APPLIED FINANCIAL, INC.
                        6975 Union Park Center, Suite 200
                               Midvale, Utah 84047

                       MASTER LEASE AGREEMENT NO. AFI0224

       This Master Lease Agreement is made December 5, 2001, between APPLIED
FINANCIAL, INC., with its principal office at 6975 Union Park Center, Suite 200,
Midvale, UT 84047 (the "Lessor") and STAR SCIENTIFIC, INC. with its principal
office at 801 Liberty Way, Chester, VA 23836 (the "Lessee").

1.     LEASE:

       Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor,
the property (together with all attachments, replacements, parts, substitutions,
additions, repairs, accessions and accessories, incorporated therein and/or
affixed thereto) (collectively, the "Property") described in any Lease Schedule
("Schedule") executed and delivered by Lessor and Lessee in connection with this
Master Lease Agreement. Each Schedule shall incorporate by reference the terms
and conditions of this Master Lease Agreement, and together with the Acceptance
Certificate (as defined herein) and Master Progress Funding Agreement, if
applicable, shall constitute a separate "Lease". In the event of conflict
between the provisions of this Master Lease Agreement and any Schedule the
provisions of the Schedule shall govern.

2.     ADDITIONAL DEFINITIONS:

       (a)  Except as otherwise provided in Section 6(a) hereof, "Acceptance
Date" means, as to the Property designated on any Schedule, the date Lessee
accepts the Property as set forth in any acceptance certificate signed by the
Lessee which is acceptable to Lessor (the "Acceptance Certificate"). If Lessee
fails to sign and deliver an Acceptance Certificate, then except as otherwise
provided in Section 6(a) hereof, the Acceptance Date shall be a date determined
by Lessor which shall be no sooner than the date Lessee receives substantially
all of the Property.

       (b) "Commencement Date" means, as to the Property designated on any
Schedule, where the Acceptance Date for such Schedule falls on the first day of
a calendar quarter, that date, and in any other case, the first day of the
calendar quarter following the calendar quarter in which such Acceptance Date
falls.

3.     TERM OF LEASE:

       The term of any Lease, as to all Property designated on the applicable
Schedule, shall commence on the Acceptance Date for such Property, and shall
continue for all "Initial Period" ending that number of months from the
Commencement Date as specified in the Schedule. Thereafter, Lessee shall have
options to purchase or return the Property or to extend the Lease, all as
provided in Section 18(m) of this Agreement.

4.     RENT AND PAYMENT:

       Lessee shall pay as rent for use of the Property, aggregate rentals equal
to the sum of all the Monthly Rentals (defined in the Schedule) and other
payments due under the Lease for the entire Initial Period. The Monthly Rental
shall begin on the Acceptance Date and shall be due and payable by Lessee in
advance of the first day of each month throughout the Initial Period. If the
Acceptance Date does not

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fall on the first day of a calendar quarter, then the first rental payment shall
be calculated by multiplying the number of days from and including the
Acceptance Date to the Commencement Date by a daily rental equal to
one-thirtieth (1/30) of the Monthly Rental, and shall be due and payable on the
Acceptance Date. Lessee shall pay all rentals to Lessor, or its assigns, at
Lessor's address set forth above (or as otherwise directed in writing by Lessor,
or its assigns), without notice or demand. LESSEE SHALL NOT ABATE, SET OFF OR
DEDUCT ANY AMOUNT OR DAMAGES FROM OR REDUCE ANY MONTHLY RENTAL OR OTHER PAYMENT
DUE FOR ANY REASON. THIS LEASE IS NON-CANCELABLE FOR THE ENTIRE TERM OF THE
INITIAL PERIOD AND ANY EXTENSION PERIODS.

       If any rental or other payment due under any Lease shall be unpaid after
its due date, Lessee will pay on demand, as a late charge, but not as interest,
the greater of twenty-five dollars ($25) or two percent (2%) of any such unpaid
amount but in no event to exceed maximum lawful charges. If late charges are
assessed by a lending institution due to any late payment by Lessee, Lessee
agrees to pay such late charges or to reimburse Lessor for their payment.

5.     TAXES:

       Lessee shall pay to Lessor when due all taxes, fees, assessments and
charges paid, payable or required to be collected by Lessor, however designated,
which are levied or based on the Monthly Rental or other payment due under the
Lease, or on the possession, use, operation, lease, rental, sale, purchase,
control or value of the Property, including without limitation, registration and
license fees and assessments, state and local privilege or excise taxes,
documentary stamp taxes or assessments, sales and use taxes, personal and other
property taxes, and taxes or charges based on gross revenue, but excluding taxes
based on Lessor's net income (collectively, "taxes"). Lessor shall invoice
Lessee for all taxes in advance of their payment due date, and Lessee shall
promptly remit to Lessor all taxes upon receipt of an invoice from Lessor.
Lessee shall pay all penalties and interest resulting from its failure to timely
remit all taxes to Lessor when invoiced by Lessor. Lessor shall file all
required sales and use tax and personal property tax returns and reports
concerning the Property with all applicable governmental agencies.

6.     USE; ALTERATIONS AND ATTACHMENTS:

       (a)  After Lessee receives and inspects any Property and is satisfied
that the Property is satisfactory, Lessee shall execute and deliver to Lessor an
Acceptance Certificate in form provided by Lessor; provided, however, that
Lessee's failure to execute and deliver an Acceptance Certificate for any
Property shall not affect the validity and enforceability of the Lease with
respect to the Property. If Lessee has signed and delivered a Master Progress
Funding Agreement, Lessor may, in its sole discretion, at any time by written
notice to Lessee, declare all prior Authorizations signed in connection with the
Master Progress Funding Agreement to be and constitute the "Acceptance
Certificate" for all purposes under the Lease, and the Acceptance Date of the
Lease shall be the date determined by Lessor in its sole discretion which shall
not be earlier than the date of the last Authorization.

       (b)  Lessee shall at all times keep the Property in its sole possession
and control. The Property shall not be moved from the location stated in the
Schedule without the prior written consent of Lessor which consent shall not be
unreasonably withheld. Upon any permitted change in location, Lessee hereby
authorizes Lessor to file UCC financing statements, fixture filings, real
property waivers, and other filings and recordings as may be deemed necessary,
by Lessor. If the nature of the Property is such that it requires frequent
removal from the location stated in the Schedule, Lessee may move the Property
to another location or locations upon prior written notice to Lessor, subject to
the provisions outlined in this subparagraph (b). To the extent the Property
includes vehicles, such Property shall be home-based at the location in the
Schedule.

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       (c)  Lessee shall cause the Property to be installed, used, operated and,
at the termination of the Lease, removed (i) in accordance with any applicable
manufacturer's manuals or instructions; (ii) by competent and duly qualified
personnel only; and (iii) in accordance with applicable governmental
regulations.

