Exhibit 10.4

 

EXECUTION VERSION

 

DATED 2015

 

INTER-CREDITOR 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)

 

RPC   Tower Bridge House   St Katharine’s Way
London   E1W 1AA Ref: SA01/GOD10.6

 

 

 

 

TABLE OF CONTENTS

        1. DEFINITIONS AND INTERPRETATION   1 2. PRIORITIES   6 3. BORROWER AND
GUARANTOR COVENANTS   8 4. SUBORDINATED CREDITORS AND JUNIOR SECURITY TRUSTEE
COVENANTS   9 5. PERMITTED PAYMENTS   10 6. WAIVER AND AMENDMENTS OF DEBT
DOCUMENTS   10 7. SUBORDINATION ON INSOLVENCY   11 8. TREATMENT OF DISTRIBUTIONS
  12 9. PRESERVATION OF RIGHTS   13 10. CO-OPERATION BY BORROWER, THE
GUARANTORS, THE SUBORDINATED CREDITORS AND THE JUNIOR SECURITY TRUSTEE   13 11.
PRESERVATION OF SUBORDINATION   13 12. BOOK DEBTS, INSURANCE AND CUSTODY OF
DOCUMENTS   15 13. SENIOR DEBT ENFORCEMENT   16 14. ENFORCEMENT BY THE
SUBORDINATED CREDITORS AND/OR THE JUNIOR SECURITY TRUSTEE   16 15. INFORMATION
BY SUBORDINATED CREDITOR   17 16. APPLICATION OF PROCEEDS   17 17. REFINANCING
OF SENIOR DEBT   17 18. POWER OF ATTORNEY   18 19. EXPENSES   18 20. DURATION  
20 21. RESTRICTIONS ON ASSIGNMENTS   20 22. BORROWER’S AND GUARANTOR’S
ACKNOWLEDGEMENTS   21 23. ENDORSEMENT ON DEBT DOCUMENTS   21 24. REMEDIES,
WAIVERS, AMENDMENTS AND CONSENTS   21 25. SEVERANCE   22 26. COUNTERPARTS   22
27. THIRD PARTY RIGHTS   23 28. PERPETUITY PERIOD   23 29. NOTICES   23 30.
GOVERNING LAW AND JURISDICTION   24 SCHEDULE 1 - GUARANTORS   26 SCHEDULE 2 -
SENIOR CREDITORS   27 SCHEDULE 3 - SUBORDINATED CREDITORS   28 SCHEDULE 4 -
SENIOR DEBT DOCUMENTS   29 SCHEDULE 5 - JUNIOR DEBT DOCUMENTS   30

 

 

 

 

THIS AGREEMENT is made on 2015

 

Between:

 

(1)ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD., registered in the State of
Nevada, USA under number C13461-2004 whose registered office is at 14200
Ironwood Drive, Grand Rapids, Michigan 49448, USA (Borrower).

 

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

 

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

 

(4)THE PERSONS whose details are set out at 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).

 

Background:

 

(A)The Senior Creditors have agreed to provide the Senior Debt, and the
Subordinated Creditors have agreed to provide the Junior Debt, to the Borrower
and/or the Guarantors (as applicable). The Junior Security Trustee acts as
security agent and trustee for the Subordinated Creditors in respect of the
Junior Security. The parties have agreed that the priority of their debts of the
Creditors shall be as set out in this deed.

 

(B)The Borrower and the Guarantors have agreed to enter this deed to acknowledge
its terms and to give certain covenants to the Creditors.

 

IT IS AGREED as follows:

 

1.DEFINITIONS AND INTERPRETATION

 

1.1Definitions

 

The following definitions apply in this deed.

 

Ancillary Liabilities: in relation to the Senior Debt or the Junior Debt means:

 

(a)any refinancing, novation, refunding, restructuring, deferral or extension of
any of those liabilities;

 

(b)any further advance which may be made under any agreement supplemental to the
relevant facilities or credit agreement plus all interest, indemnities, fees and
costs in connection therewith;

 

(c)any claim for damages or restitution in the event of rescission of any such
liabilities or otherwise in connection with any relevant facilities or credit
agreement;

 

(d)any claim against the Borrower and/or a Guarantor (and in relation to the
Senior Debt, the Subordinated Creditors) flowing from any recovery by the
Borrower and/or a Guarantor (and in relation to the Senior Debt, the
Subordinated Creditor) of a payment or discharge in respect of those liabilities
on the grounds of preference or otherwise; and

 

 - 1 -

 

 

(e)any amounts (including post-insolvency interest) which would be included in
any of the above but for any discharge, non-provability, unenforceability or
non-allowability of the same in any insolvency or other proceedings.

 

Business Day: a day other than a Saturday, Sunday or public holiday in England
when banks in London are open for business.

 

Calm Waters Credit Agreement: the credit agreement between (1) the Borrower and
(2) Calm Waters Partnership dated on or about the date of this deed.

 

Co-Investor Credit Agreement: the credit agreement between (1) the Borrower, (2)
Tiburon Opportunity Fund, L.P. as agent and (3) certain other lenders signatory
thereto dated on or about the date of this deed.

 

Creditors: the Senior Creditors and the Subordinated Creditors (and the Junior
Security Trustee acting as security agent and trustee for the Subordinated
Creditors) together, and Creditor means any of the Creditors.

 

Debt Document: each of the Junior Debt Documents and the Senior Debt Documents.

 

Distressed Disposal: a disposal of an asset of the Borrower or a Guarantor which
is being effected as result of the enforcement of the Senior Security and/or the
Junior Security.

 

Enforcement Date: the Business Day following the date on which a Creditor
receives written notice from a Senior Creditor that a Senior Creditor has taken
action to:

 

(a)demand repayment, or payment, of any of the Liabilities secured by the
Security constituted by any of its Security Documents;

 

(b)enforce any of the Security constituted by any of its Security Documents; or

 

(c)take possession of any asset subject to any of the Security constituted by
any of its Security Documents.

 

FINBG: FIN Branding Group, LLC, an Illinois corporation with number 03606309.

 

First Variation Deed: the variation deed, dated 3 October 2014, between the
parties to, and for the purpose of amending, the Share Purchase Agreement.

 

HIAC: Hardwire Interactive Acquisition Company, a Delaware corporation with
number 5543781.

 

Insolvency: in respect of any person means:

 

(a)that person’s bankruptcy, dissolution, liquidation, winding-up or
administration, an application is made/or an interim order in respect of that
person or that person entering, into any voluntary arrangement or composition
with creditors;

 

(b)the appointment of a receiver or administrative receiver in respect of all or
part of the person’s asset; and

 

(c)any event having a similar effect under the laws of any relevant
jurisdiction, and the term Insolvent shall be interpreted accordingly.

 

 - 2 -

 

 

Junior Debt: all Liabilities which are or may become payable or owing by the
Borrower and/or the Guarantors to any of the Subordinated Parties under the
Junior Debt Documents, or otherwise, together with all Ancillary Liabilities
relating thereto.

 

Junior Debt Document: any document referred to in Schedule 5.

 

Junior Loan Notes: Secured Loan Notes 2014, in the aggregate principal amount of
US$11,000,000, issued by the Borrower to the Subordinated Creditors on 22 April
2014.

 

Junior Loan Note Instrument: the instrument dated 22 April 2014 (as amended by
the First Variation Deed and the Second Variation Deed) pursuant to which the
Junior Loan Notes are, or are to be, constituted.

 

Junior Security Document: any document referred to in Part 2 of Schedule 5 and
any document under which Security is taken pursuant thereto and any other
document under which Security is created, whether at the date of this deed or at
any later date, which secures any of the Junior Debt and is permitted to be
taken pursuant to this deed.

 

Junior Security: any Security in favour of any or all of the Subordinated
Parties created by a Junior Security Document.

 

Liabilities: all present or future monies, obligations or liabilities, whether
actual or contingent and whether owed jointly or severally, as principal or
surety and/or in any other capacity.

 

Losses: all losses (including loss, of profit), claims, demands, actions,
proceedings, damages and other payments, costs, charges, expenses and other
liabilities of any kind.

 

Permitted Payment: any payment of amounts owing to the Subordinated Parties
permitted under clause 5.1 of this deed.

