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SECURITIES & EXCHANGE COMMISSION EDGAR FILING

Electronic Cigarettes International Group, Ltd.

Form: 10-K/A

Date Filed: 2015-04-30

Corporate Issuer CIK: 1398702

© Copyright 2015, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to theterms of use.

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/AAmendment No. 2

(Mark One)☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________to _______________.

Commission File Number: 000-52745

Electronic Cigarettes International Group, Ltd.(Exact name of registrant as specified in its charter)

Nevada 98-0534859

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

14200 Ironwood DriveGrand Rapids, Michigan 49544

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (616) 384-3272

Securities registered pursuant to Section 12(b) of the Act:

Title of each class: Name of each exchange on which registered:None None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act. Yes ̈ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ̈ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during thepreceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III orthis Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smallerreporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 ofthe Exchange Act.

Large accelerated filer ¨ Accelerated filer þNon-accelerated filer ¨ Smaller reporting company ̈

EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ̈ No þ

As of June 30, 2014, 4,975,192 (retroactively adjusted to reflect the March 24, 2015 one-for-fifteen reverse stock split) shares ofcommon stock were outstanding. The aggregate market value of the common stock held by non-affiliates of the registrant, as of June30, 2014, the last business day of the second fiscal quarter, was approximately $432,092,162, based on price of $132.30(retroactively adjusted to reflect the March 24, 2015 one-for-fifteen reverse stock split) at which the registrant’s common equity waslast sold as quoted on the Over-the-Counter Bulletin Board on that date. Shares of common stock held by each director, each officerand each person who owns 10% or more of the outstanding common stock have been excluded from this calculation in that suchpersons may be deemed to be affiliates. The determination of affiliate status is not necessarily conclusive.

The registrant had 34,879,194 shares of its common stock outstanding as of March 30, 2015.

DOCUMENTS INCORPORATED BY REFERENCE

None.


EXPLANATORY NOTE

Electronic Cigarettes International Group, Ltd. (the “Company”) is filing this Amendment No. 2 (the “Amendment”) to our AnnualReport on Form 10-K for the year ended December 31, 2014 as filed on April 1, 2015 (the “Original 10-K”), as amended on April 2,2015 (“Amendment No. 1” and with the Original 10-K the “Amended 10-K”) to provide the information required by Items 10, 11, 12,13 and 14 of Part III of Form 10-K. No changes have been made to the Amended 10-K other than the addition of the Part IIIinformation.

As required pursuant to the Securities and Exchange Act of 1934, as amended, this Amendment also includes updated certificationsfrom the Company’s Chief Executive Officer and Chief Financial Officer as Exhibits 31.1 and 31.2.

Unless expressly stated, this Amendment does not reflect events occurring after the filing of the Original 10-K, nor does it modify orupdate in any way the disclosures contained in the Amended 10-K, which speak as of the date of the original filing. Accordingly, thisAmendment should be read in conjunction with the Amended 10-K and our other SEC filings subsequent to the filing of the Original10-K. The reference on the cover of the Original 10-K to the incorporation by reference of portions of the Company’s Proxy Statementfor its 2015 Annual Meeting of Stockholders into Part III of the Original 10-K is hereby deleted.


TABLE OF CONTENTS

PART III

Item 10. Directors, Executive Officers and Corporate Governance 1Item 11. Executive Compensation 6Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 12Item 13. Certain Relationships and Related Transactions, and Director Independence 14Item 14. Principal Accountant Fees and Services 17

PART IV Item 15. Exhibits and Financial Statement Schedules 18

SIGNATURES 22

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of the Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events orconditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,”“would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similarexpressions. These forward-looking statements are found at various places throughout this Report and include informationconcerning possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans andobjectives of management; any other statements regarding future operations, future cash needs, business plans and future financialresults, and any other statements that are not historical facts.

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in our pressreleases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-lookingstatements included in this Report and in any other reports or public statements made by us are not guarantees of futureperformance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations,assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors areoutside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-lookingstatements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might notoccur or might occur to a materially different extent or at a different time than we have described. You are cautioned not to placeundue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oralforward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on ourbehalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as aresult of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements,or otherwise.

For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see“Item 1A — Risk Factors” below.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance Executive Officers and Directors Our executive officers, directors and other significant employees and their ages and positions are as follows:

Name Age Position Date First Elected orAppointed

Daniel J. O’Neill

63 Chief Executive Officer, Executive Chairmanand Director

January 9, 2015

Philip Anderson 48 Chief Financial Officer and Secretary January 9, 2015James P. Geiskopf 55 Director June 25, 2013Craig Colmar 62 Director August 18, 2014David Karp 50 Director August 18, 2014 Business Experience The following is a brief account of the education and business experience during at least the past five years of each director andexecutive officer of our company, indicating the person’s principal occupation during that period, and the name and principal businessof the organization in which such occupation and employment were carried out. Daniel J. O’Neill was the President and Chief Executive Officer of WinSport Canada, Canada’s Winter Olympic training facility, fromJanuary 2011 through his appointment as the Company’s Executive Chairman on January 9, 2015. From June 2005 throughDecember 2010, Mr. O’Neill was a private investor focusing on identifying acquisition opportunities. From June 2000 through June2005, Mr. O’Neill was the President and Chief Executive Officer of Molson Inc., one of the world’s largest beer companies, and fromMarch 1999 through June 2000, Mr. O’Neill was an executive Vice President for Molson Inc., and the President and Chief OperatingOfficer of Molson Canada. From January 1997 to March 1999, Mr. O’Neill was an Executive Vice President of the H.J. HeinzCompany, and the President and Chief Executive Officer of Star-Kist Foods, Inc. Mr. O’Neill serves on the board of directors of BRPInc. (TSX: DOO), where he is a member of the audit committee and the human resources, nomination and governance committee.Mr. O’Neill received a Masters in Business Administration from Queen’s University and a Bachelor of Arts from Carleton University inCanada.

Mr. O’Neill’s qualifications to serve on the Company’s Board include his vast executive and operational experience. Philip Anderson was an independent advisor to Pinnacle Fund, a family office and predecessor hedge fund, from December 2006through his appointment as Chief Financial Officer of the Company. At Pinnacle Fund, Phil oversaw investments in both public andprivate companies. Prior to joining Pinnacle Fund, Mr. Anderson was the director of research at Siar Capital, a family officespecializing in micro- and small-cap public and private investments. Prior to his time spent with Siar Capital, Phil performed sell-sideresearch at C.E. Unterberg and Ladenburg Thalmann. Mr. Anderson holds a Bachelor of Science from Ithaca College and a Mastersof Business Administration from Hofstra University. James P. Geiskopf has served as a director of our company since June 25, 2013. James P. Geiskopf has 32 years of experience inthe car rental industry. From 1975 to 1986, Mr. Geiskopf was the Chief Financial Officer of Budget Rent a Car of FairfieldCalifornia. From 1986 to 2007, Mr. Geiskopf was the President and Chief Executive Officer of Budget Rent a Car of FairfieldCalifornia. In 2007, Mr. Geiskopf successfully sold the franchise and its four locations. Mr. Geiskopf served on the board of directorsof Suisun Valley Bank from 1986 to 1993. The bank was successfully sold to a larger institution in 1993. Mr. Geiskopf also served onthe board of directors of Napa Valley Bancorp from 1991 to 1993. The bank holding company was successfully sold to a largerinstitution in 1993. Mr. Geiskopf was the President and director of the Resource Group Inc. from 2007 to 2009, a shell company withminimal operations quoted on the OTCBB. Mr. Geiskopf was President, Secretary, Treasurer, and director of Search ByHeadlines.com from 2011 to 2012, a shell company with minimal operations quoted on the OTCBB. Mr. Geiskopf currently serves onthe board of directors of bBooth, Inc. (OTCQB: BBTH), where he is a member of the audit committee. We believe Mr. Geiskopf is qualified to serve on our board of directors because of his business experiences, including his experiencewith other public companies, as described above.

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Craig Colmar has served as a member of the Board of Directors of the Company since August 18, 2014. Mr. Colmar has practicedlaw with Johnson and Colmar, a firm focusing on business, corporate finance and mergers and acquisitions, since 1980, where hispractice is concentrated on mergers and acquisitions transactions. In 2010, Mr. Colmar was co-founder of The Joint Corp. (NASDAQ:JYNT), a franchisor and operator of chiropractic clinics, and currently serves on its board of directors. In 2006 Mr. Colmar was co-founder of Digital Music Group, Inc., which, before its merger with Orchard Enterprises, was listed on NASDAQ. Mr. Colmar receiveda JD from Northwestern University School of Law in 1977 and a BA in economics from Northwestern University in 1974. Mr. Colmar’s qualifications to serve on our board of directors include his significant experience with corporate finance and mergersand acquisitions of public companies. David Karp has served as a director of our company since August 18, 2014. Mr. Karp is an accounting and corporate financeprofessional with over 20 years of financial and operating experience. Since 2006, Mr. Karp has been the Chief Financial Officer,Treasurer and Corporate Secretary of CounterPath Corporation, a NASDAQ and Toronto Stock Exchange (“TSX”) listed softwarecompany, with responsibility for that company’s acquisitions and integration as well as its initial listing process to the NASDAQ andthe TSX. From 2004 to 2006 he was the Chief Financial Officer and Corporate Secretary of Chemokine Therapeutics Corp., aformerly TSX listed and U.S. quoted development stage biotechnology firm, and from 2002 to 2004 he was the Chief Financial Officerof Neuro Discovery Inc., a formerly TSX-Venture listed investment management company focused on life science and biotechnologycompanies. From 1997 through 2001 he was Vice-President, Investment Banking with BMO Capital Markets. Mr. Karp holds aMaster of Business Administration degree from the Ivey School of Business at the University of Western Ontario in Canada and aBachelor of Science degree in Mechanical Engineering from the University of Waterloo in Canada. He is a Chartered FinancialAnalyst (CFA) and professional engineer.

Mr. Karp’s qualifications to serve on our board of directors include his financial experience with public companies and his experiencewith newly listed companies. Voting Agreement On July 15, 2014, we entered into a voting agreement with Man FinCo, Brent Willis, Marc Hardgrove and William Fields, in which wegranted Man FinCo the ability to designate a director to the Company’s board of directors, and Mr. Willis, Mr. Hardgrove and Mr.Fields agreed to vote any and all of their shares for the election of such director. For a further description of the voting agreement,please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and CapitalResources—Subsequent Debt and Equity Financings—The Equity Offering.”

Term of Office Each director of our company is to serve for a term of one year ending on the date of subsequent annual meeting of stockholdersfollowing the annual meeting at which such director was elected. Notwithstanding the foregoing, each director is to serve until hissuccessor is elected and qualified or until his death, resignation or removal. Our board of directors is to elect our officers and eachofficer is to serve until his successor is elected and qualified or until his death, resignation or removal. Composition of Board Our board of directors currently consists of four members, three of which qualify as independent directors under the corporategovernance standards of the NASDAQ Global Market and the independence requirements of Rule 10A-3 of the Exchange Act,constituting a board that is comprised of a majority of independent directors. Board Committees Our board of directors has established an audit committee, compensation committee and corporate governance and nominationcommittee that have the composition and responsibilities described below. Our board of directors may establish additional committeesfrom time to time, in accordance with our bylaws. All members of the committees described below are “independent” under NASDAQMarketplace Rules.

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The composition of our committees are as follows: Audit — David Karp*^, James P. Geiskopf, Craig ColmarCompensation — James Geiskopf*, Craig ColmarCorporate Governance and Nomination — Craig Colmar** — Indicates Committee Chair^ — Indicates audit financial expert

Audit Committee Our audit committee oversees our corporate accounting and financial reporting process. Among other matters, the audit committee:

· evaluates the independent registered public accounting firm’s qualifications, independence and performance;· determines the engagement of the independent registered public accounting firm;· reviews and approves the scope of the annual audit and the audit fee;· discusses with management and the independent registered public accounting firm the results of the annual audit and the

review of our quarterly financial statements;· approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit

services;· reviews our critical accounting policies and estimates; and· annually reviews the audit committee charter and the committee’s performance.

The audit committee operates under a written charter adopted by the board that satisfies the applicable standards of NASDAQ,although we are not a NASDAQ listed company. Compensation Committee Our compensation committee reviews and recommends policies relating to the compensation and benefits of our officers andemployees. The compensation committee reviews and approves corporate goals and objectives relevant to the compensation of ourchief executive officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives,and makes recommendations to the board of directors regarding compensation of these officers based on such evaluations. Thecompensation committee administers the issuance of stock options and other awards under our stock plans. The compensationcommittee reviews and evaluates, at least annually, the performance of the compensation committee. The compensation committeeoperates under a written charter adopted by the board of directors that satisfies the applicable standards of NASDAQ, although weare not a NASDAQ listed company. Corporate Governance and Nomination Committee Our corporate governance and nomination committee is responsible for, among other objectives, making recommendations to theBoard regarding candidates for directorships; overseeing the evaluation of the board of directors; reviewing developments incorporate governance practices; developing a set of corporate governance guidelines, and; reviewing and recommending changes tothe charters of other board committees. In addition, the corporate governance and nomination committee is responsible foroverseeing our corporate governance guidelines and reporting and making recommendations to the board concerning corporategovernance matters. Family Relationships

There are no relationships between any of the officers or directors of the Company.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten (10) years:

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· Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and

other minor offenses); · Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or

business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or withintwo years prior to that time;

· Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competentjurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, hisinvolvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insuranceactivities, or to be associated with persons engaged in any such activity;

· Been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or theCommodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgmenthas not been reversed, suspended, or vacated;

· Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, notsubsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants),relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulationrespecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction,order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal orprohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

· Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinaryauthority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executiveofficers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which arerequired to be disclosed pursuant to the rules and regulations of the Commission.

Leadership Structure of the Board

The Board of Directors does not currently have a policy on whether the same person should serve as both the Chief Executive Officerand Chairman of the Board or, if the roles are separate, whether the Chairman should be selected from the non-employee directors orshould be an employee. The Board believes that it should have the flexibility to make these determinations at any given point in timein the way that it believes best to provide appropriate leadership for the Company at that time. Our current Chairman, Mr. Daniel J.O’Neill also serves as the Company’s Chief Executive Officer.

Risk Oversight

The Board oversees risk management directly and through its committees associated with their respective subject matter areas.Generally, the Board oversees risks that may affect the business of the Company as a whole, including operational matters. TheAudit Committee is responsible for oversight of the Company’s accounting and financial reporting processes and also discusses withmanagement the Company’s financial statements, internal controls and other accounting and related matters. The CompensationCommittee oversees certain risks related to compensation programs and the Governance and Nomination Committee overseescertain corporate governance risks. As part of their roles in overseeing risk management, these Committees periodically report to theBoard regarding briefings provided by management and advisors as well as the Committees’ own analysis and conclusions regardingcertain risks faced by the Company. Management is responsible for implementing the risk management strategy and developingpolicies, controls, processes and procedures to identify and manage risks.

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Code of Ethics

The Board has adopted a Code of Business Ethics and Conduct (the “Code of Conduct”) which constitutes a “code of ethics” asdefined by applicable SEC rules and a “code of conduct” as defined by applicable NASDAQ rules, although we are not a NASDAQlisted company. We require all employees, directors and officers, including our principal executive officer and principal financial officerto adhere to the Code of Conduct in addressing legal and ethical issues encountered in conducting their work. The Code of Conductrequires that these individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in anhonest and ethical manner and otherwise act with integrity. The Code of Conduct contains additional provisions that apply specificallyto our Chief Executive Officer, Chief Financial Officer and other finance department personnel with respect to accurate reporting. TheCode of Conduct is available on our website at www.ecig.co. The Company will post any amendments to the Code of Conduct, aswell as any waivers that are required to be disclosed by the rules of the SEC on such website. Information contained on our websiteis not a part of, and is not incorporated into, this proxy statement, and the inclusion of our website address in this proxy statement isan inactive textual reference only. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors and executive officers, and persons who ownmore than ten (10%) percent of the Company’s common stock, to file with the SEC the initial reports of ownership and reports ofchanges in ownership of common stock. Officers, Directors and greater than ten (10%) percent stockholders are required by SECregulation to furnish the Company with copies of all Section 16(a) forms they file.

