ESCROW
AGREEMENT

     

    THIS
ESCROW AGREEMENT (the “Agreement”) is made and
entered into as of December 2, 2010, by and among 22nd Century
Limited, LLC, a limited liability company organized under the laws of the State
of Delaware (“Issuer”),
Rodman & Renshaw, LLC, a limited liability company organized under the laws
of the State of Delaware that is a broker-dealer that is acting as placement
agent for Issuer (“Placement
Agent”), and Bank of America, National Association, a national banking
association duly organized and existing under the laws of the United States of
America, having an office in Chicago, Illinois (the “Escrow Agent”).

    


    WHEREAS,
Issuer is offering to certain accredited investors (“Subscribers”) in a private
placement offering of Units consisting of the Issuer’s limited liability company
membership interests and warrants to acquire additional amounts of the Issuer’s
limited liability company membership interests (collectively, the “Securities”), with the total
gross proceeds from the sales of the Securities to be held in a non-interest
bearing escrow account until at least the minimum amount of gross proceeds of
Six Million Dollars ($6,000,0000.00) are received (the “Minimum Offering”) and
up to the maximum amount of gross proceeds of Thirteen Million Dollars
($13,000,000.00) are received (the “Maximum Offering”), all pursuant to the
details contained in the Issuer’s Private Placement Memorandum, dated as of
November 1, 2010 (collectively, the “Offering”);

    


    WHEREAS,
in connection with the Offering, Issuer and Placement Agent have entered into a
separate agreement, pursuant to which Placement Agent is authorized to solicit
and collect, on behalf of Issuer, subscriptions for the Securities in the
Offering and to manage the sale of the Securities;

    


    WHEREAS,
Subscribers desiring to purchase the Securities must, among other things, submit
the full payment for their respective investments prior to the closing of the
Minimum Offering in connection with entering into subscription agreements with
Issuer (each such agreement, a “Subscription Agreement”);
and

    


    WHEREAS,
Issuer and Placement Agent desire to deposit such funds contributed by the
Subscribers with the Escrow Agent, to be held and disbursed in accordance with
the terms of this Escrow Agreement.

    


    NOW,
THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

    


    ARTICLE
I

    ESTABLISHMENT OF
ESCROW


     

    Section
1.1.    Appointment.  The
parties hereto hereby appoint the Escrow Agent, and the Escrow Agent hereby
agrees to serve, as the escrow agent and depositary subject to the terms and
conditions set forth herein.  Escrow Agent shall open a non-interest
bearing escrow account (the “Escrow Account”) for the
deposit of the payments received by Subscribers for purchase of Securities in
the Offering, as set forth in this Agreement.  Such payments deposited
in the Escrow Account shall hereinafter collectively be referred to as the
“Escrow
Funds.”  The Escrow Funds will be held and disbursed by the
Escrow Agent only in accordance with the express terms and conditions of this
Agreement.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Section
1.2.     Receipt of Funds and Subscription
Information.  All payments for the purchase of Securities in
the Offering which are in the form of a personal, certified or cashiers’ check
shall be made payable to:  “Bank of America, N.A., Escrow Agent for
22nd
Century Limited, LLC.”  All wire transfers shall include the
Subscriber’s name and be directed in accordance with the wire instructions set
forth in Exhibit
A-2. Upon
delivery to Placement Agent or Issuer of any payment made for the purchase of
Securities in the Offering which are in the form of personal, certified or
cashiers’ checks, Placement Agent or Issuer, as the case may be, shall by noon
of the next Business Day after receipt, transmit such payment for Securities to
the Escrow Agent with a written account of each sale in the form attached hereto
as Exhibit B
(the “Subscription
Information”).  The written account of each sale shall set
forth, among other things, the name, address and taxpayer identification number
(“TIN”) or social
security number of the Subscriber, the amount of Securities subscribed and the
amount paid therefor.  Issuer shall also provide the Subscription
Information with respect to any payments made by wire transfer for the purchase
of Securities in the Offering.  To the extent Subscription Information
is not provided within two (2) business days of the receipt of Escrow Funds by
the Escrow Agent, Escrow Agent shall return such Escrow Funds.  Escrow
Agent shall have no obligation to accept documents or instructions from any
party other than Issuer or Placement Agent with respect to the Escrow Account.
Any checks received by the Escrow Agent which are made payable to any party
other the Escrow Agent shall be returned to the Issuer or Placement
Agent.

