0001615774-16-006324.txt : 20160713 0001615774-16-006324.hdr.sgml : 20160713 20160713091620 ACCESSION NUMBER: 0001615774-16-006324 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20160708 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160713 DATE AS OF CHANGE: 20160713 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Electronic Cigarettes International Group, Ltd. CENTRAL INDEX KEY: 0001398702 STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111] IRS NUMBER: 980534859 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52745 FILM NUMBER: 161764980 BUSINESS ADDRESS: STREET 1: 14200 IRONWOOD DRIVE CITY: GRAND RAPIDS STATE: MI ZIP: 49534 BUSINESS PHONE: 616-384-3272 MAIL ADDRESS: STREET 1: 14200 IRONWOOD DRIVE CITY: GRAND RAPIDS STATE: MI ZIP: 49534 FORMER COMPANY: FORMER CONFORMED NAME: Victory Electronic Cigarettes Corp DATE OF NAME CHANGE: 20130719 FORMER COMPANY: FORMER CONFORMED NAME: TECKMINE INDUSTRIES INC. DATE OF NAME CHANGE: 20070507 8-K 1 s103683_8k.htm 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 8, 2016

Electronic Cigarettes International Group, Ltd.

(Exact name of registrant as specified in its charter)

Nevada	000-52745	98-0534859
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1707 Cole Boulevard, Suite 350, Golden, Colorado	80401
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (720) 575-4222

n/a

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

Amendment to Lead Lender Credit Agreement

As previously disclosed in its Current Report on Form 8-K filed on May 1, 2015, on April 27, 2015, Electronic Cigarettes International Group, Ltd. (the “Company”) entered into a Credit Agreement (as amended, the “Lead Lender Credit Agreement”) with an institutional investor (the “Lead Lender”), pursuant to which the Lead Lender made a term loan to the Company in the original principal amount of $35,000,000 and that provided for interest at 12.00% per annum. As previously disclosed in its Current Report on Form 8-K filed on July 2, 2015, on June 26, 2015, the Company and the Lead Lender entered into an amendment to the Lead Lender Credit Agreement pursuant to which the Lead Lender made a second term loan to the Company in the principal amount of $6,000,000. As previously disclosed in its Current Report on Form 8-K filed on November 5, 2015, on October 30, 2015, the Company and the Lead Lender entered into an amendment to the Lead Lender Credit Agreement pursuant to which the Lead Lender made a third term loan to the Company in the principal amount of $18,000,000. As previously disclosed in its Current Report on Form 8-K filed on January 15, 2016, on January 11, 2016 the Company and the Lead Lender entered into an amendment to the Lead Lender Credit Agreement pursuant to which the Company and the Lead Lender made a fourth term loan to the Company in the principal amount of $9,042,955.

On July 8, 2016, the Company and the Lead Lender entered into Amendment No. 5 to the Lead Lender Credit Agreement (the “Lead Lender Amendment”) pursuant to which the Company and the Lead Lender amended the Lead Lender Credit Agreement to provide for a fifth closing under the Lead Lender Credit Agreement and for an additional term loan (collectively with all term loans under the Lead Lender Credit Agreement, the “Term Loans”) to the Company in the principal amount of $4,000,000, resulting in an aggregate outstanding principal balance under the Lead Lender Credit Agreement of $72,042,955. In addition, the Lead Lender Amendment amends the Lead Lender Credit Agreement to (i) extend the maturity date of the term loans from April 27, 2018 to June 30, 2020, (ii) eliminate amortization payments on the Term Loans until June 30, 2020, (iii) reduce the interest rate payable on the term loans thereunder from 12.0% to 4.0%, and (iv) provide for the payment of interest by the Company using shares of common stock, par value $0.001 per share (“Common Stock”), of the Company (collectively, the “Term Loan Modifications”). The term loan made pursuant to the Lead Lender Amendment shall mature on June 30, 2020 and shall bear interest on the outstanding principal balance at the rate of 4.0% per annum, payable on a quarterly basis and is evidenced by a Term Note in substantially the same form as issued to the Lead Lender at the first, second, third, and fourth closings.

In connection with the execution of the Lead Lender Amendment, the Company granted the Lead Lender additional warrants (the “Lead Lender Warrants”) to purchase an aggregate of 49,088,030 shares of Common Stock, at an exercise price of $0.145 per share of Common Stock. The Warrants are evidenced by Common Stock Purchase Warrants in substantially the same form as issued to the Lead Lender at the first, second, third, and fourth closings. In addition, each of the warrants previously issued by the Company to the Lead Lender were amended to, among other things reduce the exercise price thereof to $0.145 per share of Common Stock (the “Warrant Modifications”).

In connection with the execution of the Lead Lender Amendment, the Company issued 30,676,704 shares of Common Stock (the “In-Kind Shares”) to the Lead Lender in consideration of accrued but unpaid interest owing on the Term Loans.

Amendment to Co-Lender Credit Agreement

As previously disclosed in its Current Report on Form 8-K filed on May 1, 2015, on April 27, 2015, the Company entered into a Credit Agreement (as amended, the “Co-Lender Credit Agreement”) with various lenders party thereto (the “Co-Lenders”, and together with the Lead Lender, the “Lenders”), pursuant to which the Co-Lenders made a term loan to the Company in the original principal amount of $6,214,225.11, on substantially identical terms to the Lead Lender Credit Agreement.

On July 8, 2016, the Company and the Co-Lenders entered into Amendment No. 1 to Credit Agreement (the “Co-Lender Amendment”), which provides for, among other things, the Term Loan Modifications.

In connection with the execution of the Co-Lender Amendment, the Company reduced the exercise price to $0.145 per share of Common Stock for the warrants issued to the Co-Lenders (the “Co-Lender Warrants”, and together with the Lead Lender Warrants, the “Warrants”) in connection with the execution of the Co-Lender Credit Agreement (the “Co-Lender Warrant Modification”).

Forbearance Agreement

As previously disclosed in its Current Report on Form 8-K filed on October 5, 2015, on September 30, 2015 the Company and the Lead Lender entered into a Forbearance Agreement (the “Forbearance Agreement”) pursuant to which the Company and the Lead Lender agreed, among other things, to provide for a forbearance period up to 18 months until March 31, 2017 (the “Forbearance Period”) with respect to the collection of $1,251,251 of accrued interest payable to the Lead Lender through September 30, 2015. In connection with the Lead Lender Amendment, on July 8, 2016, the Company and the Lead Lender entered into Amendment No. 1 to Forbearance Agreement (the “Forbearance Amendment”), pursuant to which the Forbearance Agreement was amended to (i) extend the Forbearance Period from March 31, 2017 to June 30, 2020, and (ii) reduce the interest rate payable on amounts owing under the Forbearance Agreement to 4.0%.

Registration Rights Agreement

As previously disclosed on its Current Report on Form 8-K filed on May 1, 2015, on April 27, 2015 the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain of the Company’s debtholders party thereto, pursuant to which the Company agreed to register all of the shares of Common Stock issuable upon exercise of the Warrants on a Form S-1 registration statement to be filed with the Securities and Exchange Commission within 45 calendar days following request to do so by the Lead Lender (the “Filing Date”), and to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, (the “Securities Act”) within 90 days following the Filing Date (collectively, the “Registration Rights”). In connection with the Lead Lender Amendment, on July 8, 2016, the Company and the Lead Lender entered into Amendment No. 3 to Registration Rights Agreement (the “Registration Rights Amendment”), pursuant to which the Registration Rights Agreement was amended to provide that the Common Stock issuable to the Lenders under the Lead Lender Credit Agreement and the Co-Lender Credit Agreement shall be included in the securities subject to the Registration Rights.

Convertible Note Restructuring

As previously disclosed on its Current Reports on Form 8-K filed on January 17, 2014 and March 6, 2014, on January 14, 2014 and February 28, 2014, the Company issued to certain accredited investors (together with their assigns, the “Purchasers”) 15% Senior Secured Convertible Promissory Notes (the “Convertible Notes”) and warrants to purchase shares of Common Stock (“Convertible Note Warrants”). On July 8, 2016, the Company and the Purchasers (1) amended the Convertible Notes to (i) extend the maturity date thereof to June 30, 2020, (ii) reduce the interest rate payable thereunder to 4.0%, (iii) provide for the payment of interest by the Company using shares of Common Stock, and (iv) reduce the conversion price thereunder to $0.145 per share of Common Stock (collectively, the “Convertible Note Modifications”); and (2) amend the Convertible Note Warrants to, among other things, reduce the exercise price thereunder to $0.145 per share of Common Stock (the “Convertible Note Warrant Modification”, and together with the Convertible Note Modifications, the “Noteholder Restructuring”).

In connection with the consummation of the Noteholder Restructuring, on July 8, 2016 the Company acknowledged and agreed to the terms of an Amended and Restated Intercreditor Agreement, by and among the Lenders and the Purchasers (the “Amended and Restated Intercreditor Agreement”), which amends and restates that certain Intercreditor Agreement, by and among the Lenders and the Purchasers, to, among other things, provide that the security interest in the collateral of the Company and certain of its subsidiaries (the “Collateral”) held by the Purchasers is no longer subordinate to the security interest in the Collateral held by the Lenders (the “Intercreditor Restructuring”). In connection with the Intercreditor Restructuring, on July 8, 2016 the Company entered into an Intercreditor Amendment Deed (the “Intercreditor Amendment Deed), by and between the Company, the Guarantors party thereto, the Senior Creditors party thereto, the Subordinated Creditors party thereto, and the Junior Security Trustee party thereto, which amends that certain Intercreditor Deed to, among other things, provide that the security interest in the Collateral held by the Purchasers is no longer subordinate to the security interest in the Collateral held by the Lenders (the “UK Intercreditor Restructuring”, and together with the execution of the Lead Lender Amendment, the Warrant Modifications, the execution of the Co-Lender Amendment, the Co-Lender Warrant Modifications, the issuance of the In-Kind Shares, the execution of the Forbearance Amendment, the execution of the Registration Rights Amendment, the Noteholder Restructuring, and the Intercreditor Restructuring, the “Restructuring”).

Employee and Director Stock Options

In connection with the consummation of the Restructuring, on June 30, 2016, the Company contemporaneously terminated and reissued options to purchase Common Stock (collectively, the “Options”) to certain key employees and directors of the Company (each, an “Optionee”), pursuant to the terms of a Non-Qualified Stock Option Agreement with each Optionee (each, an “Option Agreement”). The consummation of the Restructuring was a condition precedent to effectiveness of each Option Agreement. The Options were reissued under the Company’s 2014 Long Term Incentive Plan in order to reduce the exercise price of each Option to $0.16 per share of Common Stock.

The foregoing description of the Restructuring does not purport to be complete and is qualified in its entirety by reference to the full text of the Lead Lender Amendment, the Co-Lender Amendment, the Forbearance Amendment, the Registration Rights Amendment, the Amended and Restated Intercreditor Agreement, and the Intercreditor Amendment Deed, copies of which are attached hereto as Exhibits 10.1 – 10.6 and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information described above under Item 1.01 of this Current Report on Form 8-K is hereby incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities

The information described above under Item 1.01 of this Current Report on Form 8-K is hereby incorporated herein by reference.

The issuances of the Warrants, the In-Kind Shares, and the Options in connection with the Restructuring were made in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the Securities Act, and/or Rule 506 of Regulation D promulgated under the Securities Act.

Item 8.01 Other Events

On July 8, 2016, the Company issued a press release announcing the Restructuring. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Neither the filing of the press release as an exhibit to this Current Report on Form 8-K nor the inclusion in the press release of a reference to the Company’s internet address shall, under any circumstances, be deemed to incorporate the information available at its internet address into this Current Report on Form 8-K. The information available at the Company’s internet address is not part of this Current Report on Form 8-K or any other report filed by the Company with the SEC.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.		Description
10.1		Amendment No.5 to Credit Agreement, dated July 8, 2016, by and between the Company and the Lead Lender
10.2		Amendment No.1 to Credit Agreement, dated July 8, 2016, by and between the Company, Tiburon Opportunity Fund, L.P., and the Additional Lenders
10.3		Amendment No. 1 to Forbearance Agreement, dated July 8, 2016, by the Company and the Lead Lender
10.4		Amendment No. 3 to Registration Rights Agreement, dated July 8, 2016, by and among the Company and the Holders party thereto
10.5		Amended and Restated Intercreditor Agreement, dated July 8, 2016, by and among the Lead Lender and the Lenders party thereto
10.6		Intercreditor Amendment Deed, dated July 8, 2016, by and between the Company, the Guarantors party thereto, the Senior Creditors party thereto, the Subordinated Creditors party thereto, and the Junior Security Trustee party thereto
99.1		Press Release dated July 8, 2016

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 13, 2016		ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

	By:	/s/ William Seamans
		Name: William Seamans
		Title: Chief Financial Officer

EX-10.1 2 s103683_ex10-1.htm EXHIBIT 10.1

Exhibit 10.1

AMENDMENT NO. 5

CREDIT AGREEMENT

This Amendment No. 5 to Credit Agreement (the “Amendment”) is dated as of July 8, 2016, and is by and between Calm Waters Partnership, a Wisconsin General Partnership (“Calm Waters”), and Electronic Cigarettes International Group, Ltd., a Nevada corporation (the “Borrower”).

