Document:

vff-ex101_239.htm

Exhibit 10.1

	
	
 

	
AMENDED AND RESTATED CREDIT AGREEMENT

	
Dated as of May 7, 2021

 

among

VILLAGE FARMS CANADA LIMITED PARTNERSHIP and 

VILLAGE FARMS, L.P.

as Borrowers

 

and

 

certain affiliates of the Borrowers

as Guarantors

 

and

 

BANK OF MONTREAL

as Lender

 

 

 

 

 

TABLE OF CONTENTS

					
	
ARTICLE 1 INTERPRETATION                                                                                                            
	
1

	
Section 1.1
	
 
	
Definitions
	
 
	
1

	
Section 1.2
	
 
	
Business Day
	
 
	
36

	
Section 1.3
	
 
	
Accounting Principles and Calculations
	
 
	
36

	
Section 1.4
	
 
	
Conflict
	
 
	
37

	
Section 1.5
	
 
	
Currency
	
 
	
37

	
Section 1.6
	
 
	
Time of Essence
	
 
	
37

	
Section 1.7
	
 
	
Headings and Table of Contents
	
 
	
37

	
Section 1.8
	
 
	
General Interpretation
	
 
	
37

	
Section 1.9
	
 
	
Computation of time Periods
	
 
	
38

	
Section 1.10
	
 
	
Severability
	
 
	
38

	
Section 1.11
	
 
	
Schedules and Exhibits
	
 
	
38

	
 
	
 

	
ARTICLE 2 CREDIT FACILITY
	
39

	
Section 2.1
	
 
	
Facility
	
 
	
39

	
Section 2.2
	
 
	
Advances
	
 
	
39

	
Section 2.3
	
 
	
Availments
	
 
	
39

	
Section 2.4
	
 
	
Purpose of Advances
	
 
	
40

	
Section 2.5
	
 
	
Borrowing Procedures
	
 
	
40

	
Section 2.6
	
 
	
Reserves
	
 
	
41

	
Section 2.7
	
 
	
Bank Products
	
 
	
42

	
Section 2.8
	
 
	
Conversion of Loans
	
 
	
42

	
Section 2.9
	
 
	
Conversion and Rollover Not Repayment
	
 
	
43

	
Section 2.10
	
 
	
Deposit of Proceeds of Advances
	
 
	
43

	
Section 2.11
	
 
	
 
	
 
	
43

	
 
	
 

	
ARTICLE 3 INTEREST, FEES AND EXPENSES
	
43

	
Section 3.1
	
 
	
Interest on Loans
	
 
	
43

	
Section 3.2
	
 
	
Overdue Amounts
	
 
	
44

	
Section 3.3
	
 
	
Confirmation of Certain Rates
	
 
	
44

	
Section 3.4
	
 
	
Inability to Determine Rates
	
 
	
45

	
Section 3.5
	
 
	
Payment of Interest
	
 
	
45

	
Section 3.6
	
 
	
Renewal Fee
	
 
	
47

	
Section 3.7
	
 
	
Standby Commitment Fee
	
 
	
47

	
Section 3.8
	
 
	
Renewal Fee
	
 
	
47

	
Section 3.9
	
 
	
Field Examination Expenses
	
 
	
47

	
Section 3.10
	
 
	
Monthly Administration Fee
	
 
	
47

	
Section 3.11
	
 
	
Termination Fee
	
 
	
48

	
Section 3.12
	
 
	
Fees for Hedging Arrangements
	
 
	
48

	
Section 3.13
	
 
	
Indemnity
	
 
	
48

	
Section 3.14
	
 
	
Breakage Costs
	
 
	
49

	
Section 3.15
	
 
	
Change in Circumstances
	
 
	
49

	
Section 3.15
	
 
	
Illegality
	
 
	
51

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 4 CDOR LOANS
	
 
	
51

(i)

 

					
	
Section 4.1
	
 
	
Minimum Advance
	
 
	
51

	
Section 4.2
	
 
	
Term
	
 
	
51

	
Section 4.3
	
 
	
Rollover of CDOR Loans
	
 
	
51

	
Section 4.4
	
 
	
Substitute Basis of Advance – CDOR Loans
	
 
	
52

	
ARTICLE 5 LETTERS OF CREDIT
	
 
	
53

	
Section 5.1
	
 
	
Letter of Credit
	
 
	
53

	
Section 5.2
	
 
	
Drawings
	
 
	
54

	
Section 5.3
	
 
	
Rollover
	
 
	
54

	
Section 5.4
	
 
	
Fees for Letters of Credit
	
 
	
54

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 6 LIBOR LOANS
	
 
	
54

	
Section 6.1
	
 
	
Minimum Advance
	
 
	
54

	
Section 6.2
	
 
	
Term
	
 
	
54

	
Section 6.3
	
 
	
Rollover of Libor Loans
	
 
	
55

	
Section 6.4
	
 
	
Effect of Benchmark Transition Event
	
 
	
55

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 7 HEDGING ARRANGEMENTS
	
 
	
57

	
Section 7.1
	
 
	
Hedging Arrangements
	
 
	
57

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 8 MASTERCARD ADVANCES
	
 
	
58

	
Section 8.1
	
 
	
MasterCard Advances
	
 
	
58

	
Section 8.2
	
 
	
Maturity of MasterCard Advances
	
 
	
58

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 9 PAYMENTS AND REPAYMENTS OF FACILITIES
	
 
	
58

	
Section 9.1
	
 
	
Place and Application of Payments and Collections
	
 
	
58

	
Section 9.2
	
 
	
Maturity of Revolving Loans
	
 
	
59

	
Section 9.3
	
 
	
Mandatory Repayments
	
 
	
59

	
Section 9.4
	
 
	
Payments Generally
	
 
	
60

	
Section 9.5
	
 
	
Taxes
	
 
	
60

	
Section 9.6
	
 
	
No Set-Off
	
 
	
61

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 10 PAYMENTS AND REPAYMENTS OF FACILITIES
	
 
	
61

	
Section 10.1
	
 
	
Collateral
	
 
	
61

	
Section 10.2
	
 
	
Collateral Proceeds
	
 
	
61

	
Section 10.3
	
 
	
Security Documents
	
 
	
62

	
Section 10.4
	
 
	
Additional Credit Parties
	
 
	
62

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 11 CONDITIONS PRECEDENT
	
 
	
63

	
Section 11.1
	
 
	
Conditions Precedent to Disbursements of Advances
	
 
	
63

	
Section 11.2
	
 
	
Conditions Precedent to All Advances
	
 
	
65

	
Section 11.3
	
 
	
Waiver of any Condition Precedent
	
 
	
65

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 12 REPRESENTATIONS AND WARRANTIES
	
 
	
66

	
Section 12.1
	
 
	
Representations and Warranties of the Credit Parties
	
 
	
66

	
Section 12.2
	
 
	
Deemed Repetition
	
 
	
75

	
 
	
 
	
 
	
 
	
 

(ii)

 

					
	
ARTICLE 13 COVENANTS
	
 
	
75

	
Section 13.1
	
 
	
Affirmative Covenants
	
 
	
75

	
Section 13.2
	
 
	
Negative Covenants
	
 
	
83

	
Section 13.3
	
 
	
Financial Covenants of the Borrower
	
 
	
87

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 14 DEFAULT AND ENFORCMENT
	
 
	
88

	
Section 14.1
	
 
	
Events of Default
	
 
	
88

	
Section 14.2
	
 
	
Rights upon Default and Event of Default
	
 
	
91

	
Section 14.3
	
 
	
Waiver
	
 
	
92

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 15 REMEDIES
	
 
	
92

	
Section 15.1
	
 
	
Remedies Cumulative
	
 
	
92

	
Section 15.2
	
 
	
Remedies Not Limited
	
 
	
92

	
Section 15.3
	
 
	
Set-Off
	
 
	
92

	
Section 15.4
	
 
	
Lender May Perform Covenants
	
 
	
93

	
 
	
 
	
 
	
 
	
 

	
ARTICLE 16 GENERAL PROVISIONS
	
 
	
93

	
Section 16.1
	
 
	
Assignment
	
 
	
93

	
Section 16.2
	
 
	
Amendments
	
 
	
94

	
Section 16.3
	
 
	
Notice
	
 
	
94

	
Section 16.4
	
 
	
Disruption of Postal Service
	
 
	
94

	
Section 16.5
	
 
	
Environmental Indemnity
	
 
	
95

	
Section 16.6
	
 
	
Further Assurances
	
 
	
95

	
Section 16.7
	
 
	
Judgment Currency
	
 
	
95

	
Section 16.8
	
 
	
Waivers
	
 
	
96

	
Section 16.9
	
 
	
Reimbursement of Expenses
	
 
	
96

	
Section 16.10
	
 
	
Governing Law
	
 
	
96

	
Section 16.11
	
 
	
Submission to Jurisdiction
	
 
	
96

	
Section 16.12
	
 
	
Waiver of Trial by Jury
	
 
	
96

	
Section 16.13
	
 
	
Counterparts
	
 
	
97

	
Section 16.14
	
 
	
Excluded Subsidies
	
 
	
97

	
Section 16.15
	
 
	
Entire Agreement
	
 
	
97

	
Section 16.16
	
 
	
Acknowledgement
	
 
	
97

	
Section 16.17
	
 
	
Previous Consent – PSF
	
 
	
97

	
Section 16.18
	
 
	
Previous Consent
	
 
	
98

	
Section 16.19
	
 
	
Amendment and Restatement of Original Agreement
	
 
	
98

	
 
	
 
	
 
	
 
	
 

	
SCHEDULES AND EXHIBITS

	
 
	
 
	
 
	
 
	
 

	
SCHEDULE 12.1(d) 
	
 
	
Business and Operations
	
 
	
 

	
SCHEDULE 12.2(e)
	
 
	
Approvals
	
 
	
 

	
SCHEDULE 12.1(j)
	
 
	
Litigation
	
 
	
 

	
SCHEDULE 12.1(l)
	
 
	
Taxes
	
 
	
 

	
SCHEDULE 12.1(m)
	
 
	
Equity Interests
	
 
	
 

	
SCHEDULE 12.1(s)
	
 
	
Intellectual Property
	
 
	
 

	
SCHEDULE 12.1(t)
	
 
	
Real Property and Locations of Collateral
	
 
	
 

(iii)

 

					
	
SCHEDULE 12.1(u)(i)
	
 
	
Environmental Matters
	
 
	
 

	
SCHEDULE 12.1 (w)
	
 
	
Material Contracts and Licences
	
 
	
 

	
SCHEDULE 12.1(x)
	
 
	
Existing Debt
	
 
	
 

	
SCHEDULE 12.1(hh)
	
 
	
Deposit Accounts
	
 
	
 

	
SCHEDULE 12.1(ii)
	
 
	
Hemp Joint Venture Agreements
	
 
	
 

	
SCHEDULE 12.1(jj)
	
 
	
AVGG Hemp Joint Venture Agreements
	
 
	
 

	
SCHEDULE 12.1(kk)
	
 
	
Permitted Investments
	
 
	
 

	
SCHEDULE 13.1(4)
	
 
	
Insurance
	
 
	
 

	
SCHEDULE 13.2(8)
	
 
	
Transactions with Affiliates
	
 
	
 

	
EXHIBIT “A”
	
 
	
Form of Borrowing Base Certificate
	
 
	
 

	
EXHIBIT “B”
	
 
	
Compliance Certificate
	
 
	
 

	
EXHIBIT “C”
	
 
	
Drawdown Notice
	
 
	
 

	
EXHIBIT “D”
	
 
	
Rollover/Conversion Notice
	
 
	
 

	
EXHIBIT “E”
	
 
	
Permitted Liens
	
 
	
 

 

 

 

(iv)

S-1

 

 

amended and restated CREDIT AGREEMENT

This Amended and Restated Credit Agreement is made as of May 7, 2021 among VILLAGE FARMS CANADA LIMITED PARTNERSHIP and VILLAGE FARMS, L.P. as borrowers, CERTAIN AFFILIATES OF THE BORROWERS, as guarantors, and BANK OF MONTREAL, as lender. 

WITNESS THAT WHEREAS:

	
(1)
	
The Lender made a credit facility available to Village Farms Canada Limited Partnership and Village Farms, L.P. on the terms and conditions set out in a credit agreement dated as of August 29, 2013 among, inter alia, Village Farms Canada Limited Partnership and Village Farms, L.P. as borrowers, certain affiliates of the borrowers, as guarantors, and the Lender, as subsequently amended by nine amending agreements (collectively, the Original Credit Agreement”);

	
(2)
	
The Lender, the Borrowers and the other Credit Parties wish to make amendments to and restate the terms of the Original Credit Agreement in accordance with the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto), the parties hereto make the following agreements.

 

Article 1
INTERPRETATION

	
Section 1.1
	
  Definitions

In this Agreement, the following terms shall have the following meanings, unless the context expressly or by necessary implication requires otherwise:

“Acceptable A/R Insurance” means accounts receivable insurance issued by an insurer satisfactory to the Lender at all times, in its sole discretion, and administered by a broker satisfactory to the Lender at all times, in its sole discretion, and in an amount and upon terms satisfactory to the Lender at all times, in its sole discretion, in respect of which the Borrower has assigned in favour of the Lender all proceeds payable thereunder and such insurer has provided a written acknowledgement to the Lender, including an agreement to pay the proceeds of such accounts receivable insurance policy directly to the Lender.

 “Accommodation” means any Advance made by way of Loan, MasterCard Advance, issuance of a Letter of Credit or Hedging Arrangement.

“Accommodations Outstanding” means, at any particular date of determination with respect to the Facility, the aggregate outstanding amount of all Accommodations made under such Facility as of such date including the Aggregate Revolver Outstandings and the Aggregate Actual Hedge Exposure.

 

S-2

“Actual Hedge Exposure” means, with respect to any particular Hedging Arrangement, the amount owing pursuant thereto (in Canadian Dollars, or the Exchange Equivalent thereof if such amount is owing in US Dollars), if any, by any Credit Party in the event of a default or termination thereunder, determined in accordance with the terms of the applicable Hedging Arrangement.

“Additional Compensation” has the meaning set forth in Section 3.15.

“Advance” means an extension of credit under the Facility by the Lender to the Borrower.

“Affiliate” means, with respect to any particular Person, any other Person that directly or indirectly Controls (including any member of the senior management group of such Person), is Controlled by, or is under common Control with, such Person, or which owns, directly or indirectly, not less than 5% of the outstanding Equity Interests of such Person.

“Aggregate Actual Hedge Exposure” means, as of any particular date of determination, the aggregate amount of the Actual Hedge Exposure under all Hedging Arrangements.

“Aggregate Deemed Hedge Exposure” means, as of any particular date of determination, the aggregate of (a) the Deemed Hedge Exposure for all Hedging Arrangements made in Canadian Dollars, plus (b) the Exchange Equivalent in Canadian Dollars of the Deemed Hedge Exposure for all Hedging Arrangements made in US Dollars.

“Aggregate Revolver Outstandings” means, as of any particular date of determination, the aggregate of (a) the aggregate outstanding Principal Amount of all Revolving Loans, plus (b)  one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit, plus (c) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit, plus (d) the Aggregate Deemed Hedge Exposure for all Hedging Arrangements, plus (e) the MasterCard Limit (only at times when a MasterCard Advance is outstanding), plus (f) all other Obligations for Bank Products. If any such amount is in US Dollars, for purposes of this definition, such amount shall be the Exchange Equivalent in Canadian Dollars. 

“Agreement” means, this amended and restated credit agreement, including all Schedules and Exhibits hereto, together with all amendments, renewals, supplements, variations, restatements, amendments and restatements or replacements hereof from time to time hereafter, made in accordance with the terms hereof.

“Applicable Law” means, at any particular time in respect of any particular Person, property, transaction or event, all laws, statutes, regulations, treaties, judgments and decrees applicable to that Person, property, transaction or event (whether or not having the force of law) and all applicable requirements, requests, official directives, consents, approvals, authorizations, guidelines, decisions, rules, orders and policies of any Governmental Authority having or purporting to have authority over such Person, property, transaction or event.

“Applicable Margin” means the Base Rate Margin, Prime Rate Margin, CDOR Margin, LIBOR Margin, US Prime Rate Margin, or Letter of Credit Fee, as applicable.

(2)

S-3

“Assignee” has the meaning set forth in Section 16.1(2).

“Associate” has the meaning given to such term in Section 195(1) of the Business Corporations Act (British Columbia), as in effect on the Original Closing Date.  

“Audited Financial Statements” means, in respect of any particular Fiscal Year, the audited consolidated and consolidating balance sheet of the Borrower Group as at the last day of such Fiscal Year and the accompanying notes thereto and the related audited consolidated and consolidated income statements, cash flow statements and changes in shareholders’ equity for such Fiscal Year, as applicable, and the accompanying notes thereto, all prepared in accordance with GAAP and setting forth in each case, in comparative form, figures for the corresponding period in the preceding Fiscal Year, all in reasonable detail and fairly presenting in all material respects the financial position and the results of operations of the Borrower, its Subsidiaries and each other Credit Party as at the date thereof and for the Fiscal Year then ended, certified by the Auditor.

“Auditor” means PricewaterhousCoopers LLP or any other independent chartered accounting firm selected by the Borrower that is of national standing or is otherwise acceptable to the Lender.

“Authorized Representative” means, with respect to any Person that is not an individual, the chief executive officer, chief financial officer or president of such Person (or a Person in a similar capacity with respect to non-corporate entities).

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 6.4.

“AVGG Hemp JV Co” means Arkansas Valley Green and Gold Hemp LLC, a Delaware limited liability company, and its successors and assigns. 

“AVGG Hemp JV Documents” means the AVGG LLC Agreement.  

 “Base Rate” means, on any particular date of determination, the fluctuating rate per annum equal to the higher of (a) the rate of interest per annum publicly announced from time to time by the Lender as its reference rate for determining rates on US Dollar denominated commercial loans made by it in Canada and (b) the Federal Funds Rate plus 100 Basis Points per annum.

“Base Rate Loan” means, a Loan that bears interest at a rate based upon the Base Rate.

“Base Rate Margin” means 0.25% per annum.

“Basis Point” means one one-hundredth of one percent (.01%).

(3)

S-4

“Bank Products” means (a) all Hedging Arrangements, and (b) all products and services provided under or in connection with any agreement or other Credit Document executed by the Borrower or any Affiliate of the Borrower in respect of Cash Management Obligations, (c)  to the extent not otherwise included in the foregoing, all other types of banking products, services and facilities (other than Letters of Credit and MasterCard Advances to be provided in accordance with this Agreement) that are provided to the Borrower by the Lender, or any Person that was an Affiliate of the Lender at the time at which such Person agreed to provide such services, products or facilities.

 “Benchmark” means, initially, LIBOR or other applicable LIBOR index rate; provided that if a Benchmark Transition Event, a Term SOFR Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBOR or other applicable LIBOR index rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) or (b) of Section 6.4.

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Bank for the applicable Benchmark Replacement Date: 

	
 
	
(1)
	
the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

	
 
	
(2)
	
the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; 

 

	
 
	
(3)
	
the sum of: (a) the alternate benchmark rate that has been selected by the Bank as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated or bilateral credit facilities at such time and (b) the related Benchmark Replacement Adjustment; 

 

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Credit Documents, upon the occurrence of a Term SOFR Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above).

(4)

S-5

If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Credit Documents.

“Benchmark Replacement Adjustment” means, with respect to any replacement of the then current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement: 

	
 
	
(1)
	
for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Bank: 

 

	
 
	
(a)
	
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; 

 

	
 
	
(b)
	
the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and 

 

	
 
	
(2)
	
for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated syndicated or bilateral credit facilities; 

 

provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Bank in its reasonable discretion.

 

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” the timing and frequency of determining rates and making payments of interest, the timing of borrowing requests or prepayment, conversion or continuation 

(5)

S-6

notices, the length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Bank decides is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).

“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: 

	
 
	
(1)
	
in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);  

	
 
	
(2)
	
in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein;

	
 
	
(3)
	
in the case of a Term SOFR Event, the date that is 30 days after the date a Term SOFR Notice is provided to the Borrower pursuant to Section 6.4(b); or

	
 
	
(4)
	
in the case of an Early Opt-in Election, the 6th Business Day after the date notice of such Early Opt-in Election is provided to the Borrower.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: 

	
 
	
(1)
	
a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor 

(6)

S-7

	
 
		
administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

	
 
	
(2)
	
 a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof) or 

	
 
	
(3)
	
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any other Credit Documents in accordance with Section 6.4 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any other Credit Documents in accordance with Section 6.4.

“Blocked Account” shall have the meaning given thereto in the Lockbox Agreement.

“Blocked Account Agreement” means the blocked account agreement made as of August 29, 2013 between Bank of Montreal, in its capacity as provider of banking services, the Canadian Borrower and the Lender, in its capacity as lender under this Agreement, as amended, restated or replaced from time to time. 

“Borrowers” means the Canadian Borrower and the US Borrower; “Borrower” means any one of them, as applicable.

“Borrower’s Account” means any account of any Borrower maintained at the Branch of Account or at any other branch of the Lender (or an Affiliate of the Lender) or an account 

(7)

S-8

of any Borrower maintained at the Chicago Branch or at any other branch of the Lender (or an Affiliate of the Lender) in the United States of America.

“Borrowing Base” means, as of any particular date of determination, an amount equal (without duplication) to the aggregate of:

	
 
	
(a)
	
85% (or such lesser or greater percentage as the Lender may determine appropriate at any time) of the Value of all Eligible Receivables other than Insured Receivables and other than Designated Receivables; plus

	
 
	
(b)
	
90% (or such lesser or greater percentage as the Lender may determine appropriate at any time) of the Value of all Insured Receivables; plus

	
 
	
(c)
	
90% (or such lesser or greater percentage as the Lender may determine appropriate at any time) of the Value of all Designated Receivables; plus

	
 
	
(d)
	
100% (or such lesser percentage as the Lender may deem appropriate at any time)  of cash of the Borrower maintained in blocked accounts, and subject to the blocked account agreements, with the Lender; minus

	
 
	
(e)
	
all Reserves (other than Priority Payables); minus

	
 
	
(f)
	
all Priority Payables.

“Borrowing Base Certificate” means a Certificate executed by an Authorized Representative of the Borrower, substantially in the form of Exhibit “A”.

“Borrower Group” means Village Farms International Inc., and each Subsidiary including without limitation the Canadian Borrower and the US Borrower.

“Branch of Account” means the branch of the Lender located at First Canadian Place, Toronto, Ontario or such other branch of the Lender (or an Affiliate of the Lender, as applicable) in Canada or the United States of America as the Lender may advise the Borrower in writing from time to time.  

“Business Day” means (a) any day on which the Lender is open for over-the-counter business in Toronto, Ontario (other than Saturday, Sunday or any other day on which banks are authorized or required by law to remain closed for normal business in Toronto, Ontario), (b) with respect to LIBOR Loans, any day of the year (other than Saturday or Sunday or any other day on which banks are authorized or required by law to remain closed for normal business in Toronto, Ontario, New York, New York or London, England and  any other day that is not a day on which dealings in US Dollar deposits are conducted by and between banks in the London interbank Eurodollar market), and (c) with respect to the Chicago Branch, any day of the year on which the Lender is open for over-the-counter business in Chicago, Illinois (other than Saturday, Sunday or any other day on which banks in Chicago, Illinois are authorized or required by law to remain closed for normal business).

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“Business Plan” means, with respect to any particular Fiscal Year, the business plan of the Borrower and each other Credit Party for such Fiscal Year (including any amendments thereto from time to time approved by the Lender), prepared on a consolidated and unconsolidated basis for the Borrower and each other Credit Party, and including a projected monthly and year to date income statement, balance sheet, statement of cash flows, listing of proposed Capital Expenditures, financial covenant calculations, borrowing base availability, major assumptions to be utilized and financial projections for such Fiscal Year on a month‐to‐month basis, and such other information as is requested by the Lender, all in form and content satisfactory to the Lender.

“Canadian Benefit Plan” means, with respect to any Canadian Credit Party, any employee benefit plan of any nature or kind whatsoever that is maintained by or contributed to, or required to be contributed to, by such Canadian Credit Party for any of its Canadian employees or former Canadian employees (excluding any statutory employee benefit plans with respect to which such Canadian Credit Party is required to comply, including the Canada Pension Plan and the Quebec Pension Plan).

“Canadian Borrower” means Village Farms Canada Limited Partnership, a limited partnership formed and existing under the laws of British Columbia, and its successors and permitted assigns.

“Canadian Credit Party” means any Credit Party organized and existing under the federal laws of Canada or any province or territory thereof.

“Canadian Dollar Equivalent” means, as at any particular date of determination with respect to any amount denominated in US Dollars, the Exchange Equivalent in Canadian Dollars of such amount on such date.

“Canadian Dollars”, ”$”, “Cdn$” and “C$” each refer to the lawful money of Canada.

“Canadian Pension Plans” means, with respect to any Canadian Credit Party, a Canadian Benefit Plan that is considered to be a pension plan for the purposes of any applicable pension benefits or tax statute or regulation in Canada established, maintained or contributed to by such Credit Party for any of its Canadian employees or former Canadian employees.

“Capital Expenditure” means, for any particular period, with respect to any particular Credit Party, any expenditure made by such Credit Party during such period in connection with the acquisition, improvement or maintenance of any capital or fixed asset of such Credit Party that is required in accordance with GAAP to be capitalized on the balance sheet of such Credit Party.

“Capitalized Lease Obligations” means, for any particular period, the aggregate liability in respect of all Capital Leases of the Credit Parties on a consolidated basis for such period, determined in accordance with GAAP.

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“Capital Lease” means, with respect to any particular Credit Party, any lease or other arrangement relating to property or assets that is required in accordance with GAAP to be listed as a capital lease on the balance sheet of such Credit Party.

“Cash Equivalents” means, as at any particular date of determination:

	
 
	
(a)
	
any bond, debenture or other evidence of indebtedness issued, or fully and unconditionally guaranteed or insured, by the Government of Canada or the government of a province of Canada, or any agency or political subdivision thereof, and maturing not more than six months from the date of issuance thereof;

	
 
	
(b)
	
certificates of deposit, time deposits, repurchase agreements, reverse repurchase agreements, or bankers’ acceptances issued by any commercial bank organized under the laws of Canada, having combined capital and surplus of not less than $1,000,000,000 and a rating of at least “A-1”(or the equivalent thereof) from Standard & Poor’s Corporation, or the equivalent rating from Moody’s Investors Services Inc. or DBRS Ltd., and maturing not more than six months from the date of issuance or execution thereof, as applicable;

	
 
	
(c)
	
commercial paper having a rating of at least “A-1” from Standard & Poor’s Corporation, or the equivalent rating from Moody’s Investors Services Inc. or DBRS Ltd., and maturing not more than three months after the date of issuance thereof;

	
 
	
(d)
	
any bond, debenture or other evidence of indebtedness issued, or fully and unconditionally guaranteed or insured, by the Government of the United States of America or any agency or political subdivision thereof, payable in US Dollars, having a rating of at least “A-1” (or the equivalent thereof) from Standard & Poor’s Corporation or an equivalent rating from DBRS Ltd. or Moody’s Investors Services, Inc., and maturing not more than six months after the date of issuance thereof.

“Cash Management Obligations” means, with respect to any particular Person, any direct or indirect liability, contingent or otherwise, of such Person in respect of cash management services, (including treasury, depository, overdraft, controlled disbursement, credit, electronic funds transfer, automatic clearing house transfer and other cash management arrangements), including obligations for the payment of fees, interest, charges, expenses, legal fees and disbursements relating to any of the foregoing.

“CDOR Discontinuation Date” has the meaning specified in Section 4.4.

“CDOR Loan” means a Loan that bears interest at a rate based upon the CDOR Rate.

“CDOR Margin” means 1.50% per annum.

“CDOR Rate” means, on any particular date of determination, the annual rate of interest that is the arithmetic average of the rates posted by all listed institutions for bankers’ acceptances for the relevant period, as displayed and identified as such on the Reuters Screen CDOR Page (as defined at such time of determination in the International Swap 

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Dealer Association, Inc. definitions) at approximately 10:00 a.m. on such date or, if such date is not a Business Day, on the immediately preceding Business Day (as adjusted by the Lender after 10:00 a.m. to reflect any error in any posted rate or in the posted average annual rate); and if such rate does not appear at such time on such Reuters Screen CDOR Page, then the CDOR Rate shall be the rate quoted at such time on such date by the Lender for banker’s acceptances accepted by the Lender.  Notwithstanding the foregoing, the “CDOR Rate” shall not be less than 0.50% per annum for purposes of this Agreement.

“CERCLA” means the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended.

 

“Certificate” means, with respect to any Person that is not an individual, a written certificate signed on behalf of such Person by an Authorized Person and, with respect to a Person that is an individual, a written certificate signed by such individual.

“Change of Control” means any event or circumstance whereby Village Farms International, Inc. shall cease to directly or indirectly, beneficially own and control at least 50.01% (on a fully diluted basis) of the economic and voting Equity Interests of the Borrowers.

“Chicago Branch” means the branch of the Lender located at 115 South LaSalle St., 12-W, Chicago Illinois 60603 or such other branch in Illinois as the Lender may designate from time to time. 

“Claim” means any claim, demand, cause of action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of any Credit Party) at law or in equity, or before or by any Governmental Authority, domestic or foreign of any nature whatsoever, whether pending or, to the knowledge of any Credit Party, threatened against or affecting any Credit Party or any property of a Credit Party.

“Closing Date” means May 7, 2021.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Collateral” means, collectively, all of the present and future undertaking, property and assets (excluding real property) against or in respect of which Liens in favour of the Lender are now or are hereafter granted (or purported to be granted) pursuant to the Security documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, non-disturbance agreement, acknowledgement agreement or similar agreement executed by any lessor, mortgagee, warehouseman, processor, consignee or other Person (other than a Credit Party) in possession of, having a lien upon, or having rights or interests in any location at which Collateral is situate, in favour of and for the benefit of the Lender, its successors and assigns, and in form and content satisfactory to the Lender.

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“Collection Accounts” shall have the meaning given thereto in the Blocked Account Agreement.

“Commitment” means the Revolving Commitment.

“Compliance Certificate” means a Certificate executed by the Borrowers substantially in the form of Exhibit “B”.

“Contingent Obligations” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person: (a) with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against Loss with respect thereto; (b) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (c) under any Hedging Arrangement; (d) to make, take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement; (e) for the obligations of another through any agreement to purchase, repurchase or otherwise acquire any obligation of another Person or any property constituting security therefor, or to provide funds for the payment or discharge of such obligation; and (f) to maintain the solvency, financial condition or any balance sheet item or level of income of another Person. The amount of any Contingent Obligation (other than in respect of a Hedging Arrangement) shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed or supported. The amount of any Contingent Obligation in respect of a Hedging Arrangement shall equal the Deemed Hedge Exposure for such Hedging Arrangement.

“Contract Period” means, with respect to any particular Letter of Credit or Hedging Arrangement, the period selected by the Borrower in accordance with the terms of this Agreement during which such instrument, commitment or arrangement will be outstanding.

“Contractual Obligation” means, with respect to any Person, any provision of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument (including any Equity Interest issued by such Person) to which such Person is a party or by which, whether in writing or orally, such Person or any of its assets is bound or to which such Person or any of its assets is subject.

“Control” (including, with correlative meanings, the terms “Controlling,” “Controlled by” and “under common Control with”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct, or to cause the direction of, the management and policies of such Person, whether through the ability to exercise voting power over any Equity Interests, whether by contract or otherwise.

“Controlled Group” means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common 

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control, which together with a Borrower and any of its Subsidiaries, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

“Conversion” means the conversion of an outstanding Advance, or a portion of an outstanding Advance, into another Type of Advance under Section 2.8.

“Conversion Date” means the Business Day on which a Conversion occurs.

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

“Credit Documents” means, collectively, this Agreement, the Security, the Guarantees, each Letter of Credit Application, the MasterCard Agreement, the Hedging Arrangements, any certificate completed and executed by a Credit Party and all other Certificates, instruments, agreements and other documents (including without limitation any agreements pertaining to Hedging Arrangements and Bank Products) delivered, or to be delivered, to the Lender under or in connection with this Agreement or any of the Facilities provided for herein and any fee letters entered into between the Borrower and the Lender in respect of fees payable to the Lender.

“Credit Parties” means, collectively, the Canadian Borrower, the US Borrower and each other Person that may now or hereafter become a Guarantor.  For greater certainty, each of PSF, Hemp JV Co, AVGG Hemp JV Co and any other Permitted JV Entity, shall not be considered a Credit Party under this Agreement. 

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Bank in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Bank decides that any such convention is not administratively feasible for the Bank, then the Bank may establish another convention in its reasonable discretion.

“Debt” means, in respect of any particular Credit Party:

	
 
	
(a)
	
all indebtedness of such Credit Party for borrowed money;

	
 
	
(b)
	
any obligation, contingent or otherwise, that is required to be classified as a liability in accordance with GAAP on the balance sheet of such Credit Party;

	
 
	
(c)
	
any obligation secured by a Lien on any property, assets or undertaking owned or acquired by such Credit Party, whether or not such obligation has been assumed;

	
 
	
(d)
	
any debt or liability of such Credit Party that represents the deferred acquisition cost of property or assets created or arising under any conditional sale agreement or other title retention agreement regardless of whether the rights and remedies of the seller under such agreement in the event of default are limited to repossession or sale of the property or assets covered thereby;

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S-14

	
 
	
(e)
	
any liabilities, contingent, unmatured or otherwise, under indemnities given in respect of any bankers’ acceptance, letter of credit or letter of guarantee;

	
 
	
(f)
	
any operating lease under which such Credit Party has furnished a residual value guarantee in respect of which such Credit Party is liable as lessee; and

	
 
	
(g)
	
any Capital Lease by which such Credit Party is bound.

“Debt Service” means, for any period, the amount required by the Borrower Group (on a consolidated basis) to service its outstanding Debt during that period and includes (without limitation) interest, required principal payments (excluding for greater certainty, any principal payments which are: (a) lump sum repayments of principal amounts which are considered non-recurring in the normal course of principal payments, (b) funded with the net proceeds arising from any issuance or sale of any Equity Interests of any member of the Borrower Group, and (c) approved for exclusion by the Lender in the period in which they occur), payments required or made under any Capital Lease, fees payable in respect of letters of credit or letters of guarantee and the stamping fees and discount rates associated with bankers’ acceptances facilities and shares which, by their terms, or upon the happening of any event, mature or are mandatorily redeemable or are redeemable at the option of the holder and which shares are not fully subordinated to the Lien created by the Security documents. 

“Deemed Hedge Exposure” means, with respect to any particular Hedging Arrangement, 10% of the principal amount thereof, or such other percentage thereof as is determined appropriate by the Lender in accordance with its policies in effect from time to time for Hedging Arrangements.

“Default” means any event, circumstance or omission that constitutes an Event of Default or that, after the giving of notice, the passage of time or the failure to remedy such event, circumstance or omission within a period of time, would constitute an Event of Default.

“Default Rate” means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate plus (b) the Applicable Margin plus (c) two percentage points (2.00%) per annum.  Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate.  In addition, the Default Rate shall result in an increase in the Letter of Credit Fee by two percentage points per annum.

“Deposit Account” means any bank, deposit or similar account in which cash proceeds or Cash Equivalents are deposited or held.

“Designated Receivables” means Eligible Receivables owing to a Credit Party from an account debtor which has a Standard & Poor’s rating of “BBB+” or better or a Moody’s Investor Services Inc. rating of “Baa” or better (or such other account debtor as the Lender may approve in writing from time to time at its sole discretion), and in respect of which, as against the relevant account debtor in respect of each such Eligible Receivable, the Credit 

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Party has a Lien, trust or similar security interest or priority claim in its favour created pursuant to PACA.  

 “Drawdown Date” means any Business Day on which an Advance is made or is deemed to be made.

“Drawdown Notice” is defined in Section 2.5(1).

“Early Opt-in Election” means, if the then-current Benchmark is LIBOR or other applicable LIBOR index rate, the occurrence of: 

	
 
	
(1)
	
a notification by the Bank to each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated or bilateral credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such credit facilities are identified in such notice and are publicly available for review), and 

	
 
	
(2)
	
the election by the Bank to trigger a fallback from LIBOR and the provision by the Bank of written notice of such election to the Borrower.

“EBITDA” means, with reference to any particular Person for any particular period, Net Income of such Person for such period plus, without duplication, all amounts deducted in arriving at such Net Income amount in respect of (i) Interest Expense for such period, plus (ii) income taxes for such period, plus (iii) all amounts properly charged for depreciation of fixed assets and amortization of intangible assets during such period on the books of such Person, plus or minus any adjustments for (iv) non cash gains or losses and extraordinary/unusual non-recurring items (such latter items to be agreed upon by the Lender in its sole discretion) for the respective period.  Notwithstanding the foregoing, proceeds in respect of business interruption insurance for losses which have occurred prior to the Original Closing Date will not be included in the calculation of EBITDA, whereas proceeds in respect of business interruption insurance for losses which have occurred after the Original Closing Date will be included in the calculation of EBITDA.  

 “EDC” means Export Development Canada and its successors and assigns.

“Eligible Receivable” means any Receivable arising from the sale of Inventory in the ordinary course of a Credit Party’s business, which the Lender determines to be an “Eligible Receivable”, and, without limiting the discretion of the Lender to make such determination, the Lender may include Receivables that satisfy all of the following criteria:

	
 
	
(a)
	
such Receivable is subject to the Lender’s perfected, first priority Lien and no other Liens (other than Permitted Liens, if applicable);

	
 
	
(b)
	
such Receivable is evidenced by an invoice or other documentary evidence satisfactory to the Lender;

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S-16

	
 
	
(c)
	
such Receivable does not arise out of a sale made by the relevant Credit Party to an Affiliate of the relevant Credit Party or to a Person controlled by an Affiliate of the relevant Credit Party;

	
 
	
(d)
	
such Receivable is not unpaid more than 90 days after the original invoice date or more than 60 days after the invoice due date;

	
 
	
(e)
	
such Receivable is not owing from an account debtor in respect of which 25% or more of the aggregate amount of all Receivables from such account debtor are unpaid more than 60 days after the invoice due dates or 90 after the original invoice dates;

	
 
	
(f)
	
such Receivable would not cause the aggregate amount of all Receivables owing by any account debtor and its Affiliates to exceed 10% (25% in respect of Wal-Mart Stores, Inc. and its Affiliates (including Sam’s Club), Loblaw Companies Limited and its Affiliates, Publix Super Markets, Inc. and its Affiliates.  The Kroger Company and its Affiliates, Albertsons Companies Inc. and its Affiliates (including Safeway, Inc.) together with such other entities as may be added to or removed from the list from time to time upon written notification from the Lender to the Borrower) of all Eligible Receivables;no covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;

	
 
	
(g)
	
the account debtor in respect of such Receivable is not a creditor or supplier of the applicable Credit Party, and such account debtor has not disputed its liability or made any claim with respect to any other Receivable due from such account debtor to such Credit Party;

	
 
	
(h)
	
none of the following events has occurred and is continuing with respect to the applicable account debtor for such Receivable: (i) death or judicial declaration of incompetency of an account debtor who is an individual; (ii) the filing by or against the account debtor of a request, proposal, notice of intent to file a proposal, proceeding, action or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under any bankruptcy, insolvency, restructuring, liquidation, winding-up, corporate or similar laws of Canada, any province or territory thereof, or any foreign jurisdiction, now or hereafter in effect; (iii) the making of a general assignment by the account debtor for the benefit of creditors; (iv) the appointment of a receiver, trustee, monitor, custodian, liquidator, administrator, interim receiver, receiver and manager, monitor or trustee or other official for the account debtor or for any of the assets of the account debtor, including “trustee” under the Bankruptcy and Insolvency Act, (Canada); (v) the institution by or against the account debtor of any other type of insolvency, liquidation, bankruptcy, winding-up or reorganization proceeding (under the laws of Canada, the United States of America or otherwise, including applicable corporate statutes, the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the account debtor; (vi) the sale, 

(16)

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assignment, or transfer of all or any material part of the assets of the account debtor; (vii) the non‐payment generally by the account debtor of its debts as they become due; (viii) the failure, cessation of the business of the account debtor as a going concern or insolvency of the account debtor; or (ix) the account debtor calling a meeting of its creditors or indicating its consent to any proceeding or action hereinabove described;

	
 
	
(i)
	
the sale giving rise to such Receivable was not made to an account debtor outside Canada or the United States of America, unless the sale is on letter of credit, guarantee or acceptance terms, in each case, as applicable, acceptable to the Lender in its reasonable credit judgment, or unless the Receivable is an Insured Receivable;

	
 
	
(j)
	
shipment of the merchandise or the rendition of services has been completed and the sale giving rise to such Receivable was not made on a bill and hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis and is not evidenced by chattel paper unless endorsed to the Lender and the account debtor’s obligation to pay is absolute and is not otherwise conditional upon completion of any further performance under any contract, agreement or arrangement or fulfillment of any condition or other matter;

	
 
	
(k)
	
the Lender has not determined, in its sole discretion that the prospect of collection of such Receivable is impaired or that such Receivable is uncollectible or collection is otherwise doubtful or that such Receivable may not be paid by reason of the account debtor’s financial position;

	
 
	
(l)
	
the account debtor is not the Government of the United States of America, any state, or any department, agency or instrumentality of any of them, unless the applicable Credit Party assigns its right to payment of such Receivable to the Lender pursuant to the Assignment of Claims Act of 1940, as amended or has otherwise complied with all other Applicable Laws, statutes, regulations and ordinances;

	
 
	
(m)
	
the account debtor is not located in any State of the United States of America or any Province of Canada which requires the filing of a Notice of Business Activities Report or registration or licencing to carry on business or similar report, registration or licencing in order to permit the relevant Credit Party to seek judicial enforcement in such State of the United States of America or Province of Canada of payment of such Receivable, unless the relevant Credit Party has qualified to do business in such Province or State or has filed a Notice of Business Activities Report or registration or licencing to carry on business or equivalent report, registration or licencing for the then current year;

	
 
	
(n)
	
the account debtor is not the Government of Canada nor, any province thereof, or any department, agency or instrumentality thereof, unless the Borrower applicable Credit Party has complied with all Applicable Laws, statutes (including the Financial Administration Act (Canada)), regulations and ordinances in order to duly and validly assign such Receivable to the Lender;

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S-18

	
 
	
(o)
	
the goods giving rise to such Receivable have been shipped and delivered to and accepted by the customer or the services giving rise to such Receivable have been performed by the relevant Credit Party and accepted by the customer and the Receivable otherwise represents a final sale;

	
 
	
(p)
	
the aggregate Receivables of such account debtor do not exceed a credit limit determined by the Lender, in its sole discretion, in respect of which the Borrower has received prior written notice, to the extent such Receivables exceed such limit;

	
 
	
(q)
	
such Receivable does not represent amounts that have been rebilled or that are subject to any credit notes, allowances, or rebates, including volume rebates;

	
 
	
(r)
	
such Receivable is not subject to any offset, deduction (other than ordinary course volume rebates deducted as provided in paragraph (r) above), defence, or any cause asserted for non-payment of any Receivables, including any dispute, claim, complaint, set-off, defence, contra account or counterclaim (real or asserted), lawful or unlawful, whether arising from or relating to a sale of merchandise by a Credit Party or any other transaction or occurrence, or otherwise contingent in any respect or for any reason;

	
 
	
(s)
	
the applicable Credit Party has not made any agreement with such account debtor for any extension of the time for payment or any deduction from payment, except for discounts or allowances made in the ordinary course of business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each applicable invoice related to such Receivable;

	
 
	
(t)
	
no return, rejection or repossession of the merchandise has occurred; and

	
 
	
(u)
	
such Receivable is payable to the applicable Credit Party and is not subject to any right, claim or interest of any Person, other than the Lender.

 “Environmental Claim” means any Claim in respect of a breach of any Environmental Law, including any remedial order, control order, stop order or other administrative order, complaint or sanction.

“Environmental Laws” means all Applicable Laws pertaining to environmental or occupational health and safety matters, in effect as at the Original Closing Date and as may be brought into effect or amended at a future date, including those pertaining to reporting, licensing, permitting, investigation, remediation and clean-up in connection with any presence or Release of a Hazardous Substance or threat of same or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling and the like of a Hazardous Substance.

“Environmental Permit” means any permit, approval, identification number, license or other authorization required pursuant to any applicable Environmental Law.

“Equipment” means all equipment and any other machinery, tools, fixtures, trade fixtures, furniture, furnishings, office equipment, vehicles and all other goods now or hereafter used 

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or usable in connection with a Credit Party’s business (other than Inventory), together with all parts, accessories and attachments relating to any of the foregoing.

“Equity Interest” means any shares, interests, participations or other rights to participate in the voting or equity ownership of a corporation and any equivalent ownership interests in any Person that is not a corporation, including any partnership or membership interest, and any warrant, option or other right to acquire or that is convertible into any ownership interest, and any other arrangement or right to, directly or indirectly, acquire any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, a statute promulgated under the laws of the United States of America, together with the regulations thereunder as the same may be amended or replaced from time to time.

“ERISA Affiliate” means as applied to any Person (i) any corporation that is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) of which that Person is a member, (ii) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control (within the meaning of Section 414(c) of the Code) of which that Person is a member, (iii) any member of an affiliated service group (within the meaning of Section 414(m) or Section 414(o) of the Code) of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member, and (iv) any Person that was formerly a Person described in clause (i), clause (ii) or clause (iii) above, with respect to the period during which such Person was a Person described in clause (i), clause (ii) or clause (iii) and to the extent that any liabilities arise after such period for which any Credit Party or any Subsidiary of such Credit Party may be liable under the Code or ERISA.

“Event of Default” is defined in Section 14.1.

“Excess Amount” is defined in Section 9.3(1).

“Excess Availability” means, as at any particular date of determination, (i) the lesser of the Revolving Commitment and the Borrowing Base, minus (ii) the Aggregate Revolver Outstandings. 

“Exchange Equivalent” means, as of any particular date of determination, with reference to any particular amount expressed in one currency, the amount of another applicable currency required to purchase such amount in the first currency on such date either (i) in the case of any amount derived directly or indirectly from any Financial Statements of the Credit Parties, the exchange rate used to convert from Canadian Dollars to US Dollars or US Dollars to Canadian Dollars, as applicable, in the preparation of such Financial Statements, and (ii) in all other cases, the applicable rate for the purchase by the Lender of the applicable amount of Canadian Dollars or US Dollars through its principal foreign exchange trading office at approximately 11:00 a.m. (Toronto time) on such date it is a Business Day and on the immediately preceding Business Day if such date is not a Business Day.

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“Excluded Subsidiaries” means Village Farms DR, S.R.L.. For greater certainty, each of PSF, Hemp JV Co, AVGG Hemp JV Co and any other Permitted JV Entity as applicable, shall be considered an Excluded Subsidiary if at any time it becomes a Subsidiary under this Agreement.  

“Excluded Taxes” means, (a) any Taxes imposed on or measured by the Lender’s net income and franchise taxes imposed on it by the jurisdiction (or any political subdivision thereof) under the laws of which the Lender is organized or in which its principal office or applicable lending office is located, and (b) any branch tax, branch profits tax or any similar tax imposed by any jurisdiction.

 “Facility” means the Revolving Facility.

“FCC” means Farm Credit Canada.

“FCC Credit Agreement” means the Credit Agreement dated March 28, 2013 between FCC and Village Farms Canada Limited Partnership, as amended, restated or replaced from time to time.

“FCC Credit Documents” means the FCC Credit Agreement and all loan documents, instruments, agreements, guarantees, security and mortgages entered into by any of the Credit Parties from time to time pursuant to the FCC Credit Agreement.

“FCC Debt” means Debt owing to FCC under the FCC Credit Agreement.

“FCC Lien” means the Liens arising under or created by the FCC Credit Documents.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the quotations for the day of such transactions received by the Lender from three federal funds brokers of recognized standing selected by it.

“Financial Statements” means Audited Financial Statements or Unaudited Financial Statements, as applicable.

“Fiscal Year” means the fiscal year of each Credit Party, all of which currently end on December 31.

“Fixed Charge Coverage Ratio” means, with reference to the Borrower Group (on a consolidated basis and which, for greater certainty, includes VF Clean Energy Inc. for purposes of this definition and calculating the Fixed Charge Coverage Ratio for purposes 

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of this Agreement) in respect of any particular Twelve Month Period (a) EBITDA, less cash Taxes, dividends paid and non-financed Capital Expenditures, divided by (b) Debt Service.  

“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to LIBOR.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“GAAP” means generally accepted accounting principles in Canada as in effect from time to time as set forth in the opinions and pronouncements of the relevant Canadian public and private accounting boards and institutes which are applicable to the relevant Person and the circumstances as of the date of determination consistently applied (including, without limitation, to the extent the same are adopted (subject to Section 1.3 hereof) by the Borrower, the International Financial Reporting Standards adopted by the Accounting Standards Board of the Canadian Institute of Chartered Accountants).

“Governmental Approvals” means, at any particular date of determination with respect to any Person or its property assets, all licenses, permits, consents, authorizations and approvals required from Governmental Authorities for the conduct of such Person’s business on such date.

“Governmental Authority” means any domestic or foreign government including any federal, provincial, state, territorial or municipal government and any executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government or any Person, body, department, bureau, agency, board, tribunal, commission branch or office thereof or having or claiming to have jurisdiction over the Credit Parties or any of their respective property or assets.

“Guarantees” means all guarantees held from time to time by or on behalf of the Lender guaranteeing or intending to guarantee, directly or indirectly, repayment of all, or any part of, the Obligations.

“Guarantor” means each Person that now or hereafter guarantees, or is intended to guarantee, repayment of all, or any part of, the Obligations.  As of the Closing Date, the Guarantors are set out on the signature pages hereto.

“Hazardous Substance” means any solid, liquid, gas, odour, heat, sound, vibration, radiation or combination of them that may impair the natural environment, injure or damage property or plant or animal life or harm or impair the health of any individual and includes, but is not limited to, petroleum, its derivatives, by-products or other hydrocarbons, asbestos, controlled products, wastes and any other materials are regulated by Environmental Laws or which may not by their nature be hazardous, either in fact or as defined in or pursuant to any Environmental Laws but which become prohibited, controlled or regulated by any Governmental Authority.

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“Hedging Arrangement” means (a) any and all forward foreign exchange transactions, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transactions is governed by a or subject to any master agreement and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any international foreign exchange master agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement and its related schedules, in each case for the purpose of hedging the Credit Parties’ exposure to exchange rates or currency valuations.

“Hemp JV Co” means Village Fields Hemp USA LLC, a Delaware limited liability company, and its successors and assigns.  

“Hemp JV Documents” means the LLC Agreement.

“Honour Date” means, with respect to any particular Letter of Credit, the date on which the Borrower receives notice of any payment by the Lender under such Letter of Credit.

“Indemnified Person” means the Lender, its Affiliates, agents, representatives, attorneys any receiver or receiver and manager appointed by the Lender, and the respective officers, directors and employees of each of the foregoing Persons.

“Insured Receivables” means, at any particular time of determination, any Receivable that is insured at such time by Acceptable A/R Insurance.

“Intellectual Property” means all trade or brand names, business names, trade-marks (including logos), trade-mark registrations and applications, brand names, service marks, service mark registrations and applications, copyrights, copyright registrations and applications, issued patents and pending applications and other patent rights, industrial design registrations, pending applications and other industrial design rights, trade secrets, proprietary information and know-how, equipment and parts lists and descriptions, instruction manuals, inventions, inventors’ notes, research data, blue prints, drawings and designs, formulae, processes, technology and other intellectual property, together with all registered user agreements, technology transfer agreements and other agreements or instruments relating to any of the foregoing.

“Intercreditor Agreement” means the intercreditor agreement dated as of August 29, 2013 entered into among FCC, the Lender and the Obligors, as the same may be amended, varied, supplemented, modified, amended and restated, renewed or replaced at any time and from time to time.

“Interest Expense” means, with reference to any period, the sum of all interest charges (including imputed interest charges with respect to Capital Leases and all amortization of debt discount and expense) of the Borrower for such period determined in accordance with GAAP.

