. ("Star") have entered
into a Restated Loan Agreement of like date as this Agreement (the "Restated
Loan Agreement") pursuant to which, inter alia, Lender will make a $4,950,000
                                    ----- ----
loan to Debtor which is denoted herein as Credit Facility C and which also
documents monies previously advanced by Lender to Star as a Leaf Purchase
Advance as Credit Facility D and provides for financing to Star for the purchase
of Barns.  Debtor has executed and delivered to Lender a guaranty of like date
of this agreement pursuant to which Debtor has guaranteed the payment of
Lender's loan to Star;

     WHEREAS, it is a condition precedent to the obligations of the Lender under
the Restated Loan Agreement that Debtor enter into this Security Agreement;

     WHEREAS, Debtor and Lender have agreed that Debtor will grant Lender a
security interest in its Intellectual Property.

     NOW, THEREFORE, in consideration of the $4,950,000 loan to Debtor and in
order to induce Lender to enter into the Restated Loan Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees with Lender as follows:

SECTION 1.  Definitions
            -----------

     1.1  Certain Defined Terms. Unless otherwise defined herein, all
          ---------------------
capitalized terms used herein shall have the respective meanings given to such
terms in the Restated Loan Agreement or in Exhibit A annexed hereto.
                                           ---------

     1.2  Other Definition Provisions. References to "Sections", "subsections",
          ---------------------------
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Exhibit A may, unless the context
                                      ---------
otherwise requires, be used in the singular or the plural depending on the
reference. All references to statutes and related regulations shall include
(unless otherwise specifically provided herein) any amendments of same and any
successor statutes and regulations.
<PAGE>

SECTION 2.  Grant of Security Interests
            ---------------------------

     In order to secure the prompt and complete payment and performance of the
Secured Obligations in accordance with the terms thereof, Debtor hereby grants
to Lender, a purchase money continuing first priority security interest in and
to all right, title and interest of Debtor in the following property, whether
now owned or existing or hereafter acquired or arising and regardless of where
located (all being collectively referred to as the "Collateral"):

     [***]

     (D)  Proceeds of all or any of the property described in subparts (A) - (C)
          above.

SECTION 3.  Security for Secured Obligations
            --------------------------------

     This Agreement secures the prompt and complete payment and performance of
the obligations of Debtor hereunder and under the Restated Loan Agreement, the
Guaranty of Debtor in favor of Lender with respect to the Obligations of Star
Scientific, Inc., and Other Loan Documents to which it is a party, now or
hereafter existing, and all renewals, extensions and restructurings of any of
the above (all such debts, obligations and liabilities of Debtor being
collectively referred to herein as the "Secured Obligations".

SECTION 4.  Representations and Warranties
            ------------------------------

     Debtor represents and warrants as follows:

     4.1  Binding Obligation. This Agreement constitutes the legal, valid and
          ------------------
binding obligation of Debtor, enforceable against Debtor in accordance with its
terms.

     4.2  Ownership of Collateral. Debtor owns the Collateral free and clear of
          ------------------------
any Lien.

     4.3  Office Locations; Fictitious Names. The principal place of business,
          ----------------------------------
the chief executive office and the office where Debtor keeps its books and
records are located at the places specified in Schedule I. If any location
specified on Schedule I is not owned by Debtor, the name and address of the
owner of such property is set forth opposite such location. Debtor does not do
business and has not done business during the past five years under any
corporate name, trade-name or fictitious business name except as disclosed on
Schedule II.

     4.4  Perfection. This Agreement creates a valid first priority security
          ----------
interest in the Collateral, securing the payment of the Secured Obligations.

                                      -2-

Note: Redacted portions have been marked with [***]. The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

<PAGE>

SECTION 5.  Further Assurances; Covenants
            -----------------------------

     5.1. Other Documents and Actions. Debtor will, from time to time,
          ---------------------------
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary, or that Lender may reasonably request, in
order to perfect and protect the Security Interests granted or purported to be
granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Debtor will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as Lender may reasonably request, in order to
perfect and preserve the Security Interests granted or purported to be granted
hereby; (b) during normal business hours and, prior to the occurrence of an
Event of Default, upon two (2) Business Days' prior notice from Lender, allow
inspection of the Collateral by Lender or persons designated by Lender, and (c)
upon Lender's request, appear in and defend any action or proceeding that may
affect Debtor's title to, or the Security Interests of the Lender in, the
Collateral.

     5.2  Lender Authorized. Debtor hereby authorizes Lender to file one or more
          -----------------
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral and reflecting the terms of this Agreement without
the signature of Debtor to the extent permitted by law.

