AGREEMENT

AGREEMENT

This Agreement is entered into as of the 30th day of April, 2014, by and among Star Scientific, Inc., with its principal place of business at 4470 Cox Road, Glen Allen, Virginia 23060 and Robert E. Pokusa, Esquire, 5322 Neville Court, Alexandria, VA 22310.

INTRODUCTION

WHEREAS, Robert E. Pokusa, Esquire (“Employee”) has been employed by Star Scientific, Inc. (“Company”) as General Counsel and Secretary of the Company since March 2001, pursuant to an Executive Employment Agreement (“Executive Employment Agreement”) that is continuing on a month to month basis according to its terms; and

WHEREAS, the Company wishes to provide Employee with certain assurances inasmuch as the Employee’s position with the Company is to be terminated by the Company on a basis other than for cause as part of the Company’s transition of its business operations.

NOW THEREFORE, in consideration of the premises, covenants and undertaking set forth herein the Parties set forth their agreement with respect to the severance and other benefits to which the Parties have mutually agreed will apply with respect to the termination of employment as noted above.

NOW THEREFORE, in consideration of the premises, covenants and undertaking set forth herein the Parties set forth their agreement with respect to the anticipated severance and other benefits which the Parties have mutually agreed will apply with respect to the termination of employment as noted above.

1. Employee’s Executive Employment Agreement will continue pursuant to its term until April 30, 2014, at which point Employee’s status as an employee will be terminated. Employee will not be required to continue to provide services under his Executive Employment Agreement between the date of this Agreement and the date of the expiration of his Executive Employment Agreement (Separation Date).

2. On or within 14 days of the Separation Date the Company shall pay Employee the amount of unreimbursed expenses incurred by Employee and submitted to Company for reimbursement. As of the Separation Date, Employee is entitled to payment for fifty (50) days of accrued but unused vacation pay, totaling $74,038.00. This amount (less required deductions for taxes) shall be paid by the Company to Employee in equal installments over the next four (4) pay periods following the Termination Date. Employee acknowledges that he was not required to sign this Agreement, including the incorporated General Release and Waiver, in order to receive payment of the same. In addition, The Company will pay to Employee eighteen (18) months of salary continuation payments. The salary continuation payments will be calculated based on Employee’s yearly base compensation of $385,000 per year (i.e. 1/12 of the yearly base compensation per month) and will be paid as set forth in Section 3 below.

3. During the first six months following the Termination Date, the salary continuation payments will be paid in cash in accordance with the Company’s customary payroll practices. Thereafter, the salary continuation payments will be paid in four quarterly grants of fully registered and freely tradable shares of the Company’s common stock issued under the Company’s 2008 Incentive Award Plan (“Plan”), to the extent such shares are available for issuance under the Plan, as set forth in and subject to the terms and conditions set forth in Appendix “A”.

4. Employee’s medical, dental and Company life insurance benefit coverage’s that are in place on April 17, 2014 also will continue in effect for the eighteen month period following the Separation Date, unless benefit eligibility requirements cease to be maintained during the severance period. Subsequent to the expiration of the eighteen month period following the Separation Date (during which Employee is covered under the Company’s medical and dental coverages), Employee shall, if permitted, shall be eligible to elect to continue his participation in the Company’s medical and dental plan through the provisions of the Consolidated Omnibus Reconciliation Act (“COBRA”), at Employee’s sole expense. Employee will continue to be charged the applicable employee contribution portion for any such insurance coverage’s as well as any supplemental coverage, such as AFLAC, and those costs along with applicable taxes and other required withholdings will be deducted from Employee’s periodic severance payments. Company shall withhold from these payments any applicable Federal and State income taxes and the applicable employee contribution portion for medical, dental and Company life insurance or other benefit coverage's in place on April 17, 2014, which coverage the Company agrees to continue in force for Employee for the eighteen month period following the Separation Date.

5. Further, as authorized by the Company’s 2000 Equity Incentive Plan or 2008 Incentive Award Plan, the Compensation Committee of the Board of Directors has approved, and the Company hereby exercises its discretion to extend the period during which Employee may exercise Stock Options grants issued to Employee for a period which is the lesser of three years from the Separation Date (the “Extended period of Exercisability”) or the expiration date of any particular Stock Option that would terminate earlier than the Extended Period of Exercisability, as reflected in the agreement attached hereto as Appendix “B”. The Extended Period of Exercisability shall become effective on the date following Employees termination of employment on which Employee shall have delivered the executed version of the Release to the Company and shall not have terminated the Release within the period permitted after execution.