     

    Section
1.3.    Uncollectible Funds; Account
Statements.  The Escrow Agent shall promptly notify Issuer and
Placement Agent of the receipt by the Escrow Agent of any non-collectable funds
or other discrepancies with respect to funds received by the Escrow Agent and
shall deliver to Issuer and Placement Agent monthly account statements with
respect to Escrow Funds on deposit in the Escrow Account.  If any
check is returned to the Escrow Agent as uncollectible or dishonored for any
reason, Escrow Agent shall return such check to the Issuer or Placement Agent
and Issuer agrees to pay to Escrow Agent any fees associated with such returned
or dishonored check.

    


    ARTICLE
II

     

    NON-INVESTMENT
OF ESCROW FUNDS

     

    The
Escrow Funds shall remain uninvested.  Issuer and Placement Agent
hereby acknowledge and agree that they will not be entitled to any interest or
other income on the Escrow Funds and will not have any claim or cause of action
against the Escrow Agent for its failure to invest the Escrow Funds in an
interest bearing or otherwise accreting account and Issuer shall indemnify and
hold the Escrow Agent harmless from any such claim (and any expenses incurred
defending such claim) asserted by Issuer, Placement Agent, any investor, any
Subscriber or any of their respective shareholders, members, managers or
creditors, or any trustee(s) in bankruptcy or other persons not a party to this
Agreement.  Issuer and Placement Agent shall inform subscribers that
payments for purchase of Securities in the Offering will remain
uninvested.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ARTICLE
III

    DISBURSEMENTS FROM THE
ESCROW ACCOUNT

    


    Section
3.1     Minimum Offering
Requirement.  Escrow Agent
shall not make any disbursements to Issuer from the Escrow Funds until such time
as Issuer and Placement Agent deliver to the Escrow Agent written notification
in the form set forth in Exhibit C hereto (the
“Minimum Offering
Notice”), signed by Issuer and Placement Agent, which shall specify that
subscriptions for at least Six Million Dollars ($6,000,000.00) (the “Minimum”) have been received
and accepted; that to the best of Issuer and Placement Agent’s knowledge after
due inquiry and review of its records, gross proceeds representing payment in
full for the Minimum have been received, deposited with and collected by Escrow
Agent; and that such subscriptions have not been withdrawn, rejected or
otherwise terminated.

     

    Section
3.2      Disbursement to Issuer Upon Receipt
of Disbursement Request.  Simultaneously
with or at any point after Issuer and Placement Agent deliver to the Escrow
Agent the Minimum Offering Notice and Escrow Agent has confirmed the Escrow
Account balance is consistent with the amount set forth in the Minimum Offering
Notice, Issuer and Placement Agent may deliver to the Escrow Agent one or more
written disbursement requests in the form set forth in Exhibit D hereto
(each, a “Disbursement
Request”), with each Disbursement Request being required to be signed by
each of the Issuer and Placement Agent.  Promptly upon receipt of a
Disbursement Request, but in no event later than five (5) Business Days
following receipt thereof by the Escrow Agent, the Escrow Agent shall disburse
to Issuer such Escrow Funds as are called for pursuant to the Disbursement
Request.

     