Specific due dates for such reports have been established by the SEC, and the Company is required to disclose in this report anyfailure to file reports by such dates during fiscal year 2014. Based solely on its review of the copies of such reports received by it, orwritten representations from certain reporting persons that no Forms 5 were required for such persons, the Company believes thatduring the fiscal year ended December 31, 2014, there was no failure to comply with Section 16(a) filing requirements applicable to itsexecutive officers, directors or ten percent stockholders other than as listed in the table below:

Name Number of Late ReportsBrent D. Willis 1 (5 transactions were not reported on a timely basis, upon the

distribution of shares.)James P. McCormick A Form 5 was not filed for the acquisition of options to purchase

shares.William R. Fields 1 (2 transactions were not reported on a timely basis, upon the

acquisition of warrants to purchase shares, and 1 transaction wasnot reported on a timely basis, upon the disposition of warrants topurchase shares). A Form 5 was not filed for the acquisition ofoptions to purchase shares.

Craig Colmar 1 (1 transaction was not reported on a timely basis, uponbecoming a required filer).

Charles L. Jarvie A Form 5 was not filed upon becoming a required filer.Howard Lefkowitz 1 (1 transaction was not reported on a timely basis, upon

becoming a required filer).Tim McClure 1 (1 transaction was not reported on a timely basis, upon

becoming a required filer).David Karp 1 (1 transaction was not reported on a timely basis, upon

becoming a required filer).

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Item 11. Executive Compensation. Summary Compensation Table for Fiscal Years 2014 and 2013

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executiveofficers during the years ended December 31, 2014 and 2013.

Name and Principal Position Year Salary

($) Bonus

($)

StockAwards

($)

OptionAwards

($)(6)

Non-EquityIncentive

PlanCompensation

($)

NonqualifiedDeferred

CompensationEarnings ($)

AllOther

Compensation($) Total ($)

Brent D. Willis(1) 2014 342,000 226,883 568,883 Chief Executive Officer 2013 142,308 — — 150,000 — — — 292,308 President and Secretary James McCormick(2) 2014 142,792 — — — — — — 142,792 Chief Financial Officer and Treasurer Robert Hartford(3) 2014 100,223 — — — — — — 100,223 Former Chief Financial 2013 71,154 — — 50,000 — — — 121,154 Officer and Treasurer Marc Hardgrove(4) 2014 216,698 — — — — — — 216,698 President — Online Division 2013 106,731 — — — — — — 106,731 Nathan Woods(5) 2013 — — — — — — — — Former Chief ExecutiveOfficer and President (1) Mr. Willis was appointed as Chief Executive Officer, President and Secretary on June 25, 2013. The amount set out in the table

above for Mr. Willis for the year 2013 up to June 25, reflects $100,000 and $50,000 of compensation, respectively, paid by VictoryElectronic Cigarettes, Inc., which became our wholly-owned subsidiary on June 25, 2013. Mr. Willis resigned as Chief ExecutiveOfficer, President and Secretary on April 8, 2015.

(2) Mr. McCormick was appointed Chief Financial Officer and Treasurer on April 22, 2014. Mr. McCormick resigned as ChiefFinancial Officer on January 9, 2015.

(3) Mr. Hartford was appointed Chief Financial Officer and Treasurer on July 9, 2013. Mr. Hartford received compensation prior toJuly 9, 2013 from the Company for services rendered as a consultant. He resigned upon the appointment of James McCormick asChief Financial Officer. Mr. Hartford received compensation following his resignation for continued services as an employee.

(4) Mr. Hardgrove was appointed as Chief Creative Innovation Officer on June 25, 2013. The amount set out in the table above forMr. Hardgrove for the year 2013 up to June 25, reflects $150,000 and $37,000 of compensation, respectively, paid by VictoryElectronic Cigarettes, Inc., which became our wholly-owned subsidiary on June 25, 2013. Mr. Hardgrove resigned as President— Online Division on March 6, 2015.

(5) Mr. Woods resigned from his position as Chief Executive Officer and President on June 25, 2013. Mr. Woods received nocompensation for his services as an employee for 2013 up to June 25. We did not have an employment agreement with Mr.Woods. He received no compensation upon his resignation or the change of control that occurred on June 25, 2013, when weacquired Victory Electronic Cigarettes, Inc. pursuant to a share exchange agreement.

(6) The aggregate grant date fair value for 2014 and 2013 stock awards was computed in accordance with FASB ASC 718. Adiscussion of all assumptions made in the valuation of the awards is in Note 12, Stock Based Compensation, to our consolidatedfinancial statements for the year ended December 31, 2014 included in this report.

Employment Agreements Employment Agreement with Robert Hartford On July 9, 2013, we entered into an employment agreement with Robert Hartford, whereby Mr. Hartford agreed to provideemployment services as the Chief Financial Officer of our company. Pursuant to the terms of his agreement, Mr. Hartford is entitled toreceive a base salary of $100,000 per annum, which is subject to annual review commencing January 1, 2014. His base salary for the2013 calendar year was based upon an amount of $100,000 pro-rated from July 9, 2013, which such amount was $46,154. InJanuary of each year starting in 2014, the board of directors will determine if a salary adjustment increase is warranted forMr. Hartford and shall establish criteria for the payment of an incentive bonus with respect to such year. Mr. Hartford was notprovided with an increase in his salary in January of 2014. Mr. Hartford’s performance bonus is based upon a target of three areasconsisting of profit growth, free cash flow and cash flow management; and a strategic objective (e.g. funding, line of credit, etc.). IfMr. Hartford achieves such targets as established by the board of directors, he will earn a performance bonus calculated at 25% of


base salary. Mr. Hartford did not receive a performance bonus in respect of 2013. Pursuant to his agreement, Mr. Hartford is alsoeligible to participate in our company’s stock option or share award plan, and Mr. Hartford has the right to receive a potential stock orstock option award each year commensurate with the achievement of the performance bonus, subject to vesting and otherrequirements.

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Pursuant to the terms of his agreement, Mr. Hartford was entitled to receive a grant of a yet to be determined equity or equity-basedaward with respect to 1,000,000 common shares of our company, to vest at a rate of 50% on December 31, 2013 and 50% onDecember 31, 2014. Accordingly, on July 9, 2013, he was granted 1,000,000 options by the board of directors, which have anexercise price of $0.25 per share and will expire on July 9, 2018. In the event of a “significant financial event or a change of control” as defined in Mr. Hartford’s employment agreement, all shares,options, warrants or share equivalents held by him will immediately vest. Mr. Hartford is entitled to three weeks’ paid vacation each year. He is also entitled to receive reimbursement for all expensesreasonably incurred in connection with the performance of his duties under the agreement. Mr. Hartford’s employment agreement was initially effective from July 9, 2013 until January 1, 2014, with annual 1-year automaticrenewals, unless terminated in accordance with the agreement. Either party was required to provide written notice to the other party ifthe former elects not to renew the employment agreement; however, the exercising party shall provide such written notice on orbefore 60 days prior to the commencement of the renewal period. Pursuant to the terms of the employment agreement, Mr. Hartford agreed that he will not, without the prior written consent of ourcompany, during the term of the employment agreement or for a period of 12 months after the expiration or termination of hisemployment, engage in or carry on business or otherwise have any interest in or permit his name to be used in connection with anye-cigarette business which is competitive to the business of our company or which provides the same or substantially similar servicesas the business of our company. Further, and under such circumstances, Mr. Hartford agreed he will not solicit, interfere with, acceptany business from or render any services to anyone whom Mr. Hartford knows or should have reason to know is a client orprospective client of our company. Mr. Hartford is not entitled to receive severance payments under the terms of his employment agreement. His agreement doesprovide that our company may terminate the employment agreement for the following reasons at any time, without payment of anyamounts except accrued amounts, by delivery of a notice of termination for any of the following reasons:

• Mr. Hartford, in carrying out his duties, engages in conduct that constitutes intentional or conscientious misconduct (including

but not limited to intentional or reckless breach of fiduciary duties);

• Mr. Hartford commits an intentional or reckless and material breach of his employment agreement or commits an intentional or

reckless act of misappropriation or fraud against our company, our property, or otherwise; • Mr. Hartford is convicted of any felony or act of dishonesty by a court of competent jurisdiction; or

• Mr. Hartford materially fails to achieve annual mutually agreed performance objectives as established by management and

agreed upon by our board of directors. Pursuant to the terms of the employment agreement, we agreed to defend, indemnify and hold harmless Mr. Hartford if he isthreatened or made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of thefact that he is or was a director, officer or employee of our company.

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Prior Employment Agreements with Brent Willis and Marc Hardgrove On June 25, 2013, we entered into employment agreements with Brent Willis and Marc Hardgrove, both of which are in substantiallythe same form (except for the economic difference as described below) whereby we agreed to employ Mr. Willis as our ChiefExecutive Officer and Mr. Hardgrove originally as our Chief Creative Innovation Officer and currently as our President – OnlineDivision. On August 22, 2014, we entered into amended and restated employment agreements with Mr. Willis and Mr. Hardgrove.See “2014 Employment Agreements”, below. Pursuant to the terms of their prior agreements, we agreed to pay Mr. Willis and Mr. Hardgrove base salaries of $200,000 and$150,000 per annum, respectively, subject to annual review commencing January 1, 2014. Both of Mr. Willis’ and Mr. Hardgrove’sbase salaries for the 2013 calendar year were pro-rated from June 25, 2013, and they received total salaries for 2013 of $92,308 and$69,231, respectively. In January of each year starting in 2014, the board of directors is to determine if a salary adjustment increaseis warranted for Mr. Willis and Mr. Hardgrove and establishes criteria for the payment of an incentive bonus with respect to such year.For 2014, the board of directors did not provide for an increase in Mr. Willis’ and Mr. Hardgrove’s base salary. Mr. Willis andMr. Hardgrove were also entitled under the terms of their prior agreement to receive performance bonuses based upon criteria to beestablished by the board of directors. If Mr. Willis or Mr. Hardgrove achieved the targets established by the board of directors, theywould each earn a performance bonus of 50% of their respective base salaries. If Mr. Willis or Mr. Hardgrove exceeded the targetsestablished by the board of directors, they had the opportunity to earn a performance bonus of up to 100% of their respective basesalaries. Pursuant to the terms of their prior agreements, Mr. Willis and Mr. Hardgrove were eligible to participate in our company’sstock option or share award plan, and had the right to receive a potential stock or stock option award each year commensurate withthe achievement of the performance bonus, subject to vesting and other requirements. Pursuant to the terms of his prior agreement, Mr. Willis was entitled to receive a grant of a yet to be determined equity or equity-basedaward with respect to 3,000,000 common shares of our company to vest at a rate of 50% on December 31, 2013 and 50% onDecember 31, 2014. Accordingly, on June 25, 2013, he was granted 3,000,000 options by the board of directors, which have anexercise price of $0.25 per share and will expire on June 25, 2018. In the event of a “significant financial event” or a “change ofcontrol” as defined under “Potential Payments upon Termination or Change in Control,” all shares, options, warrants or shareequivalents will immediately vest. Pursuant to the terms of his prior agreement, Mr. Hardgrove was entitled to receive a grant of equity or equity-based awards in for anunspecified number of shares, with vesting and other terms to be determined at the time of grant. Messrs. Willis’ and Hardgrove’s prior employment agreements were initially effective from June 25, 2013 until January 1, 2014, withannual 1-year automatic renewals, unless terminated in accordance with the agreement. Either of Messrs. Willis and Hardgrove, asapplicable, or our company was required to provide written notice to the other party if the former elected not to renew the employmentagreement; however, the exercising party shall provide such written notice on or before 60 days prior to the commencement of therenewal period. Pursuant to the terms of their prior employment agreement, Messrs. Willis and Hardgrove had agreed that they would not, without theprior written consent of our company, during the term of the employment agreement or for a period of 12 months after the expirationor termination of their employment, engage in or carry on business or otherwise have any interest in or permit their name to be usedin connection with any e-cigarette business which is competitive to the business of our company or which provides the same orsubstantially similar services as the business of our company. Further, and under such circumstances, Messrs. Willis and Hardgroveagreed that they would not solicit, interfere with, accept any business from or render any services to anyone whom they knew orshould have had reason to know is a client or prospective client of our company. Messrs. Willis and Hardgrove were not entitled to receive severance payments under the terms of their prior agreements employmentagreement. We also agreed to defend, indemnify and hold harmless Messrs. Willis and Hardgrove if either of them was threatened ormade a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that theywere a director, officer or employee of our company.

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2014 Employment Agreements On August 22, 2014, we entered into amended and restated employment agreements with Messrs. Willis and Hardgrove and a newemployment agreement with Mr. McCormick, all of which are in substantially the same form, except for the economic difference asdescribed below (the “2014 Employment Agreements”). The 2014 Employment Agreements were effective as of April 1, 2014 forMessrs. Willis and Hardgrove and May 1, 2014 for Mr. McCormick and provide for initial terms of three years from the relevanteffective dates, unless terminated by Messrs. Willis, McCormick and Hardgrove or by us. Pursuant to the terms of the 2014 Employment Agreements, we agreed to pay Mr. Willis, Mr. McCormick and Mr. Hardgrove annualbase salaries of $390,000, $225,000 and $250,000, respectively, subject to annual review. Messrs. Willis, McCormick and Hardgrovewere eligible for performance-based annual cash incentive bonuses depending on the extent to which the applicable performancegoals of the Company, which are to be established by our Compensation Committee or pursuant to a formal bonus plan, areachieved. Messrs. Willis and Hardgrove are eligible to receive annual cash incentive bonuses in an amount determined by ourCompensation Committee or our board of directors and Mr. McCormick is initially eligible for a targeted cash bonus of up to 50% ofhis base salary as well as an agreed multiple thereof, as approved by our Compensation Committee. Messrs. Willis, McCormick andHardgrove are also entitled to participate in all of our benefit plans and our equity-based compensation plans, which currently consistsof our 2014 Long-Term Incentive Plan (the “LTIP”). Their agreements also provide for the accelerated vesting of all outstanding equityawards held by them upon the occurrence of a change of control of us. Messrs. Willis, McCormick and Hardgrove are entitled to a level of paid vacation consistent with vacation afforded other similarlysituated executives. Our company has agreed to reimburse Messrs. Willis, McCormick and Hardgrove for all expenses reasonablyincurred in connection with the performance of their duties. Pursuant to the terms of the 2014 Employment Agreements, Messrs. Willis, McCormick and Hardgrove have agreed that they will not,without the prior written consent of our company, during the term of each of their 2014 Employment Agreements or for as long as theyreceive any severance benefits following the expiration or termination of their employment, be engaged as an officer or executive of,or in any way be associated in a management or ownership capacity with, any business which is in direct competition with thebusiness of our company. Further, Messrs. Willis, McCormick and Hardgrove have agreed they will not solicit, interfere with, acceptany business from or render any services to anyone whom they know or should have reason to know is a client or prospective clientof our company. Our company may terminate Messrs. Willis, McCormick and Hardgrove at any time by delivery of a notice of termination. In the eventof the death of Messrs. Willis, McCormick or Hardgrove, their respective employment automatically terminates. If our companydetermines in good faith that Mr. Willis, Mr. McCormick or Mr. Hardgrove has been absent from his duties for an aggregate of 180days within any given period of 270 consecutive days as result of incapacity, despite any reasonable accommodation required bylaw, which will be permanent and continuous during the remainder of their life, we may give notice of our intention to terminate theirrespective employment. In this event, Messrs. Willis, McCormick or Hardgrove’s employment shall terminate on the thirtieth day afterreceipt of such notice, provided they have not returned to full-time performance of their duties. In either such cases of their death ordisability, Messrs. Willis, McCormick and Hardgrove will be entitled to receive any accrued amounts of their base salary and a lumpsum payment equal to 24 months of their base salary as of the date of their termination. Messrs. Willis, McCormick and Hardgrove may terminate their employment for “Good Reason”, which includes: (A) the assignment ofany duties inconsistent with such executive’s position; (B) the Company requiring such executive to be based at any office or locationother than Nunica, Michigan and (C) any purported termination of such executive by the Company other than expressly permitted bytheir respective 2014 Employment Agreement. The 2014 Employment Agreements may be terminated for “Cause” for any of thefollowing reasons:

