Item 1.01 Entry into a Material Definitive
Agreement.
On July 21, 2022, 22nd Century
Group, Inc. (the “Company”) and certain institutional investors (the “Investors”) entered into a securities purchase
agreement (the “Securities Purchase Agreement”) relating to the issuance and sale of shares of common stock pursuant to a
registered direct offering (the “Registered Offering” and, together with the Private Placement (as defined below), the “Offerings”).
The Investors purchased approximately $35 million of shares, consisting of an aggregate of 17,073,175 shares of common stock at a purchase
price of $2.05 per share. The Securities Purchase Agreement provides that, subject to certain exceptions, until the earlier of (i) 90
days after the closing of the Offerings or (ii) the trading day following the date that the Company’s common stock’s closing
price exceeds $3.00 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 Offerings, 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 Offerings, after deducting the fees of Dawson James Securities, Inc. (the “Placement Agent”), the fees of Roth Capital
Partners, its financial advisor, and the Company’s estimated offering expenses, were approximately $32.5 million. The Offerings
closed on July 25, 2022.
The common stock was 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 July 21, 2022.
Pursuant to the Securities
Purchase Agreement, in a concurrent private placement, the Company issued and sold to the Investors warrants (the “Warrants”)
to purchase up to 17,073,175 shares of common stock (the “Private Placement”). The Warrants are exercisable immediately upon
issuance at an exercise price of $2.05 per share of common stock, subject to adjustment in certain circumstances, and expire on July 25,
2027.
The Warrants and the shares
of common stock issuable upon exercise of the Warrants (the “Warrant Shares”) have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”) and were instead offered pursuant to the exemption provided in Section 4(a)(2)
under the Securities Act and Rule 506(b) promulgated thereunder. In connection with each Investor’s execution of a Securities Purchase
Agreement, each such Investor represented to the Company that it is an “accredited investor” as defined in rules promulgated
under the Securities Act. Each Investor, either alone or together with its representatives, has sufficient knowledge and experience to
be considered a sophisticated investor, has access to the type of information sufficient to enable it to evaluate its investment, and
has agreed not to resell or distribute the Warrants or the Warrant Shares to the public except pursuant to sales registered or exempted
under the Securities Act. Under the Securities Purchase Agreement, the Company has agreed to file a registration statement on Form S-3
providing for the resale of the Warrant Shares by the Investors within 45 days of July 21, 2022.
The Company agreed to pay
the Placement Agent a cash fee of 5.0% of the gross proceeds from the Offerings, an additional 5.0% cash fee of any cash exercise of the
Warrants and to reimburse the Placement Agent for its expenses, including the reimbursement of legal fees up to an aggregate of $25,000.
The engagement agreement with the Placement Agent requires the Company to indemnify the Placement Agent and certain of its affiliates
against certain customary liabilities.
The foregoing summaries of
the terms of the Securities Purchase Agreement and the Warrants are subject to, and qualified in their entirety by, such documents attached
hereto as Exhibits 10.1 and 4.1, respectively, and incorporated herein by reference. Each of the Securities Purchase Agreement and the
Warrants 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 Securities Purchase Agreement, including the representations and warranties contained therein, are
not for the benefit of any party other than the parties to such agreement or as stated therein and are not intended as a document for
investors and the public to obtain factual information about the current state of affairs of the parties to the 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.
