Third Deed of Amendment to the Intercreditor Agreement

1.

Definitions and interpretation

2

2.

Amendments to the Inter-Creditor Deed

3

3.

Existing Security

5

4.

Representations and warranties

6

5.

Further Assurance

6

6.

Miscellaneous

6

7.

Third party rights

7

8.

Governing law and jurisdiction

7

(1)  

ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD (FORMERLY, VICTORY ELECTRONIC CIGARETTES CORPORATION), registered in the State of Nevada, USA under number ###-###-#### whose registered office is at 11335 Apple Drive, Spring Lake, Michigan 49448, USA ("Borrower");

(2)  

MUST HAVE LIMITED, a limited liability company incorporated in England and Wales with company number 05101019 whose registered office is at Unit 14, Dale Street Industrial Estate, Radcliffe, Manchester M26 1AD (“Guarantor”).

(3)  

JGB (CAYMAN) CAMBRIDGE LTD. incorporated in the Cayman Islands, whose registered office is Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands ("Senior Creditor").

(4)  

JGB COLLATERAL LLC, a Delaware limited liability company whose registered address is Corporation Trust Center, 1209 Orange St., Wilmington, Delaware 19801 USA as security agent and trustee for the Senior Creditor (“Senior Security Trustee”).

(5)  

The persons whose names and addresses are set out in column (1) of the Schedule ("Subordinated Creditors").

(6)  

MIGUEL CARLOS CORRAL of 1, Sergeants Lane, Whitefield, M45 7TR as security agent and trustee for the Subordinated Creditors ("Junior Security Trustee").

(A)  

The Borrower and the Senior Creditor entered into a Securities Purchase Agreement dated 22 April 2014 (“Securities Purchase Agreement”) pursuant to which the Borrower agreed to issue to the Senior Creditor 6% secured loan notes in the aggregate principal amount of $24,175,824 (“Senior Convertible Loan Notes”), which were constituted under an instrument dated 22 April 2014 (“Senior Convertible Loan Note Instrument”).  Pursuant to the Securities Purchase Agreement, the Borrower and the Senior Creditor entered into a Registration Rights Agreement dated 22 April 2014 (“Senior Registration Rights Agreement”).

(B)  

The obligations of the Borrower under the Convertible Note Documents (as defined in clause 1 of this deed) were guaranteed by the Guarantor by way of a guarantee dated 22 April 2014 between the Guarantor and Senior Creditor (“Senior Guarantee”) and were secured by way of a charge dated 22 April 2014 over the shares in the Guarantor between the Borrower and the Senior Security Trustee (“Senior Share Charge”). The obligations of the Borrower under the Convertible Note Documents (as defined in clause 1 of this deed) the Senior Guarantee and Senior Share Charge and the Inter-creditor Deed (as defined in recital (C)) were further secured by way of a debenture dated 22 April 2014 between the Guarantor and the Senior Security Trustee (“Senior Debenture”).

(C)  

The parties to this deed entered into an Inter-creditor Deed dated 22 April 2014 which governed the priority of the Senior Documents (as defined in clause 1 of this deed) to various documents to which the Subordinated Creditors and Junior Security Trustee were party (“Inter-creditor Deed”).

(D)  

Amendment agreements dated 3 June 2014 (the “First Amendment Agreements”) and dated 20 August 2014 (the “Second Amendment Agreements”, together with the First Amendment Agreements, the “Previous Amendment Agreements”) were entered into between the Borrower and the Senior Creditor by which the Convertible Note Documents were amended as set out in the respective Previous Amendment Agreements. The Senior Security Documents (as defined in clause 1 of this deed) were each amended by way of amendment deeds between the parties to this deed dated on or around 3 June 2014 (“First Security Amendment Agreement”) and dated on or around 12 September 2014 (“Second Security Amendment Agreement”, together with the First Security Amendment Agreement, the “Previous Security Amendment Agreements”)) in relation to the entry into the respective Previous Amendment Agreements.

(E)  

Pursuant to third amendment agreements (“Third Amendment Agreements”) the Borrower and the Senior Creditor have made amendments to the Securities Purchase Agreement and the Senior Convertible Loan Notes, respectively.

