EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of January 25, 2011,
between 22nd Century Group, Inc., a Nevada corporation (the “Company”), and
Joseph Pandolfino (the “Executive”).

1.           EMPLOYMENT DUTIES AND RESPONSIBILITIES

1.1           Position and Title.  The Company hereby agrees to employ the
Executive in the position described on Addendum A attached hereto and the
Executive hereby accepts such position and agrees to serve the Company 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.

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 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 (as such term is defined
below).  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 monthly 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.

 
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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.

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 such health (family coverage),
dental (family coverage), personal disability, life insurance, retirement, paid
time-off and other fringe benefits as are provided to similarly situated
executives of the Company.  Such benefits may be amended, from time to time, so
that they are at least commensurate with those provided to other senior
corporate officers of the Company.  Executive shall also receive other benefits
as may be set forth on Addendum A hereto.

3.6           Equipment.  Company will provide Executive with use of, or monthly
reimbursement for, a laptop 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.

3.7           Parachute Payments.  For all payments made or required to be made
pursuant to the terms of this Agreement, including any payments made with
respect to the Executive’s termination of employment for any reason, the Company
shall determine and pay the Executive an amount sufficient to cover the gross-up
of any excise, income and other taxes resulting from the imposition of the
parachute penalties of the Internal Revenue Code or applicable state tax
laws.  Such determination and payment by the Company shall be made six (6)
months and one (1) day after the date of the termination of Executive’s
employment with the Company for any reason or, if later, before the end of the
calendar year following the calendar year in which the Executive paid any such
excise tax.

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:

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 Chairman 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.

 
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4.2          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, 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.

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 either (i) three (3) years 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 but shall receive any accrued bonus for any performance
period fully completed prior to the date of termination.

 
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4.4
Termination 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; (ii) a change in the location of the Executive's principal place of
employment to a location more than 25 miles from Executive’s current worksite;
(iii) a change in job title and/or duties of Executive without the consent of
Executive; and/or (iv) a change in the person to whom the Executive reports
within the Company; 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 Executive terminates this Agreement under this Section
4.4, Executive shall be entitled to the severance benefits described under
Section 4.2 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 but not limited to a change in the job title, duties and/or person to
whom the Executive reports within the Company,

 
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(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 failure to provide the Executive with benefits at least as favorable as
those enjoyed by similarly-situated senior corporate officers of the Company
after the Change in Control or as granted to the Executive by this Agreement,

(v) any relocation of the Executive’s principal site of employment to a location
more than twenty-five (25) miles from the Executive’s principal place of
employment as of the date immediately prior to the Change in Control, or

(vi) 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 greater of either (A) the Base Salary
which remains unpaid for the remainder of the initial term of this Agreement as
set forth in Addendum A hereto or (B) the Base Salary for a period of three (3)
years following such Notice of Termination.  In addition, the Company shall pay
to the Executive any bonus and/or additional compensation that would have been
payable for the year in which such termination occurs.  In addition, the Company
shall, for eighteen (18) months following such termination, (i) reimburse the
Executive for his reasonable costs of medical and dental coverage as provided
under COBRA, (ii) reimburse the Executive for his reasonable costs incurred in
maintaining his life and disability coverage, and (iii) reimburse the Executive
for all other benefits granted to the Executive in this Agreement, each at
levels substantially equivalent to those provided by the Company to the
Executive immediately prior to the termination of his employment (including such
other benefits as shall be provided to senior corporate officers of the Company
in lieu of such benefits from time to time during the eighteen (18) month
payment period), on the same basis, including the Company’s payment of premiums
and contributions, as such benefits are provided to other senior corporate
officers of the Company or were provided to the Executive prior to the
termination.  Reimbursements of expenses which provide for nonqualified deferred
compensation under Internal Revenue Code Section 409A, if any, shall not be paid
before six (6) months and one day after the Executive’s date of termination of
employment.  The amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a taxable year of the Executive may not affect the
expenses eligible for reimbursement, or in-kind benefits to be provided in any
other taxable year.  Reimbursements shall be paid on or before the last day of
the Executive’s taxable year following the taxable year in which the expense was
incurred.  The right to reimbursement hereunder is not subject to liquidation or
exchange for another benefit.