• Such executive, in bad faith or without reasonable belief that his actions are in the best interest of the Company, fails to

perform substantially his duties under the relevant 2014 Employment Agreement;

• Such executive, in bad faith or without reasonable belief that his actions are in the best interest of the Company, engages in

illegal conduct or gross misconduct that is materially and demonstrably detrimental to the Company; or

9


• Such executive is convicted of, or pleads nolo contendere to, any felony of theft, fraud, embezzlement or violent crime. If Messrs. Willis, McCormick or Hardgrove terminates their employment for Good Reason or is terminated by the Company other thanfor Cause, the Company is required to pay such executive a lump sum consisting of their earned but unpaid base salary through thetermination date, a pro-rata annual bonus, thirty-six months of base salary, and an amount equal to three times their annual bonus(which is unspecified under the terms of Messrs. Willis and Hardgrove’s agreements and is 100% of base salary in the case of Mr.McCormick). In addition, all stock options, stock appreciation rights, restricted stock and performance shares they hold willimmediately vest and the Company will be required to pay the amount of any excise and income tax payments payable by suchexecutive as a result of any payments of our common stock in settlement of accelerated stock options or stock appreciation rights. Pursuant to the terms of the 2014 Employment Agreements, we have agreed to defend, indemnify and hold harmless Messrs. Willis,McCormick and Hardgrove if they are threatened or made a party to any action, suit or proceeding, whether civil, criminal,administrative or investigative by reason of the fact that they are or were a director, officer or employee of our company. Employment Agreement with Philip Anderson On January 15, 2015, the Company entered into an employment agreement with Mr. Anderson. The employment agreementprovides for an initial term of three years from the effective date with automatic two year extensions, unless terminated byMr. Anderson or by the Company.

Pursuant to the terms of the employment agreement, the Company agreed to pay Mr. Anderson an annual base salary of $250,000,subject to annual review. Mr. Anderson is eligible for a targeted cash bonus of up to 50% of his base salary as well as an agreedmultiple thereof, as approved by the Compensation Committee. Mr. Anderson is also entitled to participate in all of the Company’sbenefit plans and equity-based compensation plans, which currently consists of the 2014 Long-Term Incentive Plan. The employmentagreement also provides for the accelerated vesting of all outstanding equity awards held by Mr. Anderson upon the occurrence of achange of control of the Company.

Mr. Anderson also received 1,000,000 options, priced at $0.7095 per share to purchase shares of the Company’s common stock. The options vest as follows: (i) 333,333 options are fully vested on the date of grant; (ii) 333,333 options vest on the first anniversaryof the employment agreement; and (iii) the remaining 333,334 options vest on the second anniversary of the employment agreement;provided that Mr. Anderson must be employed by the Company on a vesting date in order to vest in that portion of the options. Oncevested, the options shall remain exercisable throughout their ten year term, notwithstanding any termination of Mr. Anderson’semployment.

If Mr. Anderson terminates his employment for good reason, as defined in the Employment Agreement, or is terminated by theCompany other than for cause, as defined in the employment agreement, the Company is required to pay him a lump sum consistingof his earned but unpaid base salary through the termination date, a pro-rata annual bonus, thirty-six months of base salary, and anamount equal to three times his annual bonus. In addition, all stock options, stock appreciation rights, restricted stock andperformance shares he holds will immediately vest. Employment Agreement with Daniel J. O’Neill Effective as of March 17, 2015, the Company entered into an employment agreement with Mr. O’Neill. The employment agreementprovides for an initial term of three years from the effective date with automatic two year extensions, unless terminated by Mr. O’Neillor by the Company.

Pursuant to the terms of the employment agreement, the Company agreed to pay Mr. O’Neill an annual base salary of $390,000,subject to annual review. Mr. O’Neill is eligible for a targeted cash bonus of up to 200%, as approved by the CompensationCommittee, based on the achievement of objective metrics as approved by the Board of Directors, to be established no later than

March 31st of each year. Mr. O’Neill is also entitled to participate in all of the Company’s benefit plans and equity-basedcompensation plans, which currently consists of the 2014 Long-Term Incentive Plan. The employment agreement also provides forthe accelerated vesting of all outstanding equity awards held by Mr. O’Neill upon the occurrence of a change of control of theCompany.

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Mr. O’Neill also received 2,000,000 options, priced at $0.709 per share to purchase shares of the Company’s common stock. Theoptions vested in full on the date of grant, January 9, 2015, the date he was appointed by the board. The options remain exercisablethroughout their ten year term, notwithstanding any termination of Mr. O’Neill’s employment.

If Mr. O’Neill terminates his employment for good reason, as defined in the employment agreement, or is terminated by the Companyother than for cause, as defined in the employment agreement, the Company is required to pay him a lump sum consisting of hisearned but unpaid base salary through the termination date, a pro-rata annual bonus, thirty-six months of base salary, and an amountequal to three times his annual bonus. In addition, all stock options, stock appreciation rights, restricted stock and performance shareshe holds will immediately vest. Outstanding Equity Awards at 2014 Fiscal Year End

The following table provides information relating to the unexercised options and stock awards that have not vested for the namedexecutive officers as of December 31, 2014. Each award to each named executive is shown separately, with a footnote describingthe award’s vesting schedule.

Option Awards Stock Awards

Name

Number ofSecuritiesUnderlying

UnexercisedOptions

(#) Exercisable


UnexercisedOptions

(#) Unexercisable

EquityIncentive

PlanAwards:


UnexercisedUnearned

Options (#)

OptionExercise

Price($)

OptionExpiration

Date

Number ofShares or

Units of StockThat

Have NotVested

(#)

MarketValue ofShares

or Units ofStock ThatHave NotVested

($)

EquityIncentive

Plan Awards:Number ofUnearnedShares,Units or

Other RightsThat Have Not

Vested(#)

EquityIncentive

Plan Awards:Market or

Payout Value ofUnearned

Shares, UnitsOr OtherRights

That Have NotVested

($) Brent

D. Willis 200,000(1) — — $ 3.75 6/25/18 — — $ — $ — James

McCormick — — — $ — — — $ 66,667(2) $ 87,334(3)Robert

Hartford 33,334(4) — — $ 3.75 7/9/18 — — $ — $ — Marc

Hardgrove — — — — — — — $ — $ —

(1) 100,000 options vested on December 31, 2013 and 100,000 options vested on December 31, 2014and have not been exercised.(2) These shares of restricted stock vest in three equal tranches on April 1, 2015, January 1, 2016 and April 1, 2016, if Mr.

McCormick is employed with the Company on each of the respective vesting dates.(3) These shares of restricted stock had a market value of $87,334 on December 31, 2014, based on a closing market price for the

Company’s shares of common stock of $1.31 on such date.(4) These options vested on December 31, 2014 and have not been exercised. Director Compensation We did not pay any compensation to our directors for the fiscal year ended December 31, 2014.

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Pension Benefits We do not have any defined pension plans. Potential Payments upon Termination or Change in Control Our executive employment agreements do not call for any potential payments upon the termination or change in control other thanMessrs. O’Neill, Anderson and Mr. McCormick’s respective employment agreements. If Messrs. O’Neill, Anderson or McCormickterminates their employment for Good Reason or is terminated by the Company other than for Cause, the company is required to paysuch executive a lump sum consisting of their earned but unpaid base salary through the termination date, a pro-rata annual bonus,thirty-six months of base salary, and an amount equal to three times their annual bonus (which is unspecified under the terms ofMessrs. O’Neill and Anderson’s agreements and is 100% of base salary in the case of Mr. McCormick). In addition, all stock options,stock appreciation rights, restricted stock and performance shares they hold will immediately vest and the Company will be requiredto pay the amount of any excise and income tax payments payable by such executive as a result of any payments of our commonstock in settlement of accelerated stock options or stock appreciation rights. In connection with a change of control of our company,Messrs. O’Neill, Anderson and McCormick are entitled to receive gross-up payments equal to any excise tax imposed by Section4999 of the Internal Revenue Code on any payment by the Company to such executive. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 28, 2015 by(a) each stockholder who is known to us to own beneficially 5% or more of our outstanding common stock; (b) all directors; (c) ourexecutive officers, (d) all executive officers and directors as a group, and (e) each other stockholder selling shares in this offering.Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their sharesof common stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficialownership with respect to their shares of common stock. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock thatsuch person has the right to acquire within 60 days of April 28, 2015. For purposes of computing the percentage of outstandingshares of our common stock held by each person or group of persons named above, any shares that such person or persons has theright to acquire within 60 days of April 28, 2015 is deemed to be outstanding, but is not deemed to be outstanding for the purpose ofcomputing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does notconstitute an admission of beneficial ownership. Unless otherwise identified, the address of our directors, officers and 5%shareholders is c/o Electronic Cigarettes International Group, Ltd., 14200 Ironwood Drive, Grand Rapids, Michigan 49534.

Name and address of beneficial owner:

Amount andNature ofBeneficialOwnership

Percent of class ofCommon Stock (1)

5% Stockholders: None, other than certain persons listed under “Directors and Officers”. Directors and Officers:

Daniel J. O’Neill (2) 16,464,141 20.10%Chief Executive Officer, Executive Chairman, and Director

Philip Anderson (3) 2,484,458 3.66%Chief Financial Officer and Secretary

James P. Geiskopf (4) 120,001 * Director

Craig Colmar (5) 66,666 * Director

David Karp (6) 66,666 * Director Directors and Officers as a group (5 persons): 19,135,266 22.62%

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* Less than 1% (1) Based on 65,477,771 shares of Common Stock issued and outstanding as of April 28, 2015. Shares of Common Stock subject

to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computingthe percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing thepercentage of any other person.

(2) Includes 16,464,141 shares of common stock underlying options held by Mr. O’Neill that are presently exercisable. Mr. O’Neillalso owns a convertible note which can be converted into 260,608 shares of common stock and warrants to purchase 260,608shares of common stock. The convertible note cannot be converted and the warrants are not exercisable, however, to theextent that the number of shares of common stock if issued pursuant to such conversion or exercise would exceed, whenaggregated with all other shares of common stock owned by Mr. O’Neill at such time, would result in his beneficially owning inexcess of 4.99% of the then issued and outstanding shares of our common stock. Mr. O’Neill may increase this ownership capon 61 days’ prior notice to us. As a result of this ownership cap, Mr. O’Neill beneficially owns 16,464,141 shares of our commonstock. If Mr. O’Neill waived this ownership cap, he would beneficially own 16,985,357 shares of our common stock orapproximately 20.60% of our outstanding common stock.

(3) Includes 2,484,458 shares of common stock underlying options held by Mr. Anderson that are presently exercisable.(4) Includes 100,001 shares of common stock underlying options held by Mr. Geiskopf that are presently exercisable.(5) Includes 66,666 shares of common stock underlying options held by Mr. Colmar that are presently exercisable.(6) Includes 66,666 shares of common stock underlying options held by Mr. Karp that are presently exercisable. Equity Compensation Plan Information as of December 31, 2014

Plan Category

Number ofSecurities to be

Issued uponExercise of

OutstandingOptions

Weighted AverageExercise Price of

OutstandingOptions

Number ofSecuritiesRemaining

Available forFuture Issuance

underequity

compensationplans (excluding

securitiesreflected in

column (a)) (3)

(a) (b) (c)

Equity compensation plans approved by security

holders (1) 540,000 $ 26.38 93,334(3)

Equity compensation plans approved by security

holders (2) - $ - 1,138,509(3)

Equity compensation plans not approved bysecurity holders - - -

606,667 $ 26.38 1,231,843(3)

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(1) Represents the shares authorized for issuance under the Electronic Cigarettes International Group, Ltd. 2013 Long-Term

Stock Incentive Plan, which was approved by the Company’s shareholders on March 19, 2013. The maximum aggregatenumber of shares of Common Stock that may be issued under the Plan, including pursuant to stock options, stock awardsand stock appreciation rights, is limited to 666,667 shares of Common Stock

(2) Represents the shares authorized for issuance under the Electronic Cigarettes International Group, Ltd. 2014 Long-Term

Incentive Plan, which was approved by the Company’s shareholders on April 10, 2014. The maximum aggregate numberof shares of Common Stock that may be issued under the Plan, including Stock Options, Stock Awards, and StockAppreciation Rights is limited to 10% of the shares of Common Stock outstanding on the first trading day of any fiscal year,or 1,205,176 shares for fiscal 2015.

(3) As of January 1, 2015.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Transactions with Related Parties Our Board has adopted a written policy governing the approval of related party transactions that complies with all applicable SECrequirements. Our related parties include directors (including any nominee for election as a director), executive officers, 5%shareholders and the immediate family members of these persons. Our Chief Financial Officer, in consultation with other members ofmanagement and outside counsel, as appropriate, will review potential related party transactions to determine if they are subject tothe policy. If so, the transaction will be referred to the Audit Committee of our Board of Directors for approval. In determining whetherto approve a related party transaction, our Audit Committee will consider, among other factors, the fairness of the proposedtransaction, the direct or indirect nature of the related party’s interest in the transaction, the appearance of an improper conflict ofinterests for any director or executive officer, taking into account the size of the transaction and the financial position of the relatedparty, whether the transaction would impair an outside director’s independence, the acceptability of the transaction to our regulatorsand any possible violations of other of our corporate policies. Our Related Party Transactions Policy is available on our websiteat www.ecig.co. Except as described below, during the past two years, there have been no transactions, whether directly or indirectly, between ourcompany and any of our officers, directors, beneficial owners of more than 5% of our outstanding common stock or their familymembers, that exceeded $120,000. Transactions with Brent Willis As of December 31, 2013, Brent Willis, our former Chief Executive Officer and a former Director, had loans outstanding to ourcompany in amounts totaling approximately $60,000 and Marc Hardgrove, our former President-Online Division, had loansoutstanding to our company in amounts totaling approximately $388,166, including accrued interest of approximately $6,690 and$103,010, respectively. These payables accrued interest at a rate of 12% annually and were scheduled to mature on January 31,2014. These notes were paid in full as of February 6, 2014. In September 2013, the Company moved its operations from Ballground, Georgia to Nunica, Michigan and entered into a month-to-month agreement with a company related to Brent Willis to provide office and warehouse facilities, as well as administrative servicesto include a call center, order fulfillment, purchasing, inventory management and accounting for a monthly fee of approximately$21,000 per month. The agreement was terminated during September 2014.

Logistical and service support is provided by Versatile Wood Specialties (“Versatile”) and is owned by a relative of Brent Willis.Services have been benchmarked against other providers to ensure the costs are competitive. The relationship began in early 2014and continues still today. There is no formal signed agreement in place. Services provided by Versatile in 2014 and 2013 totaled$532,000 and $0 respectively.

