Document:

January
      25, 2011

              

      

    

    

    CONFIDENTIAL

    

    22nd Century
Group, Inc.

    11923 SW
37 Terrace

    Miami, FL
33175

    Attn.:
Mr. David Rector, CEO

    

    Dear Mr.
Rector:

    

    Rodman
& Renshaw, LLC (“Rodman”), a Delaware limited liability company, is pleased
to act as the exclusive financial advisor to 22nd Century Group, Inc., a Nevada
corporation (the “Company”) with respect to the matters set forth
herein.  This letter agreement (the “Agreement”) sets forth the terms
of our engagement.

    

    1.           Services.  During
the Term (as defined below), Rodman shall provide the Company with financial
advisory and consulting services from time to time as requested by the
Company.  In such capacity, Rodman shall advise the Company with
respect to financial matters relating to the Company’s capital structure and
financing needs.  Rodman shall not be required to render services in
excess of 10 hours per calendar month.  All such services may be
rendered telephonically

    

    2.           Term.  Rodman’s
obligation to provide the services described in Section 1 shall commence on the
date that the Company consummates the merger contemplated by that certain
Agreement and Plan of Merger and Reorganization, dated as of January 25, 2011,
by and among the Company, 22nd Century
Acquisition Subsidiary, LLC, a wholly-owned subsidiary of the Company, and
22nd
Century Limited, LLC (the “Merger”) and shall continue for a period of one
year.  Notwithstanding anything
to the contrary contained herein, the provisions concerning indemnification,
contribution and the Company’s obligations to pay fees and reimburse expenses
contained herein will survive any expiration or termination of this
Agreement.

    

    3.           Fees.  In
consideration for the services to be provided by Rodman hereunder, immediately
upon consummation of the Merger, the Company shall issue to Rodman a warrant,
substantially in the form annexed hereto as Exhibit A (the “Warrant Shares”),
entitling Rodman to purchase 500,000 shares (the “Warrant”) of the common stock,
par value $0.00001 per share, of the Company, at an exercise price of $1.50 per
share at any time during the five-year period beginning on the date the Merger
is consummated. The terms of the warrant shall include, among other provisions,
anti-dilution protection in the event of stock dividends and combinations, stock
splits, stock issuances for consideration less than the exercise price (subject
to carve outs for stock issuances pursuant to equity incentive plans approved by
the Company’s board of directors and ratified by shareholders), reorganizations,
mergers and consolidations, a “cashless” or “net exercise” provision and
“piggyback” registration rights with respect to the Warrant Shares (including
any shares issued as a result of the anti-dilution provisions of the
Warrant.)

    

    4.           Expenses.  In
addition to the Warrant, whether or not a transaction is consummated, the
Company hereby agrees to reimburse Rodman for all reasonable travel and other
out-of-pocket expenses incurred in connection with Rodman’s engagement pursuant
hereto, including the reasonable fees and expenses of Rodman’s counsel; provided, however, any single
expense or group of related expenses, in excess of $5,000 shall require the
prior written approval of the Company’s chief executive officer or chief
financial officer, which approval shall be binding on the
Company.   Nothing contained in this Section 4 shall be construed
as limiting or impairing Rodman’s right to indemnification and contribution
under Section 7 hereof in any way.

    

    Rodman
& Renshaw, LLC  1251 Avenue of the Americas, 20th Floor,
New York, NY 10020

    Tel: 212 356 0500  Fax: 212 581 5690 
www.rodm.com  Member: FINRA,
SIPC

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    5.           Right of First
Refusal.  If at any time during the two-year period following
the date on which the Merger is consummated, the Company or any of its
affiliates, as defined in Rule 144 promulgated under the Securities Act of 1933,
as amended, (“Affiliates”) (i) disposes of or acquires business units (whether
in a transaction involving the purchase and sale of stock or assets) or acquires
any of its outstanding securities or make any exchange or tender offer or enters
into a merger, consolidation or other business combination or any
recapitalization, reorganization, restructuring or other similar transaction,
including without limitation, an extraordinary dividend or distributions or a
spin-off or split-off, and the Company decides to retain a financial advisor for
such transaction; (ii) decides to issue (including by way of refinance) any
indebtedness for borrowed money using a financial manager or agent, or (ii)
determines to raise capital by means of a public offering or a private placement
of debt or equity securities using an underwriter or a placement agent, then in
each such instance Rodman (or any Affiliate designated by Rodman) shall have the
first preferential right to act as the lead advisor, lead manager, lead agent,
managing underwriter, lead book runner or lead placement agent with respect to
such transaction on ordinary and customary terms to be agreed upon by the
parties.  In the event the Company decides to pursue any of the
transactions described in clauses (i), (ii)or (iii) of the first sentence if
this Section 5, it shall provide written notice of such desire or intent, which
notice shall specify the material terms of such transaction, including the
nature of the proposed transaction and the expected size of the
transaction.  Rodman shall have twenty (20) business days from its
receipt of such notice to inform the Company that it is exercising its
preferential right of first refusal as specified in this Section
5.  If Rodman decides to accept such engagement, the agreement
governing such engagement shall contain, among other things, provisions for
customary fees and other compensation for transactions of similar size and terms
and shall also contain provisions for indemnification and
contribution.  If Rodman and the Company are unable to reach agreement
on such ordinary and customary terms, and the Company proposes to pursue any
such transaction using a financial advisor, lead manager, lead placement agent,
lead agent or managing underwriter other than Rodman, the Company shall first
provide Rodman, in writing, with the proposed terms of any bona fide arms-length
negotiated terms of such engagement (the “Notice”).  If, within twenty
(20) business days of the receipt the Notice, Rodman does not accept, in
writing, the engagement to which the Notice pertains pursuant to terms no less
favorable to the Company than those set forth in the Notice, then the Company
shall be free to negotiate and enter into an engagement with any third-party
financial advisor, lead manager, lead placement agent, lead agent or managing
underwriter with regard to the transactions to which the Notice
pertains.  Rodman’s failure to exercise the rights set forth in this
Section 5 with regard to any particular transaction contemplated hereby shall
not affect Rodman’s rights as set forth in this Section 5 with regard to any
subsequent transaction within the period contemplated by this Section
5.

    

    6.           Use of
Information.  The Company will furnish Rodman such written
information as Rodman reasonably requests in connection with the performance of
its services hereunder.  The Company understands, acknowledges and
agrees that, in performing its services hereunder, Rodman will use and rely
entirely upon such information as well as publicly available information
regarding the Company and that Rodman does not assume responsibility for
independent verification of the accuracy or completeness of any information,
whether publicly available or otherwise furnished to it, concerning the Company,
including, without limitation, any financial information, forecasts or
projections considered by Rodman in connection with the provision of its
services.

    

    7.          Publicity.  In
the event of the consummation or public announcement of any transaction
hereunder, Rodman shall have the right (i) to approve the text of any such
announcement and (ii) to disclose its participation in such transaction,
including, without limitation, the placement at its cost of “tombstone”
advertisements in financial and other newspapers and journals.

    
      
         

      

      
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    8.           Securities
Matters.  The Company shall be responsible for any and all
compliance with the securities laws applicable to it, other than those
applicable to Rodman in its capacity as a financial advisor hereunder. Rodman
agrees to cooperate with counsel to the Company in that regard.

    

    9.           Indemnity.

    

    (a)         In
connection with the Company’s engagement of Rodman as its financial advisor, the
Company hereby agrees to indemnify and hold harmless Rodman and its Affiliates,
and the respective controlling persons, directors, officers, shareholders,
members, agents and employees of any of the foregoing (collectively the
“Indemnified Persons”), from and against any and all claims, actions, suits,
proceedings (including those of shareholders), damages, liabilities and expenses
incurred by any of them, including the reasonable fees and expenses of counsel,
as incurred, (collectively a “Claim”), (i) which are related to or arise out of
(a) any actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by the Company, or (b) any actions
taken or omitted to be taken by any Indemnified Person in connection with the
Company’s engagement of Rodman, or (ii) otherwise relate to or arise out of
Rodman’s activities on the Company’s behalf under Rodman’s engagement, and the
Company shall reimburse any Indemnified Person for all expenses (including the
reasonable fees and expenses of counsel) incurred by such Indemnified Person in
connection with investigating, preparing or defending any such claim, action,
suit or proceeding, as incurred, whether or not in connection with pending or
threatened litigation in which any Indemnified Person is a party.  The
Company will not, however, be responsible for any Claim, which is finally
judicially determined to have resulted from the gross negligence or willful
misconduct of any person seeking indemnification for such Claim.  The
Company further agrees that no Indemnified Person shall have any liability to
the Company for or in connection with the Company’s engagement of Rodman except
for any Claim incurred by the Company as a result of such Indemnified Person’s
gross negligence or willful misconduct.

    

    (b)         The
Company further agrees that it will not, without the prior written consent of
Rodman, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person from any and all
liability arising out of such Claim.