(F)  

In contemplation of entry into the Third Amendment Agreements, the parties to this deed have agreed to further amend the Senior Security Documents as set out in this deed, to consent to the Third Amendment Agreements and the transactions contemplated thereunder and to confirm that the Senior Documents continue in full force and effect.

(G)  

The Borrower and the Subordinated Creditors are party to a share purchase agreement dated 22 April 2014 for the sale (by the Subordinated Creditors) and acquisition (by the Borrower) of the whole of the issued share capital of the Guarantor (the “Must Have SPA”), as amended on 3 October 2014. The Borrower and the Subordinated Creditors have agreed to vary the Must Have SPA on the terms set out in this deed.

(H)  

This deed is supplemental to each of the Inter-creditor Deed, the Senior Debenture, the Senior Guarantee and the Senior Share Charge each as amended by the Previous Security Amendment Agreements.

1.1  

Terms defined in the Inter-creditor Deed shall have the same meaning when used in this deed, unless defined below. In addition, the definitions below apply in this deed.

1.2  

The rules of interpretation of the Inter-Creditor Deed shall apply to this deed as if set out in this deed save that references in the Inter-Creditor Deed to "this deed" shall be construed as references to this deed.

1.3  

Unless the context otherwise requires:

(a)  

references in the Inter-creditor Deed and Senior Share Charge to "this deed";

(b)  

references in the Senior Debenture to “this Deed”; and

(c)  

references in the Senior Guarantee to “this Guarantee”,

1.4  

Without prejudice to the generality of clause ‎1.3, references in any of the Senior Security Documents to any of the Convertible Notes Documents and/or Senior Security Documents shall be to such documents as amended by the Previous Amendment Agreements, the Third Amendment Agreements, the Previous Security Amendment Agreements and/or this deed (as the case may be).

1.5  

In this deed:

(a)  

unless the context otherwise requires, any reference to a Senior Document is to that document as amended by the Previous Amendment Agreements, the Third Amendment Agreements, the Previous Security Amendment Agreements and/or this deed (as the case may be);

(b)  

any reference to a "clause" or "Schedule" is, unless the context otherwise requires, a reference to a clause or Schedule of this deed; and

(c)  

clause and Schedule headings are for ease of reference only.

1.6  

The Schedule forms part of this deed and shall have effect as if set out in full in the body of this deed. Any reference to this deed includes the Schedule.

2.1  

The Inter-creditor Deed shall be amended with effect on and from the date of this deed as set out in this clause ‎2.

2.2  

Clause 1.1 of the Inter-creditor Deed shall be amended by:

(a)  

inserting a new definition of "Third Amendment Agreements" after the definition of “Subsidiary” as follows:

(b)  

inserting a new definition of "Deed of Variation and Acknowledgement" after the definition of “Debt Document” and before the definition of “Distressed Disposal” as follows:

(c)  

deleting the definition of “Initial Period” in its entirety and replacing it with:

2.3  

Clause 6.2 of the Inter-creditor Deed shall be deleted in its entirety and replaced with:

 

(a)

increase the amount of interest payable under a Senior Debt Document in excess of the amount payable under the Senior Convertible Loan Notes on the occurrence and continuance of an Event of Default (as defined in the Senior Convertible Loan Notes); or

 

(b)

extend the Maturity Date (as defined in the Senior Convertible Loan Notes) by more than six months or increase the amount of principal payable to the Senior Creditor under Senior Convertible Loan Notes.

2.4  

Clause 17.2(a) of the Inter-creditor Deed shall be deleted in its entirety and replaced with:

(a)  

The terms of any refinancing of the Senior Debt shall not be more onerous for the Borrower and/or the Guarantor than the terms of the Senior Debt as at the date of the Third Amendment Agreements.

3.1  

With effect from the date of this deed and in accordance with clause 23.1 of the Must Have SPA, in consideration of the payment of £1.00 by the Borrower to the Subordinated Creditors (receipt of which is hereby acknowledged), the Must Have SPA shall be amended as set out in this clause 3.

