Document:

Exhibit 10.4

 

[EXECUTION COPY]

 

CONFIDENTIAL 

 

MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED

One Bryant Park

New York, New York 10036

 

June
9, 2017

 

Fred’s,
Inc.

4300 New Getwell Road

Memphis, Tennessee 38118

Attention: Mr. Rick Hans

Executive Vice President and Chief Financial Officer

 

$550,000,000
Senior Secured Term Loan Facility

Amended and Restated Commitment Letter

 

Ladies
and Gentlemen:

 

Fred’s,
Inc. (the “Company”) has advised Merrill Lynch, Pierce, Fenner & Smith Incorporated (together, with its
designated affiliates, “MLPFS”), TPG Specialty Lending Inc. and its affiliated funds signatory hereto (collectively,
“TPG”), the affiliated funds of Birch Grove Capital LP signatory hereto (collectively, “Birch Grove”),
Crystal Financial LLC (“Crystal”), Gordon Brothers Finance Company, LLC (“GBFC”), Pathlight
Capital LLC (“Pathlight”), Silver Point Specialty Credit Fund, L.P. (“Silver Point”), Tennenbaum
Capital Partners, LLC (“Tennenbaum”) and Great American Capital Partners, LLC (“GACP” and,
together with TPG, Birch Grove, Crystal, GBFC, Pathlight, Silver Point and Tennenbaum, collectively, the “Original Initial
Lenders”), the affiliated funds of Apollo Global Management signatory hereto (collectively, “Apollo”),
the affiliated funds of Cerberus Business Finance LLC signatory hereto (collectively, “Cerberus”), KKR Credit
Advisors US LLC on behalf of itself and certain of its affiliates and managed funds and accounts (“KKR”) and
White Oak Asset Finance (“White Oak” and, together with Apollo, Cerberus and KKR, collectively, the “New
Initial Lenders” and, together with the Original Initial Lenders, collectively, the “Initial Lenders”;
the Initial Lenders together with MLPFS, each individually a “Commitment Party” and collectively, the “Commitment
Parties”) that it is seeking a new senior secured term loan facility in an aggregate principal amount of $550,000,000
(the “Term Loan Facility”) in connection with its acquisition (the “Acquisition”) of the
business and operations consisting of not less than 865 but up to 1,200 retail stores and certain intellectual property, corporate
infrastructure and distribution centers of Rite Aid Corporation (collectively, the “Acquired Business”) and
to consummate the other transactions described in the Transaction Description attached hereto as Exhibit A (the “Transaction
Description”). Capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the
annexes to this letter, the Transaction Description and in the Summary of Principal Terms and Conditions attached hereto as Exhibit
B (the “Term Sheet” and together with this amended and restated commitment letter, the Transaction Description,
and the annexes, exhibits and schedules to this amended and restated commitment letter, collectively, the “Commitment
Letter”).

 

1.           Commitment.
Each of the Initial Lenders is pleased to advise the Company of its several and not joint commitment to provide the principal
amounts of the Term Loan Facility as set forth on Schedule 1 attached hereto, in each case subject to the terms set forth in this
Commitment Letter, the amended and restated fee letter of even date herewith between MLPFS and the Company (the “Lead
Arranger Fee Letter”), the amended and restated fee letter of even date herewith between Administrative Agent (as defined
below) and the Company (the “Administrative Agent Fee Letter”), and the amended and restated fee letter of
even date herewith among the Initial Lenders and the Company (the “Initial Lender Fee Letter” and, together
with the Lead Arranger Fee Letter and the Administrative Agent Fee Letter, collectively, the “Fee Letters”).
The commitments of the Initial Lenders are several and not joint. The Initial Lenders shall be severally liable in respect of
their respective commitments and all other obligations in this Commitment Letter and in the Fee Letters, and no Commitment Party
shall be responsible for the commitment or any other obligation of any other Commitment Party.

 

     

     

    

 

2.           Titles
and Roles; Sell-Side Advisor. The Company hereby appoints each of MLPFS, and TPG (each an “Arranger” and
collectively, the “Arrangers”), in each case, acting alone or through or with branches or affiliates selected
by it, to act as the joint lead arrangers. MLPFS in its capacity as Arranger is referred to herein as “Lead Arranger.”
Crystal, GBFC and Pathlight will act as co-documentation agents under the Term Loan Facility in such capacity “Co-Documentation
Agent”. TPG will act as sole and exclusive administrative agent under the Term Loan Facility (in such capacity, the “Administrative
Agent”) for the Initial Lenders and any other parties to the Term Loan Facility as lenders (individually a “Term
Loan Lender” and collectively “Term Loan Lenders”). Each of the Arrangers, Administrative Agent,
and Co-Documentation Agents will perform the duties and exercise the authority customarily performed and exercised by it in such
role, subject to the terms below and MLPFS will be the sole physical bookrunning manager. MLPFS will have “left” and
highest placement in the information memorandum and all marketing materials and other documentation used in connection with the
Term Loan Facility and TPG will have second placement and appear immediately to the right of MLPFS in the information memorandum
and all marketing materials and other documentation used in connection with the Term Loan Facility. The Company agrees that no
other agents, co-agents, arrangers or bookrunners will be appointed, no other titles will be awarded and no compensation (other
than compensation expressly contemplated by this Commitment Letter and the Fee Letters) will be paid to any Term Loan Lender in
connection with the Term Loan Facility unless the Commitment Parties and the Company shall so agree.

 

The
parties acknowledge that MLPFS and/or its affiliates have been or may be retained as the sell-side financial advisor to the Seller
and/or the Acquired Business (in such capacity, the “Financial Advisor”) in connection with the Transactions.
The Company agrees to any such retention, and further agrees not to assert any claim the Company or any of its affiliates might
allege based on any actual or potential conflicts of interest that might be asserted to arise or result from, on the one hand,
the engagement of the Financial Advisor or from MLPFS’ and/or its affiliates’ arranging or providing or contemplating
arranging or providing financing for a competing bidder and, on the other hand, the relationship of MLPFS and/or its affiliates
with the Company and its affiliates as described and referred to herein.

 

3.           [Reserved.]

 

4.           Expenses
and Indemnification. The Company agrees (a) to pay or reimburse all reasonable and documented out-of-pocket fees, costs and
expenses incurred by the Commitment Parties or their affiliates in connection with their due diligence, approval, documentation,
syndication and closing of the Term Loan Facility, whether incurred before or after the date hereof (collectively, the “Expenses”),
including the preparation and negotiation of this Commitment Letter and the Original Commitment Letter (as hereinafter defined)
(including any amendment or modification hereto), and including reasonable attorneys’ fees and legal expenses (provided,
that, legal fees shall be limited to the reasonable fees and disbursements of Morgan Lewis & Bockius LLP as counsel to the
Lead Arranger and Choate Hall & Stewart, LLP as counsel to the Administrative Agent and, in addition, one local counsel for
the Administrative Agent in each appropriate jurisdiction), appraisal fees, real property evaluation fees, expenses related to
the USA Patriot Act compliance and background checks, electronic reporting system set-up fees (if any), filing and search charges,
recording taxes and field examination expenses and the enforcement of any of the rights and remedies of the Commitment Parties
under this Commitment Letter, in each case regardless of whether the Term Loan Facility is closed, and (b) to indemnify, defend,
and hold harmless the Commitment Parties, each of their affiliates, and each of their officers, directors, employees, agents,
advisors, and other representatives (each, an “Indemnified Person”) as set forth on Annex A hereto. All Expenses
are to be paid to, as applicable, the Lead Arranger or the Administrative Agent upon demand by any Commitment Party, together
with such advance funds on account of such charges and expenses as, as applicable, Lead Arranger or Administrative Agent may from
time to time request. The Company agrees that, once paid, none of the Expenses shall be refundable under any circumstances, regardless
of whether the Term Loan Facility closes, and shall not be credited against any other amount payable by the Company to any Commitment
Party in connection with the Term Loan Facility or otherwise.

 

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Crystal
has previously received from the Company an expense deposit and work fee of $150,000 (together with any additional amounts, the
“Deposit”) to fund the reimbursement of the Expenses. The Administrative Agent may from time to time request additions
to the Deposit if it appears that such Expenses are likely to exceed the unused portion of such Deposit and the Company agrees
to provide such additions to the Deposit. The Deposit will not be segregated, may be commingled with other funds of Crystal and
the Company will not be entitled to receive interest on the Deposit.

 

5.           Fees.
As consideration for the commitments and agreements of the Commitment Parties hereunder, the Company agrees to pay the fees described
in the Term Sheet and in the Fee Letters on the Closing Date and on the dates set forth in the Fee Letters, as applicable, on
the terms and subject to the conditions set forth therein. The terms of the Term Sheet are an integral part of each Commitment
Party’s commitment and other obligations hereunder. Each of the fees described herein and in the Fee Letters shall be nonrefundable
when paid except as expressly set forth therein. All fees payable hereunder and under the Fee Letters will be paid in immediately
available funds. Notwithstanding the foregoing, at the option of any Initial Lender or any Term Loan Lender, all or any portion
of the fees payable to such Initial Lender or Term Loan Lender hereunder may be taken in the form of original issue discount.
The obligation to pay any fee provided for herein or therein or to cause any such fee to be paid will be joint and several with
any other party having such an obligation, shall be absolute and unconditional and shall not be subject to reduction by way of
setoff or counterclaim.

 

6.           Conditions.
The commitments of each of the Commitment Parties under this Commitment Letter and its obligations to close the Term Loan Facility
on the Closing Date are subject solely to: (a) since January 28, 2017, there shall not have been any event or circumstances that,
individually or in the aggregate, has had, or would reasonably be expected to have, a Target Material Adverse Effect (as such
term is defined below) that is continuing, and (b) the satisfaction of (or procurement of a waiver of) the conditions set forth
in Exhibit C to this Commitment Letter. For the avoidance of doubt, the compliance by the Company with its obligations
under this Commitment Letter and the Fee Letters, other than satisfaction by the Company of (or procurement of a waiver of) the
conditions described (x) in Section 6(a) and (y) on Exhibit C, is not a condition to the closing of the Term Loan Facility
on the Closing Date.

 

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The
term “Target Material Adverse Effect” means a material adverse effect on the financial condition or results
of operations of the Acquired Stores, taken as a whole, but shall not be deemed to include any adverse effect arising out of,
resulting from or attributable to: (a) an event or circumstance or series of events or circumstances affecting (i) the United
States (or any other country or jurisdiction) or the global economy generally or capital, financial, banking, credit or securities
markets generally, including changes in interest or exchange rates, (ii) political conditions generally of the United States or
any other country or jurisdiction in which Seller or its Affiliates operates or (iii) any of the industries generally in which
Seller or any customers thereof operates (including demand for, and the availability and pricing of, pharmaceutical drugs) or
in which products or services of the Acquired Stores are used or distributed, (b) the negotiation, execution or the announcement
of, the consummation of the transactions contemplated by, or the performance of obligations under, the Acquisition Agreement or
the other Transaction Agreements, including effects related to compliance with the covenants or agreements contained therein or
the failure to take any action as a result of any restrictions or prohibitions set forth therein, and any adverse effect proximately
caused by (A) shortfalls or declines in revenue, margins or profitability, (B) loss of, or disruption in, any customer, supplier,
and/or vendor relationships, or (C) loss of any personnel, (c) any changes in applicable Law or U.S. GAAP, or accounting principles,
practices or policies that Seller is required to adopt, or the enforcement or interpretation thereof, (d) actions specifically
permitted to be taken or omitted pursuant to the Acquisition Agreement or taken with Buyer’s consent, (e) the effect of
any action taken by Buyer or its Affiliates with respect to the transactions contemplated hereby or with respect to Seller or
its Affiliates, (f) any acts of God, including any earthquakes, hurricanes, tornadoes, floods, tsunami, or other natural disasters,
or any other damage to or destruction of Assets caused by casualty, (g) any hostilities, acts of war (whether or not declared),
sabotage, terrorism or military actions, or any escalation or worsening of any such hostilities, act of war, sabotage, terrorism
or military actions, (h) any failure to meet internal or published projections, estimates or forecasts of revenues, earnings,
or other measures of financial or operating performance for any period (provided that the underlying causes of such failures (subject
to the other provisions of this definition) shall not be excluded) or (i) any adverse change or effect that is cured prior to
Closing (or each Subsequent Closing, as applicable); provided, however, that if the event or circumstance described in any of
the foregoing clauses (a) or (c), individually or in the aggregate, has a disproportionate effect on the Acquired Stores relative
to other industry participants, the exception described in any of the foregoing clauses (a) or (c) shall not apply with respect
to the portion of such event or circumstance that had such a disproportionate effect on the Acquired Stores. Capitalized terms
used in this paragraph have the meanings given to such terms in the Acquisition Agreement.

 

Notwithstanding
anything to the contrary in this Commitment Letter, the Fee Letters, the Loan Documents (as defined in the Term Sheet) or any
other agreement entered into by a Commitment Party concerning the financing of the Acquisition contemplated hereby to the contrary,
(a) the only representations and warranties, the accuracy of which shall be a condition to the closing of the Term Loan Facility
shall be (i) such of the representations and warranties made by the Seller or any of its affiliates in the Acquisition Agreement
as are material to the interests of the Administrative Agent, Arrangers and Term Loan Lenders, but only to the extent that the
Company or any of its affiliates has the right to terminate the Company’s (or such of its affiliates’) obligations
under the Acquisition Agreement (or to not consummate the Acquisition) as a result of a breach of such representations and warranties
in the Acquisition Agreement (the “Acquisition Agreement Representations”) and (ii) the Specified Representations
(as defined below) and (b) the terms of the Loan Documents shall be in a form such that they do not provide for additional conditions
to the closing of the Term Loan Facility if the conditions set forth in this Section 6 are satisfied (it being understood that,
(i) to the extent any collateral (including the perfection of any security interest therein) is not or cannot be provided on the
Closing Date (other than (A) the pledge and perfection of collateral with respect to which a lien may be perfected upon closing
solely by the filing of financing statements under the Uniform Commercial Code in the jurisdiction of organization of each Loan
Party, and (B) the pledge and perfection of security interests in the equity interests of subsidiaries owned by the Loan Parties
(after giving effect to the Acquisition); the assets described in clauses (A) and (B) being referred to as the “Specified
Collateral”) after the use of commercially reasonable efforts by the Company (and the Seller to the extent provided
for in the Acquisition Agreement) to do so, then the provision of such collateral or perfection of any such lien or security interest
in such collateral shall not constitute a condition precedent to the closing of the Term Loan Facility, but shall be required
to be provided within 60 days after the Closing Date, subject to such extensions as are agreed to by the Initial Lenders). For
purposes hereof, “Specified Representations” means representations and warranties of the Loan Parties in the
Loan Documents relating to organization, existence, organizational power and authority to enter into the Loan Documents; due authorization,
execution, delivery, enforceability of such Loan Documents; solvency as of the Closing Date (after giving effect to the Transactions)
of the Company and its subsidiaries (in form and scope consistent with the solvency certificate to be delivered pursuant to Exhibit
C hereto); no conflicts of the Loan Documents with organizational documents or material laws; Federal Reserve margin regulations;
the Investment Company Act; USA Patriot Act; use of proceeds not violating (i) laws applicable to sanctioned persons, (ii) laws
and regulations promulgated by OFAC, and (iii) anti-money laundering laws or the Foreign Corrupt Practices Act; and the creation,
perfection and priority of the security interests (subject to customary permitted liens) granted in the collateral (subject in
all respects to the foregoing provisions of this paragraph). This paragraph and the provisions herein are referred to herein as
the “Certain Funds Provision”.

 

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7.           Confidentiality.
The Company agrees that this Commitment Letter (including the Term Sheet) and the Fee Letters are for its confidential use only
and that neither its existence, nor the terms hereof or thereof, will be disclosed by the Company to any person other than (a)
its officers, directors (or equivalent managers), employees, accountants, affiliates, independent auditors, attorneys, leverage
lenders and other advisors, and then only on a “need-to-know” basis in connection with the Transactions and on a confidential
basis, (b) the Seller and Walgreens Boots Alliance, Inc. and their respective officers, directors (or equivalent managers), employees,
accountants, independent auditors, attorneys, and other advisors of each of the Seller and Walgreens Boots Alliance, Inc., and
then only on a “need-to-know” basis, in connection with their consideration of the Transactions and on a confidential
basis (provided that, with respect to the Fee Letters, to the extent portions thereof have been redacted in respect of the amounts,
percentages and basis points of compensation set forth therein and the pricing in a manner satisfactory to (x) in the case of
the Initial Lender Fee Letter, the Lead Arranger and the respective Initial Lenders party thereto, (y) in the case of the Lead
Arranger Fee Letter, the Lead Arranger, and (z) in the case of the Administrative Agent Fee Letter, the Lead Arranger, the Administrative
Agent and the respective Initial Lenders party thereto). The foregoing notwithstanding, the Company (and, in the case of clause
(ii) below, each of the Seller and Walgreens Boots Alliance, Inc.) may (i) provide a copy of the Commitment Letter (and the Fee
Letters, to the extent portions thereof have been redacted in respect of the amounts, percentages and basis points of compensation
set forth therein and the pricing in a manner satisfactory to (x) in the case of the Initial Lender Fee Letter, the respective
Initial Lenders party thereto, (y) in the case of the Lead Arranger Fee Letter, the Lead Arranger, and (z) in the case of the
Administrative Agent Fee Letter, the Administrative Agent and the respective Initial Lenders party thereto) to potential lenders
under the ABL Loan Facility and their officers, directors (or equivalent managers), employees, accountants, affiliates, attorneys,
and other advisors involved in the related commitments subject to confidentiality provisions similar to those provided herein,
(ii) following the acceptance of the Company of this Commitment Letter and the Fee Letters, file or make such other public disclosures
of the terms and conditions hereof (including the Term Sheet, but not including the Fee Letters) as it is required by law or by
any regulatory authority, in the opinion of its counsel, to make and (iii) disclose this Commitment Letter and Fee Letters in
connection with any exercise of its remedies in respect hereof and thereof.