    

    (c)         Promptly
upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification is
being sought hereunder, such Indemnified Person shall notify the Company in
writing of such complaint or of such assertion or institution, but failure to so
notify the Company shall not relieve the Company from any obligation it may have
hereunder, except and only to the extent such failure results in the forfeiture
by the Company of substantial rights and defenses.  If the Company so
elects or is requested by such Indemnified Person, the Company will assume the
defense of such Claim, including the employment of counsel reasonably
satisfactory to both the Company and such Indemnified Person and the payment of
the fees and expenses of such counsel. In the event, however, that such legal
counsel reasonably determines that having common counsel would present such
counsel with a conflict of interest or if the defendant in, or target of, any
such Claim, includes an Indemnified Person and the Company, and such legal
counsel reasonably concludes in writing that there may be legal defenses
available to such Indemnified Person or other Indemnified Persons different from
or in addition to those available to the Company, then such Indemnified Person
may employ its own separate counsel to represent or defend him, her or it in any
such Claim and the Company shall pay the reasonable fees and expenses of such
counsel.  Notwithstanding anything herein to the contrary, if the
Company fails timely or diligently to defend, contest, or otherwise protect
against any Claim, the relevant Indemnified Person shall have the right, but not
the obligation, to defend, contest, compromise, settle, assert crossclaims, or
counterclaims or otherwise protect against the same, and shall be fully
indemnified by the Company therefor, including without limitation, for the
reasonable fees and expenses of its counsel and all amounts paid as a result of
such Claim or the compromise or settlement thereof.  In addition, with
respect to any Claim in which the Company assumes the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain his, her
or its own counsel therefor at his, her or its own expense.

    
      
         

      

      
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    (d)         The
Company agrees that if any indemnity sought by an Indemnified Person hereunder
is held by a court to be unavailable for any reason then (whether or not Rodman
is the Indemnified Person), the Company and Rodman shall contribute to the Claim
for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to the Company, on the one hand,
and Rodman on the other, in connection with Rodman’s engagement referred to
above, subject to the limitation that in no event shall the amount of Rodman’s
contribution to such Claim exceed the amount of fees actually received by Rodman
from the Company pursuant to Rodman’s engagement.  The Company hereby
agrees that the relative benefits to the Company, on the one hand, and Rodman on
the other, with respect to Rodman’s engagement shall be deemed to be in the same
proportion as (a) the total value paid or proposed to be paid or received by the
Company or its stockholders as the case may be, pursuant to any transaction
(whether or not consummated) for which Rodman is engaged to render services
bears to (b) the fee paid or proposed to be paid to Rodman in connection with
such engagement.

    

    (e)         The
Company’s indemnity, reimbursement and contribution obligations under this
Agreement (a) shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Person may have at law or at
equity and (b) shall be effective whether or not the Company is at fault in any
way.

    

    10.         Limitation of Engagement to
the Company.  The Company acknowledges that Rodman has been
retained only by the Company, that Rodman is providing services hereunder as an
independent contractor (and not in any fiduciary or agency capacity) and that
the Company’s engagement of Rodman is not deemed to be on behalf of, and is not
intended to confer rights upon, any shareholder, owner or partner of the Company
or any other person not a party hereto as against Rodman or any of its
Affiliates, or any of its or their respective officers, directors, controlling
persons (within the meaning of Section 15 of the Securities Act of 1933, as
amended (the “Securities Act”) or Section 20 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), employees or agents.  Unless
otherwise expressly agreed in writing by Rodman, no one other than the Company
is authorized to rely upon this Agreement or any other statements or conduct of
Rodman, and no one other than the Company is intended to be a beneficiary of
this Agreement.  The Company acknowledges that any recommendation or
advice, written or oral, given by Rodman to the Company in connection with
Rodman’s engagement is intended solely for the benefit and use of the Company’s
management and directors in considering a possible transaction, and any such
recommendation or advice is not on behalf of, and shall not confer any rights or
remedies upon, any other person or be used or relied upon for any other
purpose.  Rodman shall not have the authority to make any commitment
binding on the Company.  The Company, in its sole discretion, shall
have the right to reject any transaction introduced to it by
Rodman.

    

    11.         Limitation of Rodman’s
Liability to the Company.  Rodman and the Company further agree
that neither Rodman nor any of its affiliates or any of their respective
officers, directors, controlling persons (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), employees or agents shall
have any liability to the Company, its security holders or creditors, or any
person asserting claims on behalf of or in the right of the Company (whether
direct or indirect, in contract, tort, for an act of negligence or otherwise)
for any losses, fees, damages, liabilities, costs, expenses or equitable relief
arising out of or relating to this Agreement or the services rendered hereunder,
except for losses, fees, damages, liabilities, costs or expenses that arise out
of or are based on any action of or failure to act by Rodman and that are
finally judicially determined to have resulted solely from the gross negligence
or willful misconduct of Rodman.

    
      
         

      

      
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    12.         Governing Law;
Costs.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be fully performed therein.  Any disputes which arise under
this Agreement will be heard only in the state or federal courts located in the
City of New York, State of New York.  The parties hereto expressly
agree to submit themselves to the jurisdiction of the foregoing courts in the
City of New York, State of New York.  The parties hereto expressly
waive any rights they may have to contest the jurisdiction, venue or authority
of any court sitting in the City and State of New York.  In the event
of the bringing of any action, proceeding or suit by a party hereto against the
other party hereto, arising out of or relating to this Agreement, the party in
whose favor the final judgment or award shall be entered shall be entitled to
have and recover from the other party the costs and expenses incurred in
connection therewith, including its reasonable attorneys’ fees.  Any
rights to trial by jury with respect to any such action, proceeding or suit are
hereby waived by Rodman and the Company.

     

    13.         Notices.  All
notices hereunder will be in writing and sent by certified mail, hand delivery,
overnight delivery or fax, if sent to Rodman, to Rodman & Renshaw, LLC, 1251
Avenue of the Americas, 20th Floor, New York, NY 10020, fax number (646)
841-1640, Attention: General Counsel, and if sent to the Company, to 8201 Main
Street, Suite 6, Williamsville, New York 14221, fax number (716) 877-3064,
Attention: Joseph Pandolfino, with a copy to Foley & Lardner LLP, 3000 K
Street N.W., Suite 600, Washington, D.C. 20007, Attention: Thomas L. James,
Esq.  Notices sent by certified mail shall be deemed received three
business days thereafter, notices sent by hand delivery or overnight delivery
shall be deemed received on the date of the relevant written record of receipt,
and notices delivered by fax shall be deemed received as of the date and time
printed thereon by the fax machine.

    

    14.        Miscellaneous.  This
Agreement shall not be modified or amended except in writing signed by Rodman
and the Company.  This Agreement shall be binding upon and inure to
the benefit of Rodman and the Company and their respective assigns, successors,
and legal representatives.  This Agreement constitutes the entire
agreement of Rodman and the Company, and supersedes any prior agreements, with
respect to the subject matter hereof.  If any provision of this
Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect, and the
remainder of this Agreement shall remain in full force and
effect.  This Agreement may be executed in counterparts (including
facsimile and .pdf counterparts), each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.

    
      
         

      

      
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    In
acknowledgment that the foregoing correctly sets forth the understanding reached
by Rodman and the Company, please sign in the space provided below, whereupon
this letter shall constitute a binding agreement as of the date indicated
above.

    

    
      
        
          	 
      	
                  Very
      truly yours,

                
	 
      	 
      
	 
      	
                  RODMAN
      & RENSHAW, LLC

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ John Borer

                
	 
      	
                  Name:
      John Borer

                
	 
      	
                  Title:
      Senior Managing
Director

                

        

      

    

    

    Accepted
and Agreed to as of

    the date
first written above:

    

    22ND CENTURY
GROUP, INC.

    

    
      
        	
                By:

              	
                /s/ David Rector

              	 
      
	
                Name:  David
      Rector

              
	
                Title:    
       Chief Executive
Officer

              

      

    

    
      
         

      

      
        6PLACEMENT AGENCY
AGREEMENT

    

    December
1, 2010

    

    Rodman
& Renshaw, LLC

    1251
Avenue of the Americas

    20th
Floor

    New York,
New York 10020

    

    Gentlemen:

    

    22nd Century
Limited, LLC, a Delaware limited liability company (the “Company”), hereby
confirms its agreement with Rodman & Renshaw, LLC, a Delaware limited
liability company (the “Placement Agent”), as
set forth herein (the “Agreement”).  Unless
the context otherwise requires, as used herein, all references to “the Company”
shall be deemed to refer to 22nd Century
Limited, LLC, a Delaware limited liability company, and each of its
subsidiaries, predecessors and successors, if any after giving retroactive
effect to the Offering and the Merger as such terms are defined
below.

    

    1.           Offering.

    

    (a)           The
Company will offer (the “Offering”) for sale
through the Placement Agent, as the exclusive agent for the Company, and its
respective selected dealers, a minimum of 4,000,000 Units (the “Minimum Units”), for
minimum gross proceeds of $4,000,000 (the “Minimum Amount”), and
maximum of 8,000,000 Units (the “Maximum Units”), for
maximum gross proceeds of $8,000,000 (the “Maximum
Amount”).  In the event the Offering is over-subscribed, the
Company and the Placement Agent may, in their discretion, sell up to an
additional 1,000,000 Units (the “Over-allotment
Units”) for gross proceeds of up to $1,000,000 to cover over-allotments
(the “Over-allotment”).  Each
Unit shall consist of (i) one membership unit in the Company (each a “Membership Unit” and
collectively the “Membership Units”)
and (ii) a warrant, exercisable at any time during the five-year period
beginning on the date on which the Units are sold (the “Closing Date”) to
purchase one-half of a Membership Unit for $0.75 (the “Investor Warrants”)
based on a price of $1.50 for a full Membership Unit.  Subscriptions
for Units will be accepted by the Company at a price of $1.00 per Unit (the
“Purchase
Price”), with a minimum investment of $100,000 (100,000 Units): provided,
however,
that subscriptions in lesser amounts may be accepted in the Company’s and the
Placement Agent’s discretion.