In addition, for the period commencing from the date of the Notice of
Termination and ending on December 31 of the second calendar year following the
calendar year in which the Executive’s date of termination of employment occurs,
the Executive will be provided with outplacement services that are mutually
acceptable to the Company and the Executive.  Rights and benefits of the
Executive or transferee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs.

 
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Notwithstanding the foregoing, in the event that the Company is not a
publicly-traded entity as of the date of termination of employment, or ceases to
be a publicly-traded entity within the twelve (12) month period immediately
following the date of termination of employment, then the Company shall pay to
Executive the payments set forth in this Section 4.6, or any unpaid portion
thereof, as applicable, within forty-five (45) days from the later of (i) the
date of termination of employment or (ii) the date the Company ceased to be a
publicly-traded entity.  Notwithstanding the foregoing, in the event that the
death of the Executive occurs within six (6) months following the date of
termination of employment, the Company shall pay to the Executive’s estate any
unpaid portion of the amounts due to be paid to the Executive pursuant to this
Section 4.6 within forty-five (45) days following receipt by the Company of
notice of Executive’s death.

(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 Limited, LLC 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 twenty percent (20%) 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

 
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(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

(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 was a member of such Board of Directors on
the date hereof, was appointed or elected to serve as a member of such Board of
Directors within twenty (20) days following the date hereof, or who subsequently
became a member of the Board of 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.

 
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5.3           Return of Materials, Equipment and Biological
Materials.  Executive further agrees that all memoranda, notes, computer files,
records, drawings, 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 active employment with Company.

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 (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
(including, if applicable, the severance payments referred to in Section 4
above), 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.

 
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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.

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, and/or other
plant part or tissue, and/or gene construct or fragment thereof, belonging to
the Company, 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 Tobacco
Industry.  During Executive's employment by the Company and for a period of two
(2) years after Executive ceases to be employed by the Company, 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 services to any entity engaged
in the United States in the making, offering, marketing, distributing and/or
selling of products made from the tobacco (Nicotiana) plant, and/or providing or
offering to provide the Same or Substantially Similar Services to any Customer
or Prospective Customer.  Executive specifically recognizes and agrees that the
restrictions set forth in this subsection are reasonable.

 
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b.           Non-Interference With Customers or Prospective
Customers.  Executive further agrees that, for the term of Executive’s
employment and for a period of two (2) 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, 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, supplier,
distributer, farmer and/or manufacturer to cease or reduce doing business with
the Company; (iii) from soliciting any Customer, Prospective Customer, 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.

c.           Non-Solicitation and Non-Hiring of Employees.  Executive agrees
that, for the term of Executive’s employment and for a period of two (2) 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;

 
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(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;

(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.

 
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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).

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 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 between them 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.

 
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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.

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, 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 or serving the State of New York.

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/ Joseph Pandolfino
 
By:
 /s/ Henry Sicignano III
 
Joseph Pandolfino
 
Henry Sicignano III
     
President
 

 
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ADDENDUM A TO
EMPLOYMENT AGREEMENT OF JOSEPH PANDOLFINO

This Addendum A to the Employment Agreement of Joseph Pandolfino is made and
effective as of the date of January 25, 2011 and supersedes any prior Addendum A
of such Agreement.

A.
Executive’s title for purposes of the Agreement shall be Chief Executive
Officer.

B.
Unless earlier terminated as provided in the Agreement, the Term of the
Agreement is for an initial period of five (5) 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 $150,000.00 for the six (6) month period immediately
following the effective date of this Addendum.  Thereafter, the Base Salary of
Executive may be increased in an amount as determined by the Company.  Nothing
in the Agreement will affect the pre-existing obligation of the Company or 22nd
Century Limited, LLC to pay to the Executive the previously accrued but unpaid
salary of the Executive.

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.

EXECUTIVE
 
22nd Century Group, Inc.
         
/s/ Joseph Pandolfino
 
By:
/s/ Henry Sicignano III
 
Joseph Pandolfino
 
Henry Sicignano III
     
President
 

 
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