 

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Each
Commitment Party agrees that material, non-public information regarding the Company and its subsidiaries and the Acquired Business,
their operations, assets, and existing and contemplated business plans shall be treated by it in a confidential manner, and shall
not be disclosed by it to persons who are not parties to this Commitment Letter, except: (i) to its officers, directors, employees,
attorneys, advisors, accountants, auditors, and consultants to such Commitment Party on a “need to know” basis in
connection with Transactions and on a confidential basis, (ii) to subsidiaries and affiliates of such Commitment Party, provided
that any such subsidiary or affiliate shall have agreed to receive such information hereunder subject to the terms of this paragraph,
(iii) to regulatory authorities with jurisdiction over such Commitment Party or its affiliates, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, provided that prior to any disclosure under this clause (iv),
the disclosing party agrees to provide the Company with prior notice thereof, to the extent that it is practicable to do so and
to the extent that the disclosing party is permitted to provide such prior notice to the Company pursuant to the terms of the
applicable statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to by the Company
(not to be unreasonably withheld or delayed), (vi) as requested or required by any governmental authority pursuant to any subpoena
or other legal process, provided that prior to any disclosure under this clause (vi), the disclosing party agrees to provide the
Company with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is
permitted to provide such prior notice to the Company pursuant to the terms of the subpoena or other legal process, (vii) as to
any such information that is or becomes generally available to the public (other than as a result of disclosure by such Commitment
Party in violation of the terms hereof), (viii) in connection with any proposed assignment or participation of such Commitment
Party’s interest in the Term Loan Facility, provided that any such proposed assignee or participant shall have agreed to
receive such information subject to the terms of this paragraph or as provided below, (ix) to the extent that such information
was already in the possession of such Commitment Party or its affiliates or is independently developed by it or them, (x) to the
extent that such information was received by such Commitment Party from a third party, that is not, to its knowledge, subject
to confidentiality obligations owing to the Company, and (xi) for purposes of establishing a “due diligence” defense
and in connection with any litigation or other adverse proceeding involving any parties to this Commitment Letter or the Fee Letters.
This paragraph shall terminate on the second anniversary of the date of the Original Commitment Letter.

 

Notwithstanding
anything to the contrary in this Commitment Letter, the Company agrees that (i) each Commitment Party shall have the right to
provide information concerning the Term Loan Facility to loan syndication and reporting services, and (ii) that the Projections,
any marketing materials and all other information provided by or on behalf of the Company and its affiliates to a Commitment Party
regarding the Company and its affiliates and the Transactions in connection with the Term Loan Facility may be disseminated by
or on behalf of such Commitment Party to prospective lenders and other persons, who have agreed to be bound by customary confidentiality
undertakings (including, “click-through” agreements), all in accordance with the standard loan syndication practices
of such Commitment Party (whether transmitted electronically by means of a website, e-mail or otherwise, or made available orally
or in writing, including at potential lender or other meetings). Notwithstanding anything to the contrary in this Commitment Letter,
the Company agrees that a Commitment Party may share with its affiliates any information relating to the Term Loan Facility, the
Company or its subsidiaries or the Acquired Business for purposes of the evaluation, negotiation, documentation and syndication
of the Term Loan Facility and on and after the Closing Date, may disclose information relating to the Term Loan Facility to Gold
Sheets and other publications or for its marketing materials, with such information to consist of deal terms and other information
customarily found in such publications or marketing materials and that a Commitment Party may otherwise use the corporate name
and logo of the Company or its subsidiaries or the Acquired Business in “tombstones” or other advertisements, marketing
materials or public statements.

 

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8.           Information.
The Company hereby represents and warrants (but limited, solely in the case of the Acquired Business, to the best of its knowledge)
that (i) all written information, other than Projections (as defined below) and other than forward-looking information and information
of a general economic nature or industry specific information, which has been or is hereafter made available to the Commitment
Parties by or on behalf of the Company or its subsidiaries or any of their representatives in connection with the Company and
its subsidiaries and the Acquired Business (“Information”), as and when furnished, is or will be, when furnished
and taken as a whole, correct in all material respects and does not or will not, when furnished and taken as a whole, contain
any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not
materially misleading in light of the circumstances under which such statements are made and (ii) all financial projections concerning
the Company and its subsidiaries and the Acquired Business that have been or are hereafter made available to Commitment Parties
or prospective Term Loan Lenders by the Company or its subsidiaries (the “Projections”), have been or will
be prepared in good faith based upon assumptions that are believed by the Company to be reasonable at the time made and made available
to the Commitment Parties (it being understood that projections by their nature are inherently uncertain and that, even though
the Projections are prepared in good faith on the basis of assumptions believed to be reasonable at the time such Projections
were prepared, the results reflected in the Projections may not be achieved and actual results may differ and such differences
may be material). If at any time the Company becomes aware that any of the representations in the preceding sentence would be
incorrect in any material respect if the Information and Projections were being furnished, and such representations were being
made at such time, then the Company will promptly supplement the Information and Projections so that such representations will
be correct in all material respects under those circumstances. The Company agrees to furnish, or cause to be furnished (using
commercially reasonable efforts with respect to the Acquired Business), to each Commitment Party such Information and Projections
as it may reasonably request and to supplement the Information and the Projections from
time to time until the Closing Date. In arranging and syndicating the Term Loan Facility, the Lead Arranger, and in entering into
the Term Loan Facility, the Administrative Agent and Term Loan Lenders will
be using and relying on the Information and the Projections without independent verification thereof. Notwithstanding anything
to the contrary contained in this Commitment Letter or the Fee Letters, none of the accuracy of any representation under this
Section 8, the provision of any supplement to any Information or the Projections, nor the accuracy of any such supplement
shall constitute a condition precedent to the closing and/or initial funding of any of the Term Loan Facility on the Closing Date.

 

9.           Sharing
Information; Absence of Fiduciary Relationship; Affiliate Activities. The Company acknowledges that each Commitment Party
or one or more of its affiliates may be providing debt financing, equity capital or other services (including financial advisory
services) to other companies in respect of which the Company may have conflicting interests regarding the transactions described
herein or otherwise. The Company also acknowledges that the Commitment Parties do not have any obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to the Company, confidential information obtained
by a Commitment Party from other companies (including the Seller).

 

The
Company further acknowledges and agrees that (a) no fiduciary, advisory or agency relationship between the Company, on the one
hand, and a Commitment Party, on the other hand, is intended to be or has been created in respect of any of the transactions contemplated
by this Commitment Letter, irrespective of whether such Commitment Party or one or more of its affiliates has advised or is advising
the Company on other matters, (b) each Commitment Party, on the one hand, and the Company, on the other hand, has an arms-length
business relationship that does not directly or indirectly give rise to, nor do you rely on, any fiduciary duty on the part of
such Commitment Party, (c) the Company is capable of evaluating and understanding, and it understands and accepts, the terms,
risks and conditions of the transactions contemplated by this Commitment Letter, (d) the Company has been advised that each Commitment
Party or one or more of its affiliates is engaged in a broad range of transactions that may involve interests that differ from
its interests and that such Commitment Party does not have any obligation to disclose such interests and transactions to it by
virtue of any fiduciary, advisory or agency relationship, and (e) the Company waives, to the fullest extent permitted by law,
any claims it may have against a Commitment Party for breach of fiduciary duty or alleged breach of fiduciary duty and agrees
that the Commitment Parties shall not have any liability (whether direct or indirect) to it in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including its stockholders, employees
or creditors. For the avoidance of doubt, the provisions of this paragraph apply only to the transactions contemplated by this
Commitment Letter and the relationships and duties created in connection with the transactions contemplated by this Commitment
Letter.

 

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The
Company further acknowledges that one or more of the affiliates of any Commitment Party are full service securities firm engaged
in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary
course of business, each Commitment Party or one or more of its affiliates may provide investment banking and other financial
services to, and/or acquire, hold or sell, for their respective own accounts and the accounts of customers, equity, debt and other
securities and financial instruments (including bank loans and other obligations) of, the Company, and other companies with which
the Company may have commercial or other relationships. With respect to any debt or other securities and/or financial instruments
so held by a Commitment Party or one or more of its affiliates or any of their respective customers, all rights in respect of
such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its
sole discretion.

 

In
particular, the Company acknowledges that the Company has been advised of the role of MLPFS and/or its affiliates as Financial
Advisor and that, in such capacity, (i) the Financial Advisor may recommend to the Seller that the Seller not pursue or accept
the offer or proposal of the Company for the acquisition of the Acquired Business, (ii) the Financial Advisor may advise the Seller
and/or the Acquired Business in other manners adverse to the interests of the Company, including, without limitation, by providing
advice on pricing, leverage levels, and timing and conditions of closing with respect to the bid by the Company, taking other
actions with respect to the bid of the Company and taking action under any definitive agreement between the Company, Seller and/or
the Acquired Business, and (iii) the Financial Advisor may possess information about the Seller and/or the Acquired Business,
the acquisition of the Acquired Business, and other potential purchasers and their respective strategies and proposals, but the
Financial Advisor shall have no obligation to disclose to the Company the substance of such information or the fact that it is
in possession thereof. In addition, the Company acknowledges that any of the Arrangers or Commitment Parties or their respective
affiliates may be arranging or providing (or contemplating arranging or providing) a committed form of acquisition financing to
other potential purchasers of the Acquired Business and that, in such capacity, such Arranger, Commitment Party or affiliate may
acquire information about the Acquired Business, the sale thereof, and such other potential purchasers and their strategies and
proposals, but such party shall have no obligation to disclose to the Company the substance of such information or the fact that
such party is in possession thereof.

 

10.         USA
Patriot Act. Each Commitment Party hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act, Title
III of Pub. L. 107-56 (signed into law October 26, 2001) (the “USA Patriot Act”), the Commitment Parties and
other Term Loan Lenders may be required to obtain, verify and record information that identifies the Loan Parties (as defined
in the Term Sheet), which information includes the name, address, tax identification number and other information regarding the
Loan Parties that will allow the Commitment Parties and other Term Loan Lenders to identify the Loan Parties in accordance with
the USA Patriot Act. This notice is given in accordance with the requirements of the USA Patriot Act and is effective as to each
Term Loan Lender.

 

11.         Entire
Agreement. This Commitment Letter contains the entire commitment of the Commitment Parties for this transaction and, upon
acceptance by the Company, supersedes all prior proposals, commitment letter, negotiations, discussions and correspondence (including,
without limitation, the Original Commitment Letter (except to the extent provided herein)). This Commitment Letter may not be
contradicted by evidence of any alleged oral agreement. No party has been authorized by a Commitment Party to make any oral or
written statements inconsistent with this Commitment Letter. This Commitment Letter is addressed solely to the Company and is
not intended to confer any obligations to or on, or benefits to or on, any third party (other than the Indemnified Persons). Each
of the parties hereto agrees that, if executed and accepted by the parties in the manner required herein, each of this Commitment
Letter and the Fee Letters is a binding and enforceable agreement with respect to the subject matter contained herein or therein
(including the obligation of the parties to negotiate the Loan Documents in good faith); it being acknowledged and agreed that
the closing of the Term Loan Facility is subject solely to the satisfaction of the conditions specified in Section 6 hereof, including
the execution and delivery of the relevant Loan Documents by the parties hereto in a manner consistent with this Commitment Letter
(including the applicable Documentation Principles and the obligation to negotiate in good faith); provided that nothing contained
in this Commitment Letter obligates the Company or any of its affiliates to consummate the Acquisition or to draw down any portion
of the Term Loan Facility.

 

    8 

     

    

 

12.         Surviving
Provisions. The expense and indemnification, sharing information; absence of fiduciary relationship; affiliate transactions,
confidentiality, jurisdiction, governing law and waiver of jury trial provisions contained herein shall remain in full force and
effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination
or expiration of this Commitment Letter or termination of the commitments of the Commitment Parties described herein; provided,
that, upon the execution and effectiveness of such definitive financing documentation, to the extent subject to, and covered by
the provisions of such financing documentation, the provisions hereof with respect to expense, indemnification and confidentiality
shall be superseded thereby.

 

13.         Counterparts.
This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when
taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile
transmission or other electronic means (including an email with a “pdf”) shall be effective as delivery of a manually
executed counterpart hereof.

 

14.         No
Assignment by Company; Governing Law. This Commitment Letter may not be assigned by the Company without the prior written
consent of each Commitment Party and may not be amended, waived or modified, except in writing signed by each Commitment Party
and the Company. This Commitment Letter and the Fee Letters, the rights of the parties hereto or thereto with respect to all matters
arising hereunder or related hereto, and any and all claims, controversies or disputes arising hereunder or related hereto shall
be governed by, and construed in accordance with, the law of the State of New York, but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any jurisdiction other than the State of New York,
provided, that, notwithstanding the preceding sentence and the governing law provisions of this Commitment Letter and the Fee
Letters, it is understood and agreed that (a) the interpretation of the definition of “Target Material Adverse Effect”
(and whether or not a Target Material Adverse Effect has occurred), (b) the determination of the accuracy of any Acquisition Agreement
Representation and whether as a result of any inaccuracy thereof the Company or any of its affiliates has the right to terminate
its or their obligations under the Acquisition Agreement or to decline to consummate the Acquisition and (c) the determination
of whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement and, in any case, claims
or disputes arising out of any such interpretation or determination or any aspect thereof, in each case, shall be governed by,
and construed and interpreted in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof. Each of the parties hereto agrees that all claims, controversies,
or disputes arising hereunder or hereto shall be tried and litigated only in the state courts, and to the extent permitted by
applicable law, federal courts, in each case located in New York County, New York and each of the parties hereto submits to the
exclusive jurisdiction and venue of such courts relative to any such claim, controversy or dispute. It is understood that with
respect to any suit, action or proceeding arising out of or relating to the Acquisition Agreement or the transactions contemplated
thereby and which does not involve this Commitment Letter, the Term Loan Facility or claims by or against the Company, any Commitment
Party or any Indemnified Person, the immediately preceding sentence shall not override any jurisdiction provision set forth in
the Acquisition Agreement.

 

    9 

     

    

 

Notwithstanding
anything to the contrary contained herein, the parties hereby agree that MLPFS may, without notice to the Company or any other
Commitment Party, assign its rights and obligations under this Commitment Letter and the Fee Letters to any other registered broker-dealer
wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of
its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the
date of this Commitment Letter.

 

15.         JURY
TRIAL WAIVER. EACH Commitment Party AND THE COMPANY EACH WAIVES ITS RIGHT TO
A JURY TRIAL IN RESPECT OF ANY CLAIM, CONTROVERSY, OR DISPUTE (WHETHER BASED IN CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS COMMITMENT LETTER OR THE TRANSACTIONS OR THE ACTIONS OF A COMMITMENT PARTY OR ANY OF ITS AFFILIATES IN THE NEGOTIATION,
PERFORMANCE, OR ENFORCEMENT OF THIS COMMITMENT LETTER OR THE TRANSACTIONS OR THE ACTIONS OF A COMMITMENT PARTY OR ANY OF ITS AFFILIATES
IN THE NEGOTIATION, PERFORMANCE, OR ENFORCEMENT OF THIS COMMITMENT LETTER.

 

16.         Amendment
and Restatement. This Commitment Letter amends and restates in its entirety that certain commitment letter dated as of December
19, 2016 (as amended and in effect immediately prior to effectiveness of this Commitment Letter, the “Original Commitment
Letter”) among the Commitment Parties and the Company.

 

17.         Acceptance
and Termination. This Commitment Letter will be of no force and effect unless executed by each Commitment Party and a counterpart
hereof is accepted and agreed to by the Company and, as so accepted and agreed to, received by each Commitment Party by 11:59
p.m. (Central time) on June 9, 2017, together with the Fee Letters as duly authorized, executed and delivered by the Company,
provided that the Lead Arranger Fee Letter shall only be delivered to the Lead Arranger and the Administrative Agent Fee
Letter shall only be delivered to the Administrative Agent. The commitment of each Commitment Party under this Commitment Letter,
if accepted and agreed to by the Company as provided in the immediately preceding sentence, will terminate (unless the Closing
Date occurs on or prior thereto) upon the earliest of (i) 5:00 p.m. on July 31, 2017 (the “Stated Commitment Termination
Date”); provided that upon the written request of the Company to the Commitment Parties made prior to the occurrence
of the Stated Commitment Termination Date (which written request may only be made once), the Stated Commitment Termination Date
may, at the sole discretion of the Company (but subject to the terms and conditions set forth in this Commitment Letter and the
Fee Letters), be extended to a time not later than 5:00 p.m. on October 31, 2017 (such later time, the “Extended Commitment
Termination Date”), (ii) the closing of the Acquisition without the closing of the Term Loan Facility, or (iii) after
delivery of a fully executed and effective Acquisition Agreement, the termination or expiration of the Acquisition Agreement;
provided that the termination of any commitment or this Commitment Letter pursuant to this sentence does not prejudice
your rights and remedies in respect of any breach of this Commitment Letter that occurred prior to any such termination.

 

    10 

     

    

 

18.         Assignment
Provisions. Notwithstanding any other provision of the Commitment Letter to the contrary and notwithstanding any assignment
or other transfer by any Initial Lender (a) no Initial Lender shall be relieved, released or novated from its obligations hereunder
(including its obligation to fund its applicable percentage of the Term Loan Facility on the date of the Initial Draw upon the
satisfaction (or waiver by the Commitment Parties) of the conditions specified in the Term Sheet) in connection with any assignment
or other transfer until after the initial funding of such Initial Lender’s commitment under the Term Loan Facility on the
date of the Initial Draw or the Company otherwise consents in writing, which consent shall not be unreasonably withheld and (b)
except to the extent consented to by the Company as provided in clause (a) above, no such assignment or other transfer shall,
with respect to any portion of any Initial Lender’s commitments to fund its applicable percentage of the Term Loan Facility
on the date of the Initial Draw, relieve such Initial Lender from its obligations hereunder to fund its applicable percentage
of the Term Loan Facility on the date of the Initial Draw upon the satisfaction (or waiver by the Commitment Parties) of the conditions
specified in the Term Sheet, except to the extent such portion is otherwise funded upon the initial funding on the date of the
Initial Draw). Notwithstanding the foregoing, the Initial Lenders may assign any of their commitments to their affiliates and
approved funds.

 

[Signature
Pages to Follow]

 

    11 

     

    

 

If
the Company accepts and agrees to the foregoing, please so indicate by executing and returning the enclosed copy of this letter
to MLPFS, together with the Fee Letters. We look forward to continuing to work with you to complete this transaction.

 

	 	Very truly yours,	 
	 	 	 	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
	 	 	 	 
	 	By:	/s/ Adam Cady	 
	 	Name:   Adam Cady	 
	 	Title:     Managing Director	 

 

Project
Flintstone - Amended and Restated Term Loan Commitment Letter 

  

     

     

    

 

	 	 	 
	TPG
SPECIALTY LENDING INC.	 
	 	 	 
