EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of March 19, 2013,
between 22nd Century Group, Inc., a Nevada corporation (the “Company”), and John
T. Brodfuehrer (the “Executive”).

 

1. Employment Duties and Responsibilities

 

1.1 Position and Title. The Company hereby agrees to employ the Executive in the
position(s) described on Addendum A attached hereto and the Executive hereby
accepts such position(s) and agrees to serve the Company, including Company
Affiliates (as defined below), in such capacity until this Agreement is
terminated by one of the parties in accordance with the terms set forth in
Section 4 below.

 

1.2 Company Policies and Procedures. The Executive agrees to abide by all
applicable policies and procedures of the Company and its Affiliates (as defined
below) for which notice of the policy or procedure has been given in writing by
Company and acknowledgement of receipt has been given in writing by Executive,
and Executive agrees to perform job duties to the best of his ability.

 

1.3 Attention. During the term of this Agreement, excluding any periods of
vacation and sick leave to which Executive is entitled, Executive agrees (i) to
devote the primary portion of his productive time, ability and attention to the
business of the Company and its Affiliates (as defined below), during normal
working hours, and (ii) not to acquire, hold or retain, whether directly or
indirectly, more than a two percent (2%) interest in any business competing with
or similar in nature to the business of the Company or any of its Affiliates.
For purposes of this Agreement, “Affiliates” shall mean any person or entity
that, directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under the common control of, the Company.

 

2. TERM OF EMPLOYMENT.

 

2.1 Effective Date. The Effective Date of this Agreement shall be the date first
set forth above.

 

2.2. Term. The initial term of this Agreement shall be set forth on Addendum A
hereto, and the Company agrees to employ the Executive and the Executive hereby
agrees to serve the Company until this Agreement is terminated by one of the
parties in accordance with the terms set forth in Section 4 below.

 

3. COMPENSATION

 

3.1 Base Salary. The Company shall pay to Executive, and Executive shall accept
from the Company, a bi-weekly base salary in the amount set forth on Addendum A
attached hereto (the “Base Salary”), payable on the Company’s standard pay
schedule, provided that the Executive has been in active service during the
specified pay period. Executive’s Base Salary may not be decreased at any time
during this Agreement without the express written consent of the Executive. The
Base Salary will be increased as set forth in Addendum A hereto, as well as in
such other amounts as the Company may determine in its sole discretion from time
to time, but nothing herein shall be deemed to require any such increase other
than as set forth in Addendum A hereto.

Page 1 of 13

 

 

 

3.2 Incentive Compensation/Bonus. Executive may be eligible to receive a bonus
based upon satisfactory achievement of personal performance objectives and
business performance objectives as may be determined by the Company and the
Executive from time to time, and/or such other incentive compensation
arrangements that may be entered into between the Company and the Executive in
the future.

 

3.3 Stock Options/Restricted Stock Grants. Executive will be eligible for stock
options and/or restricted stock as may be awarded by the Company, in its sole
discretion, from time to time, subject to the terms of the Company’s 2010 Equity
Incentive Plan or any similar plan or agreement then being offered by the
Company during the term of this Agreement.

 

As a one-time inducement to accept an offer of employment from the Company, the
Executive will receive a grant of 100,000 Restricted Shares (subject to
forfeiture) of the Company, upon the Effective Date of this Agreement. The
Executive will have all the rights of a shareholder of the Company with respect
to voting the Restricted Shares awarded under this grant and share adjustments,
receipt of dividends (if any) and distributions (if any) on such shares. These
100,000 Restricted Shares will no longer be subject to forfeiture on the first
to occur of the following: (i) the one-year anniversary of the Executive’s date
of hire, (ii) the event of a change in control of the Company, (iii) termination
of the Executive’s employment with the Company by his/her Death or Disability
(as defined herein), or (iv) termination of the Executive’s employment with the
Company without Cause (as defined herein).

 

 

3.4. Expenses. Executive shall be entitled to reimbursement of pre-approved
business expenses that are incurred in the furtherance of Company business and
are consistent with the Company’s policies for such expense reimbursement.

