ELEPHANT & CASTLE GROUP INC
EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>a2149144zex-10_4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<Page>

                            INTER-CREDITOR AGREEMENT

         This AGREEMENT dated as of the 17th day of December, 2004


AMONG:

                  GE INVESTMENT PRIVATE PLACEMENT PARTNERS II, A LIMITED
                  PARTNERSHIP, BY ITS GENERAL PARTNER, GE ASSET MANAGEMENT
                  INCORPORATED, ITS GENERAL PARTNER ("GEIPPP II")

AND:

                  CROWN LIFE INSURANCE COMPANY ("CLIC")


AND:

                  THE PARTIES LISTED ON THE ATTACHED SCHEDULE HERETO
                  (individually, a "Borrower Party" and collectively, the
                  "Borrower Parties")

WHEREAS:

A.       The Borrower Parties have granted, or is in the process of granting,
         certain security to CLIC to secure repayment of all indebtedness due
         and owing by the Borrower Parties to CLIC, which security has been, or
         will be, duly executed in favour of CLIC and registered under
         applicable personal property, uniform commercial code and land titles
         law, including, without limitation, a charge on all present and
         after-acquired real and personal property of each of the Borrower
         Parties (the aforementioned security together with such other security
         whether hereinbefore acquired, now held, or hereinafter acquired or
         obtained by CLIC to secure repayment of the Senior Debt (as such term
         is hereinafter defined) is hereinafter collectively referred to as the
         "Senior Security");

B.       Each of the Borrower Parties has granted certain security to GEIPPP II
         to secure repayment of certain indebtedness due and owing by the
         Borrower Parties to GEIPPP II, which security has been, or will be,
         duly executed in favour of GEIPPP II and under applicable personal
         property, uniform commercial code and land titles law, including,
         without limitation, a charge on all present and after-acquired real and
         personal property of each of the Borrower Parties (the aforementioned
         security together with such other security whether hereinbefore
         acquired, now held or hereinafter acquired or obtained by GEIPPP II to
         secure repayment of the GEIPPP II Debt (as such term is hereinafter
         defined) is hereinafter collectively referred to as the "GEIPPP II
         Security");


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C.       Each of the Borrower Parties, CLIC and GEIPPP II has agreed to enter
         into this Agreement in order to set out the respective priorities of
         the Senior Security and the GEIPPP II Security.

         NOW THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the
premises and payment by each party to each other party of the sum of Ten
($10.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party, the parties hereby
covenant, undertake, declare and agree as follows:

ARTICLE 1

                                 INTERPRETATION

1.1      DEFINITIONS

In this Agreement, including the recitals hereto, except as otherwise expressly
provided or as the context otherwise requires:

         (a)      "Accounts", "Inventory", "Proceeds", "Security Interest" and
                  any other word or phrase defined in the PPSA, shall have the
                  meanings given by the PPSA;

         (b)      "Business Day" means any day other than a day that is a
                  Saturday, a Sunday, or a statutory holiday in Vancouver,
                  British Columbia or Stamford, Connecticut;

         (c)      "Debt" means the GEIPPP II Debt and the Senior Debt,
                  collectively;

         (d)      "GEIPPP II Debt" means the indebtedness due and owing by any
                  and all of the Borrowers to GEIPPP II at the date hereof,
                  pursuant to the Amended and Restated Note and Stock Purchase
                  Agreement dated as of December 17, 2004, as amended from time
                  to time (the "Note Agreement"), the Security Agreement and New
                  Senior Note (as each is in defined in the Note Agreement).

