Document:

Security Purchase and Registration Rights Agreement

 Exhibit 10.61 
  

  
 SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT 
  
 Between 
  
 STAR SCIENTIFIC, INC.,

  
 as Issuer, 
  
 And 
  
 Elliott International, L.P., 
  

as Investor 
  
 February 28, 2005 
  

 This SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered
into effective as of February 28, 2005 between Star Scientific, Inc., a Delaware corporation (the “Company”), and Elliott International, L.P. (“Investor”).  
  
 WHEREAS, the Company and Investor desire that Investor will purchase from the
Company and the Company will issue and sell to Investor, upon the terms and conditions set forth in this Agreement: (a) an aggregate of 540,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share
(“Common Stock”), for a per share purchase price of $5.00 per share; and (b) a warrant (the “Warrant”) to purchase an additional 540,000 shares (the “Warrant Shares”) of Common Stock at a per share
price equal to $5.00 (the “Exercise Price”); and 
  
 WHEREAS, Investor will have registration rights with respect to the Shares, Warrant Shares and other Registrable Securities (as defined herein) pursuant to the terms of this Agreement. 
  
 NOW, THEREFORE, in consideration of the foregoing premises and the covenants
contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  

1. Agreement to Sell and Purchase the Shares and Warrant. At the Closing (as defined in Section 2), the Company will sell to Investor, and
Investor will purchase from the Company, upon the terms and subject to the conditions hereinafter set forth the Shares and the Warrant for the aggregate purchase price set forth for Investor on the signature page hereto. 
  
 2. Delivery of the Shares and Warrant at Closing. The completion of
the purchase, sale and issuance of the Shares and the Warrant (the “Closing”) shall occur on the date of this Agreement (the “Closing Date”) (or upon such other date as the Company and Investor shall agree), at the
offices of the Company’s counsel. At the Closing, the Company shall deliver to Investor (a) one or more stock certificates, registered in Investor’s name and address as set forth on the signature page hereto, representing the Shares and
(b) the Warrant issued in the name of Investor. The Company’s obligation to issue the Shares and the Warrant to Investor shall be subject to the following conditions, any one or more of which may be waived by the Company: (a) receipt by the
Company of a wire transfer of immediately available funds to an account designated in writing by the Company, in the full amount of the purchase price for the Shares and Warrant as set forth on the signature page hereto; and (b) the accuracy, in all
material respects, of the representations and warranties made by Investor and the fulfillment, in all material respects, of those undertakings of Investor to be fulfilled prior to the Closing. Investor’s obligation to purchase the Shares and
Warrant shall be subject to the following conditions, any one or more of which may be waived by Investor (provided that no such waiver shall be deemed given unless in writing and executed by Investor): (a) receipt by Investor of a counter-signed
copy of this Agreement executed by the Company; (b) receipt by Investor of one or more stock certificates representing the Shares; (c) receipt by Investor of a copy of the Warrant and (d) the accuracy, in all material respects, of the
representations and warranties made by the Company and the fulfillment, in all material respects, of those undertakings of the Company to be fulfilled prior to the Closing. 
  

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 3. Representations, Warranties and Covenants of the Company. The Company hereby represents and
warrants to, and covenants with, Investor, as follows: 
  
 3.1
Organization. Each of the Company and its Subsidiaries (as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”)) is duly organized and validly existing in good standing under the laws of the
jurisdiction of its organization. Each of the Company and its Subsidiaries has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business and in
good standing in each jurisdiction in which it owns or leases property or transacts business and where the failure to be so qualified would have a material adverse effect upon the financial condition or business, operations, assets or prospects of
the Company and its Subsidiaries, taken as a whole (a “Material Adverse Effect”). 
  
 3.2 Due Authorization. The Company has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and
the Warrant, and has taken all necessary corporate action to enter into and perform this Agreement, to issue the Shares in accordance with the terms of this Agreement, to enter into and perform the Warrant, and to issue the Warrant Shares in
accordance with the terms of the Warrant. This Agreement has been, and upon the Closing in accordance with the terms of the Agreement, the Warrant will be, duly authorized, validly executed and delivered by the Company and constitutes, or will
constitute, a legal, valid and binding agreement of the Company enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law). Upon their issuance in accordance with the terms of this Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable, the Warrant will be duly authorized and validly issued and the Warrant Shares, upon
exercise of the Warrant in accordance with its terms, will be duly authorized, validly issued, fully paid and non-assessable. 
  