 

3.5 Benefits. Executive shall receive health (family or single coverage;
Executive’s choice), dental (family or single coverage; Executive’s choice),
personal disability, retirement, paid time-off and other fringe benefits as are
provided to similarly situated executives of the Company from time to time.

 

3.6 Equipment. Company will provide Executive with use of a computer, cellular
phone, or other equipment that the Company may deem necessary or helpful for
Executive to conduct business and/or remain in contact with the office(s) or
employees while Executive is away from the office.

  

4. Termination of Employment

 

Executive’s employment with the Company may be terminated, prior to the
expiration of any term of this Employment Agreement as set forth on Addendum A
hereto, in accordance with any of the following provisions:

 

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4.1 Termination By Executive Without Good Reason. The Executive may terminate
employment at any time during the course of this Agreement by giving thirty (30)
days' notice in writing to the Chief Executive Officer or President of the
Company. During the notice period, Executive must fulfill all Executive’s duties
and responsibilities set forth above and use Executive’s best efforts to train
and support Executive’s replacement, if any. Failure to comply with this
requirement may result in Termination for Cause described below, but otherwise
Executive's salary and benefits will remain unchanged during the 30-day
notification period. The Company, at its option, may relieve Executive of all
Executive’s duties and responsibilities at any time during the notice period,
but will, in such instance, be required to continue to maintain Executive’s pay
and benefits through the remainder of the 30 day notice period.

 

4.2(a) Termination By The Company Without Cause. The Company may terminate
Executive’s employment without cause at any time during the term of this
Agreement by giving the Executive thirty (30) days’ notice of such termination,
during which period Executive will continue to receive the compensation and
benefits to which Executive would normally be entitled under the terms of this
Agreement. During the notice period, Executive must fulfill all of Executive’s
duties and responsibilities and use Executive’s best efforts to train and
support Executive’s replacement, if any. Notwithstanding the foregoing, the
Company, at its option, may instruct Executive during such period not to
undertake any active duties on behalf of the Company.

 

4.2(b) If Executive is terminated under this section, within thirty (30) days
following the conclusion of the notice period, the Company shall provide a
severance benefit to Executive as follows: Executive will continue to receive
Executive's Base Salary then in effect, paid in accordance with standard payroll
practices, until the later of six months following termination, or (ii) the
expiration of the initial term of the employment period as set forth in Addendum
A hereto. Under this section, Executive shall not be entitled to receive any
portion of Executive's target bonus for the period in which the termination
occurs but shall receive any accrued bonus for any performance period fully
completed prior to the date of termination.

 

4.3 Termination By The Company For Cause. The Company may, at any time and
without notice (except as required below), terminate the Executive for “cause.”
Termination by the Company of the Executive for “cause” shall be limited to
termination based on any of the following grounds: (a) fraud, misappropriation,
embezzlement or acts of similar dishonesty; (b) conviction of a felony crime;
(c) intentional and willful misconduct that subjects the Company to criminal or
civil liability; (d) breach of the Executive’s duty of loyalty to the Company or
diversion or usurpation of corporate opportunities properly belonging to the
Company; (e) material breach of this Agreement and/or any other agreement
entered into between the Company and the Executive; and/or (f) willful and/or
continued failure to satisfactorily perform the duties of Executive’s position;
provided, however, that Executive shall not be terminated for cause under
subsection (e) or (f) above unless the Company first has provided Executive with
written notice that the Company considers the Executive to be in violation of
Executive’s obligations under those subsections and Executive fails, within
thirty (30) days of such notice, to cure the conduct that has given rise to the
notice.

 

In the event of a termination by the Company for Cause, Executive shall be
entitled to receive only that Base Salary earned on or before the Executive’s
last day of active service and other post-employment benefits required by law or
under Company policy. Under this section, Executive shall not be entitled to
receive any portion of Executive’s target bonus for the period in which the
termination occurs.

 

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4.4Termination by the Executive For Good Reason.

 

a. This Agreement may be terminated by the Executive upon notice to the Company
of any event constituting "Good Reason" as defined herein.