	By:	/s/ Michael Fishman	 
	Name:   Michael
Fishman	 
	Title:     Co-Chief
Executive Officer	 
	 	 	 
	TC
LENDING, LLC
	 	 	 
	By:	/s/ Michael Fishman	 
	Name:   Michael
Fishman	 
	Title:     Co-Chief Executive Officer	 
	 	 	 
	TDL
LENDING, LLC, SERIES 3
	 	 	 
	By:	/s/ David Stiepleman	 
	Name:   David
Stiepleman	 
	Title:     President	 

 

Project Flintstone – Amended and Restated
Term Loan Commitment Letter 

  

     

     

    

 

	 	 	 
	CRYSTAL
FINANCIAL LLC
	 	 	 
	By: 	/s/ Evren Ozargun	 
	Name:   Evren Ozargun	 
	Title:     Managing Director	 

 

Project Flintstone – Amended and Restated Term Loan Commitment
Letter 

 

     

     

    

 

	 	 	 
	GORDON
BROTHERS FINANCE COMPANY, LLC
	 	 	 
	By: 	/s/ Felicia Galeota	 
	Name:   Felicia Galeota	 
	Title:     Vice
President	 

 

Project Flintstone – Amended and Restated Term Loan Commitment
Letter 

 

     

     

    

 

	 	 	 
	PATHLIGHT
CAPITAL LLC
	 	 	 
	By: 	/s/ Katie Hendricks	 
	Name:   Katie Hendricks	 
	Title:     Director	 

 

Project Flintstone – Amended and Restated Term Loan Commitment
Letter 

 

     

     

    

 

	 	 	 
	GREAT
AMERICAN CAPITAL PARTNERS, LLC
	 	 	 
	By:	/s/ John Ahn	 
	Name:   John Ahn	 
	Title:     President	 

 

Project Flintstone – Amended and Restated Term Loan Commitment
Letter

 

     

     

    

 

Special
Value Continuation Partners, LP 

TCP
Waterman CLO, LLC 

Tennenbaum
Senior Loan Fund II, LP 

Tennenbaum
Senior Loan Operating III, LLC 

Tennenbaum
Senior Loan Fund IV-B, LP 

Tennenbaum
Senior Loan Fund V, LLC 

Tennenbaum
Enhanced Yield Operating I, LLC 

Tennenbaum
Heartland Co-Invest, LP 

Tennenbaum
Energy Opportunities Co, LLC 

TCP
Direct Lending Fund VIII 

TCP
Direct Lending Fund VIII-A 

TCP
Direct Lending Fund VIII-L 

Reliance
Standard Life Insurance Company

 

On
behalf of each of the above entities:

 

By:
TENNENBAUM CAPITAL PARTNERS, LLC  

Its:
 Investment Manager

 

TCP
CLO III, LLC

 

By:
SERIES I of SVOF/MM, LLC 

Its:
 Collateral Manager

 

On
behalf of the above entity: 

	 	 	 	 
	 	By: 	/s/ Howard Levkowitz	 
	 	 	     Name: Howard Levkowitz	 
	 	 	     Title:   Managing Partner	 

 

Project Flintstone
– Amended and Restated Term Loan Commitment Letter

  

     

     

    

 

	 	 	 
	APOLLO
CENTRE STREET PARTNERSHIP, L.P.
	 
	By:
Apollo Center Street Management,

LLC, Its Investment Manager
	 	 	 
	By:	/s/ Joseph D. Glatt	 
	Name:   Joseph D. Glatt	 
	Title:     Vice President	 

	 	 	 
	APOLLO
MOULTRIE CREDIT FUND, L.P.
	 
	By:
Apollo Moultrie Credit Fund Management,

LLC, Its Investment Manager
	 	 	 
	By:	/s/ Joseph D. Glatt	 
	Name:   Joseph D. Glatt	 
	Title:     Vice President	 

	 	 	 
	APOLLO
TACTICAL VALUE SPN INVESTMENTS, L.P.
	 
	By:
Apollo Tactical Value SPN Management,

LLC, Its Investment Manager
	 	 	 
	By:	/s/ Joseph D. Glatt	 
	Name:   Joseph D. Glatt	 
	Title:     Vice President	 

	 	 	 
	APOLLO
THUNDER PARTNERS, L.P.
	 
	By:
Apollo Thunder Management,

LLC, Its Investment Manager
	 	 	 
	By:	/s/ Joseph D. Glatt	 
	Name:   Joseph D. Glatt	 
	Title:     Vice President	 

 

Project Flintstone – Amended and Restated Term Loan Commitment
Letter

  

     

     

    

 

	 	 	 
	ATCF
    S.a r.l.
	 
	By: ATCF HoldCo S.a. r.l., its sole shareholder
	 
	By: Apollo Tower Credit Management, 

    LLC, Its Investment Manager
	 	 	 
	By:	/s/ Joseph
    D. Glatt	 
	Name:   Joseph D.
    Glatt	 
	Title:     Vice
    President	 

	 	 	 
	BIRCH
    GROVE CREDIT STRATEGIES MASTER FUND LP
	 
	By: Birch Grove Advisors LLC, Its General Partner
	 	 	 
	By:	/s/ Rodd
    D. Evonsky	 
	Name:   Rodd D. Evonsky	 
	Title:     Chief
    Financial Officer	 

	 	 	 
	OPPENHEIMER
    CAPITAL STRUCTURE OPPORTUNITIES MASTER FUND LTD.
	 
	By: Birch Grove Capital LP, Its Sub-Advisor
	 	 	 
	By:	/s/ Rodd
    D. Evonsky	 
	Name:   Rodd D. Evonsky	 
	Title:     Chief
    Financial Officer	 

	 	 	 
	BIRCH
    GROVE SPV--01 LTD
	 
	By: Birch Grove Capital LP, Its General Partner
	 	 	 
	By:	/s/ Rodd
    D. Evonsky	 
	Name:   Rodd D. Evonsky	 
	Title:     Chief
    Financial Officer	 

  

    20 

     

    

 

	 	 	 
	BIRCH
    GROVE FUND--01 LTD
	 
	By: Birch Grove Advisors LLC, Its General Partner
	 	 	 
	By:	/s/ Rodd
    D. Evonsky	 
	Name:   Rodd D. Evonsky	 
	Title:     Chief
    Financial Officer	 

	 	 	 
	CERBERUS
    LEVERED LOAN OPPORTUNITIES FUND III, L.P.
	 
	By: Cerberus Levered Opportunities III GP, LLC, its
    General Partner
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

	 	 	 
	CERBERUS
    NJ CREDIT OPPORTUNITIES FUND, L.P.
	 
	By: Cerberus NJ
    Credit Opportunities GP, LLC, its General Partner
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

	 	 	 
	CERBERUS
    asrs holdings llc
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

	 	 	 
	CERBERUS
    krs levered loan opportunities fund, L.P.
	 
	By: Cerberus krs
    Levered Opportunities GP, LLC, its General Partner
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

	 	 	 
	CERBERUS
    PSERS LEVERED loan opportunities fund, L.P.
	 
	By: Cerberus PSERS
    Levered Opportunities GP, LLC, its General Partner
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

 

 Project Flintstone – Amended and Restated Term Loan Commitment
Letter

 

     

     

    

 

	 	 	 
	CERBERUS
    FSBA HOLDINGS LLC
	 	 	 
	By:	/s/ Daniel
    E. Wolf	 
	Name:   Daniel E.
    Wolf	 
	Title:     Senior
    Managing Director	 

	 	 	 
	KKR
    CREDIT ADVISORS (US) LLC,
	On behalf of itself and its affiliates and managed
    funds and accounts
	 	 	 
	By:	/s/ Jeffrey
    B. Van Horn	 
	Name:   Jeffrey B.
    Van Horn	 
	Title:     Authorized
    Signatory	 

	 	 	 
	SILVER
    POINT SPECIALTY CREDIT FUND, L.P.,
	 
	By: Silver Point Specialty Credit Fund Management,
    LLC, as its investment manager
	 	 	 
	By:	/s/ Michael
    A. Gatto	 
	Name:   Michael A.
    Gatto	 
	Title:     Authorized
    Signatory	 

	 	 	 
	WHITE
    OAK ASSET FINANCE
	 	 	 
	By:	/s/ Tom
    Otte	 
	Name:   Tom Otte	 
	Title:     Partner	 

 

 Project Flintstone – Amended and Restated Term Loan Commitment
Letter

 

     

     

    

 

Accepted
and agreed to 

as
of the date first above written: 

	 	 	 
	FRED’S,
    INC.
	 	 	 
	By:	/s/ Michael
    K. Bloom	 
	Name:   Michael K.
    Bloom	 
	Title:     Chief
    Executive Officer	 

 

 Project Flintstone – Amended and Restated Term Loan Commitment
Letter

 

     

     

    

 

SCHEDULE
1

 

Commitments

 

	Commitment
    Parties	Commitment
	The
                                         following affiliated funds of TPG Specialty Lending Inc.:

         

        TC
        Lending, LLC

         

        TDL
        Lending, LLC, Series 3

         
	 

                                                                                                                          

                                                                                                                         $56,250,000

         

        $93,750,000

         

	Crystal
    Financial LLC	$48,750,000.00
	Gordon
    Brothers Finance Company, LLC	$37,500,000.00
	Pathlight
    Capital LLC	$23,750,000.00
	Tennenbaum
                                         Capital Partners, LLC on behalf of:

         

        Special
Value Continuation Partners, LP 

        TCP
Waterman CLO, LLC 

        Tennenbaum
Senior Loan Fund II, LP 

        Tennenbaum
Senior Loan Operating III, LLC 

        Tennenbaum
Senior Loan Fund IV-B, LP 

        Tennenbaum
Senior Loan Fund V, LLC 

        Tennenbaum
Enhanced Yield Operating I, LLC 

        Tennenbaum
Heartland Co-Invest, LP 

        Tennenbaum
Energy Opportunities Co, LLC 

        TCP
Direct Lending Fund VIII 

        TCP
Direct Lending Fund VIII-A 

        TCP
Direct Lending Fund VIII-L 

        Reliance
        Standard Life Insurance Company

         
	$61,875,000.00
	Great
    American Capital Partners, LLC	$61,875,000.00
	Affiliated
    funds of Apollo Global Management 	$28,500,000.00
	Affiliated
    funds of Birch Grove Capital LP 	$40,000,000.00
	Affiliated
    funds of Cerberus Business Finance LLC 	$28,500,000.00
	KKR
    Credit Advisors US LLC on behalf of itself and certain of its affiliates and managed funds and accounts	$28,500,000.00
	Silver
    Point Specialty Credit Fund, L.P.	$26,250,000.00
	White
    Oak Asset Finance	$14,500,000.00
	Total	$550,000,000.00

 

    24 

     

    

 

ANNEX
A

 

Indemnification
Provisions

 

To
the fullest extent permitted by applicable law, the Company (the “Indemnifying Person”) agrees that it will
indemnify, defend, and hold harmless each of the Indemnified Persons from and against (i) any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements and (ii) any and all actions, suits,
proceedings and investigations in respect thereof, and (iii) any and all legal costs (provided, that, the obligations to reimburse
any Indemnified Person for legal fees and expenses shall be limited to reasonable legal fees and expenses of one firm of counsel
for all such Indemnified Persons and if necessary, of one local counsel in each appropriate jurisdiction (and, to the extent required
by the subject matter, one specialist counsel for each such specialized area of law in each appropriate jurisdiction) and in the
case of an actual or perceived conflict of interest, one counsel for such affected Indemnified Person) or other costs, expenses
or disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation,
the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, proceeding
or investigation (whether or not in connection with litigation in which any of the Indemnified Persons is a party) and including,
without limitation, any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses
and disbursements, resulting from any act or omission of any of the Indemnified Persons), directly or indirectly, caused by, relating
to, based upon, arising out of or in connection with (a) the Transactions or (b) the Commitment Letter, the Original Commitment
Letter or the Fee Letters; provided that such indemnity agreement shall not apply to any portion of any such loss, claim,
damage, obligation, penalty, judgment, award, liability, cost, expense or disbursement of an Indemnified Person to the extent
it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. These Indemnification Provisions shall be in addition to any
liability which the Indemnifying Person may have to the Indemnified Persons.

 

If
any action, suit, proceeding or investigation is commenced, as to which any of the Indemnified Persons proposes to demand indemnification,
it shall notify the Indemnifying Person with reasonable promptness; provided that any failure by any of the Indemnified
Persons to so notify the Indemnifying Person shall not relieve the Indemnifying Person from its obligations hereunder. The Indemnified
Persons shall have the right to retain counsel of their choice to represent them, and the Indemnifying Person shall pay the reasonable
fees, expenses, and disbursement of such counsel, and such counsel shall, to the extent consistent with its professional responsibilities,
cooperate with the Indemnifying Person and any counsel designated by the Indemnifying Person. The Indemnifying Person shall be
liable for any settlement of any claim against any of the Indemnified Persons made with its written consent, which consent shall
not be unreasonably withheld. Without the prior written consent of the applicable Indemnified Person, the Indemnifying Person
shall not settle or compromise any claim, unless (i) such Indemnified Person and each other Indemnified Person from which such
Indemnified Person could have sought indemnification or contribution has given his, her or its prior written consent or (ii) the
settlement, compromise, consent or termination (A) includes an express unconditional release of all Indemnified Persons and their
respective affiliates from all losses, claims, damages, expenses and liabilities, directly or indirectly, arising out of, relating
to, resulting from or otherwise in connection with such claim, (B) does not include any statements as to or any findings (or admissions)
of fault, culpability or failure to act by or on behalf of any Indemnified Person and (C) is paid by the Indemnifying Person in
cash.

 

    25 

     

    

 

In
order to provide for just and equitable contribution, if a claim for indemnification pursuant to these Indemnification Provisions
is made but is found by a judgment of a court of competent jurisdiction (not subject to further appeal) that such indemnification
may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the
Indemnifying Person, on the one hand, and the applicable Indemnified Persons, on the other hand, shall contribute to the losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements to which the applicable
Indemnified Persons may be subject in accordance with the relative benefits received by the Indemnifying Person, on the one hand,
and the applicable Indemnified Persons, on the other hand, and also the relative fault of the Indemnifying Person, on the one
hand, and the applicable Indemnified Persons collectively and in the aggregate, on the other hand, in connection with the statements,
acts or omissions which resulted in such losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements and the relevant equitable considerations shall also be considered, provided, that, no Indemnified
Person shall be liable for any fault, fraud, tort, or breach of any other Indemnified Person or for a claim or cause of action
against such other Indemnified Person. No person found liable for a fraudulent misrepresentation shall be entitled to contribution
from any other person who is not also found liable for such fraudulent misrepresentation.

 

Neither
expiration nor termination of the commitment of a Commitment Party under the Commitment Letter or funding or repayment of the
loans under the Term Loan Facility shall affect these Indemnification Provisions which shall remain operative and continue in
full force and effect.

 

No
Indemnified Person shall be liable for any damages arising from the use by others of Information or other materials obtained through
internet, Intralinks, SyndTrak or other similar transmission systems in connection with the Term Loan Facility, unless to the
extent it is found in a final non-appeable judgment by a court of competent jurisdiction (not subject to further appeal) to have
resulted from the gross negligence or willful misconduct of such Indemnified Person. In addition, no Indemnified Person shall
be responsible or liable for special, indirect, consequential, exemplary, incidental or punitive damages which may be alleged
as a result of this Commitment Letter or the Fee Letters and the Company, on behalf of itself and each of its affiliates, irrevocably
and unconditionally waives any right to seek such damages for any claim that may be alleged as a result of any breach, or as a
result, of this Commitment Letter or any element of the transactions contemplated hereby.

 

    26 

     

    

 

CONFIDENTIAL

 

EXHIBIT
A

 

FRED’S,
INC.

 

Transaction
Description

June 9, 2017

 

Capitalized
terms used but not defined in this Exhibit A shall have the meanings set forth in the Commitment Letter or the other Exhibits
and Annexes thereto.

 

The
Company (through one or more of its wholly-owned domestic subsidiaries) intends to acquire (the “Acquisition”)
all of (w) the Purchased Assets and assume the Assumed Liabilities (as each of such terms is defined in the Acquisition Agreement)
of not less than 865 but up to 1,200 retail stores of Rite Aid Corporation, (x) the Distribution Centers and the Cross-Dock Facilities
(as each such term is defined in the Acquisition Agreement) (hereinafter, the “Acquired Distribution Centers”),
and (y) the Purchased Intellectual Property and the Corporate Infrastructure (as each of such terms is defined in the Acquisition
Agreement) (such assets, collectively, the “Acquired Business”), in each case, from Rite Aid Corporation (“Seller”),
all as set forth in the Acquisition Agreement as defined below. In connection therewith:

 

(a)
The Acquisition will be effected pursuant to an Amended and Restated Asset Purchase Agreement, in form and substance satisfactory
to the Arrangers and the Initial Lenders holding at least sixty-six and two-thirds percent (66 2/3%) of the commitments in respect
of the Term Loan Facility under this Commitment Letter, without giving effect to any syndication or assignment thereof (such Initial
Lenders, the “Majority Initial Lenders”) in their sole discretion, by and among AFAE, LLC and Seller, and for
the limited purposes set forth therein, the Company and Walgreen Boots Alliance, Inc. (and together with the schedules and exhibits
thereto, the Transition Services Agreement and the other Ancillary Agreements referred to therein, and the other documents and
instruments executed and/or delivered in connection therewith, including any reverse transition services agreement (each of which
shall be in form and substance satisfactory to the Arrangers and the Majority Initial Lenders in their sole discretion), collectively,
the “Acquisition Agreement”; provided that until such time the Acquisition Agreement shall be duly executed
and delivered by the parties thereto, capitalized terms used herein by reference to definitions contained in the Acquisition Agreement,
shall instead be defined by reference to the definitions contained in the draft Acquisition Agreement provided to the Commitment
Parties with the heading “Sidley Comments March 19, 2017” (the “Draft Acquisition Agreement”) (it
being understood and agreed that the Arrangers and the Majority Initial Lenders have not approved the Draft Acquisition Agreement
as an acceptable form of the Acquisition Agreement). Such Acquisition shall be consummated pursuant to an initial Closing and
one or more Subsequent Closings (each, as defined in the Acquisition Agreement) (such retail store locations and the related assets
acquired pursuant to a Subsequent Closing, being hereinafter a “Series”, provided that all retail store locations
and the related assets acquired pursuant to a Series of Subsequent Closings (each an “Acquired Store Series”)
occurring on consecutive business days (with an average of not less than 50 retail stores per day acquired pursuant thereto (or,
if less, (x) the entire remaining balance of stores and related assets to be acquired by the Company pursuant to the Acquisition
Agreement, (y) at any time after the date that the Borrowers shall have acquired 67% of all retail store locations and related
assets required to be acquired pursuant to the Acquisition Agreement, up to 25 separate transfers of one or more retail store
locations and related assets to be acquired by the Company pursuant to the Acquisition Agreement or (z) as agreed to by the Required
Lenders (as such term is defined in Exhibit B)) shall be deemed to form a part of the same Acquired Store Series)). Following
the Acquisition, the Acquired Business will be owned by the Company, except for any assets to be acquired in connection with any
Subsequent Closing or the Distribution Center Closing (as each of such terms are defined in the Acquisition Agreement and with
the Distribution Closing being hereinafter referred to as the “Final APA Closing”).