WHEREAS, Calm Waters and the Borrower entered into that certain Credit Agreement dated as of April 27, 2015 (the “CW Credit Agreement”);

WHEREAS, the Borrower entered into that certain Credit Agreement, dated April 27, 2015 (the “Additional Lender Credit Agreement”), by and among the Borrower, Tiburon Opportunity Fund, L.P., as a lender and as agent, and various additional lenders party thereto (the “Additional Lenders” and collectively with Calm Waters, the “Lenders”);

WHEREAS, the Lenders entered into that certain Intercreditor Credit Agreement, dated April 27, 2015 (the “Intercreditor Agreement”);

WHEREAS, pursuant to Amendment No. 1 to Credit Agreement, dated June 26, 2015 (“Amendment No. 1”), the Borrower and Calm Waters amended the CW Credit Agreement to (i) increase the aggregate principal amount of the Term Loans thereunder by $6,000,000 and (ii) extend the due date of certain post-Closing obligations of the Borrower;

WHEREAS, pursuant to Amendment No. 2 to Credit Agreement, dated June 30, 2015 (“Amendment No. 2”), and as a condition to receiving funds under a trade facility with ExWorks Capital Fund I, L.P., the Borrower and Calm Waters amended the CW Credit Agreement to include a legend stating that the liens granted to the Lenders thereunder are subject to an Intercreditor Agreement among the Borrower, and the subordinated creditors party thereto;

WHEREAS, pursuant to Amendment No. 3 to Credit Agreement, dated October 30, 2015 (“Amendment No. 3”), the Borrower and Calm Waters amended the CW Credit Agreement to increase the aggregate principal amount of the Term Loans thereunder by $18,000,000;

WHEREAS, pursuant to Amendment No. 4 to Credit Agreement, dated January 11, 2016 (“Amendment No. 4”), the Borrower and Calm Waters amended the CW Credit Agreement to increase the aggregate principal amount of the Term Loans thereunder by $9,042,955 (the CW Credit Agreement, as amended by Amendment No. 1, Amendment No. 2, Amendment No. 3 and Amendment No. 4, the “Amended CW Credit Agreement”);

WHEREAS, the Borrower desires to further amend the Amended CW Credit Agreement to, among other things, reduce the interest rate payable pursuant thereto and extend the term thereof, and to increase the aggregate principal amount of the Term Loans thereunder by $4,000,000;

WHEREAS, pursuant to Section 5.1 of the Intercreditor Agreement, no term of the Amended CW Credit Agreement or the Additional Lender Credit Agreement may be amended and the performance or observance by the parties of any term of the Amended CW Credit Agreement or the Additional Lender Credit Agreement may not be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the Requisite Lenders; provided, however, that except for amendments relating to the adjustment of the amount of principal, the rate of interest, the payment of premiums or the date of maturity, any permitted amendment or waiver under Section 5.1 of the Intercreditor Agreement shall constitute an amendment or waiver applicable to the Amended CW Credit Agreement and the Additional Lender Credit Agreement (on a pro rata basis in accordance with the amount of the Obligations owed to each Lender, as appropriate), as the case may be; and

WHEREAS, Calm Waters, by itself the Requisite Lender, has agreed to (i) the amendments to the Amended CW Credit Agreement as set forth herein, (ii) increase the aggregate principal amount of the Term Loans under the Amended CW Credit Agreement and (iii) permit the issuance of a warrant to Calm Waters;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties to this Amendment, each intending to be legally bound, hereby agree as follows:

1. Definitions. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Amended CW Credit Agreement.

2. Amendments to the Amended CW Credit Agreement.

2.1. Section 1.01 of the Amended CW Credit Agreement is hereby amended by deleting the definition of “Closing” in its entirety and replacing it with the following:

“Closing” shall mean the Initial Closing, the Second Closing, the Third Closing, the Fourth Closing and the Fifth Closing.

2.2. Section 1.01 of the Amended CW Credit Agreement is hereby amended by deleting the definition of “Closing Date” in its entirety and replacing it with the following:

“Closing Date” shall mean the Initial Closing Date, the Second Closing Date, the Third Closing Date, the Fourth Closing Date and the Fifth Closing Date, unless otherwise specifically provided herein.

2.3. Section 1.01 of the Amended CW Credit Agreement is hereby amended by adding the definition of “Fifth Closing” as follows:

“Fifth Closing” shall mean the closing of the transactions contemplated by this Agreement on the Fifth Closing Date.

2.4. Section 1.01 of the Amended CW Credit Agreement is hereby amended by adding the definition of “Fifth Closing Date” as follows:

“Fifth Closing Date” shall mean July [•], 2016.

2.5. Section 1.01 of the Amended CW Credit Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following:

“Maturity Date” shall mean June 30, 2020 (or if such day is not a Business Day, the next Business Day).

2.6. Section 1.01 of the Amended CW Credit Agreement is hereby amended by deleting the definition of “Repayment Date” in its entirety.

2.7. Section 1.01 of the Amended CW Credit Agreement is hereby amended by adding the definition of “Trading Day” as follows:

“Trading Day” means a day on which the principal Trading Market is open for trading.

2.8. Section 1.01 of the Amended CW Credit Agreement is hereby amended by adding the definition of “Trading Market” as follows:

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

2.9. Section 1.01 of the Amended CW Credit Agreement is hereby amended by adding the definition of “VWAP” as follows:

“’VWAP’ means, for any date or period, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) or the weighted average of the daily volume weighted average price of the Common Stock for each Trading Day within such period on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) or the weighted average of the daily volume weighted average price of the Common Stock for each Trading Day within such period on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported or the average of the bid prices per share of the Common Stock so reported during such period, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by Lender and reasonably acceptable to the Borrower, the fees and expenses of which shall be paid by the Borrower.”

2.10. Section 1.01 of the Amended CW Credit Agreement is hereby amended by deleting the definition of “Warrant” in its entirety and replacing it with the following:

“Warrant” shall mean the Common Stock Purchase Warrants executed and delivered pursuant to Section 4.01(o), Section 4.02(g), Section 4.03(g) and Section 4.04(g), each substantially in the form of Exhibit F-1, as amended pursuant to Section 4.05(h), substantially in the form of Exhibit F-2, and Section 4.05(g), substantially in the form of Exhibit F-3.

2.11. Section 2.01 of the Amended CW Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

“Section 2.01. Term Loan. Subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the other Loan Documents, the Lender agrees to make Term Loans to the Borrower on the Closing Dates in an aggregate principal amount equal to $69,800,000, consisting of (i) a Term Loan on the Initial Closing Date in a principal amount equal to $35,000,000, (ii) a Term Loan on the Second Closing Date in a principal amount equal to $6,000,000, (iii) a Term Loan on the Third Closing Date in a principal amount equal to $18,000,000, (iv) a Term Loan on the Fourth Closing Date in a principal amount equal to $9,042,955, and (v) a Term Loan on the Fifth Closing Date in a principal amount equal to $4,000,000, to be disbursed in accordance with Schedule 3.15; provided, however, that the disbursement of any amounts in settlement of debt obligations shall be subject to payoff letters entered into between the Borrower and the obligee in form and substance (including, but not limited to, a release of the Borrower) acceptable to Calm Waters. Amounts repaid or prepaid in respect of the Term Loan may not be reborrowed. The Borrower and the Lender agree that for U.S. federal income tax purposes, the aggregate issue price under Section 1273(b) of the Internal Revenue Code of 1986, as amended, of the Term Loan is $3,800,000. The Borrower and the Lender agree to use the foregoing issue price and the values and the yields which result in such issue price for U.S. federal income tax purposes.

2.12. Section 2.04(a) is hereby amended by deleting “12%” and inserting “4%” in place thereof.

2.13. Section 2.04(b) is hereby amended by inserting the following at the end thereof:

“in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company, valued at a price per share equal to the VWAP for the 90 calendar day period preceding each interest payment date or the Maturity Date, as the case may be; provided, however, that in the event the Company does not have a sufficient number of authorized but unissued shares of Common Stock that are not otherwise contractually reserved for issuance, then interest payments shall be made in cash”

2.14. The following shall be added as a new Section 2.04(c):

“(c) Mechanics of Payment of Interest in Kind.

i. Shares Issuable on Interest Payment Date. The number of shares of Common Stock issuable on an Interest Payment Date hereunder shall be determined by the quotient obtained by dividing (x) the amount of interest to be paid by (y) the VWAP for the 90 day period preceding the date on which interest payment is due (such number of shares of Common Stock, the “In-Kind Shares”).

ii. Delivery of Certificate Upon Payment of Interest in Kind. Not later than three (3) Trading Days after each Interest Payment Date (the “In-Kind Share Delivery Date”), the Borrower shall deliver, or cause to be delivered, to the Lender a certificate or certificates representing the number of In-Kind Shares being issued. The certificates shall bear a restrictive legend in the following form, as appropriate:

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

Certificates evidencing the In-Kind Shares shall not contain any legend (including the legend set forth above): (i) while a registration statement covering the resale of the In-Kind Shares is effective under the Securities Act, (ii) following any sale of such In-Kind Shares pursuant to Rule 144, (iii) if such legend is not required under applicable requirements of the Securities Act (including under Rule 144 or judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after any of the events described in (i)-(iii) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with a copy to the applicable Lender and its broker). If all or any portion of the In-Kind Shares are issued at a time when there is an effective registration statement to cover the resale of the In-Kind Shares, or if such In-Kind Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including under Rule 144, judicial interpretations and pronouncements issued by the staff of the Commission, etc.) then such In-Kind Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this Section 2.04(c)(ii), it will, no later than three (3) Trading Days following the delivery by a Lender to the Company or the Transfer Agent of a certificate representing In-Kind Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Lender a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 2.04(c)(ii). Certificates for In-Kind Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Lender by crediting the account of the Lender’s brokerage account with the Depository Trust Company System as directed by such Lender.

iii. Failure to Deliver Certificates. If such certificate is not or certificates are not delivered to or as directed by the Lender by the In-Kind Share Delivery Date, Lender shall be entitled to elect by written notice to the Borrower at any time on or before its receipt of such certificate or certificates, to require the Borrower to pay in cash the amount of interest due in respect of which such In-Kind Shares were to be issued, in which event the Borrower shall within one business day deliver to Lender by wire transfer of immediately available funds an amount in cash equal to such interest payment.

iv. Obligation Absolute; Partial Liquidated Damages. The Borrower’s obligations to issue and deliver the In-Kind Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by Lender to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by Lender or any other Person of any obligation to the Borrower or any violation or alleged violation of law by Lender or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to Lender in connection with the issuance of such In-Kind Shares; provided, however, that such delivery shall not operate as a waiver by the Borrower of any such action the Borrower may have against Lender. If the Borrower fails for any reason to deliver to Lender such certificate or certificates pursuant to this Section 2.04 by the In-Kind Share Delivery Date, the Borrower shall pay to Lender, in cash, as liquidated damages and not as a penalty, for each $1,000 of interest due, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such In-Kind Share Delivery Date until such certificates are delivered or Lender makes an election under clause (iii), above. Nothing herein shall limit Lender’s right to pursue actual damages or declare an Event of Default pursuant hereto for the Borrower’s failure to deliver In-Kind Shares within the period specified herein and Lender shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit Lender from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

v. Compensation for Buy-In on Failure to Timely Deliver Certificates. In addition to any other rights available to Lender, if the Borrower fails for any reason to deliver to Lender such certificate or certificates by the In-Kind Share Delivery Date pursuant to Section 2.04(c)(ii), and if after such In-Kind Share Delivery Date Lender is required by its brokerage firm to purchase (in an open market transaction or otherwise), or Lender’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by Lender of the In-Kind Shares which Lender was entitled to receive on the In-Kind Share Delivery Date (a “Buy-In”), then the Borrower shall (A) pay in cash to Lender (in addition to any other remedies available to or elected by Lender) the amount, if any, by which (x) Lender’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that Lender was entitled to receive on the Interest Payment Date at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of Lender, either within one business day deliver to Lender by wire transfer of immediately available funds an amount in cash equal to such interest payment plus Late Fees on such amount or deliver to Lender the number of shares of Common Stock that would have been issued if the Borrower had timely complied with its delivery requirements under Section 2.04(c)(ii). For example, if Lender purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted sale of In-Kind Shares with respect to which the actual sale price of the In-Kind Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Borrower shall be required to pay Lender $1,000. Lender shall provide the Borrower written notice indicating the amounts payable to Lender in respect of the Buy-In and, upon request of the Borrower, evidence of the amount of such loss. Nothing herein shall limit Lender’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower’s failure to timely deliver certificates representing In-Kind Shares as required pursuant to the terms hereof.

vi. Reservation of Shares. The Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance in payment of interest on the Notes, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than Lender, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account any adjustments) upon the payment of interest hereunder. The Borrower covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration Statement (subject to Lender’s compliance with its obligations under the Registration Rights Agreement).

vii. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued in payment of interest hereunder. As to any fraction of a share which Lender would otherwise be entitled to receive on any Interest Payment Date, the Borrower shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the VWAP used in calculating the In-Kind Shares issuable on that Interest Payment Date or round up to the next whole share.

viii. Transfer Taxes and Expenses. The issuance of certificates for In-Kind Shares shall be made without charge to Lender for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of Lender and the Borrower shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Borrower the amount of such tax or shall have established to the satisfaction of the Borrower that such tax has been paid. The Borrower shall pay all Transfer Agent fees required for same-day processing of the issuance of In-Kind Shares.

ix. Reporting Requirements. The Borrower will furnish in writing to Lender promptly upon request any such information as may be requested by Lender to permit Lender to comply with the Securities Act and the Exchange Act.

x. Granting of Security Interests. The Company acknowledges and agrees that the Lender may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the In-Kind Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Lender may transfer pledged or secured In-Kind Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Lender’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

xi. Furnishing of Information; Public Information. Until the earliest of the time that the Lender no longer owns the In-Kind shares, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then then subject to the reporting requirements of the Exchange Act.”

2.15. Section 2.06(a) is hereby deleted in its entirety and replaced with “[Reserved]” in place thereof.

2.16. Section 2.09(a) is hereby deleted in its entirety and replaced with the following:

“(a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document not later than 4:00 p.m., Milwaukee, Wisconsin time, on the date when due in immediately available Dollars (except to the extent set forth in Section 2.04(c)), without setoff, defense or counterclaim. Any amounts received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Each such payment shall be made to the Lender by wire transfer of immediately available funds to an account specified by the Lender.”

2.17. The following shall be added as a new Section 3.34:

“Takeover Statutes. No “control share acquisition,” “fair price,” “moratorium,” “business combination” or other anti-takeover Law (a “Takeover Statute”) in effect as of the date hereof is applicable or will be applicable to the Lender or any affiliate or associate thereof (whether as a result of the Lender’s Beneficial Ownership and/or the Beneficial Ownership of the Lender’s affiliates and/or associates or otherwise) or any transaction contemplated by this Agreement, including any acquisition of In-Kind Shares. The Borrower Board will take all necessary action so that to the fullest extent possible no Takeover Statute will apply to the Lender or any affiliate or associate thereof (whether as a result of the Lender’s Beneficial Ownership and/or the Beneficial Ownership of the Lender’s affiliates and/or associates or otherwise) or any transaction contemplated by this Agreement, including any acquisition of In-Kind Shares. No claim will be made or enforced by the Borrower or, with the consent of the Borrower, any other Person, that any Takeover Statute applies to the Lender or any affiliate or associate thereof (whether as a result of the Lender’s Beneficial Ownership and/or the Beneficial Ownership of the Lender’s affiliates and/or associates or otherwise) or any transaction contemplated by this Agreement, including any acquisition of In-Kind Shares. The Borrower will not adopt any “poison pill” or rights plan or other anti-takeover plan or arrangement that could be triggered by the Lender’s Beneficial Ownership and/or the Beneficial Ownership of the Lender’s affiliates and/or associates. For purposes hereof, “Beneficial Ownership” means, with respect to any person, such person’s beneficial ownership of shares of Common Stock issuable hereunder alone or in combination with any other shares of Common Stock beneficially owned by such person and any other shares of Common Stock the ownership of which may be attributable to such person pursuant to any Takeover Statute; and “Law” means any federal, state, local or foreign law, statute, code, directive, ordinance, rule, regulation, order, judgment, writ, stipulation, award, injunction or decree.”