 

b. As used herein, the term "Good Reason" means the occurrence of any of the
following, without the prior written consent of the Executive: (i) failure of
the Company to pay Executive’s compensation in accordance with this Agreement;
and/or (ii) a change in duties of Executive without the consent of Executive;
provided, however, that the Executive shall not be deemed to have Good Reason
pursuant to this provision unless the Executive gives the Company written notice
that the specified conduct or event has occurred and making specific reference
to this Section 4.4 and the Company fails to cure such conduct or event within
thirty (30) days of receipt of such notice.

 

c. In the event the Executive terminates this Agreement under this Section 4.4,
Executive shall be entitled to the severance benefits described under Section
4.2(b) pertaining to Termination By the Company Without Cause.

 

4.5 Termination By Death Or Disability. The Executive’s employment and rights to
compensation under this Employment Agreement shall terminate if the Executive is
unable to perform the duties of Executive’s position due to death or disability;
and the Executive, or the Executive’s heirs, beneficiaries, successors, or
assigns, shall be entitled only to receive any compensation fully earned prior
to the date of the Executive’s last day of active employment prior to such death
or incapacitation due to disability and shall not be entitled to any other
compensation or benefits, except: (a) to the extent specifically provided in
this Employment Agreement; (b) to the extent required by law; or (c) to the
extent that such benefit plans or policies under which Executive is covered
provide a benefit to the Executive or to the Executive’s heirs, beneficiaries,
successors, or assigns. For purpose of this agreement, “disability” shall be
defined as the Executive’s failure, due to a mental or physical condition, to
perform the essential functions of Executive’s position for more than 120 days
in any 360 day period.

 

4.6 Change In Control and Termination Provisions.

 

(a) If within a three (3) year period following any Change in Control (as
defined below), after the date hereof, there occurs any of the following:

 

(i) any termination of the Executive (other than as set forth in Section 4.3
(Termination by the Company for Cause) or Section 4.5 (Termination by Death or
Disability),

 

(ii) a diminution of the Executive’s responsibilities, as compared to the
Executive’s responsibilities immediately prior to the Change in Control,
including a change in duties within the Company,

 

(iii) any reduction in the Base Salary or any other compensation as compared to
such Base Salary or any other compensation as of the date immediately prior to
the Change in Control,

 

(iv) any material breach of this Agreement by the Company;

 

then, at the option of the Executive, exercisable by the Executive within ninety
(90) days after the occurrence of any of the foregoing events, the Executive may
resign his employment with the Company (or, if involuntarily terminated, give
notice of his intention to collect benefits under this Agreement) by delivering
a notice in writing (the “Notice of Termination”) to the Company, and the
Executive shall be entitled to receive the severance benefits described under
Section 4.2(b) pertaining to Termination by the Company Without Cause.

 

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(b) Notwithstanding any provisions now or hereafter existing under the Company’s
2010 Equity Incentive Plan or any other stock option plan or restricted share
plan of the Company or any entity which directly or indirectly controls the
Company, in the event of a Change in Control, all options and all restricted
shares provided and/or to be provided to the Executive pursuant to this
Agreement, the Company’s 2010 Equity Incentive Plan and/or any other agreement
between the Company (or any entity which directly or indirectly controls the
Company) and Executive shall be granted and shall immediately fully vest as of
the date of such Change in Control with such options and restricted shares being
valued at the closing price of the common stock underlying such options and/or
restricted stock grants on the day prior to the day of the Change of Control or,
in the event such common stock is not then traded and quoted on a securities
exchange or automated quotation system, then the value per share of such common
stock shall be the higher of either (i) the book value per share of such common
stock, (ii) the price per share of such common stock on the effective date
hereof, or (iii) the average price per share of such common stock during the six
(6) month period immediately preceding the date on which such shares of common
stock were no longer traded and/or quoted on a securities exchange or automated
quotation system.