3.2  

The Parties hereby agree that the following new paragraph 4.6 shall be inserted after the existing paragraph 4.5 of Part A of Schedule 8 of the Must Have SPA:

3.3  

The parties agree that, other than the Borrower and the Subordinated Creditors, the other parties shall have no obligations under or pursuant to the Must Have SPA and/or in respect of the payment or the monitoring of receipt of the Further Extension Fee. The parties further agree that all provisions of this deed shall apply notwithstanding any failure or otherwise in respect of the payment of the Further Extension Fee and the sole remedy of the Subordinated Creditors thereof shall be a debt claim against the Borrower in respect of the Further Extension Fee in accordance with the terms of the Must Have SPA.

3.4  

The parties agree that the amendment of the Must Have SPA set out in clause 3.2 above and the payment of the Further Extension Fee in accordance with the terms of the new paragraph 4.6 of Part A of Schedule 8 of the Must Have SPA shall not constitute a breach of any of the terms of the Inter-creditor Deed and the Senior Creditor and the Senior Security Trustee hereby waive any and all prohibitions and restrictions under the Inter-creditor Deed and (to the extent necessary or appropriate) under the Senior Debt Documents which would prevent (or may prevent) the payment of the Further Extension Fee pursuant to and in accordance with the variation to the Must Have SPA set out in clause 3.2 above. Other than in respect of the payment of the Further Extension Fee in accordance with the terms of the new paragraph 4.6 of Part A of Schedule 8 of the Must Have SPA, no waiver, consent, amendment or agreement is made in respect of any payment by any person to the Subordinated Creditors and/or the Junior Security Transferee to the extent that such payment would contravene or result in a breach of any the terms, conditions or provisions of the Inter-creditor Deed and/or any of the Senior Debt Documents.

4.1  

Each of the parties confirms that:

(a)  

it has received a copy of the Third Amendment Agreements and this deed and consents to the provisions of the Third Amended Agreements and the Amended Security Documents; and

(b)  

the Inter-creditor Deed shall continue in full force and effect in all respects and the Inter-creditor Deed (as amended by the Previous Security Amendment Agreement) and this deed shall be read and construed together.

4.2  

The Guarantor confirms that:

(a)  

it consents to any amendment to the Guaranteed Obligations made by the Previous Amendment Agreements and the Third Amendment Agreements; and

(b)  

the Senior Guarantee remains in full force and effect and that the Guaranteed Obligations include all obligations and liabilities of the primary obligor to the beneficiary under the Third Amended Agreements.

4.3  

The Guarantor confirms that the Senior Debenture:

(a)  

ranks as a continuing security for the payment and discharge of the Secured Obligations including, without limitation, all present and future monies, obligations and liabilities owed by the Borrower or the Guarantor to the Senior Creditor or the Senior Security Trustee, whether actual or contingent and whether owed jointly or severally, as principal or surety and/or in any other capacity, under or in connection with the Finance Documents; and

(b)  

shall continue in full force and effect in all respects and the Senior Debenture and this deed shall be read and construed together.

4.4  

The Borrower confirms that the Senior Share Charge:

(a)  

ranks as a continuing security for the payment and discharge of the Secured Liabilities including, without limitation, all present and future monies, obligations and liabilities owed by the Borrower to the Senior Creditor, whether actual or contingent and whether owed jointly or severally, as principal or surety and/or in any other capacity, under or in connection with the Convertible Note Documents (as defined in the Senior Share Charge); and

(b)  

shall continue in full force and effect in all respects and the Senior Share Charge and this deed shall be read and construed together.

5.1  

Each of the Borrower and Guarantor represents and warrants to the Senior Creditor and the Senior Security Trustee on the date of this deed by reference to the facts and circumstances existing on that date that:

(a)  

it has the power to enter into, deliver and perform, and has taken all necessary action to authorise its entry into, delivery and performance of, this deed and the transactions contemplated by it;

(b)  

the entry into and performance by it of, and transactions contemplated by, this deed do not and will not contravene or conflict with:

(i)  

its constitutional documents;

(ii)  

any agreement or instrument binding on it or their assets; or

(iii)  

any law or regulation or judicial or official order applicable to it;

(c)  

it has obtained all required or desirable authorisations to enable it to enter into, exercise its rights and comply with its obligations in this deed and to make it admissible in its jurisdiction of incorporation. Any such authorisations are in full force and effect; and

(d)  

subject to any general principles of law limiting its obligations, its obligations under this deed are legal, valid, binding and enforceable.