         (e)      "GEIPPP II Security" means all security now held or hereafter
                  acquired or obtained by GEIPPP II for repayment of the GEIPPP
                  II Debt, including without limitation, that security referred
                  to in Recital "B" to this Agreement;

         (f)      "Lender" means either of GEIPPP II or CLIC, as the case may
                  be, and "Lenders" means all of them collectively;

         (g)      "Loan Agreement" means the loan agreement dated with effect as
                  of December 17, 2004 entered into by the Borrower Parties and
                  CLIC, as amended, restated or replaced from time to time in
                  accordance with the provisions of that agreement and this
                  Agreement;

         (h)      "party" or "parties" means any person, firm or corporation
                  which has executed and delivered this Agreement;


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         (i)      "PPSA" means the PERSONAL PROPERTY SECURITY ACT (British
                  Columbia), as amended from time to time;

         (j)      "Receiver" means a receiver, receiver-manager or agent whether
                  privately appointed or appointed by a court for the purpose of
                  realizing upon any security instrument granted by any of the
                  Borrower Parties;

         (k)      "Senior Debt" means the $5,000,000 senior secured loan to be
                  advanced by CLIC pursuant to the Loan Agreement, and includes
                  all interest, premium, penalty and costs of enforcement
                  arising thereunder or pursuant thereto;

         (l)      "Senior Security" means all security now held or hereafter
                  acquired or obtained by either of CLIC as security for the
                  repayment of Senior Debt including, without limitation, that
                  security referred to in Recital "A" to this Agreement;

         (m)      "Security" means collectively the Senior Security and the
                  GEIPPP II Security.

1.2      HEADINGS

The division of this Agreement into articles, clauses, subclauses and paragraphs
and the provision of headings is for the convenience of reference only and shall
not affect the construction or interpretation of this Agreement.

                                    ARTICLE 2
                                    CONSENTS

2.1      CLIC CONSENT

CLIC hereby consents to the creation and issue by the Borrower Parties to GEIPPP
II of the GEIPPP II Security, and to the incurring by the Borrower Parties of
the GEIPPP II Debt.

2.2      GEIPPP II CONSENT

GEIPPP II hereby consents to the creation and issue by the Borrower Parties to
CLIC of the Senior Security and to the incurring by the Borrower Parties of the
Senior Debt.

                                   ARTICLE 3
                          SUBORDINATION AND PRIORITIES

3.1      SUBORDINATION AND POSTPONEMENT OF SECURITY

Notwithstanding the dates of execution and delivery by the Borrower Parties of
the Senior Security or the GEIPPP II Security, the dates of filing or perfecting
thereof, the giving of notice in respect thereof, the nature of the security
interests granted by the Borrower Parties, the time of crystallization thereof
or the dates of any advances thereunder, it is understood and agreed by and
between the parties that the priority of the Security shall be determined on the
following basis:



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The Senior Security shall have priority over the GEIPPP II Security as to all of
the real and personal property of the Borrower Parties with respect to the
Senior Debt. For greater certainty, the priority granted hereunder to the Senior
Debt shall be reduced dollar for dollar as payments are made by any of the
Borrower Parties and applied by CLIC toward the repayment of principal under the
Senior Debt, and shall not thereafter be increased by any additional or
replacement advances of any debt to any of the Borrower Parties by CLIC. For
greater certainty, the foregoing reference to additional or replacement advances
does not constitute consent by GEIPPP II to such advances, which shall be
subject to Section 6.1 of this Agreement.

3.2      SUBORDINATION OF DEBT

The parties hereto agree that in the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets and property of any of the
Borrower Parties by reason of the liquidation, dissolution or other winding up
of any of the Borrower Parties' businesses or any sale, receivership, insolvency
or bankruptcy proceedings, or assignment for the benefit of creditors, or any
proceedings by or against any of the Borrower Parties for any relief under
bankruptcy or insolvency law or laws relating to the relief of debtors,
readjustment of indebtedness, reorganizations, arrangements, compositions or
extensions, then and in every such event all proceeds of distributions of any
kind or character, either in cash, securities or other property which shall be
payable or deliverable upon or relating to the realization of such property and
assets of the Borrower Parties shall be payable in accordance with the
priorities set forth in Article 3 hereof. GEIPPP II hereby subordinates its
rights, whether at law, in equity, under its Security or otherwise, to each and
all such distributions to the rights of CLIC under the Senior Security to the
extent necessary to give effect to the priorities set forth in this Article 3.
All payments or distributions provided for in this Section 3.2 received by
GEIPPP II that are not consistent with the priorities set forth in this Article
3 shall be held in trust by it for the benefit of and shall be forthwith paid to
CLIC in accordance with the priorities in this Article 3.