 

(c) For purposes of this Agreement, a “Change in Control” shall be deemed to
exist if any of the following occurs after the date hereof, with any transaction
which is part of the business combination by and between the Company and 22nd
Century Group, Inc. consummated on the date hereof being excluded from this
definition:

 

(i) a person, as defined in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (other than the Executive or a group including the Executive),
either (A) acquires thirty percent (30%) or more of the combined voting power of
the outstanding securities of the Company or any entity which directly or
indirectly controls the Company, which securities have the right to vote in
elections of directors of the Company or any entity which directly or indirectly
controls the Company, and such acquisition shall not have been approved within
sixty (60) days following such acquisition by a majority of the Continuing
Directors (as hereinafter defined) then in office, or (B) acquires fifty percent
(50%) or more of the combined voting power of the outstanding securities of the
Company or any entity which directly or indirectly controls the Company, which
securities have the right to vote in elections of directors of the Company or
any entity which directly or indirectly controls the Company; or

 

(ii) Continuing Directors shall for any reason cease to constitute a majority of
the Board of Directors; or

 

(iii) the Company or any entity which directly or indirectly controls the
Company disposes, by sale of stock, assets or otherwise, of all or substantially
all of the business of the Company or the business of any entity which directly
or indirectly controls the Company to a party or parties other than a subsidiary
or other affiliate of the Company or any entity which directly or indirectly
controls the Company pursuant to a partial or complete liquidation of the
Company or any entity which directly or indirectly controls the Company; or

 

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(iv) the Board of Directors of the Company or any entity which directly or
indirectly controls the Company approves the consolidation or merger of the
Company or any entity which directly or indirectly controls the Company with or
into any other person or entity (other than a wholly-owned subsidiary of the
Company or any other entity which is directly or indirectly controlled by the
Company), or any other person’s consolidation or merger with or into the Company
or any entity which directly or indirectly controls the Company, which results
in all or part of the outstanding shares of common stock of the Company or any
entity which directly or indirectly controls the Company being changed in any
way or converted into or exchanged for stock or other securities or cash or any
other property.

 

For purposes of this Agreement, the term “Continuing Director” shall mean a
member of the Board of Directors of the Company or any entity which directly or
indirectly controls the Company who either was a member of such Board of
Directors on the date hereof or who subsequently became a Director of the
Company or any entity which directly or indirectly controls the Company and
whose election, or nomination for election, was approved by a vote of at least
two-thirds (2/3) of the Continuing Directors then in office.

 

5. CONFIDENTIALITY AND NONDISCLOSURE

 

5.1 Non-Disclosure of Confidential Information. Executive recognizes that
Executive’s position with Company is one of the highest trust and confidence and
that Executive will have access to and contact with the trade secrets and
confidential and proprietary business information of Company. Executive agrees
that Executive shall not, while employed by Company or thereafter, directly or
indirectly, use for Executive’s own benefit or for the benefit of another, or
disclose to another any trade secret or Confidential Information (as defined
below) of the Company, except such use or disclosure is required in the
discharge of Executive’s duties and obligations on behalf of the Company.

 

5.2 Definition of “Confidential Information.” For purposes of this Agreement,
“Confidential Information” shall include proprietary or sensitive information,
materials, knowledge, data or other information of the Company not generally
known or available to the public relating to (a) the services, products,
Biological Materials (as hereinafter defined), customer lists, business plans,
marketing plans, pricing strategies, or similar confidential information of the
Company, including but not limited to the Company’s trade secrets, patents.
intellectual property, systems, procedures, manuals, cost and pricing
information, solicitations, proposals, bids, contracts, confidential reports and
work product prepared in connection with projects and contracts, supporting
information for any of the above items, the identities and records of government
agencies and offices and contacts, contractors and contacts, and subcontractors
and contacts with whom the Company has done business or is seeking to do
business, the identities and records of vendors and suppliers of personnel,
material and/or raw materials, all accounting and financial information,
business plans and budgets, and all other information pertaining to the business
activities and affairs of the Company of every nature and type; (b) the business
of any Company customer, including without limitation, knowledge of the
customer’s current business or staffing needs; and (c) the identities and
records of current or former employees of the Company or potential hires and
their compensation arrangements with the Company.

 

5.3 Return of Materials, Equipment and Biological Materials. Executive further
agrees that all memoranda, notes, computer files, records, drawings, reports or
other documents, in any format, made or compiled by Executive or made available
to Executive while employed by Company concerning any Company activity shall be
the property of Company and shall be delivered to Company upon termination of
Executive's employment or at any other time upon request. Executive also agrees
to return to the Company and not retain any and all equipment, including laptop
computers, and Biological Materials belonging to the Company on or before
Executive’s last day of employment with Company.