    Section
3.3     Rejection of any Subscription or
Termination of the Offering.  No later than
fifteen (15) Business Days after receipt by Escrow Agent of written notice (i)
from Issuer and Placement Agent that Issuer and Placement Agent intend to reject
a Subscriber’s subscription, (ii) from Issuer and Placement Agent that there
will be no closing of the Securities to Subscribers, or (iii) from any federal
or state securities administrator or similar regulatory authority that a stop
order has been issued with respect to the Offering and such order has remained
in effect for at least five (5) Business Days in the form set forth in Exhibit E hereto (a
“Termination Request”),
Issuer and Placement Agent shall provide Escrow Agent with joint written
instruction to pay each identified Subscriber together with the applicable
Subscriber Information, by federal wire transfer or bank check by first class
mail, the amount paid by such Subscriber without interest.  Issuer and
Placement Agent may, at any time, terminate this Agreement by delivering to the
Escrow Agent a Termination Request, which shall set forth (i) the requested
termination date and (ii) instructions for the delivery of the Escrow
Funds.  The Termination Request shall be received by the Escrow Agent
not fewer than  fifteen (15) Business Days prior to the requested
termination date.  If the Termination Request does not set forth
instructions for the delivery of the Escrow Funds, the Escrow Agent is directed
to return to the party or parties from which such funds were received and
collected based on the Subscription Information and the Escrow Agent shall incur
no liability for taking such action.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Section
3.4     Expiration of Offering
Period.  Notwithstanding
anything to the contrary contained herein, if Escrow Agent shall not have
received a Minimum Offering Notice and confirmed the Escrow Account balance in
at least the amount of the Minimum of Six Million Dollars ($6,000,000.00) on or
before the close of business on December 15, 2010 (or such later date as Issuer
and Placement Agent may notify the Escrow Agent in writing, but in no case later
than December 31, 2010) (the “Expiration Date”), Issuer and
Placement Agent shall provide Escrow Agent with joint written instruction in the
form set forth in Exhibit E hereto to pay each identified Subscriber together
with the applicable Subscriber Information, by check and by first class mail,
the amount paid by such Subscriber without interest.  Escrow Agent
shall, within fifteen (15) Business Days after receipt of such joint instruction
from Issuer and Placement Agent, return to each Subscriber, by bank check and by
first class mail, the amount paid by such Subscriber without interest as set
forth in such joint written instruction.

     

    Section
3.5     Deadline for Delivery of Disbursement
Requests.  Notwithstanding
anything to the contrary contained herein, Issuer shall not deliver to Escrow
Agent any Disbursement Request after the Expiration Date (the “Disbursement Request
Deadline”).  In the event that there are Escrow Funds remaining
in the Escrow Account as of the Disbursement Request Deadline, Escrow Agent
shall, within fifteen (15) Business Days after receipt of joint written
instruction from Issuer and Placement Agent in the form set form in Exhibit E
hereto, return to each Subscriber, by bank check and by first class mail, such
Subscriber’s allocable share of the Escrow Funds without interest as set forth
in such instruction.  If Issuer and Placement Agent have not delivered
any Disbursement Request prior to the Disbursement Request Deadline, the Escrow
Agent is directed to return to the party or parties from which such funds were
received and collected based on the Subscription Information and the Escrow
Agent shall incur no liability for taking such action.

     

    Section
3.6     Required Receipt of Funds by Escrow
Agent.  Notwithstanding
the provisions of this Article III, in no
event shall the Escrow Agent be required to disburse funds prior to its receipt
of, or any amounts in excess of, collected funds then available and payment of
its fees and expenses.

     

    ARTICLE
IV

    COMPENSATION;
EXPENSES

     

     As compensation for its services to be
rendered under this Agreement, for each year or any portion thereof, the Escrow
Agent shall receive a fee in the amount specified in Exhibit A to this Agreement and shall be
reimbursed upon request for all expenses, disbursements and advances, including
reasonable fees of outside counsel, if any, incurred or made by it outside of the performance of routine
duties in connection with carrying out the purposes of this Agreement,
including, without limitation, fees incurred in connection with review and
execution of any amendments or other documents subsequently executed in
connection with the Escrow Account.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    Issuer shall pay such fees and
expenses.  Issuer
agrees that it will, at all
times, maintain a minimum deposit with the Escrow Agent in the amount set forth
in Exhibit A to cover fees and expenses of the Escrow Agent (the “Fee
Deposit”).  The
Escrow Agent is hereby authorized and directed to apply the Fee Deposit to any
fees or expenses that have been invoiced but that have remained unpaid for
thirty (30) days or more.  Upon any such application of the Fee Deposit, Issuer
shall promptly replenish
the Fee Deposit in the amount of such application.  Amounts due for
fees and expenses at the time this Agreement is executed shall be deemed to have
been invoiced at such time and for purposes of this Article
IV shall be deemed an
invoice.  The Escrow Agent is not obligated to perform services under
this Agreement if its fees and expenses are not timely paid.  The
Set-Up Fee, Annual Administration Fee and Fee Deposit as set forth in
Exhibit
A are due upon execution of
this Agreement.
The Escrow Agent is hereby
authorized to withhold any disbursement it would otherwise make from the Escrow
Account if at the time of such disbursement any invoiced fees or expenses remain
unpaid.  It is understood that the foregoing provisions may affect the
disbursement of funds to parties not responsible for the payment of fees and
expenses.