 

Potential Event of Default: in respect of a Debt Document, any event or
circumstance which would (with the expiry of a grace period, the giving of
notice, the making of any determination under the Debt Document, the fulfilment
of any other condition or any combination of any of the foregoing) be an Event
of Default (as that term is defined under the relevant Debt Document).

 

Receiver: a receiver, receiver and manager or administrative receiver appointed
by the Senior Creditor pursuant to the provisions of its Security Documents.

 

Registration Rights Agreement: the registration rights agreement dated 22 April
2014 between the Borrower and each of the Subordinated Creditors.

 

Right: any Security or other right or benefit whether arising by set-off,
counterclaim, subrogation, indemnity, proof in liquidation or otherwise and
whether from contribution or otherwise.

 

Second Variation Deed: the variation deed, dated on or about the date of this
deed, between the parties to, and for the purpose of varying, the Junior Loan
Note Instrument and the Share Purchase Agreement.

 

Security Document: any Senior Security Document and any Junior Security
Document.

 

Security: any mortgage, charge (whether fixed or floating, legal or equitable),
pledge, lien, assignment by way of security or other security interest securing
any obligation of any person, or any other agreement or arrangement having a
similar effect.

 

 - 3 -

 

 

Senior Credit Agreements: the Calm Waters Credit Agreement and the Co-Investor
Credit Agreement.

 

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 together with all Ancillary Liabilities relating thereto.

 

Senior Debt Document: any document referred to in Schedule 2.

 

Senior Discharge Date: the date, as determined by the Senior Creditors, on which
all Senior Debt has been unconditionally and irrevocably paid and discharged in
full to the satisfaction of the Senior Creditors, whether or not by enforcement
and on which no commitment is in force under the Senior Debt Documents.

 

Senior Security Document: any document referred to in Part 2 of Schedule 4 and
any document under which Security is taken pursuant thereto and any other
document under which Security is created, whether at the date of this deed or at
any later date, which secures any of the Senior Debt.

 

Senior Security: any Security in favour of the Senior Creditors created by a
Senior Security Document.

 

Share Purchase Agreement: the share purchase agreement dated 22 April 2014 (as
varied by the First Variation Deed and the Second Variation Deed) between the
Borrower and the Subordinated Creditors, pursuant to which, inter alia, the
Borrower acquired the entire issued share capital of Must Have Limited from the
Subordinated Creditors.

 

Subordinated Parties: the Subordinated Creditors and the Junior Security Trustee
and a Subordinated Party means any of the Subordinated Parties.

 

Subsidiary: a subsidiary undertaking within the meaning of section 1162 of the
Companies act 2006.

 

VCIG: VCIG LLC, a Delaware corporation with number 5477751.

 

VEC: Victory Electronic Cigarettes, Inc., a Nevada corporation with number
E0117932013-0.

 

1.2Interpretation

 

In this deed:

 

1.2.1clause, Schedule and paragraph headings shall not affect the interpretation
of this deed;

 

1.2.2a reference to a person shall include a reference to an individual, firm,
company, corporation, partnership, unincorporated body of persons, government,
state or agency of a state or any association, trust, joint venture or
consortium (whether or not having separate legal personality) and that person’s
personal representatives, successors, permitted assigns and permitted
transferees;

 

1.2.3unless the context otherwise requires, words in the singular shall

 

1.2.4include the plural and in the plural shall include the singular;

 

 - 4 -

 

 

1.2.5unless the context otherwise requires, a reference to one gender shall
include a reference to the other genders;

 

1.2.6a reference to a party shall include that party’s successors, permitted
assigns and permitted transferees;

 

1.2.7a reference to a statute or statutory provision is a reference to it as
amended, extended or re-enacted from time to time;

 

1.2.8a reference to a statute or statutory provision shall include all
subordinate legislation made from time to time under that statute or statutory
provision;

 

1.2.9a reference to writing or written includes fax and e-mail;

 

1.2.10an obligation on a party not to do something includes an obligation not to
allow that thing to be done;

 

1.2.11a reference to this deed (or any provision of it) or to any other
agreement or document referred to in this deed is a reference to this deed, that
provision or such other agreement or document as amended (in each case, other
than in breach of the provisions of this deed) from time to time;

 

1.2.12unless the context otherwise requires, a reference to a clause or Schedule
is to a clause of, or Schedule to, this deed and a reference to a paragraph is
to a paragraph of the relevant Schedule;

 

1.2.13any words following the terms including, include, in particular, for
example or any similar expression shall be construed as illustrative and shall
not limit the sense of the words, description, definition, phrase or term
preceding those terms;

 

1.2.14a reference to an amendment includes a novation, re-enactment, supplement
or variation (and amended shall be construed accordingly);

 

1.2.15a reference to assets includes present and future properties,
undertakings, revenues, rights and benefits of every description; and

 

1.2.16a reference to determines or determined means, unless the contrary is
indicated, a determination made at the absolute discretion of the person making
it.

 

1.3Schedules

 

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

 

1.4Clawback

 

If a Senior Creditor considers that an amount paid in respect of the Senior Debt
is capable of being avoided or otherwise set aside on the liquidation or
administration of the Borrower, a Guarantor or otherwise, then that amount shall
not be considered to have been irrevocably paid for the purposes of this deed.

 

 - 5 -

 

 

2.PRIORITIES

 

2.1Senior Creditor consent to Junior Security

 

Each Senior Creditor:

 

2.1.1consents to the creation or subsistence (as appropriate) of the Junior
Security and the Junior Debt under the Junior Debt Documents; and

 

2.1.2confirms that the creation or subsistence of the Junior Security and/or the
Junior Debt under the Junior Debt Documents do not constitute a default by the
Borrower or Guarantors under any of the Senior Debt Documents.

 

2.2Subordinated Parties consent to Senior Security

 

Each of the Subordinated Parties;

 

2.2.1consents to the creation of the Senior Security; and

 

2.2.2confirms that the creation or subsistence of the Senior Security does not
constitute a default by the Borrower or Guarantors under any of the Junior Debt
Documents.

 

2.3Ranking and subordination of debt

 

Each of the parties agree that:

 

2.3.1each liability comprising the Senior Debt shall rank pari passu with each
other liability comprising the Senior Debt without any preference between such
liabilities.

 

2.3.2the Senior Debt ranks and shall rank in priority to the Junior Debt in all
respects;

 

2.3.3the Junior Debt is and shall be subordinated to, the Senior Debt; and

 

2.3.4no 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.

 

2.4Ranking and subordination of security

 

Each of the parties agree that:

 

2.4.1all Senior Security shall be available in support of all Senior Debt.

 

2.4.2the Senior Security shall rank in priority to the Junior Security; and

 

2.4.3the Junior Security is and shall be subordinated to, and rank after, the
Senior Security.

 

2.5Monies received by Subordinated Party

 

If before the Senior Discharge Date:

 

2.5.1any Subordinated Party receives a payment or distribution in cash or in any
other form in respect of, or on account of the Junior Debt from the Borrower or
a Guarantor or any other source;

 

2.5.2any Subordinated Party receives the proceeds of any enforcement of any
security, or payment under any guarantee, for any Junior Debt; or

 

 - 6 -

 

 

2.5.3the Borrower or a Guarantor makes any payment or distribution in cash or in
any other form on account of the purchase or other acquisition of any of the
Junior Debt, in each case in contravention of this deed (and, for the avoidance
of doubt, this clause shall not apply to any Permitted Payment), the relevant
Subordinated Party shall forthwith pay any and all such amounts to the Senior
Creditors for application against the Senior Debt and until it does so shall
hold all such amounts on trust for the Senior Creditors.

 

2.6Non-permitted set-off

 

If, for any reason, the Junior Debt is discharged in whole or in part by set-off
in contravention of this deed, the Subordinated Creditors will forthwith pay an
amount equal to the amount of the Junior Debt discharged by the set-off to the
Senior Creditors for application against the Senior Debt.

 

2.7Failure of trust

 

If for any reason, a trust in favour of, or a holding of property for, the
Senior Creditors under this deed is invalid or unenforceable, the Subordinated
Creditors shall pay and deliver to the Senior Creditors in cash or in kind an
amount (or, if in kind, a value) equal to the payment, receipt or recovery which
it would otherwise have been bound to hold in trust for, or as property of, the
Senior Creditors.