3.3      POSTPONEMENT OF DEBT

Without the consent of CLIC, none of the Borrower Parties shall make and GEIPPP
II shall not be permitted to receive any interest payment on account of the
GEIPPP II Debt prior to December 17, 2006, except as required by terms of the
Note Agreement and the New Senior Note as such documents exist on the date of
this Agreement (which terms for greater certainty require the approval of the
Elephant & Castle Group, Inc. board of directors). Thereafter, none of the
Borrower Parties shall be permitted to make and GEIPPP II shall not be permitted
to receive any payment under the GEIPPP II Debt unless at the time such payment
is made and immediately after the making of such payment (i) there shall not
have occurred and be continuing any default or breach under the terms of any of
the Senior Debt or the Senior Security and (ii) the making of such payment by a
Borrower Party would not cause a default or breach by any Borrower Parties of
its obligations under the Senior Security or the Senior Debt. If at any time
CLIC, acting reasonably, determines that (i) there has been a breach or default
under the terms of the Senior Debt or the Senior Security, or (ii) the making of
any payment by a Borrower Party on account of the GEIPPP II Debt would result in
such a breach or default by any Borrower Party of its obligations under the
Senior Debt or the Senior Security, then CLIC shall be entitled to notify the
Borrower Parties and GEIPPP II that no further repayments of any GEIPPP II Debt
shall be



                                      -4-
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made by the Borrower Parties after GEIPPP II's receipt of such notification. For
greater certainty, nothing in this section 3.3 is intended to limit GEIPPP II's
rights to take enforcement action against the Borrower subject to and in
accordance with Article 4.

Should GEIPPP II receive sums of money in payment of the GEIPPP II Debt at any
time or times after which CLIC has provided notice to GEIPPP II pursuant to the
immediately preceding paragraph that no further repayments of GEIPPP II Debt
shall be made, GEIPPP II shall hold such sums as a depositary and trustee for
CLIC, and shall deliver the same to CLIC without delay.

CLIC agrees that it shall consent to the Borrower Parties re-commencing payments
on account of the GEIPPP II Debt if CLIC, acting reasonably, determines that (i)
any breach or default under the terms of the Senior Debt and the Senior Security
has been fully rectified to CLIC's satisfaction such that there is no continuing
breach or default; and (ii) any such payment shall not result in any default or
breach under the terms of the Senior Debt or the Senior Security.

3.4      REALIZATION

CLIC agrees to act in a prudent and commercially reasonable manner on any
realization of the Senior Security with a view to maximizing the proceeds of the
realization in as expeditious a manner as is reasonably possible.

3.5      INSURANCE PROCEEDS

Subject to the rights of the Borrower Parties in respect of insurance proceeds
under the Loan Agreement, any insurance proceeds received by the Borrower
Parties or by any of the Lenders in respect of assets of the Borrower Parties
charged by the Security shall be dealt with according to the preceding
provisions hereof as though such insurance proceeds were paid or payable as
proceeds of realization of the collateral for which they compensate and all
insurance proceeds received by the Borrower Parties shall be held in trust by it
for the benefit of the Lenders in accordance with the provisions hereof.