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“Interest Payment Date” means, (a) with respect to any particular LIBOR Loan, the last day of the Interest Period applicable to such LIBOR Loan and the Maturity Date, (b) with respect to any particular CDOR Loan, the last day of the Interest Period applicable to such CDOR Loan and the Maturity Date, and (c) with respect to any other Loan, the last Business Day of each calendar month and the Maturity Date.

“Interest Period” means, (i) with respect to any particular LIBOR Loan, the period commencing on the date on which such LIBOR Loan is advanced or continued or another Loan is converted into such LIBOR Loan, as applicable, and ending on the date that is one, two or three months (each month being a period of 30 days for purposes of this definition) thereafter, as selected by the Borrower in its Drawdown Notice; and (ii) with respect to any particular CDOR Loan, the period commencing on the date on which such CDOR Loan is advanced or continued or another Loan is converted into such CDOR Loan, as applicable, and ending on the date that is one or three months (each month being a period of 30 days for purposes of this definition) thereafter, as selected by the Borrower in its Drawdown Notice; in each case provided that:

	
 
	
(a)
	
any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

	
 
	
(b)
	
any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

	
 
	
(c)
	
no Interest Period shall extend beyond the Maturity Date.

“Interest Rate” means each or any of the interest rates referred to herein, including without limitation the Default Rate and the interest rates set out in Section 3.1.

“Inventory” means all “inventory”, as such term is defined in the PPSA, now or hereafter acquired by any Credit Party, including and any other goods which are held for sale or lease or are to be furnished under contracts of service or consumed in a Credit Party’s business, all raw materials, work in process and finished goods, all goods that are returned or repossessed that would otherwise have constituted inventory as otherwise set out herein, and all materials and supplies of every kind and nature used or usable in connection with the acquisition, manufacture, processing, supply, servicing, storing, packing, shipping, advertising, selling, leasing or furnishing of the foregoing, and any other components or parts thereof.

 “Investment” has the meaning ascribed thereto in Section 13.2(18) hereof.  

“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate 

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derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

“Issuance Date” means the date on which a Letter of Credit is issued pursuant to this Agreement.

“ITA” means the Income Tax Act (Canada) and any successor thereto, and any regulations promulgated thereunder.

 “Landlord” means any Person that is leasing a Real Property Interest to a Credit Party pursuant to a Lease between such Person and such Credit Party, whether oral or in writing.

“Laws” means, collectively, all international, foreign, federal, provincial, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“Lease” means, any lease of real or personal property in respect of which any Credit Party has a leasehold interest, as lessee.

“Lender” means Bank of Montreal and its successors and assigns.

“Letter of Credit” means any commercial or standby letter of credit or letter of guarantee issued by the Lender or an affiliate of the Lender at the request of the Borrower pursuant to and in accordance with Article 5.

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit, executed by the Borrower in the form required by the Lender at the time such application is made.

“Letter of Credit Fee” means, as of any particular date of determination in respect of any particular Letter of Credit, the rate per annum payable to the Lender on such date in respect of the face amount of such Letter of Credit, equal to 2.00% per annum, and calculated and payable quarterly in advance. 

“LIBOR” means, with respect to the requested amount of a LIBOR Loan (or any portion of the LIBOR Loan in respect of which the Borrower has selected an Interest Period or Interest Periods commencing on the same date and having the same duration) during the relevant Interest Period:

	
 
	
(a)
	
the rate of interest per annum (expressed on the basis of a 360‐day year) determined by the Lender by reference to the rates quoted on the Reuters Monitor Screen LIBORO1 page (or any successor source from time to time) as being the arithmetic average of the rates offered in London, England by reference banks shown on such screen as of 11:00 a.m. (London, England time) two Business Days before the first day of such Interest Period to make deposits in US Dollars with leading banks in 

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the London Interbank Offer Rate market for a period comparable to such Interest Period, and if different rates are quoted for deposits in varying amounts, in the amount which is closest the amount of the requested LIBOR Loan; or

	
 
	
(b)
	
if for any reason the Reuters Monitor Screen LIBORO1 page is not available in respect of the relevant Interest Period, “LIBOR” for the amount of the requested LIBOR Loan during the relevant Interest Period shall mean the annual rate of interest (expressed on the basis of a year of 360 days) determined by the Lender as being the rate of interest at which the Lender, in accordance with its normal practices, would be prepared to offer to leading banks in the London Interbank Offer Rate market for delivery on the first day of the relevant Interest Period for a period equal to such Interest Period based on the number of days comprised therein, deposits in US Dollars of amounts comparable to the amount of the requested LIBOR Loan to be outstanding under this Agreement during such Interest Period, at or about 11:00 a.m. (London, England time); provided that, in no event, shall LIBOR be less than 0.50%.

“LIBOR Loan” means a Loan that bears interest at a rate based upon LIBOR.

“LIBOR Margin” means 1.50% per annum.

“Lien” means any lien (whether statutory or otherwise), mortgage, pledge, deposit arrangement, preference, priority assignment, security interest, deed of trust, hypothecation, sequestration, deemed trust, charge or other encumbrance or preferential arrangement of any kind or nature whatsoever (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof, easement, right of way, or capitalized Lease, any option, trust or other preferential arrangement having the practical effect of any of the foregoing, and in the case of Equity Interest, any purchase option, call or similar right of a third party with respect to such Equity Interest.)

“Loan” means any Revolving Loan, including a Prime Rate Loan, a CDOR Loan, a Base Rate Loan, a US Prime Rate Loan or a LIBOR Loan.

“Lockbox Agreement” means the lockbox and blocked account agreement dated August 29, 2013 between BMO Harris Bank N.A., the US Borrower and the Lender, as amended, restated or replaced from time to time. 

“Loss” means any loss whatsoever, whether direct or indirect, including expenses, costs, damages, judgments, penalties, awards, assessments, fines and any and all fees, disbursements and expenses of counsel, experts and consultants.

“MasterCard Advance” is defined in Section 8.1.

“MasterCard Agreement” means, as of any particular date of determination, the Lender’s standard form documents relating to the operation of MasterCard accounts in effect at such time.

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“MasterCard Limit” means $US100,000 or the Canadian Dollar Equivalent thereof.

“Material Adverse Change” means a change that results in, or would reasonably be expected to result in a Material Adverse Effect.

“Material Adverse Effect” means (a) a material adverse effect on the business, operations, assets, liabilities (actual or contingent), property or financial condition of the Credit Parties, taken as a whole; (b) a material adverse effect on the ability of the Credit Parties, taken as a whole, to perform their obligations under the Credit Documents; or (c) a material adverse effect on the rights and remedies of the Lender under the Credit Documents or the Lender’s ability to enforce its rights or remedies under this Agreement or any other Credit Document.

“Material Contract” means, with respect to any particular Person, any contract, licence or other agreement to which such Person is a party or by which it is bound that is material to such Person’s business, operations, properties, assets or prospects, having regard to the subject matter thereof or the potential consequences of a breach or termination thereof.

 “Maturity Date” means, the earliest of (i) the third anniversary of the Closing Date, namely May 7, 2024, (ii) the date which is 90 days prior to the then current maturity date in respect of the FCC Debt and (iii) the date on which the Facility is terminated earlier pursuant to this Agreement. 

“Mortgage” means any deed of trust, trust deed, hypothec, charge or mortgage in respect of a freehold or leasehold interest in real property made, or required to be made, by any Credit Party in favour or for the benefit of the Lender, in form and substance reasonably satisfactory to the Lender.

“Net Income” means, with respect to the Borrower (on a consolidated basis) for any period, net income of the Borrower for such period.

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

“Obligations” means all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for the payment of monetary amounts (whether or not performance is then required or contingent, or whether or not those amounts are liquidated or determinable) owing by the Borrower to the Lender or any of its Affiliates, of any kind or nature, present or future, whether or not evidenced by any agreement or other instrument, owing under or in connection with any or all of the Credit Documents (including without limitation Bank Products), including all obligations owing by the Borrower to the Lender under the Facility.

“Original Closing Date” means August 29, 2013.

“Original Currency” is defined in Section 16.7.

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“Other Currency” is defined in Section 16.7.

“PACA” means the Perishable Agricultural Commodities Act (PACA) of 1930 – (P.L. 71-325 (June 10, 1930), as amended from time to time.

“PACA Priority Payables” means any amount due and payable by a Credit Party to a third party producer that is secured by a Lien or trust created pursuant to PACA, that encumbers any Eligible Receivables and that ranks, or is capable of ranking prior to or pari passu with any Lien on such Eligible Receivables granted in favour of the Lender.

“Permitted Collateral Location” is defined in Section 12.1(gg).

“Permitted Investment” means, on a minimum of 30 days prior written notice to the Lender, (which such notice requirement will only apply to Permitted Investments made on or after May 21, 2019) any direct or indirect Investment by the Borrower or any other Credit Party, in any Person, (regardless of the structure used in order to effect such Investment including without limitation by way of joint venture and whether or not by way of purchase, merger or otherwise, of some, all or substantially all of the assets, Equity Interests, or a business line or unit or division, of any Person) provided that:  

	
 
	
(a)
	
immediately prior to such Investment, and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

	
 
	
(b)
	
all transactions in connection therewith shall be consummated, in all material respects, in accordance with all Applicable Laws and in conformity with all applicable Governmental Approvals and the consummation of such transaction shall not subject the Lender to any additional regulatory or other requirements;

	
 
	
(c)
	
the Borrower shall be in compliance with the financial covenants set forth in Section 13.3 both before such Investment, and on a pro forma basis (as tested by the Lender, acting reasonably, prior to the Investment being made) for the next Twelve Month Period after giving effect to such Investment, and shall demonstrate Excess Availability of at least 20% of the Revolving Commitment both before and after giving effect to such Investment;

	
 
	
(d)
	
for Permitted Investments made on or after May 21, 2019 only, the Borrower shall have delivered to the Lender at least ten (10) Business Days prior to such proposed Investment, a Compliance Certificate evidencing compliance with Section 13.3 as required under paragraph (c) above, together with all relevant financial information with respect to such Investment, including, without limitation, copies of any relevant documentation prepared in order to analyze and effect such proposed Investment (including without limitation any applicable letter of intent, joint venture agreement, shareholders agreement, corporate information memorandum or backgrounder/investment thesis), the aggregate consideration for such Investment and any other information required to demonstrate compliance with Section 13.3;

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(e)
	
any Investment made shall be in the same or related business or lines of business in which the Borrower, any Credit Party, any Subsidiary or any Permitted JV Entity is engaged as of the Original Closing Date (namely, agriculture, including produce, cannabis and hemp production and distribution and business related thereto);

	
 
	
(f)
	
if applicable, the Investment shall have been approved by the board of directors or other governing body or controlling Person of the Person in whom the Investment is made or the Person from whom the Investment is made or acquired;

	
 
	
(g)
	
for Permitted Investments made on or after May 21, 2019 only, on or prior to the date of such Investment, the Lender shall have received copies of all material agreements related to the Investment, together with such other agreements and instruments, opinions, certificates, and lien search results in respect thereof as reasonably requested by the Lender; 

	
 
	
(h)
	
the aggregate consideration paid (including all assets contributed or to be contributed by a Credit Party, all loans made or to be made by a Credit Party in connection with an Investment and any cash consideration paid or to be paid by a Credit Party in order to acquire relevant Equity Interests in connection with the proposed Investment, but excluding any guarantees granted by a Credit Party in favour of the Lender) in respect of any particular Investment shall not exceed $25,000,000 (or the Exchange Equivalent in US Dollars); and 

	
 
	
(i)
	
no Investment shall result in any recourse to the Credit Parties and no Investment shall, without the prior written consent of the Lender, require or result in any one or more of the Credit Parties obtaining loans from, or providing guarantees in favour of (other than guarantees of the indebtedness of any of PSF, Hemp JV Co or any other Permitted JV Entity in favour of the Lender), or granting Liens in favour of, any other Person.

For greater certainty, the EBITDA of all Persons in respect of whom a Permitted Investment has been made shall be excluded from covenant testing purposes under this Agreement unless otherwise approved by the Lender in writing.

“Permitted JV Entity” means a Person in respect of which or whom a Permitted Investment has been made.  

“Permitted Liens” means, with respect to any property or asset of any Person:

	
 
	
(a)
	
Liens created by the Security documents;

	
 
	
(b)
	
Liens for Taxes which are not delinquent or remain payable without penalty or which are being contested in good faith by appropriate proceedings commenced in a timely manner and diligently pursued and for which appropriate reserves have been taken in accordance with GAAP, provided that, the aggregate amount of all outstanding Taxes secured by such Liens do not at any time exceed $100,000 and there is no material risk, as determined by the Bank in its sole discretion, that 

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enforcement proceedings in respect of any such Lien will result in the seizure or sale of any Collateral;

	
 
	
(c)
	
carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business which are not delinquent for more than 90 days or remain payable without penalty or which are being contested in good faith by appropriate proceedings, provided that the aggregate amount of all such Liens does not at any time exceed $100,000 and there is no material risk, as determined by the Bank in its sole discretion, that enforcement of any such Lien would result in the seizure or sale of any Collateral;

	
 
	
(d)
	
Liens (other than any Lien imposed in respect of a Canadian Pension Plan) consisting of pledges or deposits required in the ordinary course of business in connection with workplace safety insurance, employment insurance and other social security legislation or to secure the performance of tenders, statutory obligations, surety, stay, customs and appeals bonds, bids, leases, governmental contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or to secure liability to insurance carriers;

	
 
	
(e)
	
Purchase Money Liens securing indebtedness not in excess of $100,000 in the aggregate;

	
 
	
(f)
	
Liens arising solely in respect of indebtedness between Credit Parties provided that such indebtedness is assigned to the Lender and such Liens are subordinated to Liens arising under the Security;

	
 
	
(g)
	
permits, licenses, agreements, restrictions, easements, rights-of-way and other similar interests in land (including permits, licenses, agreements, restrictions, easements and rights-of-way for sidewalks, public ways, sewers, drains, gas steam and water mains, utilities, telephone and telegraph conduits, poles, wires and cables) which do not, in the reasonable opinion of the Lender, materially impair the use or the value of the real property and improvements thereon;

	
 
	
(h)
	
title defects or irregularities in respect of real property, and reservations, limitations, provisos and conditions, if any, expressed in any original grants from the Crown, provided that in the opinion of the Lender, such matters do not materially impair or detract from the use or the value of the real property and improvements thereon or materially interfere with the business of the Credit Parties;

	
 
	
(i)
	
Liens held by Landlords in respect of property held under Lease and any other Liens of a similar nature which do not, in the opinion of the Lender, materially impair the use of such property in the operation of the business of the Credit Parties or the value of such property for the purposes of such business;

	
 
	
(j)
	
applicable municipal and other governmental restrictions affecting the use of real property or the nature of any structure which may be erected thereon, provided that in the reasonable opinion of the Lender, such matters do not materially impair or 

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detract from the use or the value of the real property and improvements thereon or materially interfere with the business of the Credit Parties;

	
 
	
(k)
	
the right reserved to or vested in any Governmental Authority to terminate any lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof, provided that any such right does not, in the opinion of the Lender, materially impair the value thereof or materially interfere with the business of the Credit Parties;

	
 
	
(l)
	
the FCC Lien which is subject to the provisions of the Intercreditor Agreement; 

	
 
	
(m)
	
Liens arising in respect of any PACA Priority Payables; and 

	
 
	
(n)
	
Liens disclosed in Exhibit “E” as of the Closing Date and any other Lien consented to in writing by the Lender.

provided that the use of the term “Permitted Liens” to describe the foregoing Liens shall mean that such Liens are permitted to exist (whether in priority to or subsequent in priority to the Security, as determined by Applicable Law); and for greater certainty such Liens shall not be entitled to priority over the Security by virtue of being described in this Agreement as “Permitted Liens”.

“Person” means any natural person, sole proprietorship, partnership, syndicate, trust, joint venture, Governmental Authority or any incorporated or unincorporated entity or association of any nature.

“PPSA” shall mean the Personal Property Security Act (British Columbia) or any other applicable Canadian federal or provincial statute pertaining to the granting, perfecting, priority or ranking of Liens on personal property, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time, and any reference to any particular section of the PPSA shall be construed to also refer to any successor section thereto “Prime Rate” means, on any particular date of determination, the greater of (a) the rate of interest, expressed as an annual rate, announced on such date by the Lender as its reference rate then in effect for determining interest rates on Canadian Dollar denominated commercial loans made by it in Canada, and (b) the CDOR Rate in effect from time to time, plus 100 Basis Points per annum.

“Prime Rate Loan” means a Loan in Canadian Dollars that bears interest at a rate based upon the Prime Rate.

“Prime Rate Margin” means 0.25% per annum.

“Principal Amount” means (a) with reference to any Loan, the principal amount thereof; (b)  with reference to a Letter of Credit, the maximum amount payable to the beneficiary thereof; and (c) with reference to a Hedging Arrangement, the Deemed Hedge Exposure.

“Priority Payables” means, as at any particular time of determination, any amount due and payable at such time by a Credit Party that is secured by a Lien (whether choate or 

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inchoate) or a statutory right in favour of a Governmental Authority, that encumbers any Collateral and that ranks, or is capable of ranking prior to or pari passu with any Lien on such Collateral granted in favour of the Lender, including without limitation, amounts due deducted or withheld, as applicable, and not yet paid, contributed or remitted, as applicable, by any Credit Party in respect of vacation pay, termination and severance pay, realty, municipal or similar Taxes, or pursuant to any legislation relating to workers’ compensation, employment insurance, the ITA, any Canadian Pension Plan, the Wage Earners Protection Act or any similar legislation. Notwithstanding the foregoing, only 50% of all PACA Priority Payables shall be excluded from the calculation of Priority Payables as at the Original Closing Date, provided, however, that after the Original Closing Date the Lender may in its sole discretion revoke such exclusion of 50% (or change the percentage amount of such exclusion, including down to 0%) of all PACA Priority Payables by notice to the Borrower.

“PSF” means Pure Sunfarms Corp., a corporation formed and existing under the laws of British Columbia, and its successors and assigns.

“Purchase Money Lien” means any Lien on specific fixed assets (including Capital Leases but, for greater certainty, excluding real property) granted by such Credit Party to secure payment of the purchase price thereof, and all extensions, renewals or replacements of such loan, provided that the obligations secured thereby do not at any time exceed 100% of the lesser of the cost or fair market value of such fixed assets of a Credit Party and, with respect to any extension, renewal or replacement of such Lien, the obligations secured thereby are not increased.

“Real Property Interest” means, at any particular time of determination, any interest (whether fee, leasehold or otherwise) in real property owned at such time by any Credit Party.

“Receivables” means all “accounts”, as such term is defined in the PPSA, now or hereafter acquired by any Credit Party and includes all accounts, contract rights, instruments, and chattel paper relating to accounts, drafts and acceptances of such Credit Party, and all other obligations owing to any other Credit Party arising out of or in connection with the sale or lease of Inventory, the performance of services or otherwise, all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to the Lender hereunder or in connection herewith.

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is LIBOR or other applicable LIBOR index rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not LIBOR or other applicable LIBOR index rate, the time determined by the Bank in its reasonable discretion.

 “Release” means a discharging, spraying, injection, abandonment, depositing, spilling, leaking, seeping, pouring, emitting, emptying, throwing, dumping, placing, pumping, 

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escaping, leaching, migrating, dispensing, dispersal, disposing, and exhausting, and when used as a noun has a correlative meaning.

“Relevant Governmental Body” means the FRB and/or the NYFRB, or a committee officially endorsed or convened by the FRB and/or the NYFRB, or any successor thereto.

“Reserves” means reserves that limit the Excess Availability under the Revolving Facility, consisting of reserves against Eligible Receivables established from time to time by the Lender, in the Lender’s sole discretion in accordance with Section 2.6, including without limitation rent reserves, reserves in respect of Bank Products, reserves in respect of suppliers the Lender has identified would be likely to exercise unpaid seller’s thirty (30) day goods rights to repossess goods or revendication rights, reserves in respect of dilution in excess of the percentage assumed by the Lender for the purpose of establishing the advance rates used to calculate the Borrowing Base, warehousemen’s and bailees’ charges reserves established from time to time by the Lender in its sole discretion in respect of Priority Payables and with respect to amounts that the Lender believes may be required to be paid in connection with the preservation, protection, collection or realization of Collateral, or in connection with any obligation of any Credit Party set forth in any Credit Document.

“Revolving Commitment” means the commitment of the Lender to make Revolving Loans and to issue Letters of Credit under the Revolving Facility, up to an aggregate outstanding Principal Amount not exceeding $10,000,000. 

“Revolving Facility” means the revolving facility established pursuant to Section 2.1 hereof.

“Revolving Loan” means any Loan  made under the Revolving Facility.

“Rollover” means the extension of any existing LIBOR Loan, CDOR Loan or Letter of Credit for an additional Interest Period or Contract Period, as applicable.

“Rollover Date” means the date on which a Rollover occurs.

“Schedules” means the schedules to this Agreement, which are listed in Section 1.11.

“Securities” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

“Security” means all security agreements and other documents held by the Lender from time to time which secure or are intended to secure, directly or indirectly, repayment of the Obligations, and the security interests, assignments and Liens constituted thereby.

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“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

“SOFR Administrator’s Website” means the NYFRB’s Website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

“Solvent” means:

	
 
	
(a)
	
with respect to a Canadian Credit Party that, as of the particular date of determination, (i) the aggregate property of such Credit Party is sufficient, if disposed of at a fairly conducted sale under legal process, to enable payment of all its obligations, due and accruing due; (ii) the aggregate property of such Credit Party is, at a fair valuation, sufficient to enable payment of all its obligations, due and accruing due; (iii) such Credit Party is able to meet its obligations as they generally become due; and (iv) such Credit Party has not ceased paying its current obligations in the ordinary course of business as they generally become due;

	
 
	
(b)
	
with respect to any US Credit Party that, as of the date of determination, (i) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the fair market value of such Credit Party’s assets; (ii) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Closing Date and reflected in the projections and Business Plan delivered to the Lender prior to the Closing Date or with respect to any transaction contemplated or undertaken after the Closing Date; (iii) such Credit Party has not incurred and does not intend to incur, and does not believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay as they become due (whether at maturity or otherwise); and (iv) such Credit Party is “solvent” within the meaning given that term and similar terms under Applicable Laws relating to fraudulent transfers and conveyances; and

	
 
	
(c)
	
with respect to any other Credit Party that, as of the particular date of determination, such Credit Party is “solvent” under Applicable Law;

and for purposes of this definition, the amount of any Contingent Obligation at such time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Subordinated Debt” means Debt owing by any Credit Party in respect of which the payee has agreed to postpone payment of all principal and interest thereon to payment and satisfaction in full of the Obligations and such payee has subordinated any security taken in respect of such Debt to the Lien of the Lender, all in form and substance satisfactory to the Lender in its sole discretion.

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“Subsidiary” of any particular Person means any other Person in respect of which such Person and/or any one of its Affiliates holds, directly or indirectly, other than by way of security only, Securities or other Equity Interests to which are attached more than 50% of the votes that may be cast (or, through operation of law or otherwise, has the ability to elect or cause the election of a majority of the directors, members, or individuals holding similar positions, or having similar powers, to the board of directors, or other governing body of such other Person or otherwise control its activities. 

“Tax” and “Taxes” include, at any time, all taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and other charges of any nature imposed by any Governmental Authority (including income, capital (including large corporations), withholding, consumption, sales, use, transfer, goods and services or other value-added, excise, customs, anti-dumping, countervail, net worth, stamp, registration, franchise, payroll, employment, health, education, business, school, property, local improvement, development, education development and occupation taxes, together with all fines, interest, penalties on or in respect of, or in lieu of or for non-collection of, those taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and other charges.

 “Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

“Term SOFR Event” means the determination by the Bank that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Bank and (c) a Benchmark Transition Event has previously occurred resulting in a Benchmark Replacement in accordance with Section 6.4 that is not Term SOFR.

“Term SOFR Notice” means a notification by the Bank to the Borrower of the occurrence of a Term SOFR Event.

“Twelve Month Period” means the period of twelve (12) calendar months ending on or immediately prior to such date of determination.

“Type of Advance” means any type of Accommodation, determined by reference to the interest or discount option applicable thereto.

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.”

“Unaudited Financial Statements” means in respect of any month, the unaudited consolidated balance sheets of the Borrower Group (prepared for greater certainty in respect of (i) VFI and all of its Subsidiaries on a consolidated basis, and (ii) VFI and all of its Subsidiaries which are not Excluded Subsidiaries on a consolidated basis) at the last day of such month and the related unaudited consolidated and consolidating income statements, cash flow statements and changes in shareholders’ equity for such month, as applicable, and the accompanying notes thereto, all prepared in accordance with GAAP and setting forth in each case, in comparative form, figures for the corresponding period for the 

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preceding month, as applicable, all in reasonable detail and fairly presenting in all material respects the financial position and the results of operations of the Borrower Group as at the date thereof and for the month then ended.

“US Benefit Plan” means, with respect to any US Credit Party, any “employee benefit plan” as defined in Section 3(3) of ERISA (other than a multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA) which is sponsored, maintained or contributed to, or required to be contributed to, by such Credit Party or any of its ERISA Affiliates for the benefit of current or former U.S. employees of such Credit Party or any of its ERISA Affiliates.

“US Borrower” means Village Farms, L.P., a limited partnership formed and existing under the laws of Delaware, and its successors and permitted assigns.

“US Credit Party” means any Credit Party organized and existing under the laws of the United States of America or any state or subdivision thereof.

“US Dollars” and the symbol “US$” each means lawful money of the United States of America.

“US Pension Plan” means a US Benefit Plan that is a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which an Credit Party, or any corporation, trade or business that is, along with any other Person, a member of a Controlled Group, may reasonably be expected to have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

“US Prime Rate Margin” means 0.25% per annum.

“US Prime Rate Loan” means a Loan in US Dollars made by the Chicago Branch that bears interest at a rate based upon the US Prime Rate.

“US Prime Rate” means a fluctuating rate of interest per annum, expressed on the basis of a year of 360 days, as applicable, which is equal at all times to the greater of (a) the reference rate of interest (however designated) of the Chicago Branch for determining interest chargeable by it on United States Dollar commercial loans in the United States and (b) the sum of (i) the Federal Funds Rate and (ii) 100 Basis Points per annum.  Any change in the US Prime Rate shall be effective on the date the change becomes effective generally.

“Value” means, as at any particular date of determination: (a) with respect to Receivables, the face amount thereof, exclusive of all sales, excise and similar taxes; and (b) with respect to Purchase Money Liens, the lesser of cost and fair market value, determined in accordance with GAAP.

“VFI” means Village Farms International, Inc. a corporation formed and existing under the federal laws of Canada, and its successors and permitted assigns.  

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“VLP” means Village Farms L.P., a limited partnership formed and existing under the laws of Delaware, and its successors and permitted assigns.  

“written” or “in writing” includes printing, typewriting, or any electronic means of communication capable of being legibly reproduced at the point of reception.

	
Section 1.2
	
  Business Day

Except as otherwise expressly provided herein, if any payment or calculation is to be made pursuant to this Agreement, or any other action is to be taken pursuant to this Agreement, on or as of a day which is not a Business Day, such payment, calculation or other action, as applicable will be made or taken, as applicable, on or as of the next day that is a Business Day unless the Business Day next following the day is in the next following month, in which event the payment, calculation or action shall be made or taken, as applicable, on or as of the immediately preceding Business Day.

	
Section 1.3
	
  Accounting Principles and Calculations

Unless otherwise specifically provided herein, any accounting term used in this Agreement shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP consistently applied. That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. If there occurs after the Original Closing Date any change in GAAP from that used in the preparation of the financial statements referred to in Section 13.1(5) or if, after the Original Closing Date the Borrowers and its Subsidiaries (if any) adopt any other accounting principles for use in the preparation of their financial statements (such changes in GAAP and such adoption being referred to herein as “Accounting Changes”) that affects in any respect the calculation of any covenants contained in this Agreement (including those in Section 13.3), the Lender and the Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenants with the intent of having the respective positions of the Lender and the Borrower after such Accounting Changes conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon by the Lender and the Borrower, or if no such changes are mutually agreed upon, the covenants in this Agreement (including those in Section 13.3) shall be calculated as if no Accounting Changes have occurred and all financial statements of the Borrower and its Subsidiaries (if any) shall be prepared and delivered in accordance with GAAP.

	
Section 1.4
	
  Conflict

Except as otherwise provided in Article 5 with respect to Letters of Credit, in Article 7 with respect to Hedging Arrangements or Article 8 with respect to MasterCard Advances, if there is a conflict or inconsistency between any provision of this Agreement and any provision of another Credit Document contemplated by or delivered under or in connection with this Agreement, the relevant provision of this Agreement shall prevail. For greater certainty, notwithstanding events of default set forth in such other Credit Documents, the events of default contained in such other Credit Documents will only be applicable to the extent that the relevant representation, warranty 

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and/or covenant relating specifically to the property secured, charged or hypothecated by such other Credit Document is not addressed in the Credit Agreement.

	
Section 1.5
	
  Currency

Unless otherwise specified, all dollar amounts stated herein refer to Canadian Dollars.  For greater certainty the Borrower may satisfy any of its reporting obligations hereunder using figures in Canadian or US Dollars, at its option.

	
Section 1.6
	
  Time of Essence

Time shall be of the essence in all provisions of this Agreement.

	
Section 1.7
	
  Headings and Table of Contents

The division of this Agreement into sections, the insertion of headings and the provision of a table of contents are for convenience of reference only and are not to affect the construction or interpretation of this Agreement.

	
Section 1.8
	
  General Interpretation

Unless otherwise specified, words importing the singular include the plural and vice versa and words importing gender include all genders. Unless otherwise specified, references in this Agreement to Sections, Schedules and exhibits are to sections of, and schedules and exhibits to, this Agreement. Unless otherwise specified, each reference to an enactment of legislation is deemed to be a reference to that enactment of legislation, and to the regulations made under that enactment, as amended or re-enacted from time to time. Unless otherwise specified, references to time of day or date mean the local time or date in the City of Toronto, Ontario.  “Including” means “including without limitation” and the term “including” shall not be construed to limit any general statement that precedes such term to the specific or similar items or matters immediately following it.

	
Section 1.9
	
  Computation of Time Periods

In this Agreement and any other Credit Document, except where expressly otherwise provided, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” mean “to but excluding”.

	
Section 1.10
	
  Severability

If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, such provision shall be deemed to be severable and the illegality, invalidity or unenforceability of such provision shall not affect the legality, validity or enforceability of the remaining provisions of this Agreement or the legality, validity or enforceability of such provision in any other jurisdiction in which such provision is not illegal, invalid or unenforceable.

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Section 1.11
	
  Schedules and Exhibits

The following Schedules and Exhibits are attached to and form part of this Agreement:

		
	
Schedule
	
Description

	
Schedule 12.1(d)
	
Business and Operations

	
Schedule 12.1(e)
	
Approvals

	
Schedule 12.1(j)
	
Litigation

	
Schedule 12.1(l)
	
Taxes

	
Schedule 12.1(m)
	
Equity Interests

	
Schedule 12.1(s)
	
Intellectual Property

	
Schedule 12.1(t)
	
Real Property and Locations of Collateral

	
Schedule 12.1(u)(i)
	
Environmental Matters

	
Schedule 12.1(w)
	
Material Contracts and Licences

	
Schedule 12.1(x)
	
Existing Debt

	
Schedule 12.1(hh)
	
Deposit Accounts

	
Schedule 12.1(ii)
	
Hemp Joint Venture Agreements 

	
Schedule 12.1(jj)
	
AVGG Hemp Joint Venture Agreements 

	
Schedule 12.1(kk) 
	
Permitted Investments

	
Schedule 13.1(4)
	
Insurance

	
Schedule 13.2(8)
	
Transactions with Affiliates

 

		
	
Exhibit
	
Description

	
Exhibit “A”
	
Borrowing Base Certificate

	
Exhibit “B”
	
Compliance Certificate 

	
Exhibit “C”
	
Drawdown Notice

	
Exhibit “D”
	
Rollover/Conversion Notice

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Exhibit
	
Description

	
Exhibit “E”
	
Permitted Liens

 

Article 2
CREDIT FACILITY

	
Section 2.1
	
  Facility

Subject to the terms and conditions set forth in this Agreement, the Lender hereby agrees to make available to the Borrowers a revolving credit facility (the “Revolving Facility”) in a maximum Principal Amount not exceeding the Revolving Commitment. 

	
Section 2.2
	
  Advances

Subject to the terms and conditions set forth in this Agreement the Borrowers may borrow, repay and reborrow under the Revolving Facility provided that the Aggregate Revolver Outstandings do not at any time exceed the lesser of the Revolving Commitment and the Borrowing Base at such time.

	
Section 2.3
	
  Availments

The Borrowers may avail themselves of the Facility at any time and from time to time prior to the Maturity Date, subject to and in accordance with the terms and conditions set forth herein. Subject to the terms and conditions set forth in this Agreement, the Lender agrees to make Accommodations available to (a) the Canadian Borrower under the Facility by way of Prime Rate Loans, Base Rate Loans, CDOR Loans, LIBOR Loans, Letters of Credit, Hedging Arrangements and MasterCard Advances, and (b) to the US Borrower under the Facility by way of Letters of Credit, US Prime Rate Loans and MasterCard Advances.  For greater certainty, all Advances to the US Borrower shall be made by the Chicago Branch.  The Borrowers have the option of allocating any portion of the Facility to the US Borrower in US Dollars and to change such allocation on a quarterly basis at the end of each fiscal quarter upon providing the Lender with ten (10) Business Days prior written notice of such allocation.  As of the Closing Date, the current allocation of the Facility to the US Borrower and BMO Chicago is US$1,574,889.

 

	
Section 2.4
	
  Purpose of Advances

The Borrowers shall use the proceeds of all Advances hereunder for such legal and proper purposes as are consistent with all Applicable Laws and with the terms of this Agreement; and without limiting the foregoing, the Borrowers shall use the proceeds of any particular Advance as follows:

	
 
	
(a)
	
the proceeds of all Advances under the Revolving Facility shall be used solely to provide for the ongoing general corporate and working capital purposes of the Borrower and other relevant Credit Parties, and to repay certain existing indebtedness of the Borrower; and 

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(b)
	
for greater certainty, the proceeds of all Advances under the Hedging Arrangements shall be used solely to assist in foreign exchange risk management by the Canadian Borrower in the normal course of its operations.

	
Section 2.5
	
  Borrowing Procedures

	
(1)
	
Drawdown Notice. Each Drawdown (other than an Advance under  a Hedging Agreement or a MasterCard Advance) shall be made upon the relevant Borrower’s irrevocable written notice, substantially in the form attached as Exhibit “C” (a “Drawdown Notice”), delivered to the Lender at or before the applicable time specified below for such Type of Advance:

		
	
Type of Advance
	
Notice

	
Prime Rate Loans 
	
Before 11:00 a.m. on the applicable Drawdown Date.

	
Base Rate Loans
	
Before 11:00 a.m. on the applicable Drawdown Date. 

	
US Prime Rate Loans
	
Before 11:00 a.m. on the applicable Drawdown Date.

	
CDOR Loans
	
Before 11:00 a.m. three Business Days prior to the requested Drawdown Date.

	
LIBOR Loans
	
Before 11:00 a.m. three Business Days prior to the requested Drawdown Date.

	
Letters of Credit 
	
Before 11:00 a.m. three Business Days prior to the requested Issuance Date.  

Each Drawdown Notice must specify the Borrower’s requested Type of Advance, Drawdown Date (which must be a Business Day), Principal Amount and the Contract Period or Interest Period, if applicable.  

	
(2)
	
Drawdown Notice Irrevocable. Any Drawdown Notice made pursuant to Section 2.5(1) shall be irrevocable and the Borrower shall be bound to borrow the funds requested therein in accordance therewith. The crediting of the applicable Advance to the Borrower in the Lender’s records conclusively establishes, in the absence of manifest error, the Borrower’s obligation to repay such Advance as provided herein.

	
(3)
	
No Liability. The Lender shall be entitled to rely upon, and shall not incur any liability to the Borrower as a result of acting upon, any Drawdown Notice. The Lender shall not be responsible for any error or omission in any Drawdown Notice or in the performance thereof and the Borrower shall indemnify the Lender for any Loss or expense suffered or incurred by the Lender as a consequence of the Lender acting upon instructions given in any such Drawdown Notice.

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(4)
	
Limits on Advances. Notwithstanding any other term of this Agreement, the Borrower shall not request an Advance under the Facility, and the Lender shall not be obligated to make an Advance under the Facility, if:

	
 
	
(a)
	
the amount of such Advance would exceed the Excess Availability under the Facility;

	
 
	
(b)
	
such Advance would have a maturity date, Contract Period or Interest Period, as applicable, that extends beyond the Maturity Date of the Facility;

	
 
	
(c)
	
Section 3.4 would be applicable to such Advance;

	
 
	
(d)
	
such Advance is a CDOR Loan and after making such Advance, more than three (3) different Interest Periods would be in effect for outstanding CDOR Loans; or

	
 
	
(e)
	
such Advance is a LIBOR Loan and after making such Advance, more than three (3) different Interest Periods would be in effect for outstanding LIBOR Loans.

	
(5)
	
Determination of Rates and Fees. Each determination by the Lender of any applicable rate or fee shall, in the absence of manifest error, be final, conclusive and binding on the Borrowers.

	
Section 2.6
	
  Reserves

Notwithstanding any other provision of this Agreement to the contrary, the Lender shall have the right at any time and from time to time to establish Reserves, and to adjust the amount of any existing Reserve, against the amount of Revolving Loan which the Borrower may otherwise request hereunder, in such amounts and with respect to such matters as the Lender shall deem necessary or appropriate, including, without limitation, (i) Reserves in respect of dilution and Reserves in respect of amounts owing by any Credit Party to holders of Liens that may have priority over the Liens of the Lender (regardless of whether such third party Liens are Permitted Liens) and (ii) Reserves in respect of any accounts payable that are more than thirty (30) days past the date on which payment thereof is due.  The amount of all Reserves established by the Lender shall be subtracted from the Borrowing Base when calculating the Excess Availability in respect of the Facility. In addition, the Lender may from time to time reduce the percentages applicable to Eligible Accounts as they relate to the Borrowing Base, to the extent determined necessary or appropriate by the Lender.

	
Section 2.7
	
  Bank Products

The Borrower may request and the Lender may, in its sole and absolute discretion, arrange for the Borrower to obtain, Bank Products. If Bank Products are provided by an Affiliate of the Lender, the Borrower agrees to indemnify and hold the Lender harmless from all costs and obligations now or hereafter incurred by the Lender which arise from any indemnity given by the Lender to such Affiliate related to such Bank Products. This indemnity obligation shall survive payment of the Obligations and termination of this Agreement. The Borrower acknowledges and agrees that the obtaining of Bank Products from the Lender or any of its Affiliates is subject to all rules and regulations of the Lender or such Affiliate that are applicable to such Bank Products.

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Section 2.8
	
  Conversion of Loans

Subject to this Agreement, the Canadian Borrower may, during the term of this Agreement, effective on any Business Day, convert, in whole or in part, any outstanding Advance (other than Advances by way of Letter of Credit, Hedging Arrangement or MasterCard Advance) under the Facility into another Type of Advance permitted under the Facility (other than an Advance by way of Letter of Credit, Hedging Arrangement or MasterCard Advance) upon the Borrower’s irrevocable written notice, substantially in the form attached hereto as Exhibit “D” (in either case, a “Conversion Notice”, delivered to the Lender at or before the applicable time specified in Section 2.5(1) for the Type of Advance into which the outstanding Advance is to be converted under Section 2.5(1), subject to the following conditions:

	
 
	
(a)
	
notwithstanding any other term in this Agreement, no Advance denominated in Canadian Dollars may be converted into an Advance denominated in US Dollars and no Advance denominated in US Dollars may be converted into an Advance denominated in Canadian Dollars;

	
 
	
(b)
	
each Conversion shall be for minimum aggregate amounts and whole multiples in excess thereof as are specified in respect of that Type of Advance in this Article 2;

	
 
	
(c)
	
a LIBOR Loan may only be converted on the last day of the relevant Interest Period;

	
 
	
(d)
	
a CDOR Loan may only be converted on the last day of the relevant Interest Period;

	
 
	
(e)
	
a Conversion into a LIBOR Loan shall only be made to the extent that the conditions outlined in Section 3.4 do not exist on the relevant Conversion Date; 

	
 
	
(f)
	
a Conversion into a CDOR Loan shall only be made to the extent that the conditions outlined in Section 3.4 do not exist on the relevant Conversion Date; and 

	
 
	
(g)
	
no Event of Default shall have occurred and be continuing on the relevant Conversion Date or after giving effect to the Conversion to be made on such Conversion Date. 

	
Section 2.9
	
  Conversion and Rollover Not Repayment

No Conversion or Rollover shall constitute a repayment of any Advance or a new Advance.

	
Section 2.10
	
  Deposit of Proceeds of Advances

The Lender shall credit to the Canadian Borrower’s Account or the US Borrower’s Account, as applicable, on the applicable Drawdown Date the proceeds of each Advance made by way of Prime Rate Loan, CDOR Loan, Base Rate Loan, US Prime Rate Loan or LIBOR Loan.

	
Section 2.11
	
  Evidence of Obligations

The Lender shall open and maintain at its Branch of Account, accounts and records evidencing the Obligations of the Borrowers under this Agreement and all Advances and 

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repayments made hereunder, which shall constitute conclusive evidence thereof in the absence of manifest error provided, however, that the obligations of the Borrowers and the other Credit Parties to make payment under and in connection with this Agreement and the other Credit Documents shall not be affected by any failure of the Lender to make or maintain any such account or record. The Lender may, but shall not be obligated to, require the Borrower to execute and deliver to the Lender promissory notes from time to time as additional evidence of the Obligations.

Article 3
INTEREST, FEES AND EXPENSES

	
Section 3.1
	
  Interest on Loans

	
(1)
	
The Borrower shall pay to the Lender interest calculated and payable in accordance with this Article 3, both before and after maturity, default and judgment on the unpaid Principal Amount of each Loan made hereunder from the date of the Advance until the Principal Amount of such loan is repaid in full, at the following rates per annum:

	
 
	
(a)
	
with respect to each Prime Rate Loan, at a rate per annum equal to the Prime Rate plus the Prime Rate Margin; 

	
 
	
(b)
	
with respect to each CDOR Loan, at the rate per annum equal, at all times during each Interest Period for such CDOR Loan, to the sum of CDOR Rate for such Interest Period plus the CDOR Margin; 

	
 
	
(c)
	
with respect to each Base Rate Loan, at a rate per annum equal to the Base Rate plus the Base Rate Margin; 

	
 
	
(d)
	
with respect to each US Prime Rate Loan, at a rate per annum equal to the US Prime Rate plus the US Prime Rate Margin; and

	
 
	
(e)
	
with respect to each LIBOR Loan, at a rate per annum equal, at all times during each LIBOR Interest Period for such LIBOR Loan, to the sum of the LIBOR for such LIBOR Interest Period plus the LIBOR Margin.

	
(2)
	
Each change in the Prime Rate, Base Rate or US Prime Rate announced by the Lender shall result in a corresponding change in the rate of interest payable hereunder for Prime Rate Loans or Base Rate Loans, as applicable.

	
(3)
	
If any Event of Default occurs and is continuing and the Lender in its discretion so elects, then, while any such Event of Default is continuing, and, after notification of the Borrower, all of the Obligations shall bear interest at the Default Rate applicable thereto.

	
Section 3.2
	
  Overdue Amounts

	
(1)
	
The Borrowers shall pay to the Lender interest as prescribed in this Agreement both before and after demand, default and judgment. Interest on any overdue amounts hereunder or in connection herewith is payable upon demand by the Lender (a) for overdue amounts in Canadian Dollars, at the Prime Rate plus the Applicable Margin plus 2.00% per annum, (b) for overdue amounts in US Dollars from the Canadian Borrower at the Base Rate plus the Applicable Margin plus 2.00% per annum, and (c) for overdue amounts in US Dollars from the US Borrower (including in respect of any overdue amounts required to indemnify the Lender in respect of a drawing made under a Letter of Credit issued at the request of the US Borrower), at the US Prime Rate plus the Applicable Margin plus 2.00% per annum in each case calculated on a daily basis on the actual number of days elapsed in a 360, 365 or 366 day year, as applicable, computed from the date the amount becomes due until such overdue amount is paid in full, and shall be compounded on the last Business Day of each month ending during such period of arrears. Without duplication, the Borrower shall pay interest on any Excess Amount, upon demand by the Lender (a) for Excess Amounts in Canadian Dollars, at the Prime Rate plus the Applicable Margin plus 2.00% per annum, 

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and (b) for Excess Amounts in US Dollars, at the Base Rate plus the Applicable Margin plus 2.00% per annum, in each case calculated on a daily basis on the actual number of days elapsed in a 365 or 366 day year, as applicable, computed from the date on which such Excess Amount arises to, but excluding, the date on which such Excess Amount is repaid and shall be compounded on the last Business Day of each month ending during such period of arrears.

	
Section 3.3
	
  Confirmation of Certain Rates

	
(1)
	
The Lender shall, prior to 11:00 a.m. (Toronto time) on the third Business Day immediately preceding the commencement of each Interest Period in respect of a CDOR Loan, including the first such Interest Period, endeavour to inform the Borrower of the prevailing CDOR Rate for the relevant Interest Period.

	
(2)
	
The Lender shall, prior to 11:00 a.m. (Toronto time) on the third Business Day immediately preceding the commencement of each Interest Period in respect of a LIBOR Loan, including the first such Interest Period, endeavour to inform the Borrower of the prevailing LIBOR for the relevant Interest Period.

	
Section 3.4
	
  Inability to Determine Rates

	
(1)
	
Subject to Section 4.4 hereof, if the Lender determines for any reason that adequate and reasonable means do not exist for determining the CDOR Rate for any requested CDOR Interest Period with respect to a proposed CDOR Loan Advance, or that the CDOR Rate for any requested CDOR Interest Period with respect to a proposed CDOR Loan Advance does not adequately and fairly reflect the cost to the Lender of funding such CDOR Loan Advance, the Lender will promptly so notify the Borrower. Thereafter, the obligation of the Lender to make or maintain CDOR Loan Advances shall be suspended until the Lender revokes such notice. Upon receipt of such notice, the Borrower may, upon two Business Days’ prior written notice to the Lender, revoke any pending request for a borrowing, conversion or continuation of CDOR Loan Advances and, unless the Lender receives such revocation notice not less than two Business Days’ prior to the applicable proposed date for the CDOR Loan Advance, the Borrower will be deemed to have converted such request into a request for a borrowing of Prime Rate Loan Advances in the amount specified therein.

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(2)
	
Subject to Section 6.4 hereof if the Lender determines for any reason that adequate and reasonable means do not exist for determining the LIBOR for any requested LIBOR Interest Period with respect to a proposed LIBOR Loan Advance, or that the LIBOR for any requested LIBOR Interest Period with respect to a proposed LIBOR Loan Advance does not adequately and fairly reflect the cost to the Lender of funding such LIBOR Loan Advance, the Lender will promptly so notify the Borrower. Thereafter, the obligation of the Lender to make or maintain LIBOR Loan Advances shall be suspended until the Lender revokes such notice. Upon receipt of such notice, the Borrower may, upon two Business Days’ prior written notice to the Lender, revoke any pending request for a borrowing, conversion or continuation of LIBOR Loan Advances and, unless the Lender receives such revocation notice not less than two Business Days’ prior to the applicable proposed date for the LIBOR Loan Advance, the Borrower will be deemed to have converted such request into a request for a borrowing of Base Rate Loan Advances or US Prime Rate Loan Advances, as applicable, in the amount specified therein. 

	
Section 3.5
	
  Payment of Interest

	
(1)
	
Accrued interest in relation to each CDOR Loan and each LIBOR Loan shall be payable in arrears on the earlier of the last day of (i) the relevant Interest Period; and (ii) the 90 day period commencing with the first day of such Interest Period, provided that if such last day of such 90 day period is not a Business Day, such last day shall be extended to the next succeeding Business Day unless such next succeeding Business Day falls in the next calendar month in which event such last day shall be the preceding Business Day. Accrued interest in relation to each Prime Rate Loan, each Base Rate Loan and each US Prime Rate Loan shall be payable monthly in arrears on the first Business Day of the following month.

	
(2)
	
Interest on each Loan hereunder on which interest is payable shall accrue from day to day from the first day of an Interest Period, Contract Period or the Drawdown Date, as the case may be, to the last day of the Interest Period, Contract Period or Drawdown Date, as the case may be, and shall be calculated on the basis of the actual number of days elapsed divided by, in the case of a LIBOR Loan and US Prime Rate Loan, 360, and, in the case of each Prime Rate Loan, CDOR Loan and Base Rate Loan, the actual number of days in the relevant calendar year, whether 365 or 366, as the case may be.

	
(3)
	
For the purposes of the Interest Act (Canada), whenever any interest or fee under this Agreement is calculated using a rate based on a period other than a calendar year, such rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to such rate as determined multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends and divided by the number of days comprising such other period.

	
(4)
	
The Lender’s certificate as to each amount and/or each rate of interest payable hereunder shall, in the absence of error which the Borrower can demonstrate to the reasonable satisfaction of the Lender, be conclusive evidence of such amount and/or rate.

	
(5)
	
If any provision of this Agreement or any other Credit Document would obligate the Borrower or a Credit Party to make any payment of interest or other amount payable to the 

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Lender in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by the Lender of interest at a criminal rate (as construed under the Criminal Code (Canada)), then notwithstanding that provision, that amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or result in a receipt by the Lender of interest at a criminal rate, the adjustment to be effected, to the extent necessary, as follows:

	
 
	
(a)
	
first, by reducing the amount or rate of interest required to be paid to the Lender under this Article 3; and

	
 
	
(b)
	
thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the Lender which would constitute interest for purposes of the Criminal Code (Canada);

provided that, notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if the Lender receives an amount in excess of the maximum permitted by the Criminal Code (Canada), then the Borrower shall be entitled, by notice in writing to the Lender, to obtain reimbursement from the Lender in an amount equal to the excess, and pending reimbursement, the amount of the excess shall be deemed to be an amount payable by the Lender to the Borrower.

	
(6)
	
Any amount or rate of interest referred to in this Agreement shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that any Advance remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over the period from the earlier of the date of advance and the Original Closing Date to the relevant Maturity Date and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Lender shall be conclusive for the purposes of that determination.

	
Section 3.6
	
  Standby Commitment Fee

Commencing on the Original Closing Date, the Borrowers shall pay to the Lender a standby commitment fee in Canadian Dollars at an annual rate (based on a 365 day year, or 366 days in the case of a leap year) of 0.375% on the undrawn portion of the amount of the Revolving Commitment, such fee to be calculated and payable monthly, in arrears, on the first Business Day following the end of each calendar month, on the outstanding daily undrawn portion of the Revolving Credit, for the period from the Original Closing Date to and including the last day of the first calendar month ending after the Original Closing Date and thereafter from the first day of each calendar month to and including the last day of such calendar month. The Lender will debit the Borrower’s Account for the amount of each standby commitment fee payable hereunder. For purposes of determining the undrawn portion of the Revolving Credit in respect of any Advance in US Dollars, the Lender shall determine the Exchange Equivalent of such Advance in Canadian Dollars on the first Business Day of the month in which such commitment fee is payable.

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Section 3.7
	
  Renewal Fee

The Borrowers shall pay to the Lender on the Closing Date a renewal fee in the amount of $25,000, which such renewal fee shall be due and payable and fully-earned on the Closing Date.

	
Section 3.8
	
  Cash Management Fees

The Borrowers shall pay to the Lender monthly cash management fees, on a per transaction basis, as agreed between the Borrower and the Lender.

	
Section 3.9
	
  Field Examination Expenses

The Borrowers shall, forthwith upon request by the Lender, reimburse the Lender for all reasonable out-of-pocket expenses incurred in connection with each field examination of the Collateral performed by the Lender or its agents or representatives.

	
Section 3.10
	
  Monthly Administration Fees

The Borrowers shall pay to the Lender an administration fee in the amount of $1,200 on the first Business Day of each calendar month (provided that the monthly administration fee for the calendar month during which the initial Advance is made hereunder shall be pro rated, based upon the number of days in such calendar month) and such administration fee shall be paid by the Borrowers so long as any Obligations remain owing to the Lender or the Lender has any obligation to make any Accommodation available to the Borrower.