 

     A-1

     

    

 

(b)
The Acquired Business will be released from all obligations in connection with any debt for borrowed money, including the credit
facility provided to Seller and its subsidiaries for which Citibank, N.A. is the agent (the “Existing Credit Facility”)
and any security interests in, encumbrances or liens on any of the assets of the Acquired Business (other than Permitted Liens
(as defined in the Acquisition Agreement)) will be released and terminated (such release of obligations and the termination and
discharge of such liens and encumbrances, the “Release”).

 

(d)
Borrowers and the other Loan Parties (as defined in Exhibit B) will enter into the Term Loan Facility and the applicable Loan
Documents.

 

(e)
Borrowers will enter into a senior secured loan facility in an aggregate principal amount of $1,650,000,000 (as may be increased
to $1,700,000,000 on or prior to the Closing Date in the form of an increase to the ABL FILO Term Facility and/or the ABL Revolving
Facility (as defined below)) consisting of (a) senior secured asset-based term loans advanced on a “first-in, last-out”
basis in an aggregate principal amount of $350,000,000 (as may be increased up to $400,000,000 on or prior to the Closing Date)
(the “ABL FILO Term Facility”), (b) senior secured asset-based IP term loans advanced on a “last out”
basis in an aggregate principal amount of $50,000,000 (the “ABL IP Term Facility”) and (c) a senior secured
asset-based revolving loan and letter of credit facility in an aggregate principal amount of $1,250,000,000 (as may be increased
up to $1,300,000,000 on or prior to the Closing Date) (the “ABL Revolving Facility”), in each case subject
to the applicable borrowing base and on the terms and conditions set forth in that certain Senior Secured Loan Facility Second
Amended and Restated Commitment Letter, dated on or about the date hereof (the “ABL Commitment Letter”), by
and among the Company, MLPFS, as arranger, Bank of America, N.A., as agent and the other parties thereto, with such changes thereto
which are reasonably satisfactory to the Initial Lenders (the “ABL Loan Facility”; such loans made under the
ABL FILO Term Facility the “ABL FILO Loans”, such loans made under the ABL IP Term Facility the “ABL
IP Loans” and such loans made under the ABL Revolving Facility the “ABL Revolving Loans” collectively,
the “ABL Loans”; and the commitments to make such ABL FILO Loans the “ABL FILO Commitments”, the
commitments to make such ABL IP Loans the “ABL IP Commitments” and the commitments to make such ABL Revolving Loans
the “ABL Revolving Commitments”, collectively the “ABL Commitments”), which shall be secured
by liens that are subordinated to the liens securing the Term Loan Facility, except for the liens on the ABL Priority Collateral
(as defined in Exhibit B) which will be senior to the liens securing the Term Loan Facility. It is understood and agreed
that, at the election of the Borrowers and the other parties to the ABL Commitment Letter, the ABL IP Term Facility may be reduced
on or prior to the Closing Date and the ABL FILO Term Facility and/or the ABL Revolving Facility may be increased (in addition
to any increase on or prior to the Closing Date effected pursuant to the accordion provisions of the ABL Commitment Letter) by
an aggregate amount not to exceed the aggregate principal amount of such reduction in the ABL IP Term Facility.

 

(f)
The fees, premiums, expenses and other transaction costs incurred in connection with the Transactions that are due and payable
on or prior to the Closing Date (the “Transaction Costs”) will be paid.

 

(g)
The proceeds of the Term Loan Facility and ABL Loan Facility will be used to pay the consideration and other amounts owing in
connection with the Acquisition under the Acquisition Agreement, to pay all or a portion of the Transaction Costs and for general
corporate purposes.

 

     A-2

     

    

 

The
Acquisition, the Release, the Term Loan Facility, the ABL Loan Facility and the other transactions described above or related
thereto are collectively referred to as the “Transactions”.

 

     A-3

     

    

 

EXHIBIT
B

TO

AMENDED
AND RESTATED COMMITMENT LETTER

 

FRED’S,
INC.

 

$550,000,000
Senior Secured Term Loan Facility 

(“Term Loan Facility”)

 

Summary
of Principal Terms and Conditions

June 9, 2017

 

This
Summary of Principal Terms and Conditions (the “Term Sheet”) is part of the amended and restated commitment
letter, dated June 9, 2017 (the “Commitment Letter”), addressed to Fred’s, Inc. (the “Company”)
by Merrill Lynch, Pierce, Fenner & Smith Incorporated (together, with its designated affiliates, “MLPFS”),
TPG Specialty Lending Inc. and its affiliated funds signatory hereto (collectively, “TPG”), the affiliated
funds of Birch Grove Capital LP signatory thereto (collectively, “Birch Grove”), Crystal Financial LLC (“Crystal”),
Gordon Brothers Finance Company, LLC (“GBFC”), Pathlight Capital LLC (“Pathlight”), Silver
Point Specialty Credit Fund, L.P. (“Silver Point”), Tennenbaum Capital Partners, LLC (“Tennenbaum”)
and Great American Capital Partners, LLC (“GACP” and, together with TPG, Birch Grove, Crystal, GBFC, Pathlight,
Silver Point and Tennenbaum, collectively, the “Original Initial Lenders”), the affiliated funds of Apollo
Global Management signatory thereto (collectively, “Apollo”), the affiliated funds of Cerberus Business Finance
LLC signatory thereto (collectively, “Cerberus”), KKR Credit Advisors US LLC on behalf of itself and certain
of its affiliates and managed funds and accounts (“KKR”) and White Oak Asset Finance (“White Oak”
and, together with Apollo, Cerberus and KKR, collectively, the “New Initial Lenders” and, together with the
Original Initial Lenders, collectively, the “Initial Lenders”; the Initial Lenders together with MLPFS, each
individually a “Commitment Party” and collectively, the “Commitment Parties”), and is subject
to the terms and conditions of the Commitment Letter. Capitalized terms used herein and the accompanying annexes shall have the
meanings set forth in the Commitment Letter unless otherwise defined herein.

 

	Borrowers: 	The
    Company, AFAE, LLC and any other wholly-owned subsidiary of the Company organized under the laws of the United States or a
    State or instrumentality thereof with assets to be included in the Borrowing Base (individually, a “Borrower”
    and collectively, “Borrowers”).  All references to Borrowers shall mean such subsidiaries of
    the Company after giving effect to the Acquisition.
	 	 
	Guarantors: 	Each
    of the Company’s existing and subsequently acquired or organized direct or indirect subsidiaries that are not Borrowers
    (collectively, the “Guarantors”, and together with Borrowers, individually a “Loan Party”
    and collectively, “Loan Parties”); provided, that, Guarantors shall not include (a) any non-US subsidiary
    of the Company organized or acquired after the Closing Date that is a “controlled foreign corporation” (within
    the meaning of Section 957 of the Internal Revenue Code) (“CFC”) and any U.S. subsidiary of the Company
    that is treated as a “disregarded entity” for federal income tax purposes the sole assets of which are equity
    interests in CFCs and that has no material assets or material operations other than the equity interests of CFC’s (such
    entity, a “CFC Holdco”), (b) immaterial subsidiaries (to be defined in a mutually acceptable manner as
    to individual and aggregate revenues and assets), and (c) special purpose entities whose only assets consist of real estate,
    improvements and fixtures thereon that are subject to existing mortgages to secure debt for borrowed money.  Notwithstanding
    the foregoing, in the event any holder of any debt for borrowed money of any Loan Party obtains any guaranty from any such
    CFC or such CFC Holdco, then, in such event, such CFC and/or CFC Holdco shall be required to provide a guaranty of the obligations
    under the Term Loan Facility.  

 

    B-1

     

    

 

	Administrative
    Agent:	TPG
    (in such capacity, “Administrative Agent”).
	 	 
	Lenders: 	TPG,
                                         Crystal, GACP, GBFC, Pathlight, Tennenbaum, Apollo, Birch Grove, Cerberus, KKR and Silver
                                         Point and such other institutions as may become parties to the Term Loan Facility as
                                         lenders (collectively “Term Loan Lenders”) but not including any Disqualified
                                         Lenders.

         

        The
term “Disqualified Lender” means (i) any natural person, (ii) those banks, financial institutions and other institutional
lenders and investors that have been separately identified in writing by the Company to Administrative Agent and Initial Lenders
prior to the date of the Original Commitment Letter, (iii) those persons that are competitors of the Company that are separately
identified by the Company to the Administrative Agent and Initial Lenders in writing (it being understood and agreed that any
bona fide debt funds or any financial investors in such persons shall not constitute a competitor thereof) prior to the date of
the Original Commitment Letter or from time to time thereafter (and if after the date of the Original Commitment Letter subject
to the approval of Administrative Agent and provided that such notice shall not apply to retroactively disqualify any parties
that have previously acquired an assignment of or participation interest in the Term Loans), and (iv) in the case of each of clauses
(i), (ii) and (iii), any of their affiliates that are clearly identifiable as such by their names or identified in writing by
the Company to the Administrative Agent.

	 	 
	Joint
    Lead Arrangers and Bookrunners:	MLPFS
    (in such capacity, “Lead Arranger”) and TPG (collectively with the Lead Arranger, the “Arrangers”).
	 	 
	Co-Documentation
    Agents:	GBFC,
    Crystal and Pathlight (collectively, “Co-Documentation Agents”).
	 	 
	Term
    Loan Facility: 	The Term Loan Facility
    will consist of a senior secured term loan facility in an aggregate principal amount of $550,000,000 provided to Borrowers,
    subject to the terms and conditions contained herein. Borrowers shall have the option to permanently reduce the amount of
    the commitments under the Term Loan Facility, on a pro rata basis, in the aggregate amount of up to $50,000,000 on or prior
    to the Closing Date, provided that (i) Borrowers shall have delivered written notice to the Initial Lenders stating the amount
    of such reduction, and (ii) the ABL Commitments shall be increased in the amount equal to the amount of the reduction. Amounts
    under the Term Loan Facility will be available in U.S. dollars.

 

    B-2

     

    

 

		

        Term
        Loans under the Term Loan Facility (the “Term Loans”) shall be made in two drawings. The first drawing
        (the “Initial Draw”) shall be in an aggregate principal amount of at least $325,000,000 and shall be
        made by the Borrowers on or before the tenth (10th) business day after the Closing Date. The second drawing
        (the “Delayed Draw”) shall be made by the Borrowers on or before the earlier of (i) the date that is
        ninety (90) days after the Closing Date and (ii) the acquisition by the Company (through one or more of its wholly-owned
        domestic subsidiaries) of 600 Acquired Stores (as defined in the Acquisition Agreement) in the aggregate (the “Outside
        Draw Date”). Repayments and prepayments of the Term Loans may not be reborrowed.

         

        Upon
        the funding of any Term Loan, the commitments in the amount of such Term Loan shall automatically terminate. On the Outside
        Draw Date, any unused commitments under the Term Loan Facility shall automatically terminate and the ability to request
        the Delayed Draw shall automatically terminate.

         

        The
        Company will be appointed to act as the agent for Loan Parties for all purposes of dealing with Administrative Agent and
        the Term Loan Lenders, including requesting Term Loans.

         

	Amortization:	Commencing
    on the first day after the first full calendar quarter after the second anniversary of the Closing Date, the Term Loans will
    be repaid in consecutive equal quarterly installments of principal in an amount equal to 1.25% of the aggregate Term Loan
    commitments on the Closing Date, with the final installment to be in the then remaining balance of the Term Loan (and including
    principal, accrued and unpaid interest and other amounts) due on the Maturity Date.
	 	 
	Term
    Loan Borrowing Base:	To
                                         the extent that, at any time, and for so long as, the outstanding amount of the Term
                                         Loans exceeds the Term Loan Borrowing Base then in effect, the ABL Loan Agent shall establish
                                         and maintain a reserve (the “Term Loan Push Down Reserve”) against
                                         the “Borrowing Base” under the ABL Loan Facility equal to the amount of such
                                         excess.

         

        “Term
        Loan Borrowing Base” means the amount calculated as follows:

         

        (a)   10% of the face amount of eligible credit card receivables of Borrowers; plus

         

        (b)   10% of the net amount of eligible pharmacy  receivables of Borrowers; plus

         

        (c)   10% of the Net Recovery Percentage of eligible merchandise inventory (other than pharmacy inventory) of Borrowers multiplied
        by the value of such eligible inventory; plus

         

        (d)   10% of the Net Recovery Percentage of eligible pharmacy inventory of Borrowers multiplied by the value of such eligible
        inventory; plus

         

        (e)   Term
Loan Pharmacy Scripts Availability (defined below). 

        

         

 

    B-3

     

    

 

		The
“value” of each category of eligible inventory will be determined in accordance with generally accepted accounting
principles as consistently applied by the Company pursuant to its then current practices (or in the case of certain categories
of inventory to be specified by ABL Loan Agent, the retail value thereof), but in any event at all times consistent with the practices
used in the most recent field examination and appraisals that have been received by ABL Loan Agent in accordance with the Loan
Documents.

         

        The
        following defined terms used herein shall have the meaning set forth below:

         

        “Net
        Recovery Percentage” means the fraction, expressed as a percentage (a) the numerator of which is the amount
        equal to the recovery on the aggregate amount of the applicable category of eligible inventory at such time on a “going
        out of business” basis (or, in the case of any Acquired Store (through the period during which the Transition Services
        Agreement is in effect), on a “store closing sale” basis) as set forth in the most recent acceptable inventory
        appraisal received by ABL Loan Agent in accordance with the requirements of the Loan Documents, net of operating expenses,
        liquidation expenses and commissions reasonably anticipated in the disposition of such assets and (b) the denominator
        of which is the original cost (or as to certain categories of inventory as specified by ABL Loan Agent, the retail value)
        of the aggregate amount of the eligible inventory subject to such appraisal.

         

        “Pharmacy
        Scripts Advance Rate” means 75% on the Closing Date, which percentage shall be reduced on the first day of each
        fiscal quarter, commencing with the first day after the first full fiscal quarter of the Borrowers occurring after the
        second anniversary of the Closing Date, by the required quarterly amortization under the Term Loan Facility divided the
        then applicable Aggregate Pharmacy Scripts Value (as defined below).

         

        “Term
        Loan Pharmacy Scripts Availability” means the lowest of:

         

        (a) 
        The sum of (i) the Pharmacy Scripts Advance Rate multiplied by the product of (x) the average per script “net orderly
        liquidation value” of eligible prescription files (“pharmacy scripts”) based on the most recent
        acceptable appraisal received by ABL Loan Agent in accordance with the requirements of the Loan Documents, net of operating
        expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets (“Pharmacy
        Scripts NOLV”), multiplied by (y) the number of eligible pharmacy scripts (the product of (x) and (y) being
        the “Aggregate Pharmacy Script Value”), minus (ii) the sum of (x) the “Pharmacy Scripts Availability”,
        if any and (y) the “FILO Pharmacy Scripts Availability” whether or not the ABL FILO Term Loan has been drawn
        (as such terms are defined in the “Borrowing Base” and the “FILO Borrowing Base”, as applicable,
        under the ABL Loan Facility), or

         

        (b) 
        the amount equal to 85% of the Term Loan Cap (determined without regard to this limitation in this clause (b)).

         

        “Term
Loan Cap” means, at any time of determination, the lesser of (a) the then outstanding principal amount of the Term Loans
plus the unused Term Loan commitments and (b) the Term Loan Borrowing Base.

 

    B-4

     

    

 

	Eligibility:	Criteria
    for determining eligible credit card receivables, eligible pharmacy receivables, eligible merchandise inventory, eligible
    pharmacy inventory, and eligible pharmacy scripts will be in the permitted discretion of ABL Loan Agent in accordance with
    ABL Loan Agent’s customary practices and as appropriate under the circumstances as determined by ABL Loan Agent pursuant
    to field examinations and other due diligence (it being understood that eligibility criteria with respect to the foregoing
    as of the Closing Date shall be mutually acceptable to the “Collateral Agents” under the ABL Loan Facility and
    the Initial Lenders).
	 	 
	Optional
    Prepayments: 	Subject
    to the Early Termination Fee provided in the Initial Lender Fee Letter, Term Loans may be prepaid in whole or in part from
    time to time at the option of Borrowers, upon notice and in minimum principal amounts and multiples to be agreed and will
    be applied to installments of principal in the inverse order of maturity (and including all breakage or similar costs, if
    any).
	 	 
	Mandatory
    Prepayments: 	Borrowers
                                         will be required to make prepayments:

         

        (a)   in an amount equal to 100% of the net cash proceeds of asset dispositions (except for (i) dispositions in connection with
        any Permitted Real Estate Financings (as hereinafter defined) or (ii) dispositions resulting from casualty losses or condemnations
        and subject to exceptions to the extent mutually agreed upon and including sales in the ordinary course of business, but
        not any bulk sales);

         

        (b)   in an amount equal to 100% of the net cash proceeds of any debt issued by any Loan Party or its subsidiaries (other than
        indebtedness under Permitted Real Estate Financings and certain other categories of permitted debt to be specified);

         

        (c)   in an amount equal to 100% of the net cash proceeds of any equity issuance by any Loan Party or its subsidiaries (other
        than equity issuances by a Loan Party or its subsidiary to its or their members or management and other employees, in
        each case as to such members, management or other employees pursuant to employee stock or option plans approved by the
        board of directors and other exceptions to be agreed);

         

        (d)   in an amount equal to 100% of the net cash proceeds of casualty insurance and condemnation receipts received by any Loan
        Party or its subsidiaries, subject to reinvestment rights to be agreed;

         

        (e)   in an amount equal to 100% of the net proceeds of extraordinary receipts (the definition of which is to be agreed), except
        for proceeds less than an amount to be agreed; and

         

        (f)    in
an amount equal to 100% of the net cash proceeds received from the Permitted Real Estate Financings.

 

    B-5

     

    

 

		Mandatory
prepayments specified in clauses (a) through (e) will be applied first to the ABL Loans (without permanent reduction in commitments),
and to cash collateralize Letters of Credit in the event that the asset sold or that is the basis for the receipts is ABL Priority
Collateral or first to the Term Loans in the event that the asset sold is the basis for the receipts is Term Loan Priority Collateral;
provided that, if the Prepayment Exception Conditions are satisfied at the time of a prepayment under clauses (b) or (c)
above, such amounts may (at the sole discretion of the Borrowers) be applied first to the Term Loans and thereafter to the ABL
Loans (and in the case of the ABL Revolving Loans, without permanent reduction in commitments), and to cash collateralize Letters
of Credit. Mandatory prepayments specified in clause (f) will be applied as provided in the definition of Permitted Real Estate
Financings. Notwithstanding anything to the contrary set forth herein, subject to customary terms and conditions, each Term Loan
Lender shall be entitled to decline its pro rata share of any mandatory prepayment specified in clause (d) or (f) above (other
than any prepayment resulting from a refinancing of all or a portion of the Term Loan Facility).