2.18. Schedule 1.01(a) of the Disclosure Schedule to the Amended CW Credit Agreement entitled “Existing Credit Agreements” is hereby amended by deleting it in its entirety and replacing it with the revised Schedule 1.01(a) attached hereto as Exhibit A.

2.19. Schedule 3.06 of the Disclosure Schedule to the Amended CW Credit Agreement entitled “Capitalization” is hereby amended by deleting it in its entirety and replacing it with the revised Schedule 3.06 attached hereto as Exhibit B.

2.20. Schedule 3.12 of the Disclosure Schedule to the Amended CW Credit Agreement entitled “Agreements” is hereby amended by deleting it in its entirety and replacing it with the revised Schedule 3.12 attached hereto as Exhibit C.

2.21. Schedule 3.15 of the Disclosure Schedule to the Amended CW Credit Agreement entitled “Use of Proceeds” is hereby amended by deleting it in its entirety and replacing it with the revised Schedule 3.15 attached hereto as Exhibit D.

2.22. Schedule 3.29 of the Disclosure Schedule to the Amended CW Credit Agreement entitled “Indebtedness” is hereby amended by deleting it in its entirety and replacing it with the revised Schedule 3.29 attached hereto as Exhibit E.

3. Conditions to the Effectiveness of Amendment. Article IV is hereby amended by adding the following as a new Section 4.05:

“Section 4.05. Conditions of Borrowing at the Fifth Closing. On the Fifth Closing Date:

(a) The representations and warranties set forth in Article III and in each other Loan Document shall be true and correct on and as of the Fifth Closing Date, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(b) On the Fifth Closing Date, no Default or Event of Default shall have occurred and be continuing.

(c) The Lender shall have received a certificate, dated the Fifth Closing Date, and signed by a Financial Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs ‎(a) and ‎(b) of this Section 4.05.

(d) The Lender shall have received duly executed counterparts of Amendment No. 5 to Credit Agreement from each party hereto.

(e) The Lender shall have received a certificate from the chief financial officer of the Borrower certifying that each of the Loan Parties, after giving effect to the Transactions to occur on the Fifth Closing Date, is Solvent.

(f) All requisite Governmental Authorities and third parties shall have approved or consented to the Transactions and the other transactions contemplated hereby to the extent required or reasonably requested by the Lender, all applicable appeal periods shall have expired and there shall not be any pending or threatened litigation, governmental, administrative or judicial action that has resulted or could reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions or the other transactions contemplated hereby.

(g) The Lender shall have received from the Company a duly executed Warrant to purchase 49,088,030 shares of Common Stock.

(h) The Lender shall have received from the Company duly executed amendments to the Common Stock Purchase Warrants and Amended and Restated Common Stock Purchase Warrants substantially in the form of Exhibits F – P.

(i) The Lender shall have received duly executed counterparts of Amendment No. 3 to the Registration Rights Agreement between the Company and the Lenders signatory thereto substantially in the form of Exhibit Q.

(j) The Lender shall have received duly executed counterparts of Amendment No.1 to the Forbearance Agreement substantially in the form of Exhibit R.

(k) The Lender shall have received (i) a certificate of the Secretary or Assistant Secretary of each Loan Party dated as of the Fifth Closing Date and certifying (A) with respect to the Borrower, that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of the Borrower authorizing the execution, delivery and performance of the Amendment and the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (B) that the certificate or articles of incorporation, bylaws or operating agreement (or comparable organizational documents) of each Loan Party have not been amended since the Fourth Closing Date and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; and (ii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (i) above.

(l) The Lender shall have received reimbursement or payment of all out-of-pocket expenses incurred by it in connection with the restructuring of the Borrower’s capital structure, including the Obligations.

(m) The Lender shall have received a certificate or certificates representing [•] duly authorized, validly issued, fully paid and non-assessable shares of Common Stock.

(n) The Lender shall have received a Note duly executed and delivered by the Borrower payable to the Lender and its registered assigns in the principal amount of $4,000,000.

(o) Lender shall have received favorable written opinions of Pryor Cashman LLP and Fennemore Craig, P.C., counsels for the Borrower, in form and substance reasonably satisfactory to the Lender.

(p) The Lender shall have received a certificate with respect to the Loan Parties dated as of the Fifth Closing Date and duly executed by a Responsible Officer of the Borrower certifying that the Perfection Certificate delivered in connection with the Second Closing is true and correct in all respects as of the Fifth Closing Date as if given on such date.

(q) The Lender shall have received Amendment No. 1 to the Additional Lender Credit Agreement substantially in the form of Exhibit S duly executed and delivered by the Borrower and the Additional Lenders.

(r) The Lender shall have received duly executed counterparts of the Amended and Restated Intercreditor Agreement substantially in the form of Exhibit T.

(s) The Lender shall have received Amendment No. 2 to each 15% Senior Secured Convertible Note dated January 14, 2014, as amended, substantially in the form of Exhibit U duly executed and delivered by the Borrower and each holder of each such Note.

(t) The Lender shall have received Amendment No. 2 to each 15% Senior Secured Convertible Note dated February 28, 2014, as amended, substantially in the form of Exhibit V duly executed and delivered by the Borrower and each holder of each such Note.

(u) The Lender shall have received Amendment No. 1 to each 8% Senior Secured Convertible Note dated January 14, 2014, as amended, substantially in the form of Exhibit W duly executed and delivered by the Borrower and each holder of each such Note.

(v) The Lender shall have received Amendment No. 2 to each Common Stock Purchase Warrant dated January 14, 2014 issued by the Borrower, as amended, substantially in the form of Exhibit X duly executed and delivered by the Borrower and each holder of each such Warrant.

(w) The Lender shall have received Amendment No. 2 to each Common Stock Purchase Warrant dated February 28, 2014 issued by the Borrower, as amended, substantially in the form of Exhibit Y duly executed and delivered by the Borrower and each holder of each such Warrant.

(x) The Lender shall have received Amendment No. 1 to each Common Stock Purchase Warrant dated January 16, 2015 issued by the Borrower, as amended, substantially in the form of Exhibit Z duly executed and delivered by the Borrower and each holder of each such Warrant.

(y) The Lender shall have received duly executed counterparts to the Intercreditor Amendment Deed substantially in the form of Exhibit AA.

(z) The Lender shall have received evidence of the appointment of Tiburon Opportunity Fund, L.P as agent for the holders of the Company’s 15% Senior Secured Convertible Promissory Notes.

(aa) The Lender shall have received duly executed counterparts to the Convertible Note Assignment substantially in the form of Exhibit BB.

(bb) The Lender shall have received four duly executed counterparts to the Term Note Assignments substantially in the form of Exhibit CC.

(cc) The Lender shall have received an Amended and Restated Note duly executed and delivered by the Borrower payable to the Lender and its registered assigns in the principal amount of $1,800,000 substantially in the form of Exhibit DD.

(dd) The Lender shall have received an Amended and Restated 4% Senior Secured Convertible Note duly executed and delivered by the Borrower payable to the Lender and its registered assigns in the principal amount of $200,000 substantially in the form of Exhibit EE.

4. Lender Consent to Borrower Action. Pursuant to Section 6.11 of the Amended CW Credit Agreement, the Lender hereby consents to the Borrower’s issuance of Common Stock Purchase Warrants to each of the Additional Lenders, excluding Dominion Capital LLC, G.T. Mascolo, Peninsula International PTE. LTD., and Cold Spring Investing LLC, substantially in the forms attached hereto as Exhibits FF-PP, in exchange for those certain Common Stock purchase Warrants issued to each of the Additional Lenders, excluding Dominion Capital LLC, G.T. Mascolo, Peninsula International PTE. LTD., and Cold Spring Investing LLC in connection with the execution of the Additional Lender Credit Agreement.

5. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms, covenants, agreements, conditions and other provisions of the Amended CW Credit Agreement shall remain in full force and effect in accordance with their respective terms. As used in the Amended CW Credit Agreement, the terms "this Agreement", herein, hereinafter, hereunder, hereto and words of similar import shall mean and refer to, from and after the date hereof, unless the context otherwise requires, the Amended CW Credit Agreement as amended by this Amendment.

6. Governing Law. This Amendment shall be governed by, construed and enforced in accordance with the laws of the State of New York and not by choice of law principles or the laws of any other State.

7. Entire Agreement and Amendments. The Amended CW Credit Agreement, as amended by this Amendment, embodies the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties.

8. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same agreement.

9. Guarantees and Security Interests. By signing this Amendment, the Borrower and each Guarantor hereby confirms that (i) the obligations of the Borrower and each Guarantor under the Amended CW Credit Agreement as amended by this Amendment and the other Loan Documents as amended hereby constitute “Secured Guarantees” and are entitled to the benefit of the guarantees and the security interests set forth in the Security Documents, (ii) the Loan Documents are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, and (iii) all Liens granted, conveyed or assigned to Calm Waters by such Person pursuant to each Loan Document to which it is party remain in full force and effect, are not released or reduced, and continue to secure full payment and performance of the Secured Guarantees as amended hereby.

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IN WITNESS WHEREOF, this Amendment has been executed as of, and is effective as of, the day and year first written above.

	Calm Waters Partnership

	By:
	Name:
	Title:

	ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

	By:
	Name:
	Title:

	VCIG LLC

	By:
	Name:	Philip Anderson
	Title:	Manager

	FIN BRANDING GROUP, LLC

	By:
	Name:	Philip Anderson
	Title:	Manager

	HARDWIRE INTERACTIVE ACQUISITION COMPANY

	By:
	Name:	Philip Anderson
	Title:	President

	VICTORY ELECTRONIC CIGARETTES, INC.

	By:
	Name:	Philip Anderson
	Title:	President

	VAPESTICK HOLDINGS LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

	MUST HAVE LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

	E-CIGS UK HOLDING COMPANY LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

EX-10.2 3 s103683_ex10-2.htm EXHIBIT 10-2

Exhibit 10.2

EXECUTION VERSION

AMENDMENT NO. 1

CREDIT AGREEMENT

This Amendment No. 1 to Credit Agreement (the “Amendment”) is dated as of July 8, 2016, and is by and between Tiburon Opportunity Fund, L.P., a Delaware limited partnership (the “Agent”) as a lender and as agent for the various additional lenders (the “Additional Lenders”) party to the Additional Lender Credit Agreement (defined below), the Additional Lenders signatory hereto, and Calm Waters Partnership, a Wisconsin General Partnership (“Calm Waters”, collectively with the Additional Lenders, the “Lenders”), and Electronic Cigarettes International Group, Ltd., a Nevada corporation (the “Borrower”).

WHEREAS, Calm Waters and the Borrower entered into that certain Credit Agreement dated as of April 27, 2015 (as amended, the “CW Credit Agreement”);

WHEREAS, the Borrower entered into that certain Credit Agreement, dated April 27, 2015 (the “Additional Lender Credit Agreement”), by and among the Borrower, the Agent, and the Additional Lenders;

WHEREAS, the Lenders entered into that certain Intercreditor Credit Agreement, dated April 27, 2015 (the “Intercreditor Agreement”);

WHEREAS, the Borrower desires to amend the Additional Lender Credit Agreement to, among other things, reduce the interest rate payable pursuant thereto and extend the term thereof;

WHEREAS, pursuant to Section 5.1 of the Intercreditor Agreement, no term of the CW Credit Agreement or the Additional Lender Credit Agreement may be amended and the performance or observance by the parties of any term of the CW Credit Agreement or the Additional Lender Credit Agreement may not be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the Requisite Lenders; provided, however, that except for amendments relating to the adjustment of the amount of principal, the rate of interest, the payment of premiums or the date of maturity, any permitted amendment or waiver under Section 5.1 of the Intercreditor Agreement shall constitute an amendment or waiver applicable to the CW Credit Agreement and the Additional Lender Credit Agreement (on a pro rata basis in accordance with the amount of the Obligations owed to each Lender, as appropriate), as the case may be; and

WHEREAS, Calm Waters, by itself the Requisite Lender, has agreed to the amendments to the Additional Lender Credit Agreement as set forth herein;

1. Definitions. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Additional Lender Credit Agreement.

2. Amendments to the Additional Lender Credit Agreement.

2.1. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by deleting the definition of “Closing Date” in its entirety and replacing it with the following:

“Closing Date” shall mean the Closing Date and the Second Closing Date, unless otherwise specifically provided herein.

2.2. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by adding the definition of “Second Closing” as follows:

“Second Closing” shall mean the closing of the transactions contemplated by this Agreement on the Second Closing Date.

2.3. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by adding the definition of “Second Closing Date” as follows:

“Second Closing Date” shall mean June [•], 2016.

2.4. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following:

“Maturity Date” shall mean June 30, 2020 (or if such day is not a Business Day, the next Business Day).

2.5. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by deleting the definition of “Repayment Date” in its entirety.

2.6. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by adding the definition of “Trading Day” as follows:

“Trading Day” means a day on which the principal Trading Market is open for trading.

2.7. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by adding the definition of “Trading Market” as follows:

2.8. Section 1.01 of the Additional Lender Credit Agreement is hereby amended by adding the definition of “VWAP” as follows:

2.9. Section 2.04(a) is hereby amended by deleting “12.0%” and inserting “4.0%” in place thereof.

2.10. Section 2.04(b) is hereby amended by inserting the following at the end thereof:

2.11. The following shall be added as a new Section 2.04(c):

“(c) Mechanics of Payment of Interest in Kind.

2.12. Section 2.06(a) is hereby deleted in its entirety and replaced with “[Reserved]” in place thereof.

2.13. Section 2.09(a) is hereby deleted in its entirety and replaced with the following:

2.14. The following shall be added as a new Section 3.34:

3. Conditions to the Effectiveness of Amendment. Article IV is hereby amended by adding the following as a new Section 4.02:

“Section 4.02. Conditions of Borrowing at the Fifth Closing. On the Second Closing Date:

(a) The representations and warranties set forth in Article III and in each other Loan Document shall be true and correct on and as of the Second Closing Date, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(b) On the Second Closing Date, no Default or Event of Default shall have occurred and be continuing.

(c) The Agent shall have received a certificate, dated the Second Closing Date, and signed by a Financial Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs ‎(a) and ‎(b) of this Section 4.04.