     

    ARTICLE
V

    EXCULPATION AND
INDEMNIFICATION

    


    Section
5.1     Limited Duties of Escrow
Agent.  The obligations and duties of the Escrow Agent are
confined to those specifically set forth in this Agreement which obligations and
duties shall be deemed purely ministerial in nature.  No additional
obligations and duties of the Escrow Agent shall be inferred or implied from the
terms of any offering documents with respect to the Securities, any Subscription
Agreement or other any other documents or agreements, notwithstanding references
herein to other documents or agreements.  In the event that any of the
terms and provisions of any other agreement between any of the parties hereto
conflict or are inconsistent with any of the terms and provisions of this
Agreement, the terms and provisions of this Agreement shall govern and control
the duties of the Escrow Agent in all respects.  The Escrow Agent
shall not be subject to, or be under any obligation to ascertain or construe the
terms and conditions of any offering documents with respect to the Securities,
any Subscription Agreement or any other agreement or instrument, or to interpret
this Agreement in light of any Subscription Agreement or other agreement or
instrument whether or not now or hereafter deposited with or delivered to the
Escrow Agent or referred to in this Agreement.  The Escrow Agent shall
not be obligated to inquire as to the form, execution, sufficiency, or validity
of any such instrument nor to inquire as to the identity, authority, or rights
of the person or persons executing or delivering same.  The Escrow
Agent shall have no duty to know or inquire as to the performance or
nonperformance of any provision of any other agreement, instrument, or
document.  The Escrow Agent shall have no duty to know or inquire as
to the terms and conditions, representation, warranties or covenants of any
other statement, agreement, instrument, or document related to the Offering,
including but not limited to the offering documents, subscription agreement or
any statement by the Issuer or Placement Agent.  The Escrow Agent
shall have no responsibility for holding, issuing or delivering any securities,
including the Securities.  The parties hereto shall provide the Escrow
Agent with a list of authorized representatives, initially authorized hereunder
as set forth on Exhibit G, as such
Exhibit G may
be amended or supplemented from time to time by delivery of a revised and
re-executed Exhibit
G to the Escrow Agent.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    The
Escrow Agent is authorized to comply with and rely upon any notices,
instructions or other communications believed by it to have been sent or given
by the parties or by a person or persons authorized by the parties, including
without limitation, communications received by electronic transmission. 
Each of the Issuer and the Placement Agent agrees to indemnify and hold harmless
the Escrow Agent against any and all claims, losses, damages, liabilities,
judgments, costs and expenses (including reasonable attorneys’ fees)
(collectively, “Losses”)
incurred or sustained by the Escrow Agent as a result of or in connection with
the Escrow Agent’s reliance upon and compliance with instructions or directions
given by such party, provided, however,
that such Losses have not arisen from the gross negligence or willful misconduct
of the Escrow Agent, it being understood that the failure of the Escrow Agent to
verify or to confirm that the person giving the instructions or directions, is,
in fact, an authorized person does not constitute gross negligence or willful
misconduct.