         

        The
“Prepayment Exception Conditions” means: (A) no Default or Event of Default has occurred and is continuing,
(B) Excess Availability for the immediately preceding 30 consecutive day period shall have been (i) for the period from the Closing
Date through the second anniversary of the Closing Date, not less than the greater of (1) 35% of the Combined Loan Cap or (2)
$600,000,000 and (ii) thereafter, not less than the greater of (1) 30% of the Combined Loan Cap or (2) $535,000,000, (C) after
giving effect to any such prepayment, the Excess Availability shall be not less than the greater of such amounts in the foregoing
clause (B), (D) Excess Availability as projected as of the end of each month for each of the twelve (12) months following such
payment shall be not less than the greater of such amounts in the foregoing clause (B), and (E) the Fixed Charge Coverage Ratio,
on a pro forma basis, after giving effect to the specified transaction the proceeds of which are proposed to be used to make such
prepayment (x) based on the most recent financial statement received by Agent prior to the date thereof for the 12 month period
prior thereto and (y) as projected as of the end of each month for each of the twelve (12) months following such specified transaction,
in each case of clause (x) and (y), shall be not less than 1.00 to 1.00.

	 	 
	Interest
    and Fees: 	See
    Schedules 1 and 2 attached hereto.
	 	 
	Use
    of Proceeds:	The
    proceeds of the Term Loans will be used by Borrowers (a) to pay costs, expenses and fees in connection with the Term Loan
    Facility, the Acquisition and the other Transactions, (b) for payment of consideration for the acquisition of additional retail
    stores and related assets and/or the Acquired Distribution Centers pursuant to, and in accordance with the terms of the Acquisition
    Agreement, and (c) to pay down the ABL Loan Facility without permanent reduction in commitments thereunder.
	 	 
	Closing
    Date: 	The
    date on or before July 31, 2017 (or to the extent that the Company has extended the Stated Commitment Termination Date in
    accordance with the terms of this Commitment Letter, the date on or before the Extended Commitment Termination Date) on which
    the conditions set forth in Section 6 of the Commitment Letter are satisfied or waived (the “Closing Date”).

 

    B-6

     

    

 

	Term:	5
    years from the Closing Date (the “Maturity Date”).
	 	 
	Collateral: 	Subject
                                         to the Certain Funds Provisions and the limitations set forth below, to secure all obligations
                                         of each Loan Party, (a) first priority (subject to certain specified permitted liens),
                                         perfected security interests in and liens on all Term Loan Priority Collateral and (b)
                                         second priority (subject to certain specified permitted liens), perfected security interests
                                         in and liens on all ABL Priority Collateral subordinate only to the liens securing the
                                         ABL Loan Facility pursuant to the terms of the Intercreditor Agreement (as defined below).

         

        “ABL
        Priority Collateral” means all present and future assets and properties of the Loan Parties, including (a) accounts
        (other than accounts arising under contracts for sale of Term Loan Priority Collateral as such term is defined below)
        and payment intangibles, including credit card receivables, (b) general intangibles (including all intellectual property
        and loans or advances payable by a Loan Party to any other Loan Party) and prescription files, (c) chattel paper (other
        than chattel paper relating to Term Loan Priority Collateral), (d) documents, (e) instruments (including any promissory
        notes), (f) supporting obligations, (g) letters of credit and letter-of-credit rights, (h) deposit and securities accounts,
        investment property (including any stock or other equity or ownership interests in the subsidiaries and affiliates of
        each Loan Party), (i) commercial tort claims, (j) inventory, (k) all books, records and documents related to the foregoing
        (including databases, customer lists and other records, whether tangible or electronic, which contain any information
        relating to any of the foregoing) and (l) all proceeds and products of any or all of the foregoing in whatever form received,
        including proceeds of business interruption and other insurance and claims against third parties), other than (x) Excluded
        Assets or (y) to the extent constituting Term Loan Priority Collateral.

         

        “Term
        Loan Priority Collateral” means all present and future assets and properties of the Loan Parties consisting
        of (a) equipment, (b) fixtures, (c) motor vehicles, (d) fee and leasehold real property (including improvements and rights
        related thereto), (e) any deposit account used exclusively for the deposit of proceeds of Term Loan Priority Collateral,
        (f) to the extent evidencing, governing, securing or otherwise related to any of the foregoing and the other Term Loan
        Priority Collateral, documents, general intangibles (excluding all intellectual property, any loans or advances payable
        by a Loan Party to any other Loan Party and all prescription files), chattel paper, instruments, investment property (excluding
        any stock or other equity or ownership interests in the subsidiaries and affiliates of each Loan Party), commercial tort
        claims, letters of credit, supporting obligations and letter of credit rights, (g) accounts arising from contracts of
        sale of Term Loan Priority Collateral and (h) all proceeds and products of any or all of the foregoing in whatever form
        received (but not including proceeds of business interruption insurance or any identifiable proceeds of ABL Priority Collateral),
        other than Excluded Assets.

         

        “Collateral”
means the ABL Priority Collateral and the Term Loan Priority Collateral. 

 

    B-7

     

    

 

		Notwithstanding
anything to the contrary contained herein, the Collateral shall not include the following (the “Excluded Assets”):
(a) shares of any subsidiary that is a CFC or a CFC Holdco, in each case in excess of sixty-five percent of all of the issued
and outstanding shares of capital stock of such subsidiary entitled to vote to secure the obligations of Borrowers, if a pledge
of a greater percentage would result in material adverse tax consequences to the Company, (b) leasehold interests in real property,
but only to the extent granting such lien is expressly prohibited by such lease, (c) deposit accounts exclusively used for trust,
payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees,
(d) any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under
the terms of such contract, agreement, lease, permit, license, charter or license agreement covering real or personal property,
or applicable law with respect thereto, the valid grant of a security interest or lien therein to Administrative Agent would constitute
or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement
and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement,
lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition
cannot be waived; provided, that, the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is
unenforceable under Sections 9-406, 9-407 or 9-408 of the Uniform Commercial Code or other applicable law or (ii) so as to limit,
impair or otherwise affect Administrative Agent’s unconditional continuing security interests in and liens upon any rights
or interests of a Loan Party in or to monies due or to become due under any such contract, lease, permit, license, charter or
license agreement, (e) any United States intent-to-use trademark applications to the extent that, and solely during the period
in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law; provided, that, upon submission and acceptance by the U.S. Patent and Trademark Office
of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a), such intent-to-use trademark application shall be considered
Collateral, (f) any governmental licenses or state or local franchises, charters and authorizations, to the extent security interests
in such licenses, franchises, charters or authorizations are prohibited thereby, provided, that, the foregoing exclusion shall
in no way be construed (i) to apply if any such prohibition is unenforceable under the Uniform Commercial Code or other applicable
law or (ii) so as to limit, impair or otherwise affect Administrative Agent’s unconditional continuing security interests
in and liens upon any proceeds thereof, (g) equipment owned by any Loan Party on the Closing Date or thereafter acquired that
is subject to a lien securing a purchase money obligation or capitalized lease permitted to be incurred pursuant to the Loan Document
if the contract or other agreement in which such lien is granted validly prohibits the creation of any other lien on such equipment,
and (h) pledges and security interests prohibited by applicable law, rule or regulation (including any legally effective requirement
to obtain the consent of any governmental authority). Proceeds of Excluded Assets shall be deemed Collateral. 

 

    B-8

     

    

 

		In
addition, no actions will be required by Loan Parties to perfect security interests in (i) commercial tort claims with a value
of less than an amount to be agreed, (ii) promissory notes in an principal amount of less than an amount to be agreed, (iii) share
certificates of subsidiaries organized under the laws of a jurisdiction outside of the United States or Canada and (iv) store
deposit accounts which are not maintained at a depository bank where other deposit accounts are and so long as funds in such accounts
are remitted to a concentration account on a daily basis or other regular periodic basis in a manner consistent with the requirements
contained under the heading “Cash Management”.

         

        As
        to specific items of Collateral, Administrative Agent may determine not to perfect its security interest therein based
        on the de minimus value thereof relative to the costs of such perfection. The obligations secured shall include hedging
        and bank product obligations of any Loan Party where a Term Loan Lender or an affiliate of a Term Loan Lender is a counterparty.

         

        Intercreditor
        arrangements between Administrative Agent and the agent or other representative for the ABL Loan Facility (the “ABL
        Loan Agent”) will be set forth in an intercreditor agreement (the “Intercreditor Agreement”),
        which will be substantially in the form attached hereto as Exhibit D, subject to such revisions as may be agreed
        by the Administrative Agent, the Majority Initial Lenders and the ABL Loan Agent.

         

	Documentation:	Definitive
                                         loan documentation (collectively, the “Loan Documents”), including,
                                         without limitation, a term loan agreement, security agreements, pledge agreements, guarantees,
                                         control agreements, mortgages, evidence of insurance coverage, lender’s loss payable
                                         endorsements as to casualty and business interruption insurance, mortgagee’s title
                                         insurance (with satisfactory endorsements and coverage for matters disclosed by surveys),
                                         flood certificates and evidence of flood insurance for all fee and leasehold real property
                                         subject to a mortgage, the Intercreditor Agreement, lien search results, customary opinion
                                         letters of counsel to the Loan Parties, collateral access agreements, collateral assignment
                                         of rights under acquisition documents (including any transition services agreement),
                                         payoff letters, borrowing base certificate and documents and agreements related to all
                                         of the foregoing, each in form and substance reasonably satisfactory to the Company,
                                         Administrative Agent and Initial Lenders.

         

        The
terms and provisions of the Loan Documents will be mutually agreed upon, the terms of which (including materiality thresholds,
baskets, exceptions, qualifications and grace periods) will be negotiated in good faith (giving due regard to the operational
requirements, size, industry, businesses, financial condition, leverage, capital structure, projected performance, reporting and
accounting systems, Excess Availability, collateral and practices of the Company and its subsidiaries, the Transactions, and the
practices and procedures of the Administrative Agent and the asset-based lending market), and will be consistent with this Term
Sheet (the “Documentation Principles”). 

 

    B-9

     

    

 

		With
respect to lien waivers and access agreements from lessors of leased real property or operators of premises where inventory or
books and records of Borrowers are located, Borrowers shall use commercially reasonable efforts to obtain such agreements prior
to closing for the corporate headquarters, distribution centers and warehouses (but not for retail store locations) and to the
extent not delivered prior to closing, shall use commercially reasonable efforts to obtain such agreements thereafter. To the
extent that Administrative Agent has not received a reasonably acceptable lien waiver and access agreement for a leased or third
party location of any Loan Party consisting of a warehouse, distribution center or store location in a state where a landlord
has a lien under applicable law, ABL Loan Agent shall establish a one-month reserve in respect of amounts payable under the applicable
lease or other agreement with such lessor or operator subject to certain limitations to be agreed.

         

        The
        real estate mortgages in favor of the Administrative Agent for the benefit of the Term Loan Lenders shall be filed no
        later than sixty (60) days after the date of the Closing Date (or such later period as the Administrative Agent may agree),
        provided that mortgages shall not be required with respect to real estate that has a value below $100,000.

         

        Borrowers
        shall use their best efforts to deliver certificates of title with respect to motor vehicles to the Administrative Agent
        upon the Administrative Agent’s request if (i) an Event of Default has occurred or (ii) Excess Availability is less
        than or equal to 25% of the Combined Loan Cap.

         

	Representations
    and Warranties:  	Subject
    to the Certain Funds Provisions and the Documentation Principles, limited to the following, and subject to materiality and
    other negotiated limitations and exceptions, in each case as agreed by the parties, the term loan agreement governing the
    Term Loan Facility will contain the following representations and warranties: due organization and qualification; accuracy
    of financial information; subsidiaries; due authorization; no conflict; governmental consents; binding obligations; perfected
    liens; title to assets; no encumbrances; jurisdiction of organization; location of chief executive office; organizational
    identification number; commercial tort claims; litigation; compliance with law (including regulatory and licensing requirements),
    regulation, etc. (including without limitation Regulations T, U and X, Investment Company Act, the USA Patriot Act, environmental
    laws, FCPA, OFAC and other anti-terrorism laws); no material adverse change; fraudulent transfer; solvency; ERISA compliance;
    employee and labor matters; environmental matters; intellectual property; leases; deposit accounts and securities accounts;
    complete disclosure; material contracts; indebtedness; payment of taxes; margin stock; the Acquisition and acquisition documents
    (including the Acquisition Agreement and the Transition Services Agreement); eligible credit card receivables, eligible pharmacy
    receivables, eligible inventory, eligible prescription files and other eligible assets; location of inventory and equipment;
    inventory records; insurance; no default; no brokers; equity interests; customer and trade relations; no casualty.

 

    B-10

     

    

 

	Affirmative
    Covenants: 	Subject
    to the Certain Funds Provisions and the Documentation Principles, limited to the following, and subject to materiality and
    other negotiated limitations and exceptions, in each case as agreed by the parties, the term loan agreement governing the
    Term Loan Facility will contain the following affirmative covenants: financial statements, financial projections, management
    letters and other information; notices of defaults, litigation and other material events; collateral matters (including without
    limitation, reporting, notices and appraisal requirements); payment of obligations; cash management; reports and certificates;
    existence; maintenance of properties, including implementation and maintenance of appropriate systems; taxes; insurance; inspection;
    compliance with laws (including without limitation the USA Patriot Act, FCPA, OFAC and other anti-terrorism laws and Medicaid/Medicare
    or other regulatory laws); environmental; disclosure updates; formation of subsidiaries; senior debt status; bank products;
    accounting changes; further assurances; additional loan parties; lender meetings; material contracts (including the Acquisition
    Agreement and the Transition Services Agreement); employee and labor matters; new locations of Collateral; use of proceeds;
    compliance with terms of leaseholds; books and records; accountants; physical inventories; ERISA matters.
	 	 
	Collateral
    and Financial Reporting:	Collateral
and financial reporting shall be usual and customary for facilities of this nature and as may be deemed appropriate by Administrative
Agent, including:

         

        (a)  At any time prior to the date that the Borrowers shall have acquired 90% of all retail store locations (and related assets)
        required to be acquired pursuant to the Acquisition Agreement, weekly borrowing base certificates (except that, in connection
        with a Subsequent Closing, such borrowing base certificate may be delivered upon the consummation of a Subsequent Closing)
        and, thereafter, monthly borrowing base certificates so long as Excess Availability is not less than the greater of (i)
        20.0% of the Combined Loan Cap or (ii) $335,000,000 and no default or event of default exists, otherwise weekly; provided
        that, at any time borrowing base certificates are delivered on a weekly basis, such borrowing base certificates shall
        continue to be delivered weekly until the later of (A) the date that is four consecutive weeks after such weekly reporting
        commenced and (B) (1) if such weekly reporting commenced as a result of the occurrence of any default or event of default,
        the date that no default or event of default is continuing, and/or (2) if such weekly reporting commenced as a result
        of the Borrowers’ failure to maintain Excess Availability as required above, the date that Excess Availability shall
        have exceeded such levels, at all times, for a period of thirty (30) consecutive days;

         

        (b) 
ABL Loan Agent shall cause (i) two (2) field examinations and two (2) appraisals of each of inventory and pharmacy scripts in
each 12 month period to be conducted at the expense of Borrowers, provided that (ii) at any time Excess Availability is less than
the greater of (A) 20.0% of the Combined Loan Cap or (B) $335,000,000, ABL Loan Agent shall cause a third field examination and
a third appraisal of each of inventory and pharmacy scripts to be conducted in such 12 month period at the expense of Borrowers.

 

    B-11

     

    

 

		

        Subject
        to customary terms and conditions set forth in the Intercreditor Agreement (including customary prior notice periods and
        opportunity for ABL Loan Agent to conduct any such appraisal or field exam), in the event that the ABL Loan Agent has
        not conducted such appraisals, and field examinations in accordance with the cadence set forth in clause (i) above or,
        as mutually agreed by the Administrative Agent and Term Loan Lenders, clause (ii) above (to the extent applicable), and
        provided the results of such appraisals and field exams to the Administrative Agent, Administrative Agent may cause such
        appraisals and/or field examinations to be conducted at the expense of Borrowers, which appraisal or field exam shall
        be utilized by the ABL Loan Agent in connection with determining “eligibility”, the applicable Net Recovery
        Percentage and the Pharmacy Script NOLV, provided that the amount available to be borrowed under the Borrowing Base or
        the FILO Loan Borrowing Base under the ABL Loan Facility does not increase. All appraisals and field exams shall be (x)
        conducted by appraisers and firms that are reasonably acceptable to the Administrative Agent (it being agreed that Tiger
        Capital Group, LLC and Hilco Merchant Resources are deemed to be reasonably acceptable appraisers with respect to inventory
        and pharmacy scripts and Nardella & Taylor, LLP and Richter Consulting are deemed to be reasonably acceptable field
        examiners) and (y) satisfactory in scope to the Administrative Agent (it being agreed that the scope of the most recent
        appraisals and field examinations are satisfactory to the Administrative Agent, and upon any changes in circumstance or
        financial condition of Borrowers, the Administrative Agent shall have the reasonable opportunity to consult with the ABL
        Loan Agent regarding any required changes to such scope);

         

        (c) 
        Monthly financial statements, annual unqualified audited financial statements and projections;

         

        (d) 
        Other financial and collateral reports (including rolling 13-week cash flow projections and reporting); and

         

        (e) 
        Prior to the Closing Date the Company shall provide monthly financial statements for Fred’s Inc. and shall use reasonable
        best efforts to cause the Seller to deliver monthly financial statements for the 1,200 retail stores of the Acquired Business
        including the 4-Wall EBITDA.

         

        The
term “Excess Availability” as used herein means, at any time, (i) the ABL Loan Cap at such time (plus, with
respect to the ABL FILO Term Facility and the ABL IP Term Facility, at any time prior to the date that is ninety (90) days after
the Closing Date and solely to the extent the ABL FILO Term Facility and/or the ABL IP Term Facility, as applicable, is not funded,
the sum of (A) the lesser of (x) the FILO Borrowing Base under the ABL Loan Facility and (y) the ABL FILO Commitments and (B)
the lesser of (x) the ABL IP Borrowing Base under the ABL Loan Facility and (y) the ABL IP Commitments), minus (ii) the ABL Revolving
Loans and Letters of Credit then outstanding. At all times Excess Availability is tested the Borrowers shall certify to the Administrative
Agent and the Term Loan Lenders that all expenses, including rent, trade payables and amounts due under the Transition Services
Agreement have been paid in the ordinary course of business, in all material respects.