 

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5.4 No Prior Restrictions. The Executive hereby represents and warrants to the
Company that the execution, delivery, and performance of this Agreement does not
violate any provision of any agreement or restrictive covenant which the
Executive has with any former employer which is not a Company Affiliate (a
“Former Employer”). The Executive further acknowledges that to the extent the
Executive has an obligation to the Former Employer not to disclose certain
confidential information, Executive intends to honor such obligation and the
Company hereby agrees not to knowingly request the Executive to disclose such
confidential information.

 

6. Restrictive CovenantS

 

Executive acknowledges that Executive’s services to be rendered hereunder are of
a special and unusual character, which have a unique value to the Company and
that the Company will be investing time, effort, and expense in Executive. In
view of the unique value to the Company of the services of the Executive for
which the Company has contracted hereunder, the investments by the Company in
the Executive, and as a material inducement for the Company to enter into this
Agreement and to pay to the Executive the compensation provided hereunder,
Executive covenants and agrees as follows:

 

6.1. Definitions. The following definitions shall be applicable to each of the
covenants set forth in this section.

 

a. Definition of “Same or Substantially Similar Services.” As used herein, “Same
or Substantially Similar Services” means services, including without limitation
the provision of goods and/or services that are identical or substantially
similar, in whole or in part, to goods and/or services (i) which were provided
by Executive while Executive was employed with the Company; (ii) which were
provided by employees or contractors whom Executive was directly or indirectly
managing while Executive was employed with the Company; or (iii) which were the
subject of proposals or contracts with which Executive was involved while
employed with the Company.

 

b. Definition of “Customer.” As used herein, “Customer” is defined as any person
or entity, including without limitation a Government Agency, to whom Executive,
directly or indirectly (e.g., the end user of the services if the Company is a
subcontractor), provided services while employed with the Company or with whom
Executive interacted on behalf of the Company at any time during Executive’s
employment with Company.

 

c. Definition of “Prospective Customer.” As used herein, “Prospective Customer”
shall mean any person or entity, including without limitation a Government
Agency, whom the Executive, at any time during the twelve (12) month period
preceding the termination of Executive’s employment, was involved in soliciting
or making a proposal to, on behalf of the Company, for the provision of
services.

 

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d. Definition of “Government Agency.” As used herein, “Government Agency” shall
be limited to the division, department, operating unit, group, or other
appropriate sub-entity of an agency to which the Executive provided services
while employed with the Company or with whom Executive interacted on behalf of
the Company at any time during Executive’s employment with Company.

 

e. Definition of “Biological Materials.” As used herein, “Biological Materials”
shall mean any plant, seed, propagule, embryo, leaf, root and/or other plant
part or tissue, and/or gene construct or fragment thereof, belonging to or
produced for the Company and/or its Affiliates, including any of the foregoing
produced by Executive or produced by others during Executive’s employment with
the Company.

 

f. Definition of “Intellectual Property” As used herein, “Intellectual Property”
shall mean any and all inventions, developments, formulas, discoveries,
concepts, trademarks, improvements, designs, innovations, data, processes,
software, works of authorship, know-how, plants, plant varieties (whether
registered for plant variety protection or not), tobacco products, smoking
cessation aids, drugs and ideas (whether patentable or not) directly or
indirectly related to the Company (i) conceived or made by Executive, either
alone or with others, while employed by the Company, (ii) conceived or made by
Executive, either alone or with others, with the use of Confidential
Information, and/or (iii) conceived or made by Executive, either alone or with
others, within one (1) year after the Executive’s last day of active service
unless conclusively proven by Executive to have been first conceived or made by
Executive after Executive’s last day of active service without reference to any
Confidential Information.

 

6.2 Covenants

 

a. Non-Competition with Customers, Prospective Customers and Industry. During
Executive's employment by the Company and for a period of four (4) years after
Executive ceases to be employed by the Company for any reason, then Executive
will not (except on behalf of the Company), directly or indirectly, as either an
employee, contractor, or consultant, whether personally or through another
entity, provide or offer to provide any goods or Same or Substantially Similar
Services to any person or entity planning to engage in or engaged in developing,
growing, making, offering, marketing, distributing and/or selling of smoking
cessation products or tobacco products made from the tobacco (Nicotiana) plant.
Executive specifically recognizes and agrees that the restrictions set forth in
this subsection are reasonable.