    


    Section
5.2     Liability of Escrow
Agent.  The Escrow Account shall be maintained in accordance
with applicable laws, rules and regulations and policies and procedures of
general applicability to escrow accounts established by the Escrow
Agent.  The Escrow Agent shall not be liable for any act that it may
do or omit to do hereunder in good faith and in the exercise of its own best
judgment or for any damages not directly resulting from its gross negligence or
willful misconduct.  Without limiting the generality of the foregoing
sentence, it is hereby agreed that in no event will the Escrow Agent be liable
for any lost profits or other indirect, special, incidental or consequential
damages which the parties may incur or experience by reason of having entered
into or relied on this Agreement or arising out of or in connection with the
Escrow Agent’s duties hereunder, notwithstanding that the Escrow Agent was
advised or otherwise made aware of the possibility of such
damages.  The Escrow Agent shall not be liable for acts of God, acts
of war, breakdowns or malfunctions of machines or computers, interruptions or
malfunctions of communications or power supplies, labor difficulties, actions of
public authorities, or any other similar cause or catastrophe beyond the Escrow
Agent’s reasonable control.  Any act done or omitted to be done by the
Escrow Agent pursuant to the advice of its attorneys shall be conclusively
presumed to have been performed or omitted in good faith by the Escrow
Agent.

     

    Section
5.3     Suspension of Performance;
Disbursement Into Court.  In the event the Escrow Agent is
notified of any dispute, disagreement or legal action relating to or arising in
connection with the escrow, the Escrow Funds, or the performance of the Escrow
Agent's duties under this Agreement, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it.  The
Escrow Agent may hold all documents and funds and may wait for settlement of any
such controversy by final appropriate legal proceedings, arbitration, or other
means as, in the Escrow Agent's discretion, it may require.  In such
event, the Escrow Agent will not be liable for interest or
damages.  Furthermore, the Escrow Agent may, at its option, file an
action of interpleader requiring the parties to answer and litigate any claims
and rights among themselves.  The Escrow Agent is authorized, at its
option, to deposit with the court in which such action is filed, all documents
and funds held in escrow, except all costs, expenses, charges, and reasonable
attorneys’ fees incurred by the Escrow Agent due to the interpleader action and
which Issuer agrees to pay.  Upon initiating such action, the Escrow
Agent shall be fully released and discharged of and from all obligations and
liability imposed by the terms of this Agreement.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Section
5.4     Indemnification.  Issuer
hereby agrees to indemnify and hold the Escrow Agent, and its directors,
officers, employees, and agents, harmless from and against all costs, damages,
judgments, attorneys’ fees (whether such attorneys shall be regularly retained
or specifically employed), expenses, obligations and liabilities of every kind
and nature which the Escrow Agent, and its directors, officers, employees, and
agents, may incur, sustain, or be required to pay in connection with or arising
out of this Agreement, unless the aforementioned results from the Escrow Agent’s
gross negligence or willful misconduct, and to pay the Escrow Agent on demand
the amount of all such costs, damages, judgments, attorneys’ fees, expenses,
obligations, and liabilities.  Specifically with respect to a breach
of the representations, warranties or covenants in Article XI of this Agreement
costs shall include, but are not limited to, (i) taxes, penalties and
interest arising from such a breach and (ii) fees charged by accountants,
attorneys, or other professionals to confirm the taxable status of the Escrow
Account and to prepare any tax returns or other required filings with the
Internal Revenue Service (“IRS”) (or reasonable fees
charged by the Escrow Agent for similar services provided by its own employees)
arising from such a breach.  The costs and expenses of enforcing this
right of indemnification also shall be paid by Issuer.  The foregoing
indemnities in this paragraph shall survive the resignation or substitution of
the Escrow Agent and the termination of this Agreement.  The Placement
Agent shall not be required to indemnify Escrow Agent for expenses, loses or
liabilities not resulting from Placement Agent’s own actions or
inactions.  Escrow Agent shall nevertheless be entitled to recover
from Placement Agent expenses, loses or liabilities incurred by it resulting
from its complying with instructions delivered to it by Placement Agent either
individually or in conjunction with Issuer.

    


    ARTICLE
VI

    TERMINATION OF
AGREEMENT


     

    Section
6.1     Termination.  Upon
the first to occur of the termination of the Escrow Period, the disbursement of
all amounts in the Escrow Funds pursuant to a Disbursement Request or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 5.3 or Article VII hereof,
this Escrow Agreement shall terminate and the Escrow Agent shall have no further
obligations or liability whatsoever with respect to this Escrow Agreement or the
Escrow Funds.  The escrow period (“Escrow Period”) shall begin
upon the execution and delivery of this Agreement and shall terminate upon the
earlier to occur of the following (upon which this Agreement shall
terminate):

     

    (a)      December
15, 2010, which date may be extended until December 31, 2010 upon written notice
to Escrow Agent (which written notice shall include a statement that such
extension is not in contravention of the terms of the Offering) in the form of
Exhibit F
attached hereto; or

     

    (b)     The
termination date set forth in a properly executed and delivered Termination
Request; or


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (c)      delivery
of the Escrow Deposits by the Escrow Agent pursuant to Article III;
or

     

    (c)      The
resignation of the Escrow Agent as set forth in Article VII herein.