     

    (b)          Placement
of the Units by the Placement Agent will be made on a reasonable efforts,
“all-or-none” basis with respect to the Minimum Amount and on a reasonable basis
with respect to the Maximum Amount.  The Units will be offered to
potential subscribers, which may include related parties of the Placement Agent
or the Company, commencing on November 1, 2010, the date of the preliminary
Memorandum, and ending on January 19, 2011 unless extended by the Company and
the Placement Agent within their mutual discretion or terminated earlier as
provided herein (the “Offering
Period”).  The date on which the Offering shall terminate shall
be referred to as the “Termination Date.”  The closing of the Offering
may be held up to ten days after the Termination Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)           The
Placement Agent shall only tender to, and the Company shall only accept
subscriptions from or sell Units to, persons or entities that either (i) qualify
as (or are reasonably believed to be) “accredited investors,” as such term is
defined in Rule 501 of Regulation D (“Regulation D”)
promulgated under Section 4(2) of the Securities Act of 1933, as amended (the
“Act”) or (ii)
are not (or are reasonably believed not to be) “U.S. Persons” as such term is
defined in Regulation S (“Regulation S”)
promulgated under the Act.

     

    (d)           The
offering of the Units will be made by the Placement Agent on behalf of the
Company solely pursuant to the Memorandum, which at all times will be in form
and substance acceptable to the Placement Agent and its counsel and contain such
legends and other information as the Placement Agent and its counsel may, from
time to time, deem necessary and desirable to be set forth
therein.  “Memorandum” as used
in this Agreement means the Company’s Confidential Private Placement Memorandum,
dated November 1, 2010, inclusive of all exhibits, and any and all amendments,
supplements and appendices thereto, including the final Memorandum, dated
December 16, 2010, as amended and other Company-approved documents that the
Placement Agent may use on the Company’s behalf to sell the
Units.  Unless otherwise defined, each term used in this Agreement
will have the same meaning as shall be set forth in the Memorandum.

     

    2.           Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Placement Agent that, except as otherwise set forth in the
disclosure schedule provided by the Company to the Placement Agent on the date
hereof and as updated, if necessary, by the Company immediately prior to the
closing of the transactions contemplated hereby, and collectively attached
hereto as Exhibit
A (the “Company
Disclosure Schedule”), and assuming that the conditions described in
Section 6 hereof are satisfied, each of the representations and warranties
contained in this Section 2 is true in all respects as of the date hereof and
will be true in all respects as of the Closing Date.  The Company
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered clauses contained in this Section 2, and the disclosure of
information on any paragraph of the Company Disclosure Schedule shall not
qualify for disclosure on any other paragraph of the Company Disclosure Schedule
under this Section 2.  For purposes of this Section 2, the phrase “to
the knowledge of the Company” or any phrase of similar import shall be deemed to
refer to the actual knowledge Joseph Pandolfino, C. Anthony Rider, Michael R.
Moynihan or Henry Sicignano III.

     

    (a)           The
Memorandum has been diligently prepared by the Company, at its sole cost, in
conformity with all applicable laws, and is in compliance with Regulation D and
the requirements of all other rules and regulations (collectively, the “Regulations”) of the
Securities and Exchange Commission (the “SEC”) relating to
offerings of the type contemplated by the Offering, and the applicable
securities laws and the rules and regulations of those jurisdictions wherein the
Units will be and have been offered and sold.  The Units will be
offered and sold pursuant to the registration exemption provided by Section 4(2)
and/or Section 4(6) of the Act or pursuant to Regulation D or Regulation S as a
transaction not involving a public offering and the requirements of any other
applicable state securities laws and the respective rules and regulations
thereunder in those United States jurisdictions in which the Placement Agent
notifies the Company that the Units are being offered for sale.  The
Memorandum describes all material aspects, including attendant risks, of an
investment in the Company.  The Company has not taken nor will it take
any action that conflicts with the conditions and requirements of, or that would
make unavailable with respect to the Offering, the exemption(s) from
registration available pursuant to Regulation D or Regulation S or Section 4(2)
and/or Section 4(6) of the Act and knows of no reason why any such exemption
would be otherwise unavailable to it.  Neither the Company nor its
affiliates has been subject to any order, judgment or decree of any court or
governmental authority of competent jurisdiction temporarily, preliminarily or
permanently enjoining such person for failing to comply with Section 503 of
Regulation D.

     

    
      
         

      

      
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    (b)           The
Memorandum does not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  None of the statements, documents, certificates or
other items prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not
misleading.  There is no fact that the Company has not disclosed in
the Memorandum and of which the Company is aware that materially and adversely
affects or could reasonably be expected to materially and adversely affect the
business prospects, financial condition, operations, or assets of the
Company.

     

    (c)           The
Company is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware.  The Company
has no subsidiaries and does not have an equity interest in any other firm,
partnership, association or other entity except as otherwise described in the
Memorandum.  The Company is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each jurisdiction
where the location of its properties or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects or property of the Company (“Material Adverse
Effect”).

     

    (d)           The
Company has all requisite power and authority (corporate and other) to conduct
its business as presently conducted and as proposed to be conducted (as
described in the Memorandum), to enter into and perform its obligations under
this Agreement and, immediately prior to the closing of this Offering, the
Agreement and Plan of Merger and Reorganization by and among 22nd Century Group,
Inc. (“Pubco”),
22nd
Century Acquisition Subsidiary, LLC (“Merger Sub”) and the
Company, substantially in the form and substance of the draft dated December 17,
2010 (the “Merger
Agreement”), that will effect the Merger and, under the Securities
Purchase Agreement annexed to the Memorandum as Exhibit A (the “Securities Purchase
Agreement”), the Investor Warrants, the Broker’s Warrants described in
Section 3(e) below and in the Memorandum (the “Broker’s Warrants”),
and, collectively with this Agreement, the Merger Agreement, the Securities
Purchase Agreement and the Investor Warrants, the “Transaction
Documents”) and to issue, sell and deliver (i) the Units, including the
Membership Units and the Investor Warrants underlying the Units, (ii) the
Broker’s Warrants and (iii) Membership Units underlying the Investor Warrants
and the Broker’s Warrants (collectively the “Securities”).  The
execution and delivery of each of the Transaction Documents has been duly
authorized by the necessary corporate action.  This Agreement has been
duly executed and delivered and constitutes, and each of the other Transaction
Documents, upon due execution and delivery, will constitute, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms (i) except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors’ rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and except that no representation is
made herein regarding the enforceability of the Company’s obligations to provide
indemnification and contribution remedies under the securities laws and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (e)           None
of the execution and delivery of, or performance by the Company under, this
Agreement or any of the other Transaction Documents or the consummation of the
transactions herein or therein contemplated conflicts with or violates, or will
result in the creation or imposition of any lien, charge or other encumbrance
upon any of the assets of the Company under, any agreement or other instrument
to which the Company is a party or by which the Company or its assets may be
bound, any term of the Company’s certificate of formation or its limited
liability company operating agreement, or any license, permit, judgment, decree,
order, statute, rule or regulation applicable to the Company or any of its
assets.

     

    (f)           The
Company’s total capitalization, both immediately before and after the closing of
the Offering, is accurately described in the Memorandum.  Except as
set forth in the Memorandum, all outstanding Membership Units are duly
authorized and validly issued and outstanding.  Except as set forth in
the Memorandum there are and, as of the Closing Date, will be no:  (i)
outstanding options, subscription agreements, warrants or other rights
permitting or requiring the Company or others to purchase or acquire any
Membership Units, or other equity securities of the Company, or to pay any
dividend or make any other distribution in respect thereof; (ii) securities
issued or outstanding that are convertible into or exchangeable for any of the
foregoing and there are no contracts, commitments or understandings, whether or
not in writing, to issue or grant any such option, warrant, right or convertible
or exchangeable security; (iii) Membership Units or other securities of the
Company will be reserved for issuance for any purpose; (iv)  voting trusts
or other contracts, commitments, understandings, arrangements or restrictions of
any kind with respect to the ownership, voting or transfer of Membership Units
or other securities of the Company, including without limitation, any preemptive
rights, rights of first refusal, proxies or similar rights; and (v) person
holding a right to require the Company to register any securities of the Company
under the Act or to participate in any such registration.  As of the
Closing Date, the issued and outstanding Membership Units of the Company will
conform to all statements in relation thereto contained in the Memorandum and
the Memorandum describes all material terms and conditions
thereof.  All issuances by the Company of its securities were at the
time of their issuance exempt from registration under the Act and any applicable
state securities laws.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (g)           Immediately
after the closing of the Offering, the Company will merge with Merger Sub a
newly-formed Delaware limited liability company that is a wholly-owned
subsidiary of Pubco, a Nevada corporation whose stock is quoted on the OTC
Bulletin Board (the “Merger”).  Based
solely on the representations and warranties of Pubco contained in the Merger
Agreement, together with the Parent Disclosure Schedule (as defined in such
Merger Agreement) thereto (the “Pubco
Representations”) and its review of the Pubco Representations, the
Company does not have knowledge of any facts or circumstances that would lead
the Company to believe that immediately prior to the effectiveness of the
Merger, Pubco will have any assets or any liabilities or will be engaged in any
trade or business.  In the Merger (i) each holder of a Membership
Unit, including purchasers of Units in the Offering, will receive one share of
Pubco’s common stock, par value $0.0001 per share (the “Common Stock”) in
exchange for each Membership Unit they own at the time of the Merger; (ii) each
purchaser of Units in the Offering will receive a warrant to purchase such
number of shares of Common Stock equal to the number of Membership Units subject
to the Investor Warrant held by such purchaser, exercisable at any time during
the five year period beginning on the closing date of the Merger, at an exercise
price of $1.50 per full share of Common Stock, in exchange for each Investor
Warrant owned at the time of the Merger; (iii) each holder of the Century
Warrants (as defined in the Memorandum) will receive a warrant to purchase such
number of shares of Common Stock equal to the number of Membership Units subject
to the Century Warrant so held, exercisable at any time during the five year
period beginning on the closing date of the Merger, at a price of $3.00 per full
share of Common Stock, in exchange for each Century Warrant owned at the time of
the Merger; and (iv) the holder of the Broker’s Warrants will receive a warrant
to purchase such number of shares of Common Stock equal to the number of
Membership Units subject to the Broker’s Warrant so held, exercisable at any
time during the five year period beginning on the closing date of the Merger, at
an exercise price of $1.50 per full share of Common Stock, in exchange for the
Broker’s Warrant owned at the time of the Merger.