 

    B-12

     

    

 

		“Combined
Loan Cap” shall have the meaning set forth in the ABL Commitment Letter.

         

        The
        term “ABL Loan Cap” as used herein means, at any time, the lesser of (i) the “Borrowing Base”
        under the ABL Loan Facility at such time and (ii) the aggregate amount of the ABL Revolving Commitments.

         

        Through
        the later of the date that is (x) the six (6) month anniversary of the Closing Date and (y) sixty (60) days following
        the date that the Borrowers shall have acquired 80% of all retail store locations (and related assets) required to be
        acquired pursuant to the Acquisition Agreement, the ABL Loan Agent will, at the expense of the Borrowers, retain Berkeley
        Research Group, LLC as a consultant and financial advisor (“Advisor”) to provide: (i) financial reporting
        and borrowing base validation services (including, without limitation, rolling 13-week cash flow projections and reporting);
        (ii) pre-close evaluation of the cash management and collateral reporting available off the clone system following a month-end
        close during the ten (10) store pre-close testing project; (iii) progress reporting on the Company’s progress relating
        to integration and Transition Services Agreement processes; (iv) evaluation of the satisfactory integration (during such
        period of engagement) and plan of integration of the ERP system; and (v) financial advisory services as requested by the
        ABL Loan Agent and Administrative Agent. Any and all reports prepared by the Advisor shall be provided to the Administrative
        Agent and Initial Lenders. ABL Loan Agent shall cause the Advisor, from time to time upon reasonable advance request by
        the Administrative Agent and the Initial Lenders (but, in any event, not more frequently than one time per week), to participate
        in status calls with the Administrative Agent and the Initial Lenders with respect to the services performed and reports
        prepared by the Advisor.

         

	Cash
    Management:	As
of the Closing Date, Loan Parties shall have a cash management system in form and substance reasonably satisfactory to ABL Loan
Agent and Administrative Agent (it being understood that a cash management system similar in function to that of Rite Aid Corporation
shall be satisfactory to ABL Loan Agent and Administrative Agent). Loan Parties will direct all credit card issuers and processors,
and those customers making payments on receivables, to remit payments to deposit accounts that, subject to the Certain Funds Provision,
are the subject of control agreements among the applicable Loan Party, Administrative Agent, ABL Loan Agent and the depository
bank in form and substance reasonably satisfactory to ABL Loan Agent and Administrative Agent and Loan Parties will be required
to promptly remit any payments received by them to these accounts. Funds deposited into the deposit accounts of Loan Parties shall
be remitted to ABL Loan Agent for application to the obligations upon a Cash Dominion Event.

 

    B-13

     

    

 

		“Cash
Dominion Event” means (a) Excess Availability is less than the greater of (i) 15.0% of the Combined Loan Cap at any
time or (ii) $270,000,000, or (b) an event of default exists or has occurred and is continuing; provided, that,

         

        (i)     to the extent that the Cash Dominion Event has occurred due to clause (a) of this definition, if Excess Availability shall
        be equal to or greater than the applicable amount for at least 30 consecutive days, the Cash Dominion Event shall no longer
        be deemed to exist or be continuing until such time as Excess Availability may again be less than the amount in clause
        (a) of this definition, and

         

        (ii)    to the extent that the Cash Dominion Event has occurred due to clause (b) of this definition, if such event of default
        is cured or waived or otherwise no longer exists, the Cash Dominion Event shall no longer be deemed to exist or be continuing.

         

	Financial
    Covenant:	Borrowers
    shall maintain minimum Excess Availability at all times equal to the greater of (a) the sum of (i) 10% of the lesser of (A)
    the Maximum Credit (as defined in the ABL Commitment Letter), plus the then outstanding principal amount of the term loans
    and commitments under the ABL FILO Term Facility, plus the then outstanding principal amount of the term loans and commitments
    under the ABL IP Term Facility, and (B) the sum of the Borrowing Base (without giving effect to the ABL FILO Push Down Reserve,
    ABL IP Push Down Reserve or the Term Loan Push Down Reserve), plus the FILO Borrowing Base, plus the ABL IP Borrowing Base
    (as each such term in this clause (B) is defined in the ABL Commitment Letter), and (ii) 5% of the Term Loan Cap, and (b)
    (x) from the Closing Date through the 60 day anniversary of the Closing Date, $135,000,000 and (y) thereafter, $175,000,000.
	 	 
	Negative
    Covenants: 	Subject
to the Certain Funds Provisions and the Documentation Principles, limited to the following, and subject to materiality and other
negotiated limitations and exceptions (including baskets in amounts to be agreed for certain covenants), in each case as agreed
by the parties, the term loan agreement governing the Term Loan Facility will contain the following negative covenants: dividends,
distributions, redemptions and repurchases of capital stock; incurrence of debt (including capital leases, provided that
indebtedness in respect of Permitted Real Estate Financings shall be permitted) and guarantees; repurchases, repayments or prepayment
of subordinated debt or optional repurchases, prepayments or other optional payments in respect of other debt; creation or suffering
of liens; loans, investments and acquisitions (including the acquisition of additional store locations under the Acquisition Agreement
after the Closing Date); affiliate transactions; changes in the conduct of business, fiscal year or accounting practices; asset
sales, store closings, mergers, consolidations and other fundamental changes; restrictions affecting subsidiaries; limitation
on amendment of organizational documents and certain material agreements (including the Acquisition Agreement and Transition Services
Agreement); use of proceeds; inventory and equipment with bailees; bank accounts and credit card arrangements; and burdensome
agreements.

 

    B-14

     

    

 

		The
negative covenant on dividends, redemptions and repurchases of capital stock and on optional prepayments of indebtedness will
expressly allow such dividends, redemptions and repurchases, or such optional prepayments, provided, that, (i) no such dividends,
redemptions and repurchases or optional prepayments may be made on or before the second anniversary of the Closing Date (other
than dividends in an aggregate amount not to exceed $10,000,000 in any fiscal year, so long as no default or event of default
shall have occurred and be continuing or would result therefrom (including under the Financial Covenant)) and (ii) Loan Parties
may make dividends, redemptions and repurchases of capital stock and on optional prepayments of indebtedness after the second
anniversary of the Closing Date, provided, that, (A) as of the date of any such payment in respect thereof, and after giving effect
thereto, each of the Payment Conditions (as defined below) is satisfied and (B) Administrative Agent shall have received prior
notice and other information related to such transactions in a manner and on terms to be agreed.

         

        The
negative covenants shall permit the Loan Parties to enter into one or more (a) term loan real estate financings (“Mortgage
Financing”) and/or (b) asset dispositions consisting of sale-leaseback transactions (“Sale-Leaseback”
and, together with any Mortgage Financing, collectively, the “Permitted Real Estate Financings”) of owned real
estate and related improvements, in each case solely consisting of the Acquired Distribution Centers so long as (A) no default
or event of default then exists or would arise therefrom, (B) in the case of any Sale-Leaseback, (x) any disposition of any such
property shall be for the fair market value of such property being sold pursuant to such Sale-Leaseback at the time of such disposition,
(y) such Sale-Leaseback is made pursuant to leases on market terms, and (z) the Loan Parties shall cause each purchaser to enter
into a collateral access agreement with the Administrative Agent on terms reasonably satisfactory to the Administrative Agent
(unless otherwise agreed by the Administrative Agent, which shall not impair the right of the Administrative Agent to impose Reserves),
(C) in the case of any Mortgage Financing, (w) such indebtedness shall not have a maturity date occurring prior to 91 days after
the term of the Term Loan Facility or require amortization payments in excess of monthly straight-line amortization on a thirty
(30) year term, (x) the Liens securing such Mortgage Financing shall not at any time encumber any property other than the applicable
Acquired Distribution Center that is the subject of such financing, (y) the obligors under any such Mortgage Financing shall not
consist of any party that is not a Loan Party (other than to the limited extent of any SPE holding title to such Acquired Distribution
Center), and (z) the Loan Parties shall cause each holder of indebtedness under such Mortgage Financing (or agent therefor) to
enter into a collateral access agreement with the Administrative Agent on terms reasonably satisfactory to the Administrative
Agent (unless otherwise agreed by the Administrative Agent, which shall not impair the right of the Administrative Agent to impose
Reserves), (D) the aggregate Sale-Leaseback amount and indebtedness (including capitalized lease obligations) incurred pursuant
to any such Permitted Real Estate Financings shall not exceed $125,000,000 at any time outstanding and (E) the net proceeds from
any such Permitted Real Estate Financings shall be applied as follows: (x) up to 30% of such net proceeds to the repayment of
the outstanding Term Loan Facility and (y) the remainder of such net proceeds to the repayment of the ABL Loans (without, in the
case of ABL Revolving Loans, a permanent reduction in commitments) and to cash collateralize Letters of Credit. Any mortgage,
lien or other security interest held by the Administrative Agent with respect to any Acquired Distribution Center that is the
subject of a Permitted Real Estate Financing shall be discharged upon the consummation of such Permitted Real Estate Financing.

 

    B-15

     

    

 

		The
negative covenant governing acquisitions after the Closing Date (other than pursuant to the Acquisition Agreement) will expressly
allow an acquisition, provided that, except as otherwise provided below, (i) no acquisition or series of related acquisitions
involving consideration in excess of $40,000,000 per year (of which, through the first anniversary of the Closing Date, not more
than $20,000,000 in the aggregate shall be paid in consideration of any acquisition of assets not constituting prescription files),
in any one case or in the aggregate, shall occur prior to the second anniversary of the Closing Date; provided that the
limitations set forth in this clause (i) shall no longer apply in the event that Excess Availability as of the fiscal year ended
January 2018 is greater than $500,000,000, (ii) as of the date of any such acquisition and after giving effect thereto, each of
the Payment Conditions is satisfied, (iii) the acquisition shall be with respect to an operating company or division or line of
business that engages in a line of business substantially similar, reasonably related or incidental to the business that Borrowers
are engaged in, (iv) the board of directors (or other comparable governing body) of the person to be acquired shall have duly
approved such acquisition and such person shall not have announced that it will oppose such acquisition or shall not have commenced
any action which alleges that such acquisition will violate applicable law, and (v) Administrative Agent shall have received prior
notice and other information related to such transactions in a manner and on terms to be mutually agreed. 

 

    B-16

     

    

 

		The
negative covenants will include a provision permitting the acquisition by the Borrowers of additional stores (and related assets)
from Seller under the Acquisition Agreement, provided that the consummation of any such Subsequent Closing shall be subject only
to the following conditions (the “Subsequent Acquisition Conditions”): (a) the closing of the acquisition of
Purchased Assets pursuant to such Subsequent Closing, in accordance with the Acquisition Agreement, (b) as of the date of any
such purchase and after giving effect thereto, Excess Availability shall be not less than the greater of (x) 25% of the Combined
Loan Cap and (y) $200,000,000 (determined after giving effect to the acquisition of the eligible assets related to such stores),
(c) to the extent not previously provided, the Administrative Agent shall have received customary lien release documents with
respect to the assets then being acquired, (d) Administrative Agent shall have received a current borrowing base certificate with
respect to the assets acquired pursuant to such Subsequent Closing, (e) Administrative Agent shall have received not less than
three business days’ prior written notice of the proposed Subsequent Closing, (f) (i) at any time during the Acquisition
Period (x) the Specified Representations shall be true and correct in all material respects at such time where not already qualified
by materiality or “material adverse effect”, otherwise in all respects, (y) the Acquisition Agreement Representations
(set forth in (1) the first sentence of Section 3.05 (or equivalent substitute provision) of the Acquisition Agreement, (2) Section
3.09 (or equivalent substitute provision) of the Acquisition Agreement, (3) second and third sentence of Section 3.13 (or equivalent
substitute provision) of the Acquisition Agreement, (4) the last sentence of Section 3.15 (or equivalent substitute provision)
of the Acquisition Agreement, (5) the last sentence of Section 3.18 (or equivalent substitute provision) of the Acquisition Agreement
and (6) such other provisions of the Acquisition Agreement, as mutually agreed by the Arrangers and the Majority Initial Lenders,
on the one hand, and the Borrowers on the other hand) will be true and correct as and to the same extent required by Section 6
of the Commitment Letter (it being understood that references to “the Acquisition” therein shall for this purpose
refer to such Subsequent Closing) and (z) the Sellers shall have certified to the Borrowers that the covenants contained in the
first sentence of Section 5.01 (or equivalent substitute provision) of the Acquisition Agreement (with respect to Inventory levels
and prescription volumes), Section 5.01(f) (or equivalent substitute provision) of the Acquisition Agreement and such other Sections
of the Acquisition Agreement (as may be mutually agreed by the Arrangers and the Majority Initial Lenders, on the one hand, and
the Borrowers on the other hand) have been complied with in all material respects; and (ii) at any time after the Acquisition
Period or after the LCT Limitation (as defined in the ABL Commitment Letter) has been exceeded, the Borrowers shall have satisfied
all conditions precedent set forth below under the heading “Conditions Precedent to Initial Draw and Delayed Draw”
with respect to such Term Loans, and (g) Administrative Agent shall have received a certificate of a responsible officer of the
Company certifying and attaching calculations demonstrating (as applicable), compliance with each of the conditions set forth
herein.

         

        “Acquisition
        Period” means, the period commencing on the Closing Date and ending on the six-month anniversary of the Closing
        Date.

         

        Any
        new domestic or foreign subsidiary acquired pursuant to an acquisition after the Closing Date will be joined as a Borrower
        or Guarantor (except as to any subsidiary that is not required to be a Guarantor) and additional Loan Documents executed
        and delivered in connection therewith. Assets acquired after the Closing Date (other than pursuant to the terms of the
        Acquisition Agreement) will only be eligible after a satisfactory field examination, appraisal and legal diligence, subject,
        in all instances (including in respect of assets acquired pursuant to the terms of the Acquisition Agreement), to reserves
        and eligibility criteria.

         

        “Payment
        Conditions” means, at the time of determination with respect to any specified transaction or payment the following:

         

        (a)   The Administrative Agent shall have received unqualified audited financial statements for the fiscal year of the Borrowers
        ended January 2019,

         

        (b)   as of the date of any such transaction or payment, and after giving effect thereto, no default or event of default shall exist
or have occurred and be continuing,

 

    B-17

     

    

 

		(c)   as of the date of any such transaction or payment, on a pro forma basis and after giving effect thereto, either:

         

        (i)   
        (A) the Excess Availability for the immediately preceding 30 consecutive day period shall have been not less than the
        greater of (1) 20.0% of the Combined Loan Cap or (2) $335,000,000, (B) the Excess Availability on the date of such specified
        transaction or payment shall be not less than the greater of such amounts, (C) Excess Availability as projected as of
        the end of each month for each of the twelve (12) months following such transaction or payment (with certain exceptions
        to be agreed) shall be not less than the greater of such amounts and (D) the Fixed Charge Coverage Ratio based on the
        most recent financial statement received by the Administrative Agent prior to the date thereof for the 12 month period
        prior thereto, shall be not less than 1.00 to 1.00; or

         

        (ii)  
        provided that the Fixed Charge Coverage Ratio for any 12 month period ended on or after the second anniversary of the
        Closing Date, shall not have been less than 1.00 to 1.00, (A) the Excess Availability for the immediately preceding 30
        consecutive day period shall have been not less than the greater of (1) 30.0% of the Combined Loan Cap or (2) $500,000,000,
        (B) the Excess Availability on the date of such specified transaction or payment shall be not less than the greater of
        such amounts, and (C) Excess Availability as projected as of the end of each month for each of the twelve (12) months
        following such transaction or payment shall be not less than the greater of such amounts; and,

         

        (d)  Administrative Agent shall have received a certificate of an authorized officer of Borrowers certifying as to compliance
        with the preceding clauses and demonstrating (in reasonable detail) the calculations required thereby which is reasonably
        acceptable to the Administrative Agent and the Term Loan Lenders.

         

        Borrowers
        shall not be permitted to draw the ABL FILO Term Loan or the ABL IP Term Loan under the ABL Loan Facility until the Term
        Loan Facility is fully funded.

         

	Events
    of Default: 	Limited
    to the following, subject to the Documentation Principles, and subject to cure periods to be agreed, materiality and other
    negotiated limitations, in each case as agreed by the parties, the term loan agreement governing the Term Loan Facility will
    contain the following events of default: payment and performance defaults under any of the Loan Documents, cross-defaults
    to other material indebtedness (to be defined as indebtedness in excess of $25,000,000), an early termination date occurs
    under any swap contract, breach of representations and warranties, insolvency (whether or not insolvency proceedings have
    been instituted), voluntary and involuntary bankruptcy, judgments and attachments in excess of an amount to be agreed (or
    not subject to stay), non-monetary judgments that could have a material adverse effect, revocation of (or attempted revocation
    of) any guaranty, dissolution, change in control, impairment of a material portion of the security, ERISA, actual or asserted
    invalidity or unenforceability of any Loan Documents or liens securing obligations under the Loan Documents, invalidity of
    subordination or intercreditor provisions, material uninsured loss, felony indictment, injunction or court or other governmental
    order preventing continuing conduct of all or any material part of the business affairs of the Loan Parties, or suspension
    or termination of all or a substantial portion of its business.

 

    B-18

     

    

 

	Conditions
    Precedent to Closing: 	The
conditions precedent to the closing of the Term Loan Facility will consist of those conditions precedent set forth in Section
6 of the Commitment Letter.
	 	 
	Conditions
    Precedent to Initial Draw and Delayed Draw:	The
                                         Initial Draw shall be made in one advance on or before ten (10) business days after the
                                         Closing Date. The advance under the Initial Draw shall be subject to (i) five (5) days’
                                         prior written notice from the Company to the Administrative Agent of the request for
                                         the Term Loan in accordance with the procedures set out in the Loan Documents and (ii)
                                         the Draw Conditions (as defined below).

         

        The
        Delayed Draw shall be made in one advance on or before the Outside Draw Date. The advance under the Delayed Draw shall
        be subject to (i) five (5) days’ prior written notice from the Company to the Administrative Agent of the request
        for the Term Loan in accordance with the procedures set out in the Loan Documents and (ii) the Draw Conditions (as defined
        below).