	
Section 3.11
	
  Termination Fee

	
(1)
	
The Borrowers may terminate all of the Facility in whole (but not in part) at any time prior to the Maturity Date if: (i) the Borrowers provide the Lender with not less than thirty (30) days’ prior written notice of its intention to terminate the Facility, and (ii) the Borrowers repay in full all outstanding Obligations, together with all accrued and unpaid interest thereon, all accrued and unpaid commitment fees and all other fees due hereunder (including any prepayment fee payable pursuant to Section 3.11(2)) to the Maturity Date, and (iii) all outstanding Letters of Credit and Hedging Arrangements are terminated to the satisfaction of the Lender, or the obligations pursuant to all such Letters of Credit and Hedging Arrangements are cash collateralized or otherwise secured in such form and in such amount as is satisfactory to the Lender, acting reasonably.  

	
(2)
	
If the Borrowers terminate the Facility prior to the Maturity Date, or if all or any of the Obligations are declared due and payable pursuant to Article 14, the Borrowers shall pay a prepayment fee to the Lender, as liquidated damages for the loss of bargain and not as a penalty, in an amount equal to (i) two percent (2%) of the aggregate Commitment under the Facility, if such termination or declaration occurs on or prior to May 7, 2022, or (ii) one percent (1%) of the aggregate Commitment under the Facility, if such termination or declaration occurs after May 7, 2022, but on or prior to May 7, 2023, or (iii) one-half of one percent (0.5%) of the aggregate Commitments under the Facility, if such termination or declaration occurs after May 7, 2023.

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(3)
	
Notwithstanding the foregoing, the Borrowers shall not be obligated to pay any prepayment fee that would otherwise be payable pursuant to  Section 3.11(2) if the Borrowers terminate the Facility as a result of (a) the transfer of such Facility to another division of Bank of Montreal or (b) any increase by the Lender to 100% of PACA Priority Payables being excluded from the Borrowing Base.

	
Section 3.12
	
  Fees for Hedging Arrangements

Hedging Arrangements shall be provided at the Lender’s rates in effect on the date on which such Hedging Arrangements become effective, as determined by the Lender, and any such determination shall, in the absence of manifest error, be final, conclusive and binding upon the Borrower.

	
Section 3.13
	
  Indemnity

	
(1)
	
General. Each Credit Party shall, and does hereby, jointly and severally indemnify the Indemnified Persons against all suits, actions, proceedings, claims, Losses, expenses (including fees, charges and disbursements of counsel), damages and liabilities including, without limitation, liabilities arising under Environmental Laws that the Lender may sustain or incur as a consequence of (i) any default under this Agreement or any other Credit Document, (ii) any misrepresentation contained in any writing delivered to the Lender in connection with this Agreement, (iii) the use of proceeds of any Facility, or (iv) the operations of any of the Credit Parties or any Affiliate of any of the Credit Parties, except that no Indemnified Person shall be indemnified for any of the foregoing matters to the extent the same resulted from its own gross negligence or wilful misconduct as determined by a court of competent jurisdiction.

	
(2)
	
Certificate. A certificate of the Lender setting out the basis for the determination of the amount necessary to indemnify the relevant Person pursuant to this Section 3.13(2) shall be conclusive evidence, absent manifest error, of the correctness of that determination.

	
(3)
	
Survival. It is the intention of each of the Credit Parties and the Lender this Section 3.13 shall supersede any other provisions in this Agreement which in any way limit the liability of any of the Credit Parties and that each of the Credit Parties shall be liable for any obligations arising under this Section 3.13 even if the amount of the liability incurred exceeds the amount of the other Obligations. The obligations of the Credit Parties under this Section 3.13(3) are joint and several and absolute and unconditional and shall not be affected by any act, omission or circumstance whatsoever, whether or not occasioned by the fault of the Lender, except in respect of gross negligence or wilful misconduct by it. The obligations of each of the Credit Parties under this Section 3.13 shall survive the repayment of the other Obligations and the termination of the Facilities.

	
Section 3.14
	
  Breakage Costs

	
(1)
	
The Canadian Borrower may not repay, prepay or cancel any Advance made by way of CDOR Loan or LIBOR Loan prior to the expiry of the Interest Period relating thereto without the prior written consent of the Lender and the provision of cash collateral by the 

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Borrower to the Lender in an amount determined by the Lender in its discretion, acting reasonably.

	
(2)
	
If a Borrower repays, prepays or cancels an Advance (including repayment pursuant to Section 3.11, by way of LIBOR Loan, CDOR Loan, Letter of Credit or Hedging Arrangement prior to the last day of the applicable Interest Period or Contract Period), the applicable Borrower shall indemnify the Lender for any loss or expense suffered or incurred by the Lender including any loss of profit or expenses which the Lender incurs by reason of the liquidation prior to the last day of the applicable Interest Period or Contract Period or redeployment of deposits or other funds acquired by it to effect or maintain the Advance or any interest or other charges payable to lenders of funds borrowed by the Lender in order to maintain the Advance until the last day of the applicable Interest Period or Contract Period together with any other charges, costs or expenses incurred by the Lender relative thereto.

	
(3)
	
A certificate of the Lender setting out the basis for the determination of the amount necessary to indemnify the Lender pursuant to this Section 3.14 shall be conclusive evidence, absent manifest error, of the correctness of such determination.

	
Section 3.15
	
  Change in Circumstances

	
(1)
	
Reduction in Rate of Return. If at any time the Lender determines, acting reasonably, that any change in any Applicable Law or any interpretation thereof after the date of this Agreement, or compliance by the Lender with any direction, requirement, guidelines or policies or request from any Governmental Authority given after the date of this Agreement, whether or not having the force of law, has or would have, as a consequence of the Lender’s obligations under this Agreement, and taking into consideration the Lender’s policies with respect to capital adequacy, the effect of reducing the rate of return on the Lender’s capital (in respect of making, maintaining or funding an Advance hereunder) to a level below that which the Lender would have achieved but for the change or compliance, then from time to time, upon demand of the Lender, the Borrowers shall pay the Lender such additional amounts as will compensate the Lender for the reduction.

	
(2)
	
Taxes, Reserves, Capital Adequacy, etc. If, after the date of this Agreement, the introduction of any Applicable Law or any change or introduction of a change in any Applicable Law (whether or not having the force of law) or in the interpretation or application thereof by any court or by any Governmental Authority, central bank or other authority or entity charged with the administration thereof, or any change in the compliance of the Lender therewith now or hereafter:

	
 
	
(a)
	
subjects the Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Tax or changes the basis of taxation, or increases any existing Tax on payments of principal, interest, fees or other amounts payable by the Borrowers to the Lender under or by virtue of this Agreement (except for Excluded Taxes); or

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(b)
	
imposes, modifies or deems applicable any reserve, special deposit, deposit insurance or similar requirement against assets held by, or deposits in or for the account of, or loans by or any other acquisition of funds by, an office of the Lender in respect of any Advance or any other condition with respect to this Agreement;

and the result of any of the foregoing, in the sole determination of the Lender acting reasonably, shall be to increase the cost to, or reduce the amount received or receivable by the Lender or its effective rate of return in respect of making, maintaining or funding an Advance hereunder, the Lender shall, acting reasonably, determine that amount of money which shall compensate the Lender for the increase in cost or reduction in income.

	
(3)
	
Payment of Additional Compensation. If the Lender determines that it is entitled to compensation in accordance with the provisions of this Section 3.15 (“Additional Compensation”), the Lender shall promptly so notify the Borrowers and shall provide to the Borrowers a photocopy of the relevant Applicable Law or direction, requirement, guideline, policy or request, as applicable, and a certificate of an officer of the Lender setting forth the Additional Compensation and the basis of calculation thereof, which shall be conclusive evidence of the Additional Compensation in the absence of manifest error. The Borrowers shall pay to the Lender within 30 Business Days of the giving of notice the Additional Compensation for the account of the Lender accruing from the date of the notification. The Lender shall be entitled to be paid Additional Compensation from time to time to the extent that the provisions of this Section 3.15 are then applicable notwithstanding that the Lender has previously been paid Additional Compensation.

	
Section 3.16
	
  Illegality

If any Applicable Law, or any change therein or in the interpretation or application thereof by any court or by any Governmental Authority or central bank or other authority or entity charged with the interpretation or administration thereof, or compliance by the Lender with any request or direction (whether or not having the force of law) of any Governmental Authority, central bank or other authority or entity charged with the administration or interpretation thereof, now or hereafter makes it unlawful or impossible for the Lender to make, fund or maintain an Advance or to perform its obligations under or by virtue of this Agreement, the Lender may, by written notice thereof to the Borrowers, terminate its obligations to make further Advances under this Agreement, and the Borrowers, if required by the Lender, shall repay forthwith (or at the end of such longer period as the Lender in its discretion has agreed) the Principal Amount of the Advance together with accrued interest without penalty or bonus and such Additional Compensation as may be applicable to the date of payment and all other outstanding Obligations to the Lender. If any change shall only affect a portion of the Lender’s obligations under this Agreement which is, in the opinion of the Lender, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Lender or the Borrowers under this Agreement, the Lender shall only declare its obligations under that portion so terminated by written notice to the Borrowers.

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Article 4
CDOR LoanS

	
Section 4.1
	
  Minimum Advance

Each Advance by way of CDOR Loan shall be in minimum aggregate amount of $1,000,00 and larger whole multiples of $100,000.

	
Section 4.2
	
  Term

Each CDOR Loan shall have an Interest Period of one or three months (each month being a period of 30 days for purposes of this Section), subject to availability.  No Interest Period of a CDOR Loan shall extend beyond the Maturity Date.

	
Section 4.3
	
  Rollover of CDOR Loans

At least three Business Days before the expiry of the Interest Period of each CDOR Loan, the Borrower shall notify the Lender by irrevocable telephone notice, followed by written confirmation on the same day in form and substance substantially in accordance with Exhibit “D”, if it intends to:

	
 
	
(a)
	
enter into a new Interest Period with respect to the maturing CDOR Loan, or

	
 
	
(b)
	
repay the maturing CDOR Loan; or

	
 
	
(c)
	
convert the CDOR Loan into another form of Advance pursuant to Section 2.8.

If the Borrower fails to provide the foregoing notice or make the required payment, payment of its Obligations to the Lender with respect to that maturing CDOR Loan shall be funded with an Advance under a Prime Rate Loan in the amount outstanding under that CDOR Loan.

	
Section 4.4
	
  Substitute Basis of Advance – CDOR Loans

	
(1)
	
If, at any time the Lender determines in good faith (which determination shall be conclusive, absent manifest error) that:

	
 
	
(b)
	
an interest rate or discount rate is not ascertainable pursuant to the provisions of the definition of “CDOR Rate” and the inability to ascertain such rate is unlikely to be temporary;

	
 
	
(c)
	
the regulatory supervisor for the administrator of the CDOR Rate screen rate, the Bank of Canada, an insolvency official with jurisdiction over the administrator for the CDOR Rate, a resolution authority with jurisdiction over the administrator for the CDOR Rate, or a court or an entity with similar insolvency or resolution authority over the administrator for the CDOR Rate, has made a public statement, or published information, stating that the administrator of the CDOR Rate, has ceased or will cease to provide the CDOR Rate, permanently or indefinitely on a 

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specific date; provided that, at that time, there is no successor administrator that will continue to provide the CDOR Rate; or

	
 
	
(d)
	
the administrator of the CDOR Rate screen rate or a Governmental Authority having jurisdiction over the Lender or the administrator of the CDOR Rate screen rate has made a public statement identifying a specific date after which the CDOR Rate, or the CDOR Rate screen rate shall no longer be made available, or used for determining the interest rate of loans or the discount rates for bankers' acceptances; provided that, at that time, there is no successor administrator that will continue to provide the CDOR Rate, (the date of determination or such specific date in the foregoing paragraphs (i) through (iii), the “CDOR Discontinuation Date”),

then the Lender and the Borrower shall negotiate in good faith to select a replacement index rate for the CDOR Rate and make such spread adjustments thereto and other related amendments to this Agreement such that, to the extent practicable, the all-in rate paid by the Borrower under this Agreement based on the replacement index rate will be substantially equivalent to the CDOR Rate immediately prior to the CDOR Rate's replacement.

 

	
(2)
	
Upon an agreement being reached between the Lender and Borrower pursuant to subsection (1) above, the Lender and the Borrower shall enter into an amendment to this Agreement that gives effect to the replacement index rate, spread adjustments and such other related amendments as may be appropriate in the discretion of the Lender for the implementation and administration of Canadian Dollar loans bearing interest with discount rates calculated with reference to the replacement index rate.

	
(3)
	
Selection of the replacement index rate, spread adjustments, and all other related amendments to this Agreement contemplated by this Section shall give due consideration to the prevailing market practice for: (i) determining a rate of interest applicable to newly originated Canadian Dollar loans made in Canada at such time, and (ii) transitioning existing loans and bankers' acceptances from CDOR Rate-based rates to loans bearing interest with reference to the new reference index rate.

	
(4)
	
Until an amendment reflecting the transition to such a new reference index rate becomes effective as contemplated by this Section, the discount rate applicable to each Advance, conversion or rollover of a CDOR Loan shall continue to be calculated with reference to the CDOR Rate; provided that if the Lender determines (which determination shall be conclusive, absent manifest error) that a CDOR Discontinuation Date has occurred, then following the CDOR Discontinuation Date, until such time as an amending agreement adopting such a new reference index rate becomes effective as contemplated by this Section:

	
 
	
(a)
	
any requested Advance by way of, conversion into, or rollover of, a CDOR Loan shall be deemed to be a request for a Prime Rate Loan in the same principal amount under the Facility; and

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(b)
	
in respect of a maturing CDOR Loan, in the event the Borrower fails to give, if applicable, a notice with respect thereto specifying the conversion of such CDOR Loan on the maturity date thereof into an Advance other than a CDOR Loan (and provided a valid notice of repayment has not been delivered to the Lender in respect thereof), such maturing CDOR Loan shall be converted on the maturity date thereof into a Prime Rate Loan under the Facility as if a valid notice had been given to the Lender by the Borrower pursuant to the provisions hereof.

	
(5)
	
Notwithstanding any other provision of the Agreement, if at any time the replacement index rate agreed upon to replace the CDOR Rate shall be less one half of one per cent (0.50%), it shall be deemed to be one half of one per cent (0.50%) for the purposes of the Agreement.

	
(6)
	
For certainty, upon the occurrence of a CDOR Discontinuation Date, the Prime Rate shall be determined without regard to subparagraph (b) of the definition thereof.

 

 

Article 5
LETTERS OF CREDIT

	
Section 5.1
	
  Letter of Credit

The Lender agrees, on the terms and subject to the conditions hereinafter set forth, to issue Letters of Credit in Canadian Dollars or US Dollars or such other major currency as the Lender may agree in its sole discretion for the account of the applicable Borrower from time to time on any Business Day prior to 5 Business Days before the Maturity Date. The aggregate Principal Amount of Letters of Credit issued and outstanding at any time hereunder shall not exceed an amount equal to the lesser of (a) $3,500,000 (including the Exchange Equivalent thereof in Canadian Dollars of any letters of Credit issued in a different currency) and (b) the Excess Availability under the Revolving Credit on the applicable date of determination. No Letter of Credit issued hereunder shall expire on a date that is later than the earlier of (a) the date immediately preceding the first anniversary of the date on which such Letter of Credit was issued or renewed, if applicable, and (b) the Maturity Date. Each Drawdown Notice for a Letter of Credit shall be accompanied by a Letter of Credit Application, completed and duly executed and delivered by the Borrower, and shall be governed by and subject to the Lender’s customary Letter of Credit terms and procedures from time to time in effect.

 

	
Section 5.2
	
  Drawings

Any drawing under a Letter of Credit shall be funded by a Loan by way of a Prime Rate Loan (if drawn by the Canadian Borrower in Canadian Dollars under the Revolving Facility), or by way of a Base Rate Loan (if drawn by the Canadian Borrower in US Dollars or any other currency under the Revolving Facility), or by way of a US Prime Rate Loan (if drawn by the US Borrower in US Dollars or any other currency under the Revolving Facility). 

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Section 5.3
	
  Rollover

At least three Business Days before the maturity date of any Letter of Credit the applicable Borrower shall notify the Lender, by notice substantially in the form attached as Exhibit “D” if it wishes the issue of a replacement Letter of Credit on the maturity date or if it wishes to extend the maturity date of any Letter of Credit. If the applicable Borrower fails to provide the foregoing notice, the maturing Letter of Credit shall expire on its maturity date. Notwithstanding the foregoing, the Lender shall have the sole discretion in determining whether or not to issue any replacement Letter of Credit or to extend the maturity date thereof.

 

	
Section 5.4
	
  Fees for Letters of Credit

The applicable Borrower shall pay a Letter of Credit Fee to the Lender in respect of each Letter of Credit issued hereunder.

Article 6
Libor loans

	
Section 6.1
	
  Minimum Advance. 

Each Advance by way of Libor Loan shall be in a minimum aggregate amount of US$1,000,000 and whole multiples of US$100,000.

	
Section 6.2
	
  Term. 

Each Libor Loan shall have an Interest Period of one, two or three months (each month being a period of 30 days for purposes of this Section), subject to availability. No Interest Period of a Libor Loan shall extend beyond the Maturity Date.

	
Section 6.3
	
  Rollover of Libor Loans. 

At least three Business Days before the expiry of the Interest Period of each Libor Loan, the Canadian Borrower shall notify the Lender in form and substance substantially in accordance with Exhibit “D”, if it intends to:

	
 
	
(a)
	
enter into a new Interest Period with respect to the maturing Libor Loan, or

	
 
	
(b)
	
repay the maturing Libor Loan.

If the Canadian Borrower fails to provide the foregoing notice or make the required payment, payment of its Obligations to the Lender with respect to that maturing Libor Loan shall be funded with an Advance under a Base Rate Loan in the amount outstanding under that Libor Loan.

	
Section 6.4
	
  Effect of Benchmark Transition Event

	
 
	
(a)
	
Notwithstanding anything to the contrary herein or in any other Credit Documents (and any Hedging Arrangement shall be deemed not to be a “Credit Document” for 

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purposes of this Section 6.4), if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any other Credit Documents in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Documents and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any other Credit Documents in respect of any Benchmark setting at or after 5:00 p.m. (Toronto time) on the 5th Business Day after the date notice of such Benchmark Replacement is provided by the Bank to the Borrower without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Documents.

	
 
	
(b)
	
Notwithstanding anything to the contrary herein or in any other Credit Documents and subject to the provision below in this paragraph, if a Term SOFR Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any other Credit Documents in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Documents; provided that, this clause (b) shall not be effective unless the Bank has delivered to the Borrower a Term SOFR Notice.

	
 
	
(c)
	
In connection with the implementation of a Benchmark Replacement, the Bank will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Documents, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Documents.

	
 
	
(d)
	
The Bank will promptly notify the Borrower of (i) any occurrence of a Benchmark Transition Event, Term SOFR Event or Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (v) the commencement or conclusion of any Benchmark Unavailability Period.  Any determination, decision or election that may be made by the Bank pursuant to this Section 6.4, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent 

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manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Credit Documents, except, in each case, as expressly required pursuant to this Section 6.4.

	
 
	
(e)
	
Notwithstanding anything to the contrary herein or in any other Credit Documents, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Bank may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Bank may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

	
 
	
(f)
	
Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Libor Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for an Advance of or conversion to USBR Loans.  During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

 

Article 7
HEDGING ARRANGEMENTS

	
Section 7.1
	
  Hedging Arrangements

	
(1)
	
The Canadian Borrower may from time to time enter into Hedging Arrangements with the Lender pursuant to which the Lender will, in the sole discretion of the Lender, provide to the Borrower, at rates determined by the Lender, foreign exchange rate protection in respect of such foreign exchange rate transactions in the ordinary course of the Borrower’s business, subject to the terms of this Agreement and the applicable Credit Documents relating to such Hedging Arrangement. The Borrower agrees that no Hedging Arrangement will be entered into for speculative purposes.

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(2)
	
The Aggregate Deemed Hedge Exposure under all outstanding Hedging Arrangements shall not at any time exceed $1,000,000 and the aggregate face amount of all outstanding Hedging Agreements shall not exceed at any time $5,000,000. 

	
(3)
	
With respect to foreign exchange rate agreements, the term of such agreement shall expire not later than the earlier of (a) one (1) year from the date such Hedging Arrangement is executed by the Borrower and (b) the Maturity Date.

	
(4)
	
The Canadian Borrower agrees to complete such Credit Documents and to pay such fees as the Lender may require in respect of each such Hedging Arrangement.

	
(5)
	
The Security documents shall secure all obligations owing under or in respect of each Hedging Arrangement entered into between the Borrower and the Lender.

	
(6)
	
If an Event of Default has occurred and is continuing, the Canadian Borrower shall, upon request by the Lender, immediately pay to the Lender an amount equal to 10% (or such other percentage as the Lender, acting reasonably, shall determine appropriate) of the Aggregate Actual Hedge Exposure for all outstanding Hedging Agreements in respect of which the Lender has not already been fully reimbursed, and pay all other amounts owing to the Lender under the terms of all outstanding Hedging Arrangements, and the Borrower agrees that the Lender would not have an adequate remedy at law for failure of the Borrower to honour any such demand and that the Lender shall have the right to require the Borrower to specifically perform such undertaking without regard to the date upon which the Lender is required under any outstanding Hedging Arrangements to purchase any currency on behalf of the Borrower, the date upon which the Borrower is obligated to reimburse the Lender for currency purchased by the Lender on its behalf or the date upon which the Borrower is obligated to pay to the Lender any other amounts owing to such Lender under the terms of any Hedging Arrangements.

	
(7)
	
The Borrowers will not enter into arrangements similar to the Hedging Arrangements with any Person other than the Lender.  Notwithstanding the foregoing and for greater certainty, the Borrower may, on an unsecured basis, enter into commodity Hedging Arrangements in respect of natural gas with persons other than the Lender.

Article 8
MASTERCARD ADVANCES

	
Section 8.1
	
  MasterCard Advances

Subject to the terms and conditions hereof, the Revolving Facility may be availed by the Borrower through the use of a corporate MasterCard or MasterCards issued by the Lender to or at the request of the Borrower. The Lender shall issue such card or cards as are requested by the Borrower upon the completion of, and in accordance with, the credit card agreements and other documents customarily required by the Lender in connection with the issuance of corporate MasterCards and loans and advances (“MasterCard Advances”) made through such card or cards and the MasterCard Advances shall be disbursed and otherwise dealt with in accordance with and subject to the provisions of such credit card agreements and other documents; and interest and fees in connection with the MasterCard Advances shall be calculated and paid at the rates and at the 

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times set out in such credit card agreements and other documents. The aggregate amount of all MasterCard Advances shall not at any time exceed the MasterCard Limit. All MasterCard Advances, when made and outstanding, shall be deemed to be Revolving Loans and shall reduce the Excess Availability under the Revolving Credit in an amount equal to the MasterCard Limit.

 

	
Section 8.2
	
  Maturity of MasterCard Advances

The outstanding amount of all MasterCard Advances, including accrued and unpaid interest thereon, shall mature and become due and payable in full by the Borrower on the earlier of (a) the date specified in the MasterCard Agreement, and (b) the Maturity Date.

 

 

Article 9
PAYMENTS AND REPAYMENTS OF FACILITIES

	
Section 9.1
	
  Place and Application of Payments and Collections

	
(1)
	
All payments of principal, interest, fees and all other Obligations payable hereunder and under the other Credit Documents shall be made to the Lender at its office at the address set out on the signature page hereof (or at such other place as the Lender may specify). All such payments shall be made in the currency in which such Obligations are denominated, in immediately available funds at the place of payment, without set-off or counterclaim and without reduction for, and free from, any and all present or future taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions or conditions of any nature imposed by any government or any political subdivision or taxing authority thereof (but excluding any taxes imposed on or measured by the net income of the Lender).

	
(2)
	
Any voluntary prepayment of a Revolving Loan shall be applied to repay such Revolving Loan to the full extent thereof and any excess shall be returned to the Borrowers.

	
(3)
	
Any mandatory repayment of Accommodations Outstanding made by the Borrower pursuant to Section 9.3 shall, upon receipt by the Lender, be applied by the Lender to the Obligations then due and payable, in such order and such manner as the Lender determines appropriate.  The Borrower hereby irrevocably waives the right to direct the application of payments and collections at any time received by the Lender from or on behalf of the Borrower, and the Borrower hereby irrevocably agrees that the Lender shall have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time by the Lender against the Obligations in such manner as the Lender determines appropriate.

	
(4)
	
The Borrower hereby irrevocably authorizes the Lender to charge any of the Deposit Accounts for the amounts from time to time necessary to pay any then due Obligations; provided that the Borrower acknowledges and agrees that the Lender shall be under no obligation to do so and the Lender shall incur no liability to the Borrower or any other Person for the Lender’s failure to do so.

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Section 9.2
	
  Maturity of Revolving Loans

The Borrower shall repay in full the outstanding Principal Amount under the Revolving Facility, and all accrued and unpaid interest thereon, on the Maturity Date.

	
Section 9.3
	
  Mandatory Repayments

	
(1)
	
Currency Fluctuations. The Borrowers covenant and agree that if at any time the Exchange Equivalent in Canadian Dollars of the aggregate Principal Amount of all outstanding Accommodations under the Facility exceeds lesser of (i) the Revolving Commitment, and (ii) the Borrowing Base, or any other limit set herein in respect of the Facility is exceeded at any time, whether or not as a result of any change in the exchange rate between Canadian Dollars and US Dollars (the amount by which the Accommodation thereunder exceeds the Excess Availability being herein referred to as the “Excess Amount”), the Borrowers shall immediately and without notice or demand prepay such Facility to the extent necessary to ensure that the aggregate Principal Amount outstanding under such Facility does not exceed the Excess Availability thereunder.

	
(2)
	
Asset Dispositions. Each Credit Party agrees that, subject to the provisions of the Intercreditor Agreement and the FCC Credit Documents all proceeds derived from the sale or disposition (whether voluntary or involuntary, including as a result of expropriation), or on account of damage or destruction, of Collateral consisting of real estate, Equipment or other fixed assets of such Credit Party shall, upon the occurrence and during the continuation of an Event of Default or in circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, be paid to the Lender as a mandatory prepayment of the Facility (but in circumstances where there is not sufficient Borrowing Base to support the Accommodations Outstanding, only to the extent required to reduce the Accommodations Outstanding to the Borrowing Base).

	
(3)
	
Insurance Proceeds. Each Credit Party agrees that, subject to the provisions of the Intercreditor Agreement, all insurance proceeds which may become payable to such Credit Party in respect of any Collateral consisting of Receivables and/or Inventory shall, upon the occurrence and continuation of an Event of Default or in circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, be paid to the Lender as a mandatory prepayment of the Facility (but in circumstances where there is not sufficient Borrowing Base to support the Accommodations Outstanding, only to the extent required to reduce the Accommodations Outstanding to the Borrowing Base).

	
Section 9.4
	
  Payments Generally

All amounts owing in respect of the Facility, whether on account of principal, interest or fees or otherwise, shall be paid in the currency in which the Advance is outstanding. Each payment under this Agreement shall be made for value on the day the payment is due. All interest and other fees shall continue to accrue until payment has been received by the Lender. Each payment shall be made by debit to the Borrower’s Account by the Lender at or before 1:00 p.m. (Toronto time) on the day that payment is due. Each Borrower hereby authorizes the Lender to debit the 

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Borrower’s Account in respect of any and all payments to be made by such Borrower or any Credit Party under or in connection with this Agreement and the other Credit Documents.

	
Section 9.5
	
  Taxes

	
(1)
	
Payments. All payments to be made by or on behalf of the Borrowers under or with respect to the Credit Documents shall be made free and clear of and without deduction or withholding for, or on account of, any present or future Taxes, unless such deduction or withholding is required by Applicable Law. If a Borrower is required to deduct or withhold any Taxes from any amount payable to the Lender (i) the amount payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions and withholdings applicable to, and taking into account all Taxes on, or arising by reason of the payment of, additional amounts under this Section 9.5), the Lender receives and retains an amount equal to the amount that it would have received had no such deductions or withholdings been required, (ii) the relevant Borrower shall make such deductions or withholdings, and (iii) the relevant Borrower shall remit the full amount deducted or withheld to the relevant taxing authority in accordance with Applicable Law. Notwithstanding the foregoing, the Borrowers shall not be required to pay additional amounts in respect of Excluded Taxes.

	
(2)
	
Indemnity. Each of the Borrowers shall indemnify the Lender for the full amount of any Taxes (other than Excluded Taxes) imposed by any jurisdiction on amounts payable by the Borrowers under this Agreement and paid by the Lender and any liability (including penalties, interest and reasonable expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted, and any Taxes levied or imposed with respect to any indemnity payment made under this Section 9.5. Each of the Borrowers shall also indemnify the Lender for any Taxes (other than Excluded Taxes) that may arise as a consequence of the execution, sale, transfer, delivery or registration of, or otherwise with respect to this Agreement or any other Credit Document. The indemnifications contained in this Section 9.5 shall be made within 30 days after the date the Lender makes written demand therefor.

	
(3)
	
Evidence of Payment. Within 30 days after the date of any payment of Taxes by a Borrower, the relevant Borrower shall furnish to the Lender the original or a certified copy of a receipt evidencing payment by the Borrower of such Taxes with respect to any amount payable to the Lender hereunder.

	
(4)
	
Survival. Each of the Borrower’s obligations under this Section 9.5 shall survive the termination of this Agreement and the payment of all amounts payable under or with respect to this Agreement.

	
Section 9.6
	
  No Set-Off

All payments to be made by the Borrowers shall be made without set-off or counterclaim and without any deduction of any kind.

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Article 10
COLLATERAL

	
Section 10.1
	
  Collateral

The payment and performance of the Obligations shall at all times, unless otherwise explicitly agreed in writing by the Lender, be secured by, among other things, all of the Credit Parties’ assets, including without limitation, all Receivables, Inventory, Equipment, chattel paper, documents of title, instruments, intangibles, and property of the Credit Parties (other than real property), in each case whether now or hereafter acquired or arising and subject to Permitted Liens, pursuant to the Security required by the Lender, including all documents listed in Section 10.3.

	
Section 10.2
	
  Collateral Proceeds

Each Borrower shall make such arrangements as shall be necessary or appropriate in the Lender’s opinion to ensure, subject to the Intercreditor Agreement, that all proceeds of the Collateral are promptly paid into the Blocked Account or the Collection Accounts to be dealt with in accordance with the Lockbox Agreement and the Blocked Account Agreement, as applicable; and until so remitted, such proceeds shall, subject to the Intercreditor Agreement, be deemed to be held in trust for the Lender until deposited into the Blocked Account or the Collection Accounts and without limiting the foregoing, each Borrower and each other Credit Party agrees to make such arrangements as shall be necessary or appropriate to assure that all proceeds of the Collateral are deposited (in the same form as received) in the Blocked Account or the Collection Accounts to be dealt with in accordance with the Lockbox Agreement and the Blocked Account Agreements, as applicable. Any proceeds of Collateral received by any Credit Party shall be held in trust for the Lender until deposited into the Blocked Account or the Collection Accounts in the same form in which received, shall not be commingled with any assets of such Credit Party, and, subject to the Intercreditor Agreement, shall be deposited immediately to the Blocked Account or the Collection Accounts to be dealt with in accordance with the Lockbox Agreement and the Blocked Account Agreement, as applicable.  Each Borrower, and each of the other Credit Parties, acknowledges that all funds in the Blocked Account and the Collection Accounts are to be dealt with in accordance with the Lockbox Agreement and the Blocked Account Agreement, as applicable, and that, to the extent of any interest of the Credit Parties therein, the Lender, subject to the Intercreditor Agreement, has (and is hereby granted to the extent it does not already have) a Lien on such accounts and all funds contained therein to secure the Obligations. Notwithstanding the foregoing and for greater certainty, prior to the occurrence of an Event of Default and in circumstances where there is sufficient Borrowing Base to support the Accommodations Outstanding, all funds in the Blocked Account and the Collection Accounts shall be transferred to accounts controlled by the Borrower in accordance with the Lockbox Agreement and the Blocked Account Agreement, as applicable.  Upon the occurrence of an Event of Default or in circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, no amounts deposited in the Blocked Accounts and the Collection Accounts shall be released to the Credit Parties, but shall, subject to the Intercreditor Agreement, instead be applied to, or otherwise held for application to, or as Security for, the outstanding Obligations (but in circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, only to the extent required to reduce the Accommodations Outstanding to the Borrowing Base) and (to the extent so provided in any other Credit Document) any and all other indebtedness, liabilities and obligations, present or future, 

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of each of the Credit Parties to the Lender, it being understood and agreed that the Borrower notwithstanding such application shall have the right to obtain additional Loans under this Agreement subject to the terms and conditions hereof.

	
Section 10.3
	
  Security Documents

The Credit Parties shall cause the following Security documents and guarantees to be executed and delivered to the Lender on or prior to the Closing Date, to secure the Obligations, each in form and substance satisfactory to the Lender:

	
 
	
(a)
	
a general security agreement executed by each Credit Party, creating a security interest in all of the present and future personal property, assets and undertaking of such Credit Party, including Securities (or the equivalent), Receivables and Inventory registered in every location where such Credit Party has assets, subject only to Permitted Liens;

	
 
	
(b)
	
a general assignment of book debts executed by each Canadian Credit Party;

	
 
	
(c)
	
an assignment of the interest of each Credit Party in all insurance policies held by or for the benefit of such Credit Party (subject to the terms of the Intercreditor Agreement);

	
 
	
(d)
	
a Guarantee, executed by each Guarantor; and

	
 
	
(e)
	
such other security agreements as may be requested by the Lender, acting reasonably.

	
Section 10.4
	
  Additional Credit Parties

Village Farms International, Inc. shall ensure that each Person that becomes a Subsidiary of the Borrower or a Guarantor after the Original Closing Date and that is not a party hereto shall forthwith execute and deliver to the Lender a guarantee and other Security documents similar to those delivered by the other Credit Parties. The Borrowers shall deliver or cause the delivery of such legal opinions and other supporting documents as the Lender reasonably requires.  Notwithstanding the foregoing, and for greater certainty, each of PSF, Hemp JV Co, AVGG Hemp JV Co and any other Permitted JV Entity shall not be required to deliver to the Lender for purposes of this Agreement a guarantee and other Security documents similar to those delivered by the Credit Parties.  

Article 11
CONDITIONS PRECEDENT

	
Section 11.1
	
  Conditions Precedent to Disbursements of Advances

The obligation of the Lender to establish and/or maintain the Facility under this Agreement is subject to and conditional upon the satisfaction of the following conditions on or before the Closing Date: 

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(a)
	
Delivery of Credit Documents. The Lender shall have received sufficient copies, in form and substance satisfactory to the Lender, of the following:

	
 
	
(i)
	
all documents relating to the Security and all other Credit Documents, duly executed by all the parties thereto (other than the Lender);

	
 
	
(ii)
	
a Certificate of an Authorized Representative of each Credit Party, dated the Closing Date, with respect to its constating documents and by-laws and the due authorization, execution and delivery of all Credit Documents to which it is a party and all the transactions contemplated thereby, and confirming that all representations and warranties contained in this Agreement are true and correct as if made on the date of the Certificate;

	
 
	
(iii)
	
the Lender shall have received a good standing, status or compliance certificate (as applicable) for each of the Credit Parties (dated as of the date no earlier than five (5) days prior to the date hereof) from the applicable government office in the jurisdiction of its incorporation and each jurisdiction in which it is qualified to do business;

	
 
	
(iv)
	
opinions of counsel to the Credit Parties, addressed to the Lender and its counsel with respect to, inter alia, due authorization, execution, delivery, and enforceability of the Credit Documents and the creation, validity and perfection of the security interests constituted by the Security;

	
 
	
(v)
	
duly executed and binding certificate(s) of insurance evidencing the insurance required under this Agreement, that: (A) all losses under all insurance policies are payable to the Lender, as first loss payee (subject to the terms of the Intercreditor Agreement), (B) the Lender has been added as an additional insured in respect of all liability policies, (C) the policies contain a standard mortgage clause approved by the Insurance Bureau of Canada, and (D) that the Lender will be given at least 30 days prior written notice of any cancellation or termination of any policy;

	
 
	
(vi)
	
such other Credit Documents as the Lender may reasonably request, including (A) the Security documents listed in Section 10.3 hereof, (B) all applicable Collateral Access Agreements, (C) the Lender shall have received and reviewed, to its satisfaction, original copies of the environmental questionnaires or checklists in form and substance acceptable to the Lender completed by the applicable Borrower in respect of each premise occupied by each Credit Party; and (D) standard credit documentation used by the Lender in connection with the issuance of Letters of Credit and Hedging Arrangements, if applicable, prior to any Advance in respect thereof;

	
 
	
(vii)
	
estoppel letters, discharges, subordination agreements and/or intercreditor agreements (including in respect of Farm Credit Canada), as applicable, in respect of existing security filings;

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(viii)
	
an executed Borrowing Base Certificate, together with an executed Compliance Certificate prepared by the Canadian Borrower on behalf of the Borrowers; and

	
 
	
(ix)
	
such other documents or agreements as may be requested by the Lender including without limitation blocked account agreements

	
 
	
(b)
	
Payout and Discharge. All funds owed by the Credit Parties to those creditors identified (based upon information provided by any Credit Party) by the Lender shall be repaid in full and all Liens (other than Permitted Liens and any related existing Debt incurred in connection therewith) and/or security registrations made in favour of such creditors shall be discharged or the Lender shall have received an undertaking from such creditors to discharge all such Liens and/or security registrations in form and substance satisfactory to the Lender.

	
 
	
(c)
	
Registration of Security. All registrations, recordings and filings of or with respect to the Security which in the opinion of counsel to the Lender are necessary to render effective the Lien intended to be created thereby (subject to Permitted Liens) shall have been completed.

	
 
	
(d)
	
Fees. All fees payable in accordance with this Agreement on or before the Closing Date (including legal fees and expenses of the Lender) shall have been paid to the Lender.

	
 
	
(e)
	
Due Diligence. The Lender shall have completed, to its satisfaction, its business, legal and accounting due diligence review with the respect to the Credit Parties, including but not limited to all required financial results including monthly projections for the balance of the 2021 Fiscal Year, the assets (field examination), the corporate structure and organizational documents, environmental (including environmental checklists and indemnity in the Lender’s standard form and environmental reports as deemed necessary), material contracts, insurance (including business interruption insurance and claims made in respect thereof), claims and lawsuits, background checks on key management and key management contracts as required by the Lender.

	
 
	
(f)
	
Material Adverse Change. No Material Adverse Change shall have occurred with respect to the Credit Parties.

	
 
	
(g)
	
Financial Statements. The Lender shall have received the Borrower’s consolidated and non-consolidated financial statements for the most recently completed Fiscal Year, together with the most recently prepared month-end financial reports.

	
Section 11.2
	
  Conditions Precedent to All Advances

The obligation of the Lender to make available any Advance, (except Rollovers or Conversions), including the first Advance, are subject to and conditional upon each of the conditions below being satisfied on the applicable Drawdown Date:

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(a)
	
No Default. No Default or Event of Default exist has occurred and is continuing on the Drawdown Date, or would result from making the Advance.

	
 
	
(b)
	
Representations Correct. The representations and warranties contained in Section 12.1 shall be true and complete on each Drawdown Date as if made on that date.

	
 
	
(c)
	
No Breach of Laws. Such Advance shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to the Lender as then in effect;

	
 
	
(d)
	
Notice of Advance. The applicable Borrower shall have provided notice in respect of such Advance as required hereunder.

	
 
	
(e)
	
Borrowing Base Certificate. The Borrower shall have provided a current Borrowing Base Certificate in accordance with Section 13.1(5)(a)

	
 
	
(f)
	
Certain Advances. The Borrower shall execute and deliver to the Lender customary credit documentation required by the Lender from time to time in connection with each Letter of Credit and Hedging Arrangement.

	
Section 11.3
	
  Waiver of any Condition Precedent

The conditions stated in Section 11.1 and Section 11.2 are inserted for the sole benefit of the Lender and the conditions stated therein may only be waived by the Lender, and any such waiver may be made in whole or in part, with or without terms or conditions and in respect of all or any portion of the Advances, without affecting the right of the Lender to assert terms and conditions in whole or in part in respect of any other future Advance.

Article 12
REPRESENTATIONS AND WARRANTIES

	
Section 12.1
	
  Representations and Warranties of the Credit Parties

Each Credit Party, for and on behalf of itself as applicable, makes the following representations and warranties to the Lender, all of which shall survive the execution and delivery of this Agreement, and acknowledges and confirms that the Lender is, among other things, relying upon such representations and warranties as a basis for its decision to enter into this Agreement and to make Advances hereunder:

	
 
	
(a)
	
Status. Each Credit Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and it has the power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage. Each Credit Party is duly qualified to carry on its business, and is in good standing, in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualification except where not being so qualified would not have a Material Adverse Effect.

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(b)
	
Power and Authority. It has the corporate or other equivalent power to execute, deliver and perform the terms and provisions of each Credit Document to which it is a party and has taken all necessary action to authorize the execution, delivery and performance by it of each Credit Document to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party, and each such Credit Document constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium or similar laws affecting creditors’ generally, the fact that specific performance and injunctive relief may only be given at the discretion of the courts, and the equitable or statutory powers of the courts to stay proceedings before them and to stay the execution of judgments.

	
 
	
(c)
	
No Violation. Neither the execution, delivery or performance by each Credit Party of the Credit Documents to which it is a party, nor compliance by it with the terms and provisions thereof, contravenes any Applicable Law, conflicts with or results in any breach of any of the terms, covenants, conditions or provisions of, or constitutes a default under, or results in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Credit Documents) upon any of its property or assets pursuant to, any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other agreement or instrument to which it is a party or by which it or any of its property or assets is bound or to which it may be subject, or breaches or violates any provision of its constating documents or any Contractual Obligation to which it is a party.

	
 
	
(d)
	
Business and Operations. The business and operations of each Credit Party, and the locations thereof, are accurately described in Schedule 12.1(d).

	
 
	
(e)
	
Approvals. Except as set forth in Schedule 12.1(e), no order, consent, certificate, approval, permit, license, authorization or validation of, or filing, recording or registration with, or exemption by, any Person (including any Governmental Authority, shareholder, member, partner or other owner of Issued Equity, or any Person that is party to a Contractual Obligation of any Credit Party) is required to authorize, or is required in connection with, the execution, delivery or performance by any Credit Party of any Credit Document to which it is a party, or the legality, validity, binding effect or enforceability with respect to it of any such Credit Document, or the consummation of the transactions contemplated therein, other than filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Lender for filing or recordation, on or prior to the Closing Date.

	
 
	
(f)
	
Security Documents. The Security documents create, and grant to the Lender, valid and enforceable first priority Liens upon the Collateral, subject only to the terms of this Agreement and to Permitted Liens, on the terms set out therein, and the Security documents have been registered or recorded, as applicable, in all places where registration or recording, as applicable, is necessary to perfect the charges and security interests created thereby.

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(g)
	
Title to Collateral. Each Credit Party has good and marketable title to all of its Collateral, free and clear of all Liens other than Permitted Liens.

	
 
	
(h)
	
Financial Statements; Financial Condition; Undisclosed Liabilities.

	
 
	
(i)
	
The Financial Statements submitted to the Lender for the Fiscal Year ended 2020 and for the period ended February 28, 2021 present fairly, in all material respects, and all Financial Statements submitted to the Lender during the term of this Agreement, present or will present fairly (subject, in the case of any interim Financial Statements prepared by management of the applicable Person in the Credit Parties, to normal year end adjustments), the financial position, on a consolidated basis, of the Borrower Group and, on an unconsolidated basis, of each Credit Party, as applicable, as at the date thereof and the results of operations and cash flows, on a consolidated or unconsolidated basis, as applicable, for the periods covered thereby, and all such Financial Statements have been, or will be, as applicable, prepared in accordance with GAAP. Since the Original Closing Date, there has been no Material Adverse Change.  

	
 
	
(ii)
	
Except as fully reflected in the Financial Statements described in Section 12.1(h), there are no liabilities or obligations with respect to any Credit Party of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in aggregate, would be material; and no Credit Party is aware of any basis for the assertion against it of any liability or obligation of any nature whatsoever that is not fully reflected in the Financial Statements described in Section 12.1(h) that, either individually or in the aggregate, would be material.

	
 
	
(i)
	
Projections. The financial projections of the Credit Parties for the Fiscal Year ending December 31, 2021 to and including the Fiscal Year ending December 31, 2021, including monthly projections for each remaining calendar month during the Fiscal Year ending December 31, 2021 and annual projections thereafter, are based upon good faith estimates and assumptions made by the management of the Borrower and, notwithstanding that such projections are not to be viewed as facts and that actual results during the period covered by such projections may differ from such projections, as of the Closing Date, the Borrower believes the assumptions made in such projections are reasonable and that such projections are attainable.  

	
 
	
(j)
	
Litigation. Except as set forth on Schedule 12.1(j), there are no Claims.

	
 
	
(k)
	
Disclosure. No Credit Document furnished to the Lender by or on behalf of any Credit Party for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. There are 

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no facts known (or which should upon the reasonable exercise of diligence be known) to any Credit Party (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein, in the other Credit Documents or otherwise to the Lender for use in connection with the transactions contemplated hereby.

	
 
	
(l)
	
Taxes. Except as set forth on Schedule 12.1(l) or as otherwise permitted pursuant to Section 13.1(3), (i) all Tax returns and reports required to be filed by each Credit Party for its five most recent taxation years or Fiscal Years have been filed in a timely manner, and all Taxes due and payable on such Tax returns, and all assessments, fees and other governmental charges levied against any Credit Party, and upon their respective assets, have been paid when due; and (ii) no Credit Party has received notice of any proposed tax audits with respect to any Credit Party, or of any tax assessments against any Credit Party, that are not being actively contested in good faith by appropriate proceedings by the applicable Credit Party and in respect of which adequate reserves or other appropriate provisions, if any, have been made in accordance with GAAP and the details thereof have been provided to the Lender to its satisfaction.

	
 
	
(m)
	
Equity Interests. Schedule 12.1(m) sets forth a true and complete list of all Subsidiaries of the Borrower and of each other Credit Party, each registered owner of Equity Interests in the Borrower, each Subsidiary of the Borrower and each other Credit Party (other than in respect of Village Farms International, Inc. which is a public corporation) and the number and percentage ownership of such Equity Interests held by each such owner thereof. All outstanding Equity Interests in each Credit Party have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth on Schedule 12.1(m), there is no existing option, warrant, phantom stock or unit, call, right, commitment or other agreement to which any Credit Party is a party requiring, or any other Equity Interest that upon conversion or exchange would require, the issuance by any Credit Party of any additional Equity Interests.

	
 
	
(n)
	
No Restrictions. There is no encumbrance or restriction on the ability of any Credit Party to (i) pay dividends or make any other distributions on its Equity Interests, or to pay any Debt owed by it, (ii) make loans or advances, or (iii) transfer any of its properties or assets, except, in each case, such encumbrances or restrictions existing under or by reason of (A) Applicable Law, (B) this Agreement or the other Credit Documents, (C) customary provisions restricting subletting or assignment of any lease governing any of its leasehold interests, (D) customary provisions restricting the assignment of contracts, permits and/or licenses, or (E) the FCC Credit Documents.

	
 
	
(o)
	
Compliance with Applicable Laws. Each Credit Party (i) has obtained and is in compliance with all Governmental Approvals that are necessary for the conduct of its business as presently conducted, and the use of its property and assets (both real and personal), each of which is in full force and effect, is a good, valid and 

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subsisting approval that has not been surrendered, forfeited or become void or voidable, and (ii) is in compliance in all material respects with all Applicable Laws, including Environmental Laws.

	
 
	
(p)
	
Labour Matters. Except as could not individually or in the aggregate reasonably be expected to have a Material Adverse Effect (i) there are no strikes or other labour disputes against any Credit Party that are pending or, to the knowledge of each Credit Party, threatened, (ii) all payments due from any Credit Party on account of employee insurance of any kind and vacation pay have been paid or accrued as a liability on its books and each Credit Party has withheld and remitted all amounts on behalf of all employees of such Credit Party required to be withheld or remitted by it, and has made all employer contributions to be made by it, in each case, in accordance with Applicable Laws, (iii) there is no obligation of any Credit Party under any collective agreements or under any consulting or management agreement requiring payments which cannot be cancelled without material liability, (iv) each Credit Party is in material compliance with the terms and conditions of all consulting agreements, management agreements and employment agreements, if any, (v) there is no organizing activity involving any Credit Party or, to the knowledge of any Credit Party, threatened by any labour union or group of employees, (vi) no labour union or group of employees has made a pending demand for recognition, and (vii) there are no complaints or charges against any Credit Party pending or threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any individual by any Credit Party.

	
 
	
(q)
	
Insurance. Each Credit Party maintains insurance in compliance with Section 13.1(4) and all premiums and other sums of money payable for that purpose have been paid.

	
 
	
(r)
	
Locations of Collateral. All of the Collateral is located at the Permitted Collateral Locations or is in transit to or from such locations. Other than Village Farms DR S.R.L.,  there are no material account debtors of any Credit Party resident outside of Canada or the United States of America that are not insured to at least 90% of their book value.

	
 
	
(s)
	
Intellectual Property. All Intellectual Property owned or used by any Credit Party is listed on Schedule 12.1(s).

	
 
	
(t)
	
Real Property. All Real Property Interests of each Credit Party and the nature of its interest (both registered and beneficial) Credit Party therein, is correctly set forth on Schedule 12.1(t). Each Credit Party has legal and marketable title to all of its Real Property Interests, free and clear of all Liens other than Permitted Liens.

	
 
	
(u)
	
Environmental Matters.

	
 
	
(i)
	
No Credit Party, nor any of its premises or operations used in the conduct of its business, is subject to any outstanding written order, consent decree 

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or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any activity relating to any Hazardous Substance. No Credit Party has received any letter or request for information under any provincial, federal or state law or law of any other jurisdiction applicable to it, in respect of any Hazardous Substance or any activity relating thereto that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Credit Party’s premises and operations is free from the presence of all Hazardous Substances except for such presence permitted by Environmental Laws or that could not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. No Credit Party has caused or suffered to occur any Release of any Hazardous Substance on, at, in, under, above, to or from any real property owned, leased or otherwise used by it or any other real property that could individually or in the aggregate reasonably be expected to have a Material Adverse Effect. The Borrower has no knowledge of any conditions, occurrences or activities relating to any Hazardous Substance (other than in accordance with Environmental Laws) which could reasonably be expected to form the basis of an Environmental Claim against any Credit Party. No Credit Party nor any predecessor of any Credit Party has filed any notice under any Environmental Law indicating past or present treatment of any Hazardous Substance at any real property owned, leased or otherwise used by it or any other real property, and no Credit Party’s operations involve the generation, transportation, treatment, storage or disposal of any Hazardous Substance. Each Credit Party is, and, except as set forth in Schedule 12.1(u)(i), has been, in compliance with all Environmental Laws, except for such non-compliance that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Credit Party has obtained, and is in compliance with, all Environmental Permits required by Environmental Laws for the operations of its businesses as presently conducted or as proposed to be conducted and all such Environmental Permits are valid, uncontested and in good standing. Compliance by the Credit Parties with all current requirements pursuant to or under Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to any Credit Party relating to any Environmental Law, any Release of any Hazardous Substances, or any activity relating to any Hazardous Substance which individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect. The Borrower on its own and on behalf of each other Credit Party, hereby acknowledges and agrees that neither the Lender nor any of its officers, directors, employees, attorneys and representatives (i) is now, or has ever been, in control of any Credit Party’s premises or operations or any Credit Party’s affairs, and (ii) has the capacity or the authority through the provisions of the Credit Documents or otherwise to direct or influence any (A) Credit Party’s conduct with respect to the ownership, operation or management of 

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any Credit Party’s premises or operations or any Credit Party’s affairs, (B) undertaking, work or task performed by any employee, Lender or contractor of any Credit Party or the manner in which such undertaking, work or task may be carried out or performed, or (C) Credit Party’s compliance with Environmental Laws or Environmental Permits.

	
 
	
(v)
	
No Defaults. No Credit Party is in default in the performance, observance or fulfillment of any of its obligations, covenants or conditions contained in any Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, directly or indirectly, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect.