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Transactions with William Fields On December 30, 2013, we entered into a comprehensive partnership agreement with Fields Texas Limited LLC’s affiliate, E-CigAcquisition Company LLC (“Fields Texas”) pursuant to which Fields Texas will act as our exclusive agent to secure sales anddistribution agreements of our products with various retailers and distributors both in the United States and internationally. William R.Fields, a director of the Company from December 30, 2014 through March 6, 2015, beneficially owns 25% of Fields Texas. FieldsTexas will also support our acquisition, product development, marketing, pricing and promotional efforts both in the United States andinternationally. Upon the execution of the Partnership agreement, we issued Fields Texas warrants to purchase 465,000 shares ofcommon stock at an exercise price of $135.75 per share which were immediately exercisable. Subsequently, Fields Texas assigneda portion of their warrants to an unaffiliated third party and the remainder as a pro-rata distribution to its members. Pursuant to theprotective down round provision contained in the warrant, as further described below, following the completion of our subsequentprivate offerings of convertible notes, warrants and shares of our common stock described under “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”, as of December 31, 2014, the exerciseprice of the warrants had adjusted to $0.75 per share and the number of shares currently subject to purchase was increased to39,980,535 shares of common stock. This followed the exchange by one of the Fields Texas members of all of its warrants for 5-yearwarrants to purchase 2,000,000 shares of Common Stock at an exercise price of $0.75, on December 31, 2014. The Companyissued 26,967 shares on April 17, 2014 from a partial exercise by the unaffiliated third party of warrants that Fields Texas hadassigned to it. The Company issued 15,241 shares on November 3, 2014, from a partial exercise of warrants by one of the FieldsTexas members. On November 25, 2014, the Company issued 37,861 shares in exchange for the cancelation of all of the warrantsheld by one of the Fields Texas members. In January 2015, Fields Texas members holding warrants to purchase 39,980,535 sharesamended their warrants to remove the protective down round position, fix the exercise price of the warrants at $0.75 and the numberof shares issuable at 2,000,000. Following the cancellation by one of the Fields Texas members of warrants to purchase 1,000,000shares in March 2015, as of March 31, 2015, the members of Fields Texas held in the aggregate warrants to purchase 3,000,000shares at an exercise price of $0.75. The Company also paid Fields Texas a $200,000 development fee to offset initial start-up costsand expenses.

Pursuant to the partnership agreement, we will pay Fields Texas ongoing commissions on the net sales of our products sold throughthe sales and distribution agreements secured by Fields Texas. In addition, for every $10,000,000 in annual net sales realizedthrough the sales and distribution agreements secured by Fields Texas, up to an aggregate of $100,000,000 in annual net salesrealized, we will issue Fields Texas five-year warrants to purchase 35,333 shares of common stock at an exercise price equal to theclosing price on the date the warrants are issued.

The exercise prices of the warrants are subject to adjustment upon certain events, such as stock splits, combinations, dividends,distributions, reclassifications, mergers or other corporate changes and dilutive issuances.

For a merger or acquisition, strategic partnership, joint venture, licensing or similar transaction that Fields Texas facilitates, we willpay a one-time fee equal to 5% of the purchase price paid in the same form of consideration as used in the transaction, thoughwarrants may be substituted for shares of common stock at our option on a one-for-one basis with the exercise price set as theclosing price of the day such transaction closed. To date, we have paid Fields Texas a fee of $1,250,000 and issued five-yearwarrants to purchase 33,333 shares of common stock at an exercise price of $150.00 per share in connection with the FIN acquisitionwhich were immediately exercisable. Subsequently, Fields Texas distributed its warrants on a pro-rata basis to its members. Inconnection with the exchanges on November 25, 2014 and December 31, 2014, mentioned above, members of Fields Texascancelled warrants to purchase 16,667 shares of common stock. Pursuant to the adjustment provision contained in the warrants, asof December 31, 2014, the exercise price of the warrants had adjusted to $0.75 per share and the number of shares subject topurchase was increased to 3,333,333 shares of common stock. These warrants were cancelled in January 2015 in connection withthe warrant amendments mentioned above. The term of the partnership agreement is for three years and will automatically be renewed for successive periods upon achievingannual net sales targets.

On April 28, 2014, the Company entered into an advisory agreement with Fields Texas Limited LLC (“FTX”), to provide variousadvisory services, which agreement was terminated on September 4, 2014. William R. Fields, one of our former directors, owns100% of FTX. Pursuant to the advisory agreement, the Company was obligated to pay FTX a fee equal to 3% of the total purchaseprice paid in connection with our VIP and Hardwire acquisitions for advice provided in connection with such acquisitions. Fields Texasdid not receive a 5% facilitation fee relating to the VIP or Hardwire acquisitions. To date, we have paid FTX fees of $270,000 inconnection with the VIP acquisition and $150,000 in connection with the Hardwire acquisition and will pay FTX an additional$330,000 as a fee upon our repayment of the VIP Promissory Notes described under “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations—Liquidity and Capital Resources”.

15


Transactions with Hardwire

Triangle Fulfillment EU dba Snap Networks provides marketing and logistics support and is wholly owned by the Director of Hardwire.This relationship was established prior to the entity being acquired and continues still today. Services in 2014 and 2013 were $31,000and $0 respectively.

Triangle Holdings Limited Hong Kong provides marketing and logistics support and is wholly owned by the Director of Hardwire. Thisrelationship was established prior to the entity being acquired and continues still today. Services in 2014 and 2013 were $577,000and $0 respectively.

Triangle Fulfillment provides marketing and logistics support and is wholly owned by the Director of Hardwire. This relationship wasestablished prior to the entity being acquired and continues still today. Services in 2014 and 2013 were $393,000 and $0 respectively. The Company incurred approximately $425,000 in expenses for various services received from Triangle during the year endedDecember 31, 2014. An executive at the Company also has an ownership interest in Triangle. Transactions with Vapestick management At December 31, 2012, a director of Vapestick owed $27,116 to Vapestick. There were no stated terms on the advance provided tothe director. This was paid back January 9, 2014, at the closing of our acquisition of Vapestick.

The Company, through the acquisition of Vapestick, became a party to a distribution agreement with MPL Ltd. (“MPL”). Under theterms of the agreement, MPL is licensed to act as the manufacturer, importer and distributor for Vapestick products for specifiedretailers in return for a royalty payment. Either party may terminate the agreement after January 1, 2016 on six months prior noticeand the satisfaction of certain conditions. The Chief Executive Officer of MPL is related to the Company’s President-International.Royalties for the years ended December 31, 2014 and 2013 were approximately $482,000 and $0, respectively. The Company, through the acquisition of Vapestick, became a party to a supplier agreement with Internet Marketing Hub Ltd. (“IMH”).Under the terms of the agreement, IMH provides the labor and expertise for the design, development and maintenance, includingsearch engine optimization for internet marketing on the websites: www.vapestick.co.uk and www.electroniccigarettedirect.co.uk. TheCompany’s President-International is a 50% owner of IMH. Pursuant to the terms of the agreement Vapestick will pay £15,000($23,367 as of December 31, 2014) for each month during which the agreement continues, and will pay an additional £10,000($15,578 as of December 31, 2014) per month for each month during the whole of which the Vapestick website is found at all timeson page 1 of Google UK’s organic search listings, following a search of Google UK only, using only the key phrase “electroniccigarette”. Total costs incurred under this agreement were approximately $271,000 and $0 for the years months ended December 31,2014 and 2013, respectively.

Director Independence

Although our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” ofThe NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is aperson other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of theCompany’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of adirector. The NASDAQ listing rules provide that a director cannot be considered independent if:

16


· the director is, or at any time during the past three years was, an employee of the company;· the director or a family member of the director accepted any compensation from the company in excess of $120,000 during

any period of 12 consecutive months within the three years preceding the independence determination (subject to certainexclusions, including, among other things, compensation for board or board committee service);

· a family member of the director is, or at any time during the past three years was, an executive officer of the company;· the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to

which the company made, or from which the company received, payments in the current or any of the past three fiscal yearsthat exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject tocertain exclusions);

· the director or a family member of the director is employed as an executive officer of an entity where, at any time during thepast three years, any of the executive officers of the company served on the compensation committee of such other entity; orthe director or a family member of the director is a current partner of the company’s outside auditor, or at any time during thepast three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

Based on the above qualifications, we have determined that Craig Colmar, David Karp and James Gieskopf are all independentdirectors. Item 14. Principal Accounting Fees and Services.

On April 1, 2014, the Company dismissed Accell Audit & Compliance, P.A. (“Accell”) as the Company’s independent registered publicaccounting firm and engaged McGladrey LLP (“McGladrey”) as its registered public accounting firm, effective April 1, 2014. OnJanuary 8, 2015, the Company dismissed McGladrey as the Company’s independent registered public accounting firm. On January15, 2015, the Company agreed to engage Rehmann Robson LLC (“Rehmann”) as its registered public accounting firm, effectiveJanuary 15, 2015 Principal Accounting Fees The following table presents aggregate fees for professional services rendered by Accell, McGladrey, and Rehmann for the audit ofour annual consolidated financial statements for the fiscal years ended December 31, 2014 and 2013.

For the Year Ended

December 31, 2014 2013 Audit fees (1) $ 2,005,166 $ 294,641 Audit- related fees (2) 695,904 - Tax fees (3) 110,004 - All other fees (4) 476,797 - Total fees $ 3,287,871 $ 294,641

(1) Audit fees were for professional services rendered for the audits of the financial statements of the Company, assistance with

review of documents filed with the Securities and Exchange Commission, consents, and other assistance required to beperformed by our independent registered public account firm.

(2) Audit-related fees were for professional services rendered relating to the acquisitions done by the Company in 2014,including due diligence, consulting and audits of the target companies.

(3) Tax fees were for professional services rendered in conjunction with international tax planning and corporate tax planning. (4) Other fees were for professional services rendered and consents issued related to our registration statements.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee pre-approves all audit and non-audit services provided by the independent auditors prior to the engagement ofthe independent auditors with respect to such services. The Chairman of the Audit Committee has been delegated the authority bythe Committee to pre-approve interim services by the independent auditors other than the annual audit. The Chairman must report allsuch pre-approvals to the entire Audit Committee at the next Committee meeting.

17


PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this Report:

(1) Financial Statements:

The audited consolidated balance sheet of the Company as of December 31, 2014, the related consolidated statements ofoperations, stockholders’ deficit and cash flows for the year then ended, the footnotes thereto, and the report of Rehmann RobsonLLC, independent auditors, are filed herewith.

The audited consolidated balance sheet of the Company as of December 31, 2013, the related consolidated statements ofoperations, stockholders’ deficit and cash flows for the year then ended, the footnotes thereto, and the report of McGladrey LLP,independent auditors, are filed herewith.

The audited consolidated balance sheet of the Company as of December 31, 2012, the related consolidated statements ofoperations, stockholders’ deficit and cash flows for the year then ended, the footnotes thereto, and the report of Accell, Audit &Compliance, P.A., independent auditors, are filed herewith.

(2) Financial Schedules:

None

Financial statement schedules have been omitted because they are either not applicable or the required information is included in theconsolidated financial statements or notes hereto.

(3) Exhibits:

The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.

(b) The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed withthe SEC in which the exhibit was included.

Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements thathave been made solely for the benefit of the parties to the agreement. These representations and warranties:

• may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the

agreements, which disclosures are not necessarily reflected in the agreements;

• may apply standards of materiality that differ from those of a reasonable investor; and

• were made only as of specified dates contained in the agreements and are subject to subsequent developments and changedcircumstances.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that theserepresentations and warranties were made or at any other time. Investors should not rely on them as statements of fact.

Exhibit No. Description of Exhibit2.1 Share Exchange Agreement dated April 2, 2013 among our Company, Victory Electronic Cigarettes, Inc. and the

shareholders of Victory Electronic Cigarettes, Inc. (1)2.2 Share Exchange Agreement by and among Victory Electronic Cigarettes Corporation, Vapestick Holdings Ltd., and

all the shareholders of Vapestick Holdings Ltd., dated December 15, 2013. (2)

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2.3 Agreement and Plan of Merger by and among Victory Electronic Cigarettes Corporation, VCIG LLC, FIN Electronic

Cigarette Corporation, Inc. and Elliot B. Maisel as Representative, dated February 12, 2014 (3)2.4 Exchange Agreement by and between Victory Electronic Cigarettes Corporation and the MHL Shareholders, dated

as of April 22, 2014. (11)2.5 Agreement to Buy the Shares in Ten Motives Limited and 10 Motives Limited by and between Victory Electronic

Cigarettes Corporation, E-Cigs UK Holding Company Limited, and the Ten Motives Shareholders, dated as of May30, 2014.(17)

3.1(i) Articles of Incorporation (4)3.1(i)(a) Articles of Merger (5)3.1(i)(b) Amendment to Articles of Incorporation(6)3.1(i)(c) Amendment to Articles of Incorporation(20)3.1(i)(d) Amendment to Articles of Incorporation(34)3.1(ii) Bylaws (4)4.1 Form of Convertible Note issued in January 2013 offering (7)4.2 Form of Warrant issued in January 2013 Offering (7)4.3 Form of Convertible Note dated November 4, 2013 (8)4.4 Form of Warrant issued to E-Cig Acquisition Company LLC and William R. Fields (9)4.5 Form of 15% Senior Secured Convertible Promissory Note issued in offerings in January and February 2014 (10)4.6 Form of Warrant issued in offerings in January and February 2014 (10)4.7 Form of 6% Secured Convertible Promissory Note issued in offering on April 22, 2014(11)4.8 Form of Amendment to 6% Convertible Note dated June 3, 2014(18)4.9 Form of Amendment No. 2 to 6% Convertible Note dated August 20, 2014(25)4.10 Form of Amendment No. 3 to 6% Convertible Note dated October 15, 2014(26)4.11 Form of Warrant from April 30, 2014 offering(12)4.12 Form of Agent Warrant (13)4.13 4% Exchange Convertible Note dated May 30, 2014(23)4.14 4% Convertible Note dated May 30, 2014(17)4.15 Form of 12% Convertible Notes dated July 17, 2014(24)4.16 Form of Warrant dated July 17, 2014(24)4.17 Form of December 12% Convertible Note (28)4.18 Form of 10% Convertible Note issued in January 14, 2015 offering (29)4.19 Form of January 12% Convertible Note issued in January 16, 2015 offering (30)4.20 Form February 12% Convertible Note issued in February 2015 offering (32)4.21 Form of Warrant issued in February 2015 offering (32)4.22 Form March 12% Convertible Note issued in March 2015 offering (33)4.23 Form of Warrant issued in March 2015 offering (33)4.24 Form of Prepaid Warrant issued in March 13, 2015 exchange (33)10.1 $200,000 Debenture dated January 31, 2013 issued by Victory Electronic Cigarettes LLC in favor of our company

(2)10.2 Security Agreement dated March 25, 2013 but effective as of January 31, 2013 between Victory Electronic

Cigarettes Inc. as debtor and our company as secured party (2)10.3 Return To Treasury Agreement dated June 18, 2013 between our company and Stephen Brady (14)10.4 Non-Broker Private Placement Agreement dated May 1, 2013 between our company and Wolverton Securities Ltd.

(14)10.5 General Financial Advisory Agreement dated June 21, 2013 between our company and Wolverton Securities Ltd.

