Exhibit 10.1


 





EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is made as of October 7, 2015, between 22nd Century Group, Inc., a Nevada corporation with its office
located at 9530 Main Street, Clarence, New York 14031 (the “Company”), and Dr. Paul Rushton, an individual residing
at 3608 Llano River Trail, McKinney, Texas 75070 (the “Employee”).


 


		1.	Employment
Duties and Responsibilities



 


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


 


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


 


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


 


		2.	TERM OF EMPLOYMENT



 


2.1Effective Date. The Effective
Date of this Agreement shall be October 30, 2015.


 


2.2.Term. The initial term
of this Agreement shall be set forth on Addendum A hereto, and the Company agrees to employ the Employee and the Employee 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



 


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


 






    Page 1 of 14 


     


    

 


3.2Incentive Compensation/Bonus.
Employee 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 Employee from time to time, and/or such other incentive compensation
arrangements that may be entered into between the Company and the Employee in the future.


 


3.3Stock Options/Restricted
Stock Grants. Employee 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 2014 Omnibus Incentive Plan or any similar plan
or agreement then being offered by the Company during the term of this Agreement.


 


3.4.Expenses. Employee 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.


 


3.5Benefits. Employee shall
receive health (family or single coverage), dental (family or single coverage), personal disability, retirement, and/or other fringe
benefits as are provided to similarly situated executives of the Company from time to time, as well as Employee may participate
in the Company’s 401(k) retirement plan, Employee shall receive the relocation benefits described in Addendum A hereto, and
Employee shall be eligible for paid time off as described in Addendum A.


 


3.6Equipment.
Company will provide Employee with use of a computer, use of a company cellular phone or reimbursement for monthly cellular phone
charges (not to exceed $60.00 per month), in each case at the option of the Company, for Employee to conduct business and/or remain
in contact with the office(s) or employees while Employee is away from the office.


 


		4.	Termination
of Employment



 


Employee’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:


 


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


 


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


 






    Page 2 of 14 


     


    

 


4.2(b)If Employee
is terminated under this section, within thirty (30) days following the conclusion of the notice period, the Company shall provide
a severance benefit to Employee as follows: Employee will continue to receive Employee's Base Salary then in effect, paid in accordance
with standard payroll practices for a period of twelve months following termination. Under this section, Employee shall not be
entitled to receive any portion of any bonus for the period in which the termination occurs.


 


4.3Termination
By The Company For Cause. The Company may, at any time and without notice (except as required below), terminate the Employee
for “cause.” Termination by the Company of the Employee 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 Employee’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 Employee; and/or (f) willful and/or
continued failure to satisfactorily perform the duties of Employee’s position; provided, however, that Employee shall not
be terminated for cause under subsection (e) or (f) above unless the Company first has provided Employee with written notice that
the Company considers the Employee to be in violation of Employee’s obligations under those subsections and Employee 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, Employee shall be entitled to receive only that Base Salary earned on or before the Employee’s
last day of active service and other post-employment benefits required by law or under Company policy. Under this section, Employee
shall not be entitled to receive any portion of any bonus for the period in which the termination occurs.


 


 4.4 Termination by the Employee For Good Reason.




 


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


 


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


 


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


 






    Page 3 of 14 


     


    

 


4.5Termination
By Death Or Disability. The Employee’s employment and rights to compensation under this Agreement shall terminate if
the Employee is unable to perform the duties of Employee’s position due to death or disability; and the Employee, or the
Employee’s heirs, beneficiaries, successors, or assigns, shall be entitled only to receive any compensation fully earned
prior to the date of the Employee’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 Agreement;
(b) to the extent required by law; or (c) to the extent that such benefit plans or policies under which Employee is covered provide
a benefit to the Employee or to the Employee’s heirs, beneficiaries, successors, or assigns. For purpose of this agreement,
“disability” shall be defined as the Employee’s failure, due to a mental or physical condition, to perform the
essential functions of Employee’s position for more than 180 days in any 360 day period.


 


4.6Change
In Control and Termination Provisions.


 


(a)If within
a one (1) 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 Employee (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 Employee’s responsibilities, as compared to the Employee’s responsibilities immediately prior to the Change in
Control, including a change in duties within the Company,


 


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


 


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


 


then, at the option of the Employee, exercisable
by the Employee within ninety (90) days after the occurrence of any of the foregoing events, the Employee 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 Employee shall be entitled to receive the
severance benefits described under Section 4.2(b) pertaining to Termination by the Company Without Cause.