	
 
	
(w)
	
Material Contract. All Material Contracts are listed on Schedule 12.1(w), and a true and complete copy of each Material Contract has been provided to the Lender. All Material Contracts are in full force and effect, and there are no defaults thereunder.

	
 
	
(x)
	
Debt. All Debt of the Credit Parties, as of the Closing Date, is disclosed in the Audited Financial Statements of the Credit Parties for the most recently completed Fiscal Year or on Schedule 12.1(x).

	
 
	
(y)
	
CERCLA. No portion of any Credit Party’s property has been listed, designated or identified in the National Priorities List or the CERCLA Information System both as published by the United States Environmental Protection Agency, or any similar list of sites published by any federal, state or local authority proposed for requiring clean up or remedial or corrective action under any requirements of Applicable Laws.

	
 
	
(z)
	
US Benefit Plans. Except as could not individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (i) each US Benefit Plan has been maintained and is in compliance with Applicable Laws including, without limitation, all requirements relating to employee participation, investment of funds, benefits and transactions with the Credit Parties and Persons related to them, (ii) with respect to US Benefit Plans: (a) no condition exists and no event or transaction has occurred with respect to any US Benefit Plan that is reasonably likely to result in any Credit Party, to the best of its knowledge, incurring any liability (other than ordinary course funding obligations and claims for benefits), fine or penalty; and (b) no Credit Party has a material contingent liability with respect to any post-retirement benefit under a “welfare plan”, as such term is defined in Section 3(1) of ERISA, and (iii) all contributions (including employee contributions made by authorized payroll deductions or other withholdings) required to be made have been made in accordance with all Applicable Laws and the terms of each US Benefit Plan, . Each of the US Benefit Plans that is intended to be “qualified” within the meaning of Section 401(a) of the Code either (a) has received a favourable determination letter from the Internal Revenue Service, (b) is or will be the subject of an application for a favourable determination letter, and no circumstances exist 

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that have resulted or could reasonably be expected to result in the revocation or denial of any such determination letter, or (c) is entitled to rely on an appropriately updated prototype plan Credit Document that has received a national office determination letter and has not applied for a favourable determination letter of its own.

	
 
	
(aa)
	
Canadian Benefit Plans. No Credit Party sponsors, contributes to or administers any Canadian Pension Plans. Except as could not individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (i) all obligations of each Credit Party (including fiduciary, contribution, funding, investment and administration obligations) required to be performed in connection with the Canadian Benefit Plans and any funding agreements therefor under the terms thereof and applicable statutory and regulatory requirements, have been performed in a timely and proper fashion, and (ii) there have been no improper withdrawals or applications of the assets of any Credit Party’s Canadian Benefit Plans. There are no outstanding material disputes concerning the assets or liabilities of any Credit Party’s Canadian Benefit Plans.

	
 
	
(bb)
	
Not an Investment Company. No Credit Party is an “investment company” or a company “controlled” by an “investment company” within the meaning of the United States Investment Company Act of 1940.

	
 
	
(cc)
	
No Margin Stock. No Credit Party is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock. None of the proceeds of any Advance shall be used to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System of the United States) or to extend credit to others for the purpose of purchasing or carrying any margin stock.

	
 
	
(dd)
	
Solvency. Each Credit Party is Solvent.

	
 
	
(ee)
	
Default. No Default or Event of Default has occurred which is continuing.

	
 
	
(ff)
	
Receivables.

	
 
	
(i)
	
Each Eligible Receivable is valid and subsisting and arises out of a bona fide sale of Inventory sold and delivered by the applicable Credit Party to, or in the process of being delivered to, or out of and for services theretofore actually rendered by it to, the account debtor named therein.

	
 
	
(ii)
	
No Eligible Receivable is evidenced by any instrument or chattel paper unless such instrument or chattel paper has been endorsed by the owner thereof and delivered to the Lender (except to the extent the Lender specifically requests the owner thereof not to do so with respect to any such instrument or chattel paper).

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(iii)
	
No surety bond was required or given in connection with any Eligible Receivable or the contracts or purchase orders out of which the same arose.

	
 
	
(iv)
	
The amount of each Eligible Receivable represented as owing thereunder is the correct amount of such Eligible Receivable actually and unconditionally owing, except for normal cash discounts on normal trade terms in the ordinary course of business.

	
 
	
(v)
	
The amount of each Eligible Receivable represented as owing is not disputed and is not subject to any set-off, credits, deductions or counterclaims other than those arising in the ordinary course of the applicable Credit Party’s business.

	
 
	
(gg)
	
Inventory.

	
 
	
(i)
	
All Inventory and Equipment is located at a location set forth on Schedule 12.1(t) (each, a “Permitted Collateral Location”).

	
 
	
(ii)
	
No Inventory is or will be consigned to any other Person without the Lender’s prior written consent except in the ordinary course of business.

	
 
	
(hh)
	
Deposit Accounts. The location, description and beneficiary of each Deposit Account is accurately set forth on Schedule 12.1(hh).

	
 
	
(ii)
	
Hemp Joint Venture. Attached hereto as Schedule 12.1(ii) are true and complete copies of the following executed agreements related to the joint venture entered into among, inter alia, VLP and Nature Crisp, LLC, regarding the operations of Hemp JV Co for purposes of the production, cultivation and distribution of industrial hemp derived from United States field (outdoor) production, if permitted pursuant to Applicable Law:

	
 
	
(i)
	
Limited Liability Company Agreement of Village Fields Hemp USA LLC dated as of February 27, 2019 entered into among VLP, Nature Crisp, LLC and Hemp JV Co (the “LLC Agreement”).

	
 
	
(jj)
	
AVGG Hemp Joint Venture.  Attached hereto as Schedule 12.1(jj) are true and complete copies of the following executed agreements related to the joint venture entered into among, inter alia, VLP and Arkansas Valley Hemp, LLC, regarding the operations of AVGG Hemp JV Co for purposes of the production, cultivation and distribution of industrial hemp derived from United States field (outdoor) production, if permitted pursuant to Applicable Law:

	
 
	
(i)
	
Limited Liability Company Agreement of Arkansas Valley Green and Gold LLC dated as of May 20, 2019 entered into among VLP, Hemp JV Co, Arkansas Valley Hemp, LLC and AVGG Hemp JV Co (the “AVGG LLC Agreement”).

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(kk)
	
Permitted Investments.  Attached as Schedule 12.1(kk) is, as of the Closing Date, a true and complete list of all Permitted Investments which have been made.

	
Section 12.2
	
  Deemed Repetition

The representations and warranties made in Section 12.1 shall be deemed to be repeated on each Drawdown Date, Interest Payment Date, Rollover Date and Conversion Date, and as of the last day of each calendar month, as if made on and as of each such date unless specifically made as of a certain date.

Article 13
COVENANTS

	
Section 13.1
	
  Affirmative Covenants

While any obligation of any Credit Party or the Lender is outstanding under any Credit Document and the Commitment has not been terminated, each of the Credit Parties agrees as follows:

	
(1)
	
Maintenance of Business. Except as provided in Section 13.2(4), it shall preserve and maintain its existence, and preserve and keep in force and effect all licenses, permits and franchises necessary to the proper conduct of its business.

	
(2)
	
Maintenance of Properties. Except with respect to its assets and operations located in Marfa, Texas, it shall maintain, preserve and keep its property, plant, Equipment and other assets in good repair, working order and condition (ordinary wear and tear excepted) and shall from time to time make all needed and proper repairs, renewals, replacements, additions and improvements thereto so that at all times the efficiency thereof shall be fully preserved and maintained except with the prior written consent of the Lender (such consent not to be unreasonably withheld).

	
(3)
	
Taxes and Assessments. It shall duly pay and discharge, all Taxes, rates, assessments, fees and governmental charges upon or against it or its property and assets or in respect of this Agreement or any other Credit Document, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves are provided therefor.

	
(4)
	
Insurance.

	
 
	
(a)
	
It shall maintain in force, with good and responsible insurance companies, insurance coverage on its property, assets and undertaking that is substantially similar to the coverage listed in Schedule 13.1(4). The Borrower shall upon request, furnish to the Lender a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section 13.1(4).

	
 
	
(b)
	
All insurance required hereby shall be maintained in amounts and under policies and with insurers acceptable to the Lender, acting reasonably, and all such policies 

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shall name the Lender as first loss payee in respect of Receivables and Inventory (to the extent such insurance is held by such Credit Party), loss payee and mortgagee in respect of other Collateral as its interests may appear and additional insured, as applicable, and shall contain a standard mortgage clause all in form and content acceptable to the Lender acting reasonably. The Credit Parties shall pay or caused to be paid, when due all premiums on such insurance. Certificates of insurance evidencing compliance with the foregoing and, at the Lender’s request, the policies of such insurance shall be delivered by the Borrower to the Lender. All insurance required hereby shall provide that no cancellation thereof shall be effective until at least 30 days after receipt by the applicable Credit Party and the Lender of written notice thereof, and shall be satisfactory to the Lender in all other respects. In case of any material loss, damage to or destruction of the Collateral or any part thereof, the Borrower shall promptly give written notice thereof to the Lender generally describing the nature and extent of such damage or destruction. In case of any loss, damage to or destruction of the Collateral or any part thereof, the Credit Parties, at their cost and expense, shall, except as required under the FCC Credit Documents, use all proceeds of insurance to promptly cause to be repaired or replaced the Collateral so lost, damaged or destroyed. Upon the occurrence and during the continuation of an Event of Default or in circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, if any Credit Party receives any proceeds of insurance for any loss, damage to or destruction of Collateral, such proceeds shall, subject to the provisions of the Intercreditor Agreement, immediately be paid to the Lender as a mandatory prepayment of the Facility (but in circumstances where there is not sufficient Borrowing Base to support the Accommodation Outstanding, only to the extent required to reduce the Accommodations Outstanding to the Borrowing Base).  Upon the occurrence and during the continuation of an Event of Default, each Credit Party hereby authorizes the Lender, subject to the provisions of the Intercreditor Agreement, at the Lender’s option, to adjust, compromise and settle any Losses under any insurance afforded to such Credit Party, and hereby irrevocably constitutes the Lender, and each of its nominees, officers, agents, attorneys, and any other Person whom the Lender may designate, as its attorney in fact, with full power and authority to effect such adjustment, compromise and/or settlement and to endorse any drafts drawn by an insurer of the Collateral or any part thereof and to do everything necessary to carry out such purposes. All insurance proceeds shall, subject to the provisions of the Intercreditor Agreement, be subject to the Lien of the Lender under the Security documents and subject to Permitted Liens.  For greater certainty, unless an Event of Default has occurred and is continuing, the Lender shall pay over and transfer to the Borrowers any insurance proceeds in respect of the Collateral which are received by the Lender in excess of any amounts required to reduce the Accommodations Outstanding to the then available Borrowing Base.

	
 
	
(c)
	
Unless it provides the Lender with evidence of the insurance coverage required by this Agreement, the Lender may purchase insurance at the Credit Parties’ expense to protect the Lender’s interests in the Collateral, and the Lender shall not be required to require such coverage to apply to claims made by or against any Credit 

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Party. The Borrower may later cancel any such insurance purchased by the Lender, but only after providing the Lender with evidence that the Borrower has obtained insurance as required by this Agreement. If the Lender purchases insurance for the Collateral, the Borrower shall be responsible for all of the costs of that insurance, including interest thereon and any other out of pocket costs and expenses that the Lender may suffer or incur in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance shall be added to the Obligations. The costs of the insurance may be more than the cost of insurance the Borrower may be able to obtain on its own.

	
(5)
	
Financial Reports. It shall maintain a standard system of accounting in accordance with GAAP and shall promptly furnish to the Lender and its duly authorized representatives such information respecting its business and financial condition as the Lender may reasonably request; and without limiting the foregoing, it shall provide the following information to the Lender:

	
 
	
(a)
	
as soon as available, and in any event not more than three (3) Business Days after the last Business Day of each calendar week (or not more than 40 days after the last Business Day of each fiscal quarter of the Borrower in circumstances where there are no Obligations owing to the Lender and, for purposes of this clause, Obligations does not include Advances outstanding by way of Letter of Credit), a Borrowing Base Certificate, showing the computation of the Borrowing Base in reasonable detail as of the close of business on the last Business Day of such calendar week (or such calendar month, as applicable), together with such other information as is therein required, prepared by the Borrower. For greater certainty, all calculations of availability in any Borrowing Base Certificate shall originally be made by the Borrower and certified by an Authorized Representative of the Borrower, provided that the Lender shall from time to time in its sole discretion, and at such intervals as the Lender determines, review and adjust any such calculation (A) to reflect its reasonable estimate of declines in value of any Collateral, due to collections of Receivables received or otherwise and (B) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the reserves determined by the Lender;  

	
 
	
(b)
	
as soon as available, and in any event within 30 days after the close of each monthly accounting period of the Borrower (or not more than 30 days after the last Business Day of each fiscal quarter of the Borrower in circumstances where there are no Obligations owing to the Lender and, for purposes of this clause, Obligations does not include Advances outstanding by way of Letter of Credit):  

	
 
	
(i)
	
a copy of the Unaudited Financial Statements as of the last day of such monthly accounting period;

	
 
	
(ii)
	
a Receivables aging report on an “invoice date” basis, including reconciliation of cash and accounts receivable;

	
 
	
(iii)
	
an accounts payable aging report;

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(iv)
	
a priority claims and statutory deductions report; and

	
 
	
(v)
	
a report reconciling accounts payable and Receivables set out in the reports provided pursuant to Section 13.1(5)(b)(ii), Section 13.1(5)(b) and Section 13.1(5)(b)(iv) for the applicable monthly accounting period to the corresponding figures for such items in the Unaudited Financial Statements for such monthly accounting period provided pursuant to Section 13.1(5)(b)(i);

in each case (A) accompanied by management commentary on the results reported as compared to performance in the previous Fiscal Year and as against the budget prepared for the current Fiscal Year of the Borrower, (B) prepared by the Borrower in such format and detail as is required by the Lender, and (C) certified by an Authorized Representative of the Borrower;

	
 
	
(c)
	
as soon as available, and in any event within 90 days after the last day of each Fiscal Year of the Borrower:

	
 
	
(A)
	
a copy of the Audited Financial Statements for such Fiscal Year in respect of the Borrower Group, certified by an Authorized Representative of the Borrower and accompanied by an unqualified opinion of the Auditor, confirming that the financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Borrower as of the close of such Fiscal Year and the results of its operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; and

	
 
	
(B)
	
a report reconciling accounts payable and Receivables amounts provided pursuant to Section 13.1(5)(b)(ii) and (b)(iii) for such Fiscal Year to the corresponding amounts for such items in the Audited Financial Statements and Unaudited Financial Statements for such Fiscal Year;

	
 
	
(d)
	
promptly after receipt thereof, any additional written reports, management letters or other detailed information contained in writing concerning significant aspects of the operations and financial affairs of any Credit Party relevant to the preparation of the Financial Statements;

	
 
	
(e)
	
as soon as available, and in any event not less than 30 days after the end of each Fiscal Year, a copy of the Business Plan for the next Fiscal Year; and

	
 
	
(f)
	
promptly after knowledge thereof shall come to the attention of any officer or director of any Credit Party, written notice of any threatened or pending litigation 

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or governmental proceeding or labour controversy against the Borrower, the Guarantor or any Credit Party that, if adversely determined, would have a Material Adverse Effect, or of the occurrence of any Default or Event of Default;

	
 
	
(g)
	
promptly after knowledge thereof shall come to the attention of any officer or director of any Credit Party, written notice of any Default or Event of Default.

Each of the financial statements of the Borrower and/or the Borrower Group furnished to the Lender pursuant to this Section 13.1(5) shall be accompanied by a Compliance Certificate prepared by the Canadian Borrower on behalf of the Borrowers (which such certificate shall include for greater certainty the requisite financial covenant calculations hereunder).

	
(6)
	
Inspection; Appraisals; Verification.

	
 
	
(a)
	
It shall at reasonable times and on reasonable notice permit (and arrange for all access required to permit) the Lender and its duly authorized representatives and agents, to (i) examine and make copies of the corporate books and books of accounts and other financial records of each Credit Party, (ii) discuss the affairs, finances and accounts of each Credit Party with, and to be advised as to the same by, their officers, employees and independent chartered accountants (and each Credit Party hereby authorizes its accountants to discuss with the Lender the finances and affairs of such Credit Party), and (iii) visit and inspect any of the premises of the Credit Parties and to conduct field examinations, provided that the Lender shall not conduct more than one (1) field examination during any particular Fiscal Year; provided that if an Event of Default has occurred and is continuing, the Lender shall be entitled to conduct field examinations of the Credit Parties at such times and intervals as the Lender determines appropriate in its sole discretion.  Notwithstanding the foregoing and the for greater certainty, the number of visits to and examinations, at reasonable times and on reasonable notice, of the Credit Parties which do not constitute field examinations shall not be restricted.  

	
 
	
(b)
	
It shall, upon request by the Lender at any time and from time to time, deliver to the Lender such evidence of the existence, identity and location of the Collateral and of its availability as collateral security pursuant hereto (including, without limitation, reports stating the book value of Inventory by major category and location). It agrees that the Lender shall have the right to verify all or any part of the Collateral in any manner, and through any medium, that the Lender considers appropriate, and it agrees to furnish all assistance and information, and perform any acts, that the Lender may require in connection therewith. It agrees to promptly notify the Lender of any Collateral that such Credit Party has determined is obsolete, and it shall provide the prior book value of such Collateral, a description thereof and its location.

	
(7)
	
Location of Collateral and Offices.

	
 
	
(a)
	
The Collateral is and shall remain in the possession or control of the applicable Credit Party at the Permitted Collateral Locations.

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(b)
	
A Credit Party shall at all times own or lease each Permitted Collateral Location, except to the extent otherwise permitted by the Lender. If a Permitted Collateral Location is not owned by a Credit Party, the Borrower shall, if so requested by the Lender, deliver a Collateral Access Agreement.  For greater certainty, as of the Closing Date, the Lender only requires Collateral Access Agreements in respect of those leased premises where the Credit Parties maintain books and records relating to Receivables.  Upon the occurrence of a Default or an Event of Default, the Borrower shall, if so requested by the Lender, make commercially reasonable best efforts to deliver or cause to be delivered a Collateral Access Agreement in respect of such other Permitted Collateral Locations as the Lender may require in the circumstances.

	
(8)
	
Settlements on Receivables.

	
 
	
(a)
	
If an Event of Default has occurred and is continuing, the proceeds of any Collateral sold by it shall be set aside at the request of the Lender and held by it as trustee for the Lender and such shall remain part of the Collateral.

	
 
	
(b)
	
Unless an Event of Default has occurred and is continuing, each Credit Party may settle and adjust disputes and claims with its customers and account debtors, handle returns and recoveries and grant discounts, credits and allowances in the ordinary course of its business as presently conducted for amounts and on terms which it in good faith considers advisable. If an Event of Default has occurred and is continuing, unless the Lender requests otherwise, each Credit Party shall promptly notify the Lender of (i) all returns and recoveries, and (ii) all disputes and claims and settle or adjust them at no expense to the Lender, provided that no discount, credit or allowance shall be granted to any customer or account debtor and no returns of merchandise or other goods shall be accepted by any Credit Party without the Lender’s consent. Notwithstanding the foregoing, the Lender may, if an Event of Default has occurred and is continuing, settle or adjust disputes and claims directly with customers or account debtors for amounts and upon terms which the Lender considers advisable.

	
(9)
	
Collection of Receivables.

	
 
	
(a)
	
Regardless of whether an Event of Default has occurred and is continuing, and regardless of whether the Lender has exercised any or all of its rights under other provisions of this Agreement or any other Credit Document, and without prejudice to any other right or remedy available to the Lender at law or in equity, if the Lender requests any Credit Party to do so:

	
 
	
(i)
	
all instruments and chattel paper at any time constituting part of the Receivables or any other Collateral (including any post-dated cheques) shall, upon receipt by such Credit Party, be immediately endorsed to and deposited with the Lender; and

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(ii)
	
the Credit Party shall instruct all customers and account debtors to remit all payments in respect of Receivables or any other Collateral to a lockbox or lockboxes under the sole custody and control of, and in such locations as are specified by, the Lender or to a blocked account or blocked accounts, satisfactory to the Lender.

	
 
	
(b)
	
If an Event of Default has occurred and is continuing, and without prejudice to any other rights or remedies available to the Lender at law or in equity, the Lender or its designee may notify any Credit Party’s customers and account debtors at any time that Receivables or any other Collateral have been assigned to the Lender or of the Lender’s security interest therein, and (subject to the provisions of the Intercreditor Agreement) either in its own name, or the applicable Credit Parties’ name, or both, demand, collect (including, without limitation, through a lockbox or blocked account analogous to that described in Section 13.1(9)(a)(ii)), receive, bring enforcement proceedings in respect of, compound and give acquittances for, any or all amounts due or to become due on Receivables or any other Collateral, and in the Lender’s discretion file any claim or take any other action or proceeding which the Lender may deem necessary or appropriate to protect or realize upon the Lien of the Lender in the Receivables or any other Collateral.

	
 
	
(c)
	
Any proceeds of Receivables or other Collateral transmitted to or otherwise received by the Lender pursuant to Section 13.1(9)(a) and Section 13.1(9)(b) may be handled and administered by the Lender in and through one or more remittance accounts at the Lender (such remittance accounts to constitute special restricted accounts for purposes of and subject to the provisions of this Agreement), and each Credit Party acknowledges that the maintenance of such remittance accounts by the Lender is solely for the Lender’s convenience and that no Credit Party has any right, title or interest in such remittance account or any amounts at any time standing to the credit thereof.

	
 
	
(d)
	
Upon the occurrence and during the continuation of an Event of Default and/or in the circumstances where there is not a sufficient Borrowing Base to support the Accommodations Outstanding, the Lender shall apply proceeds of Receivables and other Collateral received by it from any source to the payment of the Obligations (whether or not then due and payable, but in circumstances where there is not sufficient Borrowing Base to support the Accommodations Outstanding, only to the extent required to reduce the Accommodations Outstanding to the Borrowing Base), such applications to be made in accordance with Section 9.1(3). Except for purposes of computing interest on the Obligations in accordance with this Agreement, the Lender need not apply or give credit for any item included in proceeds of Receivables or other Collateral until the Lender has received final payment therefor at its office in cash or Cash Equivalents, acceptable to the Lender; provided that, if the Lender does give credit for any item prior to receiving final payment therefor and the Lender fails to receive such final payment or an item is charged back to the Lender for any reason, the Lender shall be entitled to charge the amount of such item back against any Deposit Account maintained with the Lender, together with interest thereon at the rate referred to in Section 3.5(2) hereof 

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which applies to Revolving Loans in the currency of the amount involved. Concurrently with each transmission of any proceeds of Receivables or other Collateral to the Deposit Account, the Borrower shall furnish the Lender with a report in such form as the Lender shall require, identifying the particular Receivable or other Collateral from which the same arises or relates.

	
(10)
	
Inventory and Equipment.

	
 
	
(a)
	
It shall at its own cost and expense maintain, keep and preserve its Inventory in good condition; provided that, notwithstanding the foregoing, it may, until an Event of Default, (i) use, consume and sell the Inventory in the ordinary course of business, but a sale in the ordinary course of business shall not under any circumstance include any transfer or sale in satisfaction, partial or complete, of a debt owing by any Credit Party; and (ii) sell obsolete, worn out or unusable Equipment which is concurrently replaced, on a reasonably expeditious basis, consistent with past practices and having regard to the particular Equipment, replacing same with similar Equipment at least equal in quality and condition to that sold and owned by such Credit Party, free of any Lien other than Permitted Liens, in a manner consistent with the past practices of such Credit Party.

	
 
	
(b)
	
If an Event of Default has occurred and is continuing, if any of the Inventory is at any time evidenced by a document of title, such document of title shall be promptly delivered by such Credit Party to the Lender unless the Lender expressly agrees otherwise.

	
(11)
	
Compliance with Laws. It shall comply in all material respects with the requirements of all Applicable Laws.

	
(12)
	
Insolvency Applications. It acknowledges that its business and financial relationships with the Lender are unique, and that the Lender does not have a common interest with any of its other creditors; and it agrees that if it files any plan of arrangement under the Companies’ Creditors Arrangement Act or makes any proposal under the Bankruptcy and Insolvency Act, the Lender will be placed in its own class for voting and distribution purposes, and the Credit Party will not permit or acquiesce in, directly or indirectly, the classification of the Lender with any other creditor for any purpose of such plan or proposal or otherwise.

	
(13)
	
US Benefit Plan Matters. It will maintain each US Benefit Plan in compliance in all material respects with all requirements of Applicable Law. It will promptly notify the Lender on becoming aware of (a) the institution of any steps by any Person to terminate any US Pension Plan, (b) the failure of any Credit Party to make a required contribution to any US Pension Plan if such failure is sufficient to give rise to an Encumbrance under Section 302(f) of ERISA, (c) the taking of any action with respect to a US Pension Plan which is reasonably likely to result in the requirement that any Credit Party furnish a bond or other security to the US Pension Benefit Guaranty Corporation under ERISA or such US Pension Plan, or (d) the occurrence of any event with respect to any US Benefit Plan which is reasonably likely to result in any Credit Party incurring any material liability (other than ordinary course funding obligations and claims for benefits), fine or penalty, 

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and in the notice to the Lender thereof, provide copies of all Credit Documents relating thereto.

	
Section 13.2
	
  Negative Covenants

While any obligation of any Credit Party to the Lender is outstanding under any Credit Document and the Commitments have not been terminated, each Borrower agrees as follows:

	
(1)
	
Change of Name. It shall not change its name, and it shall ensure that no other Credit Party changes its name, without first giving the Lender at least thirty (30) days’ prior written notice of its intent to do so.

	
(2)
	
Limitation on Liens. It shall not, and it shall ensure that each other Credit Party does not, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any Collateral, whether now owned or hereafter acquired, other than Permitted Liens.

	
(3)
	
Disposition of Assets. It shall not, and it shall ensure that each other Credit Party does not, sell, lease, transfer, assign, convey or otherwise dispose of any of its properties or assets except in the ordinary course of business and in accordance with the terms of the Credit Documents.

	
(4)
	
Consolidations and Mergers. It shall not, and it shall ensure that each other Credit Party does not, merge, consolidate, amalgamate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favour of any Person, except that any Credit Party may merge, amalgamate with, or dissolve or liquidate into, any other Credit Party (so long as it remains an Credit Party), provided that in any such transaction, other than an amalgamation, the Credit Party shall be the continuing or surviving corporation.

	
(5)
	
Formation of New Entities. It shall not, and it shall ensure that each other Credit Party does not, form or acquire or otherwise permit to exist any Subsidiary, without the prior written consent of the Lender (such consent not to be unreasonably withheld).  Notwithstanding the foregoing and for greater certainty, but subject to Section 13.2(24) and the definitions of Permitted Investment and Permitted JV Entity, as applicable, this clause (5) shall not apply in respect of each of PSF, Hemp JV Co, AVGG Hemp JV Co and any other Permitted JV Entity. 

	
(6)
	
Maintenance of Equity Interests. It shall not, and it shall ensure that each other Credit Party does not, assign, sell or transfer, or permit the assignment, sale or transfer of, any of its Equity Interests or any Equity Interest of any other Credit Party; and the Borrower shall not permit a Change of Control to occur.

	
(7)
	
Limitations on Debt. It shall not, and it shall ensure that each other Credit Party does not, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, Debt in an aggregate amount exceeding $5,000,000, determined on a consolidated basis, except:  (i) the FCC Debt; (ii) Debt incurred pursuant to this 

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Agreement; (iii) Debt existing on the Closing Date and described in Section 12.1(x); (iv) Debt secured by Permitted Liens (subject to the $5,000,000 aggregate limit described above); (v) Debt for amounts payable to suppliers in the ordinary course of business; (vi) Capitalized Lease Obligations in an aggregate amount not exceeding $100,000 at any time, determined in accordance with GAAP on a consolidated basis for the Borrower and each other Credit Party; (vii) unsecured Debt owing to another Credit Party; and (viii) Debt incurred for the purpose of acquiring the use or possession of any property under a lease or similar arrangement, whether or not the Credit Party has the express or implied right to acquire title to or purchase such property, if, after giving effect thereto, the aggregate amount of fixed rentals and other consideration payable by all Credit Parties under all such leases and similar arrangements would (i) exceed $11,000,000 or (ii) exceed $2,000,000 during any Fiscal Year.  

	
(8)
	
Transactions with Affiliates or Associates. It shall not, and it shall ensure that each other Credit Party does not, enter into any contract, arrangement or transaction with any Affiliate or Associate, except: (i) as expressly permitted by this Agreement or listed on Schedule 13.2(8) hereto; (ii) agreements approved by the Lender in respect of Subordinated Debt, (iii) agreements in the ordinary course of, and pursuant to the reasonable requirements of, business and at prices and on terms substantially the same as those that the Credit Party would reasonably expect to receive in a comparable arm’s length transaction with another Person (excluding any requirement for security that might otherwise be required from an arm’s length party), or (iv) as otherwise disclosed in writing to, and approved by, the Lender.

	
(9)
	
Management Fees and Compensation. It shall not, and it shall ensure that each other Credit Party does not, pay any management, consulting or similar fees to any Affiliate or to any officer, director or employee of it or any Affiliate except (i) payment of reasonable compensation and expense reimbursement to officers and employees for actual services rendered to, and expenses incurred for, it in the ordinary course of business, and (ii) payment of directors’ fees and reimbursement of actual out-of-pocket expenses incurred in connection with attending board of director meetings not to exceed in the aggregate for the Credit Parties with respect to all such items $700,000 in any Fiscal Year provided that no such payment shall be made if an Event of Default has occurred and is continuing or if the making of such payment will result in an Event of Default.  

	
(10)
	
Contingent Obligations. It shall not, and it shall ensure that each other Credit Party does not, create, incur, assume or suffer to exist any Contingent Obligations, other than in respect of the Obligations, except: (i) endorsements for collection or deposit in the ordinary course of business; (ii) Contingent Obligations incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds and other similar obligations; and (iii) Contingent Obligations arising with respect to customary indemnification obligations in favour of purchasers in connection with dispositions permitted under Section 13.2(3), and (iv) Contingent Obligations described in clause (b) of the definition thereof and permitted pursuant to Section 13.2(10); provided that, in any such case, such Contingent Obligations are not otherwise expressly restricted or prohibited by this Agreement.

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(11)
	
Restricted Payments.  It shall not, and it shall ensure that each other Credit Party does not, directly or indirectly, (i) declare or make any payment or other distribution of assets, properties, cash, rights, obligations or Securities on account of any of Equity Interests (except that any Credit Party may declare and pay dividends to another Credit Party (so long as it remains an Credit Party)), or (ii) purchase, redeem or otherwise acquire for value any of its, or any of its Affiliate’s, shares of capital stock, partnership interests, membership interests or other equity securities or any warrants, rights or options to acquire such interests or Securities now or hereafter outstanding, or (iii) make any payment in respect of Subordinated Debt, or (iv) make any other payment or distribution to any of its shareholders or Affiliates or any other non-arm’s length party. Notwithstanding the foregoing and for greater certainty, Village Farms International, Inc. may, provided that (y) no Default or Event of Default has occurred and is continuing or would occur as the result of any proposed distribution by Village Farms International, Inc. and (z) the Borrower Group is at such time in compliance with Section 13.3(1) hereof, declare and pay dividends on account of any of its Equity Interests.  Notwithstanding the foregoing and for greater certainty, but subject to Section 13.2(24) and the definitions of Permitted Investment and Permitted JV Entity, as applicable, nothing in this clause (11) shall prevent (i) the US Borrower from fulfilling its obligations under the Hemp JV Documents and under the AVGG Hemp JV Documents, as applicable, or (ii) any Credit Party from fulfilling its obligations under any documents governing a Permitted Investment.  

	
(12)
	
Change in Business. It shall not, and it shall ensure that each other Credit Party does not, engage in any material line of business substantially different from those lines of business carried on by it on the date hereof and it shall not change the location from which such line of business is carried on by it, all as described in Section 12.1(d).

	
(13)
	
Change in Structure. It shall not, and it shall ensure that each other Credit Party does not, make any changes in its equity capital structure (including a change in the terms of its outstanding equity securities), or amend its constating documents (including any shareholder agreement), except as necessary to effect transactions permitted under Section 13.2(3).

	
(14)
	
Accounting Changes. It shall not, and it shall ensure that each other Credit Party does not, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change its Auditor (unless it is another independent accounting firm of national standing which is acceptable to the Lender acting reasonably) or Fiscal Year.

	
(15)
	
Deposit Accounts. It shall not, and it shall ensure that each other Credit Party does not, open or maintain any Deposit Account except with the Lender or as disclosed in Schedule 12.1(hh) provided, however, that (i) Deposit Accounts indicated as “Permanent Accounts” on Schedule 12.1(hh) maintained other than with the Lender or its Affiliates shall not at any time have, in the aggregate, funds deposited therein in excess of US$400,000 or, if the Marfa, Texas facility is in operation, US$800,000.

	
(16)
	
Material Contracts. It shall not and it shall ensure that each other Credit Party does not, (i) cancel or terminate any Material Contract; (ii) waive any default or breach under any Material Contract; (iii) amend or otherwise modify any Material Contract; or (iv) take any 

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other action in connection with any Material Contract or Licence, that would, in each case, have a Material Adverse Effect.

	
(17)
	
Limitation on Sale and Leaseback Transactions. It shall not, and it shall ensure that each other Credit Party does not, directly or indirectly, enter into any sale and leaseback transaction with respect to any property or assets (whether now owned or hereafter acquired).

	
(18)
	
Loans and Investments. It will not, and it shall ensure that each other Credit Party does not, on an aggregate basis in excess of US$1,000,000 during each Fiscal Year without the prior written approval of the Lender, (i) purchase or acquire, or make any commitment to purchase or acquire, any capital stock, Equity Interest, or any obligations or other Securities of, or any interest in, any Person, including, without limitation, the establishment or creation of a Subsidiary, or (ii) make or commit to make any acquisition of all or substantially all of the assets of another Person, or of any business or division of any Person, including without limitation, by way of merger, consolidation, amalgamation or other combination or (iii) make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in or guarantee of, any Person including any Affiliate or make any payments in respect thereof (the items described in clauses (i), (ii), and (iii) are referred to as “Investments”), except for: (A) Investments in cash and Cash Equivalents; (B) extensions of credit by one Credit Party to another Credit Party (so long as it remains an Credit Party), as the case may be and interest and other payments made in connection with such extensions of credit; (C) extensions of credit which constitute trade receivables in the ordinary course of business; and (D) Permitted Investments.  Notwithstanding the foregoing and for greater certainty, but subject to Section 13.2(24) and the definitions of Permitted Investment and Permitted JV Entity, as applicable, this clause (18) shall not apply in respect of any Investment in PSF, Hemp JV Co., AVGG Hemp JV Co or any other Permitted JV Entity, as applicable. 

	
(19)
	
Use of Cash. Use any cash on deposit with the Lender which is subject to an offset agreement in breach of any term or covenant contained in this Agreement or any other Credit Document.

	
(20)
	
Location of Assets in Other Jurisdictions. It will not, and it shall ensure that each other Credit Party does not, except for any Collateral in transit for delivery to a customer in the ordinary course of business of such Credit Party, as part of the performance of its obligations or the provision of its services to such customer under a contract entered into with such customer in the ordinary course of business of such Credit Party, (i) acquire any Collateral outside of the jurisdictions identified in Schedule 12.1(t), or (ii) move any Collateral to a jurisdiction where the Lender would not have, or continue to have, a first priority Lien over such Collateral under Applicable Law, or (iii) knowingly suffer or permit in any other manner any of its Collateral to not be subject to the Lender’s Lien or to be or become located in a jurisdiction as a result of which the Lender’s Lien over such Collateral is not perfected.

	
(21)
	
Excluded Subsidiaries. It will not, and it shall ensure that each other Credit Party does not, without the prior written approval of the Lender, allow or cause any Excluded Subsidiary 

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to (i) incur any Debt, other than Debt to a Credit Party or Debt secured by or which could be secured by Permitted Liens or Debt for amounts payable to suppliers in the ordinary course of business, (ii) grant, incur or suffer any Lien other than a Permitted Lien, (iii) purchase or acquire, or make any commitment to purchase or acquire, any capital stock, equity interest, or any obligations or other Securities of, or any interest in, any Person, including, without limitation, the establishment or creation of a Subsidiary, (iv) make or commit to make any acquisition of all or substantially all of the assets of another Person, or of any business or division of any Person, including without limitation, by way of merger, consolidation, amalgamation or other combination or (v) make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any Affiliate or make any payments in respect thereof.  Notwithstanding the foregoing and for greater certainty, but subject to Section 13.2(24) and the definitions of Permitted Investment and Permitted JV Entity, as applicable, this clause (21) shall not apply in respect of PSF, Hemp JV Co,  AVGG Hemp JV Co and any other Permitted JV Entity, as applicable. 

	
(22)
	
Loans to Excluded Subsidiaries. It will not, and it shall ensure that each other Credit Party does not, make loans or advance funds or make or increase, as the case may be, any equity investment in any Excluded Subsidiary.  Notwithstanding the foregoing and for greater certainty, but subject to Section 13.2(24) and the definitions of Permitted Investment and Permitted JV Entity, as applicable, this clause (22) shall not apply in respect of loans, advances of funds or any increase of Equity Interests in PSF, Hemp JV Co, AVGG Hemp JV Co or any other Permitted JV Entity. 

	
(23)
	
Pension Plans. It will not, and it shall ensure that each other Credit Party does not create or establish a defined benefit pension plan.

	
(24)
	
JV Co Restrictions.  For greater certainty, each of Hemp JV Co and AVGG Hemp JV Co are and shall be considered as a Permitted JV Entity for purposes of this Agreement, and the Borrowers and each other Credit Party shall, in respect of each Permitted JV Entity, comply, and cause compliance, in all respects with the requirements set out in clauses (h) and (i) of the definition of Permitted Investment set out in this Agreement.

	
Section 13.3
	
  Financial Covenants of the Borrower

While any Obligation of any Credit Party or any Obligation of the Lender is outstanding under any Credit Document, each Credit Party agrees as follows:

	
(1)
	
Fixed Charge Coverage Ratio. If at any time Excess Availability is less than 20% of the Revolving Commitment, then the Borrower Group shall, at all times during the period in which Excess Availability is less than 20% of the Revolving Commitment and continuing for a period of 60 consecutive days after which Excess Availability is no longer less than 20% of the Revolving Commitment, maintain a Fixed Charge Coverage Ratio of not less than 1.0:1.0, calculated and tested, in respect of the relevant Twelve Month Period, as of the last day of each calendar month and at such other times as the Lender determines necessary or appropriate.  For greater certainty, Excess Availability will be determined and calculated as at the end of each fiscal month of the Borrower. 

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(2)
	
Capital Expenditures. The Borrowers and the other Credit Parties will not without the prior written consent of the Lender expend or become obligated for any Capital Expenditures in an aggregate amount exceeding $5,000,000 during any Fiscal Year, determined in accordance with GAAP on a consolidated basis. 

Article 14
DEFAULT AND ENFORCEMENT

	
Section 14.1
	
  Events of Default

The occurrence of any of the following events shall constitute an event of default (an “Event of Default”) under this Agreement:

	
 
	
(a)
	
Payment Defaults. Failure by any Credit Party to pay to the Lender when due all amounts owing to the Lender under any Credit Document, including without limitation, all Accommodations Outstanding, interest and other Obligations.

	
 
	
(b)
	
Non-Payment Defaults under Article 13. Failure of any Credit Party to comply with any covenant in Article 13 hereof and that failure, if capable of being remedied, is not remedied within 15 days after either the Credit Party has become aware of its occurrence or the Lender has notified the Borrower of its occurrence.

	
 
	
(c)
	
Other Non-Payment Defaults under Credit Documents. Failure of any Credit Party to comply with any covenant given in favour of the Lender in any Credit Document (other than a Default pursuant to Section 14.1(a) or Section 14.1(b)) if such failure is capable of being remedied and such failure has not been remedied within 15 days after the earlier of (A) the date on which an officer of any Credit Party became aware of its occurrence, and (B) the date on which the Borrower received notice of its occurrence from the Lender.

	
 
	
(d)
	
Default in Other Agreements. (i) Failure of any Credit Party to pay when due any principal, interest or other amount payable in respect of any indebtedness owing by such Credit Party (other than indebtedness owing pursuant to any Credit Document) in an individual principal amount of $250,000 or more or in an aggregate principal amount of $250,000 or more, after the expiry of any applicable grace period provided therefor; or (ii) breach or default by any Credit Party with respect to any other term of any indebtedness owing by any Credit Party (other than covenants in respect of indebtedness owing pursuant to any Credit Document), including any loan agreement, Mortgage, indenture or other agreement relating thereto, after the expiry of any applicable grace period provided therefor, in each case, if the effect of such breach or default is to cause, or to permit such indebtedness to become or be declared due and payable (or subject to a compulsory repurchase or redemption) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be.  

	
 
	
(e)
	
Breach of Representations and Warranties. Any representation, warranty, certification or statement made or deemed to be made by any Credit Party in any Credit Document is untrue in any material respect as of the date on which such 

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representation, warranty, certification or statement was made or deemed to have been made.

	
 
	
(f)
	
Action by Other Creditors. Any judgment, writ, warrant of attachment, distress or any similar process in an amount exceeding $250,000 is entered or filed against one or more of the Credit Parties or against any Collateral (or which, when combined with other judgments, writs, warrants of attachment, distress or other similar proceedings entered or filed against one or more Credit Parties or against any Collateral, exceeds an aggregate amount of $250,000), and such judgment, writ, warrant of attachment, distress or any similar process is not diligently appealed in good faith and vacated, bonded, stayed or satisfied within 30 days thereafter or, within such 30 day period, any Collateral is possessed or seized by any third party creditor.  

	
 
	
(g)
	
Invalidity and Contest. (i) Any Credit Document, or any provision thereof, shall at any time cease to be a legally binding and enforceable obligation of any Credit Party that is a party thereto in accordance with its terms or be declared null and void, (ii) the legality, validity, binding nature or enforceability of any Credit Document, or any provision thereof, shall be contested by any Credit Party, or (iii) any Credit Party shall deny that it has any further liabilities or obligations under any Credit Document to which it is a party except as permitted under such Credit Document.

	
 
	
(h)
	
Governmental Approvals. Any Governmental Approval required for any Credit Party to conduct its business substantially in the manner presently conducted or to perform its obligations under any Credit Document is not obtained or is withdrawn or ceases to be in full force and effect and same would have a Material Adverse Effect and (i) in the Lender’s opinion, it is not possible for such Credit Party to obtain such Governmental Approval within 60 days after the date on which such Governmental Approval was required or withdrawn, as applicable, or (ii) in the Lender’s opinion, it is possible for such Credit Party to obtain such Governmental Approval within 60 days after the date on which such Governmental Approval was required or withdrawn, as applicable, but such Governmental Approval is not obtained within such 60 day period.

	
 
	
(i)
	
Voluntary Proceedings. Any Credit Party (i) institutes proceedings for substantive relief in any bankruptcy, insolvency, debt restructuring, reorganization, readjustment of debt, dissolution, liquidation, winding-up or other similar proceedings (including proceedings under the Bankruptcy and Insolvency Act (Canada), the Winding-up and Restructuring Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the United States Bankruptcy Code, incorporating statute (or other legislation, document or agreement creating such Credit Party), including proceedings for the appointment of a trustee, interim receiver, receiver, receiver and manager, administrative receiver, custodian, liquidator, provisional liquidator, administrator, sequestrator or other like official with respect to such Credit Party or all or any material part of the Collateral, or (ii) makes an assignment for the benefit of creditors, or (iii) is unable, or admits in 

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writing its inability, to pay its debts as they become due or otherwise acknowledges its insolvency or commits any other act of bankruptcy or is insolvent under any applicable legislation, or (iv) voluntarily suspends the conduct of its business or operations, or (v) acquiesces in, or takes any action in furtherance of, any of the foregoing.

	
 
	
(j)
	
Involuntary Proceedings. If any third party (i) makes any application under the Companies’ Creditors Arrangement Act (Canada), the United States Bankruptcy Code or similar legislation in Canada or the United States of America in respect of any Credit Party, or (ii) files a proposal or notice of intention to file a proposal under the Bankruptcy and Insolvency Act (Canada), the United States Bankruptcy Code or similar legislation in Canada or the United States of America in respect of any Credit Party, or (iii) institutes any winding-up proceeding under the Winding-up and Restructuring Act (Canada), the United States Bankruptcy Code, any relevant incorporating statute or any similar legislation in Canada or the United States of America in respect of any Credit Party, or (iv) presents a petition in bankruptcy under the Bankruptcy and Insolvency Act (Canada) or any similar legislation in Canada or the United States of America in respect of any Credit Party, or (v) files, institutes or commences any other petition, proceeding or case under any other bankruptcy, insolvency, debt restructuring, reorganization, incorporation, readjustment of debt, dissolution, liquidation, winding-up or similar law now or hereafter in effect, seeking bankruptcy, liquidation, reorganization, dissolution, winding-up, composition or readjustment of debt of any Credit Party, the appointment of a trustee, interim receiver, receiver, receiver and manager, administrative receiver, custodian, liquidator, provisional liquidator, administrator, sequestrator or other like official for any Credit Party, or any material part of any Credit Party’s assets or any similar relief in Canada or the United States of America; unless such application, filing, proceeding, petition or case, as applicable, is being contested in good faith by bona fide action on the part of the relevant Credit Party and is dismissed, stayed or withdrawn within 30 days after the commencement thereof.

	
 
	
(k)
	
Material Adverse Change. At any time an event or circumstance occurs that, in the opinion of the Lender, is or will be a Material Adverse Change.

	
 
	
(l)
	
Change of Control. A Change of Control occurs or, in the opinion of the Lender, will occur, each without the prior written consent of the Lender.

	
 
	
(m)
	
Pension Plans. (i) The institution of any steps by any Credit Party or any member of its Controlled Group or any applicable regulatory authority to terminate a Canadian Pension Plan or US Pension Plan (in whole or in part) if, as a result of such termination, any Credit Party is required to make an additional contribution to such Canadian Pension Plan or US Pension Plan, or to incur an additional material liability or obligation to such Canadian Pension Plan or US Pension Plan, or (ii) a contribution failure occurs with respect to any US Pension Plan sufficient to give rise to a lien or charge under Section 302(f) of ERISA or under any applicable pension benefits legislation in any other jurisdiction.

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(n)
	
Loss of Collateral, etc. Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $250,000 (excluding any related deductible under insurance policies).  

	
 
	
(o)
	
Dissolution, etc. The dissolution, liquidation, wind-up or termination of existence of any Credit Party or if any proceedings are commenced in respect thereof unless, in the case of proceedings not brought by an Obligor, such proceedings are being actively and diligently contested in good faith by bona fide action on the part of the relevant Credit Party and is dismissed, stayed or withdrawn within 30 days after the commencement thereof.

	
Section 14.2
	
  Rights upon Default and Event of Default

Upon the occurrence of a Default, which is continuing, the Lender may, on notice to the Borrowers, declare that the ability of the Borrowers to require any further Advances under the Facilities shall be suspended. Upon the occurrence of an Event of Default which is continuing, the Lender may do either or both of the following:

	
 
	
(a)
	
declare that the Commitment under any or all of the Facility has expired and that the Lender’s obligation to make Advances has terminated; and

	
 
	
(b)
	
declare the entire principal amount of all Advances outstanding, all unpaid accrued interest and all fees and other amounts required to be paid by the Borrowers hereunder to be immediately due and payable without the necessity of presentment for payment, notice of non-payment and of protest (all of which are hereby expressly waived) and proceed to exercise any and all rights and remedies hereunder and under any other Credit Document.

From and after the issuance of any declaration referred to in this Section 13.2, the Lender shall not be required to honour any cheque or other instrument presented to it by the Borrower regardless of the date of issue or presentation. Immediately upon receipt of a declaration under Section 14.2(b), the Borrowers shall pay to the Lender all amounts outstanding hereunder including, without limitation, the Deemed Hedge Exposure owing under each Hedging Arrangement. Without limiting the generality of the foregoing, the applicable Borrower shall pay to the Lender the maximum amount payable under all outstanding Letters of Credit, which are unmatured or unexpired, which amounts shall be held by the Lender as collateral security for the Borrower’s obligations with respect to those Letters of Credit, as applicable. The Deemed Hedge Exposure under any Hedging Arrangement shall be determined in accordance with the applicable Hedge Agreement.

	
Section 14.3
	
  Waiver of Default

No express or implied waiver by the Lender of any demand, Default or Event of Default shall in any way be or be construed to be a waiver of any future or subsequent Default or Event of Default. To the extent permitted by Applicable Law, the Credit Parties hereby waive any rights now or thereafter conferred by statute or otherwise which may limit or modify any of the Lender’s rights or remedies under any Credit Document. Each Credit Party agrees that the exercise by the Lender of any rights or remedies under any Credit Document without having declared an 

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acceleration shall not in any way alter, affect or prejudice the right of the Lender to make a declaration pursuant to Section 14.2 at any time and, without limiting the foregoing, shall not be construed as or deemed to constitute a waiver of any rights under Section 14.2.

Article 15
REMEDIES

	
Section 15.1
	
  Remedies Cumulative

For greater certainty, the rights and remedies of the Lender under this Agreement and the other Credit Documents are cumulative and are in addition to and not in substitution for any rights or remedies provided by law. Any single or partial exercise by the Lender of any right or remedy upon the occurrence of a demand, Default or Event of Default shall not be deemed to be a waiver of, or to alter, affect or prejudice any other right or remedy to which the Lender may be lawfully entitled as a result of the demand, Default or Event of Default, and any waiver by the Lender of the strict observance of, performance of or compliance with any term, covenant, condition or agreement herein contained, and any indulgence granted thereby, shall be deemed not to be a waiver of any subsequent demand, Default or Event of Default.

	
Section 15.2
	
  Remedies Not Limited

The Lender may, to the extent permitted by Applicable Law, bring suit at law, in equity or otherwise, for any available relief or purpose including, but not limited to: (a) the specific performance of any covenant or agreement contained in this Agreement or in any other Credit Document; (b) an injunction against a violation of any of the terms of this Agreement or any other Credit Document; (c) in aid of the exercise of any power granted by this Agreement or any other Credit Document or by law; or (d) the recovery of any judgment for any and all amounts due in respect of the Obligations.

	
Section 15.3
	
  Set-Off

Upon the occurrence of demand, Default or Event of Default, the Lender and each of its branches (including the Chicago Branch) and offices are hereby authorized by each Credit Party from time to time, without notice to: (a) set-off and apply any and all amounts owing by the Lender or any of its branches or offices to any Credit Party (whether payable in Canadian Dollars or any other currency and any amounts so owing in any other currency may be converted into one or more currencies in which the Obligations are denominated at such rate or rates as the party may be able to obtain, acting reasonably, and whether matured or unmatured, and in the case of deposits, whether general or special, time or demand and however evidenced) against and on account of the Obligations (whether or not any declaration under Section 14.2 has been made and whether or not those Obligations are unmatured or contingent); (b) hold any amounts owing by the Lender as collateral to secure payment of the Obligations owing to it to the extent that those amounts may be required to satisfy any contingent or unmatured Obligations owing to it; and (c) return as unpaid for insufficient funds any and all cheques and other items drawn against any deposits so held as the Lender in its sole discretion may elect. For greater certainty, and in addition to the rights, powers and remedies set out above, the Lender and each of its branches and offices may exercise 

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at their discretion any and all set-off and other rights and remedies afforded to each of them pursuant to Applicable Law.

	
Section 15.4
	
  Lender May Perform Covenants

If any Credit Party fails to perform any of its obligations under any covenant contained in this Agreement or any other Credit Document, the Lender may (but has no obligation to), upon notice to the Borrower, perform any covenant on behalf of such Credit Party and, if the covenant requires the payment or expenditure of money, the Lender may make Advances to fund such expenditure, and such Advances shall constitute Prime Rate Loans under the Revolving Facility and shall be repaid by the Borrower upon demand by the Lender.