 

2.8Continuing status of security

 

Nothing in this deed shall affect the status of the Security Documents as
continuing security, nor shall the ranking of the Security in clause 2.4 be
affected by any act, omission, transaction, limitation, matter, thing or
circumstance whatsoever which but for this provision might operate to affect the
relative priorities of the Security constituted by the Security Documents,
including, but not limited to:

 

2.8.1the nature of the Security constituted by the Security Documents and the
order of their execution or registration;

 

2.8.2any provision contained in any of the Security Documents;

 

2.8.3the, respective date (or dates) on which any person received notice of the
existence or creation of any Security constituted by any Security Document;

 

2.8.4the respective date (or dates) on which monies may be, or have been,
advanced or become owing or payable under a Debt Document or secured under a
Security Document;

 

2.8.5any fluctuation from time to time in the amount of Liabilities secured by a
Security Document and in particular, without limitation, any reduction to nil of
the Liabilities so secured;

 

2.8.6the existence at any time of a credit balance on any current or other
account of the Borrower or a Guarantor;

 

2.8.7the appointment of any liquidator, Receiver, administrator or other similar
officer either in respect of the Borrower or a Guarantor or over all or any part
of the Borrower’s or a Guarantor’s assets (as applicable); and/or

 

2.8.8any amendment or supplement to, or variation of, any Debt Document.

 

 - 7 -

 

 

2.9Invalidity of security

 

If all or any of the Senior Security or Junior Security:

 

2.9.1is released; or

 

2.9.2is or becomes wholly or partly invalid or unenforceable,

 

the Senior Creditors or Subordinated Creditors (respectively) shall bear the
resulting loss and shall not be entitled to share in monies derived from assets
over which it has no effective security.

 

2.10No challenge to security

 

No Creditor shall challenge or question:

 

2.10.1the validity or enforceability of any Security constituted by a Security
Document;

 

2.10.2the nature of any Security constituted by a Security Document; or

 

2.10.3without prejudice to the generality of the foregoing, whether any Security
constituted by a Security Document is fixed or floating.

 

2.11Conflict with provision in Debt Documents

 

The parties agree that if there is an inconsistency between any of the
provisions of this deed and the provisions of a Debt Document, the provisions of
this deed shall prevail.

 

3.BORROWER AND GUARANTOR COVENANTS

 

3.1Borrower and Guarantor covenants

 

So long as the Senior Debt is outstanding, neither the Borrower nor a Guarantor
shall, and each shall procure that none of its Subsidiaries shall (in each case,
except as the Senior Creditors have previously consented to in writing):

 

3.1.1make a loan or provide credit to the Subordinated Creditors;

 

3.1.2pay or repay, or make any distribution in respect of, or purchase or
acquire, any of the Junior Debt in cash or kind;

 

3.1.3purchase or acquire, or permit any Subsidiary to purchase or acquire, any
of the Junior Debt;

 

3.1.4permit any Subsidiary to purchase or acquire any of the Junior Debt;

 

3.1.5exercise any right of set-off against the Junior Debt;

 

3.1.6create, subsist, or allow to exist, any Security (other than Junior
Security) over any of its assets for, or any guarantee for or in respect of, any
of the Junior Debt or in respect of a loan or credit provided to the
Subordinated Creditors by another person;

 

3.1.7amend, waive or release any term of the Junior Debt Documents;

 

3.1.8vary the Junior Debt Documents; or

 

3.1.9take, or omit to take, any action which may impair the ranking or the
subordination set out in this deed.

 

Provided that the provisions of this clause 3.1 shall not apply to any Permitted
Payment.

 

 - 8 -

 

      4. SUBORDINATED CREDITORS AND JUNIOR SECURITY TRUSTEE COVENANTS     4.1 No
payment, Security or guarantee       Each Subordinated Creditor and the Junior
Security Trustee covenants with the Senior Creditors that, so long as the Senior
Debt is outstanding, it shall not (except with the prior consent of the Senior
Creditors):       4.1.1 demand payment, prepayment or repayment of, or any
distribution in respect of (or  on account of) any of the Junior Debt in cash or
in kind from the Borrower or a Guarantor or any other source or apply any money
or property in discharge of any Junior Debt;         4.1.2 receive payment of,
or any distribution in respect of (or an account of) any of the Junior Debt in
cash or in kind from the Borrower or a Guarantor or any other source or apply
any money or property in discharge of any Junior Debt;         4.1.3 discharge
any of the Junior Debt by set-off;         4.1.4 allow to exist or subsist or
receive the benefit of any Security, guarantee, indemnity or other assurance
against financial loss for, or in respect of, or receive the benefit of any
guarantee, from any person in respect of the Junior Debt (other than Junior
Security);         4.1.5 take, or omit to take, any action which may impair the
ranking or the subordination set out in this deed;         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 contemplated by this deed;         4.1.7 accelerate any of the
Junior Debt or otherwise declare any of the Junior Debt prematurely payable
(other than in accordance with clause 14 of this deed);         4.1.8 either
alone or in conjunction with any other person, commence or take any action
against the Borrower or a Guarantor for the enforcement of, or in connection
with, any Junior Debt Document (including for the payment of any amount
thereunder) or for the termination thereof (other than in accordance with clause
14 of this deed);         4.1.9 take any step, or support any step, which may
lead to the Insolvency of the Borrower or a Guarantor (other than in accordance
with clause 14 of this deed); and/or         4.1.10 otherwise exercise any
remedy for the recovery or enforcement of the Junior Debt.         Provided that
the provisions of this clause 4.1 shall not apply to any Permitted Payment,    
  4.2 No set-off       Each of the Subordinated Parties shall not claim any
right of set-off, abatement or any other extinction or reduction in respect of
any liability which it has to the Borrower or any Guarantor.

 

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    4.3 No other arrangements       Each of the Subordinated Parties shall not
make any arrangement which would place, or which aims to place, the Subordinated
Creditors in a position similar to that in which it would be if:       4.3.1 it
had received a payment in respect of the Junior Debt (other than a Permitted
Payment); or         4.3.2 the Junior Debt had been secured by Security (other
than the Junior Security).       4.4 No Security       Nothing in clause 2 or
this clause 4 shall create, or be deemed to create, Security.     5. PERMITTED
PAYMENTS     5.1 The Borrower (or a Guarantor, in discharge of the obligations
of the Borrower) may, subject to clause 5.2:         5.1.1 make each payment of
interest, and all amounts relating to interest, on the Junior Loan Notes on the
relevant due date; and/or         5.1.2 make each scheduled repayment of
principal of the Junior Loan Notes (excluding, for avoidance of doubt, any
voluntary early repayment) in accordance with the Junior Loan Note Instrument;
and/or         5.1.3 make any payments in respect of the Initial Consideration
and Earn-out Consideration (in each case, as defined in the Share Purchase
Agreement) due to the Subordinated Creditors pursuant to the Share Purchase
Agreement.       5.2 The payments permitted by clause 5.1 may only be made if;  
      5.2.1 no step has been taken to enforce any Senior Security or Junior
Security;         5.2.2 no event of default, other termination event or
Potential Event of Default has occurred, is continuing and has not been remedied
or waived in respect of any Senior Debt Document or would occur as result of the
making of the relevant payments; and         5.2.3 no step has been taken for
the winding up, dissolution, administration or reorganisation of the Borrower
and/or a Guarantor or the appointment of a liquidator, Receiver, administrator
or other similar officer of the Borrower and/or a Guarantor or any of the assets
of the Borrower and/or a Guarantor.       6. WAIVER AND AMENDMENTS OF DEBT
DOCUMENTS     6.1 No waiver or amendments of Junior Debt Documents       Without
prejudice to the generality of the provisions of clauses 3 and 4, neither the
Borrower, any Guarantor nor any Subordinated Party shall agree any modification,
waiver or amendment to, or make any other agreement affecting, any Junior Debt
Document which would:       6.1.1 increase the margin or change the basis on
which the interest payable is calculated under a Junior Debt Document;

 