       (d)  Lessee may not make alterations or attachments that will
detrimentally affect the Property's end-of-Initial Period residual value without
first obtaining the written consent of Lessor. Any such alterations or
attachments shall be made at Lessee's expense and shall not interfere with the
normal and satisfactory operation or maintenance of the Property. The
manufacturer may incorporate engineering changes or make temporary alterations
to the Property upon request of Lessee. Unless Lessor shall otherwise agree in
writing, all such alterations and attachments shall be and become the property
of Lessor upon their attachment to the Property or, at the option of Lessor,
shall be removed by Lessee at the termination of the Lease as to such Property
and the Property restored at Lessee's expense to its original condition,
reasonable wear and tear only excepted.

       (e)  The Property is and shall remain personal property during the term
of the Lease notwithstanding that any portion thereof may in any manner become
affixed, attached to or located on real property or any building or improvement
thereon. Lessee shall not permit the Property to become an accession to other
goods or a fixture to or part of any real property. Upon request by Lessor,
Lessee will obtain and deliver to Lessor a waiver of liens, in form satisfactory
to Lessor, from all persons not a party hereto who might secure an interest,
lien or other claim in the Property.

       (f)  In the event the Property includes software (which Lessee agrees
shall include all documentation, later versions, updates, upgrades, and
modifications) (herein "Software"), the following shall apply: (i) Lessee shall
possess and use the Software in accordance with the terms and conditions of any
license agreement ("License") entered into with the owner/vendor of such
Software and shall not breach the License (at Lessor's request, Lessee shall
provide a complete copy of the License to Lessor); (ii) Lessee agrees that
Lessor has an interest in the License and Software due to its payment of the
price thereof and is an assignee or third-party beneficiary of the License,
(iii) as due consideration for Lessor's payment of the price of the License and
Software and for providing the Software to Lessee at a lease rate (as opposed to
a debt rate), Lessee agrees that Lessor is leasing (and not financing) the
Software to Lessee; (iv) except for the original price paid by Lessor, Lessee
shall, at its own expense, pay promptly when due all servicing fees, maintenance
fees, update and upgrade costs, modification costs, and all other costs and
expenses relating to the License and Software and maintain the License in effect
during the term of the Lease; and (v) the Software shall be deemed Property for
all purposes under the Lease.

       (g)  Lessee shall comply with all applicable laws, regulations,
requirements, rules and orders, all manufacturer's instructions and warranty
requirements, and with the conditions and requirements of all policies of
insurance with respect to the Property and the Lease.

       (h)  The Property is leased solely for commercial or business purposes.

7.     MAINTENANCE AND REPAIRS; RETURN OF PROPERTY:

       (a)  During the continuance of each Lease, Lessee shall, at its own
expense, and in accordance with all manufacturer maintenance specifications, (i)
keep the Property in good repair, condition and working order; (ii) make all
necessary adjustments, repairs and replacements; (iii) furnish all required
parts, mechanisms, devices and servicing; and (iv) not use or permit the
Property to be used for any purpose for which, in the opinion of the
manufacturer, the Property is not designed or reasonably suitable. Such parts,
mechanisms and devices shall immediately become a part of the Property for all
purposes hereunder and title thereto shall vest in Lessor. If the manufacturer
does not provide

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maintenance specifications, Lessee shall perform all maintenance in accordance
with industry standards for like Property.

       (b)  During the continuance of each Lease, Lessee shall, at its own
expense, either (i) enter into and maintain in force a contract with the
manufacturer or other qualified maintenance organization reasonably satisfactory
to Lessor for maintenance of each item of Property that reasonably requires such
a contract, or (ii) self-maintain the items of Property in accordance with the
manufacturer's standard maintenance agreement. Such contract as to each item
shall commence upon the Acceptance Date. Lessee shall furnish Lessor with a copy
of such contract or provide to Lessor satisfactory evidence of self-maintenance,
in Lessor's sole discretion, upon demand.

       (c)  Lessee shall pay all shipping and delivery charges and other
expenses incurred in connection with the Property. Upon default, or at the
expiration or earlier termination of any Lease, Lessee shall, at its own
expense, assemble, prepare for shipment and promptly return the Property to
Lessor at the location within the Continental United States designated by
Lessor. Upon such return, the Property shall be in the same operating order,
repair, condition and appearance as of the Acceptance Date, except for
reasonable wear and tear from proper use thereof, and shall include all
engineering changes theretofore prescribed by the manufacturer. If available,
Lessee shall provide maintenance certificates or qualification letters and/or
arrange for and pay all costs which are necessary for the manufacturer to accept
the Property under contract maintenance at its then standard rates
("recertification"). The term of the Lease shall continue upon the same terms
and conditions until such recertification has been obtained. With regard to
Software, at the expiration or earlier termination of any Lease, or upon demand
by Lessor upon the occurrence of an Event of Default under the Lease, Lessee
shall (i) delete from its systems all Software then installed, (ii) destroy all
copies or duplicates of the Software which were not returned to Lessor, and
(iii) cease using the Software altogether. Upon its receipt from Lessee, Lessor
shall be responsible to return the Software to the owner/vendor/licensor so that
Lessee shall not be in breach of any software license.

8.     OWNERSHIP AND INSPECTION:

       (a)  The Property shall at all times be the property of Lessor or its
assigns, and Lessee shall have no right, title or interest therein except as to
the use thereof subject to the terms and conditions of the Lease. For purposes
of the foregoing, Lessee transfers to Lessor all of Lessee's right, title and
interest (including all ownership interest) in and to the Property free and
clear of all liens, security interests and encumbrances. Lessor may affix (or
require Lessee to affix) tags, decals or plates to the Property indicating
Lessor's ownership, and Lessee shall not permit their removal or concealment.
Lessee shall not permit the name of any person or entity other than Lessor or
its assigns to be placed on the Property as a designation that might be
interpreted as a claim of ownership or security interest.

       (b)  LESSEE SHALL KEEP THE PROPERTY AND LESSEE'S INTEREST UNDER ANY LEASE
FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES, EXCEPT THOSE PERMITTED IN WRITING
BY LESSOR OR ITS ASSIGNS.

       (c)  Lessor, its assigns and their agents shall have free access to the
Property at all reasonable times during normal business hours for the purpose of
inspecting the Property and for any other purpose contemplated in the Lease.

       (d)  Lessee shall immediately notify Lessor in writing of all details
concerning any material damage or loss to the Property, including without
limitation, any damage or loss arising from the alleged or apparent improper
manufacture, functioning or operation of the Property.