(d) The Lender shall have received duly executed counterparts of Amendment No. 1 to Credit Agreement from each party hereto.

(e) All requisite Governmental Authorities and third parties shall have approved or consented to the Transactions and the other transactions contemplated hereby to the extent required or reasonably requested by the Lender, all applicable appeal periods shall have expired and there shall not be any pending or threatened litigation, governmental, administrative or judicial action that has resulted or could reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions or the other transactions contemplated hereby.

(f) Each Lender shall have received from the Company duly executed amendments to the Common Stock Purchase Warrants substantially in the form of Exhibit A.

(g) The Lender shall have received (i) a certificate of the Secretary or Assistant Secretary of each Loan Party dated as of the Second Closing Date and certifying (A) with respect to the Borrower, that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of the Borrower authorizing the execution, delivery and performance of the Amendment and the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (B) that the certificate or articles of incorporation, bylaws or operating agreement (or comparable organizational documents) of each Loan Party have not been amended since the Fourth Closing Date and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; and (ii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (i) above.

(h) Each Lender shall have received a certificate or certificates representing the In-Kind Shares due to such Lender.

(i) The Lender shall have received duly executed counterparts of the amended and restated Intercreditor Agreement substantially in the form of Exhibit B.

4. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms, covenants, agreements, conditions and other provisions of the Additional Lender Credit Agreement shall remain in full force and effect in accordance with their respective terms. As used in the Additional Lender Credit Agreement, the terms "this Agreement", herein, hereinafter, hereunder, hereto and words of similar import shall mean and refer to, from and after the date hereof, unless the context otherwise requires, the Additional Lender Credit Agreement as amended by this Amendment.

5. Governing Law. This Amendment shall be governed by, construed and enforced in accordance with the laws of the State of New York and not by choice of law principles or the laws of any other State.

6. Entire Agreement and Amendments. The Additional Lender Credit Agreement, as amended by this Amendment, embodies the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties.

7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same agreement.

8. Guarantees and Security Interests. By signing this Amendment, the Borrower and each Guarantor hereby confirms that (i) the obligations of the Borrower and each Guarantor under the Additional Lender Credit Agreement as amended by this Amendment and the other Loan Documents as amended hereby constitute “Secured Guarantees” and are entitled to the benefit of the guarantees and the security interests set forth in the Security Documents, (ii) the Loan Documents are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, and (iii) all Liens granted, conveyed or assigned to Calm Waters by such Person pursuant to each Loan Document to which it is party remain in full force and effect, are not released or reduced, and continue to secure full payment and performance of the Secured Guarantees as amended hereby.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, this Amendment has been executed as of, and is effective as of, the day and year first written above.

	Calm Waters Partnership (in its capacity as the Requisite Lender under the Intercreditor Agreement)

	By:
	Name:
	Title:

	ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

	By:
	Name:
	Title:

	VCIG LLC

	By:
	Name:	Philip Anderson
	Title:	Manager

	FIN BRANDING GROUP, LLC

	By:
	Name:	Philip Anderson
	Title:	Manager

	HARDWIRE INTERACTIVE ACQUISITION COMPANY

	By:
	Name:	Philip Anderson
	Title:	President

	VICTORY ELECTRONIC CIGARETTES, INC.

	By:
	Name:	Philip Anderson
	Title:	President

	VAPESTICK HOLDINGS LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

	MUST HAVE LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

	E-CIGS UK HOLDING COMPANY LIMITED

	By:
	Name:	Philip Anderson
	Title:	Director

	TIBURON OPPORTUNITY FUND, L.P. (as agent)

	By:
	Name:
	Title:

[Signatures Continue]

[Signature Page for Additional Lenders]

	ADDITIONAL LENDER:



	By:
	Name:
	Title:

Although it is the Borrower’s desire to maximize its cash for its growth and operations, should the Additional Lender wish to receive its interest payments in cash instead of shares of Common Stock, then such Additional Lender should indicate as such by checking here:______

EX-10.3 4 s103683_ex10-3.htm EXHIBIT 10-3

Exhibit 10.3

EXECUTION VERSION

AMENDMENT NO. 1 TO

FORBEARANCE AGREEMENT

This AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT (this “Amendment”) dated as of July 8, 2016 (the “Effective Date”) is entered into by Electronic Cigarettes International Group, Ltd. (the “Borrower”), and Calm Waters Partnership (the “Lender”).

Recitals

WHEREAS, on September 30, 2015 the Borrower and Lender entered into that certain Forbearance Agreement (the “Forbearance Agreement”);

WHEREAS, the Borrower and Lender desire that the Forbearance Agreement be amended to reflect changes in certain provisions as specified below; and

NOW, THEREFORE, in consideration of the foregoing, and of the mutual representations, warranties, covenants, and agreements herein contained, the parties hereto agree as follows:

Agreement

Section 1. Defined Terms. Unless otherwise indicated herein, all terms which are capitalized but are not otherwise defined herein shall have the meaning ascribed to them in the Forbearance Agreement.

Section 2. Amendments to Forbearance Agreement.

a. Section 4(a)(a) is hereby amended by deleting “March 31, 2017” and inserting “June 30, 2020” in place thereof.

b. Section 4(b) is hereby deleted in its entirety and replaced with the following:

“(b) During the Forbearance Period, interest shall continue to accrue on the Obligations as set forth in the Credit Agreement and Notes, provided that interest shall accrue on the September 2015 Interest Payment at a rate equal to 14% per annum until June 30, 2016. Beginning July 1, 2016, interest shall accrue on the September 2015 Interest Payment at a rate equal to 4% per annum; provided, however, that all amounts not paid when due hereunder shall bear interest (after as well as before judgment), payable on demand, at 6% per annum. The September 2015 Interest Payment and interest accrued hereunder shall be paid to the Lender in cash on June 30, 2020.”

c. Section 8 is hereby amended by deleting “780 North Water Street” and inserting “833 East Michigan Street, Suite 1800” in place thereof.

Section 3. Conditions Precedent. Lender shall not be obligated under this Amendment, and the terms of this Amendment shall not be binding on Lender, unless and until: (i) Borrower has duly executed and delivered to Lender this Agreement, together with a copy of a resolution of its board of directors approving the terms and execution and delivery of this Amendment; (ii) Lender has duly executed and delivered to Borrower this Amendment; (c) Borrower has duly executed and delivered to Lender the amended and restated Forbearance Warrant, substantially in the form attached hereto as Exhibit A; (d) the representations and warranties set forth in Section 5 of the Agreement shall be true and correct on and as of the date hereof, with the same effect as though made on and as of such date, and Lender shall have received a certificate, dated the Fifth Closing Date (as defined in the Credit Agreement), and signed by the chief financial officer of the Borrower, confirming compliance with the conditions precedent set forth in this clause; and (e) all of the conditions set forth in Section 4.05 to the Credit Agreement (as added by Amendment No. 5 thereto) have been satisfied.

Section 4. Release. Borrower forever releases and discharges Lender and its affiliates, officers, directors, shareholders, agents, representatives, attorneys and employees (collectively, the “Released Parties”), and each of them, past and present, from any and all actions, obligations, costs, damages, losses, claims, liabilities and demands of whatever kind and nature which Borrower has had, now has or hereafter may have, arising from or by reason of or in any way connected with any transaction, matter, event or circumstances which occurred or existed prior to the date hereof. It is understood and agreed that this release is not to be construed as an admission of liability on the part of Lender or the Released Parties.

Section 5. Ratifications; Inconsistent Provisions. Except as otherwise expressly provided

herein, the Forbearance Agreement, is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Effective Date, all references in the Forbearance Agreement to “this Forbearance Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Forbearance Agreement shall mean the Forbearance Agreement as amended by this Amendment. Notwithstanding the foregoing to the contrary, to the extent that there is any inconsistency between the provisions of the Forbearance Agreement and this Amendment, the provisions of this Amendment shall control and be binding.

Section 6. Counterparts. This Amendment may be executed in any number of counterparts, all of which will constitute one and the same instruments and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Facsimile or other electronic transmission of any signed original document shall be deemed the same as delivery of an original.

[The Remainder of this Page is Blank]

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of the date first written above by its respective officers thereunto duly authorized.

	ELECTRONIC CIGARETTES
	INTERNATIONAL GROUP, LTD.

	By:
	Name:
	Title:

	CALM WATERS PARTNERSHIP

	By:
	Name:
	Title:

EX-10.4 5 s103683_ex10-4.htm EXHIBIT 10-4

Exhibit 10.4

EXECUTION VERSION

AMENDMENT No. 3

REGISTRATION RIGHTS AGREEMENT

This AMENDMENT No. 3 TO REGISTRATION RIGHTS AGREEMENT (this “Amendment”), is made and entered into as of July 8, 2016, by and among Electronic Cigarettes International Group, Ltd., a Nevada corporation, (the “Company”) and the holders of registration rights under the Registration Rights Agreement (defined below) signatory hereto (each, a “Holder” and collectively, the “Holders”).

RECITALS:

WHEREAS, on April 27, 2015, the Company entered into a Credit Agreement (as amended, the “Lead Lender Credit Agreement”), by and between the Company and Calm Waters Partnership, a Wisconsin general partnership (the “Lead Lender”), pursuant to which the Lead Lender provided the Company with a term loan upon the terms and conditions set forth in the Lead Lender Credit Agreement;

WHEREAS, on April 27, 2015, the Company entered into a Credit Agreement (as amended, the “Additional Lender Credit Agreement” and together with the Lead Lender Credit Agreement, the “Credit Agreements”), by and among the Company and various additional lenders party thereto (the “Additional Lenders” and together with the Lead Lender, the “Lenders”), pursuant to which the Additional Lenders provided the Company with a term loan upon the terms and conditions set forth in the Additional Lender Credit Agreement;

WHEREAS, as a condition to extending the financing under the Credit Agreements, the Company granted the registration rights pursuant to that certain Registration Rights Agreement, dated as of April 27, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “Registration Rights Agreement”);

WHEREAS, on June 26, 2015, pursuant to that certain Amendment to Registration Rights Agreement between the Company and certain holders of registration rights signatory thereto, dated June 26, 2015, the parties amended the Registration Rights Agreement to clarify that the registration rights granted pursuant to the Registration Rights Agreement apply to securities issued pursuant to the Credit Agreements as amended or modified from time to time;

WHEREAS, on September 30, 2015, pursuant to that certain Amendment No. 2 to Registration Rights Agreement between the Company and certain holders of registration rights signatory thereto, dated September 30, 2015, the parties further amended the Registration Rights Agreement to provide that the Common Stock then issued and issuable upon exercise of those certain warrants to purchase shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company granted to the Lead Lender pursuant to that certain Forbearance Agreement between the Company and the Lead Lender, dated September 30, 2015, shall be included within the definition of Registrable Securities under the Registration Rights Agreement;

WHEREAS, the parties hereto desire to further amend the Registration Rights Agreement to provide that the shares of Common Stock issuable to the Holders in lieu of cash interest due to such Holders pursuant to the Credit Agreements shall be included within the definition of Registrable Securities under the Registration Rights Agreement;

WHEREAS, Section 6(e) of Registration Rights Agreement provides that the provisions of the Registration Rights Agreement may only be amended by a writing signed by the Company and the Holders of 50% or more of the then outstanding Registrable Securities; and

WHEREAS, the Company and the Holders party hereto, constituting Holders of 50% or more of the outstanding Registrable Securities, desire to amend the Registration Rights Agreement on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment, each intending to be legally bound, hereby agree as follows:

1. Definitions. Capitalized terms used but not defined in this Amendment shall have the respective meanings ascribed to such terms in the Registration Rights Agreement.

2. Amendments to the Registration Rights Agreement.

A. Section 1 of the Registration Rights Agreement is hereby amended by adding the following definition:

“Interest Shares” means shares of Common Stock issued to a Holder in lieu of cash interest due pursuant to the Credit Agreements.”

B. Section 1 of the Registration Rights Agreement is hereby amended by deleting the definition of “Registrable Securities” in its entirety and replacing it with the following:

“Registrable Securities” means, as of any date of determination, (a) all Warrant Shares then issued and issuable upon exercise of the Warrants, (b) all shares of Common Stock then issued and issuable upon exercise of the Forbearance Warrants, (c) all Interest Shares issued to Holder(s) and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another Registration Statement hereunder with respect thereto for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercised by “cashless exercise” as provided in the Warrants), as reasonably determined by the Company, upon the advice of counsel to the Company.”

C. Section 6(g) of the Registration Rights Agreement is hereby amended by deleting the last sentence thereof in its entirety and replacing it with the following:

“Each Holder may assign their respective rights hereunder in part or in whole to any person to whom the Warrant or Warrant Shares or Forbearance Warrants or shares of Common Stock issuable upon exercise of Forbearance Warrants or Interest Shares are transferred.”

3. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms, covenants, agreements, conditions and other provisions of the Registration Rights Agreement shall remain in full force and effect in accordance with their respective terms. As used in the Registration Rights Agreement, the terms “this Agreement”, herein, hereinafter, hereunder, hereto and words of similar import shall mean and refer to, from and after the date hereof, unless the context otherwise requires, the Registration Rights Agreement as amended by this Amendment.

4. Governing Law. This Amendment shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to its conflict of laws principles.

5. Counterparts. This Amendment may be executed in a number of counterparts, by facsimile, each of which shall be deemed to be an original as of those whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Amendment shall become binding when one or more of the counterparts hereof, individually or taken together, are signed by all the parties.

[Remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first above written.

	ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

	By:
	Name:
	Title:

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first above written.

	Name of Holder:

	Signature of Authorized Signatory of Holder:

	Name of Authorized Signatory:

EX-10.5 6 s103683_ex10-5.htm EXHIBIT 10-5

Exhibit 10.5

EXECUTION VERSION

AMENDED AND RESTATED

INTERCREDITOR AGREEMENT

THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT (this Amended and Restated Intercreditor Agreement, together with all exhibits, schedules, extensions, renewals, amendments, restatements, substitutions, and replacements hereto and hereof, this “Agreement”) is dated as of July 8, 2016 by and among CALM WATERS PARTNERSHIP, a Wisconsin general partnership, together with its successors and assigns, (“Calm Waters”), the additional lenders party hereto (collectively, the “Additional Lenders”), and the holders of the Promissory Notes (as defined below) party hereto (collectively, the “Holders,” and together with Calm Waters and the Additional Lenders, the “Lenders,” and each, individually, a “Lender”).

