Item 1.01 Entry into a Material Definitive
Agreement.
On June 7, 2021, 22nd Century
Group, Inc. (the “Company”) entered into a placement agent agreement (the “Placement Agent Agreement”) with Cowen
and Company, LLC (the “Placement Agent”) relating to the Company’s registered direct offering (the “Offering”)
to a select investor (the “Investor”). Pursuant to the Placement Agent Agreement, the Company agreed to pay the Placement
Agent a cash fee of 3.0% of the gross proceeds from the Offering. The Placement Agent Agreement requires us to indemnify the Placement
Agent and certain of its affiliates against certain customary liabilities.
In addition, on June 7, 2021,
the Company and the Investor entered into a securities purchase agreement
(the “Securities Purchase Agreement”) relating to the issuance and sale of shares of common stock. The Investor is purchasing
$40 million of shares, consisting of an aggregate of 10,000,000 shares of common stock at $4.00 per share. The Securities Purchase Agreement
provides that, subject to certain exceptions, until the earlier of (i) 90 days after the closing of the Offering or (ii) the trading day
following the date that the common stock’s closing price exceeds $6.00 for a period of 10 consecutive trading days, 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 six months 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
$38.2 million. The Offering is expected to close on or before June 9, 2021.
The common stock is being
offered and sold pursuant to the Company’s Registration Statement on Form S-3 (Registration No. 333-239981) previously filed with
the Securities and Exchange Commission and declared effective on July 30, 2020, the base prospectus included therein and the related prospectus
supplement dated June 7, 2021.
The foregoing summaries of
the terms of the Placement Agent 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 Agent 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 Agent 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.