Article 16
GENERAL PROVISIONS

	
Section 16.1
	
  Assignment

	
(1)
	
This Agreement shall enure to the benefit of and be binding upon the parties hereto, their respective successors and any permitted Assignees. The Credit Parties shall not assign, delegate or transfer all or any part of their rights or obligations under this Agreement without the prior written consent of the Lender, which consent may be withheld in the Lender’s sole discretion.

	
(2)
	
Subject to Section 16.1(3), the Lender may, provided such assignment is at no additional cost to the Credit Parties, without the prior written consent of the Borrowers, assign all or any part of its rights and obligations in respect of the Credit Documents to one or more financial institutions or other entities (each an “Assignee”), and any such assignment shall become effective upon receipt by the Borrower of (i) written notice from the Lender that it has assigned all or any part of its rights under the Credit Documents and (ii) a written undertaking from the Assignee (addressed to all the parties to this Agreement) agreeing to be bound by this Agreement and to perform the obligations assigned to it. Any Assignee shall be treated as a lender for all purposes of this Agreement, shall be entitled to the full benefit hereof and shall be subject to the obligations of the Lender to the same extent as if it were an original party in respect of the rights or obligations assigned to it, and the Lender shall be released and discharged accordingly and to the same extent, and the Schedules hereto, as applicable, shall be amended accordingly from time to time without further notice or other requirement.

	
(3)
	
Notwithstanding Section 16.1(2), the Lender may not assign all or any part of its rights to or have any of its obligations assumed by any private equity fund or hedge fund that in the ordinary course of business invests in debt (a) considered to be very weak, (b) where the issuer of such debt is in imminent default to its creditor(s), or (c) where the issuer of such debt is in insolvency proceedings, unless, in each case, an Event of Default shall have occurred and be continuing or upon the exercise of any rights pursuant to Section 13.2.

	
(4)
	
The Lender may disclose to any prospective Assignee, on a confidential basis, such information concerning the Credit Parties, their businesses and properties as it considers appropriate, without liability to any Credit Party.

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Section 16.2
	
  Amendments

No amendment or waiver of any provision of this Agreement or consent to any departure by a party from any provision of this Agreement will be effective unless it is in writing, and any such amendment, modification, waiver or consent will be effective only in the specific instance, for the specific purpose and for the specific length of time for which it is given.

	
Section 16.3
	
  Notice

Unless otherwise specified, any notice or other communication required or permitted to be given to a party under this Agreement shall be in writing and may be delivered personally or sent by prepaid registered mail, e-mail, PDF or facsimile, to the address, e-mail address or facsimile number of the party set out beside its name at the foot of this Agreement to the attention of the Person there indicated or to such other address, e-mail address, facsimile number or other Person's attention as the party may have specified by notice in writing given under this Section. Any notice or other communication shall be deemed to have been given (i) if delivered personally, when received; (ii) if mailed, subject to Section 15.4, on the fifth Business Day following the date of mailing; (iii) if sent by facsimile or e-mail, on the Business Day when the appropriate confirmation of receipt has been received if the confirmation of receipt has been received before 3:00 p.m. on that Business Day or, if the confirmation of receipt has been received after 3:00 p.m. on that Business Day, on the next succeeding Business Day; and (iv) if sent by facsimile or e-mail on a day which is not a Business Day, on the next succeeding Business Day on which confirmation of receipt has been received. All communication with any Credit Party hereunder may be directed through the Canadian Borrower. For greater certainty, any notice or other document or instrument which is required to be given or delivered to any Credit Party hereunder shall be deemed (unless notice to such Credit Party is required by Applicable Law) to have been given to and received by such Credit Party if given to the Canadian Borrower.

	
Section 16.4
	
  Disruption of Postal Service

If a notice has been sent by prepaid registered mail and before the fifth Business Day after the mailing there is a discontinuance or interruption of regular postal service so that the notice cannot reasonably be expected to be delivered within five Business Days after the mailing, the notice will be deemed to have been given when it is actually received (or upon refusal of receipt).

	
Section 16.5
	
  Environmental Indemnity

Each Credit Party shall, and does hereby, indemnify and hold each Indemnified Person harmless from and against any and all Claims and Losses incurred or suffered by, or asserted against, the Indemnified Person, with respect to or as a direct or indirect result of, (a) the presence on or under, or any Release of any Hazardous Substance from any of the Collateral, comprising real property or any other real properties owned or used by any of the Credit Parties or any Subsidiary or any of their successors and assigns; or (b) the breach of any Applicable Laws by any mortgagor, owner, lessee or occupant of such properties. The obligations of each of the Credit Parties under this Section 16.5 shall survive the repayment of the other Obligations and the termination of the Facilities.

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Section 16.6
	
  Further Assurances

Each Credit Party agrees to comply with all terms and conditions of each of the Credit Documents and, at any time and from time to time, upon request of the Lender, to execute and deliver to the Lender, such further Credit Documents or instruments and shall do or cause to be done such further acts as the Lender may deem necessary or desirable to ensure such compliance, to give effect to the intent of the Credit Documents and to secure the Obligations, including, without limitation, executing and delivering, or causing to be executed and delivered, such further Credit Documents or instruments as may be necessary or desirable to (i) give the Lender a first priority Lien in any and all property and assets now or hereafter acquired by any Credit Party, subject only to Permitted Liens, and (ii) to assign all or any part of the Lender’s rights and obligations hereunder to any Assignee.

	
Section 16.7
	
  Judgment Currency

If for the purpose of obtaining judgment in any court it is necessary to convert all or any part of the liabilities or any other amount due to the Lender in respect of any of the Borrowers’ obligations under this Agreement in any currency (the “Original Currency”) into another currency (the “Other Currency”), each Credit Party to the fullest extent that it may effectively do so, agrees that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Lender could purchase the Original Currency with the Other Currency on the Business Day preceding that on which final judgment is paid or satisfied. The obligations of the applicable Borrower in respect of any sum due in the Original Currency from it to the Lender shall, notwithstanding any judgment in any Other Currency, be discharged only to the extent that on the Business Day following receipt by the Lender of any sum adjudged to be so due in such Other Currency the Lender may, in accordance with its normal banking procedures, purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due to the Lender in the Original Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Lender against such Loss, and if the amount of the Original Currency so purchased exceeds the sum originally due to the Lender in the Original Currency, the Lender agrees to remit such excess to the applicable Borrower.

	
Section 16.8
	
  Waivers

No failure to exercise, and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, remedy, power or privilege shall preclude the exercise of any other right, remedy, power or privilege.

	
Section 16.9
	
  Reimbursement of Expenses

The Credit Parties jointly and severally agree to: (a) pay or reimburse the Lender on demand, for all of its reasonable out-of-pocket costs and expenses (including reasonable legal fees and disbursements) incurred in connection with the preparation, negotiation and execution of this Agreement and the other Credit Documents including any subsequent amendments of this Agreement or any other Credit Document, and the consummation and the administration of the 

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transactions contemplated hereby including the reasonable fees and disbursements of counsel to the Lender; and (b) pay or reimburse, on demand, the Lender for all its costs and expenses (including legal fees) incurred in connection with the determination, preservation and enforcement of any responsibilities, rights and remedies under this Agreement and the other Credit Documents, including the reasonable fees and disbursements of its counsel. The obligations of the Credit Parties under this Section 16.9 shall survive the repayment of all Advances and the termination of the Facilities.

	
Section 16.10
	
  Governing Law

This Agreement and each of the Credit Documents (unless the particular Credit Document otherwise provides) are governed by, and are to be construed and interpreted in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable therein.

	
Section 16.11
	
  Submission to Jurisdiction

Each Credit Party irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of British Columbia and hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such court. Each Credit Party hereby irrevocably waives, to the fullest extent it may effectively do so, the defence of an inconvenient forum to the maintenance of such action or proceeding. Each Credit Party hereby irrevocably consents to the service of any and all process in such action or proceeding by the delivery of such process to such Borrower at its address provided in accordance with Section 16.3.

	
Section 16.12
	
  Waiver of Trial by Jury

Each Credit Party hereby knowingly voluntarily and intentionally waive any rights they may have to a trial by jury in respect of any litigation based on, or arising out of, under, or in connection with, this Agreement or any other Credit Document, or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Lender or of the applicable Borrower or any other Credit Parties. Each Credit Party acknowledge and agree that they have received full and sufficient consideration for this provision (and each other provision of each other Credit Document to which it is a party) and that this provision is a material inducement for the Lender entering into this Agreement and each other Credit Document.

	
Section 16.13
	
  Counterparts

This Agreement and the Credit Documents may be executed and delivered in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument. This Agreement and the Credit Documents may be executed and delivered by facsimile transmission or PDF and each of the parties hereto may rely on such facsimile signature of PDF as though that facsimile signature or PDF were an original hand-written signature.

	
Section 16.14
	
  Excluded Subsidiaries

The parties hereto acknowledge and agree that each Excluded Subsidiary is not a Credit Party for purposes of this Agreement or any of the Credit Documents.

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Section 16.15
	
  Entire Agreement

This Agreement and all other Credit Documents constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, negotiations, discussions, undertakings, representations, warranties and understandings, whether written or oral.

	
Section 16.16
	
  Acknowledgement

Each Credit Party hereby acknowledges, confirms and agrees that all Credit Documents (including without limitation Security documents) previously, now or hereafter delivered by such Credit Party in favour of the Lender remain in full force and effect in accordance with their respective terms, subject to any amendments thereof from time to time. For greater certainty, each Credit Party that has previously executed and delivered a Security document hereby acknowledges and confirms that each such Security document secures the obligations of such Credit Party under and in connection with this Agreement and all other relevant Credit Documents.

	
Section 16.17
	
  Previous Consent - PSF

The Lender and the Borrower  hereby acknowledge and confirm that, subject to the provisions hereof, the Lender previously consented under Section 15.17 of Original Credit Agreement to VFI and the Canadian Borrower, as applicable, entering into and carrying out (subject to Section 13.2(24) hereof) their obligations under the Delta 3 Lease (as that term is defined in the Original Credit Agreement).  In furtherance of the foregoing, the Lender hereby confirms that (subject to what is stated below regarding FCC) it previously released under the Original Credit Agreement its applicable security interest, if any, in the land owned by VFI located at 4431 80th Street, Delta, British Columbia (the legal description of which is contained on Schedule A to the Delta 3 Lease), the greenhouses owned by the Canadian Borrower which are located on the Delta 3 Location (as that term is defined in the Original Credit Agreement), and the personal property owned by VFI and/or the Canadian Borrower which are located on the Delta 3 Location (except for and excluding for greater certainty that personal property which is used solely in respect of the tomato growing operations conducted by one or more of the Credit Parties at such location).  Notwithstanding the consent reiterated herein, all provisions of this Agreement and the Credit Documents continue to remain in full force and effect with respect to the Credit Parties as PSF is a wholly-owned subsidiary of the Credit Parties. 

	
Section 16.18
	
  Previous Consent.

The Lender and the Borrower hereby acknowledge and confirm that, subject to the provisions hereof, the Lender previously consented under Section 15.18 of the Original Credit Agreement (from and with effect as of February 27, 2019 in respect of clause (i) below and from and with effect as of May 20, 2019 in respect of clause (ii) below) to the US Borrower entering into and carrying out (subject to Section 13.2(24) hereof) its obligations under (i) the LLC Agreement and the joint venture transaction contemplated therein, and (ii) the AVGG LLC Agreement and the joint venture transaction contemplated therein. Notwithstanding the consent reiterated herein, all provisions of this Agreement and the Credit Documents continue to remain 

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in full force and effect with respect to the Credit Parties as each of Hemp JV Co and AVGG Hemp JV Co is an Affiliate of the Credit Parties. 

	
Section 16.19
	
  Amendment and Restatement of Original Agreement

This Agreement amends, restates, consolidates and supplements certain provisions of the Original Credit Agreement and shall not be considered a novation thereof.  Any provision hereof which differs from or is inconsistent with a provision of the Original Credit Agreement constitutes an amendment to the Original Credit Agreement with each such amendment being effective as and from the date hereof.  The provisions of the Original Credit Agreement as amended hereby have been consolidated and restated in this Agreement.  This Agreement will not discharge or constitute a novation of any debt, obligation, covenant or agreement contained in the Original Credit Agreement or in any collateral, agreements, certificates and other documents executed and delivered by or on behalf of the Credit Parties in respect thereof or in connection therewith, but same shall remain in full force and effect save to the extent same are amended by the provisions of this Agreement.  All representations and warranties set out in this Agreement are freshly made on the date hereof except to the extent made as of a specific date referred to herein, but nothing herein shall release or otherwise affect the Credit Parties’ liability in connection with the representations and warranties contained in the Original Credit Agreement.  Notwithstanding any other provision hereof, each Guarantor confirms that its existing Guarantee of the Obligations continues to guarantee, inter alia, all of such indebtedness, liabilities and obligations, including but not limited to that arising under this Agreement (the “Guaranteed Obligations”). Each Credit Party confirms that each Security document to which it is (or any of its predecessors was) a party remains in full force and effect, unamended, and in the case of the Borrower, continues to secure the Obligations, and in the case of each Guarantor, continues to secure its Guaranteed Obligations. Where applicable, section references to the Original Credit Agreement in the Security documents and Guarantees granted in connection with the Original Credit Agreement shall be deemed to be amended, as applicable, to refer to the corresponding section references of this Agreement.

 

[SIGNATURE PAGES FOLLOW]

The parties have executed this Agreement as of the day and year first written above.

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
VILLAGE FARMS CANADA LIMITED PARTNERSHIP by its general partner VILLAGE FARMS CANADA GP INC., as Borrower

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the limited partnership

(97)

S-98

 

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief financial Officer 

Facsimile: (604) 940-6312
	
 
	
VILLAGE FARMS, L.P., by its general partner VILLAGE FARMS OF DELAWARE, L.L.C., as Borrower

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the limited partnership

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
VILLAGE FARMS INTERNATIONAL, INC., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

 

	
 
	
 
	
 

	
 
	
 
	
I have authority to bind the corporation

(98)

S-99

 

					
	
 
	
 
	
 
	
 

	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
VILLAGE FARMS CANADA GP INC., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the corporation

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
VF OPERATIONS CANADA INC., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the corporation

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer 

Facsimile: (604) 940-6312
	
 
	
VF U.S. HOLDINGS INC., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the corporation

 

(99)

S-100

 

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
AGRO POWER DEVELOPMENT, INC., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and Chief Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the corporation

 

				
	
4700 – 80th Street

Delta, BC  V4K 3N3

 

Attention: Chief Financial Officer

Facsimile: (604) 940-6312
	
 
	
VILLAGE FARMS OF DELAWARE, L.L.C., as Guarantor

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Stephen C. Ruffini

	
 
	
 
	
Name:Stephen C. Ruffini

	
 
	
 
	
Title:Executive Vice President and  Financial Officer

	
 
	
 
	
 

	
 
	
I have authority to bind the corporation

 

(100)

S-101

 

 

				
	
100 King Street West, 11th Floor

Toronto, Ontario  M5X 1A1

 

Attention:Director, Asset Based
Lending

Facsimile:(416) 643-4249

 
	
 
	
BANK OF MONTREAL

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Sahil Khullar

	
 
	
 
	
Name: Sahil Khullar

	
 
	
 
	
Title: Director, Asset Based Lending

	
 
	
 
	
 

	
 
	
By:
	
/s/ Anthony Lam

	
 
	
 
	
Name: Anthony Lam

	
 
	
 
	
Title: Director, Asset Based Lending

	
 
	
 

 

				
	
111 West Monroe Street 5E

Chicago, Illinois  60603

 

Attention: Director Cross Border

Facsimile: (312) 293-4044
	
 
	
BANK OF MONTREAL (Chicago Branch)

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Laura Ullman

	
 
	
 
	
Name: Laura Ullman

	
 
	
 
	
Title: SVP/Director

	
 
	
 
	
 

	
 
	
By:
	
 

	
 
	
 
	
Name:

	
 
	
 
	
Title:

	
 
	
 

 

 

 

 

 

(101)Document

MULTI-TENANT
     OFFICE/INDUSTRIAL LEASE (NNN)
CYPRESS DISTRIBUTION CENTER
Cypress, California
LANDLORD:
KATELLA/HOLDER STREET, LLC,
a Delaware limited liability company
TENANT:
IRHYTHM TECHNOLOGIES, INC.,
a Delaware corporation

TABLE OF CONTENTS
									
		Article 1 - LEASE SUMMARY AND PROPERTY SPECIFIC PROVISIONS
	1
		Article 2 - LEASE
	9
		Article 3 - PREMISES	9
		Article 4 - TERM AND POSSESSION
	9
		Article 5 - RENT
	10
		Article 6 - SECURITY DEPOSIT
	10
		Article 7 - OPERATING EXPENSES/UTILITIES/SERVICES
	11
		Article 8 - MAINTENANCE AND REPAIR
	11
		Article 9 - USE
	12
		Article 10 - HAZARDOUS MATERIALS
	13
		Article 11 - PARKING
	13
		Article 12 - TENANT SIGNS
	14
		Article 13 - ALTERATIONS
	14
		Article 14 - TENANT’S INSURANCE
	15
		Article 15 - LANDLORD’S INSURANCE
	16
		Article 16 - INDEMNIFICATION AND EXCULPATION
	17
		Article 17 - CASUALTY DAMAGE/DESTRUCTION
	18
		Article 18 - CONDEMNATION
	19
		Article 19 - WAIVER OF CLAIMS; WAIVER OF SUBROGATION
	19
		Article 20 - ASSIGNMENT AND SUBLETTING
	20
		Article 21 - SURRENDER AND HOLDING OVER    
	21
		Article 22 - DEFAULTS
	22
		Article 23 - REMEDIES OF LANDLORD
	22
		Article 24 - ENTRY BY LANDLORD
	23
		Article 25 - LIMITATION ON LANDLORD’S LIABILITY
	24
		Article 26 - SUBORDINATION
	24
		Article 27 - ESTOPPEL CERTIFICATE
	24
		Article 28 - RELOCATION OF PREMISES	24
		Article 29 - MORTGAGEE PROTECTION	24
		Article 30 - QUIET ENJOYMENT
	25
		Article 31 - MISCELLANEOUS PROVISIONS
	25

Exhibits

Exhibit A     Premises Floor Plan 
Exhibit B        Site Plan 
Exhibit C        Work Letter
Exhibit D        Notice of Lease Term Dates 
Exhibit E        Rules and Regulations 
Exhibit F        Estoppel Certificate
Exhibit G        Environmental Questionnaire and Disclosure Statement

Riders

Rider No. 1     Extension Option 
Rider No. 2    Fair Market Rental Rate
Rider No. 3    Expansion Option
Rider No. 4    Termination Option 
Rider No. 5    Options in General

18th
This MULTI-TENANT OFFICE/INDUSTRIAL LEASE (NNN) (“Lease”), entered into as of this __ day of March, 2021 (the “Effective Date”) for reference purposes, is by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company, hereinafter referred to as “Landlord”, and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation, hereinafter referred to as “Tenant”.
ARTICLE 1 - LEASE SUMMARY AND PROPERTY SPECIFIC PROVISIONS
1.1    Landlord’s Address:    KATELLA/HOLDER STREET, LLC
c/o LBA Realty LLC
3347 Michelson Drive, Suite 200
Irvine, California 92612
Attn: Asset Manager - Cypress Distribution Center
Telephone: (949) 833-0400
E-mail: leasingnotices@lbarealty.com
With a copy to:    Katella/Holder Street, LLC
c/o LBA Realty
3347 Michelson Drive, Suite 210 Irvine, California 92612
Attn: Regional Operations Manager - Cypress Distribution Center
Telephone: (949) 833-0400
E-mail: leasingnotices@lbarealty.com
For payment of Rent:    KATELLA/HOLDER STREET, LLC
P.O. Box 741151
Los Angeles, California 90074-1151
1.1    Tenant’s Address:    Before the Commencement Date:
IRHYTHM TECHNOLOGIES, INC. 11085 Knott Ave, Suite B Cypress, CA 90630
Attn:    Head of Workplace & Real Estate
After the Commencement Date:
The Premises
With a copy to:    IRHYTHM TECHNOLOGIES, INC.
699 8th St # 600
San Francisco, CA 94103
Attn: Head of Workplace & Real Estate
Tenant Billing Address:    IRHYTHM TECHNOLOGIES, INC.
699 8th St # 600 San Francisco, CA 94103 Attn: Finance
1.3.Building; Property: The building located at 6550 Katella Avenue, Cypress, California 90630 (the “Building”). The Building, together with all other buildings, improvements and facilities, now or subsequently located upon the land (the “Site”), including, without limitation, the two (2) buildings currently located within the Property, as shown on the Site Plan attached hereto as Exhibit B (as such area may be expanded or reduced from time to time) is referred to herein as the “Property”. The Property is commonly known as the Cypress Distribution Center. Landlord and Tenant stipulate and agree that the Property contains 546,219 rentable square feet in the aggregate and the Building contains 342,086 rentable square feet, for all purposes of this Lease.
1.4.Premises: Suite 200 of the Building, consisting of 34,573 rentable square feet of office space (the “Office Premises”) and 34,360 rentable square feet of warehouse space (the “Warehouse Premises”), as outlined on the Premises Floor Plan attached hereto as Exhibit A. The estimated rentable square footage of the Premises is 68,933, subject to adjustment pursuant to Section 3.2 of the Standard Lease Provisions. Tenant’s Percentage of the Building: 19.75%.
1.5.City: The City of Cypress, County of Orange, State of California.
1.6.Commencement Date: The later of: (i) six (6) months following the Turnover Date, (ii) August 1, 2021. Estimated Commencement Date: August 1, 2021.
1.7.Term: One hundred twenty-six (126) full calendar months, plus any partial month at the beginning of the Term, commencing on the Commencement Date and ending on the last day of the one hundred twenty-sixth (126th) full calendar month following the Commencement Date (“Expiration Date”).
1.8.Monthly Base Rent:
Office Premises:

Months or Period  
01-12*
13-24
01-36
01-48
01-60
01-72
01-84
01-96
01-108
01-120
01-126

Monthly Base Rent
$57,045.45**
$58,756.81
$60,519.52
$62,335.10
$64,205.16
$66,131.31
$68,115.25
$70,158.71
$72,263.47
$74,431.37
$76,664.31

Warehouse Premises:
Months or Period  
01-12*
13-24
01-36
01-48
01-60
01-72
01-84
01-96
01-108
01-120
01-126

Monthly Base Rent
$30,924.00**
$31,851.72
$32,807.27
$33,791.49
$34,805.23
$35,849.39
$36,924.87
$38,032.62
$39,173.60
$40,348.81
$41,559.27

*Including any partial month at the beginning of the Term.
**Notwithstanding the foregoing, provided Tenant is not in default under this Lease beyond any applicable notice and cure period, Landlord hereby agrees to abate Tenant’s obligation to pay Monthly Base Rent during the second (2nd) through the seventh (7th) full calendar months of the initial Term (such total amount of abated Monthly Base Rent being hereinafter referred to as the “Abated Amount”). During such abatement period, Tenant will still be responsible for the payment of all other monetary obligations under the Lease. Tenant acknowledges that any default by Tenant under this Lease will cause Landlord to incur costs not contemplated hereunder, the exact amount of such costs being extremely difficult and impracticable to ascertain, therefore, should Landlord terminate the Lease as after a Tenant default after having been given notice and opportunity to cure, then the total unamortized sum of such Abated Amount (amortized on a straight line basis over the initial Term of this Lease) so conditionally excused shall become immediately due and payable by Tenant to Landlord; provided, however, Tenant acknowledges and agrees that nothing in this subparagraph is intended to limit any other remedies available to Landlord at law or in equity under applicable law (including, without limitation, the remedies under Civil Code Section 1951.2 and/or 1951.4 and any successor statutes or similar laws), in the event Tenant defaults under this Lease beyond any applicable notice and cure period. Upon reasonable notice to Tenant at any time prior to application of the entire Abated Amount, Landlord shall have the right to purchase from Tenant any and all then remaining Abated Amount as it applies to one or more of the remaining abatement months by paying to Tenant an amount equal to the unused balance of the Abated Amount that Landlord elects to purchase back from Tenant (the “Abated Amount Purchase Price”). Upon Landlord’s payment to Tenant of the Abated Amount Purchase Price with respect to the applicable remaining abatement months, Tenant shall thereupon be required to pay Monthly Base Rent during such months in an amount equal to the Abated Amount that Tenant would have been entitled to receive but for Landlord’s payment to Tenant of the Abated Amount Purchase Price.
Accordingly, Tenant shall deliver the following amounts to Landlord upon its execution of this Lease (pursuant to Sections 4.2 and 5.1 of the Standard Provisions):
									
	(a)	Monthly Base Rent:	$87,969.45 for Month 1.
	(b)	Tenant’s Percentage	
		of Operating Expenses (est.):	$16,514.49 for Month 1.
	(c)	Security Deposit:	$354,670.74 (See Section 1.9 below)
	Total due upon execution of this Lease:	$459,154.68.

1.9.Security Deposit: $354,670.74, subject to reduction in accordance with the terms and conditions of Article 6.
1.10.Permitted Use: Warehousing, manufacturing, research and development, storage and general office use, subject to the provisions set forth in this Lease and as permitted by Law.
1.11.Parking: One hundred sixty-nine (169) unreserved parking spaces, subject to the terms of Article 11 of the Standard Lease Provisions.

1.12.Brokers: Cushman & Wakefield of California, Inc., representing Landlord and Tenant.
1.13.Interest Rate: The lesser of: (a) Eight percent (8%) or (b) the maximum rate permitted by law in the State where the Property is located.
1.14.Insurance Amounts:
a.Commercial General Liability Insurance: General liability of not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) in the aggregate.
b.Commercial Automobile Liability Insurance: Limit of liability of not less than One Million Dollars ($1,000,000.00) per accident.
c.Worker’s Compensation and Employers Liability Insurance: With limits as mandated pursuant to the laws in the State in which the Property is located, or One Million Dollars ($1,000,000.00) per person, disease and accident, whichever is greater.
d.Umbrella Liability Insurance: Limits of not less than Three Million Dollars ($3,000,000.00) per occurrence.
e.If Tenant’s business includes professional services, Professional Liability (also known as errors and omissions insurance): Not less than the minimum limits required by law for Tenant’s profession, and in any event, not less than One Million Dollars ($1,000,000.00) per occurrence.
f.Loss of Income, Extra Expense and Business Interruption Insurance: In the amount of at least 12 months of Monthly Base Rent.
1.3.Tenant Improvements: Landlord, at Landlord’s sole cost and expense, promptly following the mutual execution of this Lease, using Building-standard methods, materials, finishes and specifications, shall complete certain sewer system work as further described in Schedule 2 attached to Exhibit C attached hereto (the “Landlord Improvements”). The Landlord Improvements shall be constructed in accordance with all applicable Laws, in a good and workmanlike manner, free of defects and using new Building standard materials and equipment of good quality. Tenant shall have the right to submit a written “punch list” to Landlord, setting forth any defective item of construction, and Landlord shall promptly cause such items to be corrected.
Landlord hereby grants to Tenant an allowance of: (i) up to $75.00 per rentable square foot of the Office Premises (i.e., up to $2,592,975.00, based on the Office Premises containing approximately 34,573 rentable square feet), plus (ii) up to $2.50 per rentable square foot of the Warehouse Premises (i.e., up to $85,900.00, based on the Warehouse Premises containing approximately 34,360 rentable square feet), plus (iii) $675,000.00 ($3,353,875.00 in the aggregate) (collectively, the “Allowance”), to be applied as provided in the Work Letter.
1.4.Tenant’s Percentage: 12.62%, which is the ratio that the rentable square footage of the Premises bears to the rentable square footage of the Property.
1.5.Common Areas; Definitions; Tenant’s Rights. During the Term, Tenant shall have the non-exclusive right to use, in common with other tenants in the Property, and subject to the Rules and Regulations referred to in Article 9 of the Standard Lease Provisions, those portions of the Property (the “Property Common Areas”) not leased or designated for lease to tenants that are provided for use in common by Landlord, Tenant and any other tenants of the Property (or by the sublessees, agents, employees, customers invitees, guests or licensees of any such party), whether or not those areas are open to the general public. The Property Common Areas shall include, without limitation, all other buildings on the Property exclusive of areas maintained and repaired by tenants, and all parking areas (subject to Article 11 of the Standard Lease Provisions), loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas appurtenant to the Building, fixtures, systems, decor, facilities and landscaping contained, maintained or used in connection with those areas, and shall be deemed to include any city sidewalks adjacent to the Property and located on the Site, any pedestrian walkway system, park or other facilities located on the Site and open to the general public. The common areas of the Building shall be referred to herein as the “Building Common Areas” and shall include, without limitation, the following areas of the Building: the common entrances, lobbies, common restrooms, accessways, loading docks, ramps, drives and platforms and any passageways and serviceways thereto to the extent not exclusively serving another tenant or contained within another tenant’s premises, and the common pipes, conduits, wires and appurtenant equipment serving the Premises. The Building Common Areas and the Property Common Areas shall be referred to herein collectively as the “Common Areas.” If Tenant is leasing the entire Building, then all elements of the Building and the Building Common Areas shall constitute part of the Premises and all references to Common Areas contained in this Lease shall mean and refer to those elements of the Property outside of the Premises. Notwithstanding anything to the contrary herein, Landlord acknowledges that the Tenant Improvements identified in the plans issued for review by Hendy on January 13, 2021 (the “Hendy Plans”) will include certain modifications to the Building and parking areas required to accommodate both grade and dock high loading including, without limitation, the construction of a truck well serving the Premises (the “Truck Well”). In furtherance of the foregoing, the Common Areas shall exclude, and Tenant shall have the exclusive right to use and modify, the Truck Well identified in the Hendy Plans.
1.6.Operating Expenses.
a.Intentionally omitted.
b.Operating Expenses. In addition to the Monthly Base Rent, Tenant shall pay to Landlord Tenant’s Percentage of Operating Expenses, in the manner and at the times set forth in the following provisions of this Section 1.18. “Operating Expenses” shall consist of all costs and expenses of operation, maintenance and repair of the Common Areas of the Property as determined by standard accounting practices and calculated assuming the Property is at least ninety-five percent (95%) occupied. Operating Expenses include the following costs by way of illustration but not limitation: (i) any and all assessments imposed with respect to the Property pursuant to any covenants, conditions and restrictions affecting the Property; (ii) costs, levies or assessments resulting from statutes or regulations promulgated by any government authority in connection with the use or occupancy of the Property; (iii) all costs of utilities serving the Common Areas and any costs of utilities for the Premises which are not separately metered, (iv) all Taxes and Insurance Costs as defined in the Standard Lease Provisions, (v) waste disposal; (vi) 

security, if any; (vii) costs incurred in the management of the Property, including, without limitation: (1) supplies, materials, equipment and tools, (2) wages, salaries, benefits, pension payments, fringe benefits, (and payroll taxes, insurance and similar governmental charges related thereto) of employees used in the operation and maintenance of the Property, (3) the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Property, (4) accounting fees, legal fees and real estate consultant’s fees, and (5) a management/administrative fee not to exceed four percent (4%) of gross rents for the Property; (viii) repair and maintenance of all portions of the Building and all buildings on the Property other than such portions as are maintained by Tenant or any other tenants, including the elevators (if any), restrooms (if any), structural and non-structural portions of the Building and all other buildings on the Property, and the plumbing, heating, ventilating, air-conditioning and electrical systems installed or furnished by Landlord and not maintained by Tenant pursuant to Section 8.2 of the Standard Provisions; (ix) maintenance, costs and upkeep of all parking and Common Areas; (x) amortization on a straight-line basis over the useful life together with interest at the rate of eight percent (8%) per annum on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) reasonably intended to produce a reduction in operating charges or energy consumption; or (2) required after the date of this Lease under any Law that was not applicable to the Building at the time it was originally constructed; or (3) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Property at the same quality levels as prior to the repair or replacement; (xi) costs and expenses of gardening and landscaping; (xii) maintenance of signs (other than signs of tenants of the Property); (xiii) personal property taxes levied on or attributable to personal property used in connection with the Property; and (xiv) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses among different tenants and/or different buildings and/or different premises of the Property based upon differing levels of use, demand, risk or other distinctions among such parties, premises or Buildings (the “Cost Pools”). Such Cost Pools may include, for example, all office space tenants or industrial/R&D space tenants in the Property and may be modified to take into account the addition of any additional buildings within the Property. Accordingly, in the event of such allocations into Cost Pools, Tenant’s Percentage shall be appropriately adjusted to reflect such allocation. In addition, if Landlord does not furnish a particular service or work (the cost of which, if furnished by Landlord would be included in Operating Expenses) to a tenant (other than Tenant) that has undertaken to perform such service or work in lieu of receiving it from Landlord, then Operating Expenses shall be considered to be increased by an amount equal to the additional Operating Expenses that Landlord would reasonably have incurred had Landlord furnished such service or work to that tenant.
c.Exclusions from Operating Expenses. Notwithstanding anything to the contrary contained elsewhere in this Lease, the following items shall be excluded from Operating Expenses: (i) Costs of decorating, redecorating, or special cleaning or other services provided to certain tenants and not provided on a regular basis to all tenants of the Property; (ii) Any charge for depreciation of the Property or equipment and any interest or other financing charge; (iii) All costs relating to activities for the marketing, solicitation, negotiation and execution of leases of space in the Property, including without limitation, costs of tenant improvements; (iv) All costs for which Tenant or any other tenant in the Property is being charged other than pursuant to the operating expense clauses of leases for space in the Property; (v) The cost of correcting defects in the construction of the Building or any other building in the Property or in the building equipment, except that conditions (not occasioned by construction defects) resulting from ordinary wear and tear will not be deemed defects for the purpose of this category; (vi) the cost of repair made by Landlord because of the total or partial destruction of the Property or the condemnation of a portion of the Building or any other building in the Property; (vii) The cost of any items for which Landlord is reimbursed by insurance or otherwise compensated by parties other than tenants of the Building or any other building in the Property pursuant to clauses similar to this paragraph; (viii) Any operating expense representing an amount paid to a related corporation, entity, or person which is in excess of the amount which would be paid in the absence of such relationship; (ix) The cost of any work or service performed for or facilities furnished to any tenant of the Building or any other building in the Property to a greater extent or in a manner more favorable to such tenant than that performed for or furnished to Tenant; (x) The cost of alterations of space in the Building or any other building in the Property which is leased to other tenants; (xi) Ground rent or similar payments to a ground lessor; (xii) Legal fees and related expenses incurred by Landlord (together with any damages awarded against Landlord) due to the gross negligence or willful misconduct of Landlord; (xiii) Costs arising from the presence, removal, abatement, or remediation of any Hazardous Materials within, upon or beneath the Property except to the extent caused by the release or emissions of such Hazardous Materials by Tenant or any Tenant’s Parties; (xiv) Salaries and compensation of ownership and management personnel to the extent that such persons provide services to properties other than the Property and wages and/or benefits attributable to personnel above the level of the immediate supervisor of the Property manager; (xv) Costs of selling or financing the Property, the Building or any portions thereof; (xvi) capital costs other than as expressly provided in Section 1.18(b)(x); (xvii) costs, fines, penalties, or interest incurred due to a violation of Laws by Landlord; and (xviii) expense reserves.
d.Estimate Statement and Payment of Tenant’s Percentage of Operating Expenses. By
the first day of April (or as soon as practicable thereafter) of each calendar year during the Term, Landlord shall endeavor to deliver to Tenant a statement (“Estimate Statement”) estimating the Tenant’s Percentage of Operating Expenses for the current calendar year. If at any time during the Term, but not more often than quarterly, Landlord reasonably determines that the estimated amount of Tenant’s Percentage of Operating Expenses payable by Tenant for the current calendar year will be greater or less than the amount set forth in the then current Estimate Statement, Landlord may issue a revised Estimate Statement and Tenant agrees to pay Landlord, within thirty (30) days after receipt of the revised Estimate Statement, the difference between the amount owed by Tenant under such revised Estimate Statement and the amount owed by Tenant under the original Estimate Statement for the portion of the then current calendar year which has expired. Thereafter Tenant agrees to pay Tenant’s Percentage of Operating Expenses based on such revised Estimate Statement until Tenant receives the next calendar year’s Estimate Statement or a new revised Estimate Statement for the current calendar year. Tenant’s Percentage of Operating Expenses shown on the Estimate Statement (or revised Estimate Statement, as applicable) shall be divided into twelve (12) equal monthly installments, and Tenant shall pay to Landlord, concurrently with the regular monthly Rent payment next due following the receipt of the Estimate Statement (or revised Estimate Statement, as applicable), an amount equal to one (1) monthly installment of such Tenant’s Percentage of Operating Expenses multiplied by the number of months from January in the calendar year in which such statement is submitted to the month of such payment, both months inclusive (less any amounts previously paid by Tenant with respect to any previously delivered Estimate Statement or revised Estimate Statement for such calendar year). Subsequent installments shall be paid concurrently with the regular monthly Rent payments for the balance of the calendar year and shall continue until the next calendar year’s Estimate Statement (or current calendar year’s revised Estimate Statement) is received.

e.Actual Statement. By the first day of June (or as soon as practicable thereafter) of each subsequent calendar year during the Term, Landlord shall endeavor to deliver to Tenant a statement (“Actual Statement”) which states the Tenant’s Percentage of actual Operating Expenses payable by Tenant for the immediately preceding calendar year. If the Actual Statement reveals that the Tenant’s Percentage of actual Operating Expenses were more than the Tenant’s Percentage of estimated Operating Expenses paid by Tenant with respect to the preceding calendar year, Tenant agrees to pay Landlord the difference in a lump sum within thirty (30) days after receipt of the Actual Statement. Such obligation will be a continuing one which will survive 

the expiration or earlier termination of this Lease. If the Actual Statement reveals that the Tenant’s Percentage of actual Operating Expenses were less than the Operating Expenses paid by Tenant with respect to the preceding calendar year, Landlord will credit any overpayment toward the next monthly installment(s) of Rent due from Tenant or, if no such installments remain (i.e., following the expiration or earlier termination of the Lease), refund such amounts to Tenant within thirty (30) days. Prior to the expiration or sooner termination of the Term and Landlord’s acceptance of Tenant’s surrender of the Premises, Landlord will have the right to estimate the Tenant’s Percentage of actual Operating Expenses for the then current calendar year and to collect from Tenant prior to Tenant’s surrender of the Premises, any excess of such Tenant’s Percentage of actual Operating Expenses over the Tenant’s Percentage of estimated Operating Expenses paid by Tenant in such calendar year, and Landlord shall reconcile the same with the actual Operating Expenses incurred by Landlord and charge or refund Tenant for any underpayment or overpayment in accordance with this Section; provided, however, in the event of an overpayment by Tenant, Landlord shall reimburse Tenant for such overpayment within thirty (30) days following Landlord’s delivery of the Actual Statement.
f.No Release. Any delay or failure by Landlord in delivering any Estimate Statement or Actual Statement pursuant to this Section 1.18 shall not constitute a waiver of its right to receive Tenant’s payment of Tenant’s Percentage of Operating Expenses, nor shall it relieve Tenant of its obligations to pay Operating Expenses pursuant to this Section 1.18, except that Tenant shall not be obligated to make any payments based on such Estimate or Actual Statement until thirty (30) days after receipt of such statement.
g.Review. Within one hundred twenty (120) days after receiving Landlord’s Actual Statement, Tenant may, upon advance written notice to Landlord and during reasonable business hours, cause a review of Landlord’s books and records with respect to the preceding calendar year only to determine the accuracy of Landlord’s Actual Statement. Landlord shall make all pertinent records available for review that are reasonably necessary for Tenant to conduct its review. If any records are maintained at a location other than the office of the Building, Tenant may either review the records at such other location or pay for the reasonable cost of copying and shipping the records. If Tenant retains an agent, at Tenant’s sole cost and expense, to review Landlord’s records, the agent shall be an independent accountant of national standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to a confidentiality agreement. Within sixty (60) days after the records are made available to Tenant, Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any objection to the Actual Statement of Operating Expenses for that year. If Tenant provides Landlord with a timely Objection Notice, Landlord and Tenant shall work together in good faith to resolve any issues raised in Tenant’s Objection Notice. If Tenant fails to provide Landlord with a timely Objection Notice, Landlord’s Actual Statement shall be deemed final and binding, and Tenant shall have no further right to review or object to such statement. If Landlord and Tenant determine that Operating Expenses for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the next installment of Rent in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant determine that Operating Expenses for the calendar year are greater than reported, Tenant shall pay Landlord the amount of any underpayment within thirty (30) days after such determination. The records obtained by Tenant shall be treated as confidential. In no event shall Tenant be permitted to review Landlord’s records or to dispute any statement of Operating Expenses unless Tenant has paid and continues to pay all Rent when due.
1.3.Utilities and Services.
a. Utilities and Services. As used in this Lease, “Premises Utilities Costs” shall mean all actual charges for utilities for the Premises of any kind, including but not limited to water, sewer and electricity, telecommunications and cable service, and the costs of heating, ventilating and air conditioning and other utilities as well as related fees, assessments and surcharges. Tenant shall contract directly for all utilities services for the Premises and shall pay all Premises Utilities Costs directly to the various utility service providers providing such utility services to the Premises. Should Landlord elect to supply any or all of such utilities, Tenant agrees to purchase and pay for the same as Additional Rent. Tenant shall reimburse Landlord within thirty (30) days after billing for fixture charges and/or water tariffs, if applicable, which are charged to Landlord by local utility companies. Landlord will notify Tenant of this charge as soon as it becomes known. This charge will increase or decrease with current charges being levied against Landlord, the Premises or the Building by the local utility company, and will be due as Additional Rent. In no event shall Landlord be liable for any interruption or failure in the supply of any such utility or other services to Tenant. In no event shall any Rent owed Landlord under this Lease be abated by reason of the failure to furnish, delay in furnishing, unavailability or diminution in quality or quantity of any such utility or other services or interference with Tenant’s business operations as a result of any such occurrence; nor shall any such occurrence constitute an actual or constructive eviction of Tenant or a breach of an implied warranty by Landlord.
b.Maintenance/Janitorial/Service Contracts. Tenant shall, at its sole cost and expense, maintain and repair, and enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor to service all hot water, heating and air conditioning systems and equipment (“HVAC”) within the Premises, or which serve the Premises exclusively, including, without limitation, any rooftop package HVAC units, distribution lines and internal venting systems. Such repair and maintenance shall include any and all services required to conform and maintain the HVAC units in compliance with current ASHRAE Standards. As used herein, "ASHRAE Standards" shall mean those standards established by the American Society of Heating, Refrigerating and Air Conditioning Engineers, Inc. (“ASHRAE”) and Air Conditioning Contractors of America (“ACCA”) Standard Practice for Inspection and Maintenance of Commercial Building HVAC Systems, ANSI/ASHRAE/ACCA Standard 180-2008, as the same may be amended from time to time. Tenant shall have complete control over the operation of the HVAC units within the Premises, or which exclusively serve the Premises, during the Term. All cleaning and janitorial services, including regular removal of trash and debris, for the Premises shall be performed and obtained, at Tenant’s sole cost and expense, exclusively by or through Tenant or Tenant’s janitorial contractors. The maintenance contractor and janitorial contractor for same must be approved in writing by Landlord in advance, such approval not to be unreasonably withheld, conditioned or delayed. All maintenance/service contracts shall include all services recommended by the equipment manufacturer within the operation/maintenance manual and all services required to conform and maintain the HVAC in compliance with current ASHRAE Standards and shall become effective (and a copy thereof delivered to Landlord) within thirty (30) days following the Commencement Date. If Tenant fails to procure and maintain any or all of such service contacts, then Landlord reserves the right, upon thirty (30) days’ prior written notice to Tenant and Tenant’s failure to cure prior to the expiration of such notice period, to procure and maintain any or all of such service contracts, and if Landlord so elects, Tenant shall reimburse Landlord, as Additional Rent, within thirty (30) days following written demand, for the cost therefor. 
c.Tenant’s Obligations. Tenant shall cooperate fully at all times with Landlord and abide by current ASHRAE Standards all reasonable and non-discriminatory regulations and requirements which Landlord may prescribe for the proper functioning and protection of the Building’s services and systems. Tenant shall not connect any conduit, pipe, apparatus or other device to the Building’s water, waste or other supply lines or systems for any purpose. Neither Tenant nor its employees, agents, contractors, licensees or invitees shall at any time enter, adjust, tamper with, touch or otherwise in any manner affect the 

mechanical installations or facilities of the Building. Tenant agrees to reasonably cooperate with Landlord to the extent required by Landlord to comply with California Public Resources Code Section 25402.10 including, without limitation, providing or consenting to any utility company releasing Tenant’s energy consumption information for the Premises to Landlord. Tenant hereby consents to the release of Tenant’s energy consumption information for the Premises to Landlord, and if requested, Tenant shall promptly sign any documentation requested by the utility company to evidence such consent.
1.20 Additional Hazardous Materials Requirements. In addition to Tenant’s obligations under Article 10 of the Standard Provisions, Tenant shall comply with the following provisions with respect to Hazardous Materials (as that term is defined in Article 10):
a.    Environmental Questionnaire; Disclosure. Prior to the execution of this Lease, Tenant
shall complete, execute and deliver to Landlord an Environmental Questionnaire and Disclosure Statement (the “Environmental Questionnaire”) in the form of Exhibit G, and Tenant shall certify to Landlord all information contained in the Environmental Questionnaire as true and correct to the best of Tenant’s knowledge and belief. The completed Environmental Questionnaire shall be deemed incorporated into this Lease for all purposes, and Landlord shall be entitled to rely fully on the information contained therein. Within ten (10) business days following Landlord’s demand therefor (each such date of demand is hereinafter referred to as a “Disclosure Date”), until and including the last Disclosure Date occurring prior to the expiration or sooner termination of this Lease, Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous Materials, or any combination thereof, that were stored, generated, used or disposed of on, under or about the Premises for the twelve (12) month period prior to each Disclosure Date, and that Tenant intends to store, generate, use or dispose of on, under or about the Premises during the next twelve (12) month period. At Landlord’s request, Tenant’s disclosure obligations under this Section 1.20 shall include a requirement that Tenant update, execute and deliver to Landlord the Environmental Questionnaire, as the same may be reasonably modified by Landlord from time to time; provided, however, Tenant shall not be required to update the Environmental Questionnaire more than once per year unless an environmental event of default has occurred or Tenant has materially changed its business. In addition to the foregoing, within ten (10) business days of Landlord’s request, Tenant shall promptly notify Landlord of, and shall promptly provide Landlord with true, correct, complete and legible copies of, all of the following environmental items relating to the Premises: reports filed pursuant to any self-reporting requirements; reports filed pursuant to any Environmental Laws or this Lease; all permit applications, permits, monitoring reports, workplace exposure and community exposure warnings or notices, and all other reports, disclosures, plans or documents (even those that may be characterized as confidential) relating to water discharges, air pollution, waste generation or disposal, underground storage tanks or Hazardous Materials; all orders, reports, notices, listings and correspondence (even those that may be considered confidential) of or concerning the release, investigation, compliance, clean up, remedial and corrective actions, and abatement of Hazardous Materials
whether or not required by Environmental Laws; and all complaints, pleadings and other legal documents filed against Tenant related to Tenant’s use, handling, storage or disposal of Hazardous Materials.
b.Inspection; Compliance. Subject to the provisions of Article 24, below, Landlord and Landlord Parties (as that term is defined in Article 10) shall have the right, but not the obligation, to inspect, investigate, sample and/or monitor the Premises, including any air, soil, water, groundwater or other sampling, and any other testing, digging, drilling or analyses, at any time to determine whether Tenant is complying with the terms of this Section 1.20 and Article 10, and in connection therewith, Tenant shall provide Landlord with access to all relevant facilities, records and personnel. If Tenant is not in compliance with any of the provisions of this Section
1.20.and Article 10, or in the event of a release of any Hazardous Materials on, under, from or about the Premises by Tenant or any Tenant’s Parties in violation of applicable Environmental Laws, Landlord and Landlord Parties shall have the right, but not the obligation, without limitation on any of Landlord’s other rights and remedies under this Lease, to immediately enter upon the Premises and to discharge Tenant’s obligations under this Section 1.20 and Article 10 at Tenant’s expense, including without limitation the taking of emergency or long term remedial action. Landlord and Landlord Parties shall endeavor to minimize interference with Tenant’s business but shall not be liable for any such interference. In addition, Landlord, at Tenant’s sole cost and expense, shall have the right, but not the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims or causes of action arising out of the storage, generation, use or disposal by Tenant or Tenant’s Parties of Hazardous Materials on, under, from or about the Premises in violation of applicable Environmental Laws. All sums reasonably disbursed, deposited or incurred by Landlord in connection herewith, including, but not limited to, all costs, expenses and actual attorneys’ fees, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Interest Rate from the date of such demand until paid by Tenant. Landlord agrees that if any testing proves that the Tenant or Tenant’s Parties have not violated applicable Environmental Laws or this Lease in connection with the presence of said Hazardous Materials, Tenant shall not be liable for any costs or expenses in connection with such inspection, testing and monitoring.
c.Tenant Obligations. If the presence of any Hazardous Materials on, under or about the Premises caused by Tenant or Tenant’s Parties results in (i) injury to any person, (ii) injury to or contamination of the Premises, or (iii) injury to or contamination of any real or personal property wherever situated, Tenant, at its sole cost and expense, shall promptly take all actions necessary to return the Premises to the condition required by applicable Environmental Laws. Without limiting any other rights or remedies of Landlord under this Lease, Tenant shall pay the cost of any cleanup work performed on, under or about the Premises as required by this Lease or any Environmental Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous Materials caused by Tenant or Tenant’s Parties. If Landlord has reason to believe that Tenant or Tenant’s Parties may have caused the release of any Hazardous Materials on, under, from or about the Premises in violation of applicable Environmental Laws, then Landlord may require Tenant, at Tenant’s sole cost and expense, to conduct monitoring activities on or about the Premises satisfactory to Landlord, in its sole and absolute judgment, concerning such release of Hazardous Materials on, under, from or about the Premises. Notwithstanding anything to the contrary contained in the foregoing, Tenant shall not, without Landlord’s prior written consent, take any remedial action in response to the presence of any Hazardous Materials on, under or about the Premises, or enter into any settlement agreement, consent decree or other compromise with any governmental agency with respect to any Hazardous Materials claims; provided, however, Landlord’s prior written consent shall not be necessary in the event that the presence of Hazardous Materials on, under or about the Premises (i) poses an immediate threat to the health, safety or welfare of any individual, or (ii) is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Landlord’s consent before taking such action. Tenant’s failure to timely comply with this Section 1.20 shall constitute an event of default under this Lease.
d. Tenant’s Responsibility at Conclusion of Lease. Promptly upon the expiration or sooner termination of this Lease, Tenant shall represent to Landlord in writing that (i) Tenant has made a diligent effort to determine whether any Hazardous Materials are on, under or about the Premises in violation of applicable Environmental Laws, as a result of any acts or omissions of Tenant or Tenant’s Parties and (ii) no such Hazardous Materials exist on, under or about the Premises, other than as specifically identified to Landlord by Tenant in writing. If Tenant discloses the existence of Hazardous Materials on, under or 