WITNESSETH:

WHEREAS, Electronic Cigarettes International Group, Ltd., a Nevada corporation (the “Borrower”) has entered into a Credit Agreement dated April 27, 2015 (as amended, restated or otherwise modified from time to time, the “CW Credit Agreement”) with Calm Waters pursuant to which Calm Waters has agreed to provide a term loan to Borrower in the original principal amount of $35,000,000. The indebtedness of the Borrower to Calm Waters is evidenced by promissory notes (as amended, restated or otherwise modified from time to time, the “CW Notes”);

WHEREAS, the Borrower has also entered into a Credit Agreement dated April 27, 2015 (as amended, restated or otherwise modified from time to time, the “Additional Lender Credit Agreement” and together with the CW Credit Agreement, the “Credit Agreements”) with the other lenders party hereto (collectively, the “Additional Lenders”), pursuant to which the Additional Lenders have agreed to provide term loans to Borrower in the aggregate original principal amount of $6,214,225.11. The indebtedness of the Borrower to the Additional Lenders is evidenced by promissory notes (as amended, restated or otherwise modified from time to time, the “Additional Lender Notes”);

WHEREAS, the Borrower has issued 15% Senior Secured Convertible Promissory Notes dated either January 14, 2014 or February 28, 2014 in the aggregate principal amount of $[•] to the Holders, which were amended in January 2015 to, among other things, reduce the interest rate payable thereon and extend the maturity date thereof (as amended, restated or otherwise modified from time to time, the “Promissory Notes,” and together with the CW Notes and the Additional Lender Notes, the “Notes”);

WHEREAS, to secure amounts outstanding under the CW Credit Agreement and the CW Notes, the Borrower, together with subsidiaries of the Borrower identified in the CW Security Agreement referred to below (therein, the “Guarantors”) and Calm Waters have entered into that certain Guarantee and Collateral Agreement dated April 27, 2015 (the “CW Security Agreement”) pursuant to which the Guarantors have agreed to guaranty payment of the Borrower’s obligations to Calm Waters pursuant to the CW Credit Agreement and the Borrower and the Guarantors have each granted to CW a security interest in substantially all of their respective property to secure payment of all obligations of Borrower and the Guarantors to CW;

WHEREAS, to secure amounts outstanding under the Additional Lender Credit Agreement and the Additional Lender Notes, the Borrower, together with the Guarantors and the Additional Lenders have entered into that certain Guarantee and Collateral Agreement dated April 27, 2015 (the “Additional Lender Security Agreement”) pursuant to which the Guarantors have agreed to guaranty payment of the Borrower’s obligations to the Additional Lenders pursuant to the Additional Lender Credit Agreement and the Borrower and the Guarantors have each granted to the Additional Lenders a security interest in substantially all of their respective property to secure payment of all obligations of Borrower and the Guarantors to each of the Additional Lenders;

WHEREAS, to secure amounts outstanding under the Promissory Notes, the Borrower, together with subsidiaries of the Borrower identified in the Security Agreement referred to below (therein, the “Additional Debtors,” and together with the Guarantors, the “Grantors”) and the Holders have entered into that certain Security Agreement dated [•] (the “Promissory Note Security Agreement” and together with the CW Security Agreement and the Additional Lender Security Agreement, the “Security Agreements”) pursuant to which the Borrower and the Additional Debtors have each granted to the Holders a security interest in substantially all of their respective property to secure payment of all obligations of Borrower and the Additional Debtors to the Holders; and

WHEREAS, the parties hereto have entered into that certain Intercreditor Agreement dated April 27, 2015 which provides that the security interest in the collateral of the Borrower and the Additional Debtors held by the Holders is subordinate to the security interest of CW and the Additional Lenders (the “2015 Intercreditor Agreement”);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and intending to be legally bound hereby, the parties hereto agree as follows:

Article I
RECITALS; DEFINITIONS AND OTHER CONVENTIONS

Section 1.1. Recitals. The foregoing recitals are hereby incorporated into and made a material part of this Agreement.

Section 1.2. Definitional Conventions.

(a) The words “hereof”, “herein”, “hereunder” and “hereto” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section, subsection, paragraph, item, exhibit and schedule references are to this Agreement unless otherwise specified.

(b) All terms defined in this Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified.

Section 1.3. Definitions. As used in this Agreement (including the preamble and recitals hereto), the following terms shall have the meanings assigned to them below in this Section 1.3 or in the provision of this Agreement referred to below:

“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified and shall include any Person that directly or indirectly owns 5% or more of any class of equity interests of the Person specified or that is an officer or director of the Person specified; provided, however, that in no event shall the term “Affiliate,” when used with respect to the Borrower or the other Obligors, include CW or its successors or assigns.

“Aggregate Principal Indebtedness” means, as of any date of determination, the sum of (i) the aggregate principal balance outstanding under the CW Credit Agreement and the CW Notes, plus (ii) the aggregate principal balance outstanding under the Additional Lender Credit Agreement and the Additional Lender Notes, plus (iii) the aggregate principal amount of the outstanding Promissory Notes.

“Agreement” shall have the meaning given to such term in the preamble hereto.

“Authorized Officer” means the chief executive officer, chief financial officer, treasurer or managing partner, as applicable, of the Borrower, acting singly.

“Bankruptcy Proceeding” means any proceeding by, against or with respect to, the Borrower or any Obligor under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law or for the appointment of a receiver for the Borrower or any Obligor or its assets.

“Borrower” shall have the meaning given to such term in the recitals hereof.

“Business Day” means any day other than a Saturday, Sunday or legal holiday on which banks in New York City are authorized or required by law to close.

“Collateral” means all property and interests in property, real and personal, tangible and intangible, now owned or hereafter acquired or created by the Borrower or any Obligor in or upon which a security interest, lien or mortgage is granted to any Lender to secure any obligations owing to Lenders, or any of them, and all balances held by any Lender for the account of the Borrower or any Obligor or any other property held or owing by any Lender to or for the credit or for the account of the Borrower or any Obligor with respect to which any Lender has rights to set off or appropriate or a common law lien.

“Credit Document” as used herein means all notes, loan agreements, guarantees, security agreements, mortgages, instruments, pledge agreements, assignments, acceptance agreements, commitments, facilities, reimbursement agreements and any other agreements, documents and instruments, now or hereafter existing, creating, evidencing, guarantying, securing or relating to any or all of the Obligations, including without limitation the CW Credit Agreement, the CW Notes, Additional Lender Credit Agreement, the Additional Lender Notes and the Promissory Notes, together with all amendments, modifications, renewals, extensions or restatements thereof.

“Default” shall have the meaning given to such term in each Credit Document, as applicable.

“Designated Collateral” shall have the meaning assigned to such term in Section 3.1 hereof.

“Designated Lender” shall mean Calm Waters, solely in its capacity as the Lender designated by all Lenders hereunder to hold or control, for the benefit of all Lenders, the Designated Collateral.

“Disputed Payment” shall have the meaning assigned to such term in Section 3.5 hereof.

“Event of Default” shall have the meaning given to such term in each Credit Document, as applicable.

“Event of Default Notice” shall have the meaning given to such term in Section 2.1 hereof.

“Lender” means individually and “Lenders” means individually and collectively, each Lender and their respective successors and assigns.

“Mortgages” means the mortgages or deeds of trust required to be executed by the Borrower or any Grantor from time to time pursuant to the Credit Documents, granting a security interest in and to the real property defined and described therein, in favor of or for the benefit of one or more of the Lenders, and all exhibits, schedules, extensions, renewals, amendments, substitutions and replacements to and of any such mortgage or deed of trust.

“Obligations” as used herein means any and all of the indebtedness, obligations and liabilities of any kind and description arising in any way, of the Borrower or of any Obligor, to any Lender or to any affiliate of any Lender, whether individual or collective, joint or several, direct or indirect, absolute or contingent, secured or unsecured, due or to become due, contractual or tortious, arising by operation of law or otherwise, now existing or hereafter arising under or in respect of the Credit Documents or other instruments or agreements executed and delivered pursuant thereto or in connection therewith, whether incurred by the Borrower and/or any Grantor as principal, surety, endorser, guarantor, accommodation party or otherwise, including without limitation any future advances, whether obligatory or voluntary under, or refinancings, renewals or extensions of or substitutions for, any existing or future debt, principal, interest and fees, late fees, yield-maintenance amounts, prepayment premiums and expenses (including without limitation reasonable attorneys’ fees and costs), or that have been or may hereafter be contracted or incurred and any and all costs, expenses and liabilities which may be made or incurred by any Lender in any way in connection with any of the Obligations or any collateral security therefor.

“Obligor” means individually, and “Obligors” means individually and collectively, the Borrower, the Grantors and each and every other maker, endorser, guarantor, surety of or party obligated for (or whose assets secure) any of the Obligations.

“Person” means any individual, partnership, limited liability company, corporation, trust, joint venture or unincorporated organization, including any government or agency or political subdivision thereof.

“Post-Default Payment” means any payments, or proceeds of the Collateral, from the Borrower or any other source with respect to the Obligations, including without limitation from the exercise of any set-off, distributions received with respect to the Obligations in any Bankruptcy Proceeding or the proceeds from the sale of any Obligations to the Borrower or any Affiliate of the Borrower, which payments or proceeds are:

(a) received by a Lender within ninety (90) days prior to a Special Event of Default,

(b) received by a Lender upon the occurrence or during the continuance of a Default or Event of Default under any Credit Agreement,

(c) received as a result of the exercise by any Lender of any set-off against any asset of the Borrower or any Obligor; or

(d) received as proceeds of Collateral as a result of any foreclosure or other realization upon the Collateral by any Lender or in a Bankruptcy Proceeding.

“Qualified Lender” means a Lender which is neither the Borrower nor an Affiliate of the Borrower.

“Requisite Lenders” means, on any date of determination, Lenders which are Qualified Lenders holding 50% or more of the Aggregate Principal Indebtedness.

“Returning Lender” shall have the meaning assigned to such term in Section 3.5 hereof.

“Security Agreement” means individually, and “Security Agreements” means individually and collectively, the CW Security Agreement, the Additional Lenders Security Agreement, the Promissory Note Security Agreement and any other security agreement required to be executed by the Borrower or any Grantor on the date of this Agreement and from time to time thereafter pursuant to the CW Credit Agreement and/or the Additional Lender Credit Agreement and/or the Promissory Notes, granting a security interest in and to the collateral defined and described therein, in favor of any Lender, and all exhibits, schedules, extensions, renewals, amendments, substitutions and replacements to and of any such security agreement.

“Security Document” means individually, and “Security Documents” means individually and collectively: (i) the Mortgages; (ii) each Security Agreement, (iii) any additional security devices, agreements or instruments executed by the Borrower or other Obligor granting a lien or security interest to secure the Obligations, (iv) the ancillary documents relating to any of the foregoing including but not limited to financing statements; and (v) all extensions, renewals, amendments, substitutions, replacements to or restatements of any of the foregoing.

“Sharing Adjustments” shall have the meaning assigned to such term in Section 3.5(a) hereof.

“Sharing Payment” shall have the meaning assigned to such term in Section 3.5(a) hereof.

“Special Collateral Account” means that certain restricted account maintained by and under the sole dominion and control of the Designated Lender for the purpose of receiving and holding Post-Default Payments.

“Special Event of Default” means (i) the commencement of a Bankruptcy Proceeding, (ii) the acceleration of all of the obligations under any Credit Document, or (iii) any other Default or Event of Default which has not been waived or cured within thirty (30) days after an Event of Default Notice with respect thereto has been delivered to the Lenders.

Article II
COORDINATED ACTION IF DEFAULT OR EVENT OF DEFAULT AND ACCELERATION

Section 2.1. Notice of Default. Upon the occurrence of a Default or an Event of Default, the applicable Lender may give notice thereof to the Lenders (an “Event of Default Notice”) and shall schedule a meeting of all Lenders to be held within ten (10) Business Days of the sending of such notice at a mutually convenient time and place or by means of a telephone conference call in which each person participating in the meeting may hear and be heard by all other persons participating in the meeting. At such meeting the Lenders shall consult with one another in an attempt to determine a mutually acceptable course of conduct regarding the Borrower and the collection of the outstanding Obligations, including without limitation the exercise of rights and remedies by the Lenders under the Security Documents. Each Lender shall take such action with respect to such Default or Event of Default as shall be directed by, and only as directed by, the Requisite Lenders; provided that unless and until the Lenders shall have received such directions, each Lender may (but shall not be obligated to) take such action under (i) and (ii) below, as it deems necessary:

(i) Emergency Actions. If the Requisite Lenders have not yet provided instructions with regard to a Default or Event of Default, a Lender may take such actions with regard to such Default or Event of Default which such Lender, in good faith, believes to be reasonably required to protect Collateral from damage or destruction, or material diminution of value; provided, however, that upon receipt of the instructions from the Requisite Lenders which comply with this Section 2.1, the actions of such Lender shall be governed thereby and such Lender shall not take any further action which would be contrary thereto.

(ii) Administrative Actions. Each Lender shall have the right to take such actions, or omit to take such actions, hereunder and under the Security Documents not inconsistent with the instructions of the Requisite Lenders, or the terms of this Agreement as such Lender deems necessary or appropriate to perfect or continue the perfection of the liens on the Collateral to protect or insure the Collateral. Except as provided above and as otherwise provided pursuant to applicable law, no Lender shall have any duty as to the collection or protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of rights pertaining to the Collateral beyond the safe custody of any Collateral in such Lender’s possession.

Section 2.2. Restrictions on Actions. Each Lender agrees that, so long as any Obligations are outstanding, each Lender’s respective rights and remedies under its Credit Documents and its Security Documents may only be exercised in accordance with and subject to the terms of this Agreement. Each Lender shall, for the mutual benefit of all Lenders, except as otherwise expressly permitted under this Agreement:

(a) Refrain from accelerating or demanding repayment of the Obligations owed to it;

(b) Refrain from taking or filing any action, judicial or otherwise, to enforce any rights or pursue any remedy under its Credit Documents and its Security Documents, except for delivering notices hereunder;

(c) Refrain from accepting any guaranty of, or any other security for, the Obligations owing to it, except any additional security granted to each of the Lenders; and

(d) Refrain from exercising any rights or remedies under its Credit Documents and its Security Documents which have or may have arisen or which may arise as a result of an Event of Default or the acceleration of the maturities of the Obligations;

provided, however, that nothing contained in subsections (a) through (d) above, or otherwise in this Agreement, shall prevent any Lender from (x) imposing a default rate of interest in accordance with its respective Credit Documents, (y) raising any defenses in any action in which it has been made a party defendant or has been joined as a third party, or (z) making such demands or filing such claims in respect of the Obligations as are necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders, or rules of procedure at any time. Except as expressly set forth in or otherwise limited by this Agreement, each of the Lenders shall have any and all rights and remedies it may have as a creditor under applicable law.