         

        “Draw
        Conditions” means, as of the date of any advance under the Term Loan Facility and after giving effect thereto,
        (a) Excess Availability shall be not less than the greater of (x) 25% of the Combined Loan Cap and (y) $200,000,000 (determined
        after giving pro forma effect to the acquisition of the eligible assets related to stores acquired on such date as part
        of a Subsequent Closing that has satisfied the Subsequent Acquisition Conditions), (b) Administrative Agent shall have
        received a current borrowing base certificate dated as of the date of such advance giving effect to the assets acquired
        pursuant to a Subsequent Closing occurring on such date (if any), provided that the Subsequent Acquisition Conditions
        are satisfied with respect to such Subsequent Closing, and (c) the Specified Representations shall be true and correct
        in all material respects at such time where not already qualified by materiality or “material adverse effect”,
        otherwise in all respects.

         

	Assignments
    and Participations: 	
Each Term Loan Lender will be permitted to make assignments
of its interest in the Term Loan Facility in a minimum amount equal to $5,000,000 (other than in the case of assignments to other
affiliates, approved funds or other Term Loan Lenders) to any affiliates, approved funds or other Term Loan Lenders and other
financial institutions (other than Disqualified Lenders) constituting an “eligible assignee”. For the avoidance of
doubt, each of the Approved Assignees shall be deemed to be an “eligible assignee”. 

 

    B-19

     

    

 

		No
assignment or participation may be made to natural persons, any Loan Party or any of their affiliates or subsidiaries, or any
holder of any subordinated debt of a Loan Party or any Disqualified Lenders that have been identified to Administrative Agent
and whose identity is available to each Term Loan Lender on request, provided that the Term Loan Lenders may make an assignment
or participation to Disqualified Lenders after an event of default. Administrative Agent shall not have any responsibility or
obligations to determine whether any Term Loan Lender or potential Term Loan Lender is a Disqualified Lender and will have no
liability with respect to any assignment to a Disqualified Lender. Each Term Loan Lender may collaterally assign its rights under
the Term Loan Facility to any financing source.

         

        Notwithstanding
        the foregoing, any assignment of a portion of commitments prior to the funding of the Delayed Draw shall be subject to
        the Assignment Provisions set forth in paragraph 18 of the Commitment Letter (as though the references therein to Initial
        Draw also refer to Delayed Draw).

         

	Amendments
    and Waivers: 	
Amendments, waivers and consents with respect to the
provisions of the Loan Documents will require the approval of Administrative Agent and the Required Lenders, provided that, in
addition to the approval of Required Lenders, (a) the consent of each Term Loan Lender directly and adversely affected thereby
will be required with respect to matters relating to (i) increases in the commitment of such Term Loan Lender, (ii) reductions
of principal, interest or fees (provided that a waiver of default interest, default or event of default shall not constitute a
reduction of interest for this purpose), (iii) extensions of final maturity or the due date of any interest, fee or other payments,
and (iv) changes to the order of application of funds and (b) the consent of all Term Loan Lenders will be required with respect
to: (i) modifications of the pro rata sharing requirements of the Loan Documents, (ii) modification of the voting percentage or
change in the definition of “Required Lenders” or any other provisions specifying the number of Term Loan Lenders
or portion of the Loans or commitments required to take any action under the Loan Documents, (iii) permitting any Borrower to
assign its rights under the Loan Documents, (iv) releases of all or substantially all of the value of the Collateral or guarantees
(other than in connection with transactions permitted pursuant to the Loan Documents), (v) subordination of the lien on Collateral
in favor of Administrative Agent (other than with respect to certain permitted liens to be agreed) or subordination of the payment
of the obligations in respect of the Term Loan Facility and (vi) increases in the percentages applied to eligible assets in the
Term Loan Borrowing Base or other modifications to the Term Loan Borrowing Base or any components thereof which would result in
an increase in the amount of the Term Loan Borrowing Base.

 

    B-20

     

    

 

		“Required
Lenders” means those non-defaulting Term Loan Lenders who collectively hold more than 50% of the aggregate amount of
outstanding commitments under the Term Loan Facility plus the outstanding amount of the Term Loans under the Term Loan Facility,
provided, that, at any time that there are 2 or more unaffiliated Term Loan Lenders, “Required Lenders” must include
at least 2 unaffiliated Term Loan Lenders.

         

        The
        Loan Documents shall contain customary provisions for replacing defaulting Term Loan Lenders, replacing Term Loan Lenders
        claiming increased costs, tax gross ups and similar required indemnity payments and replacing non-consenting Term Loan
        Lenders in connection with amendments and waivers requiring the consent of all Term Loan Lenders or of all Term Loan Lenders
        adversely affected thereby so long as Term Loan Lenders holding at least 50% of the aggregate amount of the loans and
        commitments under the Term Loan Facility shall have consented thereto.

         

	Cost
    and Yield Protections:	
    Customary for facilities and transactions of this type, including customary tax gross-up provisions and including provisions
    relating to Dodd-Frank, Basel III and FATCA.
	 	 
	Governing
    Law: 	New
    York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of
    any jurisdiction other than the State of New York (other than certain security documents that will be governed by local law
    as applicable or as the parties may otherwise agree); subject to the proviso set forth in the “Governing Law”
    section of the Commitment Letter.
	 	 
	Expenses,
    Waivers and Indemnity: 	
                                         The Loan Parties will pay all of the reasonable and documented out-of-pocket costs and
                                         expenses and customary administrative charges incurred by Administrative Agent, Lead
                                         Arranger and the Initial Lenders including, without limitation, reasonable legal costs
                                         and expenses, reasonable financial consultant and advisor costs and expenses, filing
                                         and search charges, recording taxes, appraisals, real estate evaluations and field examination
                                         charges and expenses, provided, that, legal fees shall be limited to the reasonable fees
                                         of one counsel for Lead Arranger and one counsel for Administrative Agent and, in addition,
                                         one local counsel in each appropriate jurisdiction and, to the extent required by the
                                         subject matter, one specialist counsel for each such specialized area of law in each
                                         appropriate jurisdiction, and in the case of the enforcement, collection or protection
                                         of the rights of Term Loan Lenders, in addition, one additional counsel for the Term
                                         Loan Lenders in the absence of any conflict of interest.

         

        Waivers
to include, but not be limited to a waiver by Administrative Agent, Arrangers, Term Loan Lenders and each Loan Party of its rights
to jury trial; waiver by each Loan Party of claims for special, punitive, exemplary, indirect or consequential damages in respect
any breach or alleged breach by Administrative Agent, Arrangers, or any Term Loan Lender of any of the Loan Documents.

 

    B-21

     

    

 

		Loan
Parties shall indemnify and hold harmless Administrative Agent, Arrangers and Term Loan Lenders and their respective directors,
officers, agent, representatives and employees from and against all losses, claims, damages, expenses, or liabilities including,
but not limited to, reasonable and documented legal or other expenses incurred in connection with investigating, preparing to
defend, or defending any such loss, claim, damage, expenses or liability, incurred in respect of the Term Loan Facility or the
relationship between Administrative Agent, Arrangers or any Term Loan Lender and any Loan Party (provided, that, the obligation
to reimburse any indemnified person for legal fees and expenses shall be limited to legal fees and expenses of one firm of counsel
for all such indemnified persons and one local counsel in each appropriate jurisdiction (and, to the extent required by the subject
matter, one specialist counsel for each such specialized area of law in each appropriate jurisdiction) and in the case of an actual
or perceived conflict of interest as determined by the affected indemnified person, one counsel for such affected indemnified
person), except that the foregoing indemnity will not, as to any Indemnified Person, apply to costs, expenses or liabilities to
the extent they (a) are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from (i)
the willful misconduct, bad faith or gross negligence of such indemnified person or (ii) a material breach of the material obligations
of such indemnified person under the Commitment Letter, the Fee Letters or the Loan Documents or (b) relate to any claim, litigation,
investigation or proceeding between or among indemnified persons other than (i) claims against any Administrative Agent, Arranger
or Term Loan Lenders or their respective affiliates, in each case in their respective capacities or in fulfilling their respective
roles as the agent or arranger or any other similar role under the Term Loan Facility as the case may be (excluding their role
as a Term Loan Lender) to the extent such persons are otherwise entitled to indemnification and (ii) claims arising out of any
act or omission on the part of the Loan Parties or their subsidiaries or affiliates.

         

This
Term Sheet for the Term Loan Facility is not meant to be, nor shall it be construed as an attempt to describe all of the terms
of the documentation, or the specific phrasing for, the provisions of the documentation. Rather, it is intended only to outline
certain material terms to be included in the Loan Documents, provided, that the Loan Documents will not contain any conditions
precedent to (x) the initial funding under the Term Loan Facility other than those set forth in Section 6 of the Commitment Letter
and (y) borrowings used to consummate a Subsequent Acquisition under the Term Loan Facility other than the Subsequent Acquisition
Conditions. All references to any Term Loan Lender in this Term Sheet include its successors and assigns and such Term Loan Lender
may designate one of its affiliates to act in its place in any of the roles for which it is specified in the Term Sheet.

 

    B-22

     

    

 

SCHEDULE
1

TO

EXHIBIT B TO COMMITMENT LETTER

 

Interest
and Certain Fees

 

	Interest
    Rate: 	Term
                                         Loans shall bear interest at a rate per annum equal to the LIBOR Rate plus the Applicable
                                         Margin. If LIBOR Rate shall be less than zero, such rate shall be deemed zero for purposes
                                         of the Term Loan Facility.

         

        As
        used herein:

         

        “Applicable
        Margin” means 9.50% per annum.

         

        “LIBOR
        Rate” means the greater of (i) 1.00% or (ii) the rate per annum equal to the London Interbank Offered Rate,
        or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Bloomberg
        screen page (or such other commercially available source providing such quotations as may be designated by the Administrative
        Agent in its reasonable discretion from time to time) at or about 11:00 a.m., London time, two (2) Business Days prior
        to the commencement of each month for a one month term (and, if any such rate is below zero, the LIBOR Rate shall be deemed
        to be zero).

         

	Default
    Rate: 	Following
    the occurrence and during the continuance of an event of default, the applicable rates of interest for all Term Loans shall
    be increased by 2% per annum above the otherwise then applicable rates.  
	Rate
    and Fee Basis; Payment Dates:	All per annum rates and fees will be computed on basis of actual days elapsed over a 360 day year.  Interest is
    payable on the first day of each month in arrears.
	Fees:	The
                                         Company shall pay all fees as and when required under the Fee Letters.

         

        At
the option of any Term Loan Lender, all or any portion of the fees payable to such Term Loan Lender under the Commitment Letter
or under the Fee Letters may be taken in the form of original issue discount.

 

    B-23

     

    

 

EXHIBIT C

TO

COMMITMENT LETTER

 

Conditions Precedent to the Closing of
the Term Loan Facility

 

The conditions precedent to the closing
of the Term Loan Facility will consist of the condition precedent set forth in Section 6(a) of the Commitment Letter and the following
conditions precedent:

 

	(a)	The Administrative Agent and Term Loan Lenders shall have received (i) an effective Acquisition Agreement, duly executed by each of the parties thereto, in form and substance satisfactory to the Arrangers and the Majority Initial Lenders in their sole discretion and (ii) evidence that the Acquisition (other than the Acquired Stores, the Acquired Distribution Centers, the Corporate Infrastructure, and the related assets and liabilities to be acquired in any Subsequent Closing or the Final APA Closing, as each of such terms is defined in the Acquisition Agreement) shall have been, or, substantially concurrently with the initial borrowing under the Credit Facility shall be, consummated in all material respects in accordance with applicable laws and the terms of the Acquisition Agreement (including the Ancillary Agreements referred to therein).
	 	 
	(b)	The Acquired Store Series of the Company commencing on the Closing Date shall not consist of less than 100 retail stores of the Acquired Business (which, for the avoidance of doubt, shall be completed within 10 business days thereafter).
	 	 
	(c)	The ABL Loan Facility shall have been or, substantially concurrently with the closing of the Term Loan Facility shall be, consummated.
	 	 
	(d)	
        Subject in all cases to the Certain
Funds Provisions, the Administrative Agent and Initial Lenders shall have received: (i) the loan agreement, guaranties, security
agreements, pledge agreements, intellectual property security agreements, Intercreditor Agreement, collateral assignment of rights
under acquisition documents (including any transition services agreement) and other definitive documentation for the Term Loan
Facility, in each case to the extent the Loan Parties are party thereto, executed and delivered by the applicable Loan Parties
and the Commitment Parties party thereto subject to and on terms and consistent with this Commitment Letter (including the Funds
Certain Provisions and Documentation Principles), (ii) a reasonably satisfactory cooperation and license agreement from the Sellers
and its affiliates in connection with the Administrative Agent’s and/or Term Loan Lenders’ access to conduct field
examinations of the Purchased Assets, including the Duplicate IT System (subject to the limits on field examinations set forth
herein), use of any intellectual property licensed to the Borrowers and exercise of rights and remedies under the Term Loan Facility
(including conducting “store closing” and similar themed sales), as applicable, in respect of any retail stores of
the Acquired Business subject to the Transition Services Agreement or which utilize (in accordance with the Acquisition Agreement)
intellectual property of the Sellers, (iii) customary legal opinions, (iv) customary evidence of authority from each Loan Party,
(v) customary officer’s certificates from each Loan Party, (vi) good standing certificates (to the extent applicable) in
the respective jurisdictions of organization of each Loan Party, (vii) customary lien searches with respect to each Loan Party,
(viii) UCC financing statements for each Loan Party, (ix) current borrowing base certificate dated as of the Closing Date (or
such other date agreed to by the Administrative Agent) (x) evidence of insurance coverage including certificates naming the Administrative
Agent as additional insured and lender’s loss payee to casualty and business interruption insurance and (xi) borrowing request
and disbursement authorization letter (including funds flow memorandum). Administrative Agent shall have received evidence that
notices to each credit card processor used by Borrowers have been sent to such credit card processor with respect to the security
interest of Administrative Agent and instructions to remit payments to a bank account of Borrowers specified therein and not to
change such bank account without the prior written consent of Administrative Agent. Subject in all cases to the Certain Funds
Provision, Administrative Agent, for the benefit of itself and Term Loan Lenders, shall hold perfected, first priority (subject
to certain specified permitted liens) security interests in and liens upon the Term Loan Priority Collateral and perfected second
priority (subject to certain specified permitted liens) security interests in and liens upon the ABL Priority Collateral, and
none of the Collateral shall be subject to any other pledges, security interests, mortgages or assignments as security, except
for liens permitted under the Loan Documents. Receipt by Administrative Agent of (A) customary payoff letters as to the Company’s
existing ABL credit facility (the “Existing Fred’s ABL”) reflecting the amounts required to repay in
full all outstanding obligations thereunder (other than (x) contingent indemnity and expense reimbursement obligations for which
no claims have been asserted and (y) any letters of credit outstanding thereunder which shall be permitted to be rolled into the
ABL Loan Facility and “grandfathered” thereunder) and providing that upon receipt of such funds all such arrangements
under the Existing Fred’s ABL are terminated and the liens securing any obligations thereunder are released and (B) customary
lien releases and discharges in respect of the Existing Credit Facility for the assets acquired on the Closing Date under the
Acquisition Agreement.

 

    C-1 

     

    

 

	 	On the Closing Date, after giving effect
        to the Transactions, the Company, the Loan Parties and their respective subsidiaries shall not have any third party debt for borrowed
        money other than (i) the Term Loan Facility, (ii) the ABL Loan Facility, (iii) ordinary course capital leases, purchase money indebtedness,
        equipment financings, letters of credit, bank guarantees and surety bonds of the Loan Parties and their respective subsidiaries
        that are not otherwise prohibited by the Loan Documents, (iv) intercompany indebtedness of the Loan Parties and their subsidiaries
        not otherwise prohibited by the Loan Documents and (v) certain other debt for borrowed money that the Company and the Administrative
        Agent reasonably agree may remain outstanding after the Closing Date.

	 	 
	(e)	The opening Excess Availability at closing after the application of proceeds of the initial funding under the ABL Loan Facility and/or issuance of initial Letters of Credit (as such term is defined in the ABL Loan Facility documents) under the ABL Loan Facility and after payment of all fees and expenses of the Transactions payable on the Closing Date, shall be not less than the greater of (x) 25% of the Combined Loan Cap and (y) $200,000,000.
	 	 
	(f)	Administrative Agent, Administrative Agent and each Term Loan Lender shall have received at least 5 business days prior to the Closing Date all documentation and information as is reasonably requested by Administrative Agent or a Term Loan Lender that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the USA Patriot Act, in each case to the extent requested in writing at least 10 business days prior to the Closing Date.

 

    C-2 

     

    

 

	(g)	Administrative Agent shall have received (i) (A) projected balance sheets, income statements, statements of cash flows and projected Excess Availability and Borrowing Base, FILO Borrowing Base and Term Loan Borrowing Base of the Company and its subsidiaries after giving effect to the Transactions and covering the term of the Term Loan Facility, which projections shall be on a monthly basis for the twelve-month period following the Closing Date and on an annual basis thereafter for the term of the Term Loan Facility, in each case with the results and assumptions in all of such projections in form and substance reasonably satisfactory to Administrative Agent (it being understood that Administrative Agent has received all such projections under this clause (A) as of the date of the Commitment Letter) and (B) to the extent the Company may prepare them, any updates and modifications to such projected financial statements of the Company and its subsidiaries, (ii) an opening pro forma balance sheet, income statements, statements of cash flows for the Company and its subsidiaries (including the Acquired Business) as of and for the twelve-month period ended at least 30 calendar days prior to the Closing Date, (iii) interim unaudited financial statements of the Company and its subsidiaries for the year to date period ended at least 30 calendar days prior to the Closing Date, with prior year comparison since the last audited financial statements for which financial statements are available, (iv) a quality of earnings report from Ernst & Young for the 1,200 retail stores of the Acquired Business setting forth 4-wall EBITDA for the fiscal year ended January 28, 2017 and a report prepared by the Seller’s management setting forth 4-wall EBITDA for the 1,200 retail stores of the Acquired Business for the period of 12 fiscal months ended April 29, 2017 and (v) an acceptable appraisal of each of inventory and pharmacy scripts for the 1,200 retail stores of the Acquired Business.
	 	 
	(h)	Administrative Agent shall have received a customary solvency certificate from the chief financial officer of the Company substantially in the form attached hereto as Annex I as of the Closing Date.
	 	 
	(i)	All costs, fees and expenses contemplated hereby or in the Fee Letters due and payable on the Closing Date to Administrative Agent, Arrangers, and the Term Loan Lenders in respect of the Transactions shall have been paid, provided that invoices for any costs and expenses to be reimbursed on the Closing Date must be received at least two business days (or such later date as to which the Company may agree in its sole discretion) prior to the Closing Date or otherwise such costs and expenses will be paid no later than 10 days after the Closing Date.
	 	 