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9.     WARRANTIES:

       (a)  Lessee acknowledges that Lessor is not the manufacturer of the
Property nor manufacturer's agent nor a dealer therein. The Property is of a
size, design, capacity, description and manufacture selected by the Lessee.
Lessee is satisfied that the Property is suitable and fit for its purposes.
LESSEE AGREES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OR REPRESENTATION AS TO: (i) THE DESCRIPTION,
CONDITION, DESIGN, QUALITY OR PERFORMANCE OF THE PROPERTY OR QUALITY OR CAPACITY
OF MATERIALS OR WORKMANSHIP IN THE PROPERTY; (ii) ITS MERCHANTABILITY OR FITNESS
OR SUITABILITY FOR A PARTICULAR PURPOSE WHETHER OR NOT DISCLOSED TO LESSOR, AND
(iii) DELIVERY OF THE PROPERTY FREE OF THE RIGHTFUL CLAIM OF ANY PERSON BY WAY
OF INFRINGEMENT OR THE LIKE. LESSOR EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES. If
the Software is not properly installed, does not function as represented or
warranted by original licensor, or is unsatisfactory for any reason, Lessee
shall make any claim on account thereof solely against original licensor and
shall nevertheless pay all sums payable under the Lease, Lessee hereby waiving
the right to make any Such claims against Lessor. Lessor shall not be liable to
Lessee for any loss, damage or expense of any kind or nature caused, directly or
indirectly, by the Property or the use, possession or maintenance thereof, or
the repair, service or adjustment thereof, or by any delay or failure to provide
any such maintenance, repair, service or adjustment, or by any interruption of
service or loss of use thereof (including without limitation, Lessee's use of or
right to use any Software) or for any loss of business howsoever caused.

       (b)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE LEASE,
LESSOR SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO LESSEE OR ANY THIRD
PARTY, FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT
OF OR RELATED TO THE TRANSACTION CONTEMPLATED HEREUNDER, WHETHER IN AN ACTION
BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR ANY OTHER
LEGAL THEORY, INCLUDING WITHOUT LIMITATION, LOSS OF ANTICIPATED PROFITS, OR
BENEFITS OF USE OR LOSS OF BUSINESS, EVEN IF LESSOR IS APPRISED OF THE
LIKELIHOOD OF SUCH DAMAGES OCCURRING.

       IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF
ANY LEASE WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES
OR EXCLUSION OF DAMAGES, IS INTENDED BY THE PARTIES TO BE SEVERABLE FROM ANY
OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT ELEMENT OF RISK ALLOCATION
AND IS INTENDED TO BE ENFORCED AS SUCH.

       (c)  Lessor assigns to Lessee all assignable warranties on the Property,
including without limitation any warranties described in lessor's purchase
contract, which assignment shall be effective only (i) during the Initial Period
and any extensions thereof, and (ii) so long as no Event of Default exists.

10.    NET LEASE; LESSEE'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL:

       This Agreement is a "net lease" and, as between Lessor and Lessee, Lessee
shall be responsible for and shall indemnify Lessor against, all costs, expenses
and claims of every nature whatsoever arising out of or in connection with or
related to the Lease or the Property.

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       Lessee agrees that its obligation to pay Monthly Rental and other
obligations under the Lease shall be irrevocable, independent, absolute and
unconditional and shall not be subject to any abatement, reduction, recoupment,
defense, offset or counterclaim otherwise available to Lessee; nor, except as
otherwise expressly provided herein or as agreed to by Lessor in writing, shall
this Agreement terminate for any reason whatsoever prior to the end of the
Initial Period.

11.    ASSIGNMENT BY LESSOR:

       Lessor may assign or transfer its rights and interests in the Lease and
Property to another party ("Lessor's Assignee") either outright or as security
for loans (collectively, the "Underwriting"). Upon notice of any such assignment
and instructions from Lessor, Lessee shall pay its Monthly Rental and other
payments and perform its other obligations under the Lease to the Lessor's
Assignee (or to another party designated by Lessor's Assignee). Upon any such
sale or assignment, LESSEE'S OBLIGATIONS TO LESSOR'S ASSIGNEE UNDER THE ASSIGNED
SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL AND LESSEE WILL NOT ASSERT AGAINST
LESSOR'S ASSIGNEE ANY CLAIM, DEFENSE, OFFSET OR COUNTERCLAIM WHICH LESSEE MIGHT
HAVE AGAINST LESSOR. Lessor's Assignee shall have all of the rights but none of
the obligations of Lessor under the assigned Lease, and after such assignment
Lessor shall continue to be responsible for all of Lessor's obligations under
the Lease.

       Upon any such assignment, Lessee agrees to promptly execute and deliver
to Lessor: (i) estoppel certificates, acknowledgments of assignment and other
documents requested by Lessor which acknowledge the assignment, affirm
provisions of the Lease, or which may be required to effect the Underwriting,
and (ii) UCC-1 financing statements or precautionary filings as requested.

       Only one executed counterpart of any Schedule shall be marked "Original";
any other executed counterparts shall be marked "Duplicate Original" or
"Counterpart". No security interest in any Schedule may be created through the
transfer and possession of any counterpart other than the "Original".

12.    RISK OF LOSS ON LESSEE:

       From the earlier of the date the supplier ships the Property to Lessee or
the date Lessor confirms Lessee's purchase order or contract to supplier until
the date the Property is returned to Lessor as provided in the Lease. Lessee
hereby assumes and shall bear all risk of loss for theft, damage or destruction
to the Property, howsoever caused. NO SUCH LOSS OR DAMAGE SHALL IMPAIR ANY
OBLIGATION OF LESSEE UNDER THIS LEASE WHICH SHALL CONTINUE IN FULL FORCE AND
EFFECT.

       In the event of damage or loss to the Property (or any part thereof) and
irrespective of payment from any insurance coverage maintained by Lessee, but
applying full credit therefore, Lessee shall at the option of Lessee, (a) place
the Property in good repair, condition and working order; or (b) replace the
Property (or any part thereof) with like property of equal or greater value, in
good repair, condition and working order and transfer clear title to such
replacement property to Lessor whereupon such replacement property shall be
deemed the Property for all purposes under the Lease; or (c) pay to Lessor the
total rent due and owing at the time of such damage or loss plus all amount
which is equal to the Casualty Loss Value specified in the Casualty Loss
Schedule attached to the applicable Schedule.