about the Premises or if Landlord at any time discovers that Tenant or Tenant’s Parties caused the release of any Hazardous Materials on, under, from or about the Premises in violation of applicable Environmental Laws, Tenant shall, at Landlord’s request, immediately prepare and submit to Landlord within thirty (30) days after such request a comprehensive plan, subject to Landlord’s approval, specifying the actions to be taken by Tenant to return the Premises to the condition required by applicable Environmental Laws. Upon Landlord’s approval of such clean-up plan, Tenant shall, at Tenant’s sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to clean up such Hazardous Materials in accordance with all Environmental Laws and as required by such plan and this Lease. Notwithstanding anything to the contrary herein, under no circumstance shall Tenant be liable for any losses, costs, claims, liabilities and damages (including attorneys’ and consultants’ fees) arising out of any Hazardous Material present at any time on or about the Property, or the soil, air, improvements, groundwater or surface water thereof, except to the extent due to the release or emission of such Hazardous Material by Tenant or Tenant’s Parties in violation of applicable Environmental Laws.
1.21 Landlord’s Additional Repair Obligations. Landlord, at Landlord's cost (subject to inclusion in Operating Expenses as provided in Section 1.18 of the Summary), shall repair, maintain and replace as necessary, the foundation and structural elements of the Building (including structural load bearing walls and roof structure), and utility meters, electrical lines, pipes and conduits serving the Building and the Premises; provided, however, to the extent such maintenance, repairs or replacements are required as a result of any act, neglect, fault or omission of Tenant or any of Tenant's Parties, Tenant shall pay to Landlord, as Additional Rent, the costs of such maintenance, repairs and replacements. In addition, and subject to Sections 17.1 and 17.2 of the Standard Lease Provisions, Landlord shall, as part of the Operating Expenses, repair, maintain and replace, as necessary (a) the basic heating, ventilating, air conditioning ("HVAC"), sprinkler and electrical systems within the Building core and standard conduits, connections and distribution systems thereof within the Premises (but not any above standard improvements installed in the Premises such as, for example, but not by way of limitation, custom lighting, special or supplementary HVAC or plumbing systems or distribution extensions, special or supplemental electrical panels or distribution systems, or kitchen or restroom facilities and appliances to the extent such facilities and appliances are intended for the exclusive use of Tenant), and (b) the Common Areas, if any; provided, however, to the extent such maintenance, repairs or replacements are required as a result of any act, neglect, fault or omission of Tenant or any of Tenant's Parties, Tenant shall pay to Landlord, as Additional Rent within ten (10) days after demand, the costs of such maintenance, repairs and replacements. Landlord shall not be liable to Tenant for failure to perform any such maintenance, repairs or replacements, unless Landlord shall fail to make such maintenance, repairs or replacements and such failure shall continue for an unreasonable time following written notice from Tenant to Landlord of the need therefor. Without limiting the foregoing, Tenant waives the right to make repairs at Landlord's expense under any applicable Laws now or hereafter in effect.
1.22 Tenant Termination Right. If Tenant is unable to obtain approval from the City of Cypress permitting Tenant to add a loading dock/truck well on or before April 25, 2021 (the “Outside Termination Date”), then Tenant shall have the one-time right to terminate the Lease by delivering written notice of such termination (the “Termination Notice”) to Landlord on or before April 30, 2021 (the “Termination Notice Delivery Date”); provided, that, if the City of Cypress is still reviewing Tenant’s application for approval as of the Outside Termination Date, Tenant shall have the right to extend the Outside Termination Date and the Termination Notice Delivery Date by an additional 14 days by providing notice to Landlord of the same. If Tenant timely delivers the Termination Notice to Landlord, then the Lease shall terminate, and Landlord shall promptly return any prepaid Rent and the Security Deposit to Tenant. If Tenant fails to timely deliver the Termination Notice to Landlord on or before April 20, 2021 (as may be extended), then the Lease shall not terminate and Tenant shall be deemed to have irrevocably waived its right to terminate the Lease under this Section 1.22.
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STANDARD LEASE PROVISIONS
ARTICLE 2 - LEASE
2.1 Lease Elements; Definitions; Exhibits. The Lease is comprised of the Lease Summary and Property Specific Provisions (the “Summary”), these Standard Lease Provisions (“Standard Provisions”) and all exhibits, and riders attached hereto (collectively, “Exhibits”), all of which are incorporated together as part of one and the same instrument. All references in any such documents and instruments to “Lease” means the Summary, these Standard Provisions and all Exhibits attached hereto. All terms used in this Lease shall have the meanings ascribed to such terms in the Summary, these Standard Provisions and any Exhibits. To the extent of any inconsistency between the terms and conditions of the Summary, these Standard Provisions, or any Exhibits attached hereto, the Summary and any Exhibits attached hereto shall control over these Standard Provisions.
ARTICLE 3 - PREMISES
3.1.Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, upon and subject to, the terms, covenants and conditions of this Lease. Each party covenants and agrees, as a material part of the consideration for this Lease, to keep and perform their respective obligations under this Lease.
3.2.Landlord’s Reserved Rights. Provided the same do not unreasonably adversely affect Tenant’s use of the Premises or Tenant’s parking rights and do not materially increase the obligations or decrease the rights of Tenant under this Lease, Landlord reserves the right from time to time to do any of the following: (a) expand the Building and construct or alter other buildings or improvements on the Property; (b) make any changes, additions, improvements, maintenance, repairs or replacements in or to the Property, Common Areas and/or the Building (including the Premises if required to do so by any applicable Laws or to the extent necessary in conjunction with any improvements to the Property, Common Areas and/or the Building), and the fixtures and equipment thereof, including, without limitation: (i) maintenance, replacement and relocation of pipes, ducts, conduits, wires and meters and equipment above the ceiling surfaces, below the floor surfaces and within the walls of the Building and the Premises; and (ii) changes in the location, size, shape and number of driveways, entrances, stairways, elevators, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways, easements, parking spaces and parking areas as long as Tenant’s parking ratio is not substantially and adversely impacted; (c) close temporarily any of the Property while engaged in making repairs, improvements or alterations to the Property; and (d) perform such other acts and make such other changes with respect to the Property, as Landlord may, in the exercise of reasonable good faith business judgment, deem to be appropriate. In no event shall Landlord reconfigure the Premises as a result of any changes to the Property, Common Areas and/or the Building or as a result of Landlord’s exercise of its rights under this Section 3.2. Landlord shall endeavor to minimize, as reasonably practicable, the interference with Tenant’s business as a result of any construction performed pursuant to this Section 3.2. All measurements of rentable area of the Premises in this Lease shall be deemed to be correct and shall not be subject to remeasurement.
ARTICLE 4 - TERM AND POSSESSION
4.1.Term; Notice of Lease Dates. The Term shall be for the period designated in the Summary commencing on the Commencement Date and ending on the Expiration Date, unless the Term is sooner terminated or extended as provided in this Lease. If the Commencement Date falls on any day other than the first day of a calendar month then the Term will be measured from the first day of the month following the month in which the Commencement Date occurs. Within ten (10) days after Landlord’s written request, Tenant shall execute a written confirmation of the Commencement Date and Expiration Date of the Term in the form of the Notice of Lease Term Dates attached hereto as Exhibit D. The Notice of Lease Term Dates shall be binding upon Tenant unless Tenant reasonably objects thereto in writing within such ten (10) day period. Landlord shall use commercially reasonable efforts to complete the Landlord Improvements promptly following the Effective Date, and Landlord shall cooperate with Tenant during the completion of the Landlord Improvements to timely permit Tenant to complete the Tenant Improvement.
4.2.Possession. Landlord shall deliver possession of the Premises to Tenant as provided in the Work Letter, or if no Work Letter is attached hereto, Landlord shall deliver possession of the Premises to Tenant in its then as-is condition, subject to the provisions of Section 4.3 below. Tenant agrees that if Landlord is unable to deliver possession of the Premises to Tenant on or prior to the date that this Lease is mutually executed and delivered, the Lease will not be void or voidable, nor will Landlord be liable to Tenant for any loss or damage therefrom. Notwithstanding the foregoing, Landlord will not be obligated to deliver possession of the Premises to Tenant until Landlord has received from Tenant all of the following: (i) a copy of this Lease fully executed by Tenant; (ii) the Security Deposit required hereunder and the first installment of Monthly Base Rent and Additional Rent, if any, due under this Lease; and (iii) copies of Tenant’s insurance certificates as required hereunder.
4.3.Condition of Premises. Tenant acknowledges that, except as otherwise expressly set forth in this Lease or the Work Letter, neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises, the Building or the Property or their condition, or with respect to the suitability thereof for the conduct of Tenant’s business, and Tenant shall accept the Premises in its then as-is condition on delivery by Landlord. Pursuant to Section 1938 of the California Civil Code, Landlord hereby advises Tenant that as of the date of this Lease neither the Premises, the Building nor the Property have undergone inspection by a Certified Access Specialist (CASp). Further, pursuant to Section 1938 of the California Civil Code, Landlord notifies Tenant of the following: “A Certified Access Specialist (CASp) can inspect the premises and determine whether the premises comply with all of the applicable construction-related accessibility standards under state law. Although California state law does not require a CASp inspection of the premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of any such CASp inspection, the payment of the costs and fees for the CASp inspection and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Therefore and notwithstanding anything to the contrary contained in this Lease, Landlord and Tenant agree that (a) Tenant may, at its option and at its sole cost, cause a CASp to inspect the Premises and determine whether the Premises complies with all of the applicable construction-related accessibility standards under California law, (b) the parties shall mutually coordinate and reasonably approve of the timing of any such CASp inspection so that Landlord may, at its option, have a representative present during such inspection, and (c) Tenant shall be solely responsible for the cost of any repairs necessary to correct violations of construction-related accessibility standards within the Premises, any and all such alterations and repairs to be performed in accordance with Article 13 of this Lease, but only to the extent such alterations and repairs are disclosed by such CASp inspection and required by applicable Laws to be corrected; provided Tenant shall have no obligation to remove any repairs or alterations made pursuant to a CASp inspection under this Section 4.3.

4.4.Early Access. So long as Landlord has received from Tenant the first month’s Monthly Base Rent and Additional Rent, if any, due pursuant to Section 5.1 of this Lease, certificates satisfactory to Landlord evidencing the insurance required to be carried by Tenant under this Lease, and the Security Deposit, and so long as Tenant and its contractors and employees do not interfere with the completion of the Landlord Improvements, Landlord shall give Tenant and Tenant’s designated contractors access to the Premises upon mutual execution of this Lease (the “Early Access Period”) for purposes of installing Tenant’s furniture, fixtures, and equipment (“Tenant’s Work”) and constructing the Tenant Improvements. Tenant’s Work shall be performed by Tenant at Tenant’s sole cost and expense. Tenant’s access to the Premises during the Early Access Period shall be subject to all terms and conditions of this Lease, except that Tenant shall not be obligated to pay Rent during the Early Access Period until the Commencement Date. Landlord and Tenant agree to cooperate with the other party during the period of any such early access so as not to interfere with such party’s completion of the Landlord Improvements or the Tenant Improvements, as the case may be.
ARTICLE 5 - RENT
5.1.Monthly Base Rent. Tenant agrees to pay Landlord, the Monthly Base Rent as designated in the Summary. Monthly Base Rent and recurring monthly charges of Additional Rent (defined below) shall be paid by Tenant in advance on the first day of each and every calendar month (“Due Date”) during the Term, except that the first full month’s Monthly Base Rent and Additional Rent, if any, shall be paid upon Tenant’s execution and delivery of this Lease to Landlord. Monthly Base Rent for any partial month shall be prorated in the proportion that the number of days this Lease is in effect during such month bears to the actual number of days in such month.
5.2.Additional Rent. All amounts and charges payable by Tenant under this Lease in addition to Monthly Base Rent, if any, including, without limitation, payments for Operating Expenses, Taxes, Insurance Costs and Premises Utilities Costs to the extent payable by Tenant under this Lease shall be considered “Additional Rent”, and the word “Rent” in this Lease shall include Monthly Base Rent and all such Additional Rent unless the context specifically states or clearly implies that only Monthly Base Rent is referenced. Rent shall be paid to Landlord, without any prior notice or demand therefor and without any notice, deduction or offset, in lawful money of the United States of America.
5.3.Late Charges & Interest Rate. If Landlord does not receive Rent or any other payment due from Tenant within five (5) days after the Due Date, Tenant shall pay to Landlord a late charge equal to eight percent (8%) of such past due Rent or other payment. Tenant agrees that this late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of Tenant’s late payment. Accepting any late charge shall not constitute a waiver by Landlord of Tenant’s default with respect to any overdue amount nor prevent Landlord from exercising any other rights or remedies available to Landlord. If any installment of Monthly Base Rent or Additional Rent, or any other amount payable by Tenant hereunder is not received by Landlord by the Due Date, it shall bear interest at the Interest Rate set forth in the Summary from the Due Date until paid. All interest, and any late charges imposed pursuant to this Section 5.3, shall be considered Additional Rent due from Tenant to Landlord under the terms of this Lease. Notwithstanding the foregoing, Tenant will not be assessed the foregoing late charge and interest on the first two (2) late payments during the Term, if the applicable payment is made within five (5) days of Tenant’s receipt of notice of nonpayment from Landlord.
ARTICLE 6 - SECURITY DEPOSIT
Concurrently with Tenant’s execution and delivery of this Lease to Landlord, Tenant shall deposit with Landlord the Security Deposit, if any, designated in the Summary. The Security Deposit shall be held by Landlord as security for the full and faithful performance by Tenant of all of the terms, covenants and conditions of this Lease to be performed by Tenant during the Term. If Tenant defaults beyond the expiration of any applicable notice and cure periods with respect to any of its obligations under this Lease, Landlord may (but shall not be required to) use, apply or retain all or any part of the Security Deposit for the payment of any Monthly Base Rent, Additional Rent or any other sum in default, or for the payment of any other amount, loss or damage which Landlord may spend, incur or suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. If Tenant shall not be in default beyond applicable notice and cure periods, the Security Deposit or any balance thereof shall be returned to Tenant within thirty (30) days following the expiration of the Term, provided that Landlord may retain the Security Deposit until such time as any amount due from Tenant in accordance with this Lease has been determined and paid in full. If Landlord sells its interest in the Building during the Term and if Landlord deposits with or credits to the purchaser the Security Deposit (or balance thereof), then, upon such sale, Landlord shall be discharged from any further liability with respect to the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code to the extent such law (i) establishes the time frame by which a landlord must refund a security deposit under a lease, or (ii) provides that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant, or to clean the subject premises.
Notwithstanding the foregoing, provided Tenant is not then in default beyond any applicable notice and cure periods and has not previously been in default beyond any applicable notice and cure periods under this Lease at any prior to the last day of the thirty-sixth (36th) full calendar month of the initial Term, on the first (1st) day of the thirty- seventh (37th) full calendar month of the initial Term (the “First Adjustment Date”), Landlord shall apply $118,223.58 of the Security Deposit against the Monthly Base Rent (for both the Office and Warehouse space) then payable by Tenant for the thirty-seventh (37th) full calendar month of the initial Term. Furthermore, provided Tenant is not then in default beyond any applicable notice and cure periods and has not previously been in default beyond any applicable notice and cure periods under this Lease at any prior to the last day of the forty-eighth (48th) full calendar month of the initial Term, on the first (1st) day of the forty-ninth (49th) full calendar month of the initial Term (the “Second Adjustment Date”), Landlord shall apply $118,223.58 of the Security Deposit against the Monthly Base Rent (for both the Office and Warehouse space) then payable by Tenant for the forty-ninth (49th) full calendar month of the initial Term. There shall be no reduction in the Security Deposit if Tenant is in default beyond any applicable notice and cure periods as of the applicable adjustment date set forth herein, or if Tenant has been in default beyond any applicable notice and cure periods under this Lease at any time prior to the First Adjustment Date of the Second Adjustment Date, as the case may be.
ARTICLE 7 - OPERATING EXPENSES/UTILITIES/SERVICES
7.1.Operating Expenses. Tenant shall pay for or contribute to the costs of operation, maintenance, repair and replacement of the Premises, Building and Property as provided in the Summary.

7.2.Utilities and Services. Utilities and services to the Premises and the Property are described in the Summary.
7.3.Taxes. As used in this Lease, the term “Taxes” means: All real property taxes and assessments, possessory interest taxes, sales taxes, personal property taxes, business or license taxes or fees, gross receipts taxes, license or use fees, excises, transit charges, and other impositions of any kind (including fees “in-lieu” or in substitution of any such tax or assessment) which are now or hereafter assessed, levied, charged or imposed by any public authority upon the Building, Site, Property and/or Premises or any portion thereof, its operations or the Rent derived therefrom (or any portion or component thereof, or the ownership, operation, or transfer thereof), and any and all costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in attempting to protest, reduce or minimize the same. Taxes shall not include inheritance or estate taxes imposed upon or assessed against the interest of Landlord, gift taxes, excess profit taxes, franchise taxes, or similar taxes on Landlord’s business or any other taxes computed upon the basis of the net income of Landlord. If it shall not be lawful for Tenant to reimburse Landlord for any such Taxes, the Monthly Base Rent payable to Landlord under this Lease shall be revised to net Landlord the same net rent after imposition of any such Taxes by Landlord as would have been payable to Landlord prior to the payment of any such Taxes. Tenant shall pay for or contribute to Taxes as part of Operating Expenses as provided in the Summary. Notwithstanding anything herein to the contrary, Tenant shall be liable for all taxes levied or assessed against personal property, furniture, fixtures, above-standard Tenant Improvements and alterations, additions or improvements placed by or for Tenant in the Premises. Furthermore, Tenant shall pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or value added tax, or any other applicable tax on the rent or services provided herein or otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Property; or (iii) taxes assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.
7.4.Insurance Costs. As used in this Lease, “Insurance Costs” means the cost of insurance obtained by Landlord pursuant to Article 15 (including self-insured amounts and deductibles, if any, to the extent permitted under Article 15, below). Tenant shall pay for or contribute to Insurance Costs as part of Operating Expenses as provided in the Summary.
7.5.Interruption of Utilities. Landlord shall have no liability to Tenant for any interruption in utilities or services to be provided to the Premises when such failure is caused by all or any of the following: (a) accident, breakage or repairs; (b) strikes, lockouts or other labor disturbances or labor disputes of any such character;
(c)governmental regulation, moratorium or other governmental action; (d) inability, despite the exercise of reasonable diligence, to obtain electricity, water or fuel; (e) service interruptions or any other unavailability of utilities resulting from causes beyond Landlord’s control including without limitation, any electrical power “brown-out” or “black-out”; or (f) any other cause beyond Landlord’s reasonable control. In addition, in the event of any such interruption in utilities or services, Tenant shall not be entitled to any abatement or reduction of Rent (except as expressly provided in Articles 17 and 18 if such failure is a result of any casualty damage or taking described therein), no eviction of Tenant shall result, and Tenant shall not be relieved from the performance of any covenant or agreement in this Lease. In the event of any stoppage or interruption of services or utilities which are not obtained directly by Tenant, Landlord shall diligently attempt to resume such services or utilities as promptly as practicable. Tenant hereby waives the provisions of any applicable existing or future Law, ordinance or governmental regulation permitting the termination of this Lease due to an interruption, failure or inability to provide any services (including, without limitation, to the extent the Premises are located in California, the provisions of California Civil Code Section 1932(1)).
ARTICLE 8 - MAINTENANCE AND REPAIR

8.1.Landlord’s Repair Obligations. Except as otherwise stated in the Summary, Tenant waives the right to make repairs at Landlord’s expense under any applicable Laws (including, without limitation, to the extent the Premises are located in California, the provisions of California Civil Code Sections 1941 and 1942 and any successor statutes or laws of a similar nature). All other repair and maintenance of the Premises, Building and Property to be performed by Landlord, if any, shall be as provided in the Summary.
8.2.Tenant’s Repair Obligations. Except for Landlord’s obligations specifically set forth elsewhere in this Lease and in Section 8.1 above and in the Summary, Tenant shall at all times and at Tenant’s sole cost and expense, keep, maintain, clean, repair, preserve and replace, as necessary, the interior of the Premises and all parts thereof including, without limitation, all Tenant Improvements, Alterations, and all furniture, fixtures and equipment, including, without limitation, all computer, telephone and data cabling and equipment, Tenant’s signs, if any, door locks, closing devices, security devices, interior of windows, window sashes, casements and frames, floors and floor coverings, shelving, kitchen, restroom facilities and/or appliances of any kind located within the Premises, if any, custom lighting, and any additions and other property located within the Premises, so as to keep all of the foregoing elements of the Premises in good condition and repair, reasonable wear and tear and casualty damage excepted. Tenant shall replace, at its expense, any and all plate and other glass in and about the Premises which is damaged or broken from any cause whatsoever except due to the negligence or willful misconduct of Landlord, its agents or employees. Such maintenance and repairs shall be performed with due diligence, lien-free and in a first-class and workmanlike manner, by licensed contractor(s) that are selected by Tenant and approved by Landlord, which approval Landlord shall not unreasonably withhold or delay. All other repair and maintenance of the Premises, Building and Property to be performed by Tenant, if any, shall be as provided in the Summary. If Tenant refuses or neglects to repair and maintain the Premises properly as required hereunder to the reasonable satisfaction of Landlord, then at any time following ten (10) days from the date on which Landlord makes a written demand on Tenant to effect such repair and maintenance, Landlord may enter upon the Premises and make such repairs and/or maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as Additional Rent, Landlord’s costs for making such repairs plus an amount not to exceed ten percent (10%) of such costs for overhead, within thirty (30) days after receipt from Landlord of a written itemized bill therefor. Any amounts not reimbursed by Tenant within such thirty (30) day period will bear interest at the Interest Rate until paid by Tenant.
ARTICLE 9 - USE
Tenant shall procure, at its sole cost and expense, any and all permits required by applicable Law for Tenant’s use and occupancy of the Premises. Tenant shall use the Premises solely for the Permitted Use specified in the Summary, and shall not use or permit the Premises to be used for any other use or purpose whatsoever without Landlord’s prior written approval. Tenant shall observe and comply with the Rules and Regulations attached hereto as Exhibit E, as the same may be modified by Landlord from time to time, and all reasonable non-discriminatory modifications thereof and additions thereto from time to time put into effect and furnished to Tenant by Landlord. Landlord shall endeavor to enforce the Rules and Regulations, but shall have no liability to 

Tenant for the violation or non-performance by any other tenant or occupant of any such Rules and Regulations. Tenant shall not use or allow the Premises to be used for any improper, immoral, unlawful or reasonably objectionable purpose. Tenant shall not do or permit to be done anything that will obstruct or interfere with the rights of other tenants or occupants of the Building or the Property, if any, or injure or annoy them. Tenant shall not cause, maintain or permit any nuisance in, on or about the Premises, the Building or the Property, nor commit or suffer to be committed any waste in, on or about the Premises. Without limiting the foregoing, Tenant agrees that the Premises shall not be used for the use, growing, producing, processing, storing (short or long term), distributing, transporting, or selling of marijuana, cannabis, cannabis derivatives, or any cannabis containing substances (“Cannabis”), or any office uses related to the same, nor shall Tenant permit, allow or suffer, any of Tenant’s officers, employees, agents, servants, licensees, subtenants, concessionaires, contractors and invitees to bring onto the Premises, any Cannabis. Without limiting the foregoing, the prohibitions in this paragraph shall apply to all Cannabis, whether such Cannabis is legal for any purpose whatsoever under state or federal law or both. Notwithstanding anything to the contrary, any failure b y Tenant to comply with each of the terms, covenants, conditions and provisions of this paragraph relating to Cannabis shall automatically and without the requirement of any notice be a Default that is not subject to cure, and Tenant agrees that upon the occurrence of any such Default, Landlord may elect, in its sole discretion, to exercise all of its rights and remedies under this Lease, at law or in equity with respect to such Default. Furthermore Tenant is prohibited from engaging or permitting others to engage in any activity which would be a violation of any state and/or federal laws relating to the use, sale, possession, cultivation and/or distribution of any controlled substances (whether for commercial or personal purposes) regulated under any applicable law or other applicable law relating to the medicinal use and/or distribution of marijuana/Cannabis (“Prohibited Drug Law Activities”).
Tenant shall, at its sole cost and expense, observe and comply with all Laws and all requirements of any board of fire underwriters or similar body relating to (i) Tenant's particular use of the Premises, (ii) the Alterations or the Tenant Improvements in the Premises (as opposed to any pre-existing improvements in the Premises), or (iii) the Base Building, but, as to the Base Building, only to the extent such obligations are triggered by (x) Tenant's Alterations or the Tenant Improvements to the extent the same are non-general office improvements (i.e., any changes that would be required simply by “pulling a permit,” whether by Tenant, another tenant or Landlord for improvements to the Premises, would be a Landlord obligation pursuant to Section 9.3, below), or (z) Tenant’s particular use of the Premises for non-general office use. The "Base Building" shall include the structural portions of the Building, and the public restrooms, elevators, exit stairwells and the systems and equipment located in the internal core of the Building on the floor or floors on which the Premises is located.
Landlord shall comply with all applicable Laws relating to the Common Areas of the Property and Base Building, provided that compliance with such applicable Laws is not the responsibility of Tenant under this Lease (such as improvements to the Common Areas required in connection with Tenant’s particular use of the Premises for non-general office use and other requirements described in the immediately preceding paragraph), and provided further that Landlord's failure to comply therewith would prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Premises, or would unreasonably and materially affect the safety of Tenant's employees or create a significant health hazard for Tenant's employees. Landlord shall be permitted to include in Operating Expenses any costs or expenses incurred by Landlord under this Section 9.3 to the extent not prohibited by the terms of Section 1.18 above.
ARTICLE 10 - HAZARDOUS MATERIALS
As used in this Lease, the term “Environmental Law(s)” means any past, present or future federal, state or local Law relating to (a) the environment, human health or safety, including, without limitation, emissions, discharges, releases or threatened releases of Hazardous Materials (as defined below) into the environment (including, without limitation, air, surface water, groundwater or land), or (b) the manufacture, generation, refining, processing, distribution, use, sale, treatment, receipt, storage, disposal, transport, arranging for transport, or handling of Hazardous Materials. As used in this Lease, the term “Hazardous Materials” means and includes any hazardous or toxic materials, substances or wastes as now or hereafter designated or regulated under any Environmental Laws including, without limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), and freon and other chlorofluorocarbons. Except for ordinary and general office supplies, such as copier toner, liquid paper, glue, ink and common household cleaning materials, and motor vehicle fuel stored in fuel tanks of motor vehicles used on site in compliance with all Environmental Laws (some or all of which may constitute Hazardous Materials), and other Hazardous Materials used in connection with the Permitted Use, Tenant agrees not to cause or permit any Tenant Parties (as defined below) to cause any Hazardous Materials to be brought upon, stored, used, handled, generated, released or disposed of on, in, under or about the Premises, the Building, the Common Areas or any other portion of the Property by Tenant, its agents, officers, directors, shareholders, members, managers, partners, employees, subtenants, assignees, licensees, contractors or invitees (collectively, “Tenant’s Parties”), without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. Upon the expiration or earlier termination of this Lease, Tenant agrees to promptly remove from the Premises, the Building and the Property, at its sole cost and expense, any and all Hazardous Materials, including any equipment or systems containing Hazardous Materials which are installed, brought upon, stored, used, generated or released upon, in, under or about the Premises, the Building and/or the Property or any portion thereof by Tenant or any of Tenant’s Parties, to the extent required by Environmental Laws. To the fullest extent permitted by law, Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord and Landlord’s members, shareholders, partners, officers, directors, managers, employees, agents, contractors, successors and assigns (collectively, “Landlord Parties”) from and against any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including, without limitation, clean-up, removal, remediation and restoration costs, sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees and court costs) which arise or result from the presence of Hazardous Materials on, in, under or about the Premises, the Building or any other portion of the Property and which are caused by Tenant or any of Tenant’s Parties. The provisions of this Article 10 will survive the expiration or earlier termination of this Lease. Tenant shall give Landlord written notice of any evidence of Mold, water leaks or water infiltration in the Premises promptly upon discovery of same. At its expense, Tenant shall investigate, clean up and remediate any Mold in the Premises caused or exacerbated by Tenant or any of Tenant’s Parties; provided, however, that, subject to Section 19.1 below, Tenant shall have no obligation to investigate, clean up and remediate any Mold in the Premises caused by Landlord, Landlord’s Parties or any other tenant of the Building or any unaffiliated third-party. Investigation, clean up and remediation may be performed only after Tenant has Landlord’s written approval of a plan for such remediation. All clean up and remediation shall be done in compliance with all applicable Laws and to the reasonable satisfaction of Landlord. As used in this Lease, “Mold” means mold, fungi, spores, microbial matter, mycotoxins and microbiological organic compounds. Landlord represents to Tenant that to Landlord’s “actual knowledge”, as of the date hereof, no pre-existing Hazardous Materials are present at or under the Premises, the Building or the Project in violation of any applicable Environmental Laws.  

ARTICLE 11 - PARKING
During the Term, Tenant shall be entitled to utilize the number and type of parking spaces specified in the Summary within the parking areas for the Property as designated by Landlord from time to time at no cost to Tenant. Landlord shall at all times have the right to establish and modify the nature and extent of the parking areas for the Building and Property (including whether such areas shall be surface, underground and/or other structures); provided, that, Tenant’s parking ratio is not reduced as a result thereof. In addition, if Tenant is not the sole occupant of the Property, Landlord may, in its discretion, designate any unreserved parking spaces as reserved parking; provided, that, Tenant’s parking ratio is not reduced as a result thereof. The terms and conditions for parking at the Property shall be as specified in the Summary and in the Rules and Regulations regarding parking as contained in Exhibit E attached hereto, as the same may be modified by Landlord from time to time. Tenant shall not use more parking spaces than its allotment and shall not use any parking spaces specifically assigned by Landlord to other tenants, if any, or for such other uses such as visitor, handicapped or other special purpose parking. Tenant’s visitors shall be entitled to access to the parking areas on the Property designated for visitor use, subject to availability of spaces and the terms of the Summary.
Notwithstanding the foregoing, Tenant shall have the right to convert up to ten (10) unreserved parking spaces to up to ten (10) reserved, exclusive electric vehicle charging stations, on a one-to-one basis, at Tenant’s sole cost and expense, in a location designated by Landlord and approved by Tenant within reasonable proximity to the Premises. Tenant, at Tenant’s sole cost and expense, in accordance with the terms and conditions of the Lease governing Alterations, shall install such electric vehicle charging stations and power upgrades to the Property as required to install such electric vehicle charging stations. Tenant shall pay to Landlord $100.00 per month for each electric vehicle charging station throughout the Term. In addition, Tenant shall have the right, subject to Landlord’s prior approval as to design and location (not to be unreasonably withheld, conditioned or delayed), at Tenant’s sole cost and expense, to designate that such electric vehicle charging stations are for Tenant’s exclusive use (via stencil, sign, or other identifier). Landlord shall have no obligation to enforce or police the exclusivity of Tenant’s electric charging stations. In the event Tenant exercises its rights under this paragraph, the parties will execute an amendment to the Lease in order to identify those spaces reserved for Tenant’s exclusive use.
ARTICLE 12 - TENANT SIGNS
Tenant shall have the right to install, at Tenant’s sole cost and expense: (i) one (1) Building standard entry sign (restricted solely to Tenant’s name and logo) on the exterior of the Building above the doorway to the Premises or such other location as may be reasonably approved by Landlord, (ii) one (1) Building-top sign (restricted solely to Tenant’s name and logo) on the exterior of the Building in a mutually agreed-upon location, and (iii) one (1) monument sign (restricted solely to Tenant’s name and logo) at the entrance of the Property in a mutually agreed-upon location, subject to the provisions of this Article 12. Subsequent changes to Tenant’s sign and/or any additional signs, to the extent permitted by Landlord herein, shall be made or installed at Tenant’s sole cost and expense. All aspects of any such signs shall be subject to the prior written consent of Landlord (which shall not be unreasonably withheld), and shall be per Landlord’s standard specifications and materials, as revised by Landlord from time to time. Tenant shall have no right to install or maintain any other signs, banners, advertising, notices, displays, stickers, decals or any other logo or identification of any person, product or service whatsoever, in any location on or in the Property except as
(i)shall have been expressly approved by Landlord in writing prior to the installation thereof (which approval may be granted or withheld in Landlord’s reasonable discretion), (ii) shall not violate any signage restrictions or exclusive sign rights contained in any then existing leases with other tenants of the Property, if any, and (iii) are consistent and compatible with all applicable Laws, and the design, signage and graphics program from time to time implemented by Landlord with respect to the Property, if any. Landlord shall have the right to remove any signs or signage material installed without Landlord’s permission, without being liable to Tenant by reason of such removal, and to charge the cost of removal to Tenant as Additional Rent hereunder, payable within ten (10) days after written demand by Landlord. Any additional sign rights of Tenant, if any, shall be as provided in the Summary. The Building top-sign and monument rights granted to Tenant under this Article 12 are personal to the original Tenant executing this Lease and any Permitted Transferee and approved Transferee in connection with an assignment of the Lease or sublease of all or substantially all of the Premises, and are not transferable to third party Transferees separate and apart from an assignment of the Lease or sublease of all or substantially all of the Premises; provided, however, that the name of any such Permitted Transferee or Transferee that desires to replace Tenant’s name on such signage is not an Objectionable Name. As used herein, “Objectionable Name” shall mean any name which relates to an entity which is of a character or reputation, or is associated with a political orientation or faction, which is inconsistent with the quality of the Building, or which would otherwise reasonably offend landlords of comparable buildings in the vicinity of the Building.
ARTICLE 13 - ALTERATIONS
13.1.Alterations. After installation of the initial Tenant Improvements for the Premises, Tenant may, at
its sole cost and expense, make alterations, additions, improvements and decorations to the Premises (“ Alteration(s)”) subject to and upon the following terms and conditions:
a.Tenant shall not make any Alterations which: (i) affect any area outside the Premises including the outside appearance, character or use of any portions of the Building or other portions of the Property;
(ii)materially and adversely affect the Building’s roof, roof membrane, any structural component or any base Building equipment, services or systems (including fire and life/safety systems), or the proper functioning thereof, or Landlord’s access thereto; (iii) in the reasonable opinion of Landlord, lessen the value of the Building or the Property; (iv) will violate or require a change in any occupancy certificate applicable to the Premises; or (v) would trigger a legal requirement which would require Landlord to make any alteration or improvement to the Premises, Building or other aspect of the Property unless Tenant agrees to perform such alterations or reimburse Landlord for the cost thereof.
b.Tenant shall not make any Alterations not prohibited by Section 13.1(a), unless Tenant first obtains Landlord’s prior written consent, which consent Landlord shall not unreasonably withhold, provided Landlord’s prior approval shall not be required for any Alterations that is not prohibited by Section 13.1(a) above and is of a cosmetic nature that satisfies all of the following conditions (hereinafter a “Pre-Approved Alteration”): (i) the costs of such Alterations do not exceed One Dollar ($1.00) per rentable square foot of the Premises; (ii) to the extent reasonably required by Landlord or by Law due to the nature of the work being performed, Tenant delivers to Landlord final plans, specifications, working drawings, permits and approvals for such Alterations at least ten (10) days prior to commencement of the work thereof; (iii) Tenant and such Alterations otherwise satisfy all other conditions set forth in this Section 13.1; and (iv) the making of such Alterations will not otherwise cause a default by Tenant under any provision of this Lease. Tenant shall provide Landlord with ten (10) days’ prior written notice before 

commencing any Alterations. In addition, before proceeding with any Alteration, Tenant’s contractors shall obtain, on behalf of Tenant and at Tenant’s sole cost and expense: (A) all necessary governmental permits and approvals for the commencement and completion of such Alterations, and (B) if the cost of such Alterations exceeds $250,000.00, a completion and lien indemnity bond, or other surety satisfactory to Landlord for such Alterations. Landlord’s approval of any plans, contractor(s) and subcontractor(s) of Tenant shall not release Tenant or any such contractor(s) and/or subcontractor(s) from any liability with respect to such Alterations and will create no liability or responsibility on Landlord’s part concerning the completeness of such Alterations or their design sufficiency or compliance with Laws.
c.All Alterations shall be performed: (i) in accordance with the approved plans, specifications and working drawings, if any; (ii) lien-free and in a first-class workmanlike manner; (iii) in compliance with all building codes and Laws; (iv) in such a manner so as not to impose any additional expense upon nor materially delay Landlord in the maintenance and operation of the Building; (v) by licensed and bondable contractors,
subcontractors and vendors selected by Tenant and reasonably approved by Landlord, and (vi) at such times, in such manner and subject to such rules and regulations as Landlord may from time to time reasonably designate. Tenant shall pay to Landlord, within ten (10) days after written demand, the costs of any increased insurance premiums incurred by Landlord to include such Alterations in the causes of loss - special form property insurance obtained by Landlord pursuant to this Lease, if Landlord elects in writing to insure such Alterations; provided, however, Landlord shall not be required to include the Alterations under such insurance. If the Alterations are not included in Landlord’s insurance, Tenant shall insure the Alterations under its causes of loss-special form property insurance pursuant to this Lease. Without limitation on the foregoing, upon Landlord’s obtaining knowledge of the commencement of any alteration, change, improvement, or addition to the Premises, Landlord shall be permitted to post a timely Notice of Non-Responsibility at the Premises, which shall also be recorded in the office of the Recorder of the County in which the Building is located, all in accordance with the terms of Sections 8444 and 8060 of the California Civil Code.
d.Tenant shall pay to Landlord, as Additional Rent, the reasonable third-party costs of Landlord’s engineers and other consultants for review of all plans, specifications and working drawings for the Alterations and for any services rendered by Landlord’s management personnel and engineers to coordinate and/or supervise any of the Alterations to the extent such services are provided in excess of or after the normal on-site hours of such engineers and management personnel, within thirty (30) days after Tenant's receipt of invoices either from Landlord or such engineers, consultants, and/or management personnel; provided, however, such third party costs shall not exceed a total of Five Thousand and No/100 Dollars ($5,000.00) in connection with any particular request for Alterations, unless and to the extent (i) Landlord, in advance of incurring such costs, notifies Tenant in writing that given the particular nature and scope of the Alterations and the corresponding review and services by Landlord’s engineers and other consultants, the same is anticipated to exceed Five Thousand and No/100 Dollars ($5,000.00) and proposes an alternate budget for such costs, and (ii) Tenant thereafter approves such budget; provided further, however, if Tenant fails within five (5) business days to either affirmatively approve such proposed budget or otherwise rescind the corresponding request for Alterations, Tenant shall be deemed to have approved such proposed budget. In addition to such costs, Tenant shall pay to Landlord, within thirty (30) days after completion of any Alterations, a construction supervision fee equal to three percent (3%) of the total hard cost of the Alterations.
e.Throughout the performance of the Alterations, Tenant shall obtain, or cause its contractors to obtain, workers compensation insurance and commercial general liability insurance in compliance with the insurance provisions of this Lease.
13.2.Removal of Alterations. All Alterations and the initial Tenant Improvements in the Premises (whether installed or paid for by Landlord or Tenant), shall become the property of Landlord and shall remain upon and be surrendered with the Premises at the end of the Term; provided, however, Landlord may, by written notice delivered to Tenant concurrently with Landlord’s consent to plans for any Alterations identify those Alterations which Landlord shall require Tenant to remove at the end of the Term. If Landlord requires Tenant to remove any such Alterations, Tenant shall, at its sole cost, remove the identified items on or before the expiration or sooner termination of this Lease and repair any damage to the Premises caused by such removal to its original condition (or, if Tenant fails to so remove any such Alterations, Tenant shall pay to Landlord all of Landlord’s costs of such removal and repair). Notwithstanding anything to the contrary herein, in no event shall Tenant be required to remove the Tenant Improvements, or (2) any Alterations, other than Alterations that are Specialty Improvements. “Specialty Improvements” means any Alterations other than normal and customary general office improvements. Notwithstanding the foregoing, “Specialty Improvements” (i) shall not include conference rooms or training space and (ii) shall include (a) any Alterations which affect the Base Building, (b) any fitness facility in the Premises, and
(c)any kitchens, showers, restrooms, washrooms or similar facilities in the Premises that are not part of the Base Building.
13.2.Liens. Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed against all
or any part of the Property or the Premises, nor against Tenant’s leasehold interest in the Premises, by reason of or in connection with any repairs, alterations, improvements or other work contracted for or undertaken by Tenant or any of the Tenant’s Parties. If any such liens are filed, Tenant shall, at its sole cost, immediately cause such liens to be released of record or bonded so that such lien(s) no longer affect(s) title to the Property, the Building or the Premises. If Tenant fails to cause any such lien to be released or bonded within ten (10) days after filing thereof, Landlord may cause such lien to be released by any means it shall deem proper, including payment in satisfaction of the claim giving rise to such lien, and Tenant shall reimburse Landlord within five (5) business days after receipt of invoice from Landlord, any sum paid by Landlord to remove such liens, together with interest at the Interest Rate from the date of such payment by Landlord.
ARTICLE 14 - TENANT’S INSURANCE
14.1.Tenant’s Insurance. On or before the earlier of any Early Access Period, the Commencement Date or the date Tenant commences or causes to be commenced any work of any type in the Premises, and continuing during the entire Term, Tenant shall obtain and keep in full force and effect, the following insurance with limits of coverage as set forth in Section 1.14 of the Summary:
a.Special Form (formerly known as “all risk”) insurance, including fire and extended coverage, sprinkler leakage (including earthquake sprinkler leakage), vandalism, malicious mischief upon property of every description and kind owned by Tenant and located in the Premises or the Building, or for which Tenant is legally liable or installed by or on behalf of Tenant including, without limitation, furniture, equipment and any other personal property, and any Alterations (but excluding the initial Tenant Improvements previously existing or installed in the Premises), in an amount not less than the full replacement 

cost thereof. In the event that there shall be a dispute as to the amount which comprises full replacement cost, the decision of Landlord or any Mortgagee of Landlord shall be presumptive.
b.Commercial general liability insurance coverage on an occurrence basis, including personal injury, bodily injury (including wrongful death), broad form property damage, contractual liability (including Tenant’s indemnification obligations under this Lease), and liquor liability (if Tenant serves alcohol on the Premises). The limits of liability of such commercial general liability insurance may be increased every five (5) years during the Term upon reasonable prior notice by Landlord to an amount reasonably required by Landlord and appropriate for tenants of buildings comparable to the Building.
c.Commercial Automobile Liability covering all owned, hired and non-owned automobiles.
d.Worker’s compensation, in statutory amounts and employers’ liability, covering all persons employed in connection with any work done in, on or about the Premises for which claims for death, bodily injury or illness could be asserted against Landlord, Tenant or the Premises.
e.Umbrella liability insurance on an occurrence basis, in excess of and following the form of the underlying insurance described in Section 14.1.b. and 14.1.c. and the employer’s liability coverage in Section 14.1.d. which is at least as broad as each and every area of the underlying policies. Such umbrella liability insurance shall include pay on behalf of wording, concurrency of effective dates with primary policies, blanket contractual liability, application of primary policy aggregates, and shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance, subject to customary commercially reasonable deductible amounts imposed on umbrella policies.
f.If Tenant’s business includes professional services, Tenant shall, at Tenant’s expense, maintain in full force and effect professional liability (also known as errors and omissions insurance), covering Tenant and Tenant’s employees from work related negligence and liability in trade.
g.Loss of income, extra expense and business interruption insurance in the amount of at least 12 months of Monthly Base Rent.
h.Any other form or forms of insurance as Tenant or Landlord or any Mortgagee of Landlord may reasonably require from time to time, in form, amounts and for insurance risks against which a prudent tenant of a building similar to the Building would protect itself, but only to the extent such risks and amounts are available in the insurance market at commercially reasonable costs.
14.2.Requirements. Each policy required to be obtained by Tenant hereunder shall: (a) be issued by insurers which are reasonably approved by Landlord and/or Landlord’s Mortgagees and are authorized to do business in the state in which the Building is located and rated not less than Financial Size VII, and with a Financial Strength rating of A in the most recent version of Best’s Key Rating Guide (provided that, in any event, the same insurance company shall provide the coverages described in Sections 14.1.a. and 14.1.g. above); (b) be in form reasonably satisfactory from time to time to Landlord; (c) name Tenant as named insured thereunder and Landlord as a loss payee as to Tenant’s property insurance, as their respective interests may appear, and shall name Landlord and, at Landlord’s request, such other persons or entities of which Tenant has been informed in writing, as additional insureds as to Tenant’s commercial liability and umbrella insurance, all as their respective interests may appear; (d) not have a deductible amount exceeding One Hundred Thousand Dollars ($100,000.00), which deductible amount shall be deemed self-insured with full waiver of subrogation; (e) be primary, and any insurance carried by Landlord or any other additional insureds shall be excess and non-contributing; (f) with respect to Tenant’s property policy, include language containing an endorsement that the insurer waives its right to subrogation; (g) intentionally deleted; (h) contain a cross liability or severability of interest endorsement; and (i) be in amounts sufficient at all times to satisfy any coinsurance requirements thereof. Tenant agrees to deliver to Landlord, as soon as practicable after the placing of the required insurance, but in no event later than the date Tenant is required to obtain such insurance as set forth in Section 14.1 above, certificates from the insurance company evidencing the existence of such insurance. Tenant shall cause replacement certificates to be delivered to Landlord prior to the expiration of any such policy or policies. If any such initial or replacement certificates are not furnished within the time(s) specified herein, Landlord shall have the right, but not the obligation, to procure such policies and certificates at Tenant’s expense.
14.3.Effect on Insurance. Tenant shall not do or permit to be done anything which will (a) violate or invalidate any insurance policy or coverage maintained by Landlord or Tenant hereunder, or (b) increase the costs of any insurance policy maintained by Landlord. If Tenant’s occupancy or conduct of its business in or on the Premises (other than for the Permitted Use) results in any increase in premiums for any insurance carried by Landlord with respect to the Building or the Property, Tenant shall either discontinue the activities affecting the insurance or pay such increase as Additional Rent within ten (10) days after being billed therefor by Landlord. If any insurance coverage carried by Landlord pursuant to this Lease or otherwise with respect to the Building or the Property shall be cancelled or reduced (or cancellation or reduction thereof shall be threatened) by reason of the use or occupancy of the Premises other than as allowed by the Permitted Use by Tenant or by anyone permitted by Tenant to be upon the Premises, and if Tenant fails to remedy such condition within five (5) business days after notice thereof, Tenant shall be deemed to be in default under this Lease and Landlord shall have all remedies provided in this Lease, at law or in equity, including, without limitation, the right (but not the obligation) to enter upon the Premises and attempt to remedy such condition at Tenant’s cost.
ARTICLE 15 - LANDLORD’S INSURANCE
During the Term, Landlord shall maintain property insurance written on a Special Form (formerly known as “all risk”) basis covering the Property and the Building, including the initial Tenant Improvements (excluding, however, Tenant’s furniture, equipment and other personal property and Alterations, unless Landlord otherwise elects to insure the Alterations pursuant to Section 13.1 above) against damage by fire and standard extended coverage perils and with vandalism and malicious mischief endorsements, rental loss coverage, at Landlord’s option, earthquake damage coverage, and such additional coverage as Landlord deems appropriate. Landlord shall also carry commercial general liability in such reasonable amounts and with such reasonable deductibles as would be carried by a prudent owner of a similar building in the state in which the Building is located. At Landlord’s option, all such insurance may be carried under any blanket or umbrella policies that Landlord has in force for other buildings and projects. In addition, at Landlord’s option, Landlord may elect to self-insure all or any part of such required insurance coverage. Landlord may but shall not be obligated to carry any other form or forms of insurance as Landlord or any Mortgagee or ground lessors of Landlord may reasonably determine is advisable. The cost of insurance obtained by Landlord pursuant to this Article 15 