Article III
COLLATERAL IN POSSESSION OR CONTROL OF DESIGNATED LENDER; APPLICATION OF PROCEEDS; CERTAIN PAYMENTS

Section 3.1. Collateral in Possession or Control of Designated Lender. Each of the Lenders acknowledges that the Collateral includes certain types of assets which by their nature require either actual possession or control in order to obtain a first priority perfected security interest in such Collateral (hereinafter referred to as a “Designated Collateral”), and further acknowledges that the Designated Lender shall control or physically possess, as applicable, in accordance with applicable law, all such Designated Collateral for the ratable benefit of all the Lenders. Nothing contained herein imposes on the Designated Lender any duties with respect to the Designated Collateral beyond the reasonable care in the custody and preservation of the Designated Collateral while in the Designated Lender’s possession or control. Notwithstanding any provision to the contrary set forth elsewhere in this Agreement, the Designated Lender shall not have any duties or responsibilities in its capacity as Designated Lender except those expressly set forth herein or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Designated Lender.

Section 3.2. Application of Proceeds. All amounts owing with respect to the Obligations shall be secured by the Collateral on a pro rata basis without distinction as to whether some Obligations are then due and payable and other Obligations are not then due and payable. The Lenders agree that with respect to all Post-Default Payments, including without limitation proceeds from any realization of the Collateral by any Lender, the proceeds thereof shall be applied:

(i) first, to the payment of expenses incurred by the Lenders with respect to maintenance and protection of the Collateral and of expenses incurred with respect to the sale of or realization upon any of the Collateral or the perfection, enforcement or protection of the rights of the Lenders (including without limitation reasonable attorneys’ fees and expenses and other collection costs);

(ii) second, equally and ratably to all the Obligations, according to the aggregate amounts thereof then owing to each Lender;

(iii) third, the balance, if any, shall be returned to the Borrower or such other Persons as are entitled thereto.

The Lenders hereby agree that all Post-Default Payments, whether received by realization on the Collateral or otherwise, shall be applied to the payment of the Obligations in accordance with the provisions of this Section 3.2.

Section 3.3. Special Collateral Account.

(a) The Lenders agree that all Post-Default Payments received by any Lender from the Borrower or from any other source shall be deposited into the Special Collateral Account. All amounts deposited into the Special Collateral Account shall be held and invested in accordance with subsection (b) of this Section 3.3 or shall be distributed in accordance with subsection (c) of this Section 3.3. Each Lender shall promptly notify the other Lenders of such Lender’s receipt of a Post-Default Payment and shall promptly deliver to the Designated Lender such amounts for deposit into the Special Collateral Account (with such endorsements as may be required). Each Lender agrees that any Post-Default Payment held by it shall be held in trust for the benefit of the Lenders. Notwithstanding the foregoing, no Lender shall be required to deliver to the Designated Lender any Post-Default Payment received prior to the occurrence of an event described in Section 3.3(c) or deposit any such Post-Default Payment into the Special Collateral Account until the time an event described in Section 3.3(c) occurs.

(b) Except as provided in Section 3.3(c) hereof, if the Default or Event of Default which caused a payment received by a Lender to be a Post-Default Payment is waived or cured in accordance with the provisions of the applicable Credit Document and if no other Default or Event of Default has occurred and then is continuing, all amounts deposited by a Lender in the Special Collateral Account pursuant to Section 3.3(a) shall be repaid to each such Lender, together with such Lender’s share of interest earned thereon on a pro rata basis and any Post-Default Payments theretofore received by such Lender shall not be required to be delivered to the Designated Lender or deposited into the Special Collateral Account pursuant to Section 3.3(a) to the extent the same constituted a Post- Default Payment by reason of such cured or waived Default or Event of Default. No amount held in the Special Collateral Account representing payment of any Obligations to the Lender initially entitled thereto, and no payments thereafter received by a Lender shall constitute a Post-Default Payment by reason of such cured or waived Default or Event of Default. No payment returned to a Lender for which such Lender has been obligated to make a deposit into the Special Collateral Account shall thereafter ever be characterized as a Post-Default Payment by reason of such cured or waived Default or Event of Default. If the Default or Event of Default which was subject to the notice pursuant to Section 2.1 is a Default or Event of Default under the terms of each Credit Document, then such Default or Event of Default shall not be considered to be cured or waived for the purposes of this Section unless such Default or Event of Default has been cured or waived under each Credit Document.

(c) If the Obligations have been accelerated or the Requisite Lenders have instructed any Lender to foreclose on a substantial portion of the Collateral, seek the appointment of a receiver, commence litigation against the Borrower, liquidate the Collateral, seize Collateral, or exercise other remedies of similar character, or if a Bankruptcy Proceeding shall commence with respect to the Borrower, all amounts in the Special Collateral Account, together with all interest earned thereon, and all subsequent Post-Default Payments shall be applied in accordance with Section 3.2.

(d) The parties hereto and, by its consent hereto, the Borrower, agrees that in the event any Post-Default Payment, whether or not deposited in the Special Collateral Account, is applied in accordance with Section 3.2, then the Obligations discharged by such Post-Default Payment shall be the Obligations to which such Post-Default Payment is applied in accordance with the provisions of Section 3.2 and not the Obligations with respect to which such Post- Default Payment may have been originally made.

Section 3.4. Turnover of Collateral. If any Lender acquires custody, control or possession of any Designated Collateral other than pursuant to the terms of this Agreement, such Lender shall promptly cause such Designated Collateral, to the extent the same do not constitute Post-Default Payments, to be delivered to the Designated Lender in accordance with Section 3.1. If any Lender acquires custody, control or possession of any other Collateral or any proceeds of Collateral other than pursuant to the terms of this Agreement, such Lender shall promptly cause such other Collateral or proceeds to be disposed of or distributed in accordance with Section 3.2 and Section 3.3 hereof, as applicable. Until such time as such Lender shall have complied with the provisions of the immediately preceding sentences, such Lender shall be deemed to hold any such Collateral or proceeds in trust for the parties entitled thereto under this Agreement.

Section 3.5. Sharing; Set-Offs.

(a) No Lender shall set off against any assets of the Borrower or any other Obligor without the prior approval of the Requisite Lenders, which may be by telephonic vote. Subject to the remaining provisions of this Section 3.5, if a Lender obtains a payment in the nature of a set-off (hereinafter referred to as a “Sharing Payment”) with respect to any assets of the Borrower or any other Obligor, such Lender shall promptly purchase from the remaining Lenders participations in the Obligations owing to the remaining Lenders and shall make such other adjustments from time to time as shall be equitable (the purchase of such participation or the making of such other adjustments shall be referred to as “Sharing Adjustments”) such that all Lenders shall share the benefit of such Sharing Payment on a pro rata basis in accordance with the Obligations then outstanding.

(b) If any Lender exercises any right of set-off or similar right with respect to any assets of the Borrower or any other Obligor (whether or not such assets shall constitute Collateral), such Lender shall promptly cause such amounts to be disposed of in accordance with Section 3.2 and Section 3.3 hereof unless such Lender immediately complies with paragraph (a) above.

(c) If, during the course of, or pursuant to, any Bankruptcy Proceeding of the Borrower or any other Obligor, a Lender (the “Returning Lender”) is required by a court or other tribunal of competent jurisdiction to disgorge, refund, rebate, or otherwise return any payment received for which there has been a distribution under Section 3.4 or Section 3.5 hereof by such Returning Lender with respect to the Obligations (a “Disputed Payment”) to any trustee presiding over such Bankruptcy Proceeding or to any other Person, the other Lenders shall immediately pay to the Returning Lender their respective shares of such Disputed Payment on a pro rata basis determined by multiplying the amount of the Disputed Payment by a fraction, the numerator of which is the portion of such Disputed Payment received by such Lender and the denominator of which is the amount of such Disputed Payment. In addition, each of the parties hereto shall pay to the other parties hereto such amounts so that, after giving effect to the payments hereunder by all parties, the amounts received by all parties are not in excess of the amounts to be paid to them hereunder as though such Disputed Payment had not been made.

Section 3.6. Retention and Investment of Proceeds.

(a) Proceeds which, due to their nature, due to a restraining order or otherwise are not permitted to be applied as set forth above, or due to the Requisite Lenders determining it to be impractical to divide and apply such proceeds to the payment of the Obligations, shall be held by the Designated Lender or another Lender appointed by the Requisite Lenders until such proceeds (A) are converted into cash, (B) are permitted to be applied or (C) become practical to divide at which time such proceeds shall be applied in accordance with the terms of this Agreement.

(b) Pending disbursement of any amounts held by any Lender pursuant to this Agreement, such Lender shall (to the extent such Lender deems practical) invest such amounts in (A) marketable direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing not later than the earlier of the anticipated distribution date of such amounts and the date 180 days from the date of acquisition thereof; (B) investments in commercial paper maturing not later than the earlier of the anticipated distribution date of such amounts and the date 180 days from the date of acquisition thereof and having, at such date of acquisition, a rating of “A-I” or better from Standard & Poor’s Corporation or a rating of “P-I” or better from Moody’s Investors Service, Inc.; (C) investments in certificates of deposit, banker’s acceptances and time deposits maturing not later than the earlier of the anticipated distribution date of such amounts and the date 180 days from the date of acquisition thereof issued or guaranteed by or placed with and money market deposit accounts issued or offered by, any office of any commercial bank which has a combined capital and surplus and undivided profits of not less than $1,000,000,000 and which has a long-term bank deposit rating of “A” or better from Standard & Poor’s Corporation or from Moody’s Investors Service, Inc.; and (D) investments in repurchase agreements with any commercial bank referred to in item (C) above with respect to obligations of the type referred to in item (A) above, provided that such repurchase agreement is secured by such obligations and requires repurchase thereunder within ten (10) days.

Article IV
OTHER COLLATERAL; DUTY TO NOTIFY, COOPERATION; MARSHALLING

Section 4.1. Additional Collateral. The Lenders agree that all of the provisions of this Agreement shall apply to any and all properties, assets and rights of the Borrower or any other Obligor in which any Lender, at any time, acquires a security interest or lien pursuant to any Credit Document.

Section 4.2. Cooperation; Accountings. To the extent that the exercise of the rights, powers and remedies of any Lender in accordance with this Agreement requires that any action be taken by any other Lender, such Lender shall, to the extent not prohibited by applicable law, take such action and cooperate with all Lenders to ensure that the rights, powers and remedies of all Lenders are exercised in full. Each of the Lenders will, upon the reasonable request of another Lender, from time to time execute and deliver or cause to be executed and delivered such further instruments and do and cause to be done such further acts as may be necessary or proper to carry out more effectively the provisions of this Agreement. The Lenders agree to render accountings to each other upon reasonable request, giving effect to the application of proceeds of the Collateral as hereinbefore provided.

Section 4.3. Marshalling. No Lender shall be required to marshal any present or future security for (including, without limitation, the Collateral), or other assurances of payment of, the Obligations or any of them, or to resort to such collateral security or other assurances of payment in any particular order; and all of each of such Person’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that they lawfully may, each Lender hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Lenders’ rights and remedies under the Security Documents or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or otherwise assured, and to the extent that they lawfully may, each Lender hereby irrevocably waives the benefits of all such laws.

Section 4.4. Purchase of Collateral. No Lender may purchase all or any part of the Collateral at any public or private sale of such Collateral and make payment on account thereof by using any claim then due and payable to such Lender from the Persons which granted a security interest in such Collateral as a credit against the purchase price unless all Lenders are purchasing such Collateral and making payment by using the Obligations as a credit on the purchase price on a pro rata basis in accordance with the amount of the Obligations owed to each Lender which is a Qualified Lender. Such Lender shall comply with Article 9 of the UCC of the relevant jurisdiction as a secured party. Each of the Lenders shall cooperate with each other Lender in order to obtain the maximum sale price reasonably possible upon any foreclosure or other sale of all or any part of the Collateral. Notwithstanding the foregoing, all sales, transfers and other dispositions of any Collateral shall be accomplished in a commercially reasonable manner.

Section 4.5. No Other Collateral. No Lender shall take any security interest in the personal property or liens upon the real property of the Borrower or any other Obligor other than security interests and liens which are governed by the terms of this Agreement, other than security interests granted to a Lender to secure indebtedness existing on the date of this Agreement and subordinated pursuant to commercially reasonable subordination agreements.

Section 4.6. Rights of Lenders to Receive Payment.

(a) Nothing in this Agreement is intended to or shall limit any Lender’s right to receive and retain regularly scheduled payments of principal and interest, when due, on any Obligation so long as such payment does not otherwise constitute a Post-Default Payment.

(b) The Lenders agree that with respect to all payments that are not Post-Default Payments (other than payments described in clause (a), above), including without limitation proceeds from any realization of the Collateral by any Lender, the proceeds thereof shall be applied:

(ii) second, equally and ratably to all the Obligations, according to the aggregate amounts thereof then owing to each Lender;

(iii) third, the balance, if any, shall be returned to the Borrower or such other Persons as are entitled thereto.

The Lenders hereby agree that all such payments, whether received by realization on the Collateral or otherwise, shall be applied to the payment of the Obligations in accordance with the provisions of this Section 4.6.

Article V
AMENDMENTS AND WAIVERS OF CREDIT DOCUMENTS AND SECURITY DOCUMENTS

Section 5.1. Amendments and Waivers of Credit Documents and Security Documents. No term of the Credit Documents and/or Security Documents may be amended, and the performance or observance by the parties to a Credit Document or a Security Document of any term of such Credit Document or Security Document may not be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the Requisite Lenders; provided, however, that except for amendments relating to the adjustment of the amount of principal, the rate of interest, the payment of premiums or the date of maturity, any permitted amendment or waiver under this Section 5.1 shall constitute an amendment or waiver applicable all Credit Documents and Security Documents (on a pro rata basis in accordance with the amount of the Obligations owed to each Lender, as appropriate), as the case may be.

Article VI
MISCELLANEOUS PROVISIONS REGARDING LENDERS’ POWERS

Section 6.1. Reliance by Lenders. Each Lender shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by such Lender. Each Lender shall be fully justified in failing or refusing to take action under this Agreement or the Security Documents unless it shall first receive such advice or concurrence of the Requisite Lenders.