                                    ARTICLE 4

                                     DEFAULT

4.1      STANDSTILL

GEIPPP II hereby acknowledges, confirms and agrees that its rights as to demand,
acceleration and realization of the GEIPPP II Debt and the GEIPPP II Security
are, until such time as the Senior Debt has been satisfied and paid in full,
subject to the following specific agreement:

         (a)      GEIPPP II shall not, for a period of 90 days (the "standstill
                  period") from the earlier of the date of receipt by any
                  Borrower Party of a notice of default issued by GEIPPP II, or
                  the date of receipt by GEIPPP II of a notice from CLIC that a
                  default has occurred in respect of the Senior Debt or the
                  Senior Security, take any steps or actions to enforce payment
                  of the GEIPPP II Debt or to commence realization upon the
                  GEIPPP II Security including, without limitation, issuance of
                  demand, acceleration of



                                      -5-
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                  indebtedness and obligation, issuance of all statutorily
                  required notices, exercising rights of set-off, commencement
                  of bankruptcy proceedings, foreclosure, power of sale, taking
                  of possession, giving in payment, appointing or making
                  application to a court for an order appointing an agent or a
                  receiver or receiver-manager or by any other means of
                  enforcement thereof; provided that: (i) notwithstanding the
                  foregoing, the standstill period shall be deemed to expire and
                  be terminated upon (A) the taking of any step, action or
                  proceeding by CLIC (including any Receiver appointed by it)
                  for the purpose of realizing on the Security which step,
                  action or proceeding occurs after the issuance of the
                  preparatory notices in connection with the Senior Security by
                  any one of the foregoing, or (B) after an order has been
                  rendered declaring any Borrower Party a bankrupt; and (ii)
                  GEIPPP II may issue one or more preparatory notices in
                  connection with the GEIPPP II Security at any time after any
                  preparatory notices have been issued in connection with the
                  Senior Security by CLIC or a Receiver appointed by it;

         (b)      at the expiry of the standstill period and provided that the
                  event of default or, if more than one, all of the events of
                  default, set out in the notice of default has or have not been
                  cured, waived or otherwise revoked on or before the expiry of
                  such standstill period, GEIPPP II shall be free to take such
                  steps to enforce payment of the GEIPPP II Debt as it shall
                  determine; and

         (c)      for greater certainty, if at any time, or from time to time,
                  (i) the event of default or, if more than one, all of the
                  events of default, set out in a notice of default is or are
                  cured or waived or the notice of default is otherwise revoked
                  and (ii) the Borrower Parties have paid GEIPPP II all arrears
                  of principal and interest in respect of any scheduled payment
                  that was not paid when due as a result of the blockage of such
                  payment as provided for herein (which payment may be made and
                  accepted, provided that the conditions set forth in the
                  preceding clause (i) are satisfied), then the standstill
                  period applicable to such notice of default will cease to be
                  applicable and a new standstill period will commence upon the
                  issuance of any new notice of default, provided that the
                  aggregate number of days in any 365-day period during which a
                  standstill period is in force shall not exceed 130 days (the
                  "Annual Standstill Period Limit").

4.2      CROSS NOTICES AND CONTROL OF RECEIVERSHIP

Each Lender shall as soon as is reasonably possible notify in writing the other
Lender of any default under its respective Security. In the event any Lender
appoints a Receiver by private instrument or is successful in obtaining a court
order for the appointment of a Receiver of all or by any portion of the assets
of any of the Borrower Parties, the other Lender shall have the right to
privately appoint its own Receiver or make separate application to the court for
the appointment of its own separate Receiver in respect of any or all of the
Borrower Parties subject to such court order, provided that any Receiver
appointed by CLIC or appointed by a court upon application of CLIC shall have
complete management, control and possession of the property, assets and
undertaking of any or all of the Borrower Parties in priority to the rights of
any receiver appointed by GEIPPP II or appointed by the court upon application
of GEIPPP II until such time as CLIC has lawfully received all amounts owing on
account of the Senior Debt. Each



                                      -6-
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Lender agrees to consent to all orders of the court as may be applied for by the
other Lender in order to carry out the terms of this provision.