(14)10.6 Promissory Note with Brent Willis (15)10.7 Promissory Note with Marc Hardgrove (15)10.8 Promissory Note with David Martin (15)10.9 Sales and Consulting Agreement by and among Victory Electronic Cigarettes Corporation and E-Cig Acquisition

Company LLC, dated December 30, 2013 (9)10.10 Form of Securities Purchase Agreement from offerings in January and February 2014 (10)10.11 Form of Registration Rights Agreement from offerings in January and February 2014 (10)10.12 Form of Security Agreement from offerings in January and February 2014 (10)

19


10.13 Form of Amended and Restated Promissory Notes dated February 28, 2014 (23)10.14 Form of Registration Rights Agreement entered into by and among Victory Electronic Cigarettes Corporation and

the FIN shareholders dated February 28, 2014 (10)10.15 Form of Promissory Notes dated April 22, 2014(11)10.16 Form of Registration Rights Agreement entered into with MHL Shareholders dated April 22, 2014(11)10.17 MHL Shareholders Guarantee (11)10.18 Security Agreement entered into between MHL and the MHL Shareholders(11)10.19 Form of Securities Purchase Agreement from April 22, 2014 offering(11)10.20 Form of Amendment to Securities Purchase Agreement dated June 3, 2014(18)10.21 Form of Amendment No. 2 to Securities Purchase Agreement dated August 20, 2014(25)10.22 Form of Amendment No. 3 to Securities Purchase Agreement dated October 15, 2014(26)10.23 Form of Registration Rights Agreement from April 22, 2014 offering(11)10.24 Form of Amendment to Registration Rights Agreement dated June 3, 2014(18)10.25 Form of Amendment No. 2 to Registration Rights Agreement dated October 15, 2014(26)10.26 Purchasers Guarantee from April 22, 2014 offering(11)10.27 Security Agreement entered into between MHL and purchasers from April 22, 2014 offering(11)10.28 Pledge and Security Agreement entered into between the Company and purchasers from October 15, 2014

offering(26)10.29 Share Charge entered into with purchasers from April 22, 2014 offering(11)10.30 Intercreditor Agreement(11)10.31 Amendment to Intercreditor Agreement(18)10.32 Second Amendment to Intercreditor Agreement (27)10.33 Third Amendment to Intercreditor Agreement(26)10.34 Form of Securities Purchase Agreement for April 30, 2014, June 19, 2014 and July 16, 2014 offering(12)10.35 Form of Registration Rights Agreement for April 30, 2014, June 19, 2014 and July 16, 2014 offering(19)10.36 Exchange Agreement dated May 30, 2014(24)10.37 Purchase Agreement dated May 30, 2014(17)10.38 Asset Purchase Agreement entered into on July 2, 2014 (21)10.39 Securities Purchase Agreement entered into on July 3, 2014(21)10.40 Voting Agreement entered into on July 15, 2014 (22)10.41 Registration Rights Agreement entered into with Man FinCo on July 15, 2014 (22)10.42 Registration Rights Agreement entered into with sellers of Hardwire on July 16, 2014 (22)10.43 Form of Exchange Agreement dated July 17, 2014(24)10.44 Advisory Agreement by and among Fields Texas Limited LLC and the Company dated April 28, 2014(25)10.45 Termination Agreement of Advisory Agreement with Fields Texas Limited LLC(25)10.46 Form of Securities Purchase Agreement for December 2014 offering(28)10.47 Form of Securities Purchase Agreement for January 14, 2015 offering(29)10.48 Form of Securities Purchase Agreement for January 16, 2015 offering(30)10.49 Form of Securities Purchase Agreement for February 2015 offering(32)10.50 Form of Securities Purchase Agreement for March 2015 offering(33)10.51 Form of Exchange Agreement for March 13, 2015 exchange (33)10.52 Form of 0.04% Unsecured Promissory Note dated March 13, 2014(33)10.53 † Employment Agreement with Brent Willis dated June 25, 2013. (14)10.54 † Employment Agreement with Marc Hardgrove dated June 25, 2013. (14)10.55 † Employment Agreement with Robert Hartford dated July 9, 2013 (16)10.56† Amended and Restated Employment Agreement with Brent Willis dated August 22, 2014(25)10.57† Amended and Restated Employment Agreement with Marc Hardgrove dated August 22, 2014(25)10.58† Employment Agreement with James McCormick dated August 22, 2104(25)10.59† Employment Agreement with Philip Anderson, dated January 15, 2015 (31)10.60† Employment Agreement with Daniel J. O’Neill, dated March 17, 201510.61† 2013 Stock Option Plan (13)10.62† 2014 Stock Option Plan (23)

20


14.1* Code of Ethics21.1 List of Subsidiaries (23)31.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302

of the Sarbanes-Oxley Act of 2002.31.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302

of the Sarbanes-Oxley Act of 2002.32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002.32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002.101.INS** XBRL Instance Document101.SCH** XBRL Taxonomy Schema101.CAL** XBRL Taxonomy Calculation Linkbase101.DEF** XBRL Taxonomy Definition Linkbase101.LAB** XBRL Taxonomy Label Linkbase101.PRE** XBRL Taxonomy Presentation Linkbase

* Previously filed on the Original 10-K.** Previously filed on Amendment No. 1.† Management contract or compensatory plan or arrangement. In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

(1) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 5, 2013.(2) Filed as an Exhibit on Annual Report on Form 10-K with the SEC on March 31, 2014.(3) Filed as an Exhibit on Current Report to Form 8-K with the SEC on February 19, 2014.(4) Filed as an Exhibit on Registration Statement on Form SB-2 with the SEC on May 15, 2007.(5) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 18, 2013.(6) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 11, 2014.(7) Filed as an Exhibit on Current Report to Form 8-K with the SEC on February 6, 2013.(8) Filed as an Exhibit on Quarterly Report on Form 10-Q with the SEC on November 14, 2013.(9) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 6, 2014.

(10) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 6, 2014.(11) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 29, 2014(12) Filed as an Exhibit on Current Report to Form 8-K with the SEC on May 6, 2014.(13) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 17, 2014.(14) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 28, 2013.(15) Filed as an Exhibit on Current Report to Form 8-K with the SEC on August 21, 2013.(16) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 12, 2013.(17) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 5, 2014.(18) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 9, 2014.(19) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 24, 2014.(20) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 9, 2014.(21) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 10, 2014.(22) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 18, 2014.(23) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on July 2, 2014.(24) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on July 28, 2014.(25) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on September 8, 2014.(26) Filed as an Exhibit on Current Report to Form 8-K with the SEC on October 21, 2014.(27) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on October 23, 2014.(28) Filed as an Exhibit on Current Report to Form 8-K with the SEC on December 29, 2014.(29) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 14, 2015.(30) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 22, 2015.(31) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 22, 2015.(32) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 4, 2015.(33) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 17, 2015.(34) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 24, 2015.

21


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD Date: April 30, 2015 By: /s/ Daniel J. O’Neill Daniel J. O’Neill Chief Executive Officer and Executive Chairman

(Principal Executive Officer)

Date: April 30, 2015 By: /s/ Philip Anderson Philip Anderson Chief Financial Officer and Treasurer

(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the Registrant and in the capacities and on the dates indicated.

Date: April 30, 2015 By: /s/ Daniel J. O’Neill Daniel J. O’Neill Chief Executive Officer, Executive Chairman and Director

(Principal Executive Officer) Date: April 30, 2015 By: /s/Philip Anderson Philip Anderson Chief Financial Officer and Secretary

(Principal Financial Officer and Principal Accounting Officer) Date: April 30, 2015 By: /s/ James P. Geiskopf James P. Geiskopf Director Date: April 30, 2015 By: /s/ Craig Colmar Craig Colmar Director Date: April 30, 2015 By: /s/ David Karp David Karp Director

22


INDEX TO EXHIBITS

Exhibit No. Description of Exhibit2.1 Share Exchange Agreement dated April 2, 2013 among our Company, Victory Electronic Cigarettes, Inc. and the

shareholders of Victory Electronic Cigarettes, Inc. (1)2.2 Share Exchange Agreement by and among Victory Electronic Cigarettes Corporation, Vapestick Holdings Ltd., and

all the shareholders of Vapestick Holdings Ltd., dated December 15, 2013. (2)2.3 Agreement and Plan of Merger by and among Victory Electronic Cigarettes Corporation, VCIG LLC, FIN Electronic

Cigarette Corporation, Inc. and Elliot B. Maisel as Representative, dated February 12, 2014 (3)2.4 Exchange Agreement by and between Victory Electronic Cigarettes Corporation and the MHL Shareholders, dated

as of April 22, 2014. (11)2.5 Agreement to Buy the Shares in Ten Motives Limited and 10 Motives Limited by and between Victory Electronic

Cigarettes Corporation, E-Cigs UK Holding Company Limited, and the Ten Motives Shareholders, dated as of May30, 2014.(17)

3.1(i) Articles of Incorporation (4)3.1(i)(a) Articles of Merger (5)3.1(i)(b) Amendment to Articles of Incorporation(6)3.1(i)(c) Amendment to Articles of Incorporation(20)3.1(i)(d) Amendment to Articles of Incorporation(34)3.1(ii) Bylaws (4)4.1 Form of Convertible Note issued in January 2013 offering (7)4.2 Form of Warrant issued in January 2013 Offering (7)4.3 Form of Convertible Note dated November 4, 2013 (8)4.4 Form of Warrant issued to E-Cig Acquisition Company LLC and William R. Fields (9)4.5 Form of 15% Senior Secured Convertible Promissory Note issued in offerings in January and February 2014 (10)4.6 Form of Warrant issued in offerings in January and February 2014 (10)4.7 Form of 6% Secured Convertible Promissory Note issued in offering on April 22, 2014(11)4.8 Form of Amendment to 6% Convertible Note dated June 3, 2014(18)4.9 Form of Amendment No. 2 to 6% Convertible Note dated August 20, 2014(25)4.10 Form of Amendment No. 3 to 6% Convertible Note dated October 15, 2014(26)4.11 Form of Warrant from April 30, 2014 offering(12)4.12 Form of Agent Warrant (13)4.13 4% Exchange Convertible Note dated May 30, 2014(23)4.14 4% Convertible Note dated May 30, 2014(17)4.15 Form of 12% Convertible Notes dated July 17, 2014(24)4.16 Form of Warrant dated July 17, 2014(24)4.17 Form of December 12% Convertible Note (28)4.18 Form of 10% Convertible Note issued in January 14, 2015 offering (29)4.19 Form of January 12% Convertible Note issued in January 16, 2015 offering (30)4.20 Form February 12% Convertible Note issued in February 2015 offering (32)4.21 Form of Warrant issued in February 2015 offering (32)4.22 Form March 12% Convertible Note issued in March 2015 offering (33)4.23 Form of Warrant issued in March 2015 offering (33)4.24 Form of Prepaid Warrant issued in March 13, 2015 exchange (33)10.1 $200,000 Debenture dated January 31, 2013 issued by Victory Electronic Cigarettes LLC in favor of our company

(2)10.2 Security Agreement dated March 25, 2013 but effective as of January 31, 2013 between Victory Electronic

Cigarettes Inc. as debtor and our company as secured party (2)10.3 Return To Treasury Agreement dated June 18, 2013 between our company and Stephen Brady (14)10.4 Non-Broker Private Placement Agreement dated May 1, 2013 between our company and Wolverton Securities Ltd.

(14)10.5 General Financial Advisory Agreement dated June 21, 2013 between our company and Wolverton Securities Ltd.

(14)10.6 Promissory Note with Brent Willis (15)

23


10.7 Promissory Note with Marc Hardgrove (15)10.8 Promissory Note with David Martin (15)10.9 Sales and Consulting Agreement by and among Victory Electronic Cigarettes Corporation and E-Cig Acquisition

Company LLC, dated December 30, 2013 (9)10.10 Form of Securities Purchase Agreement from offerings in January and February 2014 (10)10.11 Form of Registration Rights Agreement from offerings in January and February 2014 (10)10.12 Form of Security Agreement from offerings in January and February 2014 (10)10.13 Form of Amended and Restated Promissory Notes dated February 28, 2014 (23)10.14 Form of Registration Rights Agreement entered into by and among Victory Electronic Cigarettes Corporation and

the FIN shareholders dated February 28, 2014 (10)10.15 Form of Promissory Notes dated April 22, 2014(11)10.16 Form of Registration Rights Agreement entered into with MHL Shareholders dated April 22, 2014(11)10.17 MHL Shareholders Guarantee (11)10.18 Security Agreement entered into between MHL and the MHL Shareholders(11)10.19 Form of Securities Purchase Agreement from April 22, 2014 offering(11)10.20 Form of Amendment to Securities Purchase Agreement dated June 3, 2014(18)10.21 Form of Amendment No. 2 to Securities Purchase Agreement dated August 20, 2014(25)10.22 Form of Amendment No. 3 to Securities Purchase Agreement dated October 15, 2014(26)10.23 Form of Registration Rights Agreement from April 22, 2014 offering(11)10.24 Form of Amendment to Registration Rights Agreement dated June 3, 2014(18)10.25 Form of Amendment No. 2 to Registration Rights Agreement dated October 15, 2014(26)10.26 Purchasers Guarantee from April 22, 2014 offering(11)10.27 Security Agreement entered into between MHL and purchasers from April 22, 2014 offering(11)10.28 Pledge and Security Agreement entered into between the Company and purchasers from October 15, 2014

offering(26)10.29 Share Charge entered into with purchasers from April 22, 2014 offering(11)10.30 Intercreditor Agreement(11)10.31 Amendment to Intercreditor Agreement(18)10.32 Second Amendment to Intercreditor Agreement (27)10.33 Third Amendment to Intercreditor Agreement(26)10.34 Form of Securities Purchase Agreement for April 30, 2014, June 19, 2014 and July 16, 2014 offering(12)10.35 Form of Registration Rights Agreement for April 30, 2014, June 19, 2014 and July 16, 2014 offering(19)10.36 Exchange Agreement dated May 30, 2014(24)10.37 Purchase Agreement dated May 30, 2014(17)10.38 Asset Purchase Agreement entered into on July 2, 2014 (21)10.39 Securities Purchase Agreement entered into on July 3, 2014(21)10.40 Voting Agreement entered into on July 15, 2014 (22)10.41 Registration Rights Agreement entered into with Man FinCo on July 15, 2014 (22)10.42 Registration Rights Agreement entered into with sellers of Hardwire on July 16, 2014 (22)10.43 Form of Exchange Agreement dated July 17, 2014(24)10.44 Advisory Agreement by and among Fields Texas Limited LLC and the Company dated April 28, 2014(25)10.45 Termination Agreement of Advisory Agreement with Fields Texas Limited LLC(25)10.46 Form of Securities Purchase Agreement for December 2014 offering(28)10.47 Form of Securities Purchase Agreement for January 14, 2015 offering(29)10.48 Form of Securities Purchase Agreement for January 16, 2015 offering(30)10.49 Form of Securities Purchase Agreement for February 2015 offering(32)10.50 Form of Securities Purchase Agreement for March 2015 offering(33)10.51 Form of Exchange Agreement for March 13, 2015 exchange (33)10.52 Form of 0.04% Unsecured Promissory Note dated March 13, 2014(33)10.53 † Employment Agreement with Brent Willis dated June 25, 2013. (14)10.54 † Employment Agreement with Marc Hardgrove dated June 25, 2013. (14)10.55 † Employment Agreement with Robert Hartford dated July 9, 2013 (16)

24


10.56† Amended and Restated Employment Agreement with Brent Willis dated August 22, 2014(25)10.57† Amended and Restated Employment Agreement with Marc Hardgrove dated August 22, 2014(25)10.58† Employment Agreement with James McCormick dated August 22, 2104(25)10.59† Employment Agreement with Philip Anderson, dated January 15, 2015 (31)10.60† Employment Agreement with Daniel J. O’Neill, dated March 17, 201510.61† 2013 Stock Option Plan (13)10.62† 2014 Stock Option Plan (23)14.1* Code of Ethics21.1 List of Subsidiaries (23)31.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302

of the Sarbanes-Oxley Act of 2002.31.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302

of the Sarbanes-Oxley Act of 2002.32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002.32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002.101.INS** XBRL Instance Document101.SCH ** XBRL Taxonomy Schema101.CAL ** XBRL Taxonomy Calculation Linkbase101.DEF ** XBRL Taxonomy Definition Linkbase101.LAB ** XBRL Taxonomy Label Linkbase101.PRE ** XBRL Taxonomy Presentation Linkbase

* Previously filed on the Original 10-K.** Previously filed on Amendment No. 1.† Management contract or compensatory plan or arrangement. In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

(1) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 5, 2013.(2) Filed as an Exhibit on Annual Report on Form 10-K with the SEC on March 31, 2014.(3) Filed as an Exhibit on Current Report to Form 8-K with the SEC on February 19, 2014.(4) Filed as an Exhibit on Registration Statement on Form SB-2 with the SEC on May 15, 2007.(5) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 18, 2013.(6) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 11, 2014.(7) Filed as an Exhibit on Current Report to Form 8-K with the SEC on February 6, 2013.(8) Filed as an Exhibit on Quarterly Report on Form 10-Q with the SEC on November 14, 2013.(9) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 6, 2014.