6. Company and its Officers and Directors know of no improper action or conduct by Mr. Pokusa at any time during his employment with Star Scientific, Inc.

7. Company agrees to indemnify Employee to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware and Article Tenth of the Company’s Ninth Amended and Restated Certificate of Incorporation with respect to claims made based upon acts or omissions by Employee or others during his employment by Company. Company agrees that its obligation to indemnify Employee in accordance with said Article Tenth and this Agreement shall not be diminished by any subsequent amendment or rescission of said Article Tenth, and shall continue in full force and effect after this Agreement terminates in whole or in part for any reason. The obligation to indemnify shall apply in any suit or proceeding in which Employee is called as a witness or is required to answer questions or respond to interrogatories whether or not Employee is a named defendant. Employee’s right to indemnification includes reasonable reimbursement for lost salary and expenses incurred in connection with Employee’s participation in the type of matters described above. Subject to the right to indemnification, Employee agrees to reasonably cooperate with Company with respect to any current or future litigation and regulatory matters and to assist the Company in defending against any such litigation and in responding to any regulatory matters.

8. The consideration referenced in Sections 2 through 5 is contingent on and subject to Employee delivering and not revoking an executed form of the Release attached hereto as Appendix “C”, which will extinguish, among other things, any obligation for the Company to otherwise pay Employee severance under any prior agreement or understanding.

9. In consideration for the grants and other benefits provided in Sections 2 through 5, Employee agrees as follows:

10. This Agreement and the terms of Employee’s Executive Employment Agreement, to the extent it governs Employee’s conduct following termination of employment, contain the entire and only agreement between the Parties with respect to Employee’s termination as an employee of Company and any oral or written representations or assurances regarding Employee’s termination as an employee of Company other than those contained or referenced in this Agreement shall have no force and effect. This Agreement may only be modified by a written agreement signed by both Parties.

11. This Agreement shall be construed in accordance with the laws of Virginia without regard to its conflict of law principles.

In witness whereof the Parties hereto executed this Agreement as of the date first written above.

Appendix A

STOCK GRANT TERMS

The stock grants (“Stock Grants”) shall be made pursuant to Section 8.4 of the Company’s 2008 Incentive Award Plan (“Plan”) and shall be subject to the terms set forth in this Appendix “A” and the Plan. Capitalized terms that are used but not defined in the Agreement or in this Appendix “A” shall have the meaning ascribed to them in the Plan.

Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains Employee’s responsibility and the Company makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the award or vesting of the Stock or the subsequent sale of any shares and does not commit to structure the Stock to reduce or eliminate Employee’s liability for Tax-Related Items.

Appendix “B”

AMENDMENT TO STOCK OPTION AWARD AGREEMENT(S)

Reference is made to certain Stock Option Award Agreement(s) (hereinafter the “Stock Option Agreement(s)”) dated: (i) May 6, 2008 for 225,000 Option Shares; and (ii) April 5, 2012 for 35,000 Option Shares entered into between Star Scientific, Inc. (the “Company”) and Robert E. Pokusa (the “Employee”).

As authorized pursuant to the Company’s 2000 Equity Award Plan and/or 2008 Incentive Award Plan, the Company is hereby exercising its discretion to extend the duration of the exercise period of the Stock Options issued under the Stock Option Agreement(s) for a period of three years from the date of this Agreement or until the expiration date of the Stock Option Agreement(s), if that period is less than the extended time period set forth immediately above (the “Extended Period of Exercisability”).

Except with respect to any transfer by operation of law in connection with the death of the Employee or as otherwise agreed to by the Board or a committee thereof, the Stock Options may not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall the Stock Options be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Stock Options contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the Stock Options, the Stock Options shall, at the election of the Company, become null and void.

The Stock Option Agreement(s) are hereby ratified and confirmed and the Parties acknowledge that they are in full force and effect, as provided herein and this instrument shall be deemed to be a part of such Stock Option Agreement(s). If this instrument is inconsistent with any provision of the Stock Option Agreement(s), this instrument shall control.

Executed as of this 30th day of April, 2014.