13.    INSURANCE:

       Lessee shall obtain and maintain for the entire term of this Lease, at
its own expense (as primary insurance for Lessor and Lessee), property damage
and liability insurance and insurance against loss or

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damage to the Property including without limitation loss by fire (including so
called extended coverage), theft, collision and such other risks of loss as are
customarily insured against on the type of Property leased under any Lease and
by businesses in which Lessee is engaged, in such amounts, in such form and with
such insurers as shall be satisfactory to Lessor; provided, however, that the
amount of insurance against loss or damage to the Property shall be equal to or
greater than the Casualty Loss Value of such items of Property as specified in
the Causality Loss Schedule attached to the Schedule. Each insurance policy will
name Lessee as insured and Lessor and its assignees as additional insureds and
loss payees thereof as their interests may appear, shall contain cross-liability
endorsements and shall contain a clause requiring the insurer to give Lessor and
its assignees at least thirty (30) days prior written notice of any material
alteration in the terms of such policy or of the cancellation thereof. Lessee
shall furnish to Lessor a certificate of insurance or other evidence
satisfactory to Lessor that such insurance coverage is in effect; provided,
however, that Lessor shall be under no duty either to ascertain the existence of
or to examine such insurance policy or to advise Lessee in the event such
insurance coverage shall not comply with the requirements hereof. All insurance
covering loss or damage to the Property shall contain a breach of warranty
clause satisfactory to Lessor.

14.    INDEMNIFICATION:

       Except for the gross negligence or willful misconduct of Lessor, Lessee
shall indemnify and hold Lessor harmless from and against any and all claims,
(including without limitation negligence tort and strict liability), damages,
judgments, suits and legal proceedings, and any and all costs and expenses in
connection therewith (including attorney's fees incurred by Lessor either in
enforcing this indemnity or in defending against such claims), arising out of or
in any manner connected with or resulting from the Lease or the Property,
including, without limitation the manufacture, purchase, financing, ownership,
rejection, non-delivery, transportation, delivery, possession, use, operation,
maintenance, condition, lease, return, storage or disposition thereof, including
without limitation (a) claims for injury to or death of persons and for damage
to property; (b) claims relating to patent, copyright, or trademark
infringement, (c) claims relating to latent or other defects in the Property
whether or not discoverable by Lessor and (d) claims for wrongful, negligent or
improper act or misuse by Lessor. Lessee agrees to give Lessor prompt notice of
any such claim or liability. For purposes of this paragraph and any Lease, the
term "Lessor" shall include Lessor, its successors and assigns, shareholders,
directors, officers, representatives and agents, and the provisions of this
paragraph shall survive expiration of any Lease with respect to events occurring
prior thereto.

       Upon request of Lessor, Lessee shall assume the defense of all demands,
claims, or actions, suits and all proceedings against Lessor for which indemnity
is provided and shall allow Lessor to participate in the defense thereof. Lessor
shall be subrogated to all rights of Lessee for any matter which Lessor has
assumed obligation hereunder, and may settle any such demand, claim, or action
without Lessee's prior consent, and without prejudice to Lessor's right to
indemnification hereunder.

15.    EVENTS OF DEFAULT:

       An "Event of Default" shall occur under any Lease if Lessee does any of
the following and such breach is not cured to Lessor's satisfaction within ten
(10) days after written notice thereof is provided to Lessee; provided, however,
that the ten (10) day cure period shall not apply for Lessee's breach of Section
15(e) or failure to maintain insurance as required under section 13 hereof:

       (a)  fails to pay any Monthly Rental or other payment required under the
Lease when the same becomes due and payable and such failure continues for ten
(10) days after its due date;

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       (b)  attempts to or does, remove, sell, assign, transfer, encumber,
sublet or part with possession of any one or more items of the Property or any
interest under any Lease, except as expressly permitted herein, or permits a
judgment or other claim to become a lien upon any or all of Lessee's assets or
upon the Property;

       (c)  permits any item of Property to become subject to any levy, seizure,
attachment, assignment or execution or Lessee abandons any item of Property;

       (d)  or any guarantor, fails to observe or perform any of its covenants
and obligations required to be observed or performed under the Lease and such
failure continues uncured for twenty (20) days after occurrence thereof, except
that the twenty (20) day cure period shall not apply and an Event of Default
shall occur immediately upon Lessee's failure to maintain insurance;

       (e)  or any guarantor, breaches any of its representations and warranties
made under any Lease, or if any such representations or warranties shall be
false or misleading in any material respect;

       (f)  or any guarantor, shall (i) be adjudicated insolvent or a bankrupt,
or cease, be unable, or admit in writing its inability, to pay its debts as they
mature, or make a general assignment for the benefit of creditors or enter into
any composition or arrangement with creditors; (ii) apply for or consent to the
appointment of a receiver, trustee or liquidator of it or of a substantial part
of its property, or authorize such application or consent, or proceedings
seeking such appointment shall be instituted against it without such
authorization, consent or application and shall continue undismissed for a
period of sixty (60) days; (iii) authorize or file a voluntary petition in
bankruptcy or apply for or consent to the application of any bankruptcy,
reorganization in bankruptcy, arrangement, readjustment of debt, insolvency,
dissolution, moratorium or other similar law of any jurisdiction, or authorize
such application or consent or proceedings to such end shall be instituted
against it without such authorization, application or consent and such
proceeding instituted against it shall continue undismissed for a period of
sixty (60) days;

       (g)  or any guarantor, shall suffer a material adverse change in its
financial condition which, in the reasonable discretion of Lessor, would
adversely affect Lessee's ability to make rental payments after the date hereof
as reasonably determined by Lessor in its reasonable discretion, or there shall
occur a substantial change in ownership of the outstanding stock of Lessee or a
substantial change in control of its board of directors;

       (h)  shall be in default under any other Schedule or agreement executed
with Lessor; or shall fail to sign and deliver to Lessor any document requested
by Lessor in connection with any Lease or shall fail to do any thing reasonably
determined by Lessor to be necessary or desirable to effectuate the transaction
contemplated by the Lease or to protect Lessor's rights and interests in the
Lease and Property; or shall fail to provide financial statements to Lessor as
provided in Section 18(g) hereof, or if Lessee is in default of any agreement
greater than $1,000,000.00 with any party other than Lessor;

       (i)  breach by Lessee of any license or other agreement for Computer
Software (hereafter described as Software) included in the Schedule;

       (j)  failure of Lessee to promptly execute and deliver to Lessor any
document required under Section 11 of this Agreement.

16.    REMEDIES:

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       Upon the occurrence of any Event of Default and at any time thereafter,
Lessor may, with or without giving notice to Lessee and with or without
canceling the Lease, do any one or more of the following:

       (a)  enforce this Agreement according to its terms;

       (b)  advance funds on Lessee's behalf to cure the Event of Default,
whereupon Lessee shall immediately reimburse Lessor therefore, together with
late charges accrued thereon;

       (c)  refuse to deliver the Property to Lessee;

       (d)  upon notice to Lessee, cancel this Master Lease Agreement and any or
all Schedules executed pursuant thereto.