Section 6.2. Non-Reliance on Other Lenders. Each Lender represents to the other Lenders that it has, independently and without reliance upon any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its loans or other extensions of credit under its Credit Documents and to enter into such agreements. Each Lender also represents that it will, independently and without reliance upon any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Security Documents and this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished by any Lender to the other Lenders hereunder, no Lender shall have any duty or responsibility to provide the Lenders with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower which may come into the possession of such Lender or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

Section 6.3. Determination of Amounts of Obligations. Each Lender will maintain at its principal business office a register for the recordation of the principal amount of Obligations owing to such Lender from time to time. Upon any request by any other Lender therefor, each Lender shall deliver to each other Lender a certificate, dated the date of delivery thereof, signed by such Lender, as to (a) the identity of such Lender, (b) the principal amount of Obligations then outstanding held by such Lender, (c) in the case of any such certificate being delivered in contemplation of the application of amounts pursuant to Section 3.2 hereof, the amount of interest owing to such Lender and any other amounts in respect of Obligations owing to such Lender (in the case of any such other amounts, accompanied by appropriate evidence thereof) and (d) in the event any of the Obligations shall have become or been declared to be due and payable, the principal amount then owing to such Lender. If requested by any other Lender, the Borrower shall verify any information provided any Lender pursuant to the immediately preceding sentence. For the purposes of determining the amount of Obligations held by any Lender, absent knowledge to the contrary, each Lender shall be entitled to rely on certifications received by it from the other Lenders for such purpose in accordance with the foregoing (in each case, which certificates shall be given substantially contemporaneously with the action being taken); provided, that in the absence of a Lender’s receipt of any certification requested by it pursuant to this sentence, such Lender shall be entitled to take such action if such Lender shall have sufficient knowledge to make any determination required to be made in connection with such action.

Article VII
GENERAL PROVISIONS

Section 7.1. Consents, Amendments, Waivers.

(a) Consents, Amendments and Waivers of the Credit Documents and the Security Documents. Consents under and amendments and waivers of the Credit Documents and the Security Documents shall be subject to the terms of Section 5.1 hereof.

(b) Consents, Amendments, and Waivers of this Agreement. No amendment, waiver or consent of this Agreement shall be effective unless in writing and signed by Lenders holding at least 66-2/3% of the Aggregate Principal Indebtedness; provided, that unanimous consent of the Lenders shall be required to (i) amend the definitions set forth in this Agreement of “Aggregate Principal Indebtedness,” “Collateral,” “Obligations,” “Post-Default Payment,” “Requisite Lenders,” or amend Section 4.6 or any provision of Article II, Article III or Article V hereof; or (ii) change the voting percentages set forth in this Section 7.1. No amendment, waiver or consent shall affect the rights or duties of any Lender hereunder unless in writing and signed by such Lender and the Lenders required by the foregoing sentence.

Section 7.2. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the conflicts of laws principles thereof.

Section 7.3. Parties in Interest. All terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, including, without limitation, any future holder of any Credit Document and any institutional lender who becomes a participant in or holder of any of the Obligations, by amendment to any Credit Document or otherwise. No Lender shall allow any Person to become a transferee of Obligations from such Lender or to become a party to any Credit Document unless such Lender shall have caused such Person to execute and deliver to the other Lenders a written agreement by which such Person becomes a “Lender” under this Agreement and assumes the obligations of a “Lender” hereunder.

Section 7.4. Counterparts. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute but one and the same instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. Delivery of an executed signature page hereto by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 7.5. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof.

Section 7.6. Notices. Any notice, request or consent required hereunder or in connection herewith shall be deemed satisfactorily given if in writing and delivered by hand or overnight courier service, mailed by registered or certified mail or sent by facsimile to:

(a) the Lenders to the attention of the individuals and at the respective addresses or telecopier numbers set forth on the signature pages hereto;

(b) Borrower to the attention of:

Electronic Cigarettes International Group, Ltd.

1707 Cole Boulevard, Suite 350

Golden, Colorado 80401

Facsimile No.: 1-888-479-0691

Attention: William Seamans

Email: bill.seamans@ecigcorporate.com

All notices and other communications given to any part hereto, in accordance with the provisions of this Agreement, shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service, or sent by fax or on the date five (5) Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 7.6, or in accordance with the latest unrevoked direction from such party given in accordance with this Section 7.6. As agreed to among the Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person.

Section 7.7. Termination of Credit Documents. Upon the irrevocable payment in full in cash of all Obligations to any Lender, such Lender shall cease to be a party to this Agreement; provided, however, if all or any part of the payments to such Lender are thereafter invalidated or set aside or required to be repaid to any Person in any Bankruptcy Proceeding, then this Agreement shall be renewed as of such date and shall thereafter continue in full force and effect to the extent of the Obligations so invalidated, set aside or repaid; and provided further that if any payment made to such Lender constitutes a Post-Default Payment, such Lender shall continue to be a party to this Agreement.

Section 7.8. No Third Party Beneficiaries. This Agreement is solely for the benefit of each of the Lenders and is not intended to grant any rights, benefits or defenses to or for the benefit of Borrower or any Person now or hereafter acting for or through the rights or interests of the Borrower.

Section 7.9. Bankruptcy Proceedings. Nothing contained herein shall limit or restrict the independent right of any Lender to initiate an action or actions in any Bankruptcy Proceeding in its individual capacity and to appear to be heard on any matter before the bankruptcy or other applicable court in any such Bankruptcy Proceeding, including without limitation, with respect to any question concerning the post-petition usage of Collateral and post-petition financing arrangements. Except to the extent set forth in this Agreement with respect to matters pertaining to the Collateral, or to the extent any Lender, for itself, expressly authorizes another Lender in writing otherwise, no Lender is: (i) entitled to initiate such actions on behalf of any other Lender; or (ii) entitled to appear and be heard on any matter before the bankruptcy or other applicable court in any such Bankruptcy Proceeding as the representative of any other Lender; or (iii) authorized in any such Bankruptcy Proceeding to enter into any agreement for, or give any authorization or consent with respect to, any determination of adequate protection with respect to the Obligations or the post-petition usage of Collateral, unless such agreement, authorization or consent has been approved in writing by the Requisite Lenders. Each Lender agrees that from and after the institution of any Bankruptcy Proceeding involving the Borrower, as respects the Collateral such Lender will not enter into any agreement with such Borrower with respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate protection without the written consent of the Requisite Lenders. This Agreement shall survive the commencement of any such Bankruptcy Proceeding.

Section 7.10. Contesting Liens or Security Interests; Contesting Obligations. No Lender shall contest the validity, perfection, priority or enforceability of or seek to avoid, have declared fraudulent or have put aside any lien or security interest granted to any other Lender and each party hereby agrees to cooperate in the defense of any action contesting the validity, perfection, priority or enforceability of such liens or security interests. No Lender shall contest the validity or enforceability of or seek to avoid, have declared fraudulent or have set aside any Obligations.

Section 7.11. No Partnership. It is expressly understood, confirmed and acknowledged by the parties hereto that nothing contained in this Agreement nor the existence or terms of the CW Credit Agreement and related documents thereto shall be deemed to constitute an admission of any Additional Lender as a partner to Calm Waters or create any other affiliate relationship between them.

Section 7.12 2015 Intercreditor Agreement. Upon the effectiveness of this Agreement, the 2015 Intercreditor Agreement shall be terminated and of no further force or effect.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, intending to be legally bound hereby, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first written above.

	CALM WATERS PARTNERSHIP

	By:
		Name: Richard S. Strong
		Title: Managing Partner

	Notice Address:	115 S. 84^th Street
		Milwaukee, Wisconsin 53214
	Facsimilie No.:	(414) 453-9174
	Attention:	Susan Hollister
	E-mail:	shollister@baraboogrowth.com

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

	ADDITIONAL LENDER

	By:
		Name:
		Title:

	Notice Address:


	Telecopy No.:
	Attention:
	E-mail:

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

	HOLDER

	By:
		Name:
		Title:

	Notice Address:


	Telecopy No.:
	Attention:
	E-mail:

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

ACKNOWLEDGMENT OF AND AGREEMENT

TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT

Reference is hereby made to the Amended and Restated Intercreditor Agreement dated July __, 2016, among Calm Waters Partnership, and the other lenders signatory thereto. Capitalized terms used and not defined herein shall have the meanings ascribed to them in the Intercreditor Agreement.

The Borrower acknowledges, consents and, to the extent performance by the Borrower is required thereunder, agrees to the terms and conditions of the Amended and Restated Intercreditor Agreement, including, without limitation, the provisions of Section 3.3(d) thereof.

The Borrower shall execute and deliver such other documents and instruments, in form and substance reasonably satisfactory to the Lenders, and shall take such other action, in each case as any Lender may reasonably request, to effectuate and carry out the provisions of the Amended and Restated Intercreditor Agreement including, without limitation, by recording or filing in such places as any Lender may deem desirable, such other documents or instruments as such Lender may specify.

[Remainder of page left intentionally blank]

IN WITNESS WHEREOF, the party below has caused this Acknowledgment of and Agreement to Amended and Restated Intercreditor Agreement to be executed by its duly authorized officers as of the ___ day of June, 2016.

	ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.,
	as the Borrower

	By:
		Name: William Seamans
		Title: Chief Financial Officer

EX-10.6 7 s103683_ex10-6.htm EXHIBIT 10-6

Exhibit 10.6

EXECUTION VERSION

DATED

2016

Intercreditor amendment deed

Between

Electronic Cigarettes International Group, Ltd

(as Borrower)

and

The persons named in Schedule 1

(as Guarantors)

and

The persons named in Schedule 2

(as Senior Creditors)

and

The persons named in Schedule 3

(as Subordinated Creditors)

and

Miguel Carlos Corral

(as Junior Security Trustee)

Table of contents

1.	definitions and interpretation	1
2.	conditions precedent	2
3.	amendments TO the original Inter-creditor Deed	2
4.	COVENANTS	2
5.	confirmation of existing security	2
6.	continuity and further assurance	2
7.	miscellaneous	3
Schedule 1 GUARANTORS		4
SCHEDULE 2 SENIOR CREDITORS		5
SCHEDULE 3 subordinated creditors		6
SCHEDULE 4 conditions precedent		7
SCHEDULE 5 AMENDMENTS TO INTERCREDITOR DEED		8

THIS DEED is made on

2016

Between:

(1)

ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD, registered in the State of Nevada, USA under number C13461-2004 whose registered office is at 1707 Cole Boulevard Golden, Colorado 80401, USA (Borrower).

(2)

THE PERSONS, whose details are set out in Schedule 1 (each a Guarantor and together the Guarantors).

(3)

THE PERSONS, whose details are set out in Schedule 2 (each a Senior Creditor and together the Senior Creditors).

(4)

THE PERSONS, whose details are set out in Schedule 3 (each a Subordinated Creditor and together the Subordinated Creditors).

(5)

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

Whereas:

(A)

The parties entered into an intercreditor deed dated 24 April 2015 as amended pursuant to an amendment letter dated 26 June 2015, an amendment letter dated 25 October 2015 and an amendment letter dated 11 January 2016 and as amended, varied, supplemented, novated or replaced from time to time (Original Intercreditor Deed).

(B)

The parties hereto have agreed to amend the Original Intercreditor Deed as set out in this deed.

IT IS AGREED as follows:

definitions and interpretation

1.1

Terms defined in the Original Intercreditor Deed shall have the same meaning when used in this deed, unless defined below. In addition, the definitions below apply in this deed:

Agreement No.5 to Credit Agreement: the amendment number 5 to the CW Credit Agreement dated on or around the date of this deed between the Borrower and the Senior Creditors amending the CW Credit Agreement to increase the aggregate principal amount of the Terms Loans thereunder by $4,000,000 and to, among other things, reduce the interest rate payable pursuant thereto and extend the term thereof.

CW Credit Agreement: the credit agreement dated 27 April 2015 between CW and the Borrower as amended pursuant to the Amendment No. 1 to the Credit Agreement dated 25 June 2015, the Amendment No. 2 to Credit Agreement dated 30 June 2015, the Amendment No. 3 to Credit Agreement dated 30 October 2015, the Amendment No. 4 to Credit Agreement dated 11 January 2016 (each as defined therein) and the Amendment No.5 to Credit Agreement.

CW: Calm Waters Partnership a Wisconsin General Partnership with registered office at 115 S. 84th Street, Suite 200, Milwaukee, Wisconsin 53214, USA.

Effective Date: the date on which the CW informs the Borrower that the conditions precedent have been satisfied in accordance with clause 2.

- 1 -

Original Intercreditor Deed: has the meaning given in recital (A).

1.2

This deed is a Finance Document.

1.3

The rules of interpretation of the Original Intercreditor Deed shall (where relevant) apply to this deed as if set out in this deed save that references in the Original Intercreditor Deed to "this deed" shall be construed as references to this deed.

1.4

In this deed:

1.4.1

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

1.4.2

clause and Schedule headings are for ease of reference only.

conditions precedent

2.1

The Effective Date is conditional on CW having received all of the documents and evidence specified in Schedule 4 in the form and substance, and containing the information, that it requires.

2.2

On satisfaction of the conditions precedent referred to in clause 2.1, CW shall promptly notify the Borrower in writing that those conditions have been satisfied.

amendments TO the original Inter-creditor Deed

With effect on and from the Effective Date, the Original Intercreditor Deed shall be amended as set out in Schedule 5.

COVENANTS

4.1

The Borrower and the Guarantor make the covenants set out in clause 3 of the Original Intercreditor Deed on the date of this deed and on the Effective Date.

4.2

The Subordinated Creditors and Junior Security Trustee make the covenants set out in clause 4 of the Original Intercreditor Deed on the date of this deed and the Effective Date.

confirmation of existing security

The Borrower confirms, acknowledges and agrees that the Senior Security and the Junior Security shall continue in full force and effect in all respects and such security documents and this deed shall be read and construed together.

continuity and further assurance

6.1

The provisions of the Original Intercreditor Deed shall, save as amended in this deed, continue in full force and effect.

6.2

The Borrower and Guarantors shall, at the request of CW and at their own expense, do all such acts and things necessary or desirable to give effect to the provisions of this deed.

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miscellaneous

7.1

The provisions of clauses 18 – 30 of the Original Intercreditor 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.

7.2

This deed may be executed and delivered in any number of counterparts, each of which is an original and which, together, have the same effect as if each party had signed the same document.

This deed has been entered into on the date stated at the beginning of it.