 

b. Non-Interference With Customers or Prospective Customers. Executive further
agrees that, for the term of Executive’s employment and for a period of four (4)
years after Executive ceases to be employed by the Company, the Executive shall
not undertake to interfere with the Company’s relationship with any Customer,
Prospective Customer, researcher, supplier, distributer, farmer and/or
manufacturer. This means that Executive shall refrain: (i) from making
disparaging comments about the Company or its management or employees to any
Customer or Prospective Customer; (ii) from attempting to persuade any Customer,
Prospective Customer, researcher, supplier, distributer, farmer and/or
manufacturer to cease or reduce doing business with the Company; (iii) from
soliciting any Customer, Prospective Customer, researcher, supplier,
distributer, farmer and/or manufacturer for the purpose of providing services
competitive with the Company Business; or (iv) from assisting any person or
entity in doing any of the foregoing.

 

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c. Non-Solicitation and Non-Hiring of Employees. Executive agrees that, for the
term of Executive’s employment and for a period of four (4) years after
Executive ceases to be employed by the Company, the Executive shall not,
directly or indirectly, as an employee, consultant, contractor, principal,
agent, or owner, on Executive’s own behalf or the behalf of another person or
entity: (i) induce or attempt to induce any person employed by the Company to
leave their employment with the Company; (ii) hire or employ, or attempt to hire
or employ, any person employed by the Company; or (iii) assist or facilitate in
any way any other person or entity in the hiring of any person employed by the
Company. The foregoing restriction also shall apply with respect to any person
who was an employee, consultant or subcontractor of the Company at the time of,
or during the six (6) months preceding, the Executive’s termination from the
Company. This provision shall not limit the scope or the enforceability of the
confidentiality restriction prohibiting the use or disclosure of any information
pertaining to current or former employees of the Company or potential hires that
was obtained in any manner during the period of Executive’s employment with the
Company.

 

d. Further Covenants. Executive further agrees, for the term of Executive’s
employment with the Company or any of its affiliates and for a period of two (2)
years after Executive ceases to be employed by the Company or any of its
affiliates, as follows:

 

(i) To disclose promptly in writing to the Company (but to no others), in such
manner as the Company may from time to time prescribe, all Intellectual
Property, whether patentable or not. All such Intellectual Property shall be the
sole and exclusive property of the Company;

 

(ii) To assign and convey to the Company, upon request, the complete worldwide
right, title and interest in and to all Intellectual Property conceived or made
by Executive. Upon the request of the Company, Executive shall execute such
further assignments and other instruments as may be necessary or desirable to
fully and completely assign all such Intellectual Property to the Company and to
assist the Company in applying for, obtaining and enforcing patents or
copyrights or other rights in the United States and in any other jurisdiction
with respect to any such Intellectual Property;

 

(iii) To promptly deliver to the Company any and all written records (in the
form of notes, sketches, drawings and any other form as may be specified by the
Company) documenting the concepts and/or actual reduction to practice of any
such Intellectual Property. Such written records shall at all times be and
remain the sole property of the Company;

 

(iv) Executive shall not be entitled to any payments or awards by reason of any
patent application made by the Company or the granting of any patent thereon
and, in the event the Company is required by its contracts with its customers,
including the United States Government, to transfer rights to certain
Intellectual Property to said customers, Executive also shall not be entitled to
any payments or awards by reason of any patent application made by any of said
customers, or the granting of any patent thereon;

 

(v) During the Executive’s employment with the Company and thereafter, Executive
shall do all lawful acts, including the execution of papers and giving of
testimony that may be necessary or helpful, in obtaining, sustaining, reissuing
and renewing United States patents and foreign jurisdiction patents on all such
Intellectual Property and/or for perfecting and maintaining the title of the
Company thereto; and to otherwise cooperate with the Company in any controversy
or legal proceedings relating to such Intellectual Property or to patent
applications or patents based thereon;