       (e)  if Lessor determines, in its sole discretion, not to take possession
of the Property, Lessor shall continue to be the owner of the Property and may,
but is not obligated to, dispose of the Property by sale or otherwise, all of
which determinations may be made by Lessor in its sole discretion and for its
own account;

       (f)  declare immediately due and payable all amounts due or to become due
hereunder for the full term of the Lease (including any renewal or purchase
options which Lessee has contracted to pay);

       (g)  with or without terminating the Lease, recover the Casualty Loss
Value of the Property as of the rent payment date immediately preceding the date
of default together with all costs and expenses incurred by Lessor in the
repossession, recovery, storage, repair, sale, re-lease or other disposition of
the Property, including without limitation, reasonable attorneys' fees and costs
incurred in connection therewith or otherwise resulting or arising from Lessee's
default, and any indemnity if then determinable, plus interest on all of the
above until paid (before and after judgment) at the lesser of the rate of
eighteen percent (18%) per annum or the highest rate permitted by law
(collectively, "Lessor's Damages");

       (h)  without notice to Lessee, repossess the Property wherever found,
with or without legal process, and for this purpose Lessor and/or its agents or
assigns may enter upon any premises of or under the control or jurisdiction of
Lessee or any agent of Lessee, without liability for suit, action or other
proceeding by Lessee (any damages occasioned by such repossession being hereby
expressly waived by Lessee) and remove the Property therefrom; Lessee further
agrees on demand, to assemble the Property and make it available to Lessor at a
place to be designated by Lessor;

       (i)  in its sole discretion, re-lease or sell any or all of the Property
at a public or private sale on such terms and notice as Lessor shall deem
reasonable (such sale may, at Lessor's sole option, be conducted at Lessee's
premises), and recover from Lessee liquidated damages for the loss of a bargain
and not as a penalty an amount equal to the Lessor's Damages;

       (j)  if Lessee breaches any of its obligations under Section 7(c) of this
Agreement with regard to Software, Lessee shall be liable to Lessor for
additional damages in an amount equal to the original price paid by Lessor for
the Software, and in addition, at Lessor's option. Lessor shall be entitled to
injunctive relief;

       (k)  exercise any other right or remedy which may be available to it
under the Uniform Commercial Code or any other applicable law;

                                                                             9

<PAGE>

       (l)  a cancellation hereunder shall occur only upon notice by Lessor and
only as to such items of Property as Lessor specifically elects to cancel and
this Lease shall continue in full force and effect as to the remaining items, if
any;

       (m)  (i) by notice to Lessee, declare any license agreement with respect
to Software terminated, in which event the right and license of Lessee to use
the Software shall immediately terminate, and Lessee shall thereupon cease all
use of the Software and return all copies thereof to Lessor or original
licensor; (ii) have access to and disable the Software by any means deemed
necessary by Lessor, for which purposes Lessee hereby expressly consents to such
access and disablement, promises to take no action that would prevent or
interfere with Lessor's ability to perform such access and disablement, and
waives and releases any and all claims that it has or might otherwise have for
any and all losses, damages, expenses, or other detriment that it might suffer
as a result of such access and disablement; and (iii) Lessee agrees that the
detriment which Lessor will suffer as a result of a breach by Lessee of the
obligations contained in the Lease cannot be adequately compensated by monetary
damages, and therefore Lessor shall be entitled to injunctive and other
equitable relief to enforce the provisions of this paragraph 16(m). LESSEE
AGREES THAT LESSOR SHALL HAVE NO DUTY TO MITIGATE LESSOR'S DAMAGES UNDER ANY
LEASE BY TAKING LEGAL ACTION TO RECOVER THE SOFTWARE FROM LESSEE OR ANY THIRD
PARTY, OR TO DISPOSE OF THE SOFTWARE BY SALE, RE-LEASE OR OTHERWISE.

       In the event Lessor in good faith believes that the prospect of payment
or performance has become impaired, Lessor shall have the right, in its
reasonable discretion, to declare the entire indebtedness under any Lease
immediately due and payable.

       Lessor may exercise any and all rights and remedies available at law or
in equity, including those available under the Uniform Commercial Code. The
rights and remedies afforded Lessor hereunder shall not be deemed to be
exclusive, but shall be in addition to any rights or remedies provided by law.
Lessor's failure promptly to enforce any right or remedy hereunder shall not
operate as a waiver of such right or remedy, and Lessor's waiver of any default
shall not constitute a waiver of any subsequent or other default. Lessor may
accept late payments or partial payments of amounts due under the Lease and may
delay enforcing any of Lessor's rights or remedies hereunder without losing or
waiving any of Lessor's rights or remedies under the Lease.

17.    LESSEE'S REPRESENTATIONS AND WARRANTIES:

       Lessee represents and warrants as follows:

       (a)  If Lessee is a corporation, duly organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation, duly
qualified to do business in each jurisdiction where any Property is, or is to be
located, and has full corporate power and authority to hold property under lease
and to enter into and perform its obligations under any Lease, the execution,
delivery and performance by Lessee of any Lease has been duly authorized by all
necessary corporate action on the part of Lessee, and is not inconsistent with
its Articles of Incorporation or By-Laws or other governing instruments;

       (b)  If Lessee is a partnership, duly organized by written partnership
agreement and validly existing in accordance with the laws of the jurisdiction
of its organization, duly qualified to do business in each jurisdiction where
the Property is, or is to be located, and has full power and authority to hold
property under lease and to enter into and perform its obligations under any
Lease, the execution, delivery and performance by Lessee of any Lease has been
duly authorized by all necessary action on the part of the Lessee, and is not
inconsistent with its partnership agreement or other governing instruments. Upon
request, Lessee will deliver to Lessor certified copies of its partnership
agreement and other governing

                                                                             10

<PAGE>

instruments and original certificate of partners and other instruments deemed
necessary or desirable by Lessor. To the extent required by applicable law,
Lessee has filed and published its fictitious business name certificate;

       (c)  The execution, delivery and performance by Lessee of any Lease does
not violate any law or governmental rule, regulation, or order applicable to
Lessee does not and will not contravene any provision, or constitute a default
under any indenture, mortgage, contract, or other instrument to which it is
bound and, upon execution and delivery of each Lease, will constitute a legal,
valid and binding agreement of Lessee, enforceable in accordance with its terms;

       (d)  No action, including any permits or consents, in respect of or by
any state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by Lessee of any Lease;

       (e)  All computer hardware and software that is utilized by Lessee in the
operation of its businesses is "Year 2000 Compliant" in that it is capable of
accepting, processing and printing date data between and within the twentieth
and twenty-first centuries, and neither the performance nor functionality of any
computer hardware or software is affected by dates prior to during, or after the
Year 2000. Upon request, Lessee shall provide written assurances to Lessor that
its hardware and software are "Year 2000 Compliant".

18.    GENERAL:

       (a)  Entire Agreement. Each Schedule shall incorporate the terms and
            ----------------
conditions of this Master Lease Agreement and, together with the Acceptance
Certificate (as defined herein) and Master Progress Funding Agreement (and
Authorizations thereunder), if applicable, and any amendments to any of the
foregoing documents, shall supersede all prior agreements and constitute the
entire understanding and agreement between the Lessor and Lessee with regard to
the subject matter hereof and thereof, and there is no understanding or
agreement, oral or written, which is not set forth herein or therein.

