Item 1.01 Entry into a Material Definitive
On June 19, 2017, 22nd Century Group, Inc.
(the “Company”) entered into Warrant Exercise Agreements (the “Exercise Agreements”) with all of the holders
(the “Exercising Holders”) of its outstanding warrants to purchase up to 7,043,211 shares of common stock of the Company
at $1.00 per share and warrants to purchase up to 4,250,000 shares of common stock for $1.45 per share (collectively, the "Original
Warrants") whereby the Exercising Holders and the Company agreed that the Existing Holders would, subject to beneficial ownership
limitations on exercise contained in the Original Warrants, exercise all of the Original Warrants. The Company expects to receive
aggregate gross proceeds before expenses of approximately $13.2 million from the exercise of all of the Original Warrants by the
Exercising Holders by August 21, 2017, of which approximately $6.6 million will be received within three days from June 19, 2017
as a result of the immediate exercise of approximately 5.6 million of the Original Warrants.
In consideration for the Existing Holders
exercising their Original Warrants for cash, the Company will issue to each Exercising Holder a new warrant (each, a "New
Warrant") to purchase shares of common stock equal to the number of shares of common stock received by such Exercising Holder
upon the cash exercise of such Exercising Holder's Original Warrants. The terms of the New Warrants will be substantially similar
to the terms of the Original Warrants, except that the New Warrants will (i) have an exercise price equal to $2.15 per share and
(ii) be exercisable six months from first issuance of the New Warrants for a period of five years.
The Exercise Agreements also provide that,
subject to certain exceptions, for a period ending on the earlier of (i) 100 days after June 19, 2017 and (ii) the trading day
following the day that the daily volume weighted average price of the Company’s common stock over five consecutive trading
days exceeds $2.35 per share, neither the Company nor any of its subsidiaries will issue, enter into any agreement to issue, or
announce the issuance or proposed issuance of, any shares of common stock or common stock equivalents.
The issuance of the New Warrants will not
be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. The
New Warrants will be issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act
and/or Regulation D promulgated thereunder. Each Exercising Holder has represented that it is an accredited investor, as defined
in Rule 501 of Regulation D promulgated under the Securities Act.
In connection with the Exercise Agreements,
the Company engaged Chardan Capital Markets, LLC to act as the Company's financial advisor. The Company has agreed to pay Chardan
Capital Markets, LLC a cash fee equal to six percent of the aggregate gross proceeds raised in connection with the Exercise Agreements.
The description of terms and conditions
of the New Warrants and the Exercise Agreements set forth herein do not purport to be complete and are qualified in their entirety
by reference to the full text of the form of New Warrant and the form of Exercise Agreement, which are attached hereto as Exhibits
4.1 and 10.1, respectively.