4.3      INDEPENDENT RIGHT TO ACT

Except as otherwise provided herein, a Lender's right to demand or accelerate
payment of any indebtedness owing by the Borrower Parties or to take such steps
as such Lender may deem appropriate from time to time to realize on its Security
shall not be limited hereby.

4.4      CO-OPERATION IN RECEIVERSHIP APPOINTMENT

Subject to Section 4.1 hereof, each Lender shall promptly and in good faith
co-operate with the other Lender in order to implement and appoint any Receiver
which the other Lender elects to have appointed or elects to apply to a court
for appointment and, to that end, each Lender shall promptly do such acts and
things and execute and deliver such instruments as may be reasonably required in
that regard.

                                   ARTICLE 5
                       COVENANTS OF THE BORROWER PARTIES

5.1      CONSENT

Each of the Borrower Parties hereby consents to the Lenders entering into this
Agreement, and agrees not to take, or to participate with CLIC or GEIPP II in
taking, any action that would constitute a breach by CLIC or GEIPPP II, as the
case may be, of its obligations hereunder. Without limiting the generality of
the foregoing, no Borrower Party shall enter into any amendment or modification
to the Senior Debt or Senior Security, or incur any additional obligations to
CLIC, except as permitted under Section 6.1.

5.2      AGREEMENT TO BE BOUND

Each of the Borrower Parties hereby confirms to and agrees with the Lenders that
so long as any of the indebtedness of the Borrower Parties herein referred to
remains outstanding to any of the Lenders, it shall stand possessed of its
assets so charged for the Lenders, in accordance with their respective rights as
herein set out and all funds, monies, or proceeds received by any Borrower Party
from the sale or other disposition of its property shall be held in trust by the
Borrower Parties for the benefit of the Lenders in accordance with the
provisions of this Agreement.

5.3      DEFAULT

Each of the Borrower Parties agrees that any default by the Borrower Parties in
complying with, fulfilling, observing and performing the terms and provisions of
this Agreement shall be and shall be deemed to be an Event of Default by the
Borrower Parties under the terms and provisions of the Senior Security and the
GEIPPP II Security and shall entitle CLIC and GEIPPP II or any of them to
immediately proceed to enforce the terms and provisions of the Senior Security
or the GEIPPP II Security, as the case may be, in accordance with and subject to
the terms thereof.



                                      -7-
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                                   ARTICLE 6
                                    GENERAL

6.1      CLIC DEBT

CLIC shall not make any Material Modification to the Senior Debt or Senior
Security without the prior written consent of GEIPPP II, which consent shall not
be unreasonably withheld or delayed. For the purposes of this section 6.1,
"Material Modification" means any amendment or modification to the Senior Debt
or the Senior Security which would:

         (a)      increase the interest rate or principal amount of the Senior
                  Debt except for increases in principal to cover workout costs
                  and enforcement costs (including closing costs in connection
                  therewith) and any advances to protect or preserve the
                  collateral ("Protective Advances");

         (b)      increase in any other material respect any monetary
                  obligations of any of the Borrower Parties under the Loan
                  Agreement or the Senior Security;

         (c)      shorten the scheduled maturity date of the Senior Debt (other
                  than by acceleration of the Senior Debt);

         (d)      increase the amount of any principal payments required under
                  the Senior Debt or modify any related principal amortization
                  schedule in a manner which would increase the amount of
                  principal payments except if increased in connection with (a)
                  above;

         (e)      convert or exchange the Senior Debt into or for any other
                  indebtedness or subordinate any of the Senior Debt to any
                  indebtedness of the Borrower Parties;

         (f)      extend the period during which voluntary prepayments are
                  prohibited or impose any prepayment fee or premium or yield or
                  spread maintenance charge in connection with a prepayment of
                  the Senior Debt in excess of that which is currently provided
                  under the Loan Agreement or after the current maturity date of
                  the Senior Debt or increase the amount of such prepayment fee,
                  premium or yield or spread maintenance charge;

         (g)      grant CLIC the right to any contingent interest, additional
                  interest or any so-called "kicker" measured on the basis of
                  the cash flow or appreciation of any property subject to the
                  Senior Security (or other similare equity participation);

         (h)      shorten any cure periods under the Senior Debt or Senior
                  Security;

         (i)      make any additional occurrences or circumstances a breach,
                  default or "Event of Default" under the Senior Debt or the
                  Senior Security.