 

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(vi) Insofar as reports, papers and technical information created by Executive
and/or the Company contain unique, proprietary, non-public, and/or copyrightable
material, the Executive agrees that the Company shall have the sole and
exclusive right to disclose, publish, reproduce, distribute and circulate said
material, without cost or liability; and Executive hereby grants all rights of
Executive therein to the Company and Executive further releases the Company, its
affiliates and its customers from any and all liability for disclosing,
publishing, reproducing, distributing and/or circulating any such materials; and

 

(vii) All information and/or materials related to the Company and/or its
business as created, in whole or in part, by the Executive during the course of
Executive’s employment with the Company shall be solely owned by the Company as
“Works Made for Hire”, as defined by the United States Copyright Act. To the
extent any such works are not, by operation of law, “works made for hire”, then
Executive hereby assigns to the Company the sole and exclusive ownership of any
and all rights of copyright in such works, including, without limitation, all
Intellectual Property, and the Company shall have the sole right to obtain and
hold in its own name all copyrights, copyright registrations and similar
protections that may be available in such materials, works and Intellectual
Property.

 

6.3 Enforcement and Remedies

 

a. Reasonableness of Restrictions. Executive has carefully read and considered
the provisions of this Section 6 and, having done so, agrees that the
restrictions set forth in such provisions (including, but not limited to, the
time period of the restrictions) are fair and reasonable and are reasonably
required for the protection of the interests of the Company, its shareholders,
directors, officers, and employees.

 

b. Severability and Reformation. In the event that, notwithstanding the
foregoing, any portions of this Section 6 hereof shall be held to be invalid or
unenforceable, the remaining portions thereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable portions had not
been included therein. In the event that any provision of this Section 6 shall
be declared by a court of competent jurisdiction to be invalid due to overly
broad, the parties do hereby authorize the court to reform the offending
provision so as to make it enforceable.

 

c. Successors. Executive specifically acknowledges and agrees that these
covenants contained in this Section 6 shall be enforceable by any successor to
the Company.

 

d. Extension of Term of Covenant In Event of Breach. In the event Executive
breaches any of the restrictions set forth in Section 6.2, then, in addition to
any other remedies to which the Company may be entitled, the duration of the
restrictions shall be extended automatically to two years from the latest date
on which Executive shall have ceased to violate the covenants.

 

e. Additional Remedies. In the event that Executive breaches any of the
covenants contained herein, the Company shall be entitled to its remedies at law
and in equity, including but not limited to compensatory and punitive damages,
and payment by Executive of the reasonable attorneys’ fees, court costs, and
other expenses incurred by the Company in enforcing the terms of this Agreement.
The parties also recognize that any breach of the covenants contained herein may
result in irreparable damage and injury to Company which will not be adequately
compensable in monetary damages, and that in addition to any remedy that Company
may have at law, the Company may obtain such preliminary or permanent injunction
or decree as may be necessary to protect Company against, or on account of, any
breach of the provisions contained herein. In addition, Executive covenants and
agrees that, if Executive violates any of the covenants under Section 6.2 above,
the Company shall be entitled to an accounting and repayment of all profits,
compensation, commission, remuneration or benefits which Executive, directly or
indirectly, has realized and/or may realize from the transactions that give rise
to such violation(s).

 

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7. General Provisions.

 

7.1 Notices. All notices and other communications required or permitted by this
Agreement to be delivered by the Company or Executive to the other party shall
be delivered in writing, either personally or by certified or express mail,
return receipt requested, postage prepaid, respectively, to the attention of the
Chairman, Chief Executive Officer or President at the headquarters of the
Company, or to the address of record of the Executive on file at the Company. If
notice is sent by certified mail, it shall be deemed given and effective on the
third day after it was deposited in the mail.

 

7.2 Amendments: Entire Agreement. This Agreement may not be amended or modified
except by a writing executed by all of the parties hereto. This Agreement,
including any addenda hereto, constitutes the entire agreement between Executive
and the Company relating in any way to the employment of Executive by the
Company, and supersedes all prior discussions, understandings and employment
agreements among Executive, Company and Company’s Affiliates with respect
thereto.