 3.3 Non-Contravention. Except as would not reasonably be expected to have a Material Adverse Effect, the execution and delivery of this Agreement,
the issuance and sale of the Shares and the Warrant under this Agreement, the fulfillment of the terms of this Agreement and the consummation of the transactions contemplated hereby will not (A) conflict with or constitute a violation of, or default
(with or without the giving of notice or the passage of time or both) under, (i) any material bond, debenture, note or other evidence of indebtedness, or under any material lease, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any Subsidiary is a party or by which it or any of its Subsidiaries or their respective properties are bound, (ii) the charter, by-laws or other organizational documents of the Company or any
Subsidiary, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any Subsidiary or their respective properties, or (B) result in the creation
or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any Subsidiary or an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any Subsidiary is a party or by which any
of them is bound or to which any of the property or assets of the Company or any Subsidiary is subject. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency,
self-regulatory organization, stock exchange or market, or other governmental body in the United States is required for the execution and delivery 
  

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 of this Agreement, the valid issuance and sale of the Shares and Warrant pursuant to this Agreement, other than such as
have been made or obtained, and except for any securities filings required to be made under federal or state securities laws. 
  
 3.4 SEC Filings. Since January 1, 2004, the Company and its Subsidiaries have filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission (the “SEC” or “Commission”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (collectively, the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not misleading. 
  
 3.5 Absence of Certain Change. Except as disclosed in the SEC Documents filed at least thirty (30) days prior to the date hereof, since September
30, 2004 there has been no adverse change or adverse development in the business, properties, assets, operations, financial condition, prospects, liabilities or results of operations of the Company or its Subsidiaries which to the knowledge of the
Company would reasonably be expected to have a Material Adverse Effect. 
  
 3.6 Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 100,000,000 shares of Common Stock, of which as of the date hereof, 69,570,758 shares are issued and outstanding, 8,988,207 shares
are issuable and reserved for issuance pursuant to the Company’s stock option plans or securities exercisable or exchangeable for, or convertible into, shares of Common Stock, and (ii) 100,000 shares of preferred stock, of which as of the date
hereof no shares are issued. All of such outstanding shares have been, or upon issuance will be, validly issued, fully paid and nonassessable. Except as disclosed in the SEC Documents, as of the date hereof, (i) no shares of the Company’s
capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iii) there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries, (iv) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance or exercise of the Shares and the Warrant and (v) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. The Company disclosed in its SEC Documents or has furnished to Investor true and correct copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the “By-laws”). 
  

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 4. Representations, Warranties and Covenants of Investor. 
  
 4.1 Organization. Investor is duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization. Investor has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business
and in good standing in each jurisdiction in which it owns or leases property or transacts business and where the failure to be so qualified would have a material adverse effect on the financial condition of Investor. 
  
 4.2 Due Authorization. Investor has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement, and has taken all necessary corporate, company, partnership or individual action as the case may be to enter and perform this Agreement. This Agreement has been duly authorized
and validly executed and delivered by Investor and constitutes a legal, valid and binding agreement of Investor enforceable against Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). 
  
 4.3
Non-Contravention. The execution and delivery of this Agreement, the purchase of the Shares and the Warrant under this Agreement, the fulfillment of the terms of this Agreement and the consummation of the transactions contemplated hereby will
not (A) conflict with or constitute a violation of, or default (with or without the giving of notice or the passage of time or both) under, (i) any material bond, debenture, note or other evidence of indebtedness, or under any material lease,
indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which Investor is a party, (ii) the charter, by-laws or other organizational documents of Investor, as applicable, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to Investor or its property, or (B) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of Investor or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or instrument to which Investor is a party or by which any of them is bound or to which any of the property or assets of Investor is subject. No consent, approval, authorization or
other order of, or registration, qualification or filing with, any regulatory body, administrative agency, self-regulatory organization, stock exchange or market, or other governmental body in the United States is required for the execution and
delivery of this Agreement and the purchase of the Shares and the Warrant by Investor, other than such as have been made or obtained. 
  
 4.4 Private Placement. Investor represents and warrants to, and covenants with, the Company that Investor is acquiring the Shares and the Warrant
for its own account for investment only and with no present intention of distributing any of the Shares, the Warrant or the Warrant Shares, or any arrangement or understanding with any other persons regarding the distribution of the Shares, Warrant
or Warrant Shares. Investor has been advised and understands that neither the Shares, the Warrant nor the Warrant Shares have been registered under the 
  

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 Securities Act or under the “blue sky” or similar laws of any jurisdiction and may be resold only if registered
pursuant to the provisions of the Securities Act and such other laws, if applicable, or, subject to the terms and conditions of this Agreement, if an exemption from registration is available. Investor has been advised and understands that the
Company, in issuing the Shares and the Warrant, is relying upon, among other things, the representations and warranties of Investor herein in concluding that such issuance is a “private offering” and is exempt from the registration
provisions of the Securities Act. 
  