     

    (h)           The
Merger Agreement provides that Pubco will assume all of the Company’s
obligations at the time of the Merger, including any and all obligations arising
under the Transaction Documents.

     

    (i)      
     Based solely upon the Pubco Representations and
its review of the Pubco Representations, the Company does not have knowledge of
any facts or circumstances that would lead the Company to believe that: (i)
Pubco’s capitalization immediately following the Merger will not be as set forth
in the Memorandum; (ii) the Common Stock does not conform in all material
respects to the description thereof contained in the Memorandum; (iii) any of
the issued and outstanding shares of Common Stock were not duly authorized and
validly issued, are not fully paid and nonassessable and were not issued in
compliance with federal and state securities laws; (iv) any of the outstanding
shares of Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase securities
of the Pubco; (v) except as described in the Memorandum, there are any
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of Pubco; and (vi)
the description of Pubco’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, are other than
as set forth or incorporated by reference in the Memorandum.

     

    (j)        
   (i)           The
Units (including the Over-allotment Units) and the Membership Units included in
the Units have been duly authorized for issuance and sale pursuant and when
issued will be validly issued and outstanding and the holders of such Membership
Units will have the same rights, benefits, duties and obligations as the other
members of the Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (ii)          The
Investor Warrants and the Broker’s Warrants have been duly and validly
authorized by all required corporate actions and will, when issued and delivered
by the Company be validly executed and delivered by, and will be valid and
binding agreements of, the Company, enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles. The Membership Units issuable upon the exercise of the
Investor Warrants and the Broker’s Warrants, when issued and delivered in
accordance with the terms thereof, will be duly authorized and validly issued
and outstanding and the holders of such Membership Units will have the same
rights, benefits, duties and obligations as the other members of the
Company.

     

    (iii)         Based
solely on the Pubco Representations and its review of the Pubco Representations,
the Company does not have knowledge of any facts or circumstances that would
lead the Company to believe that: (A) the shares of Common Stock to be issued in
the Merger will not be duly and validly authorized by all required corporate
actions and will not, when issued and delivered by Pubco pursuant to the Merger
Agreement, be fully paid and nonassessable; (B) any of the warrants issued in
the Merger, as well as the Advisor Warrants (as defined and described in the
Memorandum) will not be duly and validly authorized by all required corporate
actions and will not, when issued and delivered by the Company be validly
executed and delivered by, and will not be valid and binding agreements of,
Pubco, enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles; and (C) the Common
Stock issuable on exercise of the warrants to be issued by Pubco in the Merger
as well as the Advisor Warrants will not have been duly authorized and reserved
for issuance and sale pursuant to their terms and, when issued and delivered by
Pubco pursuant to such warrants, will not be validly issued, fully paid and
nonassessable.

     

    (k)           No
consent, authorization or filing of or with any court or governmental authority
is required in connection with the issuance of any of the Securities (as defined
in the Memorandum) or the consummation of the transactions contemplated herein
or in the other Transaction Documents, except for required filings with the SEC
and applicable “Blue Sky” or state securities commissions relating specifically
to the Offering (all of which will be duly made on a timely basis).

     

    (l)           The
financial statements, together with the related notes thereto, of the Company
included in the Memorandum are true and complete and present fairly, in all
material respects, the financial position of the Company as of the date
specified and the results of its operations and changes in financial position
for the period covered thereby.  Such financial statements and related
notes were prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”) throughout the
periods indicated except as may be disclosed in the notes thereto, and except
that the unaudited financial statements omit full notes and normal year-end
adjustments.  Except as set forth in such financial statements or in
the Memorandum, the Company (i) has no material liabilities of any kind, whether
accrued, absolute, contingent or otherwise and (ii) has not entered into any
material transactions or commitments.  The other financial and
statistical information with respect to the Company included in the Memorandum
are true, correct and accurate and present fairly the information shown therein
on a basis consistent with the financial statements of the Company included in
the Memorandum.  Except as set forth in the Memorandum, the Company
does not know of any facts, circumstances or conditions (or any state of facts,
circumstances or conditions which management of the Company has concluded could
give rise thereto) that could reasonably be expected to have a Materially
Adverse Effect.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (m)         The
conduct of business by the Company as presently and proposed to be conducted is
not subject to continuing oversight, supervision, regulation or examination by
any governmental official or body of the United States or any other jurisdiction
wherein the Company conducts or proposes to conduct such business, except as
described in the Memorandum and except such regulation as is applicable to
commercial enterprises generally.  The Company has obtained all
requisite licenses, permits and other governmental authorization necessary to
conduct its business as presently, and as proposed to be,
conducted.

     

    (n)          Except
as set forth in the Memorandum, no default by the Company or, to the knowledge
of the Company, any other party exists in the due performance under any material
agreement to which the Company is a party or to which any of its assets is
subject (collectively, the “Company
Agreements”).  The Company Agreements disclosed in the
Memorandum are the only material agreements to which the Company is bound or by
which its assets are subject and that are required to be disclosed in the
Memorandum, are accurately and fairly described in the Memorandum and are in
full force and effect in accordance with their respective terms.

     

    (o)          There
are no actions, proceedings, claims or investigations, before or by any court or
governmental authority (or any state of facts which management of the Company
has concluded could reasonably be expected to give rise thereto), pending or, to
the knowledge of the Company, threatened, against the Company, or involving its
assets or, to the knowledge of the Company, involving any of its officers or
directors which, if determined adversely to the Company or such officer or
director, could have a Material Adverse Effect or materially and adversely
affect the transactions contemplated by this Agreement or the other Transaction
Documents or the enforceability thereof.

     

    (p)          The
Company is not in violation of: (i) its certificate of formation or limited
liability company operating agreement; (ii) except as disclosed in the
Memorandum, any indenture, mortgage, deed of trust, note or other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its assets may be subject; (iii) any statute, rule or regulation
currently applicable to the Company; or (iv) any judgment, decree or order
applicable to the Company, which violation or violations individually, or in the
aggregate, would result in a Material Adverse Effect.

     

    (q)          The
Company does not own any real property in fee simple, and the Company has good
and marketable title to all property (personal and tangible) that it owns, free
and clear of all security interests, liens and encumbrances.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (r)           The
Company either owns free and clear of all security interests, liens and
encumbrances all right, title and interest in, or possesses adequate and
enforceable rights to use, all patents, patent applications, trademarks, trade
names, service marks, copyrights, rights, licenses, franchises, trade secrets,
confidential information, processes, formulations, software and source and
object codes necessary for the conduct of its business (collectively, the “Intangibles”).  To
the Company’s knowledge, the Company has not infringed and it is not infringing
upon the rights of others with respect to the Intangibles and the Company has
not received notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles, or any notice of conflict with
the asserted rights of others with respect to the Intangibles.

     

    (s)           The
Company has operated its business diligently and only in the ordinary course as
theretofore conducted and since the date of the most recent balance sheet
included in the Memorandum and, except as disclosed in the Memorandum, there has
been no: (i) material adverse change in the business condition (financial or
otherwise) or prospects of the Company; (ii) transaction by the Company
otherwise than in the ordinary course of business; (iii) issuance of any
securities (debt or equity) or any rights to acquire any such securities; (iv)
damage, loss or destruction, whether or not covered by insurance, with respect
to any asset or property of the Company; or (v) agreement to permit any of the
foregoing.

     

    (t)           The
Company has filed, on a timely basis, each Federal, state, local and foreign tax
return which is required to be filed by it, or has requested an extension
therefor and has paid all taxes and all related assessments, penalties and
interest to the extent that the same have become due.

