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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10

        
          

        

      

      
         


      

    


    (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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