  


(b)Notwithstanding any provisions
now or hereafter existing under the Company’s 2014 Omnibus 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 Employee pursuant to this Agreement, the Company’s 2014 Omnibus
Incentive Plan and/or any other agreement between the Company (or any entity which directly or indirectly controls the Company)
and Employee 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.


 






    Page 4 of 14 


     


    

 


(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:


 


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


 


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


 


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


 


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


 


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


 






    Page 5 of 14 


     


    

 


		5.	CONFIDENTIALITY AND NONDISCLOSURE



 


5.1Non-Disclosure
of Confidential Information. Employee recognizes that Employee’s position with Company is one of the highest trust and
confidence and that Employee will have access to and contact with the trade secrets and confidential and proprietary business information
of Company. Employee agrees that Employee shall not, while employed by Company or thereafter, directly or indirectly, use for Employee’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 Employee’s duties and obligations on behalf
of the Company.


 


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


 


5.3Return of
Materials, Equipment and Biological Materials. Employee further agrees that all memoranda, notes, computer files, records,
drawings, reports or other documents, in any format, made or compiled by Employee or made available to Employee while employed
by Company concerning any Company activity shall be the property of Company and shall be delivered to Company upon termination
of Employee's employment or at any other time upon request. Employee 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 Employee’s last
day of employment with Company.


 


5.4No Prior
Restrictions. The Employee 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 Employee has with any former employer
which is not a Company Affiliate (a “Former Employer”). The Employee further acknowledges that to the extent the Employee
has an obligation to the Former Employer not to disclose certain confidential information, Employee intends to honor such obligation
and the Company hereby agrees not to knowingly request the Employee to disclose such confidential information.


 






    Page 6 of 14 


     


    

 


		6.	Restrictive
CovenantS



 


Employee acknowledges
that Employee’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 Employee. In view of the unique value to the Company
of the services of the Employee for which the Company has contracted hereunder, the investments by the Company in the Employee,
and as a material inducement for the Company to enter into this Agreement and to pay to the Employee the compensation provided
hereunder, Employee 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 Employee while Employee was employed with the Company;
(ii) which were provided by employees, contractors or third-parties whom Employee was directly or indirectly managing or
with whom Employee interacted on behalf of the Company at any time during Employee’s employment with Company; or (iii) which
were the subject of proposals, contracts or negotiations with which Employee was involved while employed with the Company.


 


b.Definition
of “Customer.”  As used herein, “Customer” is defined as any person or entity, including without limitation
a Government Agency, to whom Employee, 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 Employee interacted on behalf of the Company at any time during
Employee’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 Employee, at any time during the twelve (12) month period preceding
the termination of Employee’s employment, was involved in working on a proposal for, 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 Employee provided services while employed with
the Company or with whom Employee interacted on behalf of the Company at any time during Employee’s employment with Company.


 


e.Definition of “Biological
Materials.” As used herein, “Biological Materials” shall mean any plant, seed, propagule, embryo, leaf, root
and/or other plant part or tissue, and/or gene construct or fragment thereof, belonging to or produced for the Company and/or its
Affiliates, including any of the foregoing produced by Employee or produced by others during Employee’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, cannabis
products, cannabinoids, cannabinoid products, drugs and ideas (whether patentable or not) directly or indirectly related to the
Company and/or its Affiliates (i) conceived or made by Employee, either alone or with others, while employed by the Company or
its Affiliates, (ii) conceived or made by Employee, either alone or with others, with the use of Confidential Information, and/or
(iii) conceived or made by Employee, either alone or with others, within one (1) year after the Employee’s last day of active
service unless conclusively proven by Employee to have been first conceived or made by Employee after Employee’s last day
of active service without reference to any Confidential Information.


 






    Page 7 of 14 


     


    

 


6.2Covenants.


 


a.Non-Competition
with Customers, Prospective Customers and Industry. During Employee's employment by the Company and for a period of three (3)
years after Employee ceases to be employed by the Company for any reason, then Employee will not (except on behalf of the Company),
directly or indirectly, as either an employee, contractor, or consultant, whether personally or through another entity, provide
or offer to provide any goods or Same or Substantially Similar Services to any person or entity planning to engage in or engaged
in developing, growing, making, offering, marketing, distributing and/or selling of smoking cessation products, tobacco products,
cannabis products, cannabinoids or other similar products made from or related to the tobacco (Nicotiana) plant or the cannabis
plant ((e.g., Cannabis indica, Cannabis sativa, etc.) and/or providing or offering to provide the Same or Substantially
Similar Services to any Customer or Prospective Customer. Employee specifically recognizes and agrees that the restrictions set
forth in this subsection are reasonable.