(10) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 6, 2014.(11) Filed as an Exhibit on Current Report to Form 8-K with the SEC on April 29, 2014(12) Filed as an Exhibit on Current Report to Form 8-K with the SEC on May 6, 2014.(13) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 17, 2014.(14) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 28, 2013.(15) Filed as an Exhibit on Current Report to Form 8-K with the SEC on August 21, 2013.(16) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 12, 2013.(17) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 5, 2014.(18) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 9, 2014.(19) Filed as an Exhibit on Current Report to Form 8-K with the SEC on June 24, 2014.(20) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 9, 2014.(21) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 10, 2014.(22) Filed as an Exhibit on Current Report to Form 8-K with the SEC on July 18, 2014.(23) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on July 2, 2014.(24) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on July 28, 2014.(25) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on September 8, 2014.(26) Filed as an Exhibit on Current Report to Form 8-K with the SEC on October 21, 2014.

25


(27) Filed as an Exhibit on Registration Statement on Form S-1/A with the SEC on October 23, 2014.(28) Filed as an Exhibit on Current Report to Form 8-K with the SEC on December 29, 2014.(29) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 14, 2015.(30) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 22, 2015.(31) Filed as an Exhibit on Current Report to Form 8-K with the SEC on January 22, 2015.(32) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 4, 2015.(33) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 17, 2015.(34) Filed as an Exhibit on Current Report to Form 8-K with the SEC on March 24, 2015.


Exhibit 10.60

EMPLOYMENT AGREEMENT

BETWEEN

ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

AND

DANIEL J O’NEILL

(Executive)

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated effective as of March 17, 2015 (the “Effective Date”) isentered into by and between Electronic Cigarettes International Group, Ltd, a Nevada corporation (the “Company”), and Daniel J.O’Neill, an individual with a physical address at 304 Spring Creek Drive, Canmore, AB T1W 0G8 (the “Executive”) (collectively, the“Parties,” individually, a “Party”).

WITNESSETH:

WHEREAS, the Executive has substantial experience in consumer product goods business; and WHEREAS, the Company desires to continue the Executive’s employment on the terms and conditions set forth in

this Agreement; WHEREAS, the Board has determined that it is in the best interests of the Company, its affiliates, and its

stockholders to employ the executive as Executive Chairman, notwithstanding the possibility, threat, or occurrence of a Change inControl (as defined in Article Seven herein); and

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein,

the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE ONE

DEFINITIONS 1. Definitions. As used in this Agreement:

(a) The term “Accrued Obligations,” when used in the case of the Executive’s death or disability shall mean the

sum of (1) the that portion Executive’s Base Salary that was not previously paid to the Executive from the last payment date throughthe Date of Termination, and (2) an amount equal 24 months salary at the level of the Executive’s Base Salary then in effect,

(b) The term “Automatic Extension” shall have the meaning set forth in Section 2.2 herein. (c) The term “Base Salary”, shall have the meaning set forth in Section 3.1 herein.


(d) The term “Board” shall have the meaning set forth in the recitals. (e) The term “Cause” shall have the meaning set forth in Section 4.3 herein. (f) The term “Common Stock” shall mean the Common Stock, par value $0.001, of the Company. (g) The term “Compensation Committee” shall mean the Compensation Committee of the Company. (h) The term “Corporate Documents” shall mean the Company’s Articles of Incorporation, as amended and/or

its Bylaws, as amended. (i) The term “Effective Date” shall have the meaning set forth in the preamble. (j) The term “Good Reason” shall have the meaning set forth in Section 4.4 herein. (k) The term “Initial Term” shall have the meaning set forth in Section 2.2 herein. (l) The term “Severance Benefit” shall have the meaning set forth in Section 4.7(a)(i) herein. (m) The term “Without Cause” shall have the meaning set forth in Section 4.3 herein. (n) The term “Without Good Reason” shall have the meaning set forth in Section 4.5 herein.

ARTICLE TWO

POSITION & DUTIES 2. Employment.

(a) Title. The Executive shall serve as the Executive Chairman of the Company and agrees to perform services

for the Company and such other affiliates of the Company, as described in Section 3 herein. (b) Term. The Executive’s employment shall be for an initial term of three (3) years (“Initial Term”), commencing

on the Effective Date. The Executive’s employment shall be automatically extended on the day after the second year anniversary ofthe Effective Date (“Automatic Extension”), and on each anniversary date thereof, for additional two (2) year periods.

( c ) Duties and Responsibilities. The Executive shall report to the Board and in his capacity as an officer of the

Company shall perform such duties and services as may be appropriate and as are assigned to him by the Board. During the term ofthis Agreement Executive shall, subject to the direction of the Board of the Company, oversee and direct the operations of theCompany together with the Chief Executive Officer, and shall perform such duties as are customarily performed by an ExecutiveChairman of a company such as the Company or as are otherwise delegated to him from time to time by the Board, or such authorityas implied by such position.


(d) Performance of Duties. During the term of the Agreement, except as otherwise approved by the Board or as

provided below, the Executive agrees to devote substantially all his business time, effort, skill and attention to the affairs of theCompany and its subsidiaries, will use his best efforts to promote the interests of the Company, and will discharge his responsibilitiesin a diligent and faithful manner, consistent with sound business practices. The foregoing shall not, however, preclude Executive fromdevoting reasonable time, attention and energy in connection with the following activities, provided that such activities do notmaterially interfere with the performance of his duties and services hereunder:

(a) serving as a director or a member of a committee of any company or organization, if serving in such

capacity does not involve any conflict with the business of the Company or any subsidiary and such other companyor organization is not in competition, in any manner whatsoever, with the business of the Company or any of itssubsidiaries;

(b) fulfilling speaking engagements; (c) engaging in charitable and community activities; (d) managing his personal business and investments; and (e) any other activity approved of by the Board. For purposes of this Agreement, any activity specifically

listed on Schedule A shall be considered as having been approved by the Board. (e ) Representations and Warranties of the Executive with Respect to Conflicts, Past Employers and Corporate

Opportunities. The Executive represents and warrants that: ( a ) his employment by the Company will not conflict with any obligations which he has to any other

person, firm or entity; (b) he has not brought to the Company (during the period before the signing of this Agreement) and he

will not bring to the Company any materials or documents of a former or present employer, or any confidentialinformation or property of any other person, firm or entity; and

( c ) he will not, without disclosure to and approval of the Board, directly or indirectly, assist or have an

active interest in (whether as a principal, stockholder, lender, employee, officer, director, partner, venturer, consultantor otherwise) in any person, firm, partnership, association, corporation or business organization, entity or enterprisethat competes with or is engaged in a business which is substantially similar to the business of the Company;provided, however, that ownership of not more than two percent (2%) of the outstanding securities of any class of anypublicly held corporation shall not be deemed a violation of this Section 2.5; provided, further, that any investmentspecifically listed on Schedule A shall not be deemed a violation of this Section 2.5. (f) Activities and Interests with Companies Doing Business with the Company. In addition to those activities and

interests of Executive disclosed on Schedule A attached hereto, Executive shall promptly disclose to the Board, in accordance withthe Company’s policies, full information concerning any interests, direct or indirect, he holds (whether as a principal, stockholder,lender, executive, director, officer, partner, venturer, consultant or otherwise) in any business which, as reasonably known toExecutive, purchases or provides services or products to, the Company or any of its subsidiaries, provided that the Executive neednot disclose any such interest resulting from ownership of not more than two (2%) of the outstanding securities of any class of anypublicly held corporation.


( g ) Other Business Opportunities. Nothing in this Agreement shall be deemed to preclude the Executive from

participating in other business opportunities if and to the extent that: (a) such business opportunities are not directly competitive with,similar to the business of the Company, or would otherwise be deemed to constitute an opportunity appropriate for the Company; (b)the Executive’s activities with respect to such opportunities do not have a material adverse effect on the performance of theExecutive’s duties hereunder, and (c) the Executive’s activities with respect to such opportunity have been fully disclosed in writing tothe Board.

ARTICLE THREE

COMPENSATION 3. Compensation.

( a ) Base Salary. Executive shall receive an initial annual base salary of Three Hundred and Ninety Thousand

Dollars ($390,000.00), payable according to the Company’s normal payroll policies and procedures (the “Base Salary”) and subject toall federal, state, and municipal withholding requirements. In the first year of employment, the executive will consider deferring aportion of his salary given the cash-flow situation of the firm. The Base Salary shall be reviewed by the Board annually for adequacy.

( b ) Cash Bonus. The Executive shall be eligible for a cash bonus equal to an amount of up to two (2) times

base salary as determined by the Compensation Committee of the Board or by the independent directors (as that term is defined bythe stock exchange or market on which the Company’s shares may be the traded). Achievement of cash bonus will be based on

achievement of objective metrics as approved by the Board of Directors, established no later than March 31st of each year. (c) Equity-Based Compensation. The Executive shall be entitled to participate in all equity-based compensation

plans offered by the Company and as determined by the Board of Directors. The Executive shall be eligible for an equity bonus equalto an amount of up to two (2) times base salary in value as determined by the Compensation Committee of the Board or by theindependent directors (as that term is defined by the stock exchange or market on which the Company’s shares may be the traded).Achievement of equity bonus will be based on achievement of objective metrics as approved by the Board of Directors, established

no later than March 31st of each year. (a) As a sign-on incentive, the Executive will receive 30,000,000 options at fair market value on the day

of issuance. ( b ) the Executive understands that as of the date of this Agreement, the only stock-based plan offered

by the Company is the 2014 Long-Term Incentive Plan. ( c ) Upon a Change of Control, all equity-based compensation will be deemed to have vested as of the

Change of Control Effective Date (as defined by Article 7 herein).


(d) Participation In Benefit Plans.

(a) Retirement Plans. Executive shall be entitled to participate, without any waiting or eligibility periods,

in all qualified retirement plans provided to other executive officers and other key employees. (b) Taxes. The Company shall pay, on a grossed-up basis for federal, state, and local income taxes, the

amount of any excise tax payable by Executive as a result of any payments triggered by this Agreement, or othercompensation agreements between Executive and the Company, or any of its subsidiaries and any income taxpayable by Executive as a result of any payments in Common Stock triggered by this Agreement or othercompensation agreements between Executive and the Company, or any of its subsidiaries, except as mightotherwise be provided such benefit plan.

(c) Employee Benefit Plans and Insurance. The Executive shall have the right to participate in employee

benefit plans and insurance programs of the Company that the Company may sponsor from time to time and toreceive customary Company benefits, if those benefits are so offered. Nothing herein shall obligate Executive toaccept such benefits if and when they are offered.

(d) Vacation.

( i ) The Executive shall be entitled to take such vacations, with pay, as are customary among

other Executive Chairman of organizations of similar size and nature, which vacation level shall be reviewedby the Compensation Committee from time to time. No more than 1.5 times (1.5x) Executive’s authorizedannual vacation allocation may be accrued, at any given time. In the event that Executive has reached hismaximum authorized vacation allocation, accrual will not re-commence until Executive uses some of his paidvacation credit and thereby brings the balance below his maximum. Accrued paid vacation credit forfeitedbecause of an excess balance cannot be retroactively reapplied.

( i i ) Pay will only be provided for any unused, accrued paid vacation credit at the time of

Executive’s separation from the business by the Company due to a reduction in force, by Executive uponretirement, or upon the death of an employee, provided that Executive has been a regular full-time employeefor three calendar months prior to such event. Termination of employment for Cause by the Company, orExecutive’s resignation, will result in the forfeiture of any unused paid vacation credit. (e) Paid Holidays. The Executive shall be entitled to such paid holidays as are generally available to all

employees. As of the date of this Agreement, the Company’s employees are permitted to observe ten (10) paidholidays.

( f ) Reimbursement. Executive shall be entitled to reimbursement within a reasonable time for all

properly documented and approved expenses for travel in accordance with the company expense policy. TheCompany shall reimburse business expenses of Executive directly related to Company business, including, but notlimited to, airfare, lodging, meals, travel expenses, medical expenses while traveling not covered by insurance,business entertainment, expenses associated with entertaining business persons, local expenses to governments orgovernmental officials, tariffs, applicable taxes outside of the United States, special expenses associated with travelto certain countries, supplemental life insurance or supplemental insurance of any kind or special insurance rates orcharges for travel outside the United States (unless such insurance is being provided by the Company), rental carsand insurance for rental cars, and any other expenses of travel that are reasonable in nature or that have beenotherwise pre-approved. Executive shall be governed by the travel and entertainment policy in effect at the Company.


(e) Severance Benefit. In the event that Executive’s employment is terminated, other than for Cause, Executive

shall receive compensation pursuant to Section 4.7 herein. ( f ) Payroll Procedures and Policies. All payments required to be made by the Company to the Executive

pursuant to this Article Three shall be paid on a regular basis in accordance with the Company’s normal payroll procedures andpolicies.

(g) Excise Tax Gross-Up.

( a ) If any payment to or in respect of the Executive by the Company or any affiliate, whether pursuant

to this Employment Agreement or otherwise (a “Payment”), is determined to be a “parachute payment” as defined inSection 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) (such payment, a “ParachutePayment”) and also to be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penaltiesare incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest andpenalties, being herein collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive anadditional payment from the Company (the “ Gross-Up Payment ”) in an amount such that the net amount of suchadditional payment retained by the Executive, after payment of all federal, state and local income and employmentand Excise Taxes imposed on the Gross-Up Payment, shall be equal to the Excise Tax imposed on the Payment.Notwithstanding the foregoing or any other provision of this Employment Agreement, if it shall be determined that theExecutive is entitled to a Gross-Up Payment but that the net present value of the Parachute Payments (calculated atthe discount rate in effect under Section 280G of the Code) do not exceed 110% of the Reduced Amount (as definedbelow), then no Gross-Up Payment shall be made to the Executive and the aggregate amount of the ParachutePayments otherwise payable under this Employment Agreement shall be reduced to the Reduced Amount; provided,that the foregoing reduction shall not be made if the Accounting Firm (as defined below) determines that the net after-tax benefit of the payments to the Executive without the reduction imposed is more than 110% of the net after-taxbenefit of the payments to the Executive with the reduction imposed. For purposes of the foregoing, the term“Reduced Amount” shall mean the greatest amount of Parachute Payments that could be paid to the Executive suchthat the receipt of such Parachute Payments would not give rise to any Excise Tax. The determination of whichPayments shall be reduced pursuant to this Section 3.8(a) shall be made by an independent accounting firm ofrecognized standing selected by the Company and reasonably acceptable to the Executive (the “Accounting Firm”),in consultation with the Executive and shall be reasonably acceptable to him, and such determination shall be madeat the time it is determined whether any payments made to the Executive are subject to the Excise Tax.