     

    Section
6.2.     Upon termination of this Agreement pursuant
to this Article
VI, it is understood and agreed  that the Escrow Agent shall be
entitled (i) to keep any monies paid to it in respect of fees or expenses
previously due and owing and (ii) to offset from the amount of Escrow Funds
on deposit as of the date of termination any amounts due for fees and expenses
that, as of such date, have been previously invoiced and remain unpaid or which
are then due and payable on a pro rata basis.

    


    ARTICLE
VII

    RESIGNATION OF ESCROW
AGENT

    


    The
Escrow Agent may resign at any time upon giving at least thirty (30) days prior
written notice to Issuer and Placement Agent; provided that no such
resignation shall become effective until the appointment of a successor escrow
agent which shall be accomplished as follows:  Issuer and Placement
Agent shall use their best efforts to select a successor escrow agent within
thirty (30) days after receiving such notice.  If Issuer and Placement
Agent fail to appoint a successor escrow agent within such time, the Escrow
Agent shall have the right at the expense of Issuer to petition any court of
general jurisdiction sitting in Cook County, Illinois for the appointment of a
successor escrow agent.  The successor escrow agent shall execute and
deliver an instrument accepting such appointment and it shall, without further
acts, be vested with all the estates, properties, rights, powers, and duties of
the predecessor escrow agent as if originally named as escrow
agent.  Upon delivery of such instrument, the Escrow Agent shall be
discharged from any further duties and liability under this
Agreement.  The Escrow Agent shall be paid any outstanding fees and
expenses prior to transferring assets to a successor escrow agent.

    


    ARTICLE
VIII

    NOTICES

    


    All
notices required by this Agreement shall be in writing and shall be deemed to
have been received (a) immediately if sent by facsimile transmission (with
a confirming copy sent the same Business Day by registered or certified mail or
by nationally recognized overnight courier), or by hand delivery (with signed
return receipt), (b) the next Business Day if sent by nationally recognized
overnight courier or (c) the second following Business Day if sent by
registered or certified mail, in any case to the respective addresses as
follows:


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Notices
involving claims or objections to claims must be sent by registered or certified
mail or by overnight courier and may not be sent via facsimile.

    


    If to
Issuer:

    


    22nd
Century Limited, LLC

    8201 Main
Street, Suite 6

    Williamsville,
New York  14221

    Attention:  Joseph
Pandolfino, Chief Executive Officer

    Telephone:  716-270-1523

    Fax:  716-877-3064

    


    If to
Placement Agent:

    


    Rodman
& Renshaw, LLC

    1251
Avenue of Americas, 20th
floor

    New York,
New York  10020

    Attention:  Gregory
Dow, Esq.

    Telephone:  212-356-0526

    Fax:  212-356-0536

    


    If to the
Escrow Agent:

    


    Bank of
America Merrill Lynch

    Global
Securities Solutions

    540 West
Madison StreetIL4-540-20-06

    Chicago,
Illinois  60661

    Attention:   Patrice
Emery

    Telephone:  (312)
 904-1286

    Fax:  (312)
904-0990

    


    ARTICLE
IX

    TAX REPORTING; PATRIOT
ACT

    


    Section
9.1     Restrictions on Escrow
Account.  Issuer hereby (i) represents and
warrants that, as of the date this Agreement is made and entered into, the
Escrow Account is not a Qualified Settlement Fund, Designated Settlement Fund,
or Disputed Ownership Fund within the meaning of section 468B of the Internal
Revenue Code of 1986, as amended (and the regulations thereunder) and
(ii) covenants that neither Issuer nor Placement Agent shall take, fail to take
or permit to occur any action or inaction, on or after the date this Agreement
is made and entered into, that causes the Escrow Account to
become such a Qualified Settlement Fund, Designated Settlement Fund, or Disputed
Ownership Fund at any time.