 4.5 No Short Sales.
Investor represents, warrants and covenants that neither Investor nor any of its affiliates has sold at any time, prior to the Closing, any shares of the Common Stock unless such Investor owned such shares of the Common Stock at the time of such
sale and promptly delivered such shares of Common Stock against such sale. 
  
 4.6 No Advice. Investor understands that nothing in this Agreement or any other materials presented to Investor in connection with the purchase and sale of the Shares and the Warrant constitutes legal, tax or
investment advice. Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares and the Warrant. 
  
 4.7 Accredited Investor. Investor is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act and is able to bear the risk of its investment in the Shares, Warrant, and Warrant Shares. Investor has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the purchase of the Shares, Warrant and Warrant Shares. 
  
 4.8 Limited Representations. Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and
operations of the Company and its Subsidiaries which have been requested and materials relating to the offer and sale of the Shares, Warrant and Warrant Shares which have been requested by Investor. Investor and its advisors, if any, have been
afforded the opportunity to ask such questions of the Company as it deems appropriate for purposes of the investment contemplated hereby. Investor acknowledges that the Company has not disclosed its results for the twelve month period ending on, or
its financial condition at, December 31, 2004, and that the Company has no plans to do so until the completion of its audit for such period and the filing of its annual report on Form 10-K with the SEC, which may be delayed or extended in accordance
with the SEC rules. Investor acknowledges that the most recent disclosure of the Company’s results is for the three month period ending on, and the most recent disclosure of the Company’s financial condition is at, September 30, 2004, as
reported on the Company’s quarterly report on Form 10-Q, and that no information more recent than such date has been provided to Investor as to the Company’s results, operations, financial condition, business or prospects. Investor
understands that its purchase of the Shares, Warrant and, if applicable, Warrant Shares involves a high degree of risk and that Investor may lose its entire investment in the Shares, the Warrant and if applicable the Warrant Shares, and that
Investor can afford to do so without material adverse consequences to its financial condition. Investor is not relying on any information provided by the Company and its Subsidiaries, except to the extent provided in Section 3 herein. 
  
 4.9 No Recommendation. Investor understands that no United States
federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares, Warrant or Warrant Shares or the fairness or suitability of an investment in the Shares, Warrant or Warrant
Shares nor have such authorities passed upon or endorsed the merits thereof. 
  

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 4.10 Restrictive Legend. The Company shall issue the Warrant and certificates for the Shares and,
if applicable, Warrant Shares to Investor with a legend as described in Section 6 below. Investor covenants that, in connection with any transfer of Shares or Warrant Shares pursuant to the registration statement contemplated by Section 5 hereto, it
will comply with the applicable prospectus delivery requirements of the Securities Act, provided that copies of a current prospectus relating to such effective registration statement are or have been supplied to Investor. 
  
 4.11 Residence. Investor is a resident of the State of New York.

  
 4.12 No Market. Investor understands that there is no
public trading market for the Warrant, that none is expected to develop, and that the Shares, Warrant and Warrant Shares must be held indefinitely unless and until the sale of such Shares, Warrant or Warrant Shares are registered under the
Securities Act or subject to the terms and conditions of this Agreement, an exemption from registration is available. Investor has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act. 
  
 4.13 No Commissions. Investor has taken no action which would give
rise to any claim by any person for brokerage commissions, finder’s fees or similar payments by the Company or Investor relating to this Agreement or the transactions contemplated hereby. 
  
 4.14 Transactional Exemption. Investor understands that the Shares,
Warrant and Warrant Shares are being offered and sold in reliance on a transactional exemption from the registration requirements of Federal and state securities laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of Investor set forth herein in order to determine the applicability of such exemptions and the suitability of Investor to acquire the Shares, Warrant and Warrant Shares.

  
 5. Registration Rights. 
  
 5.1 Certain Definitions 
  
 “Holder” and “Holders” shall include Investor and
any transferee or transferees of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement. 
  
 The terms “register,” “registered” and “registration” shall refer to a
registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

  
 “Registrable Securities” shall mean: (i) the
Shares and Warrant Shares issued or issuable to each Holder (a) with respect to the Warrant Shares, upon exercise of the Warrant, (b) upon any distribution with respect to, any exchange for or any replacement of such Shares or Warrant, or (c) upon
any conversion, exercise or exchange of any securities issued in connection with any such distribution, exchange or replacement; (ii) securities issued or issuable upon any stock split, stock dividend, recapitalization or similar event with respect
to the foregoing; and 
  

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 (iii) any other security issued as a dividend or other distribution with respect to, in exchange for or in replacement of
the securities referred to in the preceding clauses, except that any such Shares, Warrant Shares or other securities shall cease to be Registrable Securities when (x) they have been sold to the public or (y) they may be sold by the Holder thereof
under Rule 144(k). 
  