     

    (u)          The
Company is not obligated to pay, and has not obligated the Placement Agent to
pay, a finder’s or origination fee in connection with the Offering and agrees to
indemnify the Placement Agent from any such claim made by any other
person.  The Company has not offered for sale or solicited offers to
purchase the Units except for negotiations with the Placement Agent other than
with respect to the agreements that may be executed by and between the Placement
Agent and certain other registered broker-dealers introduced by the Company to
the Placement Agent.  Except as set forth in the Memorandum, no other
person has any right to participate in any offer, sale or distribution of the
Company’s securities to which the Placement Agent’s rights, described herein,
shall apply.

     

    (v)          The
Company has and will maintain appropriate casualty and liability insurance
coverage, in scope and amounts reasonable and customary for similar
businesses.

     

    3.           Placement Agent Appointment
and Compensation.

    

    (a)           The
Company hereby appoints the Placement Agent as its exclusive agent in connection
with the Offering.  The Company acknowledges that the Placement Agent
may use selected dealers and sub-agents to fulfill its agency hereunder provided
that such dealers and sub-agents are compensated solely by the Placement
Agent.  The Company has not and will not make, or permit to be made,
any offers or sales of the Units other than through the Placement Agent without
the Placement Agent’s prior written consent.  The Placement Agent has
no obligation to purchase any of the Units.  The agency of the
Placement Agent hereunder shall continue until the earlier of the Termination
Date or the Closing Date.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (b)          The
Company will cause to be delivered to the Placement Agent copies of the
Memorandum and has consented, and hereby consents, to the use of such copies for
the purposes permitted by the Act and applicable securities laws, and hereby
authorizes the Placement Agent and its agents, employees and selected dealers to
use the Memorandum in connection with the sale of the Units until the earlier of
the Termination Date or the Closing Date, and no other person or entity is or
will be authorized to give any information or make any representations other
than those contained in the Memorandum or use any offering materials other than
those contained in the Memorandum in connection with the sale of the
Units.  The Company will provide at its own expense such quantities of
the Memorandum and other documents and instruments relating to the Offering as
the Placement Agent may reasonably request.

     

    (c)          The
Company will cooperate with the Placement Agent by making available to its
representatives such information as may be requested in making a reasonable
investigation of the Company and its affairs and shall provide access to such
employees as shall be reasonably requested.  Prior to the closing of
the Offering, if requested by the Placement Agent, the Company shall provide, at
its own expense, credit or similar reports on such key management persons as the
Placement Agent shall reasonably request.

     

    (d)          At
the closing of the Offering, the Company shall pay to the Placement Agent a cash
placement fee equal to eight percent (8%) of the aggregate Purchase Price paid
by each purchaser of Units in the Offering (the “Placement Agent’s
Fee”). The Placement Agent’s Fee will be deducted from the gross proceeds
of the Units sold at the closing.

     

    (e)          As
additional compensation, on the Closing Date the Company shall sell to the
Placement Agent or its designees, for nominal consideration, warrants to
purchase the number of Membership Units equal to eight percent (8%) of the
aggregate number of Membership Units included in the Units placed (the “Broker’s Warrants”),
at an exercise price of $1.50 per Membership Unit.  The Broker’s
Warrants shall be exercisable until the date five (5) years after the Closing
Date.  The holders of the Broker’s Warrants shall have “piggy-back”
registration rights.  The Broker’s Warrants shall provide for cashless
exercise.  In the Merger, the Broker’s Warrants will be exchanged for
warrants to purchase such number of shares of Common Stock equal to the number
of Membership Units subject to the Broker’s Warrants so held.  Other
than that, the terms of the warrants received in the Merger in exchange for the
Broker’s Warrants will be identical to the Broker’s Warrants.

     

    (f)           The
Company shall also pay the Placement Agent’s Fee to the Placement Agent, and
deliver warrants on a basis comparable to the delivery of the Broker’s Warrants
under this Agreement, with respect to, and based on, any investment by an
investor that invests in the Company at any time within two (2) years from the
later of the Termination Date and Closing Date (a “Post-Closing
Investor”).

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    4.           Subscription and Closing
Procedures.

     

    (a)           Each
prospective purchaser will be required to complete and execute two (2) original
omnibus signature pages for the Securities Purchase Agreement, which will be
forwarded or delivered to the Placement Agent at the Placement Agent’s offices
at the address set forth in Section 10 hereof, together with executed copies of
all other documents contemplated by the Securities Purchase Agreement, any other
documents reasonably requested by the Company, and such prospective purchaser’s
check, wire transfer or other good funds in the full amount of the aggregate
Purchase Price for the number of Units desired to be purchased.

     

    (b)           All
funds for subscriptions received from the Offering will be promptly forwarded by
the Placement Agent or the Company, if received by it, to and deposited into
non-interest bearing escrow account (the “Escrow Account”)
established for such purpose with Bank of America (the “Escrow
Agent”).  All such funds for subscriptions will be held in the
Escrow Account pursuant to the terms of an escrow agreement among the Company,
the Placement Agent and the Escrow Agent, such agreement to be in form and
substance satisfactory to the Company and the Placement Agent.  The
Company will pay all fees related to the establishment and maintenance of the
Escrow Account, regardless of whether a closing occurs hereunder. Subject to the
receipt of such subscriptions for the Minimum Amount, the Company, or the
Placement Agent on the Company’s behalf (any such acceptance by the Placement
Agent on the Company’s behalf to be subject to such guidelines as shall be
agreed upon by the Placement Agent and the Company) will either accept or reject
the Securities Purchase Agreement in a timely fashion and at the closing of the
Offering will countersign the Securities Purchase Agreement and provide
duplicate copies of such Agreements to the Placement Agent for delivery to the
purchasers.  The Company will give written notice to the Placement
Agent of its acceptance or rejection of each subscription.  The
Company, or the Placement Agent, on the Company’s behalf, will promptly return
to prospective purchasers of Units in this Offering incomplete, improperly
completed, improperly executed and rejected Securities Purchase Agreements and
give written notice thereof to the Placement Agent upon such
return.

     

    (c)           If
subscriptions for at least the Minimum Units have been accepted prior to the
Termination Date, the funds therefor have been collected by the Escrow Agent and
all of the conditions set forth elsewhere in this Agreement are fulfilled, a
closing shall occur within ten (10) days from the earlier of the Termination
Date or the sale of all Units offered.  Delivery of payment for the
accepted subscriptions from the funds held in the Escrow Account will be made by
wire transfer from the Escrow Agent to the Company at closing against delivery
by the Company of the Units, which wire transfer shall be net of amounts due to
the Placement Agent.  The Units and the Broker’s Warrants will be in
such authorized denominations and issued in such names as the Placement Agent
may request on or before the second full business day prior to the Closing
Date.

     

    (d)           If
Securities Purchase Agreements for the Minimum Units have not been received and
accepted by the Company on or before the Termination Date for any reason, the
Offering will be terminated (the date of such termination being referred to
herein as the “Expiration Date”), no
Units will be sold, and the Escrow Agent will, at the request of the Placement
Agent, cause all monies received from prospective purchasers of Units in the
Offering  to be promptly returned to such subscribers without interest
or offset.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    5.           Further
Covenants.  The Company hereby covenants and agrees
that:

     

    (a)           Except
with the prior written consent of the Placement Agent (which consent shall not
be unreasonably withheld), the Company shall not, at any time prior to the
Closing Date, take any action that would cause any of the representations and
warranties made by it in this Agreement not to be complete and correct on and as
of the Closing Date with the same force and effect as if such representations
and warranties had been made on and as of each such date.

     

    (b)           If,
at any time prior to the closing of this Offering, any event shall occur that
does or may materially affect the Company or as a result of which it might
become necessary to amend or supplement the Memorandum so that the
representations and warranties herein remain true, or in case it shall, in the
reasonable opinion of counsel to the Placement Agent, be necessary to amend or
supplement the Memorandum to comply with Regulation D or any other applicable
federal or state securities laws or regulations, the Company will promptly
notify the Placement Agent and shall, at its sole cost, prepare and furnish to
the Placement Agent copies of appropriate amendments and/or supplements in such
quantities as the Placement Agent may reasonably request.  The Company
will not at any time, whether before or after the closing of this Offering,
prepare or use any amendment or supplement to the Memorandum of which the
Placement Agent will not previously have been advised and furnished with a copy,
or to which the Placement Agent or its counsel will have reasonably objected in
writing or orally (confirmed in writing within 24 hours), or which is not in
compliance in all material respects with the Act, the Regulations and other
applicable securities laws.  As soon as the Company is advised
thereof, the Company will advise the Placement Agent and its counsel, and
confirm the advice in writing, of any order preventing or suspending the use of
the Memorandum, or the suspension of the qualification or registration of the
Units or the Securities for offering or the suspension of any exemption for such
qualification or registration of the Units or the Securities for offering in any
jurisdiction, or of the institution or threatened institution of any proceedings
for any of such purposes, and the Company will use its best efforts to prevent
the issuance of any such order, judgment or decree, and, if issued, to obtain as
soon as reasonably possible the lifting thereof.