No sums funded by CLIC under the Loan Agreement as a result of the making of any
Protective Advances, or interest accruals or accretions provided for in the Loan
Agreement as of the date hereof and any compounding thereof (including default
interest), shall be deemed to contravene this section 6.1.



                                      -8-
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CLIC shall not make any additional loans or advances to or for the account of
the Borrower Parties, or commit to do so, without the prior written consent of
GEIPPP II which consent may be withheld by GEIPPP II in its sole discretion.

6.2      NON-DISPOSAL OF SECURITY OR DEBT

No Lender shall sell, transfer, assign or otherwise dispose of its Security or
any Debt secured thereby without first causing the assignee to execute a
counterpart of this Agreement whereby such assignee shall agree to be bound by
the terms hereof to the same extent as if it had been an original party hereto.

6.3      NOT TO ATTACK SECURITY

No Lender shall do any act or thing to contest or bring into question the
validity, priority, perfection or enforceability of all or any part of the
Security.

6.4      TAKING OF ADDITIONAL SECURITY

Subject always to the provisions herein (including, without limitation, Section
6.1), any Lender may, from time to time, at its sole discretion, and without
notice to or consent of the other Lender, but without affecting the priorities,
postponements or subordinations hereunder, take all or any of the following
actions:

         (a)      amend, modify or supplement its Security;

         (b)      retain or obtain any additional security in any property to
                  secure any of its Debt;

         (c)      retain or obtain the primary or secondary obligation of any
                  other person with respect to any of its Debt;

         (d)      extend, renew for one or more periods (whether or not longer
                  than the original period) alter or exchange any of its Debt,
                  or release or compromise any obligation of any nature of any
                  obligor with respect to any of its Debt; or

         (e)      fail to obtain or perfect or release, any of its security
                  interest or rights of set-off in respect of, or surrender,
                  release or permit any substitution or exchange for, all or any
                  party of any property subject to any of its Security or
                  otherwise securing any of its Debt, or extend or renew for one
                  or more periods (whether or not longer than the original
                  period) or release, compromise, alter or exchange any
                  obligations of any nature of any person with respect to any
                  such property.

For greater certainty, each Lender agrees not to enter into any arrangement with
the Borrower Parties which would have the effect of giving to it preference or
priority over the other Lender's Security that is contrary to the priorities
provided for in this Agreement.



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6.5      ENFORCEMENT

Subject only to Section 3.4 of this Agreement, no Lender shall be bound to take
any action whatsoever whether legal or otherwise, for the purpose of collecting
debts, monies or any part thereof payable under any of its Security and no
Lender shall be liable or responsible for any loss or damage which may accrue by
reason of any action or failure to take any such action in respect of the
collection of any of the Senior Debt or GEIPPP II Debt, as the case may be.

No Lender shall be prejudiced in its rights hereunder by any act or failure to
act of either the Borrower Parties or the other Lender, or any non-compliance of
either the Borrower Parties or the other Lender with any agreement or
obligation, regardless of any knowledge thereof which the first Lender may have
or with which the other Lender may be charged; and no action of the first Lender
permitted hereunder shall in any way affect or impair the rights of the other
Lender or the obligations of the first Lender hereunder.