 “Registration Expenses”
shall mean all expenses to be incurred by the Company in connection with each Holder’s registration rights under this Agreement (such amount not to exceed $5,000 in the aggregate), including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company, and blue sky fees and expenses, reasonable fees and disbursements of counsel to Holders (using a single counsel selected by a majority in interest of the Holders) for a
review of the Registration Statement and related documents, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event
by the Company). 
  
 “Selling Expenses” shall
mean all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel for Holders not included within “Registration Expenses”. 
  
 5.2 Registration Requirements. The Company shall use its reasonable
best efforts to effect the registration of the resale of the Registrable Securities (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the resale of all the Registrable Securities in the manner (including manner of sale) and in all states reasonably
requested by the Holder. Such reasonable best efforts by the Company shall include, without limitation, the following: 
  
 (a) The Company shall, as expeditiously as possible after the filing of the Report on Form 10-K for the year ended December 31, 2004, including the filing
of a Form 10-K/A containing a management report and an auditor’s report on the effectiveness of the Company’s internal control over financial reporting within the time permitted under Exchange Act Release No. 50754 (November 30, 2004)
(collectively, the “Company’s 2004 10-K”): 
  
 (i) But in any event within 30 days of the filing of the Company’s 2004 10-K, prepare and file a registration statement with the Commission pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use such form, such other form as the Company is eligible to use under the Securities Act provided that such other form shall be converted into an S-3 promptly after Form S-3 becomes
available to the Company) covering resales by the Holders as selling stockholders (not underwriters) of the Registrable Securities (the “Registration Statement”). The number of shares of Common Stock initially included in such
Registration Statement shall be no less than the sum of (A) the Shares and (B) the Warrant Shares issuable upon full exercise of the Warrant. Thereafter the Company shall use its reasonable best efforts to cause such Registration Statement and other
filings to be declared effective as soon as possible, and in any event prior to 90 days (or, if the SEC elects to review the Registration Statement, 180 days) following the filing of the Company’s 2004 10-K 
  

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 (the “Effectiveness Deadline”). Without limiting the foregoing, the Company will
promptly respond to all SEC comments, inquiries and requests, and shall request acceleration of effectiveness at the earliest possible date. The Company shall provide the Holders reasonable opportunity to review the portions of any such Registration
Statement or amendment or supplement thereto containing disclosure regarding the Holders prior to filing. 
  
 (ii) Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement and notify the Holders of the filing and effectiveness of such
Registration Statement and any amendments or supplements. 
  
 (iii) Furnish to each Holder such numbers of copies of a current prospectus conforming with the requirements of the Act, copies of the Registration Statement, any amendment or supplement thereto and any documents
incorporated by reference therein and such other documents as such Holder may reasonably require in order to facilitate the disposition of Registrable Securities owned by such Holder. 
  
 (iv) Register and qualify the securities covered by such Registration Statement under the securities or
“blue sky” laws of all domestic jurisdictions, to the extent required; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions. 
  
 (v) Notify each Holder immediately of the happening of any event (but not the substance or details of any such events unless specifically requested by a Holder) as a result of which the prospectus (including any supplements thereto or
thereof) included in such Registration Statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and use its reasonable best efforts to promptly update and/or correct such prospectus. 
  
 (vi) Notify each Holder immediately of the issuance by the Commission or any state securities commission or agency of any stop order
suspending the effectiveness of the Registration Statement or the threat or initiation of any proceedings for that purpose. The Company shall use its reasonable best efforts to prevent the issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible time. 
  
 (vii) Permit counsel to the Holders to review the Registration Statement and all amendments and supplements thereto within a reasonable period of time (but not less than two (2) full Trading Days) prior to each filing
and will not request acceleration of the Registration Statement without prior notice to such counsel. 
  

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 (viii) List the Registrable Securities covered by such Registration Statement on the
principal securities exchange and/or market on which the Common Stock is then listed and prepare and file any required filings with such principal market or exchange. 
  
 (b) In the event the Registration Statement has become effective and, afterwards, any Holder’s ability to sell
Registrable Securities under the Registration Statement is suspended for more than (i) 45 days in any 90-day period or (ii) 90 days in any calendar year, including without limitation by reason of any suspension or stop order with respect to the
Registration Statement or the fact that an event has occurred as a result of which the prospectus (including any supplements thereto) included in such Registration Statement then in effect includes an untrue statement of material fact or omits to
state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, then the Company shall take such action as may be necessary to amend or supplement such
Registration Statement or prospectus such that such Registration Statement or prospectus, as so amended, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements not misleading. 
  
 (c) If the Holder(s) intend to
distribute the Registrable Securities by means of an underwriting, the Holder(s) shall so advise the Company. Any such underwriting may only be administered by nationally or regionally recognized investment bankers reasonably satisfactory to the
Company. 
  