    


    Section
9.2.    Patriot
Act.  Section 326 of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (“USA PATRIOT Act”)
requires the Escrow Agent to implement reasonable procedures to verify the
identity of any person that opens a new account with it.  Accordingly,
the parties acknowledge that Section 326 of the USA PATRIOT Act and the Escrow
Agent’s identity verification procedures require the Escrow Agent to obtain
information which may be used to confirm Issuer’s identity including without
limitation name, address and organizational documents (“identifying
information”).  Issuer and Placement Agent agree to provide the
Escrow Agent with and consent to the Escrow Agent obtaining from third parties
any such identifying information required as a condition of opening an account
with or using any service provided by the Escrow Agent.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Section
9.3.    Tax
Information.  Issuer and Placement Agent have each provided the
Escrow Agent with its fully executed IRS Form W-9 and/or other required
documentation.  Issuer and Placement Agent each represents that its
respective correct TIN assigned by the IRS, or any other taxing authority, is
set forth in the delivered forms, as well as in the Substitute IRS Form W-9 set
forth on the signature page of this Agreement.

    


    Section
9.4.    Tax Returns.  Any
tax returns required to be filed by the Issuer with respect to the Issuer and/or
the Offering will be prepared and filed by Issuer with the IRS and any other
taxing authority as required by law.  Issuer and Placement Agent each
acknowledges and agrees that Escrow Agent shall have no responsibility for the
preparation and/or filing of any income, franchise or any other tax return with
respect to the Escrow Funds or Escrow Account.

    


    ARTICLE
X

    MISCELLANEOUS
PROVISIONS

    


    Section
10.1   Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois and the parties hereto consent to jurisdiction in the State of
Illinois and venue in any state or Federal court located in the City of
Chicago.

    


    Section
10.2   Successors.  Any
entity into which the Escrow Agent may be merged or with which it may be
consolidated, or any entity to whom the Escrow Agent may transfer a substantial
amount of its Escrow business, shall be the successor to the Escrow Agent
without the execution or filing of any paper or any further act on the part of
any of the parties, anything herein to the contrary
notwithstanding.

    


    Section
10.3   Attachment or
Levy.   In the event that any Escrow Funds shall be attached,
garnished or levied upon by any court order, or the delivery thereof shall be
stayed or enjoined by an order of a court, or any order, judgment or decree
shall be made or entered by any court order affecting the property deposited
under this Escrow Agreement, the Escrow Agent is hereby expressly authorized, in
its sole discretion, to obey and comply with all writs, orders or decrees so
entered or issued, which it is advised by legal counsel of its own choosing is
binding upon it, whether with or without jurisdiction, and in the event that the
Escrow Agent obeys or complies with any such writ, order or decree it shall not
be liable to any of the parties hereto or to any other person, entity, firm or
corporation, by reason of such compliance notwithstanding such writ, order or
decree be subsequently reversed, modified, annulled, set aside or
vacated.

    


    Section
10.4   Amendments.  This
Agreement may be amended, modified, and/or supplemented only by an instrument in
writing executed by all parties hereto.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Section
10.5   Counterparts.  This
Agreement may be executed by the parties hereto individually or in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and the same agreement.  This Agreement,
signed and transmitted by facsimile machine or pdf file, is to be treated as an
original document and the signature of any party hereon, if so transmitted, is
to be considered as an original signature, and the document so transmitted is to
be considered to have the same binding effect as a manually executed
original.

     

    Section
10.6   Headings.  The
headings used in this Agreement are for convenience only and shall not
constitute a part of this Agreement.  Any references in this Agreement
to any other agreement, instrument, or document are for the convenience of the
parties and shall not constitute a part of this Agreement.

    


    Section
10.7   Business Day.  As
used in this Agreement, “Business Day” means a day
other than a Saturday, Sunday, or other day when banking institutions in
Chicago, Illinois are authorized or required by law or executive order to be
closed.