(including self-insured amounts and commercially reasonable deductibles) shall be consistent with the cost of insurance obtained by comparable landlords of comparable office projects in the northwestern Orange County area and shall be included in Insurance Costs; provided, however, any increase in the premium for the property insurance attributable to the replacement cost of the Tenant Improvements in excess of Building standard shall not be included as Insurance Costs, but shall be paid by Tenant within thirty (30) days after receipt of an invoice from Landlord; provided further, however, to the extent that the cumulative total of any such self-insured and commercially reasonable deductible amounts includable in Insurance Costs exceed One and No/100 Dollars ($1.00) per rentable square foot in any particular calendar year, then for purposes of calculating Insurance Costs for such calendar year, the excess shall be excluded from such calendar year, but instead carried over into subsequent calendar years (although each such subsequent calendar year will, in turn, remain subject to the annual $1.00 per rentable square foot maximum inclusion provided for hereinabove).
ARTICLE 16 - INDEMNIFICATION AND EXCULPATION
16.1.Tenant’s Assumption of Risk and Waiver. Except to the extent such matter is not covered by the insurance required to be maintained by Tenant under this Lease and/or except to the extent such matter is attributable to the negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees, Landlord shall not be liable to Tenant, or any of Tenant’s Parties for: (i) any damage to property of Tenant, or of others, located in, on or about the Premises, (ii) the loss of or damage to any property of Tenant or of others by theft or otherwise,
(iii)any injury or damage to persons or property resulting from fire, explosion, falling ceiling tiles masonry, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliance of plumbing works or from the roof, street or subsurface or from any other places or by dampness or by any other cause of whatsoever nature, (iv) any such damage caused by other tenants or persons in the Premises, occupants of any other portions of the Property, or the public, or caused by operations in construction of any private, public or quasi-public work, or (v) any interruption of utilities and services. Landlord shall in no event be liable to Tenant or any other person for any consequential, special or punitive damages or for loss of business, revenue, income or profits and Tenant hereby waives any and all claims for any such damages. Notwithstanding anything to the contrary contained in this Section 16.1, all property of Tenant and Tenant’s Parties kept or stored on the Premises, whether leased or owned by any such parties, shall be so kept or stored at the sole risk of Tenant and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant’s insurance carriers. Landlord or its agents shall not be liable for interference with light or other intangible rights.
16.2.Tenant’s Indemnification. Except to the extent arising from the negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees, Tenant shall be liable for, and shall indemnify, defend, protect and hold Landlord and the Landlord Parties harmless from and against, any and all claims, damages, judgments, suits, causes of action, losses, liabilities and expenses, including, without limitation, attorneys’ fees and court costs (collectively, “Indemnified Claims”), arising or resulting from (a) any occurrence in the Premises following the date Landlord delivers possession of all or any portion of the Premises to Tenant, except to the extent caused by the negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees, (b) any act or omission of Tenant or any of Tenant’s Parties; (c) the use of the Premises, the Building and the Property and conduct of Tenant’s business by Tenant or any of Tenant’s Parties, or any other activity, work or thing done, permitted or suffered by Tenant or any of Tenant’s Parties, in or about the Premises, the Building or elsewhere on the Property; and/or (d) any default by Tenant as to any obligations on Tenant’s part to be performed under the terms of this Lease or the terms of any contract or agreement to which Tenant is a party or by which it is bound, affecting this Lease or the Premises. The foregoing indemnification shall include, but not be limited to, any injury to, or death of, any person, or any loss of, or damage to, any property on the Premises, or on adjoining sidewalks, streets or ways, or connected with the use, condition or occupancy thereof, whether or not Landlord or any Landlord Parties has or should have knowledge or notice of the defect or conditions causing or contributing to such injury, death, loss or damage. In case any action or proceeding is brought against Landlord or any Landlord Parties by reason of any such Indemnified Claims, Tenant, upon notice from Landlord, shall defend the same at Tenant’s expense by counsel approved in writing by Landlord, which approval shall not be unreasonably withheld. Tenant’s indemnification obligations under this Section 16.2 and elsewhere in this Lease shall survive the expiration or earlier termination of this Lease. Tenant’s covenants, agreements and indemnification in Section 16.1 and this Section 16.2 are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant pursuant to the provisions of this Lease.
16.3.Landlord’s Indemnification of Tenant. Notwithstanding anything to the contrary contained in Section 16.1 or 16.2, Tenant shall not be required to protect, defend, save harmless or indemnify Landlord from any liability for injury, loss, accident or damage to any person resulting from Landlord’s negligent acts or omissions or willful misconduct or that of its agents, contractors, servants, employees or licensees, in connection with Landlord’s activities on or about the Premises, and subject to the terms of Article 22, Landlord hereby indemnifies and agrees to protect, defend and hold Tenant harmless from and against Indemnified Claims arising out of Landlord’s grossly negligent acts or omissions or willful misconduct or those of its agents, contractors, servants, employees or licensees in connection with Landlord’s activities on or about the Premises. Such exclusion from Tenant’s indemnity and such agreement by Landlord to so indemnify and hold Tenant harmless are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant pursuant to the provisions of this
Lease to the extent that such policies cover (or, if such policies would have been carried as required, would have covered) the result of grossly negligent acts or omissions or willful misconduct of Landlord or those of its agents, contractors, servants, employees or licensees; provided, however, the provisions of this sentence shall in no way be construed to imply the availability of any double or duplicate coverage. Landlord’s and Tenant’s indemnification obligations hereunder may or may not be coverable by insurance, but the failure of either Landlord or Tenant to carry insurance covering the indemnification obligation shall not limit their indemnity obligations hereunder.
ARTICLE 17 - CASUALTY DAMAGE/DESTRUCTION
17.1.Landlord’s Rights and Obligations. If the Premises or the Building is damaged by fire or other casualty not caused by the gross negligence or willful misconduct of Tenant (“Casualty”) to an extent not exceeding twenty-five percent (25%) of the full replacement cost thereof, and Landlord’s contractor estimates in writing delivered to the parties (the “Restoration Estimate”) that the damage thereto is such that the Building and/or Premises may be repaired, reconstructed or restored to substantially its condition immediately prior to such damage within twelve (12) months from the date of such Casualty, and Landlord will receive insurance proceeds sufficient to cover the costs of such repairs, reconstruction and restoration (including proceeds from Tenant and/or Tenant’s insurance which Tenant is required to deliver to Landlord pursuant to this Lease), then Landlord shall commence and proceed diligently with the work of repair, reconstruction and restoration and this Lease shall continue in full force and effect. If, however, the Premises or the Building is damaged to an extent exceeding twenty-five percent (25%) of the full replacement cost thereof, or Landlord’s contractor estimates that such work of repair, reconstruction and 

restoration will require longer than twelve (12) months to complete from the date of Casualty, or Landlord will not receive insurance proceeds (and/or proceeds from Tenant, as applicable) sufficient to cover the costs of such repairs, reconstruction and restoration, then Landlord may elect to either: (a) repair, reconstruct and restore the portion of the Premises or Building damaged by such Casualty (including the Tenant Improvements, the Alterations that Landlord elects to insure pursuant to Section 13.1 and, to the extent of insurance proceeds received from T enant, the Alterations that Tenant is required to insure pursuant to Section 13.1), in which case this Lease shall continue in full force and effect; or (b) terminate this Lease effective as of the date which is thirty (30) days after Tenant’s receipt of Landlord’s election to so terminate; provided that Landlord shall only have the right to terminate this Lease if Landlord also terminates the leases of all other similarly situated tenants at the Property for which Landlord has termination rights. Under any of the conditions of this Section 17.1, Landlord shall give written notice to Tenant of its intention to repair or terminate within the later of sixty (60) days after the occurrence of such Casualty, or fifteen (15) days after Landlord’s receipt of the estimate from Landlord’s contractor or, as applicable, thirty (30) days after Landlord receives approval from Landlord’s Mortgagee to rebuild.
17.2.Tenant’s Costs and Insurance Proceeds. In the event of any damage or destruction of all or any part of the Premises, Tenant shall immediately: (a) notify Landlord thereof; and (b) if Landlord elects or is required to repair the Premises pursuant to Section 17.1, deliver to Landlord all insurance proceeds received by Tenant with respect to the Tenant Improvements and Alterations (to the extent such items are not covered by Landlord’s casualty insurance) and with respect to Alterations in the Premises that Tenant is required to insure pursuant to Section 13.1, excluding proceeds for Tenant’s furniture and other personal property, and Tenant hereby assigns to La ndlord all rights to receive such insurance proceeds. If, for any reason (including Tenant’s failure to obtain insurance for the full replacement cost of any Alterations which Tenant is required to insure pursuant to Section 13.1 hereof), Tenant fails to receive insurance proceeds covering the full replacement cost of such Alterations which are damaged, Tenant shall be deemed to have self-insured the replacement cost of such Alterations, and upon any damage or destruction thereto, if Landlord elects or is required to repair the Premises pursuant to Section 17.1, Tenant shall immediately pay to Landlord the full replacement cost of such items, less any insurance proceeds actually received by Landlord from Landlord’s or Tenant’s insurance with respect to such items.
17.3.Abatement of Rent. If as a result of any such damage, repair, reconstruction and/or restoration of the Premises or the Building, Tenant is prevented from using, and does not use, the Premises or any portion thereof, then Rent shall be equitably abated or reduced, as the case may be, during the period that Tenant continues to be so prevented from using and does not use the Premises or portion thereof, in the proportion that the rentable square feet of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable square feet of the Premises. Notwithstanding the foregoing to the contrary, if the damage is due to the gross negligence or willful misconduct of Tenant or any of Tenant’s Parties, there shall be no abatement of Rent. Except for abatement of Rent as provided hereinabove, Tenant shall not be entitled to any compensation or damages for loss of, or interference with, Tenant’s business or use or access of all or any part of the Premises resulting from any such damage, repair, reconstruction or restoration.
17.4.Inability to Complete. Notwithstanding anything to the contrary contained in this Article 17, if Landlord is obligated or elects to repair, reconstruct and/or restore the damaged portion of the Building or Premises pursuant to Section 17.1 above, but is delayed from completing such repair, reconstruction and/or restoration beyond the date which is six (6) months after the date estimated by Landlord’s contractor for completion thereof pursuant to Section 17.1, by reason of any causes beyond the reasonable control of Landlord (including, without limitation, delays due to Force Majeure (not to exceed thirty (30) days), and delays caused by Tenant or any of Tenant’s Parties), then Landlord and Tenant may elect to terminate this Lease upon thirty (30) days’ prior written notice to the other party; provided, however, if Landlord completes such repair, reconstruction and/or restoration prior to the expiration of such thirty (30) day notice period, then the Lease shall not terminate, and Tenant’s election to terminate the Lease in accordance with this sentence shall be null, void and of no further force and effect.
17.5.Damage to the Property. If there is a total destruction of the improvements on the Property or partial destruction of such improvements, the cost of restoration of which would exceed one-third (1/3) of the then replacement value of all improvements on the Property, by any cause whatsoever, whether or not insured against and whether or not the Premises are partially or totally destroyed, Landlord may within a period of one hundred eighty (180) days after the occurrence of such destruction, notify Tenant in writing that it elects not to so reconstruct or restore such improvements, in which event this Lease shall cease and terminate as of the date of such destruction.
17.6.Damage Near End of Term. In addition to its termination rights in Sections 17.1, 17.4 and 17.5 above, Landlord shall have the right to terminate this Lease if any damage to the Building or Premises occurs during the last twelve (12) months of the Term and Landlord’s contractor estimates in writing delivered to the parties that the repair, reconstruction or restoration of such damage cannot be completed within the earlier of (a) the scheduled expiration date of the Term, or (b) ninety (90) days after the date of such Casualty.
17.7.Tenant’s Termination Right. In the event of any damage or destruction which affects Tenant's use and enjoyment of the Premises, if the Restoration Estimate states that the damage cannot be restored by Landlord within two hundred seventy (270) days from the date of the Casualty, Tenant shall have the right to terminate this Lease upon written notice to Landlord given within thirty (30) days after receipt of the Restoration Estimate, unless Landlord completes the restoration within said 30-day notice period, in which case this Lease shall continue in full force and effect.
17.8.Waiver of Termination Right. This Lease sets forth the terms and conditions upon which this Lease may terminate in the event of any damage or destruction. Accordingly, except as expressly provided herein, Tenant hereby waives any and all provisions of applicable Law that provide alternative rights for the parties in the event of damage or destruction (including, without limitation, to the extent the Premises are located in California, the provisions of California Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 and any successor statute or laws of a similar nature).
ARTICLE 18 - CONDEMNATION
18.1.Substantial or Partial Taking. Subject to the provisions of Section 18.3 below, either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under law, by eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or the Property which would have a material adverse effect on Landlord’s ability to profitably operate the remainder of the Building and/or the Property. The terminating party shall provide written notice of termination to the other 

party within thirty (30) days after it first receives notice of the Taking. The termination shall be effective as of the effective date of any order granting possession to, or vesting legal title in, the condemning authority. If this Lease is not terminated, Base Rent and all other elements of this Lease which are dependent upon the area of the Premises, the Building or the Property shall be appropriately adjusted to account for any reduction in the square footage of the Premises, Building or Property, as applicable. All compensation awarded for a Taking shall be the property of Landlord. The right to receive compensation or proceeds are expressly waived by Tenant, however, Tenant may file a separate claim for Tenant’s furniture, fixtures, equipment, and other personal property, Tenant Improvements (to the extent of any out of pocket costs paid by Tenant and not applied against the Allowance), Alterations paid for by Tenant, loss of goodwill and Tenant’s reasonable relocation expenses.
18.2.Condemnation Award. Subject to the provisions of Section 18.3 below, in connection with any Taking of the Premises or the Building, Landlord shall be entitled to receive the entire amount of any award which may be made or given in such taking or condemnation, without deduction or apportionment for any estate or interest of Tenant, it being expressly understood and agreed by Tenant that no portion of any such award shall be allowed or paid to Tenant for any so-called bonus or excess value of this Lease, and such bonus or excess value shall be the sole property of Landlord. Tenant shall not assert any claim against Landlord or the taking authority for any compensation because of such taking (including any claim for bonus or excess value of this Lease); provided, however, if any portion of the Premises is taken, Tenant shall be granted the right to recover from the condemning authority (but not from Landlord) any compensation as may be separately awarded or recoverable by Tenant for the taking of Tenant’s furniture, fixtures, equipment and other personal property within the Premises, Tenant Improvements (to the extent of any out of pocket costs paid by Tenant and not applied against the Allowance), Alterations paid for by Tenant, for Tenant’s relocation expenses, and for any loss of goodwill or other damage to Tenant’s business by reason of such taking.
18.3.Temporary Taking. In the event of a Taking of the Premises or any part thereof for temporary use, (a) this Lease shall be and remain unaffected thereby and Rent shall not abate, and (b) Tenant shall be entitled to receive for itself such portion or portions of any award made for such use with respect to the period of the taking which is within the Term, provided that if such taking shall remain in force at the expiration or earlier termination of this Lease, Tenant shall perform its obligations with respect to surrender of the Premises and shall pay to Landlord the portion of any award which is attributable to any period of time beyond the Term expiration date. For purpose of this Section 18.3, a temporary taking shall be defined as a taking for a period of two hundred seventy (270) days or less.
18.4.Waiver. Tenant hereby waives any rights it may have pursuant to any applicable Laws (including, without limitation, to the extent the Premises are located in California, any rights Tenant might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure) and agrees that the provisions hereof shall govern the parties’ rights in the event of any Taking.
ARTICLE 19 - WAIVER OF CLAIMS; WAIVER OF SUBROGATION
19.1.Waiver of Subrogation. Notwithstanding anything to the contrary herein, Landlord and Tenant hereby waive their rights against the other party for any claims or damages or losses, including any deductibles and self-insured amounts, which are caused by or result from (a) any occurrence insured under any property insurance policy carried by Landlord or Tenant, or (b) any occurrence which would have been covered under any property insurance required to be obtained and maintained by Landlord or Tenant under this Lease had such insurance been obtained and maintained as required. The foregoing waiver shall be in addition to, and not a limitation of, any other waivers or releases contained in this Lease. All of Landlord's and Tenant's repair and indemnity obligations in this Lease shall be subject to the release contained in this Section 19.1.
19.2.Waiver of Insurers. Tenant shall cause each property insurance policy carried by Tenant to provide that the insurer waives all rights of recovery by way of subrogation against Landlord, in connection with any claims, losses and damages covered by such policy. If Tenant fails to maintain insurance for an insurable loss, such loss shall be deemed to be self-insured with a deemed full waiver of subrogation as set forth in the immediately preceding sentence.
ARTICLE 20 - ASSIGNMENT AND SUBLETTING
20.1.Restriction on Transfer. Except with respect to a Permitted Transfer pursuant to Section 20.6 below, Tenant shall not, without the prior written consent of Landlord, which consent Landlord will not unreasonably withhold or delay, assign this Lease or any interest herein or sublet the Premises or any part thereof, or permit the use or occupancy of the Premises by any party other than Tenant (any such assignment, encumbrance, sublease, license or the like being sometimes referred to as a “Transfer”). In no event may Tenant encumber or hypothecate this Lease or the Premises. This prohibition against Transfers shall be construed to include a prohibition against any assignment or subletting by operation of law. Any Transfer without Landlord’s consent (except for a Permitted Transfer pursuant to Section 20.6 below) shall constitute a default by Tenant under this Lease, and in addition to all of Landlord’s other remedies at law, in equity or under this Lease, such Transfer shall be voidable at Landlord’s election. For purposes of this Article 20, other than with respect to a Permitted Transfer under Section 20.6 and transfers of stock of Tenant if Tenant is a publicly-held corporation and such stock is transferred publicly over a recognized security exchange or over-the-counter market, if Tenant is a corporation, partnership or other entity, any transfer, assignment, encumbrance or hypothecation of fifty percent (50%) or more (individually or in the aggregate) of any stock or other ownership interest in such entity (each, a “Change of Control”), shall be deemed an assignment of this Lease and shall be subject to all of the restrictions and provisions contained in this Article 20.
20.2.Landlord’s Options. If Tenant desires to effect a Transfer, then at least thirty (30) days prior to the date when Tenant desires the Transfer to be effective (the “Transfer Date”), Tenant shall deliver to Landlord written notice (“Transfer Notice”) setting forth the terms and conditions of the proposed Transfer and the identity of the proposed assignee, sublessee or other transferee (sometimes referred to hereinafter as a “Transferee”). Tenant shall also deliver to Landlord with the Transfer Notice, a current financial statement and such evidence of financial responsibility and standing as Landlord may reasonably require of the Transferee which have been certified by a financial officer of such Transferee and or audited by a reputable independent accounting firm (if such is the normal practice of such Transferee), and such other information concerning the business background and financial condition of the proposed Transferee as Landlord may reasonably request. Except with respect to a Permitted Transfer, within fifteen (15) days after Landlord’s receipt of any Transfer Notice, and any additional information requested by Landlord pursuant to this Section 20.2, Landlord will notify Tenant of its election to do one of the following: (a) consent to the proposed Transfer subject to such reasonable conditions as Landlord may impose in providing such consent; (b) refuse such consent, which refusal shall be on reasonable grounds; or (c) terminate this Lease and recapture the Premises for reletting by Landlord, which termination shall be effective as of the proposed Transfer Date. Notwithstanding the foregoing, Landlord may 

only terminate the Lease and recapture the Premises in the event Tenant desires to effect a Transfer of the entire Premises for substantially all of the remaining Term of the Lease.
20.3.Additional Conditions; Excess Rent. A condition to Landlord’s consent to any Transfer will be the delivery to Landlord of a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, in form and substance reasonably satisfactory to Landlord, an original of Landlord’s standard consent form executed by both Tenant and the proposed Transferee, and an affirmation of guaranty in form satisfactory to Landlord executed by each guarantor of this Lease, if any. In addition, Tenant shall pay to Landlord as Additional Rent within thirty (30) days after receipt thereof, without affecting or reducing any other obligations of Tenant hereunder, fifty percent (50%) of any rent or other economic consideration received by Tenant as a result of any Transfer which exceeds, in the aggregate, (i) the total Rent which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations allocable to any portion of the Premises subleased) for the applicable period, plus (ii) any reasonable brokerage commissions and attorneys’ fees actually paid by Tenant in connection with such Transfer, (iii) the cost of any changes, alterations and improvements to the Premises performed by Tenant in connection with such Transfer, and (iv) the amount of any free base rent reasonably provided to such Transferee. If Tenant effects a Transfer or requests the consent of Landlord to any Transfer (whether or not such Transfer is consummated), then, upon demand, and as a condition precedent to Landlord’s consideration of the proposed assignment or sublease, Tenant agrees to pay Landlord a non-refundable administrative fee of Five Hundred Dollars ($500.00), plus Landlord’s reasonable attorneys’ and paralegal fees and other costs incurred by Landlord in reviewing such proposed assignment or sublease (whether attributable to Landlord’s in-house attorneys or paralegals or otherwise), in an amount not to exceed Three Thousand Dollars ($3,000) for a transfer in the ordinary course of business. Acceptance of the Five Hundred Dollar ($500.00) administrative fee and/or reimbursement of Landlord’s attorneys’ and/or paralegal fees shall in no event obligate Landlord to consent to any proposed Transfer.
20.4.Reasonable Disapproval. Without limiting in any way Landlord’s right to withhold its consent on any reasonable grounds, it is agreed that Landlord will not be acting unreasonably in refusing to consent to a Transfer if, in Landlord’s reasonable opinion: (a) the proposed Transfer would result in more than three subleases of portions of the Premises being in effect at any one time during the Term; (b) the net worth or financial capabilities of a proposed assignee or subtenant is insufficient to meet the obligations assumed under this Lease or a sublease; (c) the proposed Transferee is an existing tenant of the Building or Property or is negotiating with Landlord (or has negotiated with
Landlord in the last six (6) months) for space in the Building or the Property (as demonstrated by an exchange of proposals or other negotiations during the preceding six (6) month period) and, in either case, Landlord has reasonably comparable space at the Property available; (d) the proposed Transferee is a governmental entity; (e) the portion of the Premises to be sublet or assigned is irregular in shape with inadequate means of ingress and egress; (f) the proposed Transfer involves a change of use of the Premises or would violate any exclusive use covenant to which Landlord is bound; (g) the Transfer would likely result in significant increase in the use of the parking areas by the Transferee’s employees or visitors, and/or significantly increase the demand upon utilities and services to be provided by Landlord to the Premises; or (h) the Transferee is not in Landlord’s reasonable opinion of reputable or good character or consistent with Landlord’s desired tenant mix for the Building.
20.5.No Release. No Transfer, occupancy or collection of rent from any proposed Transferee shall be deemed a waiver on the part of Landlord, or the acceptance of the Transferee as Tenant and no Transfer shall release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay Rent and to perform all other obligations to be performed by Tenant hereunder. Following a default beyond any applicable notice and cure periods by Tenant, Landlord may require that any Transferee remit directly to Landlord on a monthly basis, all monies due Tenant by said Transferee, and each sublease shall provide that if Landlord gives said sublessee written notice that Tenant is in default under this Lease, said sublessee will thereafter make all payments due under the sublease directly to or as directed by Landlord, which payments will be credited against any payments due under this Lease. Tenant hereby irrevocably and unconditionally assigns to Landlord all rents and other sums payable under any sublease of the Premises; provided, however, that Landlord hereby grants Tenant a license to collect all such rents and other sums so long as Tenant is not in default beyond applicable notice and cure periods under this Lease. Consent by Landlord to one Transfer shall not be deemed consent to any subsequent Transfer. In the event of default by any Transferee of Tenant or any successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such Transferee or successor. Landlord may consent to subsequent assignments of this Lease or sublettings or amendments or modifications to this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto and any such actions shall not relieve Tenant of liability under this Lease. To the extent the Premises are located in California, Tenant hereby waives (for itself and all persons claiming under Tenant) the provisions of Civil Code Section 1995.310.
20.6.Permitted Transfers. Notwithstanding the provisions of Section 20.1 above to the contrary, provided that Tenant is not then in default beyond applicable notice and cure periods, Tenant may assign this Lease or sublet the Premises or any portion thereof (herein, a “Permitted Transfer”), without Landlord’s consent and without being subject to the profit sharing or recapture provisions set forth in Sections 20.2 and 20.3 above, to any entity that controls, is controlled by or is under common control with Tenant, or to any entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires all or substantially all of the assets or equity interest of Tenant’s business as a going concern (each, a “Permitted Transferee”), provided that: (a) at least thirty (30) days prior to such assignment or sublease, Tenant delivers to Landlord a reasonably detailed description of the proposed Transfer and the financial statements and other financial and background information of the assignee or sublessee described in Section 20.2 above; (b) in the case of an assignment, the assignee assumes, in full, the obligations of Tenant under this Lease (or in the case of a sublease, the sublessee of a portion of the Premises or Term assumes, in full, the obligations of Tenant with respect to such portion) pursuant to an assignment and assumption agreement (or a sublease, as applicable) reasonably acceptable to Landlord, a fully executed copy of which is delivered to Landlord within thirty (30) days following the effective date of such assignment or subletting; (c) each guarantor of this Lease executes a reaffirmation of its guaranty in form satisfactory to Landlord; (d) the tangible net worth and ongoing profitability of the assignee or sublessee is demonstrably sufficient to satisfy Tenant’s remaining obligations under this Lease; (e) Tenant remains fully liable under this Lease; (f) the use of the Premises is pursuant to Section 1.10 of this Lease; (g) such transaction is not entered into as a subterfuge to avoid the restrictions and provisions of this Article 20 and will not violate any exclusive use covenant to which Landlord is bound; and (h) with respect to a subletting only, Tenant and such Permitted Transferee execute Landlord’s standard consent to sublease form; and (i) Tenant is not in default beyond all applicable notice and cure periods under this Lease. In addition, a Change of Control shall be deemed a Permitted Transfer and shall be permitted without Landlord's consent and without being subject to the profit sharing or recapture provisions set forth in Sections 20.2 and 20.3 above, provided that Tenant satisfies the conditions of subparts (a)-(i), above.

ARTICLE 21 - SURRENDER AND HOLDING OVER
21.1.Surrender of Premises. Upon the expiration or sooner termination of this Lease, Tenant shall surrender all keys for the Premises and exclusive possession of the Premises to Landlord broom clean and in the condition and repair received and thereafter improved, excepting reasonable wear and tear, casualty damage which is not Tenant’s obligation to repair hereunder, and maintenance, repair, and replacement obligations that are Landlord’s express obligations under this Lease, with all of Tenant’s personal property, electronic, fiber, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant (other than those items installed in connection with the Tenant Improvements) and those items, if any, of Alterations identified by Landlord pursuant to Section 13.2, removed therefrom and all damage caused by such removal repaired. Notwithstanding the foregoing, Tenant shall not be required to remove or restore the loading doors in the Premises, or any of the initial Landlord Improvements or Tenant Improvements at the expiration or earlier termination of this Lease. If Tenant fails to remove by the expiration or sooner termination of this Lease all of its personal property and Alterations identified by Landlord for removal pursuant to Section 13.2, Landlord may, (without liability to Tenant for loss thereof), at Tenant’s sole cost and in addition to Landlord’s other rights and remedies under this Lease, at law or in equity: (a) remove and store such items in accordance with applicable Law; and/or (b) upon ten (10) days’ prior notice to Tenant, sell all or any such items at private or public sale for such price as Landlord may obtain as permitted under applicable Law. Landlord shall apply the proceeds of any such sale to any amounts due to Landlord under this Lease from Tenant (including
Landlord’s attorneys’ fees and other costs incurred in the removal, storage and/or sale of such items), with any remainder to be paid to Tenant.
21.2.Holding Over. Tenant will not be permitted to hold over possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. If Tenant holds over after the expiration or earlier termination of the Term with or without the express written consent of Landlord, then, in addition to all other remedies available to Landlord, Tenant shall become a tenant at sufferance only, upon the terms and conditions set forth in this Lease so far as applicable (including Tenant’s obligation to pay all Additional Rent under this Lease), but at a Monthly Base Rent equal to one hundred twenty-five percent (125%) of the Monthly Base Rent applicable to the Premises immediately prior to the date of such expiration or earlier termination for the first two months of such holdover and one hundred fifty percent (150%) thereafter. Any such holdover Rent shall be paid on a per month basis without reduction for partial months during the holdover. Acceptance by Landlord of Rent after such expiration or earlier termination shall not constitute consent to a hold over hereunder or result in an extension of this Lease. This Section 21.2 shall not be construed to create any express or implied right to holdover beyond the expiration of the Term or any extension thereof. If Tenant holds over possession of the Premises for a period in excess of sixty (60) days following the expiration of the Term or any extension thereof, without Landlord’s consent, Tenant shall be liable, and shall pay to Landlord within ten (10) days after demand, for all losses incurred by Landlord as a result of such holdover, and shall indemnify, defend and hold Landlord and the Landlord Parties harmless from and against all liabilities, damages, losses, claims, suits, costs and expenses (including reasonable attorneys’ fees and costs) arising from or relating to any such holdover tenancy, including without limitation, any claim for damages made by a succeeding tenant. Tenant’s indemnification obligation hereunder shall survive the expiration or earlier termination of this Lease. The foregoing provisions of this Section 21.2 are in addition to, and do not affect, Landlord’s right of re -entry or any other rights of Landlord hereunder or otherwise at law or in equity.
ARTICLE 22 - DEFAULTS
22.1.Tenant’s Default. The occurrence of any one or more of the following events shall constitute a “Default” under this Lease by Tenant:
a.the abandonment of the Premises by Tenant. “Abandonment” is defined pursuant to
applicable Law;
b.the failure by Tenant to make any payment of Rent, Additional Rent or any other payment required to be made by Tenant hereunder, where such failure continues for three (3) business days after written notice thereof from Landlord that such payment was not received when due;
c.the failure by Tenant to observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in Sections 22.1(a) or (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that it may be cured but more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently prosecute such cure to completion, which completion shall occur not later than sixty (60) days from the date of such notice from Landlord; or
d.A general assignment by Tenant or any guarantor or surety of Tenant’s obligations hereunder (“Guarantor”) for the benefit of creditors;
e.The filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an arrangement, the filing by or against Tenant or any Guarantor of a petition, voluntary or involuntary, for reorganization, or the filing of an involuntary petition by the creditors of Tenant or any Guarantor, said involuntary petition remaining undischarged for a period of one hundred twenty (120) days;
f.Receivership, attachment, or other judicial seizure of substantially all of Tenant’s assets on the Premises, such attachment or other seizure remaining undismissed or undischarged for a period of thirty (30) days after the levy thereof;
g.Death or disability of Tenant or any Guarantor, if Tenant or such Guarantor is a natural person, or the failure by Tenant or any Guarantor to maintain its legal existence (other than pursuant to a Permitted Transfer), if Tenant or such Guarantor is a corporation, partnership, limited liability company, trust or other legal entity.
Any notice sent by Landlord to Tenant pursuant to this Section 22.1 shall be in lieu of, and not in addition to, any notice required under any applicable Law.

ARTICLE 23 - REMEDIES OF LANDLORD
23.1.Landlord’s Remedies; Termination. In the event of any such Default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity (including, without limitation, to the extent the Premises are located in California, the remedies of Civil Code Section 1951.4 and any successor statute or similar Law, which provides that Landlord may continue this Lease in effect following Tenant’s breach and abandonment and collect rent as it falls due, if Tenant has the right to sublet or assign, subject to reasonable limitations), Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder and
to re-enter the Premises and remove all persons and property from the Premises; such property may be removed, stored and/or disposed of as permitted by applicable Law. If Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant: (a) the worth at the time of award of any unpaid Rent which had been earned at the time of such termination; plus (b) the worth at the time of the award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (c) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (d) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom including, but not limited to: the total unamortized sum of any Abated Amount (amortized on a straight line basis over the initial Term of this Lease), tenant improvement costs, and brokers’ commissions; attorneys’ fees; any costs required to return the Premises to the condition required at the end of the Term; the costs of refurbishment, alterations, renovation and repair of the Premises; and removal (including the repair of any damage caused by such removal) and storage (or disposal) of Tenant’s personal property, equipment, fixtures, Alterations, Tenant Improvements and any other items which Tenant is required under this Lease to remove but does not remove; plus (e) all other monetary damages allowed under applicable Law.
As used in Sections 23.1(a) and 23.1(b) above, the “worth at the time of award” is computed by allowing interest at the Interest Rate set forth in the Summary. As used in Section 23.1(c) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). To the extent the Premises are located in California, Tenant hereby waives for Tenant and all those claiming under Tenant all right now or hereafter existing including, without limitation, any rights under California Code of Civil Procedure Sections 1174 and 1179 and Civil Code Section 1950.7 to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.
23.2.Landlord’s Remedies; Continuation of Lease; Re-Entry Rights. In the event of any such Default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall also have the right to (a) continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, and (b) with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed, stored and/or disposed of as permitted by applicable Law. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 23.2, and no acceptance of surrender of the Premises or other action on Landlord’s part, shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. No notice from Landlord or notice given under a forcible entry and detainer statute or similar Laws will constitute an election by Landlord to terminate this Lease unless such notice specifically so states. Notwithstanding any reletting without termination by Landlord because of any Default, Landlord may at any time after such reletting elect to terminate this Lease for any such Default.
23.3.Landlord’s Right to Perform. Except as specifically provided otherwise in this Lease, all covenants and agreements by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement or offset of Rent. In the event of any Default by Tenant, Landlord may, without waiving or releasing Tenant from any of Tenant’s obligations, make such payment or perform such other act as required to cure such Default on behalf of Tenant. All sums so paid by Landlord and all necessary incidental costs incurred by Landlord in performing such other acts shall be payable by Tenant to Landlord within five (5) days after demand therefor as Additional Rent.
23.4.Rights and Remedies Cumulative. All rights, options and remedies of Landlord contained in this Article 23 and elsewhere in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or in equity, whether or not stated in this Lease. Nothing in this Article 23 shall be deemed to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to any provision of this Lease.
23.5.Costs Upon Default and Litigation. Tenant shall pay to Landlord and its Mortgagee as Additional Rent all the expenses incurred by Landlord or its Mortgagee in connection with any default by Tenant hereunder or the exercise of any remedy by reason of any default by Tenant hereunder, including reasonable attorneys’ fees and expenses. If Landlord or its Mortgagee shall be made a party to any litigation commenced against Tenant or any litigation pertaining to this Lease or the Premises, at the option of Landlord and/or its Mortgagee, Tenant, at its expense, shall provide Landlord and/or its Mortgagee with counsel approved by Landlord and/or its Mortgagee and shall pay all costs incurred or paid by Landlord and/or its Mortgagee in connection with such litigation.
ARTICLE 24 - ENTRY BY LANDLORD
Landlord and its employees and agents shall at all reasonable times and upon giving Tenant reasonable notice of its election to do so (except in case of an emergency and to perform regularly scheduled services in which event no notice shall be required), have the right to enter the Premises to inspect the same, to supply any service required to be provided by Landlord to Tenant under this Lease, to exhibit the Premises to prospective lenders or purchasers (or during the last year of the Term or during any Default by Tenant, to prospective tenants), to post notices of nonresponsibility, and/or to alter, improve or repair the Premises or any other portion of the Building or Property, all without being deemed guilty of or liable for any breach of Landlord’s covenant of quiet enjoyment or any eviction of Tenant, and without abatement of Rent. In exercising such entry rights, Landlord shall comply with Tenant’s reasonable security measures (of which Landlord is informed in advance) and shall endeavor to minimize, to the extent reasonably practicable, the interference with Tenant’s business, and shall provide Tenant with one (1) business day advance notice (oral or written) of such entry (except in emergency situations and for scheduled services). For each of the foregoing purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes, and Landlord shall have the means which Landlord may deem proper to open 

said doors in an emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord pursuant to this Article 24 by any of said means or otherwise shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof, or grounds for any abatement or reduction of Rent and Landlord shall not have any liability to Tenant for any damages or losses on account of any such entry by Landlord.
ARTICLE 25 - LIMITATION ON LANDLORD’S LIABILITY
Notwithstanding anything contained in this Lease to the contrary, the obligations of Landlord under this Lease (including as to any actual or alleged breach or default by Landlord) do not constitute personal obligations of the individual members, managers, investors, partners, directors, officers, or shareholders of Landlord or Landlord’s members or partners, and Tenant shall not seek recourse against the individual members, managers, investors, partners, directors, officers, or shareholders of Landlord or Landlord’s members or partners or any other p ersons or entities having any interest in Landlord, or any of their personal assets for satisfaction of any liability with respect to this Lease. In addition, in consideration of the benefits accruing hereunder to Tenant and notwithstanding anything contained in this Lease to the contrary, Tenant hereby covenants and agrees for itself and all of its successors and assigns that the liability of Landlord for its obligations under this Lease (including any liability as a result of any actual or alleged failure, breach or default hereunder by Landlord), shall be limited solely to, and Tenant’s and its successors’ and assigns’ sole and exclusive remedy shall be against, Landlord’s interest in the Building, and no other assets of Landlord. The term “Landlord” as used in this Lease, so far as covenants or obligations on the part of the Landlord are concerned, shall be limited to mean and include only the owner or owners, at the time in question, of the fee title to, or a lessee’s interest in a ground lease of, the Property. In the event of any transfer or conveyance of any such title or interest (other than a transfer for security purposes only), the transferor shall be automatically relieved of all covenants and obligations on the part of Landlord contained in this Lease, provided that the transferee agrees to assume all such covenants and obligations. Landlord and Landlord’s transferees and assignees shall have the absolute right to transfer all or any portion of their respective title and interest in the Premises, the Building, the Property and/or this Lease without the consent of Tenant, and such transfer or subsequent transfer shall not be deemed a violation on Landlord’s part of any of the terms and conditions of this Lease.
ARTICLE 26 - SUBORDINATION
Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a “Mortgage”). This clause shall be self-operative, but no later than ten (10) business days after written request from Landlord or any holder of a Mortgage (each a “Mortgagee” and collectively, “Mortgagee(s)”), Tenant shall execute a commercially reasonable subordination, nondisturbance and attornment agreement. As an alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. No later than ten (10) business days after written request by Landlord or any Mortgagee, Tenant shall, without charge, attorn to any successor to Landlord’s interest in this Lease. Tenant hereby waives its rights under any current or future Law which gives or purports to give Tenant any right to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event of any such foreclosure proceeding or sale. Should Tenant fail to sign and return any such documents within said ten (10) business day period, Tenant shall be in default hereunder. Within thirty (30) days following the full execution and delivery of this Lease, Landlord will use commercially reasonable efforts to provide Tenant with a non-disturbance agreement from the holder of the existing Mortgage (the "Existing Lender"), on the Existing Lender's standard, commercially reasonable form; provided, however, Landlord's failure to provide such non-disturbance agreement shall not be a default under this Lease or otherwise affect the parties' rights and obligations under this Lease. In addition, Landlord will use commercially reasonable efforts to provide Tenant with a non-disturbance agreement from the holder of any future Mortgagees; provided, however, Landlord's failure to provide such non-disturbance agreement shall not be a default under this Lease or otherwise affect the parties' rights and obligations under this Lease.
ARTICLE 27 - ESTOPPEL CERTIFICATE
Within ten (10) business days following Landlord’s written request, Tenant shall execute and deliver to Landlord an estoppel certificate, in a form substantially similar to the form of Exhibit F attached hereto. Any such estoppel certificate delivered pursuant to this Article 27 may be relied upon by any Mortgagee, beneficiary, purchaser or prospective purchaser of any portion of the Property, as well as their assignees. Tenant’s failure to deliver such estoppel certificate following an additional two (2) business day cure period after notice shall constitute a default hereunder. Tenant’s failure to deliver such certificate within such time shall be conclusive upon Tenant that this Lease is in full force and effect, without modification except as may be represented by Landlord, that there are no uncured defaults in Landlord’s performance, and that not more than one (1) month’s Rent has been paid in advance.
ARTICLE 28 -INTENTIONALLY DELETED ARTICLE 29 - MORTGAGEE PROTECTION
If, in connection with Landlord’s obtaining or entering into any financing or ground lease for any portion of the Building or Property, the lender or ground lessor shall request modifications to this Lease, Tenant shall, within thirty (30) days after request therefor, execute an amendment to this Lease including such modifications, provided such modifications are reasonable, do not increase the obligations of Tenant hereunder, or adversely affect the leasehold estate created hereby or Tenant’s rights hereunder. In the event of any default on the part of Landlord, Tenant will give notice by registered or certified mail to any beneficiary of a deed of trust or Mortgagee covering the Premises or ground lessor of Landlord whose address shall have been furnished to Tenant, and shall offer such beneficiary, Mortgagee or ground lessor a reasonable opportunity to cure the default (including with respect to any such beneficiary or Mortgagee, time to obtain possession of the Premises, subject to this Lease and Tenant’s rights hereunder, by power of sale or judicial foreclosure, if such should prove necessary to effect a cure).
ARTICLE 30 - QUIET ENJOYMENT
Landlord covenants and agrees with Tenant that, upon Tenant performing all of the covenants and provisions on Tenant’s part to be observed and performed under this Lease (including payment of Rent hereunder), Tenant shall have the right to use and occupy the Premises in accordance with and subject to the terms and conditions of this Lease as against all persons claiming by, through or under Landlord. This covenant shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building.

ARTICLE 31 - MISCELLANEOUS PROVISIONS
31.1.Broker. Tenant represents that it has not had any dealings with any real estate broker, finder or intermediary with respect to this Lease, other than the Brokers specified in the Summary. Tenant shall indemnify, protect, defend (by counsel reasonably approved in writing by Landlord) and hold Landlord harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (including attorneys’ fees and court costs) resulting from any breach by Tenant of the foregoing representation, including, without limitation, any claims that may be asserted against Landlord by any broker, agent or finder claiming to have represented Tenant in connection with this Lease and undisclosed by Tenant herein. Landlord shall indemnify, protect, and hold Tenant harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (including attorneys' fees and court costs) resulting from any other brokers claiming to have represented Landlord in connection with this Lease. The foregoing indemnities shall survive the expiration or earlier termination of this Lease. Landlord shall pay to the Brokers the brokerage fee, if any, pursuant to a separate written agreement between Landlord and Brokers.
31.2.Governing Law. This Lease shall be governed by, and construed pursuant to, the laws of the state in which the Building is located. Venue for any litigation between the parties hereto concerning this Lease or the occupancy of the Premises shall be initiated in the county in which the Premises are located. Subject to Article 9 above, Tenant shall comply with all governmental and quasi-governmental laws, ordinances and regulations applicable to the Building, Property and/or the Premises, and all rules and regulations adopted pursuant thereto and all covenants, conditions and restrictions applicable to and/or of record against the Building, Property and/or the Site (individually, a “Law” and collectively, the “Laws”). Landlord and Tenant desire and intend that any disputes arising between them with respect to or in connection with this Lease be subject to expeditious resolution in a court trial without a jury. Consequently, Landlord and Tenant each hereby waives the right to trial by jury of any cause of action, claim, counterclaim or cross complaint in any action, proceeding or other hearing brought either by Landlord against Tenant, or by Tenant against Landlord, on any matter whatever arising out of, or in any way connected with, this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, any claim of injury or damage, and the enforcement of any remedy under any law, statute and regulation, emergency or otherwise, now or hereafter in effect; provided, however, the foregoing waiver shall not apply to any action for personal injury or property damage. If Landlord commences any summary or other proceeding for nonpayment of Rent or the recovery of possession of the Premises, Tenant shall not interpose any permissive counterclaim of whatever nature or description in any such proceeding. The foregoing shall not, however, constitute a waiver of Tenant’s right to assert any claim against Landlord in any separate action brought by Tenant. This waiver is knowingly, intentionally, and voluntarily made by each of parties hereto and each party acknowledges to the other that neither the other party nor any person acting on its respective behalf has made any representations to induce this waiver of trial by jury or in any way to modify or nullify its effect. The parties acknowledge that they have read and understand the meaning and ramifications of this waiver provision and have elected same of their own free will.
31.3.Successors and Assigns. Subject to the provisions of Article 25 above, and except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, personal representatives and permitted successors and assigns; provided, however, no rights shall inure to the benefit of any Transferee of Tenant unless the Transfer to such Transferee is made in compliance with the provisions of Article 20, and no options or other rights which are expressly made personal to the original Tenant hereunder or in any rider attached hereto shall be assignable to or exercisable by anyone other than the original Tenant and any Permitted Transferee under this Lease.
31.4.No Merger. The voluntary or other surrender of this Lease by Tenant or a mutual termination thereof shall not work as a merger and shall, at the option of Landlord, either (a) terminate all or any existing subleases, or (b) operate as an assignment to Landlord of Tenant’s interest under any or all such subleases.
31.5.Professional Fees. If either Landlord or Tenant should bring suit (or alternate dispute resolution proceedings) against the other with respect to this Lease, including for unlawful detainer, forcible entry and detainer, or any other relief against the other hereunder, then all costs and expenses incurred by the prevailing party therein (including, without limitation, its actual appraisers’, accountants’, attorneys’ and other professional fees, expenses and court costs), shall be paid by the other party, including any and all costs incurred in enforcing, perfecting and executing such judgment and all reasonable costs and attorneys’ fees associated with any appeal. Further, if for any reason Landlord consults legal counsel or otherwise incurs any costs or expenses as a result of its proper attempt to enforce the provisions of this Lease against Tenant, even though no litigation is commenced, or if commenced is not pursued to final judgment, Tenant shall be obligated to pay to Landlord, in addition to all other amounts for which Tenant is obligated hereunder, all of Landlord’s reasonable costs and expenses incurred in connection with any such acts, including attorneys’ fees incurred associated with any appeal.
31.6.Waiver. The waiver by either party of any breach by the other party of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant and condition herein contained, nor shall any custom or practice which may become established between the parties in the administration of the terms hereof be deemed a waiver of, or in any way affect, the right of any party to insist upon the performance by the other in strict accordance with said terms. No waiver of any default of either party hereunder shall be implied from any acceptance by Landlord or delivery by Tenant (as the case may be) of any Rent or other payments due hereunder or any omission by the non-defaulting party to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver.
31.7.Terms and Headings. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. Words used in any gender include other genders. The Article and Section headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof. Any deletion of language from this Lease prior to its execution by Landlord and Tenant shall not be construed to raise any presumption, canon of construction or implication, including, without limitation, any implication that the parties intended thereby to state the converse of the deleted language. The parties hereto acknowledge and agree that each has participated in the negotiation and drafting of this Lease; therefore, in the event of an ambiguity in, or dispute regarding the interpretation of, this Lease, the interpretation of this Lease shall not be resolved by any rule of interpretation providing for interpretation against the party who caused the uncertainty to exist or against the draftsman.
31.8.Time. Time is of the essence with respect to performance of every provision of this Lease in which time or performance is a factor.

31.9.Business Day. A “business day” is Monday through Friday, excluding holidays observed by the United States Postal Service and reference to 5:00 p.m. is to the time zone of the recipient. Whenever action must be taken (including the giving of notice or the delivery of documents) under this Lease during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day.
31.10.Payments and Notices. All Rent and other sums payable by Tenant to Landlord hereunder shall be paid to Landlord at the address designated in the Summary, or to such other persons and/or at such other places as Landlord may hereafter designate in writing. Any notice required or permitted to be given hereunder must be in writing and may be given by personal delivery (including delivery by nationally recognized overnight courier or express mailing service), by registered or certified mail, postage prepaid, return receipt requested, addressed to Tenant at the address(es) designated in the Summary, or to Landlord at the address(es) designated in the Summary. Either party may, by written notice to the other, specify a different address for notice purposes. Notice given in the foregoing manner shall be deemed given (i) when actually received or refused by the party to whom sent if delivered by a carrier or personally served or (ii) if mailed, on the day of actual delivery or refusal as shown by the certified mail return receipt or the expiration of three (3) business days after the day of mailing, whichever first occurs.
31.11.Prior Agreements; Amendments. This Lease, including the Summary and all Exhibits attached hereto, contains all of the covenants, provisions, agreements, conditions and understandings between Landlord and Tenant concerning the Premises and any other matter covered or mentioned in this Lease, and no prior agreement or understanding, oral or written, express or implied, including without limitation any marketing materials, brochures, or the like, written or verbal, provided by Landlord or its agents pertaining to the Premises or any such other matter shall govern the parties or be effective for any purpose, once this Lease has been executed by the parties. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. The parties acknowledge that all prior agreements, communications, representations and negotiations are deemed superseded by the execution of this Lease to the extent they are not expressly incorporated herein.
31.12.Separability. The invalidity or unenforceability of any provision of this Lease shall in no way affect, impair or invalidate any other provision hereof, and such other provisions shall remain valid and in full force and effect to the fullest extent permitted by law.
31.13.Recording. Neither Landlord nor Tenant shall record this Lease or a short form memorandum of this Lease.
31.14.Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent payment herein stipulated shall be deemed to be other than on account of the Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy provided in this Lease. Tenant agrees that each of the foregoing covenants and agreements shall be applicable to any covenant or agreement either expressly contained in this Lease or imposed by any statute or at common law.
31.15.Financial Statements. Upon ten (10) business days prior written request from Landlord (which Landlord may only make in connection with Tenant's exercise of any Option(s) in this Lease, following an event of default by Tenant, and/or in connection with a sale, recapitalization or refinance of the Property), Tenant shall deliver to Landlord for review by Landlord and by Landlord's accountants, investors and prospective purchasers and lenders: (a) Tenant’s most recent, annual financial statement prepared in Tenant’s normal and customary manner, and (b) to the extent available and subsequent to such annual financial statement, Tenant’s most recent, quarterly financial statement prepared in Tenant’s normal and customary manner. Landlord covenants and agrees not to disclose any information regarding Tenant's financial statements to any parties other than its accountants, investors, purchasers, and lenders to keep all of Tenant's financial information confidential. Such statements shall have been prepared in accordance with Tenant’s normal and customary practices, and certified as true in all material respects by an authorized officer (e.g., CFO or Controller), member/manager or general partner of Tenant. Notwithstanding the foregoing, in the event that (i) stock in the entity which constitutes Tenant under this Lease (as opposed to an entity that controls Tenant or is otherwise an affiliate of Tenant) is publicly traded on NASDAQ or a national stock exchange, and (ii) Tenant has its own, separate and distinct 10K and 10Q filing requirements (as opposed joint or cumulative filings with an entity that controls Tenant or with entities which are otherwise affiliates of Tenant), then Tenant's obligation to provide Landlord with a copy of its most recent current financial statement shall be deemed satisfied.
31.16.No Partnership. Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint venture or a member of a joint enterprise with Tenant by reason of this Lease.
31.17.Force Majeure. If either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, governmental moratorium or other governmental action or inaction (including, without limitation, failure, refusal or delay in issuing permits, approvals and/or authorizations), injunction or court order, riots, insurrection, war, governmental boycott or trade embargo, terrorism, bioterrorism, fire, earthquake, inclement weather including rain, flood or other natural disaster or other reason of a like nature not the fault of the party delaying in performing work or doing acts required under the terms of this Lease (but excluding delays due to financial inability) (herein collectively, “Force Majeure Delay(s)”), then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such Force Majeure Delay. The provisions of this Section 31.17 shall not apply to nor operate to excuse Tenant from the payment of Monthly Base Rent, or any Additional Rent or any other payments strictly in accordance with the terms of this Lease.
31.18.Counterparts. This Lease may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement. Signatures and initials required in this document may be executed via “wet” original handwritten signature or initials, or via electronic signature or mark, which shall be binding on the parties as originals, and the executed signature pages may be delivered using pdf or similar file type transmitted via electronic mail, cloud based server, e-signature technology (such as DocuSign) or other similar electronic means, and any such transmittal shall constitute delivery of the executed document for all purposes of this Lease.
31.19.Nondisclosure of Lease Terms. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlord to negotiate other leases and impair Landlord’s relationship with other tenants. Accordingly, Tenant agrees that it, and its partners, 

officers, directors, shareholders, members, managers, employees, agents and attorneys, shall not intentionally and voluntarily disclose the terms and conditions of this Lease to any newspaper or other publication or any other tenant or apparent prospective tenant of the Building or other portion of the Property, or prospective real estate agent, either directly or indirectly, without the prior written consent of Landlord, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease or as may be required pursuant to applicable Laws and regulations.
31.20.Authority. If Tenant executes this Lease as a partnership, corporation or limited liability company, then Tenant represents and warrants that: (a) Tenant is a duly organized and existing partnership, corporation or limited liability company, as the case may be, and is qualified to do business in the state in which the Building is located; (b) such persons and/or entities executing this Lease are duly authorized to execute and deliver this Lease on Tenant’s behalf; and (c) this Lease is binding upon Tenant in accordance with its terms. Tenant shall provide to Landlord a copy of any documents reasonably requested by Landlord evidencing such qualification, organization, existence and authorization within ten (10) days after Landlord’s request. Tenant represents and warrants to Landlord that Tenant is not, (i) in violation of any Laws relating to terrorism or money laundering, or (ii) among the individuals or entities identified on any list compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list. Landlord represents and warrants that: (a) Landlord is a duly organized and existing limited partnership and is qualified to do business in the state in which the Building is located; (b) such persons and/or entities executing this Lease are duly authorized to execute and deliver this Lease on Landlord's behalf; and (c) this Lease is binding upon Landlord in accordance with its terms
31.21.Joint and Several Liability. If more than one person or entity executes this Lease as Tenant: (a) each of them is and shall be jointly and severally liable for the covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant; and (b) the act or signature of, or notice from or to, any one or more of them with respect to this Lease shall be binding upon each and all of the persons and entities executing this Lease as Tenant with the same force and effect as if each and all of them had so acted or signed, or given or received such notice.
31.22.No Option. The submission of this Lease for examination or execution by Tenant does not constitute a reservation of or option for the Premises and this Lease shall not become effective as a Lease until the final lease has been approved by any and all Mortgagee(s) and it has been executed by Landlord and delivered to Tenant.
31.23.OFAC. Tenant represents and warrants to Landlord that Tenant is not in violation of any Laws relating to terrorism or money laundering and will not, act, directly or indirectly, for or on behalf of any of the following:
a.Any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, including without limitation, pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”) at its official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list;
b.Any “Specially Designated National” or “Blocked Person” as designated pursuant to any law, order, rule, or regulation that is enforced or administered by the United States Government or any of its departments or agencies; or
c.Any other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by OFAC.
TENANT SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS LANDLORD FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, RISKS, LIABILITIES AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COSTS) INCURRED BY LANDLORD ARISING FROM OR RELATED TO ANY BREACH OF THE FOREGOING REPRESENTATIONS. In addition, if the foregoing representations are untrue at any time during the Term (or any extension of the Term) of the Lease, an Event of Default will be deemed to have occurred, without the necessity of notice to Tenant, and shall entitle Landlord to terminate this Lease and realize any and all remedies available under this Lease and/or at law or in equity.
31.24.Options and Rights in General. Any option (each an “Option” and collectively, the “Options”), including without limitation, any option to extend, option to terminate, option to expand, right to lease, right of first offer, and/or right of first refusal, granted to Tenant is personal to the original Tenant executing this Lease or a Permitted Transferee and may be exercised only by the original Tenant executing this Lease or a Permitted Transferee, while leasing the entire Premises, and may not be exercised or be assigned, voluntarily or involuntarily, by any person or entity other than the original Tenant executing this Lease or a Permitted Transferee. The Options, if any, granted to Tenant under this Lease are not assignable separate and apart from this Lease, nor may any Option be separated from this Lease in any manner, either by reservation or otherwise. Tenant will have no right to exercise any Option, notwithstanding any provision of the grant of option to the contrary, and Tenant’s exercise of any Option may be nullified by Landlord and deemed of no further force or effect, if (i) Tenant is in Default under the terms of this Lease as of Tenant’s exercise of the Option in question or at any time after the exercise of any such Option and prior to the commencement of the Option event, (ii) Tenant has sublet all of the Premises except pursuant to a Permitted Transfer, or (iii) Landlord has given Tenant three (3) or more notices of default that remained uncured beyond applicable notice and cure periods during any twelve (12) consecutive month period of this Lease. Each Option granted to Tenant, if any, is hereby deemed an economic term which Landlord, in its sole and absolute discretion, may or may not offer in conjunction with any future extensions of the Term. Notwithstanding the foregoing, items (i) - (iii) of this Section
31.24.shall not apply to tenant’s Termination Option described in Rider No. 4 hereto.
31.25.Approvals. Whenever this Lease requires an approval, consent, determination or judgment by either Landlord or Tenant, unless another standard is expressly set forth, such approval, consent, determination or judgment and any conditions imposed thereby shall be reasonable and shall not be unreasonably withheld or delayed.
31.26.Access. Except when and where Tenant's right of access is specifically excluded in this Lease, Tenant shall have access to the Premises twenty-four (24) hours per day, seven (7) days per week.

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the date first above
written.
Tenant:

						
	IRHYTHM TECHNOLOGIES, INC.
		