       (b)  Time Is of the Essence; Provisions Severability. Time is of the
            -----------------------------------------------
essence with respect to any Lease. The provisions contained in any agreement
shall be deemed to be independent and severable. The invalidity or partial
invalidity of any one provision or portion of the Lease under the laws of any
jurisdiction shall not affect the validity or enforceability of any other
provisions of the Lease. The captions and headings set forth herein are for
convenience of reference only and shall not define or limit any of the terms
hereof.

       (c)  Notice. Notices or demands required to be given hereunder shall be
            -------
in writing and addressed to the other party at the address herein or such other
address provided by written notice hereunder and shall be effective (i) upon the
next business day if sent by guaranteed overnight express service (such as
Federal Express); (ii) on the same day if personally delivered; or (iii) three
days after mailing if sent by certified or registered U.S. mail, postage
prepaid.

       (d)  Governing Law; Waiver of Trial by Jury. THIS LEASE SHALL IN ALL
            --------------------------------------
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. LESSEE
AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE AND/OR FEDERAL COURTS IN THE
STATE OF UTAH IN ALL MATTERS RELATING TO THE LEASE, THE PROPERTY AND THE CONDUCT
OF THE RELATIONSHIP BETWEEN LESSOR AND LESSEE. THIS LEASE WAS EXECUTED IN THE
STATE OF UTAH (BY THE LESSOR HAVING COUNTERSIGNED IT IN UTAH) AND IS TO BE
PERFORMED IN THE STATE OF UTAH (BY

                                                                              11

<PAGE>

REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE MADE TO LESSOR IN UTAH). LESSOR
AND LESSEE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF
THE LEASE OR PROPERTY OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LESSOR AND
LESSEE.

       (e)  Binding Effect; Survivability. The provisions of each Lease shall
            -----------------------------
inure to the benefit of and shall bind Lessor and Lessee and their respective
permitted successors and assigns. All representations, warranties, covenants and
indemnities of Lessee made or agreed to in the Lease or in any certificates
delivered in connection therewith shall survive the expiration, termination or
cancellation of the Lease for any reason.

       (f)  Further Assurances; Financing Statements. Lessee will cooperate with
            -----------------------------------------
Lessor in protecting Lessor's interests in the Property, the Lease and the
amounts due under the Lease, including, without limitation, the execution and
delivery of Uniform Commercial Code statements and filings, patent and copyright
registration documents with respect to proprietary Software (if applicable), and
other documents reasonably requested by Lessor. Lessee shall pay all costs of
filing any financing, continuation or termination statements with respect to the
Property and Lease, including without limitation, any intangibles tax,
documentary stamp tax or other similar taxes or charges relating thereto and all
costs of UCC or other lien searches and of obtaining and filing any full or
partial third-party releases deemed necessary or advisable by Lessor. Lessee
will do whatever may be necessary or advisable to have a statement of the
interest of Lessor in the Property noted on any certificate of title relating to
the Property and will deposit said certificate with Lessor. Lessee will execute
and deliver to Lessor such other documents and written assurances and take such
further action as Lessor may request to more fully carry out the implementation,
effectuation, confirmation and perfection of the Lease and any rights of Lessor
thereunder. Lessee grants to Lessor a security interest in all deposits and
other property transferred or pledged to Lessor to secure the payment and
performance of all of Lessee's obligations under the Lease.

       (g)  Financial Statements. Lessee, and any guarantor, shall provide to
            --------------------
Lessor a copy of its annual audited financial statements within
one-hundred-twenty (120) days after its fiscal year end, and a copy of its
quarterly unaudited financial statements within ninety (90) days after the end
of each fiscal quarter.

       (h)  Security Interest. In the event a court of competent jurisdiction or
            ------------------
other governing authority shall determine that the Lease is not a "true lease"
or is a lease intended as security or that Lessor (or its assigns) does not hold
legal title to or is not the owner of the Property, then the Lease shall be
deemed to be a security agreement with Lessee, as debtor, having granted to
Lessor, as secured party, a security interest in the Property effective the date
of the Lease, and the Property shall secure all duties and obligations of Lessee
under any Lease or other agreement with Lessor. As security for the performance
by Lessee of its duties and obligations under any Lease, Lessee hereby grants to
Lessor a security interest in all of Lessee's rights under any license agreement
related to any Software, including, without limitation, all of its rights with
respect to the Software. With regard to any security interest created hereunder
in any of the Property, Lessee consents and agrees that Lessor shall have all of
the rights, privileges and remedies of a secured party under the Utah Uniform
Commercial Code.

       (i)  Change in Lessee's Name or Address. Lessee shall not change its name
            ----------------------------------
or address from that set forth above, unless it shall have given Lessor or its
assigns no less than thirty (30) days prior written notice.

                                                                              12

<PAGE>

       (j)  Covenant of Quiet Possession. Lessor agrees that so long as no Event
            ----------------------------
of Default has occurred and is continuing, Lessee shall be entitled to quietly
possess the Property subject to and in accordance with the terms and conditions
of this Agreement.

       (k)  Lessor's Right to Perform for Lessee. If Lessee fails to perform or
            -------------------------------------
comply with any of its agreements contained herein, Lessor may perform or comply
with such agreements and the amount of any payments and expenses of Lessor
incurred in connection with such performance or compliance (including attorneys'
fees), together with interest thereon at the lesser of the rate of eighteen
percent (18%) per annum, or the highest rate permitted by law shall be deemed
additional rent payable by Lessee upon demand.

       (l)  Attorneys' Fees. Lessee shall reimburse Lessor for all charges,
            ----------------
costs, expenses and attorneys' fees incurred by Lessor (a) in defending or
protecting its interest in the Property; (b) in the execution, delivery,
administration, amendment and enforcement of the Lease or the collection of any
rent or other payments due under the Lease; and (c) in any lawsuit or other
legal or arbitration/mediation proceeding to which the Lease gives rise,
including without limitation, actions in tort.