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          6.1.2 increase the commitments of the Subordinated Creditors under any
Junior Debt Document; or         6.1.3 amend or vary the gross-up or substitute
basis provisions in a Junior Debt Document,       6.2 No waiver or amendments of
Senior Debt Documents       Without prejudice to the generality of the
provisions of clauses 3 and 4, neither the Borrower, any Guarantor nor any
Senior Creditor shall agree any modification, waiver or amendment to, or make
any other agreement affecting, any Senior Debt Document which would:       6.2.1
increase the amount of interest payable under a Senior Debt Document in excess
of  the amount payable under the Senior Credit Agreement on the occurrence and
continuance of an Event of Default (as defined in the Senior Credit Agreement);
or         6.2.2 extend the Maturity Date (as defined in the Senior Credit
Agreement) by more than six months or increase the principal amount of the
Senior Debt payable to the Senior Creditors under the Senior Credit Agreement.  
    7. SUBORDINATION ON INSOLVENCY       Until the Senior Discharge Date, if the
Borrower and/or a Guarantor becomes Insolvent, the following provisions shall
apply:       7.1.1 the Junior Debt shall be postponed and subordinated in right
of payment to the Senior Debt         7.1.2 no Subordinated Party shall take any
action in respect of the Junior Debt except with the consent and on the
direction of the Senior Creditors (other than in accordance with clause 14 of
this deed);         7.1.3 the Senior Creditors may, and are irrevocably
authorised on behalf of the Subordinated Parties to:           (a) claim,
enforce and prove for the Junior Debt;             (b) file claims and proofs,
give receipts and take all such proceedings and do all such things as the Senior
Creditors see fit to recover the Junior Debt;             (c) receive all
distributions on the Junior Debt for application towards the Senior Debt; and/or
            (d) hold all monies received by them under clause 7 in a suspense
account and shall, as soon as it is reasonably apparent to them that the Senior
Debt will not be fully discharged, apply them in reduction of the Senior Debt or
otherwise.         7.1.4 if and to the extent that the Senior Creditors are not
entitled to, or do not wish to, claim, enforce, prove, file claims or proofs, or
take proceedings for the Junior Debt, the Subordinated Parties shall do so in
good time as requested by the Senior Creditors acting in accordance with the
instructions of the Senior Creditors;

 

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          7.1.5 the Subordinated Parties shall:             (a) hold any payment
or distribution in cash or in kind received or receivable by it in respect of
the Junior Debt (other than any Permitted Payment received) from the Borrower
and/or a Guarantor or its estate or from any other source on trust for the
Senior Creditors; and             (b) upon demand promptly pay and transfer any
such payment to the Senior Creditors for application against the Senior Debt;  
        7.1.6 the trustee in bankruptcy, liquidator, Receiver, assignee or other
person distributing the, assets of the Borrower and/or a Guarantor or their
proceeds is directed to pay distributions on the Junior Debt direct to the
Senior Creditors until the Senior Debt is irrevocably paid in full and each
Subordinated Party shall give all such directions and/or instructions as the
Senior Creditors may reasonably require to give effect to this sub-clause;      
    7.1.7 the Senior Creditors may (and are hereby irrevocably authorised to)
exercise all powers of convening meetings, voting and representation in respect
of the Junior Debt and the Subordinated Parties shall provide the Senior
Creditors with all necessary forms of proxy and of representation; and          
7.1.8 if and to the extent that the Senior Creditors are not entitled to
exercise a power conferred by this clause 7, the Subordinated Parties:          
  (a) shall exercise the power as the Senior Creditors direct; and            
(b) shall not exercise any power so, as to impair this subordination.         8.
TREATMENT OF DISTRIBUTIONS         8.1 Realisation of distribution          
8.1.1 If any Senior Creditor receives any distribution otherwise than in cash in
respect of the Junior Debt from the Borrower, a Guarantor or any other source,
such Senior Creditor may realise the distribution as it sees fit and the Senior
Debt shall not be deemed reduced by the distribution until and except to the
extent that the realisation proceeds are applied towards the Senior Debt.      
    8.1.2 Each Subordinated Party will at its own expense do all such things as
the Senior Creditors may require as being necessary or desirable to transfer to
the Senior Creditors all payments and distributions which must be turned over or
held in trust for the Senior Creditors, including endorsements and execution of
formal transfers, and will pay all costs and stamp duties in connection
therewith,         8.2 Currency exchange           If the Senior Creditors
receive any payment required to be paid by a Subordinated Creditor under this
deed or paid in respect of the Junior Debt in a currency other than the currency
of the Senior Debt, such Senior Creditors may convert the currency received into
the currency of the Senior Debt at a prevailing market rate of exchange and the
Senior Debt shall not be deemed reduced by the payment until and except to the
extent that the proceeds of conversion are applied toward the Senior Debt.

 

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      9. PRESERVATION OF RIGHTS       9.1 No waiver of rights         No delay
in exercising rights and remedies in respect of the Senior Debt or the Junior
Debt, or the Senior Security or the Junior Security, because of any term of this
deed postponing, restricting or preventing such exercise shall operate as a
waiver of any of those rights and remedies.       9.2 Junior Debt remains due
and payable       The Junior Debt shall remain owing, or due and payable, from
the Borrower and/or a Guarantor, and interest and default interest will accrue
on missed payments in accordance with the terms of the Junior Debt Documents,
despite any term of this deed that might postpone, subordinate or prevent
payment of the Junior Debt.     10. CO-OPERATION BY BORROWER, THE GUARANTORS,
THE SUBORDINATED CREDITORS AND THE JUNIOR SECURITY TRUSTEE     10.1 Co-operation
by Borrower, the Guarantors, the Subordinated Creditors and the Junior Security
Trustee       The Senior Creditors may require the Borrower, a Guarantor, the
Subordinated Creditors and/or the Junior Security Trustee, either jointly or
severally, to sign any document and take any steps to protect or give effect to
any of the Senior Creditors’ rights under this deed, or any similar or related
purpose.     11. PRESERVATION OF SUBORDINATION     11.1 Continuing subordination
      The subordination and priority provisions in this deed constitute
continuing subordination and priority arrangements and benefit the ultimate
balance of the Senior Debt, regardless of any intermediate payment or discharge
of the Senior Debt in whole or in part.     11.2 Waiver of defences       The
subordination and priority arrangements in this deed and the obligations of the
Subordinated Creditors and the Junior Security Trustee under this deed will not
be affected by any act, omission, matter or thing which but for this provision,
might operate to reduce, release or prejudice the subordination or any of those
obligations in whole or in part, including (without limitation and whether or
not known to any party):       11.2.1 any variation, extension, discharge,
compromise, dealing with, exchange or renewal of any right or remedy which a
Creditor and/or the Junior Security Trustee may now, or after the date of this
deed, have from or against the Borrower, a Guarantor or any other person;      
  11.2.2 any grant of time, waiver or indulgence granted to or composition with
the Borrower, a Guarantor or any other person;         11.2.3 any act or
omission by a Creditor and/or the Junior Security Trustee or any other person in
varying, compromising, exchanging, renewing, releasing, taking up, perfecting or
enforcing or any right, any Security, indemnity, or guarantee or any other
security interest from or against the Borrower, a Guarantor or any other person
or any non-presentation or non-observance of any formality or other requirement
in respect of any instruments or any failure to realise the full value of any
security;

 

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        11.2.4 any termination, amendment, variation, novation or supplement of
or to any Debt Document;         11.2.5 any Insolvency, bankruptcy, liquidation,
administration, winding up, incapacity, limitation, disability, discharge by
operation of law, or similar proceedings or any change in the constitution, name
or style of or in relation to the Borrower, a Guarantor or any other person;    
    11.2.6 the release of the Borrower, a Guarantor or any other, person under
the terms of any composition or arrangement;         11.2.7 any incapacity or
lack of power, authority or legal personality of or dissolution or change in the
members or status of the Borrower, a Guarantor or any other person;        
11.2.8 any amendment (however fundamental) or replacement of a Debt Document or
any other document or security;         11.2.9 any invalidity, illegality,
unenforceability, irregularity or frustration of any actual or purported
obligation of, or Security held from, the Borrower, a Guarantor or any other
person under any Debt Document or any other document or security; and/or        
11.2.10 any claim or enforcement of payment from the Borrower, a Guarantor or
any other person.       11.3 Immediate recourse       Each of the Subordinated
Creditors and the Junior Security Trustee waives any right it may have to
require the Senior Creditors (or any trustee or agent on its behalf) to:        
11.3.1 take any action or obtain judgment in any court against the Borrower, a
Guarantor or any other person;         11.3.2 make or file any claim in a
bankruptcy, liquidation, administration or Insolvency of the Borrower, a
Guarantor or any other person; or         11.3.3 proceed against, make, demand,
enforce or seek to enforce any claim, security, right or remedy against the
Borrower, a Guarantor or any other person,         11.3.4 to proceed against or
enforce any other rights or security or claim payment from any person before
claiming the benefit of this subordination, of the security conferred by the
Security Documents or of the obligations of the Subordinated Creditors or the
Junior Security Trustee under this deed. The Senior Creditors (or any trustee or
agent on their behalf) may refrain from applying or enforcing any money, rights
or security.