 


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


 


c.Non-Solicitation and Non-Hiring
of Employees. Employee agrees that, for the term of Employee’s employment and for a period of three (3) years after Employee
ceases to be employed by the Company, the Employee shall not, directly or indirectly, as an employee, consultant, contractor, principal,
agent, or owner, on Employee’s own behalf or the behalf of another person or entity: (i) induce or attempt to induce any
person employed or otherwise retained by the Company to leave their employment or retention with the Company; (ii) hire or employ,
or attempt to hire or employ, any person employed or otherwise retained by the Company; or (iii) assist or facilitate in any way
any other person or entity in the hiring or other retention of any person employed or otherwise retained by the Company. The foregoing
restriction also shall apply with respect to any person who was an employee, consultant, subcontractor or other retained positon
with the Company at the time of, or at any time during the six (6) months preceding, the Employee’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 Employee’s employment with the Company.


 






    Page 8 of 14 


     


    

 


d.Further Covenants. Employee
further agrees, for the term of Employee’s employment with the Company or any of its affiliates and for a period of three
(3) years after Employee 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 Employee. Upon the request of the Company, Employee shall execute such further assignments and other instruments as
may be necessary or desirable to fully and completely assign all such Intellectual Property to the Company and to assist the Company
in applying for, obtaining and enforcing patents or copyrights or other rights in the United States and in any other jurisdiction
with respect to any such Intellectual Property;


 


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


 


(iv) Employee 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, Employee 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 Employee’s
employment with the Company and thereafter, Employee 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 Employee and/or the Company contain unique, proprietary, non-public, and/or copyrightable
material, the Employee 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 Employee hereby grants all rights of Employee therein to the Company
and Employee 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


 






    Page 9 of 14 


     


    

 


(vii) All information
and/or materials related to the Company and/or its business as created, in whole or in part, by the Employee during the course
of Employee’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 Employee 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.


 


6.3Enforcement
and Remedies.


 


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


 


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


 


c.Successors.
Employee 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 Employee 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 Employee shall have ceased to violate the covenants.


 


e.Additional Remedies.
In the event that Employee 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 Employee 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, Employee covenants and agrees that, if Employee 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 Employee, directly or indirectly, has realized and/or may realize from the transactions that give rise to such violation(s).


 






    Page 10 of 14 


     


    

 


		7.	General Provisions



 


7.1Notices.
All notices and other communications required or permitted by this Agreement to be delivered by the Company or Employee to the
other party shall be delivered in writing, either personally, by a national overnight delivery service (such as FedEx or UPS) or
by certified or express mail, return receipt requested, postage prepaid, respectively, in each case being to the attention of the
Chief Executive Officer or President at the headquarters of the Company, or to the address of record of the Employee on file at
the Company. If notice is sent by overnight delivery service, it shall be deemed given and effective on the next business day after
it was deposited with a national overnight delivery service. 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.


 


7.2Amendments:
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 Employee and the Company relating in any
way to the employment of Employee by the Company, and supersedes all prior discussions, understandings and employment agreements
among Employee, Company and Company’s Affiliates with respect thereto.


 


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


 


7.4Severability:
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.


 


7.5Waiver of
Rights. No waiver by the Company or Employee 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.


 


7.6Definitions,
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.


 






    Page 11 of 14 


     


    

 


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


 


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


 


7.9Construction 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 Employee have executed and delivered this Agreement as of the date first written above.


 


 





	EMPLOYEE	 	22nd Century Group, Inc.
	 	 	 	 
	 	 	 	 
	 	 	 	 
	/s/
    Dr. Paul Rushton 	 	By: 	 /s/ Henry Sicignano, III
	Dr. Paul Rushton	 	Henry Sicignano, III
	 	 	President and Chief Executive Officer





 




    Page 12 of 14 


     


    

 


Addendum
A to 


Employment
agreement of DR. PAUL RUSHTON


 


This Addendum A to
the Employment Agreement of Dr. Paul Rushton is made as of the date of October 7, 2015 and shall be effective as of the date of
October 30, 2015.