 Appendix “C”

GENERAL RELEASE AND WAIVER OF CLAIMS

1. For and in consideration of the payments and other benefits due to Robert E. Pokusa, Esquire (the “Employee”) pursuant to the Agreement, dated as of April 30, 2014, (the “Severance Agreement”) by and between Star Scientific, Inc. (the “Company”) and the Employee, and for other good and valuable consideration, part or all of which consideration Employee is not otherwise entitled to receive, Employee irrevocably and unconditionally releases (gives up) any and all claims of any kind arising out of, or related to, his employment with the Company, its affiliates and subsidiaries (collectively, with the Company, the “Affiliated Entities”), or arising out of or related to the Employee’s separation from employment with the Affiliated Entities, which the Employee currently has against the Released Parties, whether known or unknown to the Employee, by reason of facts which have occurred on or prior to the date that the Employee has signed this General Release and Waiver of Claims (“Release”), except for (a) any contractual or statutory rights to indemnification to which Employee would be entitled to by virtue of his employment by the Company or by virtue of the terms and conditions of the Agreement to which this document is attached as Appendix “C,” or (b) any of the claims identified in Paragraph 2. Subject to Paragraph 2, such released claims include, without limitation, any and all claims relating to the foregoing under federal, state or local laws pertaining to employment, including, without limitation, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e et. seq., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201 et. seq., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 et. seq. the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 et. seq., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 et. seq., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et. seq., and any and all state or local laws regarding employment discrimination and/or federal, state or local laws of any type or description regarding employment, including but not limited to any claims arising from or derivative of the Employee’s employment with the Affiliated Entities, as well as any and all such claims under state contract or tort law. As used herein, “Released Parties” means the Company, or any of its divisions, affiliates, subsidiaries, parents, branches, predecessors, successors, assigns, and, with respect to such entities, their officers, directors, trustees, employees, agents, shareholders, administrators, general or limited partners, representatives, attorneys, insurers and fiduciaries, past, present and future.

2. This Release does not release any claims that the law does not permit Employee to release, including any future claims. This Release does not (a) limit or affect Employee’s right to challenge the validity of this Release under the ADEA or Older Workers Benefit Protection Act or (b) preclude Employee from filing an administrative charge or otherwise communicating with any federal, state or local government office, official or agency. Employee promises never to seek or accept any damages, remedies or other relief for Employee personally with respect to any claim released herein.

3. Employee has read this Release carefully and acknowledges that he has had a chance to review the listing of information regarding the Company’s restructuring attached hereto as Exhibit “1” and which has been provided to meet the requirements of the Older Workers Benefit Protection Act (“OWBPA”). Employee further acknowledges that Employee has been given at least forty-five (45) days after termination of employment to consider this Release and has been advised to consult with an attorney and any other advisors of the Employee’s choice prior to executing this Release, and the Employee fully understands that by signing below the Employee is voluntarily giving up any right which the Employee may have to sue or bring any of the claims released above against the Released Parties. The Employee also understands that the Employee has a period of seven (7) days after signing this Release within which to revoke this agreement, with a signed, written revocation delivered to Paul L. Perito, Esquire, and that neither the Company nor any other person is obligated to make any payments or provide any other benefits to the Employee pursuant to the Employment Agreement until seven (7) days have passed since the Employee’s signing of this Release without the Employee’s signature having been revoked other than any accrued obligations or other benefits payable pursuant to the terms of the Company’s normal payroll practices or employee benefit plans. However, notwithstanding the foregoing, the Company agrees to make payments to Employee through the date of termination, regardless of whether Employee executes this Release or revokes the Release within seven days thereafter. Finally, the Employee has not been forced or pressured in any manner whatsoever to sign this Release, and the Employee agrees to all of its terms voluntarily.

4. Notwithstanding anything else herein to the contrary, this Release shall not affect: (i) the Company’s obligations under any compensation or employee benefit plan, program or arrangement (including, without limitation, obligations to the Employee under any stock option, stock award or agreements or obligations under any pension, deferred compensation or retention plan) provided by the Affiliated Entities where the Employee’s compensation or benefits are intended to continue or the Employee is to be provided with compensation or benefits, in accordance with the express written terms of such plan, program or arrangement, beyond the date of the Employee’s termination; or (ii) rights to indemnification or liability insurance coverage the Employee may have under the by-laws of the Company or applicable law or the terms of the Agreement of which this Release is Appendix “C.”

If Employee does not timely revoke this Release as provided herein, it will become enforceable, final and binding on the eighth day after Employee signs it (regardless of whether Company has signed it yet). Thereafter, the Release may not be changed or modified except in a writing signed by both parties.

EXHIBIT “1”