       (m)  Lessee's Options at End of Initial Period. At the end of the Initial
            -----------------------------------------
Period of any Lease, Lessee shall, provided at least one-hundred-eighty (180)
days prior written notice is received by Lessor from Lessee via certified mail,
do one of the following: (1) purchase the Property for a price to be determined
by Lessor and Lessee, (2) extend the Lease for twelve (12) additional months at
the rate specified on the respective Schedule, or (3) return the Property to
Lessor at Lessee's expense to a destination within the Continental United States
specified by Lessor and terminate the Schedule; provided, however, that for
option (3) to apply, all accrued but unpaid late charges, interest, taxes,
penalties, and any and all other sums due and owing under the Schedule must
first be paid in full, the provisions of Sections 6(c) and (d) and 7(c) hereof
must be specifically complied with, and Lessee must enter into a new Schedule
with Lessor to lease Property which replaces the Property listed on the old
Schedule. With respect to options (1) and (3), each party shall have the right
in its absolute and sole discretion to accept or reject any terms of purchase or
of any new Schedule, as applicable. In the event Lessor and Lessee have not
agreed to either option (1) or (3) by the end of the Initial Period or if Lessee
fails to give written notice of its option via certified mail at least
one-hundred-eighty (180) days prior to the termination of the Initial Period,
then option (2) shall apply at the end of the Initial Period. At the end of the
extension period provided for in option (2) above, the Lease shall continue in
effect at the rate specified in the respective Schedule for successive periods
of six (6) months each subject to termination at the end of any such successive
six-month renewal period by either Lessor or Lessee giving to the other party at
least ninety (90) days prior written notice of termination.

       (n)  Amendment and Modification. The Lease may not be amended or modified
            --------------------------
except by a writing signed by a duly authorized representative of each party,
but no such amendment or modification needs further consideration to be binding.
Notwithstanding the foregoing, Lessee authorizes Lessor to amend any Schedule to
identify more accurately the Property (including, without limitation, supplying
serial numbers or other identifying data), and such amendment shall be binding
on Lessor and Lessee unless Lessee objects thereto within 10 days after
receiving notice of the amendment from Lessor.

       (o)  Joint and Several Liability. In the event two or more parties
            ---------------------------
execute the Agreement as Lessee, each party shall be jointly and severally
liable for all Lessee representations, warranties, and obligations (including
without limitation, payment obligations) under this Agreement or under any
Schedule or other document executed in connection herewith.

19.    WAIVERS:

                                                                              13

<PAGE>

       To the extent permitted by applicable law, Lessee hereby waives any and
all rights and remedies conferred upon a Lessee by Sections 2A-508 through
2A-522 of the Uniform Commercial Code, including but not limited to Lessee's
rights to: (i) cancel the Lease; (ii) repudiate the Lease; (iii) reject the
Property; (iv) revoke acceptance of the Property; (v) recover damages from
Lessor for any breaches of warranty or for any other reason; (vi) claim, grant
or permit a security interest in the Property in Lessee's possession or control
for any reason; (vii) deduct all or any part of any claimed damages resulting
from Lessor's default, if any, under the Lease; (viii) "cover" by making any
purchase or lease of or contract to purchase or lease Property in substitution
for those due from Lessor, (ix) recover any general, special, incidental or
consequential damages, for any reason whatsoever; and (x) commence legal action
against Lessor for specific performance, replevin, detinue, sequestration, claim
and deliver or the like for any Property identified in the Lease. To the extent
permitted by applicable law, Lessee also hereby waives any rights now or
hereafter conferred by statute or otherwise which may require Lessor to sell,
lease or otherwise use any Property in mitigation of Lessor's damages as set
forth in Section 16 hereof or which may otherwise limit or modify any of
Lessor's rights or remedies in that section.

       No waiver or modification by Lessor of any of the terms and conditions
hereof shall be effective unless in writing signed by an officer of Lessor.

20.    ASSIGNMENT BY LESSEE:

       LESSEE MAY NOT ASSIGN THIS AGREEMENT OR ANY OF ITS RIGHTS HEREUNDER OR
SUBLEASE THE PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, NO PERMITTED
ASSIGNMENT OR SUBLEASE SHALL RELIEVE LESSEE OF ANY OF ITS OBLIGATIONS HEREUNDER.

       BY INITIALING THIS SECTION, LESSEE ACKNOWLEDGES THAT IT HAS READ THE
ABOVE PARAGRAPHS UNDER SECTIONS 18, 19 AND 20, AND FULLY UNDERSTANDS THEIR
CONTENT AND AGREES TO THEIR PROVISIONS.

                                                             Initialed__________

21.    POWER OF ATTORNEY.

       LESSEE HEREBY AUTHORIZES AND APPOINTS LESSOR AND LESSORS AGENTS AND
ASSIGNS AS LESSEE'S ATTORNEY-IN-FACT TO (A) COMPLETE, EXECUTE, FILE AND AMEND ON
LESSEE'S BEHALF UCC FINANCING STATEMENTS, PRECAUTIONARY OR OTHERWISE, IN
CONNECTION WITH THE PROPERTY AND LEASE AND TO CONFORM THE DESCRIPTION OF THE
PROPERTY (INCLUDING SERIAL NUMBERS) IN ANY SUCH FINANCING STATEMENTS OR OTHER
DOCUMENTATION, AND (B) EXECUTE ACKNOWLEDGEMENT LETTERS AND OTHER DOCUMENTS
REQUIRED TO BE EXECUTED BY LESSEE TO EFFECT ANY UNDERWRITING WITH REGARD TO A
SCHEDULE.

       IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement on the
month, day and year first above written.

LESSOR:                                     LESSEE:

APPLIED FINANCIAL, INC.                    STAR SCIENTIFIC, INC.

BY: /s/ Mark Caldwell                      BY: /s/ Christopher G. Miller
  ----------------------------                 ------------------------------

                                                                              14

<PAGE>

TITLE: Assistant Vice President            TITLE: Chief Financial Officer
                                                  -----------------------------

                                                                              15

<PAGE>

                        MASTER PROGRESS FUNDING AGREEMENT

       Reference is made to Master Lease Agreement No, AFI0224 dated December 5,
2001, ("Master Lease") between STAR SCIENTIFIC, INC, ("Lessee") and APPLIED
FINANCIAL, INC, ("Lessor"), Lessee and Lessor have agreed to enter into one or
more Lease Schedules to the Master Lease (each Lease Schedule together with the
Master Lease is referred to herein collectively as the "Lease" and is
incorporated herein and made a part of this Agreement by this reference)
pursuant to which Lessor will lease to Lessee certain items of Property listed
on said Lease (the "Property"), All capitalized terms used herein but not
                                -----------------------------------------
defined herein shall have the meanings ascribed to them in the Lease.
---------------------------------------------------------------------

       With regard to each Lease executed and delivered by Lessee, Lessee may
request Lessor to purchase and pay for certain items of Property to be leased
thereunder prior to the commencement of such Lease. Provided Lessee completes,
executes and delivers to Lessor a Partial Acceptance and Authorization for
Progress Payment ("Authorization") in form acceptable to Lessor, and such
Authorization is consistent with all terms and conditions of this Agreement and
the Lease, and Lessee is not in default of this Agreement or the Lease, Lessor
agrees to make payments against the purchase price for such items of Property as
directed by the Authorization. All such payments made by Lessor shall be
referred to herein as "Progress Payment(s)".