     

    (c)           The
Company, at its own cost and expense, shall comply with the Act, the
Regulations, the Securities and Exchange Act of 1934, as amended (the “1934 Act”), and the
rules and regulations thereunder, all applicable state securities laws and the
rules and regulations thereunder in the states in which the Units are to be
offered and in which the Company’s counsel has advised the Placement Agent that
the Units are qualified or registered for sale or exempt from such qualification
or registration, so as to permit the continuance of the sales of the Units, and
will file with the SEC, and shall promptly thereafter forward to the Placement
Agent, any and all reports on Form D as are required.

     

    (d)           The
Company, at its own cost and expense, shall use its reasonable best efforts to
qualify the Units for sale (or seek exemption therefrom) under the securities
laws of such jurisdictions in the United States as may be mutually agreed to by
the Company and the Placement Agent, and the Company will (through Blue Sky
counsel) make such applications and furnish information as may be required for
such purposes.  The Company will, from time to time, prepare and file
such statements and reports as are or may be required to continue such
qualifications in effect for so long a period as the Placement Agent may
reasonably request.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (e)          The
Company shall place a legend on the certificates representing any of the
Securities stating that the securities evidenced thereby have not been
registered under the Act or applicable state securities laws and setting forth
or referring to the applicable restrictions on transferability and sale of such
securities under the Act and applicable state laws.  The Company shall
cause Pubco to place a similar legend on all certificates evidencing shares of
Common Stock and warrants issued in the Merger as well as any shares of Common
Stock issuable upon exercise of the Pubco warrants issued in the
Merger.

     

    (f)           The
Company shall apply the net proceeds from the sale of the Units for such
purposes as are described under “Use of Proceeds” in the
Memorandum.  Except as shall be specifically set forth in the
Memorandum or as approved by the Board of Directors of the Company, the net
proceeds of the Offering shall not be used to repay indebtedness to officers,
directors or stockholders of the Company without the prior written consent of
the Placement Agent.

     

    (g)          During
the Offering Period, the Company shall make available for review by prospective
purchasers of Units in the Offering during normal business hours at the
Company’s offices, upon their request, copies of the Company Agreements to the
extent that such disclosure shall not violate any obligation on the part of the
Company to maintain the confidentiality thereof and shall afford each
prospective purchaser of Units the opportunity to ask questions of and receive
answers from an officer of the Company concerning the terms and conditions of
the Offering and the opportunity to obtain such other additional information
necessary to verify the accuracy of the Memorandum to the extent it possesses
such information or can acquire it without unreasonable expense.

     

    (h)          Except
with the prior written consent of the Placement Agent (which shall not be
unreasonably withheld) or as set forth in the Memorandum, the Company shall not,
at any time prior to the earlier of the Closing Date or the Termination Date,
engage in or commit to engage in any transaction outside the ordinary course of
business, including without limitation the incurrence of material indebtedness,
materially change its business or operations as described in the Memorandum, or
issue, agree to issue or set aside for issuance any securities (debt or equity)
or any rights to acquire any such securities except as shall be contemplated by
the Memorandum.

     

    (i)           Whether
or not the transactions contemplated hereby are consummated, or this Agreement
is terminated, the Company hereby agrees to pay all fees, costs and expenses
incident hereto and to the Offering, including, without limitation, those in
connection with (i) preparing, printing, duplicating, filing, distributing and
binding the Memorandum and any and all amendments and/or supplements thereto and
any and all agreements, contracts and other documents related hereto and
thereto; (ii) the creation, authorization, issuance, transfer and delivery of
any of the Securities as well as any shares of Common Stock and Pubco warrants
issued in the Merger and any shares of Common Stock issuable upon exercise of
the Pubco warrants issued in the Merger, including, without limitation, fees and
expenses of any transfer agent or registrar; (iii) the fees and expenses of the
Escrow Agent (subject to Section 4(b) hereof); (iv) the formation, organization
and qualification of one or more investment vehicles for the purchasers of the
Units; (v) all fees and expenses of legal, accounting and other advisers to the
Company; (vi) all filing fees, costs and legal fees and expenses for Blue Sky
services and related filings with respect to Blue Sky exemptions and
qualifications (the “Blue Sky Fees”); and
(vii) subject to Section 8 hereof, a non-accountable expense allowance equal to
$100,000, which amount may be increased with the prior written approval of the
Company, shall be deducted from the gross proceeds of the Units sold at the
closing of the offering, to cover, without limitation, the legal fees, mailing,
telephone, travel, due diligence and similar expenses of the Placement
Agent.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (j)           Until
the earlier of the Closing Date or the Termination Date, neither the Company nor
any person or entity acting on its behalf will negotiate or enter into any
agreement with any other placement agent or underwriter with respect to a
private or public offering of the Company’s or any subsidiary’s debt or equity
securities.  Neither the Company nor anyone acting on its behalf will,
until the earlier of the Closing Date or the Termination Date, without the prior
written consent of the Placement Agent, offer for sale to, or solicit offers to
subscribe for Units or other securities of the Company from, or otherwise
approach or negotiate in respect thereof with, any other person.

     

    (k)          Until
the earlier of (x) the Expiration Date (if applicable) or (y) the fifth
anniversary of the Closing Date, in the event that no employee of the Placement
Agent is a member of the Board of Directors of the Company, then the Placement
Agent shall be entitled to appoint one observer to attend meetings of the Board
of Directors (subject to exclusion with respect to any matter in which it would
present, in the reasonable opinion of the Board of Directors, a conflict of
interest for such observer to participate in a Board of Directors discussion
with respect to such matter).

     

    (l)           Placement
Agent shall be entitled to a placement agent’s fee and warrants, calculated
pursuant to the terms set forth in Sections 3(d) and 3(e) above with respect to
any subsequent public or private offering or other financing or capital-raising
transaction of any kind (“Subsequent
Financing”) to the extent that such financing or capital is provided to
the Company, or to any Affiliate of the Company, by investors whom Placement
Agent had “introduced” (as defined below), directly or indirectly, to the
Company if such Subsequent Financing is consummated at any time within the
18-month period following the Termination Date or the Closing Date, if an
Offering is consummated (the “Tail
Period”).  A party “introduced” by Placement Agent shall mean
an investor who either (i) met with the Company and/or had a conversation with
the Company either in person or via telephone regarding the Offering, (ii) was
provided by Placement Agent with a copy of the Memorandum based upon such
investor expressing an interest, directly or indirectly, to Placement Agent in
investing in the Offering, or (iii) purchased Units; and, in each instance as
listed on an exhibit that Placement Agent shall provide in written form at the
closing of the Offering, if an Offering is consummated, or within ten (10)
business days following the termination of the Offering.  An
“Affiliate” of an entity shall mean any individual or entity controlling,
controlled by or under common control with such entity and any officer,
director, employee, stockholder, partner, member or agent of such
entity.  Pubco is an Affiliate.

     

    6.           Conditions of Placement
Agent’s Obligations.  The obligations of the Placement Agent
hereunder are subject to the fulfillment, at or before the closing of the
Offering, of the following additional conditions:

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (a)          Each
of the representations and warranties of the Company shall be true and correct
in all material respects, other than representations and warranties that contain
materiality or knowledge standards or qualifications (which representations and
warranties shall be true and correct in all respects) when made on the date
hereof and on and as of the Closing Date as though made on and as of the Closing
Date.

     

    (b)          The
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions that it is required to perform and/or
comply under the Transaction Documents at or before the closing of the
Offering.

     

    (c)          No
order suspending the use of the Memorandum or enjoining the offering or sale of
the Units shall have been issued, and no proceedings for that purpose or a
similar purpose shall have been initiated and pending, or, to the Company’s
knowledge, are contemplated or threatened.

     

    (d)          Immediately
at the closing of the Offering, the Company shall have, and upon the closing of
the Merger Pubco shall have, an outstanding capitalization as described in the
Memorandum.  In the case of the Company, all Membership Units
currently outstanding and the Units and the Membership Units included in the
Units that may be issued at the closing of the Offering will be, upon issuance,
validly issued, fully paid, and non-assessable.  In the case of Pubco,
all shares of capital stock outstanding immediately prior to the Merger are, and
all shares which may be issued the Merger will be upon issuance, validly issued,
fully paid, and non-assessable.  Prior to the closing of the Merger,
neither the Company nor Pubco will issue any securities upon the exercise of
warrants or options, without the written authorization of the Placement Agent,
except those warrants and options as set forth in the Memorandum.

     

    (e)          The
Placement Agent shall have received certificates of the Managing Member of the
Company, dated as of the Closing Date, certifying on behalf of the Company, in
such detail as the Placement Agent may reasonably request, as to the fulfillment
of the conditions set forth in subparagraphs (a), (b), (c) and (d)
above.

     

    (f)           The
Company shall have delivered to the Placement Agent (i) with respect to the
Company, a currently dated good standing certificate from the Secretary of State
of Delaware and each jurisdiction in which the Company is qualified to do
business as a foreign corporation, (ii) with respect to Pubco, a currently dated
good standing certificate from the Secretary of State of Nevada and each
jurisdiction in which the Pubco is qualified to do business as a foreign
corporation, (iii) a certificate from the Company’s Managing member that
this Agreement and the other Transaction Documents, and the transactions and
agreements contemplated by this Agreement and the other Transaction Documents
have been approved by all requisite corporate and member action and (iv)
certified resolutions of  Pubco’s Board of Directors approving the
Merger Agreement and the other documents related to the Merger as identified in
the Merger Agreement, and the transactions and agreements contemplated by the
Merger Agreement and those other documents.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (g)          On
or prior to the date hereof and at the closing of the Offering, the Managing
Member of the Company shall have provided a certificate to the Placement Agent
confirming on behalf of the Company that there have been no undisclosed material
and adverse changes in the business condition (financial or otherwise) or
prospects of the Company from the date of the latest financial statements
included in the Memorandum, the absence of undisclosed liabilities (other than
liabilities arising in the ordinary course of business subsequent to the date of
the most recent balance sheet included in the Memorandum) and such other matters
relating to the financial condition and prospects of the Company that the
Placement Agent may reasonably request.