(b) Subject to the provisions of Section 3.8(c) hereof, all determinations required to be made under this

Section 3.8, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Paymentand the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm. The initialdetermination of whether a Gross-Up Payment is required, and if so, the amounts of the Excise Tax and Gross-UpPayment, shall be determined by the Accounting Firm, whose written report shall be delivered to the Company and tothe Executive. Not later than sixty (60) days after any Payment, the Accounting Firm shall determine whether aGross-Up Payment is due with respect to such Payment, and such Gross-Up Payment shall be paid by the Companyto the Executive (except to the extent any portion thereof is paid to the taxing authorities on behalf of the Executive)not later than ten (10) days following the Accounting Firm’s determination. The Executive and the Company shallcooperate in good faith as to the treatment of a Payment for tax reporting and withholding purposes.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that,

if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given assoon as practicable but in no event later than the earlier of (i) thirty (30) days after the Executive is informed in writingof such claim or (ii) fifteen (15) days before the date on which such claim is requested to be paid, and shall apprisethe Company of the nature of such claim and the date on which such claim is requested to be paid. The Executiveshall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive givessuch notice to the Company (or such shorter period ending on the date that any payment of taxes with respect tosuch claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desiresto contest such claim, the Executive shall:

i. give the Company any information reasonably requested by the Company relating to such

claim; ii. take such action in connection with contesting such claim as the Company shall reasonably

request in writing from time to time, including without limitation, accepting legal representationwith respect to such claim by an attorney selected by the Company and reasonably acceptable tothe Executive;

iii. cooperate with the Company in good faith in order effectively to contest such claim;

and iv. permit the Company to participate in any proceedings relating to such

claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interestand penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless for anyExcise Tax or federal, state and local income and employment tax (including interest and penalties with respectthereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on theforegoing provisions of this Section 3.8(c), the Company shall control all proceedings taken in connection with suchcontest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive topay the tax claimed and sue for a refund or to contest the claim in any permissible manner, and the Executive agreesto prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and inone or more appellate courts, as the Company shall determine; provided, however, that if the Company directs theExecutive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to theExecutive, on an after-tax basis, and shall hold the Executive harmless from any Excise Tax or federal, state or localincome or employment tax (including interest or penalties with respect thereto) imposed with respect to suchadvance or with respect to any imputed income with respect to such advance. The Company’s control of the contest,however, shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and theExecutive shall be entitled to settle or contest, as the case may by, any other issue raised by the Internal RevenueService or any other taxing authority.


( d ) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section

3.8(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subjectto the Company’s complying with the requirements of Section 3.8(c)) promptly pay to the Company the amount ofsuch refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt bythe Executive of an amount advanced by the Company pursuant to Section 3.8(c), a determination is made that theExecutive shall not be entitled to any refund with respect to such claim and the Company does not notify theExecutive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after suchdetermination, then such advance shall be forgiven and shall not be required to be repaid and the amount of suchadvance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e) In the event that the Excise Tax is subsequently determined to be less than initially determined, the

Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is determined (but,if previously paid to the taxing authorities, not prior to the time the amount of such reduction is refunded to theExecutive or otherwise realized as a benefit by the Executive) the portion of the Gross-Up Payment that would nothave been paid if the Excise Tax as subsequently determined had been applied initially in calculating the Gross-UpPayment, with the amount of such repayment determined by the Accounting Firm; provided that the amount ofrequired repayment by the Executive shall be reduced, as the Accounting Firm may determine, in order to avoidputting the Executive in a worse after-tax position than he would have enjoyed had the amount of Excise Tax beencorrectly determined in the first instance, such determination to be made on a basis consistent with the intention ofthis Section 8A, which is to make the Executive whole on an after-tax basis on account of any Excise Tax (includingrelated interest and penalties). Similarly, if the amount of Gross-Up Payments actually made by the Company issubsequently determined by the Accounting Firm to have been inadequate to satisfy the Company’s obligation toprotect the Executive against the Excise Tax (including related interest and penalties), additional Gross-Up Paymentsshall be made as directed by the Accounting Firm. The Executive and the Company shall each have the right at alltimes to have the Accounting Firm review and confirm or revise earlier calculations.


ARTICLE FOUR

TERMINATION OF EMPLOYMENT 4 . 1 Death. The Executive’s employment shall terminate automatically upon the Executive’s death during the

Employment Term. 4 . 2 Disability. If the Company determines in good faith that the Disability (as defined below) of the Executive

has occurred during the Employment Term, the Company may give the Executive notice of its intention to terminate the Executive’s

employment. In such event, the Executive’s employment hereunder shall terminate effective on the 30th day after receipt of suchnotice by the Executive (the “Disability Effective Date”); provided, that, within the 30-day period after such receipt, the Executive shallnot have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean theabsence of the Executive from the Executive’s duties hereunder on a full-time basis for an aggregate of 180 days within any givenperiod of 270 consecutive days (in addition to any statutorily required leave of absence and any leave of absence approved by theCompany) as a result of incapacity of the Executive, despite any reasonable accommodation required by law, due to bodily injury ordisease or any other mental or physical illness, which will, in the opinion of a physician selected by the Company or its insurers andacceptable to the Executive or the Executive’s legal representative, be permanent and continuous during the remainder of theExecutive’s life.

4.3 Termination by Company. (a) Termination for Cause. The Company may terminate the Executive’s employment hereunder for Cause (as defined below). For purposes of

this Agreement, “Cause” shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive’s duties

hereunder (other than any such failure resulting from bodily injury or disease or any other incapacity due to mental orphysical illness) after a written demand for substantial performance is delivered to the Executive by the Board or theChairman of the Company, which specifically identifies the manner in which the Board or the Chairman of theCompany believes the Executive has not substantially performed the Executive’s duties; or

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct that is materially and

demonstrably detrimental to the Company and/or its affiliated companies, monetarily or otherwise. For purposes of this provision, no act, or failure to act, on the part of the Executive shall be considered

“willful” unless done, or omitted to be done, by the Executive in bad faith or without reasonable belief that theExecutive’s action or omission was in the best interests of the Company. Any act, or failure to act, based uponauthority given pursuant to a resolution duly adopted by the Board, upon the instructions of the Chairman or anotherBoard Member of Company, or based upon the advice of counsel for the Company shall be conclusively presumed tobe done, or omitted to be done, by the Executive in good faith and in the best interests of the Company and itsaffiliated companies. The cessation of employment of the Executive shall not be deemed to be for Cause unless anduntil there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote ofnot less than two-thirds of the entire membership of the Board then in office at a meeting of the Board called and heldfor such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity,together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executiveis guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.


(iii) the Executive’s conviction of, or plea of nolo contendere to, any felony of theft, fraud, embezzlement

or violent crime. (b) Termination without Cause. All terminations by the Company that are not for Cause, shall be considered Without Cause. 4.4 Termination by Executive. The Executive may terminate the Executive’s employment hereunder at any time

during the Employment Term for Good Reason (as defined below) For purposes of this Agreement, “Good Reason” shall mean any ofthe following (without the Executive’s express written consent):

(a) The assignment to the Executive of any duties inconsistent in any respect with the Executive’s

position (including status, offices, titles and reporting requirements), duties, functions, responsibilities or authority ascontemplated by Section 2.3 of this Agreement, or any other action by the Company that results in a diminution insuch position, duties, functions, responsibilities or authority, excluding for this purpose an isolated, insubstantial andinadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of noticethereof given by the Executive;

(b) Any failure by the Company to comply with any of the provisions of Section 2.3 of this Agreement,

other than an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by theCompany promptly after receipt of notice thereof given by the Executive;

(c) The Company’s requiring the Executive to be based at any office or location other than as provided

in Section 2.8 of this Agreement or the Company’s requiring the Executive to travel on the Company’s or its affiliatedcompanies’ business to a substantially greater extent than during the three-year period immediately preceding theEffective Date;

(d) Any failure by the Company to comply with and satisfy Section 8.1 of this Agreement; or (e) Any purported termination by the Company of the Executive’s employment hereunder otherwise

than as expressly permitted by this Agreement, and for purposes of this Agreement, no such purported terminationshall be effective.

For purposes of this Section 4.4, any good faith determination of “Good Reason” made by the Executive shall be conclusive.


4.5 Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the

Executive (other than a termination pursuant to Section 4.1) shall be communicated by a Notice of Termination (as defined below) tothe other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which (a) indicates the specifictermination provision in this Agreement relied upon, (b) in the case of a termination for Disability, Cause or Good Reason, sets forthin reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under theprovision so indicated, and (c) specifies the Date of Termination (as defined in Section 4.7 below); provided, however, thatnotwithstanding any provision in this Agreement to the contrary, a Notice of Termination given in connection with a termination forGood Reason shall be given by the Executive within a reasonable period of time, not to exceed 120 days, following the occurrence ofthe event giving rise to such right of termination. The failure by the Company or the Executive to set forth in the Notice of Terminationany fact or circumstance which contributes to a showing of Disability, Cause or Good Reason shall not waive any right of theCompany or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance inenforcing the Company’s or the Executive’s rights hereunder.

4 . 6 Date of Termination. For purposes of this Agreement, the “Date of Termination” shall mean the effective

date of termination of the Executive’s employment hereunder, which date shall be (a) if the Executive’s employment is terminated bythe Executive’s death, the date of the Executive’s death, (b) if the Executive’s employment is terminated because of the Executive’sDisability, the Disability Effective Date, (c) if the Executive’s employment is terminated by the Company (or applicable affiliatedcompany) for Cause or by the Executive for Good Reason, the date on which the Notice of Termination is given, (d) if the Executive’semployment is terminated pursuant to Section 2.2, the date on which the Employment Term ends pursuant to Section 2.2 due to aparty’s delivery of a Notice of Termination thereunder, and (e) if the Executive’s employment is terminated for any other reason, thedate specified in the Notice of Termination, which date shall in no event be earlier than the date such notice is given; provided,however, that if within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies theother party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finallydetermined, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competentjurisdiction (the time for appeal therefrom having expired and no appeal having been perfected).

4.7 Obligations of the Company upon Termination. ( a ) Good Reason or Change of Control; Other Than for Cause. If, during the Employment Term, the

Company (or applicable affiliated company) shall terminate the Executive’s employment hereunder other than forCause or the Executive shall terminate the Executive’s employment either for Good:

(i) the Company shall pay to the Executive in a lump sum (A) the sum of (1) Executive’s

Base Salary, if any, which has been earned but not paid through the Termination Date, (2) theproduct of (x) the Annual Bonus and (y) a fraction, the numerator of which is the number of days inthe current fiscal year through the Termination Date and the denominator of which is 365, and(3) any accrued vacation or other pay pursuant to the Corporation’s vacation policy, to the extent notpreviously paid; and (B) an amount equal to the sum of (1) an amount equal to 36 months ofExecutive’s Base Salary and (2) the Annual Bonus multiplied by a factor of 3;

(ii) all stock options, stock appreciation rights, and restricted stock shall immediatelyvest;

(iii) all stock options and stock appreciation rights shall be payable in Common Stock;


(iv) all performance share shall immediately vest and (v) the Company shall pay, on a grossed-up basis (as determined in the same manner

as under Section 3.4(b) herein the amount of any excise and income taxes payable by Executive asa result of any payments in Common Stock triggered by this Agreement, or other agreementsbetween Executive and the Company, or any of its subsidiaries.

to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefitsrequired to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice or arrangementor contract or agreement of the Company and its affiliated companies (such other amounts and benefits hereinafter referred to as the“Other Benefits”).

( b ) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the

Employment Term, this Agreement shall terminate without further compensation obligations to the Executive’s legalrepresentatives under this Agreement, other than for (i) payment of Accrued Obligations (which shall be paid to theExecutive’s estate or beneficiary, as applicable, in a lump sum in cash within 90 days of the Date of Termination) andthe timely payment or settlement of any other amount pursuant the Other Benefits and (ii) treatment of all othercompensation under existing plans as provided by the terms and rules of those plans.

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during

the Employment Term, this Agreement shall terminate without further compensation obligations to the Executive,other than for (i) payment of Accrued Obligations (which shall be paid to the Executive in a lump sum in cash within90 days of the Date of Termination) and the timely payment or settlement of any other amount pursuant to the OtherBenefits and (ii) treatment of all other compensation under existing plans as provided by the terms and rules of thoseplans.

( d ) Cause; Other than for Good Reason. If the Executive’s employment is terminated for Cause during

the Employment Term, this Agreement shall terminate without further compensation obligations to the Executiveother than the obligation to pay to the Executive Base Salary through the Date of Termination plus the amount of anycompensation previously deferred by the Executive and any accrued vacation or other pay pursuant to theCorporation’s vacation policy, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates theExecutive’s employment during the Employment Term, excluding a termination either for Good Reason or (ii) aChange of Control, this Agreement shall terminate without further compensation obligations to the Executive, otherthan for that portion of Executive’s Base Salary that was not previously paid to the Executive from the last paymentdate through the effective date of the Executive’s voluntary termination, any accrued vacation or other pay pursuantto the Corporation’s vacation policy and the timely payment or provision of the Other Benefits, as provided in anyapplicable plan, and the Executive shall have no further obligations nor liability to the Company. In such case, anyamounts owed to the Executive shall be paid to the Executive in a lump sum in cash within 90 days of the Date ofTermination subject to applicable laws and regulations.


4.8 Continuation of Payments During Disputes. The Parties agree that in the case of:

(a) termination which the Company contends is for Cause, but Executive claims is not for Cause; or (b) termination by Executive under Section 4.4 herein,

the Company shall continue to pay all compensation due to Executive hereunder until the resolution of such dispute, but theCompany shall be entitled to repayment of all sums so paid, if it ultimately shall be determined by a court of competent jurisdiction, ina final non-appealable decision, that the termination was for Cause or such termination by Executive was not authorized underSection 4.4 herein, and all sums so repaid shall bear interest at the prime rate as published in The Wall Street Journal on the date onwhich such court makes such determination. Any such reimbursement of payments by Executive shall not include any legal fees orother loss, costs, or expenses incurred by the Company, notwithstanding any provision of the Indemnification Agreement, which isattached as Exhibit A and is considered a part of this Agreement.

ARTICLE FIVE

INDEMNIFICATION 5 . Indemnification. The Executive shall be indemnified and held harmless pursuant to the terms and conditions set

forth in the Indemnification Agreement substantially in the form attached as Exhibit A hereto.

ARTICLE SIX

CONFIDENTIALITY 6. Confidentially; Non-Competition; and Non-Solicitation.

( a ) Confidentiality. In consideration of employment by the Company and Executive’s receipt of the salary and

other benefits associated with Executive’s employment, and in acknowledgment that (a) the Company is engaged in the electroniccigarette and related businesses, (b) maintains secret and confidential information, (c) during the course of Executive’s employmentby the Company such secret or confidential information may become known to Executive, and (d) full protection of the Company’sbusiness makes it essential that no employee appropriate for his or her own use, or disclose such secret or confidential information,Executive agrees that during the time of Executive’s employment and for a period of two (2) years following the termination ofExecutive’s employment with the Company, Executive agrees to hold in strict confidence and shall not, directly or indirectly, discloseor reveal to any person, or use for his own personal benefit or for the benefit of anyone else, any trade secrets, confidential dealings,or other confidential or proprietary information of any kind, nature, or description (whether or not acquired, learned, obtained, ordeveloped by Executive alone or in conjunction with others) belonging to or concerning the Company or any of its subsidiaries,except (i) with the prior written consent of the Company duly authorized by its Board, (ii) in the course of the proper performance ofExecutive’s duties hereunder, (iii) for information (x) that becomes generally available to the public other than as a result ofunauthorized disclosure by Executive or his affiliates or (y) that becomes available to Executive on a non-confidential basis from asource other than the Company or its subsidiaries who is not bound by a duty of confidentiality, or other contractual, legal, or fiduciaryobligation, to the Company, or (iv) as required by applicable law or legal process.