    


    Section
10.8   No
Third Party Beneficiaries.  This Agreement constitutes a
contract solely among the parties by which it has been executed and is
enforceable solely by the parties by which it has been executed and no other
persons.  It is the intention of the parties hereto that this
Agreement may not be enforced on a third party beneficiary or any similar
basis.

    


    Section
10.9   Severability.  The
parties agree that if any provision of this Agreement shall under any
circumstances be deemed invalid or inoperative this Agreement shall be construed
with the invalid or inoperative provisions deleted and the rights and
obligations of the parties shall be construed and enforced
accordingly.

    


    Section 10.10 Assignments.  No
party hereto shall assign its rights hereunder until its assignee has submitted
to the Escrow Agent (i) Patriot Act disclosure materials and the Escrow
Agent has determined that on the basis of such materials it may accept such
assignee as a customer and (ii) assignee has delivered an IRS Form W-8 or
W-9, as appropriate, to the Escrow Agent which the Escrow Agent has determined
to have been properly signed and completed.  In addition, the
foregoing rights to assign shall be subject, in the case of any party having an
obligation to indemnify the Escrow Agent, to the Escrow Agent’s approval based
upon the financial ability of assignee to indemnify it being reasonably
comparable to the financial ability of assignor, which approval shall not be
unreasonably withheld.

     

    Section 10.11 Arbitration.  Any
claim against the Escrow Agent arising out of or relating to this Agreement
shall be settled by arbitration in accordance with commercial rules of the
American Arbitration Association.  Arbitration proceedings conducted
pursuant to this Article X shall be
held in Chicago, Illinois.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Section 10.12  Offering.  Each of
the Issuer and Placement Agent represent, warrant and covenants that (i) it has
not and will not use the name of the Escrow Agent in any materials with respect
to the Offering or otherwise without the express written consent of the Escrow
Agent, which consent the Escrow Agent hereby gives with respect to the Private
Placement Memorandum and Securities Purchase Agreement of the Issuer, copies of
which have been provided to Escrow Agent; (ii) it has complied (in all material
respects) and will continue to comply (in all material respects) with all laws,
rules and regulations having application to this Agreement or the Offering,
including the Investment Act Company Act of 1940 and all other applicable
federal and state securities and financial laws and regulations; (iii) it will
not accept Subscriptions exceeding the maximum offering amount or from more than
one hundred (100) investors; (iv) at all times during the term of this Escrow
Agreement less than twenty-five percent (25%) of the amounts represented by
Subscriptions delivered to the Escrow Agent will be submitted on behalf of
Subscribers who are benefit plan investors as defined in 29 CFR 2510.101.3; (v)
each document, notice, instruction or request provided by Issuer or Placement
Agent to Escrow Agent shall comply with applicable laws and regulations; and
(vi) it shall disclose in writing to potential and actual Subscribers that the
Escrow Funds shall remain uninvested, losses to the Escrow Funds are borne
solely by Subscribers, and the Escrow Agent is not responsible for issuing or
holding the Securities.

    


    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.

    


    
      
        	 
      	
                ISSUER:

              
	 
      	 
      
	 
      	
                22nd
      CENTURY LIMITED, LLC

              
	 
      	 
      	 
      
	
                  

              	
                By: 

              	
                /s/ Joseph Pandolfino

              
	 
      	 
      	
                Name: 

              	
                Joseph Pandolfino

              
	 
      	 
      	
                Title:

              	
                Chief Executive Officer

              
	 
      	 
      	 
      
	 
      	
                PLACEMENT
      AGENT:

              
	 
      	 
      
	 
      	
                RODMAN
      & RENSHAW, LLC

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ David Horin

              
	 
      	 
      	
                Name:

              	
                David Horin

              
	 
      	 
      	
                Title:

              	
                Chief Financial Officer

              
	 
      	 
      	 
      
	 
      	
                ESCROW AGENT:

              
	 
      	 
      
	 
      	
                BANK
      OF AMERICA, NATIONAL

                ASSOCIATION

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Erik R. Benson

              
	 
      	 
      	
                Name:

              	
                Erik R. Benson

              
	 
      	 
      	
                Title:

              	
                Vice
President