5.2  

The Guarantor represents and warrants to the Senior Creditor and the Senior Security Trustee on the date of this deed by reference to the facts and circumstances existing on that date that all the representations and warranties contained in clause 8 of the Senior Debenture and clause 5 of the Senior Guarantee are true and accurate as if repeated on the date of this deed.

5.3  

The Borrower represents and warrants to the Senior Creditor and the Senior Security Trustee on the date of this deed by reference to the facts and circumstances existing on that date that all the representations and warranties contained in Part 1 of Schedule 2 of the Senior Share Charge are true and accurate as if repeated on the date of this deed.

6.1  

Each party shall at the request of the Senior Creditor and/or the Senior Security Trustee execute and deliver such documents and perform such acts as may reasonably be required for the purpose of giving full effect to this deed.

7.1  

The provisions of clauses 24, 25, 26, 29, 30.3 and 30.4 of the Inter-creditor Deed shall apply to this deed, as if set out in full and so that references in those provisions to "this deed" shall be construed as references to this deed and references to "party" or "parties" shall be construed as references to parties to this deed except that in clause 24 of the Inter-creditor Deed the words “or the Senior Security Trustee or both” shall be added after each reference to the “Senior Creditor.”

8.1  

A person who is not a party to this deed shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce, or enjoy the benefit of, any term of this deed. This does not affect any right or remedy of a third party which exists, or is available, apart from that Act.

8.2  

The rights of the parties to rescind or agree any amendment or waiver under this deed are not subject to the consent of any other person.

9.1  

This deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.

9.2  

Each party irrevocably agrees that, subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim that arises out of or in connection with this deed or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of the Senior Creditor or the Senior Security Trustee to take proceedings against any other party to this deed in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.

 

DAVID STEVEN LEVIN

 

7 Ringley Chase, Whitefield, Manchester M45 7UA

 

MELANIE LEVIN

 

7 Ringley Chase, Whitefield, Manchester M45 7UA

MIGUEL CARLOS CORRAL

 

1 Sergeants Lane, Whitefield, M45 7TR.

 

DAVID RYDER

311 Hulton Lane, Bolton, Lancashire, BL3 4LF

 

 

Executed as a deed by ELECTRONIC CIGARETTES

INTERNATIONAL GROUP, LTD                                 )                                                                

acting by ………………................ ................,                  )               

a director, in the presence of:

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

 

........................................

Director

 

 

 

 

 

 

Executed as a deed by MUST HAVE LIMITED         )                                                                

acting by ………………................ ................,                )      

a director, in the presence of:

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

........................................

Director

 

 

Executed as a deed by JGB COLLATERAL LLC  )                                                                

as Senior Security Trustee, acting by                     

………………................ ................,                                        

a director, in the presence of:

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

 

........................................

Director

 

 

 

Executed as a deed by JGB (CAYMAN)                      )

CAMBRIDGE LTD.                                                         )                                                                

acting by ………………................ ................,                 )        

a director, in the presence of:

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….........................................

Witness occupation:…….....................................

 

 

........................................

Director

 

 

 

Executed as a deed by MIGUEL CARLOS CORRAL )                                                                

as Junior Security Trustee, in the presence of:              )

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….........................................

Witness occupation:…….....................................

 

 

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Signature

 

 

Executed as a deed by DAVID RYDER                    )                                                                

in the presence of:                                                        )

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

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Signature 

 

Executed as a deed by DAVID STEVEN LEVIN        )                                                                

in the presence of:                                                           )

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

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Signature

 

 

Executed as a deed by MELANIE LEVIN                 )                                                                

in the presence of:                                                        )

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

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Signature

 

 

 

Executed as a deed by MIGUEL CARLOS CORRAL )                                                                

in the presence of                                                               )

 

Witness signature:…..….....................................

Witness name:……….….....................................

Witness address: .………....................................

………………………….....................................

Witness occupation:…….....................................

 

 

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Signature