     5.3  Corporate or Name Change. Without the prior written consent of
          ------------------------
Lender, Debtor will not change Debtor's name.

     5.4  Business Locations. Debtor will give Lender thirty (30) days prior
          ------------------
written notice of any change in Debtor's chief place of business, of any new
location of business, and of any new location for any of the Collateral. With
respect to any new location (which in any event shall be within the continental
United States), Debtor will execute such documents and take such actions as
Lender deems necessary to perfect and protect the Security Interests.

     5.5  Collateral Description. Debtor will furnish to Lender, from time to
          ----------------------
time, statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Lender may
reasonably request, all in reasonable detail.

     5.6  No Transfer/Assignment. Debtor shall not sell, assign, transfer,
          ----------------------
convey or otherwise dispose of any of the Collateral other than immaterial
dispositions in the ordinary course of business of items replaced with items of
equal or greater value, nor create, incur or permit to exist any pledge,
mortgage, lien, charge, encumbrance or security interest in or upon any of the
Collateral except in favor of the Lender. Notwithstanding the foregoing, so long
as no Event of Default (which when used herein shall have the meaning ascribed
to such term in the Loan Agreement) has occurred and is continuing, Debtor shall
have the exclusive, nontransferable right and license to use the Intellectual
Property and the exclusive right to grant to other Persons licenses and
sublicenses with respect to the Intellectual Property.

                                      -3-
<PAGE>

     5.7  Taxes. Debtor shall, at its cost and expense, pay when due all taxes,
          -----
charges and assessments against any of the Collateral, except those contested in
good faith by appropriate proceedings with timely payment of any amounts due
prior to delinquency, and all rent due on any and all premises where the
Collateral may be located.

     5.8  Defense of Claims. Debtor shall, at its cost and expense, defend
          -----------------
against all actions, claims and demands affecting the Collateral, the Security
Interest or Debtors' or Lender's right, title, interest or benefit in or to the
Collateral; Debtors shall give Lender notice of any such action, claim or demand
promptly and in any event within five (5) days;

     5.9  Maintenance. Debtor shall maintain the Collateral in good condition,
          -----------
ordinary wear and tear resulting from its intended use excepted.

SECTION 6.  Lender Appointed Attorney-in-Fact
            ---------------------------------

     Debtor hereby irrevocably appoints Lender as Debtor's attorney-in-fact,
with full authority in the place and stead of Debtor and in the name of Debtor,
Lender or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default in Lender's discretion to take any action and
to execute any instrument that Lender may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

     (a)  to obtain and adjust insurance required to be paid to Lender;

     (b)  to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

     (c)  to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above;

     (d)  to file any claims or take any action or institute any proceedings
that Lender may reasonably deem necessary for the collection of any of the
Collateral or otherwise to enforce the rights of Lender with respect to any of
the Collateral;

     (e)  to pay or discharge taxes or Liens, levied or placed upon or
threatened in writing against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by Lender in
its sole discretion;

     (f)  to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other documents (including without limitation
financing statements, continuation statements and other documents necessary or
advisable to perfect the Security Interests) relating to the Collateral; and

                                      -4-
<PAGE>

     (g)  generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, and to do, at
Lender's option and Debtor's expense, at any time or from time to time, all acts
and things that Lender reasonably deems necessary to protect, preserve or
realize upon the Collateral.

Debtor hereby ratifies and approves all acts of Lender made or taken pursuant to
this Section 7. Neither Lender nor any person designated by Lender shall be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law excluding gross negligence and willful misconduct. This power, being
coupled with an interest, is irrevocable so long as this Agreement shall remain
in force.

SECTION 7.  Remedies
            --------

     If any Event of Default shall have occurred and be continuing, Lender may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require Debtor to, and
Debtor hereby agrees that it will, at its expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed by Lender and make
it available to Lender at a place to be designated by Lender; (b) without notice
or demand or legal process, except as otherwise required by law, enter upon any
premises of Debtor and take possession of the Collateral; and (c) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at the Lender's offices or elsewhere, at
such time or times, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Debtor agrees that, to the extent notice of sale shall be required
by law, at least ten (10) days notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute commercially reasonable notification. At any sale of the Collateral,
if permitted by law, Lender may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral or
any portion thereof for the account of Lender. Lender shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. To
the extent permitted by law, Debtor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted. The information contained in Exhibit B is
confidential information of the Debtor and is subject to the provisions of: (i)
a Confidentiality Agreement between Lender and Debtor and (ii) confidentiality
provisions of the Master Agreement (collectively, the "Confidentiality
Provisions") but none of such Confidentiality Provisions shall be applicable to
the Intellectual Property Collateral in the event Lender is entitled to
foreclose upon or sell the Intellectual Property Collateral pursuant to the
provisions of this Agreement.