 (d) The Company shall enter into such customary
agreements (including an underwriting agreement containing such representations and warranties by the Company and such other terms and provisions, as are customarily contained in underwriting agreements for comparable offerings and are reasonably
satisfactory to the Company) and take all such other actions as the Holder or the underwriters participating in such offering and sale may reasonably request in order to expedite or facilitate such offering and sale other than such actions which are
disruptive to the Company or require significant management availability. 
  
 (e) The Company shall make available for inspection by the Holders, representative(s) of all the Holders together, any underwriter participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and other records customary for purposes of the Holders’ due diligence examination of the Company and review of any Registration Statement, all documents filed with the
SEC subsequent to the Closing, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement, provided that such parties agree to keep such information confidential. Notwithstanding the foregoing, the foregoing right shall not extend to any Holder (i) who is not a
financial investor or entity or (ii) who, itself or through any affiliate, has any strategic business interest that would reasonably be expected to be in conflict with any business of the Company or its Subsidiaries. 
  
 (f) The Company may suspend the use of any prospectus used in connection with
the Registration Statement only in the event, and for such period of time as, (i) such a suspension is required by the rules and regulations of the Commission or (ii) it is determined in 
  

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 good faith by the Board of Directors of the Company that because of valid business reasons (not including the avoidance
of the Company’s obligations hereunder), it is in the best interests of the Company to suspend such use, and prior to suspending such use in accordance with this clause (ii) the Company provides the Holders with written notice of such
suspension, which notice need not specify the nature of the event giving rise to such suspension. The Company will use reasonable best efforts to cause such suspension to terminate at the earliest possible date. 
  
 (g) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
may be necessary to keep such Registration Statement effective at all times during the Registration Period (as defined below), and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(h))
by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement. 
  
 (h) Each Holder agrees by its acquisition of the Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 5.2(a)(v) or 5.2(a)(vi), and upon notice of any suspension under Section 5.2(f), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 5.2, or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 
  
 (i) If requested by a Holder, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such
information as a Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or
sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement if reasonably requested by a
Holder holding any Registrable Securities. 
  
 5.3 Expenses of
Registration. All Registration Expenses in connection with any registration, qualification or compliance with registration pursuant to this Agreement shall be borne by the Company, and all Selling Expenses of a Holder shall be borne by such
Holder. 
  

 10 

 5.4 Registration of Form S-3. The Company shall use its reasonable best efforts to remain
qualified for registration on Form S-3 or any comparable or successor form or forms, or in the event that the Company is ineligible to use such form, such form as the Company is eligible to use under the Securities Act, provided that if such other
form is used, the Company shall convert such other form to a Form S-3 promptly after the Company becomes so eligible, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a
Registration Statement or Form S-3 covering the Registrable Securities has been declared effective by the SEC. 
  
 5.5 Registration Period. In the case of the registration effected by the Company pursuant to this Agreement, the Company shall keep such
registration effective from the date on which the Registration Statement initially became effective until the earlier of (a) the date on which all the Holders have completed the sales or distribution described in the Registration Statement relating
thereto or, (b) until such Registrable Securities may be sold by the Holders under Rule 144(k) (provided that the Company’s transfer agent has accepted an instruction from the Company to such effect) (the “Registration
Period”). 
  
 5.6 Indemnification. 
  
 (a) Company Indemnity. The Company will indemnify and hold harmless
each Holder, each of its officers, directors, agents and partners, and each person controlling each of the foregoing, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the circumstances under which they were made, or any violation by the Company of the Securities Act or any state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each Holder, each of its officers, directors, agents and partners, and
each person controlling each of the foregoing, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any such case to a Holder to the extent that any such claim, loss, damage, liability or expense arises out of or is based (i) on any untrue statement or omission based upon
written information furnished to the Company by a Holder or the underwriter (if any) therefore, (ii) the failure of a Holder to deliver at or prior to the written confirmation of sale, the most recent prospectus, as amended or supplemented or (iii)
the failure of a Holder otherwise to comply with this Agreement. The indemnity agreement contained in this Section 5.6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent will not be unreasonably withheld). 
  

 11 

 (b) Holder Indemnity. Each Holder will, severally and not jointly, if Registrable Securities held
by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, officers, agents and partners, and each underwriter, if any, of the
Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each other Holder (if any),
and each of their officers, directors and partners, and each person controlling such other Holder(s) against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to
make a statement therein not misleading in light of the circumstances under which they were made, and will reimburse the Company and such other Holder(s) and their directors, officers and partners, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically
for use therein, and provided that the maximum amount for which such Holder shall be liable under this indemnity shall not exceed the net proceeds received by such Holder from the sale of the Registrable Securities pursuant to the registration
statement in question. The indemnity agreement contained in this Section 5.6(b) shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities if such settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld). 
  