 


		A.	Employee’s title for purposes of the Agreement shall be Vice President of Plant Biotechnology.
Employee shall commence his employment with the Company on October 30, 2015.



 


		B.	Unless earlier terminated as provided in the Agreement, the Term of the Agreement is for an initial
period of three (3) years, and thereafter the Agreement shall renew on an annual basis unless earlier terminated by the Company
or the Employee as provided in the Agreement.



 


		C.	Effective as of the date of this Addendum, Employee’s Base Salary for purposes of the Agreement
shall be equivalent to $150,000 per year (paid bi-weekly at a rate of $5,769.23 per pay period) for the period immediately following
the effective date of this Addendum. Thereafter, the Base Salary of Employee may be increased, from time to time, in an amount
as determined by the Company.



 


		D.	Pursuant to the Agreement, Employee shall be eligible for additional compensation and benefits
as follows: participation in the Company’s 2014 Omnibus Incentive Plan and/or any similar stock equity plan that the Company
may establish after the date hereof.



 


		E.	As a one-time inducement to accept the offer of employment from the Company, the Employee will
receive a grant of an incentive stock option, subject to approval by the Board of Directors of the Company after Employee executes
the Employment Agreement and this Addendum, to purchase One Hundred Thousand (100,000) shares of common stock of the Company on
the Effective Date of this Agreement at an exercise price of Eighty-Four Cents ($0.8417) per share, with such stock option being
subject to your continued employment with the Company and vesting on November 1, 2016; provided, however, that your unvested stock
options will automatically vest on the first to occur (if any) of the following: (i) the event of a change in control of the Company
(as defined in your Employment Agreement), (ii) termination of your employment with the Company by death or disability (as defined
in your Employment Agreement), (iii) termination by you of your employment with the Company for good reason (as defined in your
Employment Agreement), or (iv) termination of your employment by the Company without cause (as defined in your Employment Agreement).



 


		F.	Employee will receive a one-time, taxable, signing bonus in the amount of Thirty-Two Thousand Dollars ($32,000).



 


		G.	During the three-month transition period of November 1, 2015 through January 31, 2016, (i) the Company will reimburse Employee
for the amounts paid by Employee for up to ten (10) round-trip, coach-class airplane tickets for Employee to fly to and from Buffalo,
New York and Dallas, Texas, and (ii) the Company will pay Coventry Green Apartments, located at 4045 Coventry Green Circle, Clarence,
New York 14221, for the rent of a two-bedroom apartment there for use by Employee and his family during that time.



 


		H.	22nd Century currently offers certain full-time employees health insurance. As of the date of this Addendum, 22nd Century is
prepared to pay 100% of your premiums for BlueCross BlueShield HMO 110 Plus Platinum Health Insurance – family coverage
and 100% of your premiums for Delta Dental PPO plus Premier Plan 3 (family coverage). If you begin your employment October
30, 2015, your health/dental insurance coverage will begin November 1, 2015.



 






    Page 13 of 14 


     


    

 


		I.	You may defer a percentage (up to the maximum permitted by law; $18,000 currently) of your pre-tax salary to the Company’s
401(k) plan. As of the date of this Addendum, the Company makes per pay period Safe Harbor non-elective contributions to each participant’s
individual account in an amount equal to 3% of the participant’s gross pay for the period, regardless of whether or
not the employee made elective deferrals to the plan.  You must designate how you would like your 401(k) account invested.
You will be eligible for this plan at the 6-month anniversary of your start date (i.e. if you begin your employment on October
30, 2015, then you will be eligible to enroll in the Company’s 401(k) plan on May 1, 2016).



 


		J.	In addition to the Company’s six paid national holidays (New Year’s Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day), you will be eligible for four weeks (20 business days) paid vacation time in addition
to five sick/personal days. (However, since the commencement date of your employment with the Company is on October 30, 2015, then
for the remainder of the calendar year of 2015 you will be eligible for only one week (5 business days) paid vacation in addition
to one sick/personal day).



 





	EMPLOYEE	 	22nd Century Group, Inc.
	 	 	 	 
	 	 	 	 
	 	 	 	 
	/s/
Dr. Paul Rushton	 	By: 	/s/ Henry Sicignano, III 
	Dr. Paul Rushton	 	Henry Sicignano, III
	 	 	President and Chief Executive Officer







 








    Page 14 of 14