     

    (h)          At
the closing of this Offering, the Company shall have (i) paid to the
Placement Agent its Placement Agent’s Fee in respect of all Units sold at the
closing, (ii) paid all fees, costs and expenses as set forth in Section
5(i) hereof, and (iii) executed and delivered to the Placement Agent the
Broker’s Warrants.

     

    (i)           There
shall have been delivered to the Placement Agent a signed opinion of counsel
(including a 10(b)-5 opinion in customary form) to the Company (“Company Counsel”),
dated as of the Closing Date, in the form reasonably satisfactory to counsel for
the Placement Agent.

     

    (j)           Prior
to the closing of the Offering, Pubco shall have engaged Continental Stock
Transfer & Trust Company as its transfer agent for purposes of handling the
transfers of its capital stock and other securities.

     

    (k)          All
proceedings taken at or prior to the closing of the Offering in connection with
the authorization, issuance and sale of the Units, the Investor Warrants and the
Broker’s Warrants will be reasonably satisfactory in form and substance to the
Placement Agent and its counsel, and such counsel shall have been furnished with
all such documents, certificates and opinions as they may reasonably request
upon reasonable prior notice in connection with the transactions contemplated
hereby.

     

    (l)   
       On or immediately prior to the closing
of the Offering, Pubco and the Placement Agent shall have entered into a
Financial Services Advisory Agreement (the “Advisory Agreement”)
in a form acceptable to the Company and the Placement Agent and their respective
counsels, which Advisory Agreement will become effective immediately upon the
closing of the Merger.  The Advisory Agreement shall provide that the
Placement Agent, or an affiliate thereof, shall provide Pubco with such advisory
services regarding Pubco’s financing needs and capitalization as Pubco shall
request from time to time and that in consideration for the obligation to
provide such services, Pubco, immediately upon the closing of the Merger shall
issue to the Placement Agent a warrant entitling the holder thereof to purchase
up to 500,000 shares of Common Stock for $1.50 per share at any time during the
five-year period beginning on the date of issuance of such
warrant.  The Advisory Agreement shall also provide that for a period
of two (2) years from the Closing Date, Pubco shall give the Placement Agent the
irrevocable preferential right of first refusal to purchase for the Placement
Agent’s account or to act as agent for any proposed private offering of Pubco’s
securities by Pubco.  The Advisory Agreement shall further provide the
Placement Agent the opportunity to purchase or sell such securities on terms no
less favorable than it can obtain elsewhere.  If within 20 business
days of the receipt of such notice of intention and statement of terms the
Placement Agent does not accept in writing such offer to purchase such
securities or to act as agent with respect to such offering upon the terms
proposed, Pubco shall be free to negotiate terms with third parties with respect
to such offering and to effect such offering on such proposed terms. Before
Pubco shall accept any proposal materially less favorable to it than as
originally proposed to the Placement Agent, the Placement Agent’s preferential
rights shall be applied, and the procedure set forth above with respect to such
modified proposal adopted. The Placement Agent’s failure to exercise these
preferential rights in any situation shall not affect the Placement Agent’s
preferential rights to any subsequent offering during the term of the right of
first refusal agreement.  The Company represents and warrants that it
has not granted any preferential rights similar to those set forth in this
Section 6(l) to any party other than the Placement Agent with regard to the
transactions contemplated by this Section 6(l) and, to its knowledge, no other
person has any right to participate in any offer, sale or distribution of the
Pubco’s securities to which the Placement Agent’s preferential rights shall
apply.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    6A.        Mutual Condition. The
obligations of the Placement Agent and the Company hereunder are subject to the
execution and delivery by the prospective purchaser of Units in this Offering of
a Securities Purchase Agreement, all other documents contemplated thereby and
any other documents reasonably requested by the Company.

     

    7.           Indemnity and
Contribution

    

    (a)   The
Company hereby agrees to indemnify and hold harmless Placement Agent and its
affiliates, and the respective controlling persons, directors, officers,
shareholders, agents and employees of any of the foregoing (collectively the
“Indemnified
Persons”), from and against any and all claims, actions, suits,
proceedings (including those of members or shareholders), damages, liabilities
and expenses incurred by any of them (including the reasonable fees and expenses
of counsel), as incurred, (collectively a “Claim”), that are (A) related to or
arise out of (i) any actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, or (ii)
any actions taken or omitted to be taken by any Indemnified Person in connection
with the Company’s engagement of Placement Agent, or (B) otherwise relate to or
arise out of Placement Agent’s activities on the Company’s behalf under
Placement Agent’s engagement, and the Company shall reimburse any Indemnified
Person for all expenses (including the reasonable fees and expenses of counsel)
as incurred by such Indemnified Person in connection with investigating,
preparing or defending any such Claim, whether or not in connection with pending
or threatened litigation in which any Indemnified Person is a
party.  Notwithstanding anything in this Agreement to the contrary,
the Company will not, however, be responsible for any Claim, to the extent that
such claim is finally judicially determined to have resulted from the gross
negligence or willful misconduct of any person seeking indemnification for such
Claim, in which case the Indemnified Persons for whom the Company has paid any
amounts shall be liable for the prompt repayment to the Company of all amounts
paid by the Company for the benefit of such Indemnified Persons, and Placement
Agent shall cause all such Indemnified Persons to sign and deliver to the
Company written agreements, in form and substance reasonably determined by
Placement Agent, memorializing this result prior to the Company being obligated
to expend any amounts to indemnify any such Indemnified Persons (the
“Indemnification Reimbursement Agreements”).  The Company further
agrees that no Indemnified Person shall have any liability to the Company for or
in connection with the Company’s engagement of Placement Agent except for any
Claim incurred by the Company as a result of such Indemnified Person’s gross
negligence or willful misconduct.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (b)   The
Company further agrees that it will not, without the prior written consent of
Placement Agent, settle, compromise or consent to the entry of any judgment in
any pending or threatened Claim in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such settlement, compromise or consent
includes an unconditional, irrevocable release of each Indemnified Person from
any and all liability arising out of such Claim.

    

    (c)   Promptly
upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification is
being sought hereunder, such Indemnified Person shall notify the Company in
writing of such complaint or of such assertion or institution but failure to so
notify the Company shall not relieve the Company from any obligation it may have
hereunder, except and only to the extent such failure results in the forfeiture
by the Company of substantial rights and defenses; provided, however, that the
Company shall not have any obligation to commence any indemnification of any
Indemnified Person unless and until Placement Agent has delivered to the Company
the signed Indemnification Reimbursement Agreement from such Indemnified
Person.  If the Company so elects or is requested by such Indemnified
Person, the Company will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel. In the event, however, that
legal counsel to such Indemnified Person reasonably determines that having
common counsel would present such counsel with a conflict of interest or if the
defendant in, or target of, any such Claim, includes an Indemnified Person and
the Company, and legal counsel to such Indemnified Person reasonably concludes
that there may be legal defenses available to it or other Indemnified Persons
different from or in addition to those available to the Company, then such
Indemnified Person may employ its own separate counsel to represent or defend
him, her or it in any such Claim and the Company shall pay the reasonable fees
and expenses of such counsel.  Subject to the other terms and
conditions of this Agreement, if the Company fails timely or diligently to
defend, contest, or otherwise protect against any Claim, the relevant
Indemnified Party shall have the right, but not the obligation, to defend,
contest, compromise, settle, assert crossclaims, or counterclaims or otherwise
protect against the same, and shall be fully indemnified by the Company
therefor, including without limitation, for the reasonable fees and expenses of
its counsel and all amounts paid as a result of such Claim or the compromise or
settlement thereof, so long as any such compromise or settlement includes a full
and complete release of the Company and all of its affiliates.  In
addition, with respect to any Claim in which the Company assumes the defense,
the Indemnified Person shall have the right to participate in such Claim and to
retain his, her or its own counsel therefor at his, her or its own
expense.

    

    (d)   Subject
to the other terms and conditions of this Agreement, the Company agrees that if
any indemnity sought by an Indemnified Person hereunder is held by a court to be
unavailable for any reason then (whether or not Placement Agent is the
Indemnified Person), the Company and Placement shall contribute to the Claim for
which such indemnity is held unavailable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and Placement
Agent on the other, in connection with Placement Agent’s engagement referred to
above, subject to the limitation that in no event shall the amount of Placement
Agent’s contribution to such Claim exceed the amount of fees actually received
by Placement Agent from the Company pursuant to Placement Agent’s
engagement.  The Company hereby agrees that the relative benefits to
the Company, on the one hand, and Placement Agent on the other, with respect to
Placement Agent’s engagement shall be deemed to be in the same proportion as (a)
the total value paid or committed to be paid or received by the Company or its
stockholders as the case may be, pursuant to the Offering (whether or not
consummated) for which Placement Agent is engaged to render Services bears to
(b) the fee paid or proposed to be paid to Rodman in connection with such
engagement.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (e)   The
Company’s indemnity, reimbursement and contribution obligations under this
Agreement (a) shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Party may have at law or at
equity and (b) shall be effective whether or not the Company is at fault in any
way.