	By:	/s/ Michael Coyle
		Michael Coyle
		Chief Executive Officer
		
	By:	/s/ Douglas Devine
		Douglas Devine
		Chief Financial Officer

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

Landlord:

						
	KATELLA/HOLDER STREET, LLC
	a Delaware limited liability company
		
	By:	
		Its: Authorized Signatory
		

EXHIBIT A

PREMISES FLOOR PLAN

EXHIBIT B
SITE PLAN

 

EXHIBIT C
WORK LETTER (ALLOWANCE)
1.TENANT IMPROVEMENTS. As used in the Lease and this Work Letter, the term “Tenant Improvements” or “Tenant Improvement Work” or “Tenant’s Work” means those items of general tenant improvement construction shown on the Final Plans (described in Section 4 below), more particularly described in Section 5 below.
2.WORK SCHEDULE. Prior to commencing construction, Tenant will deliver to Landlord, for Landlord’s review and approval, a schedule (“Work Schedule”), which will set forth the timetable for the planning and completion of the installation of the Tenant Improvements.
3.CONSTRUCTION REPRESENTATIVES. Landlord hereby appoints the following person(s) as Landlord’s representative (“Landlord’s Representative”) to act for Landlord in all matters covered by this Work Letter: Donna Clark.
Tenant hereby appoints the following person(s) as Tenant’s representative (“Tenant’s Representative”) to act for Tenant in all matters covered by this Work Letter: Claudia Purdy.
All communications with respect to the matters covered by this Work Letter are to be made to Landlord’s Representative or Tenant’s Representative, as the case may be, in writing in compliance with the notice provisions of the Lease. Either party may change its representative under this Work Letter at any time by written notice to the other party in compliance with the notice provisions of the Lease.
4.TENANT IMPROVEMENT PLANS
(a)Preparation of Space Plans. In accordance with the Work Schedule, Landlord agrees to meet with Tenant’s architect and/or space planner for the purpose of preparing and promptly reviewing preliminary space plans for the layout of the Premises prepared by Tenant (“Space Plans”). The Space Plans are to be sufficient to convey the architectural design of the Premises and layout of the Tenant Improvements therein and are to be submitted to Landlord in accordance with the Work Schedule for Landlord’s approval. If Landlord reasonably disapproves any aspect of the Space Plans, Landlord will advise Tenant in writing of such disapproval and the reasons therefor in accordance with the Work Schedule. Tenant will then submit to Landlord for Landlord’s approval, in accordance with the Work Schedule, a redesign of the Space Plans incorporating the revisions reasonably required by Landlord. Landlord hereby approves of the Space Plan attached hereto as Schedule 1.
(b)Preparation of Final Plans. Based on the approved Space Plans, and in accordance with the Work Schedule, Tenant’s architect will prepare complete architectural plans, drawings and specifications and complete engineered mechanical, structural and electrical working drawings for all of the Tenant Improvements for the Premises (collectively, the “Final Plans”). The Final Plans will show (a) the subdivision (including partitions and walls), layout, lighting, finish and decoration work (including carpeting and other floor coverings) for the Premises; (b) all internal and external communications and utility facilities which will require conduiting or other improvements from the base Building shell work and/or within common areas; and (c) all other specifications for the Tenant Improvements. The Final Plans will be submitted to Landlord for signature to confirm that they are consistent with the Space Plans. If Landlord reasonably disapproves any aspect of the Final Plans based on any inconsistency with the Space Plans, Landlord agrees to advise Tenant in writing of such disapproval and the reasons therefor within the time frame set forth in the Work Schedule. In accordance with the Work Schedule, Tenant will then cause Tenant’s architect to redesign the Final Plans incorporating the revisions reasonably requested by Landlord so as to make the Final Plans consistent with the Space Plans.
(c)Requirements of Tenant’s Final Plans. Tenant’s Final Plans will include locations and complete dimensions, and the Tenant Improvements, as shown on the Final Plans, will: (i) be compatible with the Building shell and with the design, construction and equipment of the Building; (ii) if not comprised of the Building standards set forth in the written description thereof (the “Standards”), then compatible with and of at least equal quality as the Standards and reasonably approved by Landlord; (iii) comply with all applicable laws, ordinances, rules and regulations of all governmental authorities having jurisdiction, and all applicable insurance regulations; (iv) not require Building service beyond the level normally provided to other tenants in the Building and will not overload the Building floors; and (v) be of a nature and quality consistent with the overall objectives of Landlord for the Building, as determined by Landlord in its reasonable but subjective discretion.
(d)Submittal of Final Plans. Once approved by Landlord and Tenant, Tenant’s architect will submit the Final Plans to the appropriate governmental agencies for plan checking and the issuance of a building permit. Tenant’s architect, with Landlord’s cooperation, will make any changes to the Final Plans which are requested by the applicable governmental authorities to obtain the building permit. After approval of the Final Plans no further changes may be made without the prior written approval of both Landlord and Tenant, which approval shall not be unreasonably withheld, conditioned or delayed, unless a Design Problem exists, and then only after agreement by Tenant to pay any excess costs resulting from the design and/or construction of such changes. "Design Problem" shall mean, individually or collectively, as reasonably determined by Landlord, (i) an adverse effect on the structural integrity of the Building, (ii) non-compliance with Laws (including applicable codes), (iii) an adverse effect on the systems and equipment of the Building, (iv) an adverse effect on the exterior appearance of the Building, (v) an effect on the exterior appearance of the Building, (vi) non-compliance with the Landlord's construction rules and regulations and/or Building Standards, (vii) having a server room located below an existing room containing a wet plumbing connection of another tenant in the Building, (viii) having a wet plumbing connection above an existing server room of another tenant in the Building, or (ix) incomplete, missing or inaccurate specifications.
(e)Changes to Shell of Building. If the Final Plans or any amendment thereof or supplement thereto shall require changes in the Building shell, the increased cost of the Building shell work caused by such changes will be paid for by Tenant or charged against the “Allowance” described in Section 5 below.
(f)Work Cost Estimate and Statement. Prior to the commencement of construction of any of the Tenant Improvements shown on the Final Plans, Tenant will submit to Landlord a written estimate of the cost to complete the Tenant Improvement Work, which written estimate will be based on the Final Plans taking into account any modifications which may be required to reflect changes in the Final Plans required by the City or County in which the Premises are located (the “Work Cost Estimate”). 

Landlord will either approve the Work Cost Estimate or disapprove specific items and submit to Tenant revisions to the Final Plans to reflect deletions of and/or substitutions for such disapproved items. Submission and approval of the Work Cost Estimate will proceed in accordance with the Work Schedule. Upon Landlord’s approval of the Work Cost Estimate (such approved Work Cost Estimate to be hereinafter known as the “Work Cost Statement”), Tenant will have the right to purchase materials and to commence the construction of the items included in the Work Cost Statement pursuant to Section 6 hereof. If the total costs reflected in the Work Cost Statement exceed the Allowance described in Section 5 below, Tenant agrees to pay such excess.
5.PAYMENT FOR THE TENANT IMPROVEMENTS
(a)Allowance. Landlord hereby grants to Tenant an Allowance as referenced in the Summary. The Allowance is to be used only for:
(i)Payment of the cost of preparing the Space Plans and the Final Plans, including mechanical, electrical, plumbing and structural drawings and of all other aspects necessary to complete the Final Plans. The Allowance will not be used for the payment of extraordinary design work not consistent with the scope of the Standards (i.e., above-standard design work) or for payments to any other consultants, designers or architects other than Landlord’s architect and/or Tenant’s architect, engineers, and construction manager (provided that not more than three percent (3%) of the Allowance may be applied against the cost of Tenant’s construction manager).
(ii)The payment of plan check, permit and license fees relating to construction of the Tenant Improvements (including the portion of the Tenant Improvements located outside of the Premises).
(iii)Construction of the Tenant Improvements (including the portion of the Tenant Improvements located outside of the Premises), including, without limitation, the following:
(aa) Installation within the Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items;
(bb) All electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the Premises;
(cc) The furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within the Premises, and supplemental systems installed therein, including the cost of meter and key control for after-hour air conditioning;
(dd) Any additional improvements to the Premises required for Tenant’s use of the Premises including, but not limited to, odor control, special heating, ventilation and air conditioning, noise or vibration control or other special systems or improvements;
(ee) All fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the Premises;
(ff) All plumbing, fixtures, pipes and accessories necessary for the Premises;
(gg) Testing and inspection costs; and
(hh) Fees and costs attributable to general conditions associated with the construction of the Tenant Improvements plus a construction administration fee in the amount of three percent (3%) of the Allowance (“Construction Administration Fee”) to cover the services of Landlord’s tenant improvement coordinator.
(b)Excess Costs. The cost of each item referenced in Section 5(a) above shall be charged against the Allowance. If the work cost exceeds the Allowance, Tenant shall be solely responsible for payment of all excess costs, including the Construction Administration Fee, which fee shall be paid to Landlord within thirty (30) days after invoice therefor. In no event will the Allowance be used to pay for Tenant’s furniture, artifacts, equipment, telephone systems or any other item of personal property which is not affixed to the Premises.
(c)Changes. Any changes to the Final Plans will be approved by Landlord and Tenant in the manner set forth in Section 4 above. Tenant shall be solely responsible for any additional costs associated with such changes; provided, however, that Landlord will first apply toward any such increase any remaining balance of the Allowance. Landlord will have the right to decline Tenant’s request for a change to the Final Plans if such changes are inconsistent with the provisions of Section 4 above.

(d)Governmental Cost Increases. If increases in the cost of the Tenant Improvements as set forth in the Work Cost Statement are due to requirements of any governmental agency, Tenant shall be solely responsible for such additional costs; provided, however, that Landlord will first apply toward any such increase any remaining balance of the Allowance.
(e)Unused Allowance Amounts. Any unused portion of the Allowance upon completion of the Tenant Improvements will not be refunded to Tenant or be available to Tenant as a credit against any obligations of Tenant under the Lease.
(f)Disbursement of the Allowance. Provided Tenant is not in default following the giving of notice and passage of any applicable cure period under the Lease or this Work Letter, Landlord shall disburse the Allowance to Tenant to reimburse Tenant for the actual construction costs which Tenant incurs in connection with the construction of the Tenant Improvements in accordance with the following:
(i)Ninety percent (90%) of the Allowance shall be disbursed to Tenant no more frequently than monthly during the course of construction of the Work (i.e., corresponding to, and consistent with, an industry standard 10% retention in connection with progress payments to general contractors);

 

(ii)The final ten percent (10%) of the Allowance (i.e., the final retention) shall be disbursed to Tenant when Landlord shall have received "Evidence of Completion and Payment" as to one hundred percent (100%) of Tenant's Work having been completed and paid for by Tenant as described hereinbelow and satisfaction of the items described in subparagraph (iii) below;
(iii)As to each phase of completion of Tenant's Work described in subparagraphs (i) through (ii) above, the appropriate portion of the Allowance shall be disbursed to Tenant only when Landlord has received the following "Evidence of Completion and Payment":
(A)Tenant has delivered to Landlord a draw request (“Draw Request”) in a form reasonably satisfactory to Landlord and Landlord’s lender with respect to the Improvements specifying that the requisite portion of Tenant’s Work has been completed, together with invoices, receipts and bills evidencing the costs and expenses set forth in such Draw Request and evidence of payment by Tenant for all costs which are payable in connection with such Tenant’s Work covered by the Draw Request. As between Landlord and Tenant, the Draw Request shall be deemed to constitute Tenant’s agreement that the Tenant’s Work identified therein has been completed in a good and workmanlike manner and in accordance with the Final Plans and the Work Schedule and has been paid for;
(B)The architect for the Tenant Improvements has certified to Landlord that the Tenant Improvements have been completed to the level indicated in the Draw Request in accordance with the Final Plans;
(C)Tenant has delivered to Landlord such other evidence of Tenant’s payment of the general contractor and subcontractors for the portions of Tenant’s Work covered by the Draw Request and the absence of any liens generated by such portions of the Tenant’s Work as may be reasonably required by Landlord (i.e., unconditional lien releases in accordance with California Civil Code Sections 8120 through 8138 or release bond(s) in accordance with California Civil Code Sections 8424 and 8534);
(D)Landlord or Landlord’s architect or construction representative has inspected the Tenant Improvements and determined that the portion of Tenant’s Work covered by the Draw Request has been completed in a good and workmanlike manner;
(vi) The final disbursement of the balance of the Allowance shall be disbursed to Tenant only when Landlord has received Evidence of Completion and Payment as to all of Tenant’s Work as provided hereinabove and the following conditions have been satisfied:
(A)Intentionally omitted;
(B)A certificate of occupancy, temporary certificate of occupancy, or legal equivalent for the Tenant Improvements and the Premises has been issued by the appropriate governmental body;
(C)Tenant has delivered to Landlord: (i) properly executed mechanics lien releases from all of Tenant’s contractors, agents and suppliers in compliance with both California Civil Code Sections 8120 through 8138, which lien releases shall be conditional with respect to the then-requested payment amounts and unconditional with respect to payment amounts previously disbursed by Landlord; (ii) an application and certificate for payment (AIA form G702-1992 or equivalent) signed by Tenant’s architect/space planner; (iii) original stamped building permit plans; (iv) copy of the building permit; (v) original stamped building permit inspection card with all final sign-offs;
(vi)a reproducible copy (in a form approved by Landlord) of the “as-built” drawings of the Tenant Improvements;
(vii)air balance reports; (viii) excess energy use calculations; (ix) one year warranty letters from Tenant’s contractors; (x) manufacturer’s warranties and operating instructions; (xi) final punch list completed and signed off by Tenant’s architect/space planner; and (xii) an acceptance of the Premises signed by Tenant;
(D)Landlord has determined that no work exists which adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other systems of the Building, the curtain wall of the Building, the structure or exterior appearance of the Building, or any other tenant’s use of such other tenant’s leased premises in the Building.
Notwithstanding anything to the contrary contained hereinabove, until the full amount of the Construction Administration Fee is paid to Landlord, all disbursements of the Allowance shall be subject to the prior deduction of the portion of the Construction Administration Fee allocable to the Tenant Improvements described in the applicable Draw Request.
(g)Books and Records. At its option, Landlord, at any time within six (6) months after final disbursement of the Allowance to Tenant, and upon at least ten (10) days prior written notice to Tenant, may cause an audit to be made of Tenant’s books and records relating to Tenant’s expenditures in connection with the construction of the Tenant Improvements. Tenant shall maintain complete and accurate books and records in accordance with generally accepted accounting principles of these expenditures for at least one (1) year. Tenant shall make available to Landlord’s auditor at the Premises within ten (10) business days following Landlord’s notice requiring the audit, all books and records maintained by Tenant pertaining to the construction and completion of the Tenant Improvements. In addition to all other remedies which Landlord may have pursuant to the Lease, Landlord may recover from Tenant the reasonable cost of its audit if the audit discloses that Tenant falsely reported to Landlord expenditures which were not in fact made or falsely reported a material amount of any expenditure or the aggregate expenditures. Landlord shall execute a commercially reasonable confidentiality agreement in connection with such audit.
6.CONSTRUCTION OF TENANT IMPROVEMENTS. Following Landlord’s approval of the Final Plans and the Work Cost Statement described in Section 4(f) above, Tenant’s contractor (selected as provided in Section 8(n)) will commence and diligently proceed with the construction of the Tenant Improvements. Tenant shall use diligent efforts to cause its contractor to complete the Tenant Improvements in a good and workmanlike manner in accordance with the Final Plans and the Work Schedule. Tenant agrees to use diligent efforts to cause construction of the Tenant Improvements to commence promptly following the issuance of a building permit for the Tenant Improvements. Landlord shall have the right to enter upon the Premises to inspect Tenant’s construction activities following reasonable advance notice Tenant.

7.DELIVERY OF POSSESSION; SUBSTANTIAL COMPLETION
(a)Delivery of Possession. Landlord shall deliver the Premises to Tenant in vacant, broom-clean condition and free of debris. Landlord agrees to use its commercially reasonable efforts to deliver possession of the Premises to Tenant on the date the Lease is fully executed. Tenant agrees that if Landlord is unable to deliver possession of the Premises to Tenant on or prior to such date, the Lease will not be void or voidable, nor will Landlord be liable to Tenant for any loss or damage resulting therefrom. The actual date upon which Landlord turns over possession of the Premises to Tenant is the “Turnover Date.”
(b)Substantial Completion; Punch-List. The Tenant Improvements will be deemed to be “substantially completed” when Tenant’s contractor certifies in writing to Landlord and Tenant that Tenant has substantially performed all of the Tenant Improvement Work required to be performed by Tenant under this Work Letter, other than decoration and minor “punch-list” type items and adjustments which do not materially interfere with Tenant’s use of the Premises; and Tenant has obtained a temporary certificate of occupancy or other required equivalent approval from the local governmental authority permitting occupancy of the Premises. Within ten (10) days after receipt of such certificates, Tenant and Landlord will conduct a walk-through inspection of the Premises and Landlord shall provide to Tenant a written punch-list specifying those decoration and other punch-list items which require completion, which items Tenant will thereafter diligently complete.
8.MISCELLANEOUS CONSTRUCTION COVENANTS
(a)No Liens. Tenant shall not allow the Tenant Improvements or the Building or any portion thereof to be subjected to any mechanic’s, materialmen’s or other liens or encumbrances arising out of the construction of the Tenant Improvements.
(b)Diligent Construction. Tenant will promptly, diligently and continuously pursue construction of the Tenant Improvements to successful completion in full compliance with the Final Plans, the Work Schedule and this Work Letter. Landlord and Tenant shall cooperate with one another during the performance of Tenant’s Work to effectuate such work in a timely and compatible manner.
(c)Compliance with Laws. Tenant will construct the Tenant Improvements in a safe and lawful manner. Tenant shall, at its sole cost and expense, comply with all applicable laws and all regulations and requirements of, and all licenses and permits issued by, all municipal or other governmental bodies with jurisdiction which pertain to the installation of the Tenant Improvements. Copies of all filed documents and all permits and licenses shall be provided to Landlord. Any portion of the Tenant Improvements which is not acceptable to any applicable governmental body, agency or department, or not reasonably satisfactory to Landlord, shall be promptly repaired or replaced by Tenant at Tenant’s expense. Notwithstanding any failure by Landlord to object to any such Tenant Improvements, Landlord shall have no responsibility therefor.
(d)Indemnification. Subject to the terms of the Lease regarding insurance and waiver of subrogation by the parties, Tenant hereby indemnifies and agrees to defend and hold Landlord, the Premises and the Building harmless from and against any and all suits, claims, actions, losses, costs or expenses of any nature whatsoever, together with reasonable attorneys’ fees for counsel of Landlord’s choice, arising out of or in connection with the Tenant Improvements or the performance of Tenant’s Work (including, but not limited to, claims for breach of warranty, worker’s compensation, personal injury or property damage, and any materialmen’s and mechanic’s liens).
(e)Insurance. Construction of the Tenant Improvements shall not proceed without Tenant first acquiring workers’ compensation and commercial general liability insurance and property damage insurance as well as “All
Risks” builders’ risk insurance, with minimum coverage of $2,000,000 or such other amount as may be approved by Landlord in writing and issued by an insurance company reasonably satisfactory to Landlord. Before commencing the construction of the Tenant Improvements, certificates of such insurance shall be furnished to Landlord for Landlord’s approval. All such policies shall provide that thirty (30) days prior notice must be given to Landlord before modification, termination or cancellation. All insurance policies maintained by Tenant pursuant to this Work Letter shall name Landlord and any lender with an interest in the Premises as additional insureds and comply with all of the applicable terms and provisions of the Lease relating to insurance. Tenant’s contractor shall be required to maintain the same insurance policies as Tenant, and such policies shall name Tenant, Landlord and any lender with an interest in the Premises as additional insureds.
(f)Construction Defects. Landlord shall have no responsibility for the Tenant Improvements and Tenant will remedy, at Tenant’s own expense, and be responsible for any and all defects in the Tenant Improvements that may appear during or after the completion thereof whether the same shall affect the Tenant Improvements in particular or any parts of the Premises in general. Tenant shall indemnify, hold harmless and reimburse Landlord for any costs or expenses incurred by Landlord by reason of any defect in any portion of the Tenant Improvements constructed by Tenant or Tenant’s contractor or subcontractors, or by reason of inadequate cleanup following completion of the Tenant Improvements.
(g)Additional Services. If the construction of the Tenant Improvements shall require that additional services or facilities (including, but not limited to, hoisting, cleanup or other cleaning services, trash removal, field supervision, or ordering of materials) be provided by Landlord, then Tenant shall pay Landlord for such items at Landlord’s cost or at a reasonable charge if the item involves time of Landlord’s personnel only. Notwithstanding anything to the contrary herein, electrical power, utilities, parking, elevator and heating, ventilation and air conditioning shall be available to Tenant during normal business hours for construction and move-in purposes at no charge to Tenant.
(h)Coordination of Labor. All of Tenant’s contractors, subcontractors, employees, servants and agents must work in harmony with and shall not interfere with any labor employed by Landlord, or Landlord’s contractors or by any other tenant or its contractors with respect to the any portion of the Property. Notwithstanding anything to the contrary herein, nothing in this Work Letter shall, however, require Tenant to use union labor.
(i)Work in Adjacent Areas. Any work to be performed in areas adjacent to the Premises shall be performed only after obtaining Landlord’s express written permission, which shall not be unreasonably withheld, conditioned or delayed.
(j)HVAC Systems. Tenant agrees to be entirely responsible for the maintenance or the balancing of any heating, ventilating or air conditioning system installed by Tenant and/or maintenance of the electrical or plumbing work installed by Tenant and/or for maintenance of lighting fixtures, partitions, doors, hardware or any other installations made by Tenant.

 

(k)Coordination with Lease. Nothing herein contained shall be construed as (i) constituting Tenant as Landlord’s agent for any purpose whatsoever, or (ii) a waiver by Landlord or Tenant of any of the terms or provisions of the Lease. Any default by Tenant following the giving of notice and the passage of any applicable cure period with respect to any portion of this Work Letter shall be deemed a breach of the Lease for which Landlord shall have all the rights and remedies as in the case of a breach of said Lease.
(l)Approval of Plans. Landlord will not check Tenant drawings for building code compliance. Approval of the Final Plans by Landlord is not a representation that the drawings are in compliance with the requirements of governing authorities, and it shall be Tenant’s responsibility to meet and comply with all federal, state, and local code requirements. Approval of the Final Plans does not constitute assumption of responsibility by Landlord or its architect for their accuracy, sufficiency or efficiency, and Tenant shall be solely responsible for such matters. Where no time period is specified herein, Landlord shall respond to any consent or approval request within five (5) business days and Landlord’s failure to provide or reasonably refuse its consent within two (2) business days of a second written request (delivered after the expiration of the initial five (5) business day notice) shall be deemed Landlord’s consent or approval to the request.
(m)Tenant’s Deliveries. Tenant shall deliver to Landlord, at least five (5) days prior to the commencement of construction of Tenant’s Work, the following information:
(i)The names, addresses, telephone numbers, and primary contacts for the general, mechanical and electrical contractors Tenant intends to engage in the performance of Tenant’s Work; and
(ii)The date on which Tenant’s Work will commence, together with the estimated dates of completion of Tenant’s construction and fixturing work.
(n)Qualification of Contractors. Once the Final Plans have been proposed and approved, Tenant shall select and retain a contractor, subcontractors and vendors (such as HVAC engineers), subject to Landlord's approval, which shall not be unreasonably withheld, conditioned or delayed. All contractors, subcontractors and vendors engaged by Tenant shall be bondable and licensed, possessing good labor relations, capable of performing quality workmanship and working in harmony with Landlord's general contractor and other contractors on the job, if any, all as determined by Landlord. All Tenant Improvement Work shall be coordinated with any ongoing general construction work on the Site or in the Building, if any. Landlord hereby approves the following architect, contractor, subcontractors, and vendors: Hendy and KPRS.

(o)Warranties. Tenant shall cause its contractor to provide warranties for not less than one (1) year (or such shorter time as may be customary and available without additional expense to Tenant) against defects in workmanship, materials and equipment, which warranties shall run to the benefit of Landlord or shall be assignable to Landlord to the extent that Landlord is obligated to maintain any of the improvements covered by such warranties.
(p)Landlord’s Performance of Work. Within ten (10) business days after receipt of Landlord’s notice of Tenant’s failure to perform its obligations under this Work Letter, if Tenant shall fail to commence to cure such failure, Landlord shall have the right, but not the obligation, to perform, on behalf of and for the account of Tenant, subject to reimbursement of the cost thereof by Tenant, any and all of Tenant’s Work which Landlord determines, in its reasonable discretion, should be performed immediately and on an emergency basis for the best interest of the Premises including, without limitation, work which pertains to structural components, mechanical, sprinkler and general utility systems, roofing and removal of unduly accumulated construction material and debris; provided, however, Landlord shall give Tenant at least ten (10) business days prior notice to the performance of any of Tenant’s Work.
(q)As-Built Drawings. Tenant shall cause “As-Built Drawings” (excluding furniture, fixtures and equipment) to be delivered to Landlord and/or Landlord’s representative no later than sixty (60) days after the completion of Tenant’s Work. In the event these drawings are not received by such date, Landlord may, at its election, cause said drawings to be obtained and Tenant shall pay to Landlord, as additional rent, the cost of producing these drawings.
9.TEST FIT ALLOWANCE. In addition to the Allowance, Landlord shall provide a test-fit allowance, in an amount not to exceed $0.15 per rentable square foot of the Premises (i.e., up to $10,339.95, based on the Premises containing approximately 68,933 rentable square feet), to reimburse Tenant for preparation of the initial preliminary space plan for the layout of the Premises. Landlord shall disburse the test-fit allowance to Tenant within thirty (30) days following Tenant’s demand therefor, accompanied by a written invoice documenting Tenant’s out of pocket test- fit costs that have been incurred and paid by Tenant.
10.LANDLORD CAUSED DELAY
(a)Landlord Caused Delays. The Commencement Date shall occur as provided in Section 1.6 of the Summary, provided that the Commencement Date shall be extended by the number of days of delay of the substantial completion of the Tenant Improvements in the Premises or Tenant’s occupancy of the Premises and commencement of operations to the extent caused by a "Landlord Caused Delay," as that term is defined, below, but only to the extent such Landlord Caused Delay causes the substantial completion of the Tenant Improvements to occur after the initially scheduled Commencement Date. As used in this Work Letter, "Landlord Caused Delay" shall mean actual delays to the extent resulting from (i) the failure of Landlord to timely approve or disapprove the Space Plans, Final Plans or Work Cost Estimate; (ii) material and unreasonable (when judged in accordance with industry custom and practice) interference by Landlord, its agents or Landlord Parties (except as otherwise allowed under this Work Letter) with the substantial completion of the Tenant Improvements and which objectively preclude or delay the construction of tenant improvements in the Building by any person, which interference relates to access by Tenant, or Tenant's agents to the Building or any Building facilities (including loading docks and freight elevators) or service (including temporary power and parking areas as provided herein) during normal construction hours, or the use thereof during normal construction hours; and (iii) delays due to the acts or failures to act of Landlord with respect to payment of the Tenant Improvements (except as otherwise allowed under this Work Letter).
(b)Determination of Landlord Caused Delay. If Tenant contends that a Landlord Caused Delay has occurred, Tenant shall notify Landlord in writing within three (3) business days of each of (i) the event which constitutes such Landlord Caused Delay and (ii) the date upon which such Landlord Caused Delay ends. Tenant's failure to deliver either or both of such notices to Landlord within the required time period shall be deemed a waiver by Tenant of the contended Landlord Caused Delay. 

If such action, inaction or circumstance described in the notice set forth in (i) above of this Section 10(b) of this Work Letter (the "Delay Notice") are not cured by Landlord within one (1) business days of Landlord's receipt of the Delay Notice ("Landlord’s Cure Period"), then a Landlord Caused Delay shall be deemed to have occurred commencing as of the day such Landlord Caused Delay commenced and ending as of the date such delay ends.
11.REMOVAL. All removal requirements for the Tenant Improvements are set forth in Section 13.2 of the Lease.
12.COVID DELAY. Notwithstanding anything to the contrary in this Work Letter or the Lease, if a statute, law, regulation, declaration of emergency or other decree or order is issued by a federal, California state or local governmental agency with jurisdiction over the Premises relating to the ongoing COVID-19 pandemic or a similar emergency related to infectious disease (collectively, a “Government Order”) and such Governmental Order results in a delay in the substantial completion of the Tenant Improvements (including, without limitation, delays in materials and labor resulting from the implementation of any Governmental Order or Voluntary Measure), then, provided that Tenant has applied commercial reasonably efforts in good faith to expeditiously complete the Tenant Improvements notwithstanding such Government Order, the date Tenant is otherwise obligated to pay Rent under the Lease shall be delayed one day for reach day of such interference or delay; provided, however, any such delay due to Government Order shall be offset by any days of Tenant Delays.

 

            Schedule 1

Approved Space Plan

        Schedule 2

Landlord’s Work
    

EXHTBTT D
NOTICE OF LEASE TERM DATES
Date:____________,_________
To: ________________________
Re:    [Lease (describe lease title)_______________________] dated ___________,_______      (“Lease”) by and between
____________________, a __________________ (“Landlord”), and ___________________________________, a ____________________ (“Tenant”), for the premises commonly known as __________________________________
(“Premises”).
Dear:_________________:
In accordance with the above-referenced Lease, we wish to advise and/or confirm as follows:
•That Tenant has accepted and is in possession of the Premises and acknowledges the following:
•Term of the Lease:
•Commencement Date:
•Expiration Date:
•Rentable Square Feet:
•Tenant’s Percentage of Building:
•That in accordance with the Lease, rental payments have commenced on _________________________ and rent is payable in accordance with the following schedule:
Months                                                                                Monthly Base Rent
•Rent is due and payable in advance on the first day of each and every month during the Term of the Lease.
Your rent checks should be made payable to:                                          _____________________________        
ACCEPTED AND AGREED
												
	TENANT:		LANDLORD:	
	By:		By:	
	Print Name:			
	Its:		Print	Name:
			Its:	

EXHIBIT E
RULES AND REGULATIONS
1.Tenant agrees that it shall comply with all fire and security regulations that may be issued from time to time by Landlord, and Tenant also shall provide Landlord with the name of a designated responsible employee to represent Tenant in all matters pertaining to such fire or security regulations. Tenant shall cooperate fully with Landlord in all matters concerning fire and other emergency procedures.
2.Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage. Such responsibility shall include keeping doors locked and other means of entry to the Premises closed.
3.Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Premises in any manner except by a paste, or other material which may easily be removed with water, the use of cement or other similar adhesive materials being expressly prohibited. The method of affixing any such linoleum, tile, carpet or other similar floor covering shall be subject to the approval of Landlord. The expense of repairing any damage resulting from a violation of this rule shall be borne by Tenant.
4.Tenant shall not without Landlord’s consent, which may be given or withheld in Landlord’s sole and absolute discretion, receive, store, discharge, or transport firearms, ammunition, or weapons or explosives of any kind or nature at, on or from the Premises.
5.No vehicle or equipment of any kind shall be dismantled, repaired or serviced on the Common Area.
6.Signs will conform to sign standards and criteria established from time to time by Landlord. No other signs, placards, pictures, advertisements, names or notices shall be inscribed, displayed or printed or affixed on or to any part of the outside or inside of the building without the written consent of Landlord and Landlord shall have the right to remove any such non-conforming signs, placards, pictures, advertisements, names or notices without notice to and at the expense of Tenant.
7.No antenna, aerial, discs, dishes or other such device shall be erected on the roof or exterior walls of the Premises, or on the grounds, without the written consent of the Landlord in each instance. Any device so installed without such written consent shall be subject to removal without notice at any time.
8.No loud speakers, televisions, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Premises without the prior written consent of the Landlord.
9.Tenant shall not place or permit any obstruction or materials in the outside areas immediately adjoining the Premises or permit any work to be performed outside the Premises, other than as provided in the Lease.
10.No open storage shall be permitted in the Property.
11.All garbage and refuse shall be placed in containers placed at the location designated for refuse collection, in the manner specified by Landlord.
12.No vending machine or machines of any description shall be installed, maintained or operated upon the Common Area except for the use of Tenant's employees.
13.Tenant shall not disturb, solicit, or canvass any occupant of the building and shall cooperate to prevent same.
14.No noxious or offensive trade or activity shall be carried on upon any units or any part of the Common Area nor shall anything be done thereon which would in any way interfere with the quiet enjoyment of each of the other tenants of the Project.
15.Landlord reserves the right to make such amendments to these rules and regulations from time to time as are reasonable and nondiscriminatory and not inconsistent with the Lease.
PARKING RULES AND REGULATIONS
In addition to any parking provisions contained in the Lease, the following rules and regulations shall apply with respect to the use of the Property’s parking facilities.
1.Every parker is required to park and lock his/her own vehicle. All responsibility for damage to or loss of vehicles is assumed by the parker and Landlord shall not be responsible for any such damage or loss by water, fire, defective brakes, the act or omissions of others, theft, or for any other cause.
2.Tenant shall not park or permit its employees to park in any parking areas designated by Landlord as areas for parking by visitors to the Property. Except as otherwise expressly provided in the Lease, Tenant shall not leave vehicles in the parking areas overnight nor park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or four wheeled trucks.
3.Except as otherwise expressly provided in the Lease, no extended term storage of vehicles shall be permitted.
4.All directional signs and arrows must be observed.

5.The speed limit within all parking areas shall be five (5) miles per hour.
6.Parking is prohibited: (a) in areas not striped for parking; (b) in aisles; (c) where “no parking” signs are posted; (d) on ramps; (e) in cross-hatched areas; and (f) in reserved spaces and in such other areas as may be designated by Landlord.

7.Washing, waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose is prohibited.
8.Landlord reserves the right to modify and/or adopt such other reasonable and non-discriminatory rules and regulations for the parking facilities as it deems necessary for the operation of the parking areas. Landlord may refuse to permit any person who violates these rules to park at the Property, and any violation of the rules shall subject the vehicle to removal, at such vehicle owner’s expense.
9.Tenant’s parking spaces shall be used only for parking by vehicles no larger than normally sized passenger automobiles, vans and sport utility vehicles. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the prohibited activities described herein, then Landlord shall have the right, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost thereof to Tenant, which cost shall be payable by Tenant upon demand by Landlord.
In the event of a conflict between the terms of this Exhibit E and the other terms of the Lease, Summary, Work Letter or other Exhibits or Riders hereto, the terms of the Lease, Summary, Work Letter or other Exhibits or Riders shall control.

EXHIBIT F
ESTOPPEL CERTIFICATE
The undersigned (“Tenant”) hereby certifies to ______________________________________________________(“Landlord”), and ________________________________________________________________, as follows:
1.Attached hereto is a true, correct and complete copy of that certain Lease dated _________________________, between
Landlord and Tenant (the“Lease”), for the premises commonly known as ____________________________________________(the “Premises”). The Lease is now in full force and effect and has not been amended, modified or supplemented, except as set forth in Section 6 below.
2.The term of the Lease commenced on ___________________,___.
3.The term of the Lease is currently scheduled to expire on___________________,___.
4.Tenant has no option to renew or extend the Term of the Lease except: _______________________________.
5.Tenant has no preferential right to purchase the Premises or any    portion of the Building/Premises except: _____________________________________________________________________.
6.The Lease has: (Initial One)
(    )    not been amended, modified, supplemented, extended, renewed or assigned.
(    )    been amended, modified, supplemented, extended, renewed or assigned by the following described
agreements, copies of which are attached hereto: ____________________________________________.
7.Tenant has accepted and is now in possession of the Premises and has not sublet, assigned or encumbered the Lease, the Premises or any portion thereof except as follows: ______________________________________________________.
8.The current Base Rent is $______________; and current monthly parking charges are $______________.
9.The amount of security deposit (if any) is $______________. No other security deposits have been made.
10.All rental payments payable by Tenant have been paid in full as of the date hereof. No rent under the Lease
has been paid for more than thirty (30) days in advance of its due date.
11.All work required to be performed by Landlord under the Lease has been completed and has been accepted by Tenant, and all tenant improvement allowances have been paid in full except _________________________.
12.As of the date hereof, Tenant has no actual knowledge of any defaults on the part of Landlord under the Lease except _________________________.
13.As of the date hereof, to Tenant's actual knowledge, there are no defaults on the part of Tenant under the Lease.
14.As of the date hereof, to Tenant's actual knowledge, Tenant has no defense as to its obligations under the Lease and claims no set-off or counterclaim against Landlord.
15.Tenant has no right to any concession (rental or otherwise) or similar compensation in connection with renting the space it occupies, except as expressly provided in the Lease.
16.To Tenant's actual knowledge, all insurance required of Tenant under the Lease has been provided by Tenant and all premiums have been paid.
17.There has not been filed by or, to Tenant's actual knowledge, against Tenant a petition in bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the bankruptcy laws of the United States or any state thereof, or any other action brought pursuant to such bankruptcy laws with respect to Tenant.
18.Tenant pays rent due Landlord under the Lease to Landlord and does not have any knowledge of any other person who has any right to such rents by collateral assignment or otherwise.
The foregoing certification is made with the knowledge that _____________________________________ is about to [fund a loan to Landlord or purchase the Building from Landlord], and that _____________________________________ is relying upon the representations herein made in [funding such loan or purchasing the Building].
Dated: _________________,______.
“TENANT”                _______________________________________________________
By: ____________________________________________________
Print Name: _____________________________________________
Its: ____________________________________________________

RIDER NO.1 TO LEASE
EXTENSION OPTION

This Rider No. 1 is made and entered into by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent provisions of the Lease. All references in the Lease and in this Rider to the “Lease” shall be construed to mean the Lease (and all Exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1.Subject to Rider No. 5 entitled, “Options in General”, Landlord hereby grants to Tenant one (1) option (the “Extension Option”) to extend the Term of the Lease for one (1) additional period of five (5) years (the “Option Term”), on the same terms, covenants and conditions as provided for in the Lease during the initial Term, except for the Monthly Base Rent, which shall initially be equal to the “fair market rental rate” for the Premises for the Option Term as defined and determined in accordance with the provisions of the Fair Market Rental Rate Rider attached to the Lease as Rider No. 2, subject to fair market annual rent adjustments during the Option Term.
2.The Extension Option must be exercised, if at all, by written notice (“Extension Notice”) delivered by Tenant to Landlord no sooner than that date which is fifteen (15) months and no later than that date which is twelve (12) months prior to the expiration of the then current Term of the Lease. Provided Tenant has properly and timely exercised the Extension Option, the then current Term of the Lease shall be extended by the Option Term, and all terms, covenants and conditions of the Lease shall remain unmodified and in full force and effect, except that the Monthly Base Rent shall be as set forth above and except that there shall be no remaining Extension Option.

RIDER NO. 2 TO LEASE
FAIR MARKET RENTAL RATE
This Rider No. 2 is made and entered into by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent provisions of the Lease. All references in the Lease and in this Rider to the “Lease” shall be construed to mean the Lease (and all Exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1.The term “fair market rental rate” as used in this Rider and any Rider attached to the Lease means the annual amount per square foot, projected for each year of the Option Term (including annual adjustments), that a willing, non-equity tenant (excluding sublease and assignment transactions) would pay, and a willing landlord of a comparable quality building located in the Cypress, California area would accept, in an arm’s length transaction (what Landlord is accepting in then current transactions for the Building may be used for purposes of projecting rent for the Option Term), for space of comparable size, quality and floor height as the Premises, taking into account the age, quality and layout of the existing improvements in the Premises (but excluding any improvements installed at Tenant’s cost), and taking into account items that professional real estate brokers or professional real estate appraisers customarily consider, including, but not limited to, rental rates, space availability, tenant size, tenant improvement allowances, parking charges and any other lease considerations, if any, then being charged or granted by Landlord or the lessors of such similar buildings. All economic terms other than Monthly Base Rent, such as tenant improvement allowance amounts, if any, operating expense allowances, parking charges, etc., will be factored into the determination of the fair market rental rate for the Option Term. Accordingly, the fair market rental rate will be an effective rate, not specifically including, but accounting for, the appropriate economic considerations described above.
2.Landlord shall provide written notice of Landlord’s determination of the fair market rental rate not later than sixty (60) days after the last day upon which Tenant may timely exercise the right giving rise to the necessity for such fair market rental rate determination. Tenant shall have thirty (30) days (“Tenant’s Review Period”) after receipt of Landlord’s notice of the fair market rental rate within which to accept such fair market rental rate or to reasonably object thereto in writing. Failure of Tenant to so object to the fair market rental rate submitted by Landlord in writing within Tenant’s Review Period shall conclusively be deemed Tenant’s disapproval and rejection thereof. If within Tenant’s Review Period Tenant reasonably objects to or is deemed to have disapproved the fair market rental rate submitted by Landlord, Landlord and Tenant will meet together with their respective real estate brokers and legal counsel to present and discuss their individual determinations of the fair market rental rate for the Premises under the parameters set forth in Paragraph 1 above and shall diligently and in good faith attempt to negotiate a rental rate on the basis of such individual determinations. Such meeting shall occur no later than ten (10) days after the expiration of Tenant’s Review Period. The parties shall each provide the other with such supporting information and documentation as they deem appropriate. At such meeting if Landlord and Tenant are unable to agree upon the fair market rental rate, they shall each submit to the other their respective best and final offer as to the fair market rental rate. If Landlord and Tenant fail to reach agreement on such fair market rental rate within five (5) business days following such a meeting (the “Outside Agreement Date”), then Landlord and Tenant shall submit each party’s determination to appraisal in accordance with the provisions of Section 3 below.
3.(a) Landlord and Tenant shall each appoint one (1) independent appraiser who shall by profession be an M.A.I. certified real estate appraiser who shall have been active over the five (5) year period ending on the date of such appointment in the leasing of commercial (including office) properties in the Cypress, California area. The determination of the appraisers shall be limited solely to the issue of whether Landlord’s or Tenant’s last proposed (as of the Outside Agreement Date) best and final fair market rental rate for the Premises is the closest to the actual fair market rental rate for the Premises as determined by the appraisers, taking into account the requirements specified in Section 1 above. Each such appraiser shall be appointed within ten (10) business days after the Outside Agreement Date.
(b)The two (2) appraisers so appointed shall within ten (10) business days after the date of the appointment of the last appointed appraiser agree upon and appoint a third appraiser who shall be qualified under the same criteria set forth hereinabove for qualification of the initial two (2) appraisers.
(c)The three (3) appraisers shall within ten (10) business days after the appointment of the third appraiser reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted best and final fair market rental rate, and shall notify Landlord and Tenant thereof. During such ten (10) business day period, Landlord and Tenant may submit to the appraisers such information and documentation to support their respective positions as they shall deem reasonably relevant and Landlord and Tenant may each appear before the appraisers jointly to question and respond to questions from the appraisers.
(d)The decision of the majority of the three (3) appraisers shall be binding upon Landlord and Tenant and neither party shall have the right to reject the decision or to undo the exercise of the applicable Option. If either Landlord or Tenant fails to appoint an appraiser within the time period specified in Section 3(a) hereinabove, the appraiser appointed by one of them shall within ten (10) business days following the date on which the party failing to appoint an appraiser could have last appointed such appraiser reach a decision based upon the same procedures as set forth above (i.e., by selecting either Landlord’s or Tenant’s submitted best and final fair market rental rate), and shall notify Landlord and Tenant thereof, and such appraiser’s decision shall be binding upon Landlord and Tenant and neither party shall have the right to reject the decision or to undo the exercise of the applicable Option.

(e)If the two (2) appraisers fail to agree upon and appoint a third appraiser, either party, upon ten (10) days written notice to the other party, can apply to the Presiding Judge of the Superior Court of Orange County to appoint a third appraiser meeting the qualifications set forth herein. The third appraiser, however, selected shall be a person who has not previously acted in any capacity for either party.
(f)The cost of each party’s appraiser shall be the responsibility of the party selecting such appraiser, and the cost of the third appraiser (or arbitration, if necessary) shall be shared equally by Landlord and Tenant.
(g)If the process described hereinabove has not resulted in a selection of either Landlord’s or Tenant’s submitted best and final fair market rental rate by the commencement of the applicable Option Term, then, as of the commencement of the Option Term, Tenant shall be required to pay Monthly Base Rent in an amount equal to the Monthly Base Rent in effect at the end of the initial Term, but in no event shall such amount be greater than Landlord's best and final determination of the fair market rental rate submitted to the appraiser and in no event less than Tenant's best and final determination of the fair market rental rate submitted to the appraiser. Upon the final determination of the fair market rental rate, the payments made by Tenant shall be reconciled with the actual amounts of Monthly Base Rent due during the Option Term, and the appropriate party shall make any corresponding payment to the other party within thirty (30) days after the final determination of the fair market rental rate. The parties shall enter into an amendment to this Lease confirming the terms of the decision.

RIDER NO. 3 TO LEASE
EXPANSION OPTION RIDER
This Rider No. 3 is made and entered into by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent provisions of the Lease. All references in the Lease and in this Rider to the “Lease” shall be construed to mean the Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1.Subject to the terms and conditions of this Rider No. 3 and Rider No. 5, entitled “Options in General”, Landlord hereby grants to Tenant the one-time option to expand (“Expansion Option”) into that certain office space within the Building located contiguous to the Premises consisting of approximately 25,000 rentable square feet, as depicted in Schedule 1 to Rider No. 3 attached hereto (the “Expansion Space”), which Expansion Option must be exercised on or before the date Landlord enters into a lease with a third-party following the Effective Date. For the avoidance of doubt, if Tenant does not deliver to Landlord the Expansion Notice following the Effective Date, and Landlord leases the Expansion Space to a third party following the Effective Date and prior to Tenant’s delivery to Landlord of the Expansion Notice, then the Expansion Option shall terminate, and Tenant shall have no right to lease the Expansion Space in accordance with this Rider No. 3. Tenant must exercise its Expansion Option by providing Landlord with written notice of its election to exercise the Expansion Option (“Expansion Notice”) at any time within the initial Term (the “Option Exercise Period”). The Term as to the Expansion Space shall be coterminous with the Term with respect to the original Premises as the same may be extended pursuant to Tenant’s Extension Option. If Tenant exercises its Expansion Option within the Option Exercise Period, then commencing upon delivery of the Expansion Space to Tenant in the required condition (the “Expansion Space Commencement Date”), the Monthly Base Rent for the Expansion Space shall be adjusted to the “fair market rental rate” as defined and determined in accordance with the provisions of the Fair Market Rental Rate Rider attached to the Lease as Rider No. 2, subject to fair market annual rent adjustments during the Term; provided, that, Landlord shall provide written notice of Landlord’s initial determination of the fair market rental rate not later than ten (10) business days after Landlord’s receipt of the Expansion Notice. If Tenant exercises its Expansion Option within the Option Exercise Period, Landlord shall deliver the Expansion Space to Tenant in vacant, broom clean condition, with all Building Systems in good working order, and in compliance with all Laws to the extent such compliance is required in order to allow Tenant to obtain a demolition or construction permit or other governmental approvals for the construction of the Tenant Improvements.
2.Subject to the foregoing provisions of this Rider No. 3, Tenant’s lease of the Expansion Space will be on the same terms and conditions as affect the original Premises; provided, however, effective upon the Expansion Space Commencement Date: (i) Tenant’s Percentage will be increased to take into account the additional square footage of the Expansion Space within the Building and all figures in this Lease affected by the addition of the square footage of the Expansion Space to the Premises will be adjusted accordingly; (ii) Tenant will not be entitled to any economic concessions applicable to the original Premises pursuant to the provisions of this Lease; (iii) Tenant shall deposit an additional deposit in an amount reasonably determined by Landlord based on Tenant’s financial condition at the time it exercises the Expansion Notice, in an amount not to exceed an amount that is proportionate to the Security Deposit for the original Premises; (iv) the improvement of the Expansion Space will be subject to the provisions of Paragraph 3 below; and (v) Tenant will be entitled to a pro rata increase to the number of parking spaces allocated to Tenant under the Lease.
3.Within ten (10) days following Tenant’s delivery of the Expansion Notice to Landlord, the parties will execute an amendment to the Lease in order to include the Expansion Space as part of the Premises and to document the terms of Tenant’s lease thereof. Except as otherwise set forth herein, the Expansion Space will be delivered to Tenant and Tenant shall accept the Expansion Space from Landlord in its “AS IS” condition.
4.Any termination of the Lease shall terminate all rights of Tenant with respect to the Expansion Space. The Expansion Option shall not be severable from the Lease, nor may the Expansion Option be assigned or otherwise conveyed in connection with any permitted assignment of the Lease other than to a Permitted Transferee. Landlord’s consent to any assignment of the Lease shall not be construed as allowing an assignment or a conveyance of the Expansion Option to any assignee.
5.Tenant shall have no right to exercise the Expansion Option, notwithstanding any provision hereof to the contrary, (a) during the time commencing from the date Landlord gives to Tenant a notice of default pursuant to Article 22 of this Lease and continuing until the noncompliance alleged in said notice of default is cured, or (b) during the period of time commencing on the day after a monetary obligation to Landlord is due from Tenant and unpaid (without any necessity for notice thereof to Tenant) and continuing until the obligation is paid, or (c) if Landlord has given to Tenant three or more notices of default under Article 22 of this Lease that remain uncured beyond applicable notice and cure periods, (d) if Tenant has committed any non-curable breach, or is otherwise in default of any of the terms, covenants or conditions of this Lease, or (e) if Tenant fails to timely exercise its Expansion Option within the Option Exercise Period. The provisions of this Paragraph 5 shall also apply to a Permitted Transferee.

SCHEDULE 1 TO RIDER NO. 3
EXPANSION SPACE

RIDER NO. 4 TO LEASE
TERMINATION OPTION RIDER
This Rider No. 4 is made and entered into by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent provisions of the Lease. All references in the Lease and in this Rider to the “Lease” shall be construed to mean the Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1.Subject to the terms of this Rider No. 4 and Rider No. 5, entitled “Options In General”, and notwithstanding anything to the contrary contained in the Lease, Tenant will have the one-time option to terminate and cancel the Lease (“Termination Option”), effective as of 11:59 p.m. on the last day of the ninetieth (90th) full calendar month of the initial Term (“Termination Date”), by delivering to Landlord, on or before the date which is nine (9) months prior to the Termination Date, written notice of Tenant’s exercise of its Termination Option. As a condition to the effectiveness of Tenant’s exercise of its Termination Option and in addition to Tenant’s obligation to satisfy all other monetary and non-monetary obligations arising under this Lease through to the Termination Date, Tenant shall pay to Landlord the following “Termination Consideration”: (a) the then unamortized value of the following (amortized over the initial Term together with interest at the rate of eight percent (8%) per annum): (i) the portion of the Allowance calculated based on the rentable area of the Premises, exclusive of $675,000 (i.e., $2,678,875.00 of the Allowance), (ii) the Abated Amount set forth in Section 1.8 of the Lease, and (iii) brokerage commissions paid by Landlord in connection with the execution of this Lease attributable to the portion of the Term remaining following the Termination Date; plus (b) $540,956.65. The Termination Consideration shall be due and payable by Tenant to Landlord concurrently with Tenant’s delivery of notice to Landlord of the exercise of the Termination Option. If Tenant properly and timely exercises its Termination Option and properly and timely delivers the Termination Consideration to Landlord as set forth above, then the Lease will terminate as of midnight on the Termination Date.
2.Upon determination of the final unamortized value of the Allowance, Abated Amount, and the brokerage commissions, Landlord and Tenant shall enter into an amendment acknowledging the total Termination Consideration.

RIDER NO. 5 TO LEASE
OPTIONS IN GENERAL
This Rider No. 5 is made and entered into by and between KATELLA/HOLDER STREET, LLC, a Delaware limited liability company (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent provisions of the Lease. All references in the Lease and in this Rider to the “Lease” shall be construed to mean the Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1.Definition. As used in this Lease and any Rider or Exhibit attached hereto, the word “Option” has the following meaning:
(i)The Extension Option pursuant to Rider No. 1 herein;
(ii)The Expansion Option pursuant to Rider No. 2 herein; and
(ii)     The Termination Option pursuant to Rider No. 3 herein.
2.Options Personal. Each Option granted to Tenant is personal to the original Tenant executing this Lease and any Permitted Transferee and may be exercised only by the original Tenant executing this Lease or such Permitted Transferee while leasing the entire Premises and without having assigned this Lease or sublet any portion of the Premises (other than to a Permitted Transferee), and may not be exercised or be assigned, voluntarily or involuntarily, by any person or entity other than the original Tenant executing this Lease and any Permitted Transferee. The Options, if any, granted to Tenant under this Lease are not assignable separate and apart from this Lease, nor may any Option be separated from this Lease in any manner, either by reservation or otherwise.
3.Effect of Default on Options. Except with respect to the Termination Option, Tenant will have no right to exercise any Option, notwithstanding any provision of the grant of option to the contrary, and Tenant’ s exercise of any Option may be nullified by Landlord and deemed of no further force or effect, if Tenant is in Default of any monetary obligation or material non-monetary obligation under the terms of this Lease as of Tenant’s exercise of the Option in question or at any time after the exercise of any such Option and prior to the commencement of the Option event, or (ii) Landlord has given Tenant three (3) or more notices of default that remained uncured beyond applicable notice and cure periods during any twelve (12) consecutive month period of this Lease.
4.Options as Economic Terms. Each Option is hereby deemed an economic term which Landlord, in its sole and absolute discretion, may or may not offer in conjunction with any future extensions of the Term.

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