       Upon Lessor's payment of any Progress Payment hereunder, title to the
items of Property paid by such Progress Payment shall vest in Lessor, and Lessee
hereby sells and assigns its purchase orders and contracts and all of its right,
title and interest to such items of Property to Lessor. From the date risk of
loss passes from each vendor as to items of Property paid for by Lessor
hereunder, Lessee shall bear all risk of loss, and Lessee shall assume and be
responsible for all of Lessee's obligations with respect to such items of
Property as specified in the Lease.

       Lessee agrees that in consideration of each Progress Payment made by
Lessor pursuant to this Agreement, Lessee shall pay to Lessor a daily pro-rata
interim "service charge" calculated by multiplying the "Lease Rate Factor"
specified in the applicable Lease times the amount of such Progress Payment
divided by 30. The daily service charges shall accumulate and be payable monthly
in arrears on the last day of each such month. The daily service charges shall
begin on the date Lessee authorizes Lessor to disburse the Progress Payment and
shall continue until all items of Property specified in the Lease are installed,
tested and are finally accepted by Lessee as evidenced by Lessee's execution and
delivery of the final "Acceptance Certificate" required under the Lease. If any
service charge due under this Agreement shall be unpaid after its due date,
Lessor shall be entitled to collect late charges from Lessee pursuant to
Paragraph 2 of Section 4 of the Master Lease.

       Lessee agrees that (a) if it breaches any of its obligations under this
Agreement or the Lease, or (b) if any Lease for which Progress Payments have
been made is not fully executed and delivered and the Property is not accepted
under such Lease within three (3) months after the first Progress Payment is
made for items of Property covered by such Lease, or (c) if there is a material
adverse change in the creditworthiness or financial condition of Lessee as
determined by Lessor in its sole discretion, or (d) if there is a material
adverse change in market conditions which effects Lessor's ability to secure
nonrecourse underwriting for the Lease, then Lessor may do one or more of the
following (i) cease disbursing Progress Payments, (ii) collect all service
charges due under this Agreement and all amounts due under the Lease, (iii)
without requiring Lessee to execute an Acceptance Certificate, begin the Lease
for those items of Property paid under any Progress Payment, (iv) require Lessee
to reimburse Lessor for all Progress Payments made, together with all unpaid
daily service charges, and (v) exercise any rights or remedies under the Lease
and at law or in equity. The occurrence of any of the events specified in (a)
through (d) above shall constitute an Event of Default under the Lease. Lessee
shall reimburse Lessor for all of its collection and enforcement costs
(including attorneys' fees). In the case of (iii) above, Lessee

                                                                              16

<PAGE>

hereby grants Lessor Power of Attorney to execute said Acceptance Certificate on
Lessee's behalf for which the "Acceptance Date", as more fully defined in
Section 2 of the Master Lease, shall be the date the last Progress Payment was
made by Lessor. In the case of (iv) above, upon receipt of all amounts, charges,
and reimbursements required, Lessor will convey its rights and interests in such
Property to Lessee and reassign to Lessee all purchase orders and contracts for
such Property.

Dated: December 5, 2001

LESSOR:                                         LESSEE:

APPLIED FINANCIAL, INC.                         STAR SCIENTIFIC, INC.

BY: /s/ Mark Caldwell                      BY: /s/ Christopher G. Miller
  ----------------------------                 --------------------------------

TITLE: Assistant Vice President            TITLE: Chief Financial Officer
                                                  -----------------------------

                                                                              17

<PAGE>

                             LEASE SCHEDULE NO. 001
                                       TO
                       MASTER LEASE AGREEMENT NO. AFI0224

       Reference is made to Lease Schedule No. 001 dated December 5, 2001 (the
"Schedule") to Master Lease Agreement No. AF10224 dated December 5, 2001 (the
"Master Lease") between APPLIED FINANCIAL, INC. (the "Lessor") and STAR
SCIENTIFIC, INC. (the "Lessee").

       This Schedule incorporates by reference the terms and conditions of the
Master Lease, Exhibit A (the "Property Description") and Exhibit B (the
"Casualty Loss Schedule"), and constitutes a separate "Lease" between Lessor and
Lessee. All capitalized terms used herein but not defined herein shall have the
same meanings ascribed to them in the Master Lease.

1.   Property: Used Tobacco Curing Barns (Star Model) and Container Handlers
     (Assembled) as more fully described on the attached Exhibit A of two (2)
     pages, which by this reference is made a part here.

2.   Property Location: Various locations as more fully described on the
     attached Exhibit A of two (2) pages, which by this reference is made a part
     hereof.

3.   Acceptance Date: As specified in the Acceptance Certificate

4.   Initial Period: Thirty-six (36) months starting on the Commencement Date

5.   Monthly Rental: $30,128.68, plus applicable sales tax

6.   Deposit: $10,000.00 applied to the first Monthly Rental, plus applicable
     sales tax

7.   Total Cost Not: $1,057,889.00

8.   Lease Rate Factor: .02848

9.   Floating Lease Rate Factor: The Lease Rate Factor of .02848 shall
     increase .000069966 for every five (05) basis point increase in thirty-six
     (36) month U.S. Treasury Notes as of the Acceptance Date of the Property
     (the "Revised Lease Rate Factor"), at which time the Monthly Rental under
     this Schedule shall be adjusted by multiplying the Total Cost, indicated in
     Section 7, by the Revised Lease Rate Factor. The thirty-six (36) month U.S.
     Treasury Note yield used as the basis for the derivation of the Revised
     Lease Rate Factor herein is 3.56%.

10.  Balloon Payment. For purposes of this Lease Schedule only, at the end of
     of the Initial Period, Lessee shall be required to purchase the Property on
     the last day of the Initial Period for an amount equal to $158,683.35, plus
     applicable sales tax ("Balloon Payment"). Lessee's failure to pay the
     Balloon Payment when due shall constitute an additional Event of Default
     under the Lease.

                                                                              18

<PAGE>

11.  Representation of Lessee: Lessor and Lessee agree that this Schedule
     constitutes a "finance lease" under the Uniform Commercial Code - Article
     2A, in that (a) Lessee has selected the Property in its sole discretion,
     (b) Lessor has acquired the Property solely for purposes of leasing such
     Property under this Schedule, and (c) Lessee has received a copy of the
     contract evidencing Lessor's purchase of the Property.


LESSOR:                                       LESSEE:

APPLIED FINANCIAL, INC.                       STAR SCIENTIFIC, INC.

BY: /s/ Mark Caldwell                      BY:    /s/ Christopher G. Miller
  ------------------------------                  ------------------------------

TITLE: Assistant Vice President            TITLE: Chief Financial Officer
                                                  ------------------------------

                                                                              19

Source: OneCLE Business Contracts.