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Schedule 1
GUARANTORS

Name	Company Number	Registered Office

Must Have Limited	05101019	Units 3-8 Bury South Business Park Riverview Close Dumers Lane Manchester M26 2AD

E-CIGS UK Holding Company Limited	09031860	25 Harley Street London W1G 9BR

Vapestick Holdings Limited	07777233	73 Cornhill London EC3V 3QQ

Hardwire Interactive Acquisition Company	Delaware 5543781	Corporations USA, LLC 341 Raven Circle Wyoming, DE County of Kent, 19934 USA

Victory Electronic Cigarettes, Inc.	Nevada E0117932013-0	Nevada Agency and Transfer Company 50 West Liberty Street Suite 880 Reno Nevada County of Washoe, 89501 USA

VCIG LLC	Delaware 5477751	Corporations USA, LLC 341 Raven Circle Wyoming, DE County of Kent, 19934 USA

FIN Branding Group, LLC	Illinois 03606309	National Registered Agents Inc. 208 South LaSalle Street Suite 814 Chicago Illinois, 60604 USA

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SCHEDULE 2
SENIOR CREDITORS

Name		Address

Calm Waters Partnership		115 S. 84th Street Suite 200 Milwaukee Wisconsin 53214 USA

Tiburon Opportunity Fund, L.P. acting in its capacity as agent for itself and each of the lenders signatory to the Co-Investor Credit Agreement		13313 Point Richmond Beach Road NW Gig Harbor WA 98332 USA

Tiburon Opportunity Fund, L.P. acting in its capacity as agent for each noteholder to a Secured Convertible Note		13313 Point Richmond Beach Road NW Gig Harbor WA 98332 USA

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SCHEDULE 3
subordinated creditors

Name		Address

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		6 Greenock Close Ladybridge Bolton BL3 4UD

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SCHEDULE 4
conditions precedent

A certificate, signed by a director of the Borrower and each Guarantor stating that there has been no change in name and no change to its constitutional documents since 27 April 2015.

A copy of the resolutions duly passed by the Borrower's and each Guarantor's board of directors:

2.1.1

approving the entry into, terms of and transactions contemplated by this deed; and

2.1.2

authorising specified persons to execute this deed on its behalf and take all other action in connection with this deed.

A specimen of the signature of each person authorised by the resolutions referred to in paragraph 2 in relation to this deed.

This deed, duly executed by each party.

The Agreement No.5 to Credit Agreement, duly executed by each party and the satisfaction of the conditions of borrowing set out in section 3 thereof.

The power of attorney for David Ryder appointing David Steven Levin to execute this deed on his behalf, duly executed.

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SCHEDULE 5
AMENDMENTS TO INTERCREDITOR DEED

The Original Intercreditor Deed shall be amended as set out below:

The definition of "Senior Creditors" at Schedule 2 shall be deleted and replaced by the following:

Name		Address

Calm Waters Partnership		115 S. 84th Street Suite 200 Milwaukee Wisconsin 53214 USA

Tiburon Opportunity Fund, L.P. acting in its capacity as agent for itself and each of the lenders signatory to the Co-Investor Credit Agreement		13313 Point Richmond Beach Road NW Gig Harbor WA 98332 USA

Tiburon Opportunity Fund, L.P. acting in its capacity as agent for each noteholder to a Secured Convertible Note		13313 Point Richmond Beach Road NW Gig Harbor WA 98332 USA

The definition of "Senior Debt" in clause 1.1 (Definitions) shall be deleted and replaced with the following:

"Senior Debt: all Liabilities which are or may become payable or owing by the Borrower and/or a Guarantor to any Senior Creditor under the Senior Debt Documents or the Secured Convertible Notes together with all Ancillary Liabilities relating thereto."

The definition of "Senior Debt Documents" in clause 1.1 (Definitions) shall be deleted and replaced with the following:

"Senior Debt Documents: any document referred to in Schedule 4."

The following definition shall be added to clause 1.1 (Definitions):

"Secured Convertible Note: each of:

(a)

the 15% senior secured convertible note dated 14 January 2014 (as amended in January 2015 by amendment no. 1 and to be amended by amendment no. 2 on or around the Effective Date) delivered by the Borrower to each holder of each such note;

(b)

the 15% senior secured convertible note dated 28 February 2014 (as amended in January 2015 by amendment no. 1 and to be amended by amendment no. 2 on or around the Effective Date) delivered by the Borrower to each holder of each such note; and

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(c)

the 8% senior secured convertible note dated 14 January 2014 (to be amended by amendment no. 1 on or around the Effective Date) delivered by the Borrower to each holder of each such note,

and, together, the Secured Convertible Notes."

Schedule 4 (Senior Debt Documents) shall be deleted and replaced with the following:

"Part 1: Senior Lending Documents

Senior Credit Agreements.

Part 2: Senior Security Documents

Share charge between the Borrower and Calm Waters Partnership in respect of the Borrower's shares in Must Have Limited, dated on or about the date of this deed.

Share charge between the Borrower and Calm Waters Partnership in respect of the Borrower's shares in Vapestick Holdings Limited, dated on or about the date of this deed.

Share charge between the Borrower and Calm Waters Partnership in respect of the Borrower's shares in E-Cigs UK Holding Company Limited, dated on or about the date of this deed.

Guarantee between each Guarantor and Calm Waters Partnership, dated on or about the date of this deed.

Debenture between Must Have Limited and Calm Waters Partnership, dated on or about the date of this deed.

Debenture between Vapestick Holdings Limited and Calm Waters Partnership, dated on or about the date of this deed.

Debenture between E-Cigs UK Holding Company Limited and Calm Waters Partnership, dated on or about the date of this deed.

Security Agreement between Tiburon Opportunity Fund, L.P. (as agent for the noteholders to each Secured Convertible Note) and the Borrower dated 14 January 2014."

Clause 2.3 (Ranking and subordination of debt) shall be deleted and replaced with the following:

"2.3

Ranking and subordination of debt

2.3.1

Each of the parties agree that the Senior Debt and the Junior Debt shall rank on a pari passu basis.

2.3.2

No payments shall (except as otherwise provided in this deed) be made by any person in respect of the Junior Debt while the Senior Debt is outstanding."

- 9 -

Clause 2.4 (Ranking and subordination of security) shall be deleted and replaced with the following:

"2.4

Ranking and subordination of debt

Each of the parties agree that all Senior Security and Junior Security shall rank on a pari passu basis."

Clause 4.1.6 (No payment, Security or guarantee) shall be deleted and replaced with the following:

"4.1.6

modify, amend, waive or release any term of the Junior Debt Documents, except for an amendment which does not prejudice any Senior Debt, the Senior Creditors or impair the subordination or priorities contemplated in this deed."

Clause 7.1.1 (Subordination on insolvency) shall be deleted and replaced with the following:

"7.1.1

the Junior Debt and the Senior Debt shall rank on a pari passu basis;"

10.

Clause 11.1 (Continuing subordination) shall be deleted and the sub-clauses in clause 11 shall be renumbered accordingly.

11.

Clause 16.1 (Priorities) shall be deleted and replaced with the following:

"16.1

Priorities

The priority of the Creditors shall stand (regardless of the order of execution, registration or notice or otherwise) so that all amounts from time to time received or recovered by a Creditor pursuant to the terms of any Debt Document or in connection with the realisation or enforcement of all or any part of the Security constituted by any of the Security Documents shall, after providing for all reasonable outgoings, costs, charges, expenses and liabilities of enforcement, exercising rights on winding up and payments ranking in priority as a matter of law, be applied in the following order of priority:

16.1.1

first, in or towards discharge of the Senior Debt or, as the case may be, the Junior Debt on a pari passu basis; and

16.1.2

second, after the Senior Debt and Junior Debt has been fully discharged, to the Borrower and the Guarantors or any other person entitled to it."

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EXECUTION PAGES

Borrower

EXECUTED as a deed on behalf of
ELECTRONIC CIGARETTES
INTERNATIONAL GROUP, LTD., a
Nevada corporation by


		Authorised Signatory


being [a] person[s] who, in accordance		Authorised Signatory
with the laws of that territory, [is OR are]
acting under the authority of the
corporation

- 11 -

Guarantors

EXECUTED as a deed on behalf of VICTORY ELECTRONIC CIGARETTES, INC., a Nevada corporation by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the corporation		Authorised Signatory

EXECUTED as a deed on behalf of VCIG LLC, a Delaware corporation by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the corporation		Authorised Signatory

EXECUTED as a deed on behalf of FIN BRANDING GROUP, LLC, an Illinois corporation by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the corporation		Authorised Signatory

- 12 -

EXECUTED as a deed on behalf of HARDWIRE INTERACTIVE ACQUISITION COMPANY, a Delaware corporation by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the corporation		Authorised Signatory

EXECUTED as a deed by MUST HAVE
LIMITED acting by


a director		Director
in the presence of

Witness:

Signature:

Name:

Address:



Occupation:

- 13 -

EXECUTED as a deed by VAPESTICK HOLDINGS LIMITED acting by


a director		Director
in the presence of

Witness:

Signature:

Name:

Address:



Occupation:

EXECUTED as a deed by E-CIGS UK HOLDING COMPANY LIMITED acting by


a director		Director
in the presence of

Witness:

Signature:

Name:

Address:



Occupation:

- 14 -

Senior Creditors

EXECUTED as a deed on behalf of CALM WATERS PARTNERSHIP., a Wisconsin general partnership, acting by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the partnership		Authorised Signatory

EXECUTED as a deed on behalf of TIBURON OPPORTUNITY FUND, L.P., a Delaware limited partnership, acting by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the partnership		Authorised Signatory

- 15 -


EXECUTED as a deed on behalf of TIBURON OPPORTUNITY FUND, L.P., a Delaware limited partnership, acting by


		Authorised Signatory


being [a] person[s] who, in accordance with the laws of that territory, [is OR are] acting under the authority of the partnership		Authorised Signatory

- 16 -

Subordinated Creditors

EXECUTED as a deed by MELANIE LEVIN
in the presence of		Melanie Levin

Witness:

Signature:

Name:

Address:



Occupation:

EXECUTED as a deed by DAVID STEVEN LEVIN
in the presence of		David Steven Levin

Witness:

Signature:

Name:

Address:



Occupation:

EXECUTED as a deed by DAVID STEVEN LEVIN as attorney for DAVID RYDER
in the presence of		David Steven Levin as attorney for David Ryder

Witness:

Signature:

Name:

Address:



Occupation:

- 17 -

EXECUTED as a deed by MIGUEL CARLOS CORRAL
in the presence of		Miguel Carlos Corral

Witness:

Signature:

Name:

Address:



Occupation:

- 18 -

Junior Security Trustee

EXECUTED as a deed by MIGUEL CARLOS CORRAL
in the presence of		Miguel Carlos Corral

Witness:

Signature:

Name:

Address:



Occupation:

- 19 -

EX-99.1 8 s103683_ex99-1.htm EXHIBIT 99-1

Exhibit 99.1

CONTACTS:

Dennard ▪ Lascar Associates

Ken Dennard / Rick Black

713-529-6600

ecig@dennardlascar.com

For Immediate Release

Electronic Cigarettes International Group

Completes Financial Recapitalization

Company Refinanced $94 million of Senior Notes and Convertible Debt

Reduced All Debt Interest Rates to 4%

Postponed All Debt Payments for 4 years

Cancelled and Reissued Employee Stock Options

GOLDEN, CO – July 8, 2016 – Electronic Cigarettes International Group, Ltd. (The “Company”) (OTCBB: ECIG), a leading global marketer and distributor of electronic cigarettes and vapor products, today announced the completion of its financial recapitalization. The Company worked closely with both senior secured and convertible note holders to agree to the Company’s recapitalization plan that reduced interest rates from 12% and 8%, respectively, down to 4%. In addition, all principal payments to both senior secured and convertible holders are postponed for four years to June 30, 2020.

Dan O’Neill, Chief Executive Officer of Electronic Cigarettes International Group, stated, “The recapitalization represents significant progress for the Company by alleviating interest payment pressure in the immediate term, and infusing an additional $4 million of capital into the business, significantly increasing the runway to drive profitable growth in the future. Debt holders with senior secured positions relinquished their senior positions to ensure all others would participate in the recapitalization. We are thankful to our stakeholders who have demonstrated continued belief in ECIG and support of the strategic plan and our profitable growth potential.”

The company’s senior secured debt represented $74 million with an interest rate of 12%. Under the new agreement, the debt increases to $78 million with an interest rate of 4%. In addition, all principal payments are not due until June 30, 2020. The $4 million cash infusion was obtained to capitalize on potential growth opportunities in the category globally.

The company’s convertible debt represented $20 million with an interest rate of 8%. Under the new agreement, the debt also has an interest rate of 4%. In addition, all principal payments are not due until June 30, 2020.

The Company has also cancelled employee stock options and reissued new options with the objective of retaining and motivating the current management team.

Page 2

About Electronic Cigarettes International Group, Ltd. (ECIG)

Electronic Cigarettes International Group (ECIG), a leading global marketer and distributor of electronic cigarettes and vapor products, is dedicated to providing a compelling alternative to traditional cigarettes for the more than 1 billion current smokers around the world. ECIG offers consumers a full product portfolio whose brands include VIP, FIN, Vapestick, and others, incorporating superior product quality and the latest technology. To learn more, visit www.ecig.co.

Follow ECIG on social media:

Facebook: @Electronic Cigarettes International Group, Ltd.

Twitter: @ECIGCorporate

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS ‎

Various statements contained in this press release are forward-looking statements made pursuant to the ‎Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements ‎may include projections and estimates concerning the timing and success of specific projects and our future ‎production, revenues, income and capital spending. Our forward-looking statements are generally, but not always, ‎accompanied by words such as “estimate,” “believe,” “expect,” “will,” “plan,” “target,” “could” or other words that convey the uncertainty of future events or ‎outcomes.

There can be no assurance that actual developments will be those anticipated by us. Actual results may differ ‎materially from those expressed or implied in these statements as a result of significant risks and uncertainties, ‎including, but not limited to, our ability to recover from our capacity providers, the cost and availability of ‎reinsurance coverage, challenges to our use of issuing carrier or fronting arrangements by regulators or changes ‎in state or federal insurance or other statutes or regulations, our dependence on a limited number of business ‎partners, potential regulatory scrutiny of lender-placed automobile insurance, level of new car sales, availability ‎of credit for vehicle purchases and other factors affecting automobile financing, our ability to compete effectively, ‎a downgrade in the financial strength ratings of our insurance subsidiaries, our ability to accurately underwrite ‎and price our products and to maintain and establish accurate loss reserves, changes in interest rates or other ‎changes in the financial markets, the effects of emerging claim and coverage issues, changes in the demand for our ‎products, the effect of general economic conditions, breaches in data security or other disruptions with our ‎technology, and changes in pricing or other competitive environments. ‎

Forward-looking statements involve inherent risks and uncertainties that are difficult to predict, many of which are beyond our control. Additional information about these risks and uncertainties is contained in our filings with the ‎Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the ‎date of this release, and we undertake no obligation to publicly update or revise any forward-looking statement, ‎whether as a result of new information, future developments or otherwise, except as may be required by law.

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