Item 1.01 Entry into a Material Definitive
Agreement.
On October 8, 2017, 22nd Century Group, Inc.
(the “Company”) entered into a placement agency agreement (the “Placement Agency Agreement”) with Chardan
Capital Markets, LLC (the “Placement Agent”) relating to the Company’s registered direct offering (the “Offering”)
to select investors (the “Investors”). Pursuant to the Placement Agency Agreement, the Company agreed to pay the Placement
Agent a cash fee of 6.0% of the gross proceeds from the Offering. The Placement Agent had no commitment to purchase any of the
securities and acted only as an agent in obtaining indications of interest from investors who would purchase the securities directly
from the Company. The Placement Agency Agreement requires us to indemnify the Placement Agent and certain of its affiliates against
certain customary liabilities.
In addition, on October 8, 2017, the Company
and institutional investors introduced to the Company by the Placement Agent entered into a securities purchase agreement (the
“Securities Purchase Agreement”) relating to the issuance and sale of shares of common stock. The purchase price per
share is $2.625 and the Investors are purchasing approximately $54 million of shares, consisting of an aggregate of 20,570,000
shares of common stock. The Securities Purchase Agreement provides that, subject to certain exceptions, for a period ending on
90 days after the closing of the Offering, 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 Securities Purchase Agreement provides that,
subject to certain exceptions, for a period of one year following the closing of the Offering, the Company will be prohibited from
effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of common stock or common
stock equivalents (or a combination of units thereof) involving a variable rate transaction, which generally includes any transaction
in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for,
or include the right to receive additional shares of common stock either (A) at a conversion price or exchange rate that is based
upon and/or varies with the trading prices of or quotations for the shares of common stock at any time after the initial issuance
of such securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the common stock or (ii) enters into any agreement, whereby the Company
may issue securities at a future determined price.
The net proceeds to the Company from the Offering,
after deducting Placement Agent fees and the Company’s estimated offering expenses, are expected to be approximately $50.7
million. The Offering is expected to close on or before October 10, 2017.
The common stock is registered under the Securities
Act of 1933, as amended, on the Company’s Registration Statement on Form S-3 (Registration No. 333-215391) previously filed
with the Securities and Exchange Commission and declared effective on January 17, 2017. The common stock in this Offering is being
offered and sold pursuant to a base prospectus and a prospectus supplement filed as part of the Registration Statement.
The foregoing summaries of the terms of the
Placement Agency Agreement and the Securities Purchase Agreement are subject to, and qualified in their entirety by, such documents
attached hereto as Exhibits 1.1 and 10.1, respectively, and incorporated herein by reference. Each of the Placement Agency Agreement
and the Securities Purchase Agreement contains representations and warranties that the respective parties made to, and solely for
the benefit of, the other parties thereto in the context of all of the terms and conditions of those agreements and in the context
of the specific relationship between the parties. The provisions of the Placement Agency Agreement and the Securities Purchase
Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the
parties to such agreements or as stated therein and are not intended as documents for investors and the public to obtain factual
information about the current state of affairs of the parties to those documents and agreements. Rather, investors and the public
should look to other disclosures contained in the Company’s filings with the Securities and Exchange Commission.