 

7.3 Successors and Assigns. This Agreement is personal to Executive and shall
not be assignable by Executive. The Company will assign its rights hereunder to
(a) any corporation resulting from any merger, consolidation or other
reorganization to which the Company is a party or (b) any corporation,
partnership, association or other person to which the Company may transfer all
or substantially all of the assets and business of the Company existing at such
time. All of the terms and provisions of this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.

 

7.4 Severability: Provisions Subject to Applicable Law. All provisions of this
Agreement shall be applicable only to the extent that they do not violate any
applicable law, and are intended to be limited to the extent necessary so that
they will not render this Agreement invalid, illegal or unenforceable under any
applicable law. If any provision of this Agreement or any application thereof
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of other provisions of this Agreement or of any other
application of such provision shall in no way be affected thereby.

 

7.5 Waiver of Rights. No waiver by the Company or Executive of a right or remedy
hereunder shall be deemed to be a waiver of any other right or remedy or of any
subsequent right or remedy of the same kind.

 

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7.6 Definitions, Headings, and Number. A term defined in any part of this
Agreement shall have the defined meaning wherever such term is used herein. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any manner the meaning or interpretation of this Employment
Agreement. In construing this Agreement, feminine or neuter pronouns shall be
substituted for those masculine in form, and vice versa, and plural terms shall
be substituted for singular and singular for plural, in any place where the
context so requires.

 

7.7 Governing Law. This Agreement and the parties' performance hereunder shall
be governed by and interpreted under the laws of the State of New York.
Executive agrees to submit to the jurisdiction of the courts of the State of New
York, County of Erie, and that venue for any action arising out of this
Agreement or the parties' performance hereunder shall be in a court of competent
jurisdiction located in and serving the State of New York, County of Erie.

 

7.8. Attorneys’ Fees. In the event of a dispute arising out of the
interpretation or enforcement of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs.

 

7.9 Construction and Interpretation. This Agreement has been discussed and
negotiated by, all parties hereto and their counsel and shall be given a fair
and reasonable interpretation in accordance with the terms hereof, without
consideration or weight being given to its having been drafted by any party
hereto or its counsel.

 

 

IN WITNESS WHEREOF, the Company and the Executive have executed and delivered
this Agreement as of the date first written above.

 

EXECUTIVE:   22nd Century Group, Inc.               /s/ John T. Brodfuehrer  
/s/ Joseph Pandolfino John T. Brodfuehrer   Joseph Pandolfino     Chief
Executive Officer

 

 

  

 

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Addendum A to

Employment agreement of JOHN T. BRODFUEHRER

 

This Addendum A to the Employment Agreement of John T. Brodfuehrer is made and
effective as of the date of March 19, 2013.

 

A.Executive’s title for purposes of the Agreement shall be Chief Financial
Officer and Executive shall hold the same title at Company’s Affiliate(s) as
determined by the Company.

 

B.Unless earlier terminated as provided in the Agreement, the Term of the
Agreement is for an initial period of two (2) years, and thereafter the
Agreement shall renew on an annual basis unless earlier terminated by the
Company or the Executive as provided in the Agreement.

 

C.Effective as of the date of this Addendum, Executive’s Base Salary for
purposes of the Agreement shall be equivalent to $110,000 per year (paid
bi-weekly at a rate of $4,230.77 per pay period) for the period immediately
following the effective date of this Addendum. If circumstances warrant, the
Base Salary of Executive will be increased before his 6-month anniversary of
employment. Thereafter, the Base Salary of Executive may be increased, from time
to time, in an amount as determined by the Company.

 

D.Pursuant to the Agreement, Executive shall be eligible for additional
compensation and benefits as follows: participation in the Company’s 2010 Equity
Incentive Plan and/or any similar stock equity plan that the Company may
establish after the date hereof.

 

E.The Executive shall commence employment as Chief Financial Officer on April 1,
2013.

 

 

EXECUTIVE:   22nd Century Group, Inc.               /s/ John T. Brodfuehrer  
/s/ Joseph Pandolfino John T. Brodfuehrer   Joseph Pandolfino     Chief
Executive Officer

 

 

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