   

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      11.4 Non-competition       Each of the Subordinated Creditor and the
Junior Security Trustee warrants to the Senior Creditors that it has not taken
or received, and shall not take, exercise or receive the benefit of any Right
from or against the Borrower, a Guarantor or a liquidator or administrator of
the Borrower or a Guarantor or any other person in connection with any liability
of, or payment by, the Subordinated Creditors or the Junior Security Trustee
under this deed but:

          11.4.1 if any such Right is taken, exercised or received by the
Subordinated Creditors or the Junior Security Trustee, that Right and all monies
at any time received or held in respect of that Right shall be held by the
Subordinated Creditors and/or the Junior Security Trustee on trust for the
Senior Creditors for application in or towards the discharge of the Senior Debt;
and         11.4.2 on demand by the Senior Creditors, each of the Subordinated
Creditors and the Junior Security Trustee shall promptly transfer, assign or pay
to the Senior Creditors all Rights and all monies from time to time held on
trust by the Subordinated Creditors and/or the Junior Security Trustee under
this clause 11.4.       12. BOOK DEBTS, INSURANCE AND CUSTODY OF DOCUMENTS    
12.1 Book debts       Notwithstanding the terms of any charge over book or other
debts contained in any Security Document, and any covenant by the Borrower or a
Guarantor to pay those debts into any particular account, the parties agree
that:       12.1.1 the Borrower and/or a Guarantor (as applicable) shall not be
deemed to be in breach of any such covenant so long as it complies with any such
covenant in the Senior Debt Documents;         12.1.2 the Senior Creditors may
credit any payments received by a Senior Creditor in respect of book and other
debts to any account of the Borrower or a Guarantor with the Senior Creditors;
and         12.1.3 the Senior Creditors may, in respect of any credit balances
on any of the Borrower’s or a Guarantor’s accounts, notwithstanding any charge
over those credit balances created by any Junior Security Document:          
(a) permit the Borrower and/or a Guarantor to draw on any credit balance and
otherwise permit any such account to continue to be operated as a current
account; and             (b) to the extent permitted by the relevant Senior Debt
Document, exercise any right of set-off or combination it may have against any
account of the Borrower and/or a Guarantor without regard to the other
provisions of this deed or any Junior Debt Document.         12.2 Insurance    
  The Senior Creditors may require the Borrower and/or a Guarantor to insure its
assets and, prior to the Enforcement Date, apply any monies received or
recovered in respect of any claim under any relevant insurance policy in
accordance with the terms of the Senior Debt Documents or such other insurance
provisions in the Debt Documents as the Senior Creditors may select. The
Creditors acknowledge that the Borrower’s or the Guarantor’s (as applicable)
compliance with the insurance obligations so selected shall be a full discharge
by the Borrower or such Guarantor (as applicable) of its insurance obligations
under the Debt Documents.     12.3 Title documents       The Senior Creditors
shall be entitled, but not obliged, to hold each title or other document
relating to any asset subject to Senior Security. The Subordinated Parties may
inspect any such documents provided it gives reasonable prior written notice to
the Senior Creditors.

 

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      13. SENIOR DEBT ENFORCEMENT     13.1 Co-operation by Subordinated
Creditors and Junior Security Trustee       The Subordinated Creditors and
Junior Security Trustee will, at the request of the Senior Creditors or any
Receiver appointed by the Senior Creditors, join in such documents or otherwise
take such action as may be reasonably required by the Senior Creditors or such
Receiver to facilitate the disposal of any asset subject to Senior Security
whether or not there will be any balance of proceeds available for the
Subordinated Creditors and/or Junior Security Trustee arising from that
disposal.     13.2 Distressed Disposal       If a Distressed Disposal is being
effected, the Senior Creditors are irrevocably authorised by the parties hereto
to release the Senior Security and/or the Junior Security over the asset and/or
to execute and deliver or enter into any release of that Security that may, in
the discretion of the Senior Creditors, be considered necessary or desirable in
order to effect the Distressed Disposal.     14. ENFORCEMENT BY THE SUBORDINATED
CREDITORS AND/OR THE JUNIOR SECURITY TRUSTEE     14.1 Subject to clause 14.2
below, until the Senior Discharge Date, unless the Senior Creditors have
previously consented in writing, none of the Subordinated Creditors or the
Junior Security Trustee shall:       14.1.1 accelerate any of the Junior Debt or
otherwise declare any of the Junior Debt prematurely payable on an event of
default or otherwise;         14.1.2 enforce the Junior Debt by execution or
otherwise; or         14.1.3 initiate or support or take any steps with a view
to any Insolvency, liquidation, reorganisation, administration or dissolution
proceedings or any voluntary arrangement or assignment for the benefit of
creditors or any similar proceedings involving the Borrower, whether by
petition, filing or service of a notice, convening a meeting, voting for a
resolution or otherwise.       14.2 The restrictions in clause 14.1 will not
apply to the Subordinated Creditor or the Junior Security Trustee if an Event of
Default as defined in the Junior Document has occurred (a Junior Default) and:  
    14.2.1 the Senior Creditors have received notice of the Junior Default from
the Subordinated Parties (or any of them); and         14.2.2 a period of not
less than 180 days has passed from the date of the notice of the relevant Junior
Default (Junior Standstill Period); and         14.2.3 at the end of the
relevant Junior Standstill Period, the relevant Junior Default is continuing and
has not been waived by the Subordinated Parties; and         14.2.4 the Senior
Creditors have not taken any steps to enforce the security conferred by the
Senior Security Documents (or any of them).

 

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      15. INFORMATION BY SUBORDINATED CREDITOR       15.1 Defaults         Each
Subordinated Party will, promptly upon becoming aware of the same, notify the
Senior Creditors of the occurrence of any event of default or potential event of
default (howsoever described) or mandatory prepayment event or other event
entitling that Subordinated Party to demand prepayment or repayment of any
Junior Debt prior to its specified maturity under the Junior Debt Documents.    
15.2 Amounts of debt         Each Subordinated Party will on the written request
by the Senior Creditors notify the Senior Creditors in writing of details of the
amount of the Junior Debt.     16. APPLICATION OF PROCEEDS       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;         16.1.2 second, once
the Senior Debt has been fully discharged, in or towards discharge of the Junior
Debt; and         16.1.3 third, after the Junior Debt has been fully discharged,
to the Borrower, the Guarantors or any other person entitled to it.       16.2
Preferential payments       Each Subordinated Party shall bring into account any
preferential payments received by it under section 175 of the insolvency Act
1986.     16.3 Purchaser protection       No purchaser dealing with a Creditor
or any Receiver shall be concerned in any way with the provisions of this deed,
but shall assume that the Creditor or Receiver, as the case may be, is acting in
accordance with the provisions of this deed.     17. REFINANCING OF SENIOR DEBT
    17.1 Refinancing of Senior Debt       Each of the Subordinated Parties
agrees that, subject to clause 17.2:       17.1.1 the Senior Debt may be
refinanced at any time by any person whether or not that person is a Senior
Creditor (provided that if that person is not a Senior Creditor, it is a bank or
banks of international repute and creditworthiness); and         17.1.2 the new
debt shall rank with the priority specified in this deed.