 (c)
Procedure. Each party entitled to indemnification under this Section 5.6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 5.6 except to the extent that the
Indemnifying Party is materially and adversely affected by such failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified
Party shall furnish such non-privileged information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation
resulting therefrom. 
  
 5.7 Contribution. If the
indemnification provided for in Section 5.6 herein is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein (other than by reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu 
  

 12 

 of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities as between the Company on the one hand and any Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of any Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by such Holder. 
  
 In no event shall the obligation of any Indemnifying Party to contribute
under this Section 5.7 exceed the amount that such Indemnifying Party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 5.6(a) or 5.6(b) hereof had been available under the circumstances.

  
 The Company and the Holders agree that it would not be just
and equitable if contribution pursuant to this Section 5.7 were determined by pro rata allocation (even if the Holders or the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraphs
shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions
of this section, no Holder or underwriter shall be required to contribute any amount in excess of the amount by which (i) in the case of any Holder, the net proceeds received by such Holder from the sale of Registrable Securities pursuant to the
registration statement in question or (ii) in the case of an underwriter, the total price at which the Registrable Securities purchased by it and distributed to the public were offered to the public exceeds, in any such case, the amount of any
damages that such Holder or underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 
  
 5.8 Survival. The indemnity and contribution agreements contained in Sections 5.6 and 5.7 and the representations and warranties of the Company
referred to in Section 5.2(d) shall remain operative and in full force and effect regardless of (i) any termination of this Agreement or any underwriting agreement, (ii) any investigation made by or on behalf of any Indemnified Party or by or on
behalf of the Company, and (iii) the consummation of the sale or successive resales of the Registrable Securities. 
  
 5.9 Information by Holders. Each Holder shall promptly furnish to the Company such information regarding such Holder and the distribution and/or
sale proposed by such Holder as the Company may from time to time reasonably request in writing in connection with any registration, qualification or compliance referred to in this Agreement, and the Company may exclude from such registration the
Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. The intended method or methods of disposition and/or sale of such securities as so provided by such
purchaser shall be included 
  

 13 

 without alteration in the Registration Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder. Each Holder agrees that, other than ordinary course brokerage arrangements, in the event it enters into any arrangement with a broker dealer for the sale of any Registrable Securities through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, such Holder shall promptly deliver to the Company in writing all applicable information required in order for the Company to be able to timely file a
supplement to the Prospectus pursuant to Rule 424(b), or take any other action, under the Securities Act, to the extent that such supplement or other action is legally required. Such information shall include a description of (i) the name of such
Holder and of the participating broker dealer(s), (ii) the number of Registrable Securities involved, (iii) the price at which such Registrable Securities were or are to be sold, and (iv) the commissions paid or to be paid or discounts or
concessions allowed or to be allowed to such broker dealer(s), where applicable. 
  
 6. Stock Legend. 
  
 6.1
Investor shall not sell, transfer, assign, hypothecate or pledge in any way any Shares or Warrant Shares except for sales (A) in accordance with the terms of the Plan of Distribution section of the prospectus contained in the Registration Statement
and in compliance with prospectus delivery requirements or (B) in compliance with the requirements of Rule 144 under the Securities Act. 
  
 6.2 Upon payment therefor as provided in this Agreement, the Company will issue the Shares and the Warrant in the name of Investor. Any certificate
representing Shares or Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: 
  
 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR AFTER RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT. 
  
 THESE SECURITIES REPRESENTED HEREBY ARE ALSO SUBJECT TO RIGHTS AND OBLIGATIONS AS SET FORTH IN A SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY 28,
2005 BY AND AMONG STAR SCIENTIFIC, INC. AND CERTAIN OTHER PARTIES THERETO AS SUCH MAY BE AMENDED FROM TIME TO TIME. 
  
 The Company agrees to issue Shares or Warrant Shares, issued upon exercise of the Warrant, without the legend set forth above at such time as the holder
thereof is permitted to dispose of such Shares or Warrant Shares pursuant to Rule 144(k) under the Securities Act. 
  
 The Warrant shall be imprinted with the legends set forth on Exhibit A. 
  

 14 

 7. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made
by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company and Investor herein shall survive the execution of this Agreement, the delivery to Investor of the Shares and the Warrant being purchased
and the payment therefor. 
  
 8. Notices. All notices,
requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or
by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed,
(ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, and (iv) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows: 
  
 (a)
if to the Company, to: 
  
 Star Scientific, Inc.

