Common use of Conversion Units Clause in Contracts

Conversion Units. Lender may in accordance with the Loan Agreement convert (the “Conversion”) all or a portion of this Note (including after notice by the Company of prepayment of this Note) (the “Converted Amount”) into investment units in the Company. Each such investment unit shall consist of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and one warrant to purchase one share of Common Stock at an exercise price of $1.00 for a term of seven years commencing six months from the date hereof (the “Warrants”) (collectively, the Common Stock and Warrants are referred to as the “Units”). The Converted Amount will convert into such number of shares of Common Stock and such number of Warrants that equals the Converted Amount divided by $1.00 with any partial share and Warrant to purchase a partial share that would result from such conversion calculation rounded up to a whole share of Common Stock. Once any Converted Amount is converted, the Converted Amount will be deemed to be extinguished, abated and repaid in full as of the date of the delivery of the Units. NOTWITHSTANDING THE FORGOING, THIS NOTE MAY NOT BE CONVERTED INTO THE UNITS TO THE EXTENT THAT THE COMBINATION OF SHARES AND WARRANTS RECEIVED IN THE CONVERSION WOULD RESULT IN LENDER’S BENEFICIAL OWNERSHIP IN STAR SCIENTIFIC, INC. EXCEEDING 9.99% OF THE COMPANY’S OUTSTANDING COMMON STOCK (THE “OWNERSHIP CAP”). FOR CLARIFICATION, WARRANTS SHALL NOT CONSTITUTE BENEFICIAL OWNERSHIP TO THE EXTENT SUCH WARRANTS CONTAIN A PROHIBITION ON EXERCISE IF SUCH EXERCISE WOULD CAUSE LENDER’S BENEFICIAL OWNERSHIP TO EXCEED THE OWNERSHIP CAP.

Conversion Units. Lender may in accordance with the Loan Agreement convert (the “Conversion”) all or a portion of this Note (including after notice by the Company of prepayment of this Note) (the “Converted Amount”) into investment units in the Company. Each such investment unit shall consist of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) ), and one warrant to purchase one share of Common Stock at an exercise price of $1.00 for 1.00, exercisable during a term of seven commencing four (4) years commencing six months from after the date hereof of issuance of such Warrant and ending seven (7) years after the date of issuance of such Warrant (the “Warrants”) (collectively, the Common Stock and Warrants are referred to as the “Units”). The Converted Amount will convert into such number of shares of Common Stock and such number of Warrants that equals the Converted Amount divided by $1.00 with any partial share and Warrant to purchase a partial share that would result from such conversion calculation rounded up to a whole share of Common Stock. Once any Converted Amount is converted, the Converted Amount will be deemed to be extinguished, abated and repaid in full as of the date of the delivery of the Units. NOTWITHSTANDING THE FORGOING, THIS NOTE MAY NOT BE CONVERTED INTO THE UNITS TO THE EXTENT THAT THE COMBINATION OF SHARES AND WARRANTS RECEIVED IN THE CONVERSION WOULD RESULT IN LENDER’S BENEFICIAL OWNERSHIP IN STAR SCIENTIFIC, INC. THE COMPANY EXCEEDING 9.99% OF THE COMPANY’S OUTSTANDING COMMON STOCK (THE “OWNERSHIP CAP”). FOR CLARIFICATION, WARRANTS SHALL NOT CONSTITUTE BENEFICIAL OWNERSHIP TO THE EXTENT SUCH WARRANTS CONTAIN A PROHIBITION ON EXERCISE IF SUCH EXERCISE WOULD CAUSE LENDER’S BENEFICIAL OWNERSHIP TO EXCEED THE OWNERSHIP CAP.