 

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      17.2 Conditions of new Senior Debt         17.2.1 The terms of any
refinancing of the Senior Debt shall not be more onerous for the Borrower and/or
the Guarantors than the terms of the Senior Debt as at the date of this deed and
the principal amount of the Senior Debt shall not be increased as a result of
any such refinancing.         17.2.2 Any new lender of the refinanced Senior
Debt shall, before, or at the same time as, it becomes a lender of the
refinanced Senior Debt, execute and deliver to the Subordinated Parties (in a
form acceptable to the Subordinated Parties) in which that new lender undertakes
to be bound by the terms of this deed.       18. POWER OF ATTORNEY     18.1
Appointment of attorney       By way of security, each of the Borrower, each
Guarantor, the Subordinated Creditors and the Junior Security Trustee
irrevocably appoints the Senior Creditors to be its attorney and, in its name,
on its behalf and as its act and deed, to execute any documents and do any acts
and things which the Borrower, the Guarantors, the Subordinated Creditors and/or
the Junior Security Trustee are required to execute and do under this deed.    
18.2 Ratification of acts of attorney       Each of the Borrower, a Guarantor,
the Subordinated Creditors and the Junior Security Trustee ratifies and
confirms, and agrees to ratify and confirm, anything which any of its attorneys
may do in the proper and lawful exercise or purported exercise of all or any of
the powers, authorities and discretions referred to in clause 18.1.     19.
EXPENSES     19.1 Negotiation and amendment costs and expenses       The
Borrower and each Guarantor shall, within five Business Days of demand, pay to,
or reimburse, a Senior Creditor, on a full indemnity basis, all costs, charges,
expenses, taxes and liabilities of any kind (including, without limitation,
legal, printing and out-of-pocket expenses) properly incurred by that Senior
Creditor in connection with:       19.1.1 the negotiation, preparation and
execution of this deed; or         19.1.2 any amendment, extension, waiver,
consent or suspension of rights (or any proposal for any of these) relating to
this deed,         together with interest, which shall accrue and be payable
(without the need for any demand for payment being made) from the date on which
the relevant cost or expense arose until full discharge of that cost or expense
(whether before or after judgment, liquidation, winding up or administration of
the Borrower) at the rate (the Default Rate) and in the manner provided for in
the Senior Credit Agreement in respect of interest applying on the occurrence
and continuance of an Event of Default (as defined in the Senior Credit
Agreement).     19.2 Enforcement costs, expenses and Losses       19.2.1 The
Borrower and the Guarantors shall, on demand, pay to each Creditor the amount of
all costs and expenses (including legal, printing and out-of-pocket expenses)
properly incurred by the relevant Creditor in connection with enforcing,
preserving any rights under, or monitoring the provisions of this deed.

 

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          19.2.2 The Subordinated Parties shall on demand indemnify and keep
indemnified the Senior Creditors against all Losses suffered or incurred by any
of them in respect of any breach of any of the Subordinated Parties’ covenants
or other obligations under this deed.         19.3 Legal expenses and taxes    
    The costs and expenses referred to in clause 19.2 above include, without
limitation, the fees and expenses of legal advisers and any value added tax or
similar tax, and are payable in the currency in which they are incurred.    
19.4 Default interest         19.4.1 If the Borrower, a Guarantor or any
Subordinated Party fails to pay any amount payable by it under this deed to a
Senior Creditor, it must, on demand by the Senior Creditor, pay interest on the
overdue amount from the due date up to the date of actual payment (both before
and after judgment).           19.4.2 Interest on an overdue amount is payable
at a rate equal to the Default Rate.           19.4.3 For the purpose of
determining the relevant rate under clause 19.4 above, the Senior Creditors may:
            (a) select successive periods of any duration up to three months;
and             (b) determine the appropriate rate fixing day for that period.  
        19.4.4 Interest (if unpaid) on an overdue amount will be compounded at
the end of the period selected by the Senior Creditors under clause 19.4.3 above
but will remain immediately due and payable.           19.4.5 Any interest
accruing under this clause 19.4 accrues from day to day and is calculated on the
basis of the actual number of days elapsed and a year of 360 days.         19.5
Certificates and Determinations           Any certification or determination by
the Senior Creditors of a rate or amount under this deed is, in the absence of
manifest error, conclusive evidence of the matters to which it relates.        
19.6 No Deduction           All payments to be made by the Borrower, a Guarantor
or any Creditor under this deed shall be made without any set-off, counterclaim
or equity and (subject to the following sentence) free from, clear of and
without deduction for any taxes, duties, levies, imposts or charges whatsoever,
present or future, If the Borrower, a Guarantor or any Creditor is compelled by
the law of any applicable jurisdiction (or by an order of any regulatory
authority in such jurisdiction) to withhold or deduct any sums in respect of
taxes, duties, levies, imposts or charges from any amount payable to a Creditor
under this deed or, if any such withholding or deduction is made in respect of
any recovery from the Borrower, a Guarantor or any Creditor under this deed, the
relevant party shall pay such additional amount so as to ensure that the net
amount received by the relevant Creditor shall equal the full amount due to it
under the provisions of this deed (had no such withholding or deduction been
made).        

  

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        19.7 Currency of Payment           The obligation of the Borrower, a
Guarantor or any Creditor under this deed to make payments in any currency shall
not be discharged or satisfied by any tender, or recovery pursuant to any
judgment or otherwise, expressed in or converted into any other currency, except
to the extent that tender or recovery results in the effective receipt by the
Senior Creditors of the full amount of the currency expressed to be payable
under this deed.         19.8 Currency Indemnity           19.8.1 If any sum due
from the Borrower, a Guarantor or any Creditor under this deed (a Sum), or any
order, judgment or award given or made in relation to a Sum, has to be converted
from the currency (the First Currency) in which that Sum is payable into another
currency (the Second Currency) for the purpose of:             (a) making or
filing a claim or proof against the party;             (b) obtaining or
enforcing an order, judgment or award in relation to any litigation or
arbitration proceedings; or             (c) applying the Sum in satisfaction of
any amount due under this deed,             the relevant party shall, as an
independent obligation, within three Business Days of demand, indemnify the
relevant Creditor against any cost, loss or liability arising out of or as a
result of the conversion including any discrepancy between (A) the rate of
exchange used to convert that Sum from the First Currency into the Second
Currency and (B) the rate or rates of exchange available to the relevant
Creditor at the time of its receipt of that Sum.           19.8.2 Each of the
Borrower, each Guarantor and each Creditor waives any right it may have in any
jurisdiction to pay, any amount under this deed in a currency or currency unit
other than that in which it is expressed to be payable.         20. DURATION    
    20.1 Duration           This deed shall cease to have effect when the Senior
Debt has, to the satisfaction of the Senior Creditors, been irrevocably and
unconditionally paid and discharged in full.         21. RESTRICTIONS ON
ASSIGNMENTS         21.1 Successors and assigns           This Deed is binding
on the successors and assigns of the parties hereto.         21.2 Borrower and
Guarantors           The Borrower and Guarantors may not assign or transfer any
of their rights (if any) or obligations under this deed.         21.3
Subordinated Creditors and Junior Security Trustee           The Subordinated
Creditors or the Junior Security Trustee may assign or otherwise dispose of all
or any of its rights under this deed provided that: (i) the relevant assignee or
transferee executes and delivers to the Senior Creditors a deed (in a form
acceptable to the Senior Creditors) pursuant to which the assignee or transferee
agrees to be bound by the terms of this deed; and (ii) there is no event of
default under any Debt Document subsisting as at the date of the proposed
assignment and/or transfer.        

  

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        21.4 The Senior Creditors           The Senior Creditors may, at any
time, assign or otherwise dispose of all or any of their rights under this deed
in accordance with the Debt Documents to which they are a party provided that
the relevant assignee or transferee executes and delivers to the Subordinated
Parties a deed (in a form acceptable to the Subordinated Parties) pursuant to
which the assignee or transferee agrees to be bound by the terms of this deed.  
      22. BORROWER’S AND GUARANTOR’S ACKNOWLEDGEMENTS         22.1 Borrower’s
and Guarantors’ acknowledgement and consent           Each of the Borrower and
each Guarantor acknowledges the terms of this deed and consents to the Creditors
communicating with each other about the Borrower’s and/or each Guarantors’
affairs for the purposes of this deed.         22.2 No reliance by Borrower or
Guarantor           Each of the Borrower and each Guarantor further acknowledges
that none of the provisions entered into by the Creditors are for the benefit of
the Borrower and/or the Guarantors, nor may they be enforced or relied on by the
Borrower and/or the Guarantors.         23. ENDORSEMENT ON DEBT DOCUMENTS      
  23.1 Endorsement on Debt Documents           Each of the Creditors agrees to
endorse a memorandum of this deed on each Debt Document entered into, or to be
entered into, in its favour, and acknowledges the right of the other Creditors
to the, production and delivery of a copy of any such Debt Document as soon as
reasonably practicable.         24. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS  
      24.1 Amendments           Any amendment to this deed shall be in writing
and signed by, or on behalf of, each party, except that:           24.1.1 the
Senior Creditors do not need the consent of any party other than the Borrower
(and no other party, other than the Borrower, need be party to any amendment
document) to an amendment to this deed that only alters the Borrower’s
obligations to the Senior Creditors and the, corresponding rights of the Senior
Creditors;           24.1.2 the Senior Creditors do not need the consent of any
party other than a Guarantor (and no other party, other than such Guarantor,
need be party to any amendment document) to an amendment to this deed that only
alters such Guarantor’s obligations to the Senior Creditors and the
corresponding rights of the Senior Creditors;           24.1.3 the Senior
Creditors do not need the consent of any party other than the Borrower and the
Guarantors (and no other party,  other than the Borrower and the Guarantors,
need be party to any amendment document) to an amendment to this deed that only
alters the Borrowers and Guarantors’ obligations to the Senior Creditors and the
corresponding rights of the Senior Creditors; and        