 7475 Wisconsin Ave. 
 Suite 850 
 Bethesda, MD 20814 
 Attn: Paul L. Perito 
 President and Chief Operating Officer 
 Phone: (301) 654-8300 
 Telecopy: (301) 654-9308 
  
 with copies to: 
  
 Star Scientific, Inc. 
 7475 Wisconsin Ave. 
 Suite 850 
 Bethesda, MD 20814 
 Attn: Robert E. Pokusa 
 General Counsel 
 Phone: (301) 654-8300 
 Telecopy: (301) 654-9308 
  
 and 
  
 Latham
& Watkins LLP 
 555 Eleventh Street, N.W. 
 Suite 1000 
 Washington, DC 20004 
 Attn: William P. O’Neill 
 Phone: (202) 637-2200 
 Telecopy: (202) 637-2201 
  
 (b)
if to Investor, at its address on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in writing. 
  

 15 

 9. Changes. This Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and Investor. 
  
 10.
Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 
  
 11. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 
  
 12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without
giving effect to the principles of conflicts of law. 
  
 13.
Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to such subject matter are expressly cancelled.

  
 14. Finders Fees. Neither the Company nor Investor nor
any affiliate thereof has incurred any obligation which will result in the obligation of the other party to pay any finder’s fee or commission in connection with this transaction. 
  
 15. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 
  
 16. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the Company and Investor. Investor shall not assign any rights or obligations under this Agreement other than, solely with respect to any Shares or Warrant Shares transferred in
accordance with this Agreement, including the legends described herein, to any permitted transferee of such Shares or Warrant, provided, however, that no such assignment shall relieve Investor of its obligations under this
Agreement. 
  
 17. Expenses. Each of the Company and
Investor shall bear its own expenses in connection with the preparation and negotiation of the Agreement. 
  
 [Signature pages follow.] 
  

 16 

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

			
	STAR SCIENTIFIC, INC.
		
	By:	 	 /s/ Paul. Perito

	 	 	Paul Perito
	 	 	President and Chief Operating Officer
	
	ELLIOTT INTERNATIONAL, L.P.
		
	 By:
	 	 Elliott International Capital Advisors, Inc.
 as attorney-in-fact

		
	By:	 	 /s/ Elliot Greenberg

	Print Name: Elliot Greenberg
	Title:	 	 Vice President

	Address: 712 Fifth Avenue
	               New York, NY 10019
	Contact name: Sundar Srinivsan
	Telephone: (212) 506-2999
	Aggregate Purchase Price: $2,700,000

  
 Signature Page to
Star Scientific, Inc. Securities Purchase and Registration Rights Agreement 

 Exhibit A 
  
 [Attach Warrant] 
  
 Signature Page to Star Scientific, Inc. Securities Purchase and Registration Rights AgreementWarrant dated February 25, 2005

 Exhibit 10.62 
  
 ATTACHMENT A 
  
 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AFTER
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT . 
  
 COMMON STOCK PURCHASE WARRANT 
  
 To Purchase 540,000 Shares of $0.0001 par value Common Stock of 
  
 Star Scientific, Inc. 
  
 THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value received, Elliott International, L.P. (the
“Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after February 28, 2005 (the “Initial Exercise Date”) and on or prior to
the close of business on November 25, 2005 (the “Termination Date”) but not thereafter (the “Exercise Period”), to subscribe for and purchase from Star Scientific, Inc., a corporation incorporated in Delaware (the
“Company”), up to 540,000 shares (the “Warrant Shares”) of Common Stock, par value $0.0001 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the
“Exercise Price”) under this Warrant shall be $5.00, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. The
term “Holder” shall refer to the Holder identified above or any subsequent transferee of this Warrant. 
  
 1. Authorization of Warrant Shares. The Company represents and warrants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable. 
  
 2. Exercise of Warrant. 
  
 (a) Except as provided in Section 3 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the
Initial Exercise Date and before or on the Termination Date by (i) surrendering this Warrant, with the Notice of Exercise Form annexed hereto completed and duly executed, to the offices of the Company (or such other office or agency (including the
transfer agent, if applicable) of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and (ii) delivering payment of the Exercise Price of the shares
thereby purchased by wire transfer of immediately available funds or cashier’s check drawn on a United States bank. The 
  

 1 

 Holder exercising its purchase rights in accordance with the preceding sentence shall be entitled to receive a
certificate for the number of Warrant Shares so purchased, which certificate will bear a legend substantially similar to the legend set forth on this Warrant. Certificates for shares purchased hereunder shall be delivered to the Holder within five
(5) Trading Days (as defined below) after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the
Holder shall be deemed to no longer hold this Warrant with respect to such shares and to have become a holder of record of such shares for all purposes, in each case as of the date the Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 4 prior to the issuance of such shares, have been paid. 
  
 (b) In the event that the Warrant is not exercised in full, the number of Warrant Shares shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised and/or surrendered, and the Company, if requested by Holder and at its expense, shall within ten (10) Trading Days issue and deliver to the Holder a new Warrant of like tenor in the name of the Holder or as the Holder (upon
payment by Holder of any applicable transfer taxes) may request, reflecting such adjusted Warrant Shares. 
  