(b ) Non-Competition. During Executive’s employment with the Company and for so long as Executive receives

any Severance Benefit or is receiving any Severance Amount provided under this agreement in respect of the termination of hisemployment, Executive shall not be engaged as an officer or executive of, or in any way be associated in a management orownership capacity with any corporation, company, partnership or other enterprise or venture which conducts a business which is indirect competition with the business of the Company; provided, however, that Executive may own not more than two percent (2%) ofthe outstanding securities, or equivalent equity interests, of any class of any corporation, company, partnership, or either enterprisethat is in direct competition with the business of the Company, which securities are listed on a national securities exchange or tradedin the over-the-counter market. For purposes of this Agreement, a lump sum payment equivalent made to Executive shall be judged inrelation to his most recent annual base salary to determine whether Executive is continuing to receive a Severance Benefit orSeverance Amount and shall be measured from the date such payment is received. It is expressly agreed that the remedy at law forbreach of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof.

( c ) Non-Solicitation. Executive also agrees that he will not, directly or indirectly, during the term of his

employment or within one (1) year after termination of his employment for any reason, in any manner, encourage, persuade, orinduce any other employee of the Company to terminate his employment, or any person or entity engaged by the Company torepresent it to terminate that relationship without the express written approval of the Company. It is expressly agreed that the remedyat law for breach of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof.

ARTICLE SEVEN

CHANGE OF CONTROL

7. Certain Definitions.

7 . 1 Change of Control Effective Date. The “Change of Control Effective Date” shall mean the first date during

the Change of Control Period (as defined in Section 7.2) on which a Change of Control occurs. Notwithstanding anything in thisAgreement to the contrary, if a Change of Control occurs and if the Executive’s employment with the Company (or applicable affiliatedcompany) is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executivethat such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect aChange of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of thisAgreement the “Change of Control Effective Date” shall mean the date immediately prior to the date of such termination ofemployment.

7.2 Change of Control Period. The “Change of Control Period” shall mean the period commencing on the date

of this Agreement and ending on the third anniversary of such date; provided, however, that commencing on the date one year afterthe date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof herein referred to asthe “Renewal Date”), the Change of Control Period shall be automatically extended so as to terminate three years after such RenewalDate.

7.3 Change of Control. For purposes of this Agreement, a “Change of Control” shall mean:


(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)

of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under theExchange Act) of 15% or more of either (A) the then outstanding Common Shares the Company (the “OutstandingShares”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to votegenerally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of thisSubsection 7.3(a) the following acquisitions shall not constitute a Change of Control: (w) Company-sponsoredrecapitalization that is approved by the Incumbent Board, as defined below; (x) a capital raise initiated by theCompany where the Incumbent Board remains for at least at least 548 days after the closing date of the raise, or (y)an acquisition of another company or asset(s) initiated by the Company and where the Company’s shareholdersimmediately after the transaction own at least 51% of the shares of the combined concern; or

(b) individuals who, as of the date of this Agreement, constitute the Company’s Board (the “Incumbent

Board”) cease for any reason to constitute a majority of such Board of Directors; provided, however , that anyindividual becoming a director of the Company shareholders subsequent to the date hereof whose election, ornomination for election by the Company’s shareholders was approved by a vote of a majority of the directors of theCompany then comprising the Incumbent Board shall be considered as though such individual were a member of theIncumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as aresult of either an actual or threatened election contest or other actual or threatened solicitation of proxies orconsents by or on behalf of a Person other than the Company Board; or

(c) consummation of a reorganization, merger, amalgamation or consolidation of the Company, with or

without approval by the shareholders of the Company, in each case, unless, following such reorganization, merger,amalgamation or consolidation, (i) more than 50% of, respectively, the then outstanding shares of common stock (orequivalent security) of the company resulting from such reorganization, merger, amalgamation or consolidation andthe combined voting power of the then outstanding voting securities of such company entitled to vote generally in theelection of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals andentities who were the beneficial owners, respectively, of the Outstanding Shares and Outstanding Voting Securitiesimmediately prior to such reorganization, merger, amalgamation or consolidation in substantially the sameproportions as their ownership, immediately prior to such reorganization, merger, amalgamation or consolidation, ofthe Outstanding Shares and Outstanding Voting Securities, as the case may be, (ii) no Person (excluding a parent ofthe Company that may come into being after the date of this Agreement through any transaction deliberatelyundertaken by the Company after an affirmative vote of its Incumbent Directors and the Company shareholders), anyemployee benefit plan (or related trust) of the Company or such company resulting from such reorganization, merger,amalgamation or consolidation, and any Person beneficially owning, immediately prior to such reorganization,merger, amalgamation or consolidation, directly or indirectly, 15% or more of the Outstanding Shares or OutstandingVoting Securities, as the case may be) beneficially owns, directly or indirectly, 15% or more of, respectively, the thenoutstanding shares of common stock (or equivalent security) of the company resulting from such reorganization,merger, amalgamation or consolidation or the combined voting power of the then outstanding voting securities ofsuch company entitled to vote generally in the election of directors, and (ii) a majority of the members of the board ofdirectors of the company resulting from such reorganization, merger, amalgamation or consolidation were membersof the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger,amalgamation or consolidation; or


(d) consummation of a sale or other disposition of all or substantially all the assets of the Company, with

or without approval by the shareholders of the Company, other than to a corporation, with respect to which followingsuch sale or other disposition, (i) more than 50% of, respectively, the then outstanding shares of common stock (orequivalent security) of such corporation and the combined voting power of the then outstanding voting securities ofsuch corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly,by all or substantially all the individuals and entities who were the beneficial owners, respectively, of the OutstandingShares and Outstanding Voting Securities immediately prior to such sale or other disposition in substantially thesame proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Sharesand Outstanding Voting Securities, as the case may be, (ii) no Person (excluding the Company, any employee benefitplan (or related trust) of the Company or such corporation, and any Person beneficially owning, immediately prior tosuch sale or other disposition, directly or indirectly, 15% or more of the Outstanding Shares or Outstanding VotingSecurities, as the case may be) beneficially owns, directly or indirectly, 15% or more of, respectively, the thenoutstanding shares of common stock (or equivalent security) of such corporation or the combined voting power of thethen outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (C) amajority of the members of the board of directors of such corporation were members of the Incumbent Board at thetime of the execution of the initial agreement or action of the Incumbent Board providing for such sale or otherdisposition of assets of the Company; or

(e) approval by the shareholders of the Company of a complete liquidation or dissolution of the

Company.

ARTICLE EIGHT

MISCELLANEOUS 8. Miscellaneous.

( a ) Benefit. This Agreement shall inure to the benefit of and be binding upon each of the Parties, and their

respective successors. This Agreement shall not be assignable by any Party without the prior written consent of the other Party. TheCompany shall require any successor, whether direct or indirect, to all or substantially all the business and/or assets of the Companyto expressly assume and agree to perform, by instrument in a form reasonably satisfactory to Executive, this Agreement and anyother agreements between Executive and the Company or any of its subsidiaries, in the same manner and to the same extent as theCompany.

( b ) Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the

State of Nevada without resort to any principle of conflict of laws that would require application of the laws of any other jurisdiction;provided, however, that Nevada law shall govern with respect to the Executive’s rights under a Change of Control under Article Sevenherein.


( c ) Counterparts. This Agreement may be executed in counterparts and via facsimile, each of which shall be

deemed to constitute an original, but all of which together shall constitute one and the same Agreement. Each such counterpart shallbecome effective when one counterpart has been signed by each Party thereto.

( d ) Headings. The headings of the various articles and sections of this Agreement are for convenience of

reference only and shall not be deemed a part of this Agreement or considered in construing the provisions thereof. ( e ) Severability. Any term or provision of this Agreement that shall be prohibited or declared invalid or

unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or declaration,without invalidating the remaining terms and provisions hereof or affecting the validity or enforceability of such provision in any otherjurisdiction, and if any term or provision of this Agreement is held by any court of competent jurisdiction to be void, voidable, invalid orunenforceable in any given circumstance or situation, then all other terms and provisions hereof, being severable, shall remain in fullforce and effect in such circumstance or situation, and such term or provision shall remain valid and in effect in any othercircumstances or situation.

( f ) Construction. Use of the masculine pronoun herein shall be deemed to refer to the feminine and neuter

genders and the use of singular references shall be deemed to include the plural and vice versa, as appropriate. No inference in favorof or against any Party shall be drawn from the fact that such Party or such Party’s counsel has drafted any portion of thisAgreement.

( g ) Equitable Remedies. The Parties hereto agree that, in the event of a breach of this Agreement by either

Party, the other Party, if not then in breach of this Agreement, may be without an adequate remedy at law owing to the unique natureof the contemplated relationship. In recognition thereof, in addition to (and not in lieu of) any remedies at law that may be available tothe non-breaching Party, the non-breaching Party shall be entitled to obtain equitable relief, including the remedies of specificperformance and injunction, in the event of a breach of this Agreement, by the Party in breach, and no attempt on the part of the non-breaching Party to obtain such equitable relief shall be deemed to constitute an election of remedies by the non-breaching Party thatwould preclude the non-breaching Party from obtaining any remedies at law to which it would otherwise be entitled.

( h ) Attorney’s Fees. If any Party hereto shall bring an action at law or in equity to enforce its rights under this

Agreement, the prevailing Party in such action shall be entitled to recover from the Party against whom enforcement is sought itscosts and expenses incurred in connection with such action (including fees, disbursements and expenses of attorneys and costs ofinvestigation). In the event that Executive institutes any legal action to enforce Executive’s legal rights hereunder, or to recoverdamages for breach of this Agreement, Executive, if Executive prevails in whole or in part, shall be entitled to recover from theCompany reasonable attorneys’ fees and disbursements incurred by Executive with respect to the claims or matters on whichExecutive has prevailed.

( i ) No Waiver. No failure, delay or omission of or by any Party in exercising any right, power or remedy upon

any breach or default of any other Party, or otherwise, shall impair any such rights, powers or remedies of the Party not in breach ordefault, nor shall it be construed to be a waiver of any such right, power or remedy, or an acquiescence in any similar breach ordefault; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore orthereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any provisions of thisAgreement must be in writing and be executed by the Parties and shall be effective only to the extent specifically set forth in suchwriting.


(j) Remedies Cumulative. All remedies provided in this Agreement, by law or otherwise, shall be cumulative and

not alternative. 9. Amendment. This Agreement may be amended only by a written agreement signed by the parties hereto.

(a) In addition, to the extent that any of the payments hereunder are or may be governed by Section 409A of the

Code, the parties will work together in a commercially reasonable manner in good faith to amend any provisions asnecessary for compliance or to avoid the imposition of taxes or penalties under Section 409A of the Code in a manner thatmaintains the basic financial provisions of this Agreement. In this connection, each party will make any amendments oradjustments reasonably requested by the other party which satisfy the foregoing condition.

(b) It is the intention of the Company and the Executive that this Agreement comply with the requirements of

Section 409A of the Code, and this Agreement will be interpreted in a manner intended to comply with Section 409A. Allpayments under this Agreement are intended to be excluded from the requirements of Section 409A of the Code or bepayable on a fixed date or schedule in accordance with Section 409A(a)(2)(iv) of the Code. To the extent thatreimbursements or in-kind benefits due to The Executive under this Agreement constitute “deferred compensation” underSection 409A of the Code, any such reimbursements or in-kind benefits shall be paid to The Executive in a manner consistentwith Treasury Regulations Section 1.409A-3(i)(1)(iv).

(c) Notwithstanding anything in this Agreement to the contrary, in the event that The Executive is deemed to be

a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and the Executive is not “disabled” withinthe meaning of Section 409A(a)(2)(C) of the Code, no payments hereunder that are “deferred compensation” subject toSection 409A of the Code shall be made to The Executive prior to the date that is six (6) months after the date of TheExecutive’s “separation from service” (as defined in Section 409A of the Code) or, if earlier, The Executive’s date of death.Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliestpermissible payment date. For purposes of Section 409A of the Code, each of the payments that may be made underSections 2 and 4 are designated as separate payments for purposes of Treasury Regulations Section 1.409A-1(b)(4)(i)(F),1.409A-1(b)(9)(iii) and 1.409A-1(b)(9)(v)(B).

(d) For purposes of this Agreement, with respect to payments of any amounts that are considered to be

“deferred compensation” subject to Section 409A of the Code, references to “termination of employment” (and substantiallysimilar phrases) shall be interpreted and applied in a manner that is consistent with the requirements of Section 409A of theCode.

(e) The Executive’s right to any deferred compensation, as defined under Section 409A of the Code, shall not

be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, garnishment by creditors,or borrowing, to the extent necessary to avoid tax, penalties and/or interest under Section 409A of the Code. 10. Entire Contract. This Agreement and the documents and instruments referred to herein constitute the entire contract

between the parties to this Agreement and supersede all other understandings, written or oral, with respect to the subject matter ofthis Agreement.


1 1 . Survival. This Agreement shall constitute a binding obligation of the Company and any successor thereto.

Notwithstanding any other provision in this Agreement, the obligations under Articles 5 and 6 shall survive termination of thisAgreement.

12. Savings Clause. Notwithstanding any other provision of this Agreement, if the indemnification provisions in Exhibit A

hereto or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shallnevertheless indemnify Executive as to Expenses, judgments, fines, penalties and amounts paid in settlement with respect to anyProceeding to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated and to thefullest extent permitted by applicable law.

13. Modifications and Waivers. Notwithstanding any other provision of this Agreement, the indemnification provisions in

Exhibit A hereto and the Change of Control provisions Article Seven herein, may be amended from time to time to reflect changes inNevada law or for other reasons.

1 4 . Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be

deemed to have been given (i) when delivered by hand or (ii) if mailed by certified or registered mail with postage prepaid, on thethird day after the date on which it is so mailed:

(a) if to Executive:

Daniel J O’Neill304 Spring Creek DriveCanmore, AB T1W 0G8

(b) if to the Company:

Electronic Cigarettes International Group, Ltd.14200 Ironwood Dr, NWGrand Rapids, Michigan 49534Attn: Chairman, Compensation Committee

or to such other address as may have been furnished to Executive by the Company or to the Company by Executive, as the casemay be.

1 5 . No Limitation. Notwithstanding any other provision of this Agreement, for avoidance of doubt, the parties confirm

that the foregoing does not apply to or limit Executive’s rights under Nevada law or the Company’s Corporate Documents. IN WITNESS WHEREOF, the parties have set their hands and seals hereunto on the date first above written.

ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD. EXECUTIVE By: /s/ James P. Geiskopf By: /s/ Daniel J. O’Neill Name: James P. Geiskopf Name: Daniel J. O’NeillTitle: Chairman, Compensation Committee


Schedule A

Outside Activities

Dan O’Neill

Company orProject Name

Nature ofBusiness

Date Hired orCommencedInvolvement Position Compensation

Annual Time Commitment,(time away from office)

Dated: _______________ Initials: Executive: _____ Company: ______


Exhibit A

Indemnification Agreement


Exhibit 31.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OFTHE SARBANES-OXLEY ACT OF 200 2

I, Daniel J. O’Neill, certify that:

1. I have reviewed this annual report on Form 10-K of Electronic Cigarettes International Group, Ltd;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reportbased on such evaluation; and

(d) Disclosed in this report any change in the registrant‘s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: April 30, 2015 By: /s/ Daniel J. O’Neill Daniel J. O’Neill Chief Executive Officer

(Principal Executive Officer)


Exhibit 31.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OFTHE SARBANES-OXLEY ACT OF 200 2

I, Philip Anderson, certify that:

1. I have reviewed this annual report on Form 10-K of Electronic Cigarettes International Group, Ltd;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reportbased on such evaluation; and

(d) Disclosed in this report any change in the registrant‘s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: April 30, 2015 By: /s/ Philip Anderson Philip Anderson Chief Financial Officer (Principal Financial Officer)