     

    8.           Termination.

     

    (a)           The
Offering may be terminated by the Placement Agent at any time prior to the
expiration of the Offering Period in the event that (i) any of the
representations or warranties of the Company contained herein shall prove to
have been false or misleading in any material respect when made or deemed made,
(ii) the Company shall have failed to perform any of its material
obligations hereunder, (iii) the Company shall have determined for any
reason not to continue with the Offering or (iv) the Placement Agent shall
determine in its sole discretion that it is reasonably likely that any of the
conditions to closing set forth herein will not, or cannot, be
satisfied.  In the event of any such termination occasioned by or
arising out of or in connection with the matters set forth in clauses (i)-(iii)
above, or occasioned by or arising out of or in connection with a matter set
forth in clause (iv) above due to any breach or failure hereunder on the part of
the Company, the Placement Agent shall be entitled to receive, in addition to
other rights and remedies it may have hereunder, at law or otherwise, an amount
equal to the sum of: (A) all applicable Placement Agent’s Fees earned through
the Termination Date, (B) an amount equal to three percent (3%) of the Offering
Price of all Units sold in the Offering (deeming, for this purpose, all Units
offered (other than Units available for over-subscriptions) as having been
sold), less any amounts theretofore paid in respect of the Placement Agent’s
Placement Agent Expenses, and all other expenses set forth in Section 5(i)
hereof and (C) all amounts that may become payable in respect of Post-Closing
Investors pursuant to Section 3(f) hereof.  In addition to the
sum of the amounts in clauses (A)-(C) in the previous sentence, in the event
that (a) the Company is sold (in a stock or asset sale), merged or otherwise
acquired or combined, or (b) the Company enters into a letter of intent or
agreement with respect to the foregoing, or (c) the Company completes a public
or private offering of its securities, in each case within one year after the
Offering is terminated because the Company has breached any representation,
warranty or covenant made by it herein or because the Company has determined
prior to the Expiration Date (if applicable) not to proceed with the Offering,
the Company shall pay to the Placement Agent, as applicable, (x) if the
Placement Agent has not exercised its rights under Section 8(a) hereof, an
investment banking fee equal to five percent (5%) of the total consideration
received by the Company and/or its stockholders in connection with such sale,
merger, acquisition or sale of securities or (y) if the Placement Agreement has
exercised its rights under Section 8(a) hereof, applicable Placement Agent
commissions, fees and expenses described in Sections 3(d) and 5(i) hereof as if
the Minimum Amount had been sold.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    (b)           This
Offering may be terminated by the Company at any time prior to the Termination
Date in the event that (i) the Placement Agent shall have failed to perform
any of its material obligations hereunder or (ii) there shall occur any
event described in Section 8(a) above not occasioned by or arising out of
or in connection with any breach or failure hereunder on the part of the
Company.  In the event of any termination by the Company pursuant to
clause (i) above, the Placement Agent shall be entitled to receive all Placement
Agent Expenses accrued through the Termination Date (subject to the Placement
Agent Expense Limitation), but shall be entitled to no other amounts whatsoever
except as may be due under any indemnity or contribution obligation provided
herein or any other Transaction Document, at law or otherwise.  On
such Termination Date, the Company shall pay all such unpaid costs and expenses
incurred by the Placement Agent in connection with the Offering; provided,
however,
that such costs and expenses shall not exceed the maximum Placement Agent
Expense Allowance, and all unpaid Blue Sky Fees and other expenses set forth in
Section 5(i) hereof.

     

    (c)           Upon
any such termination, the Escrow Agent will cause, at the request of the
Placement Agent, all money received from prospective purchasers of Units in the
offering in respect of subscriptions for Units not accepted by the Company to be
promptly returned to such prospective purchasers without interest, penalty,
expense or deduction.  Any interest earned thereon shall be applied to
the payment of the Escrow Agent’s fees and expenses.

     

    9.           Survival.

     

    (a)           The
obligations of the parties to pay any costs and expenses hereunder and to
provide indemnification and contribution as provided herein shall survive any
termination hereunder.

     

    (b)           The
respective indemnities, agreements, representations, warranties and other
statements of the Company set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of, and regardless of any access to information by, the Company or the
Placement Agent, or any of their officers or directors or any controlling person
thereof, and will survive the sale of the Units.

     

    10.         Notices.  All
communications hereunder will be in writing and, except as otherwise expressly
provided herein or after notice by one party to the other of a change of
address, if sent to the Placement Agent, will be mailed, delivered or telefaxed
and confirmed to Rodman & Renshaw, LLC, 1251 Avenue of the Americas, 20th Floor,
New York, New York 10020, Attention: General Counsel, Telefax number (212)
356-0536, with a copy to Morse, Zelnick, Rose & Lander LLP, 405 Park Avenue,
Suite 1401, New York, New York 10022, Attention:  Kenneth S. Rose,
Esq., and if sent to the Company, will be mailed, delivered or telefaxed and
confirmed to 8201 Main Street, Suite 6, Willamsville, NY 14221, Attention:
Joseph Pandolfino, with a copy to Foley & Lardner LLP, 3000 K Street N.W.,
Suite 600, Washington, D.C. 20007, Attention Thomas L. James, Esq.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    11.         ARBITRATION,
CHOICE OF LAW; COSTS.
THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW AND UNDERSTAND THAT (A)
ARBITRATION IS FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES ARE WAIVING
THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL, (C)
PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT FROM COURT
PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULES BY ARBITRATORS IS STRICTLY LIMITED, (E) THE PANEL OF
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (“FINRA”) ARBITRATORS WILL TYPICALLY INCLUDE
A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY ARISE BETWEEN THE PARTIES
CONCERNING THIS AGREEMENT SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE
RULES THEN PERTAINING TO FINRA.  JUDGMENT ON ANY AWARD OF ANY SUCH
ARBITRATION MAY BE ENTERED IN THE SUPREME COURT OF THE STATE OF NEW YORK OR IN
ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM SUCH
AWARD IS RENDERED.  THE PARTIES AGREE THAT THE DETERMINATION OF THE
ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM.  THE PREVAILING
PARTY, AS DETERMINED BY SUCH ARBITRATORS, IN A LEGAL PROCEEDING SHALL BE
ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE ATTORNEY’S FEES FROM
THE OTHER PARTY.

     

    12.         Confidentiality.  The
Company hereby agrees to hold confidential the identities of the purchasers in
the Offering and shall not disclose their names and addresses without the prior
written consent of the Placement Agent, unless required by law.  The
Company hereby consents to the granting of an injunction against it by any court
of competent jurisdiction to enjoin it from violating the foregoing
confidentiality provisions.  The Company hereby agrees that the
Placement Agent will have an adequate remedy at law in the event that the
Company breaches these confidentiality provisions contained herein, and that the
Placement Agent will suffer irreparable damage and injury as a result of any
such breach.  Resort to such equitable relief shall not, however, be
construed to be a waiver of any other rights or remedies which the Placement
Agent may have. Notwithstanding the foregoing, the Company shall not be deemed
to be in violation of this Section 12 by virtue of revealing the identities of
such purchasers to the Company’s transfer agent and professional
advisors.

     

    13.         Miscellaneous.  No
provision of this Agreement may be changed or terminated except by a writing
signed by the party or parties to be charged therewith.  Unless
expressly so provided, no party to this Agreement will be liable for the
performance of any other party’s obligations hereunder.  Any party
hereto may waive compliance by the other with any of the terms, provisions and
conditions set forth herein; provided,
however,
that any such waiver shall be in writing specifically setting forth those
provisions waived thereby.  No such waiver shall be deemed to
constitute or imply waiver of any other term, provision or condition of this
Agreement.  This Agreement contains the entire agreement between the
parties hereto and is intended to supersede any and all prior agreements between
the parties relating to the same subject matter.  This Agreement may
be executed in counterparts, each of which shall be deemed an original and all
of which shall constitute a single agreement.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    14.         Entire
Agreement.  This Agreement together with any other agreement
referred to herein is intended to supersede all prior agreements between the
parties with respect to the Units purchased hereunder and the subject matter
hereof.

     

    If the foregoing is in accordance with
your understanding of our agreement, kindly sign and return this Agreement,
whereupon it will become a binding agreement between the Company and the
Placement Agent in accordance with its terms.

     

    
      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                22ND
      CENTURY LIMITED, LLC

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Joseph Pandolfino

              
	 
      	 
      	
                Name:
      Joseph Pandolfino

              
	 
      	 
      	
                Title:
      Chief Executive Officer

              
	 
      	 
      
	 
      	
                Accepted
      and agreed to as of the 1st

              
	 
      	
                day
      of December, 2010.

              
	 
      	 
      
	 
      	
                RODMAN
      & RENSHAW, LLC

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ John Borer

              
	 
      	 
      	
                Name:
      John Borer

              
	 
      	 
      	
                Title:
      Senior Managing Director

              

      

    

     

    
      
         

      

      
        21

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