 

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          24.1.4 the Creditors do not need the consent of the Borrower or the
Guarantors (and no party, other than the Creditors, need to be party to any
amendment document) to an amendment to this deed that only alters the
obligations of the Creditors to each other and the corresponding rights of the
Creditors.         24.2 Waivers and consents           24.2.1 A waiver of any
right or remedy under this deed or by law, or any consent given under this deed,
is only effective if given in writing by the waiving or consenting party and
shall not be deemed a waiver of any other breach or default.  It only applies in
the circumstances for which it is given and shall not prevent the party giving
it from subsequently relying on the relevant provision.           24.2.2 A
failure or delay by a party to exercise any right or remedy provided under this
deed or by law shall not constitute a waiver of that or any other right or
remedy, prevent or restrict any further exercise of that or any other right or
remedy or constitute an election to affirm this deed. No single or partial
exercise of any right or remedy provided under this deed or by law shall prevent
or restrict the further exercise of that or any other right or remedy.  No
election to affirm this deed by a Creditor shall be effective unless it is in
writing.         24.3 Rights and remedies           The rights and remedies
provided under this deed are cumulative and are in addition to, and not
exclusive of, any rights and remedies provided by law.         25. SEVERANCE    
    25.1 Severance           If any provision (or part of a provision) of this
deed is or becomes invalid, illegal or unenforceable, it shall be deemed
modified to the minimum extent necessary to make it valid, legal and
enforceable.  If such modification is not possible, the relevant provision (or
part of a provision) shall be deemed deleted. Any modification to or deletion of
a provision (or part of a provision) under this clause shall not affect the
legality, validity and enforceability of the rest of this deed.         26.
COUNTERPARTS         26.1 Counterparts           26.1.1 This deed may be
executed in any number of counterparts, each of which when executed and
delivered shall constitute a duplicate original, but all the counterparts shall
together constitute one deed.           26.1.2 Transmission of the executed
signature page of a counterpart of this deed by fax or e-mail (in PDF, JPEG or
other agreed format) shall take effect as delivery of an executed counterpart of
this deed. If either method of delivery is adopted, without prejudice to the
validity of the deed thus made, each party shall provide the others with the
original of such counterpart as soon as reasonably possible thereafter.        
  26.1.3 No counterpart shall be effective until each party has executed and
delivered at least one counterpart.        

  

- 22 -

 

 

 

        27. THIRD PARTY RIGHTS         27.1 Third party rights           27.1.1
Except as expressly provided in this deed, a person who is not a party to this
deed shall not have any rights under the Contracts (Rights of Third Parties) Act
1999 to enforce, or enjoy the benefit of, any term of this deed. This does not
affect any right or remedy of a third party which exists, or is available, apart
from that Act.           27.1.2 The rights of the parties to rescind or agree
any amendment or waiver under this deed are not subject to the consent of any
other person.         28. PERPETUITY PERIOD         28.1 Perpetuity period      
    If the rule against perpetuities applies to any trust created by this deed,
the perpetuity period  shall  be 125 years (as  specified  by section 5(1) of
the Perpetuities and Accumulations Act 2009).         29. NOTICES         29.1
Delivery           Each notice or other communication required to be given under
or in connection with this deed shall be:           29.1.1 in writing;          
29.1.2 delivered by hand, by pre-paid first-class post or other next working day
delivery service or sent, by fax or e-mail; and           29.1.3 sent to:      
      (a) the Senior Creditors at the addresses set out in Schedule 2 of this
deed..             (b) the Subordinated Creditors at the addresses set out in
Schedule 3 of this deed, with a copy by e-mail to dlevhome@btinternet.com;
miguelcorral@live.co.uk and ian.riggs@hilldickinson.com.             (c) the
Junior Security Trustee at:              

1 Sergeants Lane, Whitefield, M45 7TR.

Attention: Miguel Carlos Corral

Email: miguelcorral@live.co.uk

Copy by email to ian.riggs@hilldickinson.com

            (d) the Borrower at:              

14200 Ironwood Drive, Grand Rapids, Michigan 49534, USA

E-mail: phil.anderson@ecigcorporate.com, Darren@fieldstx.com

Copy by e-mail to: apanjwani@pryorcashman.com. jes@robinsonbrog.com

Attention: Phil Anderson and Darren Stanwood

       

 

- 23 -

 

  

              (e) the Guarantors at:                 Units 3-8 Bury South
Business Park,  Riverview Close,  Dumers Lane, Manchester M26 2AD              
 

For the attention of: Phil Anderson and Darren Stanwood

Copy by e-mail to jes@robinsonbrog.com, Isteele@pryorcashman.com

and to kevin.mccarthy@mishcon.com

Attention: Phil Anderson and Darren Stanwood

              or to such other address or fax number as is notified in writing
by one party to the others from time to time.           29.2 Receipt            
Any notice or other communication given under or in connection with this deed
shall be deemed to be received:             29.2.1 if delivered by hand, at the
time it is left at the relevant address;             29.2.2 if posted by
pre-paid first-class post or other next working day delivery service, on the
second Business Day after posting: and             29.2.3 if sent by fax, when
received in legible form.             A notice or other communication given as
described in clause 29.1.1 or clause 29.1.3 on a day which is not a Business
Day, or after normal business hours, in the place it is received, shall be
deemed to have been received on the next Business Day.           29.3 Service of
proceedings             This clause 29 does not apply to the service of any
proceedings or other documents in any legal action or, where applicable, any
arbitration or other method of dispute resolution.           30. GOVERNING LAW
AND JURISDICTION           30.1 Governing law             This deed and any
dispute or claim arising out of or in connection with it or its subject matter
or formation (including non-contractual disputes or claims) shall be governed
by, and construed in accordance with, the law of England and Wales,          
30.2 Jurisdiction             30.2.1 The courts of England have exclusive
jurisdiction to settle any dispute, controversy, proceedings, claim or
obligation of whatever nature arising out of or in connection with this
Agreement (whether contractual or non-contractual) including a dispute regarding
the existence, validity or termination of this Agreement (a Dispute).          
  30.2.2 The Parties agree that the courts of England are the most appropriate
and convenient courts to settle Disputes and accordingly no party will argue to
the contrary.             30.2.3 This clause 30.2 is for the benefit of the
Senior Creditor only. As a result, the Senior Creditor shall not be prevented
from taking proceedings relating to a Dispute in any other courts with
jurisdiction. To the extent allowed by law, the Senior Creditor may take
concurrent proceedings in any number of jurisdictions.

 

- 24 -

 

 

    30.3 Other service       Each of the Borrower, each Guarantor, the Junior
Security Trustee and each Subordinated Creditor irrevocably consents to any
process in any legal action or proceedings under clause 30.2 being served on it
in accordance with the provisions of this deed relating to service of
notices.  Nothing contained in this deed shall affect the right to serve process
in any other manner permitted by law.     30.4 Agent for service       Each of
the Borrower, VEC, VCIG, FINBG and HIAC irrevocably appoints Vapestick Holdings
Limited for service at 25 Harley Street, London, WIG 9BR (for the attention of
Michael Clepper) as its agent to receive on its behalf in England or Wales
service of any proceedings under clause 30. Such service shall be deemed
completed on delivery to such agent (whether or not it is forwarded to and
received by the Borrower, VEC, VCIG, HIAC and/or FINBG as applicable) and shall,
be valid until such time as the Creditors have received prior written notice
from the Borrower, VEC, VCIG, HIAC and/or FINBG (as applicable) that such agent
has ceased to act as agent. If for any reason such agent ceases to be able to
act as agent or no longer has an address in England or Wales, the Borrower, VEC,
VCIG, HIAC and/or FINBG (as applicable) shall forthwith appoint a substitute
acceptable to the Creditors and deliver to the Creditors the new agent’s name
and address within England and Wales.     This document has been executed as a
deed and is delivered and takes effect on the date stated at the beginning of
it.