6.6      INDEPENDENT BUSINESS ANALYSIS

Each Lender has been and will continue to be solely responsible for making its
own independent appraisal of and investigation into the financial condition,
business and affairs of the Borrower Parties, and each Lender confirms to the
other Lender that it has not relied on and it will not hereafter rely on any
other Lender:

         (a)      to check or inquire on its behalf into the adequacy, accuracy
                  or completeness of any information provided by the Borrower
                  Parties in connection with any of the Security (whether or not
                  such information has been or is hereafter circulated to any
                  Lender); or

         (b)      to assess or keep under review on its behalf the financial
                  condition, business or affairs of the Borrower Parties.

6.7      BREACH BY THE BORROWER PARTIES

No Lender shall be prejudiced in its rights hereunder by any act or failure to
act of the Borrower Parties or any non-compliance by the Borrower Parties with
any agreement or obligation, regardless of any knowledge thereof which any
Lender may have.

6.8      WAIVER

No delay on the part of any of the Lenders or of any agent thereof in the
exercise of any right or remedy referred to herein shall operate as a waiver
thereof, and no single or partial exercise by either of the Lenders or any agent
thereof of any such right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy, nor shall any
modification, waiver or discharge of any of the provisions hereof be binding
upon any of the Lenders except as expressly set forth in writing duly signed and
delivered on behalf of such Lender, and no waiver or consent shall constitute a
consent or waiver to any further breach or default unless therein specifically
so stated.



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6.9      INVALIDITY

Any provision of this Agreement which is or becomes prohibited or unenforceable
in any jurisdiction shall not invalidate, affect or impair the remaining
provisions or invalidate or render unenforceable the provision concerned in any
other jurisdiction.

6.10     TERM OF AGREEMENT

This Agreement shall terminate when all of the Senior Debt has been repaid in
full, provided that such termination shall not effect the priorities and
agreements established herein with respect to the Security prior to the
effective date of such termination.

6.11     NO MODIFICATION OF THE BORROWER PARTIES' OBLIGATIONS

Each of the Borrower Parties hereby acknowledges and agrees that this Agreement
shall not modify, relieve or release it from any of its obligations or
liabilities to:

         (a)      CLIC under the agreements creating the Senior Debt (as may be
                  supplemented, amended, or replaced from time to time), the
                  Senior Security or with respect to the Senior Debt; or

         (b)      to GEIPPP II under the agreements creating the GEIPPP II Debt
                  (as may be supplemented, amended, or replaced from time to
                  time), the GEIPPP II Security or with respect to the GEIPPP II
                  Debt.

6.12     APPLICABLE LAW

This Agreement shall be deemed to be a contract under the laws of the Province
of British Columbia and shall be governed by and be construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein. The parties irrevocably submit to the jurisdiction of the Courts of the
Province of British Columbia.

6.13     NOTICES

Any notice provided for herein shall be deemed to have been properly given if in
writing and delivered or mailed by prepaid registered mail addressed as follows:

to GEIPPP II:              c/o GE Asset Management Incorporated
                           3003 Summer Street
                           P O Box 7900
                           Stamford, CT  06904-7900  USA

                           Attention:       Mr. David Wiederecht
                           Facsimile:       (203) 326-4073



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to CLIC:                   Crown Life Insurance Company
                           c/o Crown Capital Partners Inc.
                           1900 - 1874 Scarth Street
                           Regina, Saskatchewan
                           S4P 4B3

                           Attention:       Christopher A. Johnson
                           Facsimile:       (306) 546-8010

to the Borrower Parties:
                           c/o Elephant & Castle Group Inc.
                           Suite 2100, 1190 Hornby Street
                           Vancouver, BC  V6Z 2K5
                           Attention:       Richard Bryant
                           Facsimile:       604 684 2089

or at such other address as the party to whom such notice is being given shall
have theretofore specified by notice in writing given in the manner aforesaid.
Any notice given hereunder shall be deemed to have been given and become
effective on the day of delivery if delivered, or, in the case of notice by
mail, on the third Business Day following the mailing thereof as aforesaid,
provided that in the event of a disruption of postal service any notice shall
not be effective until the date it is actually received. Notice may also be
given by facsimile and shall be deemed to have been properly given and become
effective on the first Business Day following the date of actual receipt by the
addressee thereof.