SECTION 8.  License of Intellectual Property
            --------------------------------

     Debtor hereby assigns, transfers and conveys to Lender, effective upon the
occurrence and during the continuance of any Event of Default hereunder, the
nonexclusive right and

                                      -5-
<PAGE>

license to use all Intellectual Property owned or used by Debtor together with
any goodwill associated therewith, all to the extent necessary to enable Lender
to realize on the Collateral and any successor or assign to enjoy the benefits
of the Collateral to the extent permitted by the terms of such Intellectual
Property. This right and license shall inure to the benefit of Lender and all of
its successors, assigns and transferees, whether by voluntary conveyance,
operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure
or otherwise. Such right and license is granted free of charge, without
requirement that any monetary payment whatsoever be made to Debtor by Lender.

SECTION 9.  Limitation on Duty of Lender with Respect to Collateral
            -------------------------------------------------------

     Lender shall have no duty with respect to any Collateral in its possession
or control (or in the possession or control of any agent or bailee of Lender) or
with respect to any income thereon or the preservation of rights against prior
parties or any other rights pertaining thereto except for Lender's gross
negligence or willful misconduct. Lender shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by Lender in good
faith.

SECTION 10. Application of Proceeds
            -----------------------

     Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in any of Debtor's accounts shall be applied as set
forth in Section 7.01 of the Restated Loan Agreement: first, to all fees, costs
and expenses incurred by Lender with respect to the Loan Agreement, the Other
Loan Documents or the Collateral; second, to accrued and unpaid interest on the
Secured Obligations (including any interest which but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); third, to the principal
amounts of the Secured Obligations outstanding; and fourth, the surplus, if any,
to Debtor.

SECTION 11. Expenses
            --------

     Upon the occurrence and during the continuance of any Event of Default, all
costs and expenses (including attorneys' fees, legal expenses and court costs)
incurred by Lender in enforcing or protecting the Security Interests or any of
its remedies under this Agreement shall be payable by Debtor on demand, shall
constitute Secured Obligations, shall bear interest until paid at the highest
rate provided in the Loan Agreement and shall be secured by the Collateral.

SECTION 12. Termination of Security Interests: Release of Collateral
            ---------------------------------  ---------------------

     Upon payment in full of all Secured Obligations, the Security Interests
shall terminate and all rights to the Collateral shall revert to Debtor. Upon
such termination of the Security Interests or release of any Collateral, Lender
will, execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.

                                      -6-
<PAGE>

SECTION 13. Reinstatement.
            -------------

     Notwithstanding the provisions of Section 12, this Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any amount
received by Lender in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Debtor or upon the appointment
of any intervenor or conservator of, or trustee or similar official for any
Debtor or any substantial part of its properties, or otherwise, all as though
such payments had not been made.

SECTION 14. Notices
            -------

     All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Loan
Agreement.

SECTION 15. Successors and Assigns
            ----------------------

     This Agreement is for the benefit of Lender and its successors and assigns,
and in the event of an assignment of all or any of the Secured Obligations as
permitted under the Loan Agreement, the rights hereunder, to the extent
applicable to the Secured Obligations so assigned, may be transferred with such
Secured Obligations. This Agreement shall be binding on Debtor and its
successors and assigns.

SECTION 16. Changes in Writing
            ------------------

     No amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by Debtor therefrom, shall in any event be
effective without the written concurrence of Lender and Debtor.

SECTION 17. Applicable Law
            --------------

     Except as otherwise provided for herein, this Agreement shall be governed
by, and shall be construed and enforced in accordance with, the internal laws of
the Commonwealth of Virginia, without regard to conflicts of laws principles.

SECTION 18. Failure or Indulgence Not Waiver: Remedies Cumulative
            -----------------------------------------------------

     No failure or delay on the part of Lender in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or any other right, power or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.

                                      -7-
<PAGE>

SECTION 19. Headings
            --------

     Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

SECTION 20. Counterparts
            ------------

     This Security Agreement and any amendments, waivers, consents, or
supplements may be executed in counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.

                           [SIGNATURE PAGE FOLLOWS]

                                      -8-
<PAGE>

                     SIGNATURE PAGE FOR SECURITY AGREEMENT
                     -------------------------------------

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day first written above.

STAR TOBACCO AND                             BROWN & WILLIAMSON TOBACCO
PHARMACEUTICALS, INC.                        CORPORATION

By: _________________________                By:_____________________________
Name:                                        Name:
Title:                                       Title:

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