Company: XXII
Filing Date: 2025-06-06
Form Type: PRER14A
Source: 0001641172-25-013953
Chunk: 78

Company: 22nd Century Group, Inc.
Filing Date: 2025-06-06
Form: PRER14A
Chunk 78
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 |            |     |                             |    |   |
|                                                                                                 |     | Number of Common Stock Shares |            |     | % Ownership of Common Stock |    |   |
| Number of Shares issued to JGB                                                                  |     |                               |  5,053,577 |     |                             | 44 | % |
| Number of Shares held by all other Stockholders                                                 |     |                               | 11,507,622 |     |                             | 66 | % |

Reasons for Stockholder Approval

The JGB Amendment provides that the Company will use commercially reasonable efforts to obtain approval of the stockholders for the Voluntary Conversion Option.

Our common stock is listed on the Nasdaq Capital Market under the symbol “XXII,” and we are subject to the Nasdaq listing standards and rules. Under Rule 5635(b) of the Nasdaq Stock Market, stockholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the Company. Section 5(b) of the Amended Debenture would result in a number of shares potentially being issued to effect a change of control of the Company, which would violate Rule 5635(b) without approval of our stockholders.

Under Rule 5635(d) of the Nasdaq Stock Market, stockholder approval is required in connection with a transaction, other than a public offering, at a price below the Minimum Price (as defined under Nasdaq rules) involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. Section 5(b) of the Amended Debenture would result in shares of common stock being potentially issued at a price below the Minimum Price and if this offering were combined with other offerings, it is possible that Section 5(b) of the Amended Debenture would violate Rule 5635(d) without approval of our stockholders.

Possible Effects of the Proposal

If the stockholders do not approve this Proposal 9, then the Voluntary Conversion Option will not be included in the Amended Debenture. However, the Company, as provided in the JGB Amendment will also be obligated to incur additional management resources and expenses to call and hold a meeting every in commercially reasonable increments thereafter to seek such stockholder approval until stockholder approval is obtained. Additionally, the failure to