 “Trading Day” shall mean a day on which there is trading on the principal market or such other market or exchange on which the
Common Stock is then principally traded. 
  
 3. No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company
shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. 
  
 4. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue tax or other
incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder; provided, however, that the Holder shall
pay any applicable transfer taxes. 
  
 5. Closing of Books.
The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. 
  
 6. Division and Combination. 
  
 (a) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. The Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice 
  

 2 

 (b) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new
Warrant or Warrants under this Section 6. 
  
 7. No Rights as
Stockholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise
Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment and this Warrant shall no longer be
issuable with respect to such Warrant Shares. 
  
 8. Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 
  
 9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 
  
 10. Adjustments of Exercise Price and Number of Warrant Shares. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,
or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of
Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant
Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of

  

 3 

 Warrant Shares or other securities of the Company purchasable pursuant hereto as a result of such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. 
  
 11. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall
reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets,
shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive upon exercise of this
Warrant, the number of shares of common stock of the successor or acquiring corporation or Common Stock of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume all the obligations and liabilities of the Company hereunder, subject to such modifications as may be deemed appropriate (as determined
in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in
this Section 11. For purposes of this Section 11, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 11 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations, spin-offs, or dispositions of assets. 
  
 12. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein
provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. 
  

 4 

 13. Notice of Corporate Action. If at any time: 
  
 (a) the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other
right, or 
  
 (b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the
Company to, another corporation or, 
  
 (c) there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company; 
  
 then, in any one or more of such cases, the Company shall give to Holder (i) at least five business days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least five business days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of
which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if
addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 15(d). 
  
 14. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any applicable law or regulation. 
  
 Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its
certificate of 
  

 5 

 incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above
the amount payable therefor upon such exercise immediately prior to such increase in par value and (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant. 
  
 15.
Miscellaneous. 
  
 (a) Jurisdiction. This Warrant
shall constitute a contract under the laws of the State of New York, without regard to its conflict of law, principles or rules. 
  
 (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant will have restrictions upon resale
imposed by state and federal securities laws and/or as set forth in the Securities Purchase and Registration Rights Agreement, dated February 28, 2005, by and between the Company and the Holder. 
  
 (c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, provided, however, that all rights hereunder terminate on the Termination Date. If
the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

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

	 	(i)	If to the Holder: 

  

							
	 	  	Elliott International, L.P.
	 	  	712 Fifth Avenue
	 	  	New York, New York 10019
	 	  	Telephone:	  	(212) 506-2999
	 	  	Facsimile:	  	(212) 974-2089
	 	  	Attention:	  	Sundar Srinivasan

  

 6 

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

	 	(ii)	If to the Company: 

  

							
	 	  	Star Scientific, Inc.
	 	  	801 Liberty Way
	 	  	Chester, Virginia 23836
	 	  	Telephone:	  	(804) 530-0535
	 	  	Facsimile:	  	(804) 530-8474
	 	  	Attention:	  	Chief Financial Officer

  
 with a copy to:

  

							
	 	  	Star Scientific, Inc.
	 	  	7475 Wisconsin Avenue
	 	  	Suite 850
	 	  	Bethesda, MD 20814
	 	  	Telephone:	  	(301) 654-8300
	 	  	Facsimile:	  	(301) 654-9308
	 	  	Attention:	  	General Counsel

  
 or at such other address as the Holder
or the Company, as applicable, may hereafter have advised the other in accordance with the provisions of this paragraph. 
  
 (e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company. 
  
 (f) Successors and
Assigns; No Assignment. This Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company, provided that neither the Company (except pursuant to a transaction
subject to Section 11 herein) nor the Holder may assign this Warrant without the prior written consent of the other party. 
  
 (g) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

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

 7 

 (i) Headings. The headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant. 
  
 IN WITNESS
WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. 
  
 Dated: February 28, 2005 
  

			
	STAR SCIENTIFIC, INC.
		
	By:	 	 /s/ Paul. L. Perito

	Name:	 	Paul L. Perito
	Title:	 	Chairman, President & C.O.O.

  

 8 

 NOTICE OF EXERCISE 
  
 To:     Star Scientific, Inc. 
  

(1) The undersigned hereby elects to purchase              Warrant Shares of Star
Scientific, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. 
  
 (2) Payment shall take the form of in lawful money of the United States. 
  
 (3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned. The Warrant Shares shall be delivered to the following: 
  
 __________________________________________ 
  
 __________________________________________ 
  
 __________________________________________ 
  
 (4) Accredited Investor/Qualified Institutional Buyer. The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended. 
  

			
	[PURCHASER]
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	Dated:

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