 

- 25 -

 

 

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 Wes t 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

 

- 26 -

 

 

SCHEDULE 2 - SENIOR CREDITORS

 

Name Address CALM WATERS PARTNERSHIP 115S. 84th Street
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

   

 

- 27 -

 

 

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

 

- 28 -

 

 

SCHEDULE 4 - SENIOR DEBT DOCUMENTS

 

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.

 

- 29 -

 

 

SCHEDULE 5 - JUNIOR DEBT DOCUMENTS

 

Part 1: Junior lending documents

 

Junior Loan Notes. 

 

Junior Loan Note instrument. 

 

Registration Rights Agreement. 

 

Share Purchase Agreement.

 

Part 2: Junior Security Documents

 

Guarantee between Must Have Limited and the Subordinated Creditors, dated 22
April 2014.

 

Debenture between Must Have Limited and the Junior Security Trustee, dated 22
April 2014. 

 

Share charge between the Borrower and the Junior Security Trustee in respect of
the Borrower’s shares in Must Have Limited, dated on or about the date of this
deed.

 

- 30 -

 

 

        Borrower               EXECUTED as a deed on behalf of ELECTRONIC
CIGARETTES INTERNATIONAL GROUP, LTD., a Nevada corporation by )     )     )  
-s- Philip Anderson [img001_v1.jpg]  )   Philip Anderson )     )   Authorised
Signatory   )   -s-Ali Panjwani [img002_v1.jpg]    )   being [a] person[s] who,
in accordance with the laws of that territory, [is OR are] acting under the
authority of the corporation )   Witness )     )                   Guarantors  
            EXECUTED as a deed on behalf of VICTORY ELECTRONIC CIGARETTES, INC.,
a Nevada corporation by )     )     )   -s- Philip Anderson [img001a_v1.jpg]  )
  Philip Anderson )     )   Authorised Signatory   )    -s-Ali Panjwani
[img002_v1.jpg]   )   being [a] person[s] who, in accordance with the laws of
that territory, [is OR are] acting under the authority of the corporation )  
Witness )     )                   EXECUTED as a deed on behalf of VCIG LLC, a
Delaware corporation by )     )   -s- Philip Anderson [img001b_v1.jpg]    )  
Philip Anderson )     )   Authorised Signatory   )   -s-Ali Panjwani
[img002_v1.jpg]    )   being [a] person[s] who, in accordance with the laws of
that territory, [is OR are] acting under the authority of the corporation )  
Witness )                

 

- 31 -

 

        EXECUTED as a deed on behalf of FIN BRANDING GROUP, LLC, an Illinois
corporation by )     )   -s- Philip Anderson [img001c_v1.jpg]  )   Philip
Anderson )     )   Authorised Signatory   )    -s-Ali Panjwani [img002_v1.jpg]  
)   being [a] person[s] who, in accordance with the laws of that territory, [is
OR are] acting under the authority of the corporation )   Witness )     )      
            EXECUTED as a deed on behalf of HARDWIRE INTERACTIVE ACQUISITION
COMPANY, a Delaware corporation by )     )     )   -s- Philip Anderson
[img001d_v1.jpg]  )   Philip Anderson )     )   Authorised Signatory   )  
 -s-Ali Panjwani [img002_v1.jpg]   )   being [a] person[s] who, in accordance
with the laws of that territory, [is OR are] acting under the authority of
the  corporation )   Witness )     )                   EXECUTED as a deed by
MUST HAVE LIMITED acting by )   -s- Philip Anderson [img001g_v1.jpg]  )   Philip
Anderson )   a director
in the presence of )   Director )    

      Witness:       -s- Ali Panjwani [img002_v1.jpg]    Signature:  

 

Name: Ali Panjwani  

 

Address: c/o PRYOR CASHMAN LLP   7 Times Square, New York, NY 10036  

 

Occupation: Attorney  

 

- 32 -

 

 

        EXECUTED as a deed by VAPESTICK HOLDINGS LIMITED acting by )   -s-
Philip Anderson [img001e_v1.jpg]  )   Philip Anderson )   a director )  
Director in the presence of )    

      Witness:       -s-Ali Panjwani [img002_v1.jpg]    Signature:  

 

Name: Ali Panjwani  

 

Address: c/o PRYOR CASHMAN LLP   7 Times Square, New York, NY 10036  

 

Occupation: Attorney  

 

       

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

by 

)     )   -s- Philip Anderson [img001f_v1.jpg]  )   Philip Anderson )   a
director )   Director in the presence of )    

 

      Witness:       -s-Ali Panjwani [img002_v1.jpg]    Signature:  

 

Name: Ali Panjwani  

 

Address: c/o PRYOR CASHMAN LLP   7 Times Square, New York, NY 10036  

 

Occupation: Attorney  

 

- 33 -

 

 

        Senior Creditors               EXECUTED as a deed on behalf of
CALM  WATERS PARTNERSHIP., a Wisconsin general partnership, acting by Susan A.
Hollister
As power of attorney for )   -s- Susan A Hollister [img003_v1.jpg]  )   )   )  
)     )   Authorised Signatory Richard S. Strong )     Managing Partner )    
Calm Waters Partnership )     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 )     )     )             Subordinated
Creditors               EXECUTED as a deed by MELANIE LEVIN
in the presence of       )     )   Melanie Levin

                Witness:                             Signature:                
        Name:                         Address:                        
Occupation:        

 

- 34 -

 

 

        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

Peter Batel

    -s- Peter Batel [img004_v1.jpg]  )   )   )   )     )   Authorised Signatory
  )       )   -signature- [img005_v1.jpg]    )     )   being [a] person[s] who,
in accordance with the laws of that territory, [is OR are]
acting  under  the  authority  of  the partnership )   Witness )   -signature-
[img006_v1.jpg]  )   )         Subordinated Creditors               EXECUTED as
a deed by MELANIE LEVIN
in the presence of       )     )   Melanie Levin

                Witness:                             Signature:                
        Name:                         Address:                        
Occupation:        

 

- 35 -

 

 

        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 )  
  )   -Signature- [img007_v1.jpg]
Duly Authorised Attorney )         Subordinated Creditors           EXECUTED as
a deed by MELANIE LEVIN
in the presence of     )   )   Melanie Levin

                Witness:                             Signature:   -s-IAN RIGGS
[img008_v1.jpg]                       Name:       Ian Riggs                    
  Address:     50 Fountain St, Manchester                       Occupation:
Solicitor      

 

- 36 -

 

 

 

 

                EXECUTED as a deed by DAVID )   -s-David Steven Levin
[img007_v1.jpg] STEVEN LEVIN )   David Steven Levin in the presence of          
            Witness:                             Signature: -s-IAN RIGGS
[img008_v1.jpg]                       Name:     Ian Riggs                      
Address:   50 Fountain St, Manchester                                          
        Occupation: Solicitor                       EXECUTED as a deed by DAVID
)   -s-David Ryder [img009_v1.jpg] RYDER )   David Ryder in the presence of  
Duly Authorised Attorney                 Witness:                            
Signature: -s-IAN RIGGS [img008_v1.jpg]                       Name:     Ian
Riggs                       Address:   50 Fountain St, Manchester              
                                    Occupation: Solicitor                      
EXECUTED as a deed by MIGUEL )   -s-Miguel Carlos Corral [img009a_v1.jpg] CARLOS
CORRAL )   Miguel Carlos Corral in the presence of                      
Witness:                             Signature:  -s-IAN RIGGS [img008_v1.jpg]  
                    Name:      Ian Riggs                       Address:    50
Fountain St, Manchester                                                  
Occupation:  Solicitor      

 

- 37 -

 

 

                Junior Security Trustee                     EXECUTED as a deed
by MIGUEL )   -s-Miguel Carlos Corral [img009a_v1.jpg] CARLOS CORRAL )   Miguel
Carlos Corral in the presence of                       Witness:                
            Signature:  -s-IAN RIGGS [img008_v1.jpg]                      
Name:    Ian Riggs                       Address:  50 Fountain St              
        Manchester                       Occupation:  Solicitor      

 

 

 

-38-

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