6.14     FURTHER ASSURANCES

Each of the parties shall execute and deliver such further deeds, documents,
instruments or assurances as may be necessary or advisable in order to give full
force and effect to this Agreement and to carry out the intent thereof,
including such deeds, documents, instruments and assurances as in the reasonable
opinion of any Lender and its counsel are necessary or advisable to file or to
give notice of this Agreement pursuant to any applicable legislation.

6.15     WHOLE AGREEMENT

This Agreement contains the whole agreement between the parties with respect to
the matters herein contained and there are no other representations, warranties,
covenants or collateral agreements between any of the parties in connection
therewith other than as expressly provided for or referred to herein.



                                      -12-
<Page>

6.16     COUNTERPARTS

This Agreement may be entered into by the execution and delivery of one or more
counterparts hereof which, when taken together, shall constitute one and the
same Agreement.

6.17     SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns.

6.18     MARSHALING OF SECURITY

No Lender shall have any obligation whatsoever to marshall its security, and
each Lender hereby waives all and any rights it may have at law or equity to
require the other Lender to do so.

6.19     CANADIAN CURRENCY

All monetary amounts referenced herein are stated in Canadian dollars.

IN WITNESS WHEREOF, CROWN LIFE INSURANCE COMPANY has had these presents executed
by its proper signing officers in that behalf, effective the day and year first
above-written.

                                           CROWN LIFE INSURANCE COMPANY BY ITS
                                           AGENT, CROWN CAPITAL PARTNERS INC.

                                           Per:
                                                --------------------------------

                                           Per:
                                                --------------------------------


IN WITNESS WHEREOF, GE INVESTMENT PRIVATE PLACEMENT PARTNERS II, A LIMITED
PARTNERSHIP, has had these presents executed by its proper signing officers in
that behalf, effective the day and year first above-written.

                                           GE INVESTMENT PRIVATE PLACEMENT
                                           PARTNERS II, A LIMITED PARTNERSHIP

                                           By: GE Asset Management Incorporated
                                              Its: General Partner


                                           By: _________________________________
                                               Name:
                                               Title:



                                      -13-
<Page>

IN WITNESS WHEREOF, EACH OF THE BORROWER PARTIES has had these presents executed
by its proper signing officers in that behalf, effective the day and year first
above-written.

                                       ELEPHANT & CASTLE GROUP INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       THE ELEPHANT AND CASTLE CANADA INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       ELEPHANT & CASTLE, INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       ELEPHANT AND CASTLE OF PENNSYLVANIA, INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       E & C PUB, INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:



                                      -14-
<Page>

                                       MASSACHUSETTS ELEPHANT & CASTLE
                                       GROUP, INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       ELEPHANT & CASTLE INTERNATIONAL, INC.

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       ELEPHANT & CASTLE (CHICAGO) CORPORATION

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       ELEPHANT & CASTLE EAST HURON, LLC

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       E&C SAN FRANCISCO, LLC

                                       BY: __________________________________
                                              NAME:
                                              TITLE:

                                       E&C CAPITAL, LLC

                                       BY: __________________________________
                                              NAME:
                                              TITLE:



                                      -15-
<Page>


                                    SCHEDULE
                                BORROWER PARTIES

 Elephant & Castle Group Inc.

 The Elephant and Castle Canada Inc.

 Elephant & Castle, Inc.

 Elephant and Castle of Pennsylvania, Inc.

 E & C Pub, Inc.

 Massachusetts Elephant & Castle Group, Inc.

 Elephant & Castle International, Inc.

 Elephant & Castle (Chicago) Corporation

 Elephant & Castle East Huron, LLC

 E&C San Francisco, LLC

 E&C Capital, LLC




                                      -16-

</TEXT>
</DOCUMENT>