	(j)	The Specified Representations shall be true and correct in all material respects on the Closing Date where not already qualified by materiality or “material adverse effect”, otherwise in all respects, and the Acquisition Agreement Representations will be true and correct as and to the extent required by Section 6 of the Commitment Letter.
	 	 

    C-3 

     

    

 

ANNEX I

TO

EXHIBIT C TO COMMITMENT LETTER

 

SOLVENCY CERTIFICATE

of

FRED’S, INC. AND ITS SUBSIDIARIES

 

[Pursuant to the [Term Loan Agreement],
the undersigned hereby certifies, solely in such undersigned’s capacity as chief financial officer of Fred’s, Inc.
(the “Company”) and not individually, as follows:

 

As of the date hereof, after giving effect
to the consummation of the Transactions occurring on the date hereof, including the making of any Term Loans under the Term Loan
Agreement on the date hereof, and after giving effect to the application of the proceeds of such Term Loans:

 

		(a)	The fair value of the assets of the Company and its Subsidiaries, on a consolidated basis, exceeds,
on a consolidated basis, their debts and liabilities, subordinated, contingent or otherwise;

 

		(b)	The present fair saleable value of the property of the Company and its Subsidiaries, on a consolidated
basis, is greater than the amount that will be required to pay the probable liability, on a consolidated basis, of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured;

 

		(c)	the Company and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such liabilities become absolute and matured; and

 

		(d)	the Company and its Subsidiaries, on a consolidated basis, are not engaged in, and are not about
to engage in, business for which they have unreasonably small capital.

 

For purposes of this Certificate, the amount
of any contingent liability at any time shall be computed as the amount that would reasonably be expected to become an actual and
matured liability. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Term
Loan Agreement.

 

The undersigned is familiar with the business
and financial position of the Company and its Subsidiaries. In reaching the conclusions set forth in this Certificate, the undersigned
has made such other investigations and inquiries as the undersigned has deemed appropriate, having taken into account the nature
of the particular business anticipated to be conducted by the Company and its Subsidiaries after consummation of the transactions
contemplated by the Commitment Letter.]

 

[Signature Page Follows]

 

    ANNEX I-1 

     

    

 

IN WITNESS WHEREOF, the undersigned has
executed this Certificate in such undersigned’s capacity as chief financial officer of the Company, on behalf of the Company,
and not individually, as of the date first stated above.

 

	 	[COMPANY]
	 	 
	 	 By:	 
	 	 	Name:
Title:

 

    ANNEX I-1 

     

    

 

EXHIBIT D

TO

COMMITMENT LETTER

 

Form of Intercreditor Agreement

 

[Please see attached]

 

    D-1Exhibit 10.1

 

LEASE

 

 

by and
between

 

 

NLD MOUNT
RIDGE LLC, a

Delaware
limited liability company

 

(“Landlord”)

 

and

 

CALYXT,
INC., a Delaware corporation

 

(“Tenant”)

 

 

 

 

September
6, 2017

 

CONCERNING
LEASED PREMISES

LOCATED
AT 2800 MOUNT RIDGE ROAD, ROSEVILLE, MINNESOTA

 

 

 

 

     

    

    

TABLE
OF CONTENTS

 

	 	 
	1.   THE
    LEASED PREMISES	 
	 	 
	2.   PRELIMINARY
    TERM; INITIAL TERM	 
	 	 
	3.   RENT	 
	 	 
	4.   ACCEPTANCE
    OF LEASED PREMISES	 
	 	 
	5.   MAINTENANCE
    AND REPAIRS BY TENANT	 
	 	 
	6.   ABSOLUTE
    TRIPLE NET AND BONDABLE LEASE	 
	 	 
	7.   UTILITIES	 
	 	 
	8.   TAXES
    AND ASSESSMENTS	 
	 	 
	9.   TENANT’S
    IMPROVEMENTS	 
	 	 
	10.   INSURANCE	 
	 	 
	11.   DAMAGE,
    DESTRUCTION, OBLIGATION TO REBUILD	 
	 	 
	12.   ABATEMENT	 
	 	 
	13.   USE,
    COMPLIANCE WITH LAWS, ETC.	 
	 	 
	14.   WASTE;
    NO LIENS; PROHIBITED USES; NO HAZARDOUS MATERIALS OR USES	 
	 	 
	15.   TENANT
    REPRESENTATIONS	 
	 	 
	16.   LANDLORD’S
    PERFORMANCE OF TENANT’S DUTIES	 
	 	 
	17.   NOTICE
    TO MORTGAGEE	 
	 	 
	18.   SUBLETTING
    AND ASSIGNMENT; LEASEHOLD MORTGAGES	 
	 	 
	19.   EMINENT
    DOMAIN	 
	 	 
	20.   INDEMNIFICATION	 
	 	 
	21.   INSPECTION
    OF LEASED PREMISES	 
	 	 

    i 

    

    

	22.   DEFAULT	 
	 	 
	23.   LANDLORD’S
    REMEDIES UPON DEFAULT	 
	 	 
	24.   CONDITION
    OF LEASED PREMISES ON TERMINATION	 
	 	 
	25.   SUCCESSORS
    AND ASSIGNS	 
	 	 
	26.   NOTICES	 
	 	 
	27.   NO
    ORAL AGREEMENTS	 
	 	 
	28.   MERGER	 
	 	 
	29.   NO
    WAIVER	 
	 	 
	30.   WARRANTIES
    OF TENANT; ESTOPPEL CERTIFICATE	 
	 	 
	31.   CARDING
    AND LANDLORD'S RIGHT OF ENTRY	 
	 	 
	32.   LANDLORD
    AND TENANT	 
	 	 
	33.   TIME
    OF ESSENCE	 
	 	 
	34.   DEFINITION	 
	 	 
	35.   MORTGAGE	 
	 	 
	36.   ZONING	 
	 	 
	37.   LANDLORD’S
    CONSENT	 
	 	 
	38.   LEGAL
    EXPENSE; WAIVER OF JURY TRIAL	 
	 	 
	39.   TITLE
    OF LANDLORD	 
	 	 
	40.   LIMITATIONS
    ON LANDLORD’S LIABILITY.	 
	 	 
	41.   FINANCIAL
    STATEMENTS	 
	 	 
	42.   GOVERNING
    LAW	 
	 	 
	43.   HEADINGS	 
	 	 

    ii 

    

    

	44.   HOLDING
    OVER	 
	 	 
	45.   RIGHTS
    ARE CUMULATIVE	 
	 	 
	46.   MEMORANDUM
    OF LEASE	 
	 	 
	47.   AUTHORITY
    TO SIGN LEASE	 
	 	 
	48.   INVALIDITY.	 
	 	 
	49.   CONDITIONS
    AND COVENANTS; PERMITTED EXCEPTIONS	 
	 	 
	50.   SECURITY	 
	 	 
	51.   INTERPRETATION	 
	 	 
	52.   NO
    BROKERS	 
	 	 
	53.   GUARANTY	 
	 	 
	54.   SALE OF LEASED PREMISES; RIGHT OF FIRST REFUSAL 
	 	 
	EXHIBITS:	 
	 	 
	EXHIBIT
    A: LEGAL DESCRIPTION	 
	EXHIBIT
    B: SITE PLAN OF LEASED PREMISES	 
	EXHIBIT
    C: PERMITTED EXCEPTIONS 	 
	EXHIBIT
    D: SUBORDINATION, NON-DISTURBANCE AND	 
	                      
    ATTORNMENT AGREEMENT AND TENANT'S ESTOPPEL            

       CERTIFICATE	 
	EXHIBIT
    E: MEMORANDUM OF LEASE	 
	EXHIBIT
    F: LEASE GUARANTY	 
	 	 

    iii 

    

    

TABLE
OF DEFINITIONS

 

	Defined
    Term	 	Section
    in Which

    Term is Defined
	 	 	 
	ACM (Asbestos Containing Materials)	 	14
	Action	 	38
	Award	 	19
	Base Rent	 	3
	Building	 	1
	City	 	Recitals
	Claims	 	20
	Construction Agreement	 	Recitals
	Control	 	18
	Covenant Insurance	 	10
	Debt Service	 	19
	Default	 	22
	Default Rate	 	8
	Disaster Insurance	 	10
	ESA (Phase I Environmental Site Assessment	 	14
	Expansion	 	Recitals
	Expiration Date	 	2
	Full Insurable Value	 	10
	Guarantor	 	41
	Hazardous Materials	 	14
	Indemnified Party	 	14
	Initial Term	 	2
	Initial Term Commencement Date	 	2
	Land	 	Recitals
	Landlord Notice	 	54
	Laws	 	5
	Lease Year	 	2
	Leased Premises	 	1
	Mortgagee	 	17
	Offer	 	54
	Option to Sublet	 	23
	PCBs (Polychlorinated Biphenyl)	 	14
	Permitted Affiliate	 	18

 

     

    

    

 

	Permitted Assignment	 	18
	Permitted Exceptions	 	1
	Permitted Improvements	 	9
	Personal Property	 	1
	Preliminary Commencement Date	 	2
	Preliminary Term	 	2
	Real Property Taxes	 	8
	Research Materials	 	14
	Renewal Term	 	3
	Rent	 	3
	Repairs	 	11
	Right of First Refusal	 	54
	SNDA	 	35
	Taking	 	19
	Tenant Lien	 	18
	Tenant Notice	 	54
	Term	 	2
	Third Party	 	54
	Underlying Mortgage	 	17

 

 

    2

    

    

LEASE

 

THIS
LEASE (which is herein referred to as the “Lease”) is entered into and effective as of September 6, 2017,
between NLD MOUNT RIDGE LLC, a Delaware limited liability company (hereinafter called “Landlord”) and CALYXT,
INC., a Delaware corporation (hereinafter called “Tenant”).

 

RECITALS:

 

		A.	As
                                         of the date hereof, Tenant has sold to Landlord and Landlord has purchased from Tenant
                                         certain real property consisting of approximately 10 acres and located at 2800 Mount
                                         Ridge Road, in the City of Roseville (the “City”), County of Ramsey
                                         and State of Minnesota and legally described in Exhibit A attached hereto and
                                         depicted in Exhibit A-1 attached hereto (the “Land”).

 

		B.	A
                                         building and other improvements located on the Land also were sold by Tenant to Landlord
                                         in connection with the sale of the Land to Landlord. Tenant retained, however, ownership
                                         to certain Personal Property located on the Land, including but not limited to the furnishings
                                         now located on the Land.

 

		C.	Tenant
                                         and Landlord have agreed that Tenant shall lease back the Land and such building and
                                         other improvements from Landlord as of the date hereof, and Landlord shall, after the
                                         date hereof, substantially expand the existing improvements for Tenant’s use and
                                         occupancy as a tenant thereof pursuant to the terms of this Lease.

 

		D.	Tenant
                                         and Landlord have entered into that certain Escrow Agreement and Construction Agreement
                                         on or about the date hereof (the “Construction Agreement”) concerning
                                         Landlord’s and Tenant’s obligations with respect to the expansion of the
                                         existing improvements as forth in the Construction Agreement (the “Expansion”).

 

AGREEMENT:

 

Landlord
and Tenant mutually agree as follows:

 

		1.	THE
                                         LEASED PREMISES.

 

Landlord,
for and in consideration of the rents, covenants, agreements and stipulations hereinafter mentioned, reserved and contained, to
be paid, kept and performed by Tenant, does hereby Lease and rent unto Tenant, and Tenant hereby agrees to Lease and take upon
the terms and conditions hereinafter set forth a building occupied by Tenant immediately prior to the date hereof and all other
improvements (collectively, the “Building”) situated on the Land and depicted on the Site Plan attached hereto
as Exhibit B, subject to the terms and requirements of the liens, restrictions and encumbrances set forth in Exhibit
C attached hereto (the “Permitted Exceptions”). Upon the Initial

 

     

    

    

Term Commencement
Date (as hereafter defined), the “Building” shall include all buildings, building expansions and improvements
located on the Land other than those that are Tenant’s removable trade fixtures, furnishings, equipment, the greenhouses
located on the Land, and all other personal property of Tenant contained in the Leased Premises including supplies and inventory
located in the Leased Premises (collectively, the “Personal Property”).

 

The Land
and Building together constitute the “Leased Premises” hereunder.

 

		2.	PRELIMINARY
                                         TERM; INITIAL TERM.

 

The Preliminary
Term of this Lease (the “Preliminary Term”) commenced on the date hereof (the “Preliminary Commencement
Date”) and shall end on the date immediately preceding the Initial Term Commencement Date (as hereafter defined).

 

The
Initial Term of this Lease (the “Initial Term”) shall commence the next day after issuance of a temporary certificate
of occupancy or equivalent permit to occupy issued by the City for the Expansion, but if
the City does not issue such a certificate or if the issuance of such certificate is dependent upon completion of any item of
construction that is Tenant’s responsibility under the Construction Agreement, the Initial Term shall commence on the next
day after the date set forth in a certification of substantial completion executed by Landlord’s architect or contractor
confirming that the NLD Work, as defined in the Construction Agreement, has been substantially completed (such
next day is referred to herein as the “Initial Term Commencement Date”), and end on the last day of the month
in which the 20th annual anniversary of the Initial Term Commencement Date occurs (the “Expiration Date”)
unless sooner terminated pursuant to any provision hereof. The Preliminary Term, Initial Term and any Renewal Term(s) (as defined
in Section 3 hereof) for which Tenant properly has exercised a renewal option pursuant to Section 3 hereof, all
collectively referred to herein as the “Term.” 

 

For purposes
of this Lease, a “Lease Year” means a period of twelve (12) consecutive calendar months during the Initial
Term or any Renewal Term (as hereinafter defined) commencing on the first day of the calendar month next following the Initial
Term Commencement Date or the annual anniversary thereof, as may be applicable; provided, however, that the first Lease Year shall
include that period of time from the Initial Term Commencement Date until the end of the month in which the Initial Term Commencement
Date occurs. Within ten (10) days after the Initial Term Commencement Date is ascertainable, Landlord and Tenant shall enter into
a supplemental agreement specifying the actual date for the Initial Term Commencement Date and expiration of the Initial Term
and the Base Rent during the Initial Term, as determined by the terms for calculating Base Rent set forth in the Construction
Agreement.

 

		3.	RENT.

 

		a.	Base Rent During
Preliminary Term and Initial Term. Tenant hereby covenants and agrees to pay Landlord as monthly fixed rent (“Base
Rent”) for the Leased Premises during the Term the sums set forth below, subject to modification by amendment to this
Lease made pursuant to the terms of the Construction Agreement, the terms therein prevailing regarding the

    2 

    

    

calculation
of Base Rent (it being acknowledged that Base Rent shall increase on the first day of Lease Year 6, the first day of Lease Year
11 and the first day of Lease Year 16 each Renewal Term by 7.5% of the Base Rent in effect immediately prior to such first day):

 

	Lease	Annual	Monthly
	Period	Base
    Rent	Base
    Rent
	 	 	 
	Preliminary
    Term	$   490,000.00	$  40,833.33
	 	 	 
	Lease
    Years 1-5	$1,336,000.00	$111,333.33
	 	 	 
	Lease
    Years 6-10	$1,436,200.00	$119,683.33
	 	 	 
	Lease
    Years 11-15	$1,543,915.00	$128,659.58
	 	 	 
	Lease
    Years 16-20	$1,659,708.63	$138,309.05

 

		b.	Renewal Terms. Provided
that Tenant is not in Default beyond any applicable cure period, and the property is being occupied, both when exercising its
option to extend and at the commencement of the renewal Term, Tenant shall have the option to extend the Term of this Lease for
four (4) successive additional renewal terms of five (5) years each commencing at the Expiration Date of the Initial Term or prior
renewal term hereof (as the case may be) (each a “Renewal Term”) on the same terms and conditions as the Initial Term
except that the Base Rent for each and every Lease Year during said Renewal Terms shall increase on the first day of each Renewal
Term by 7.5% of the Base Rent in effect immediately prior to such first day as follows, subject to modification by amendment to
this Lease made pursuant to the terms of the Construction Agreement:

 

	Renewal	Annual	Monthly
	Term	Base
    Rent	Base
    Rent
	 	 	 
	First
    Renewal Term	 	 
	(Lease
    Years 21-15)	$1,784,186.77	$148,682.23
	 	 	 
	Second
    Renewal Term	 	 
	(Lease
    Years 26-30)	$1,918,000.78	$159,833.40
	 	 	 
	Third
    Renewal Term	 	 
	(Lease
    Years 31-35)	$2,061,850.84	$171,820.90
	 	 	 
	Fourth
    Renewal Term	 	 
	(Lease
    Years 36-40)	$2,216,489.65	$184,707.47

    3 

    

    

Tenant
shall give Landlord written notice of its exercise of the option for any Renewal Term not less than 270 days before the Expiration
Date of the Initial Term or the date of expiration of the Renewal Term, as the case may be.

 

		c.	Payment of Base Rent.
All Base Rent shall be payable in advance and without demand on the first day of every calendar month commencing on the Commencement
Date. Base Rent shall be prorated for any partial month at the beginning or end of the Term. Tenant shall pay Base Rent and all
other sums due to Landlord or additional rent due hereunder (collectively, “Rent”) to Landlord, as Landlord may direct,
(a) through an automatic clearing house (ACH) to a recipient identified by Landlord, (b) by wire transfer in accordance with instructions
delivered by Landlord to a recipient identified by Landlord, (c) as Landlord may otherwise direct, or (d) to the following address:

 

NLD
MOUNT RIDGE LLC

c/o
Capital Real Estate, Inc. 

50
South 6th Street, Suite 1480

Minneapolis,
MN 55402 

Attention:
Manager

 

All
Rent shall be paid in lawful money of the United States of America.

 

		d.	No Offset. The Rent
provided for under this Lease is intended to provide Landlord with an absolutely “net” return on its ownership of
the Leased Premises, free of all costs of operating, owning and occupying the Leased Premises, and without any obligation for
Landlord to provide any services to Tenant or with respect to the Leased Premises, except as expressly provided in this Lease.
Tenant shall pay all Rent without offset, defense, counterclaim, reduction, deduction, exercise of recoupment rights, deferral,
or abatement based upon: (a) any failure or alleged failure of Landlord to perform any obligations, if any, under this Lease;
(b) any alleged oral amendment of the Lease (which alleged oral amendment shall in any event be of no force and effect); (c) any
alleged prior overpayment of Rent not confirmed by Landlord in writing as a proper basis for future credit; (d) any alleged breach
of any representation or warranty by Landlord; or I any other matter whatsoever.

 

		4.	ACCEPTANCE
                                         OF LEASED PREMISES.

 

Tenant owned
the land and improvements that now exist on the Leased Premises and which were constructed pursuant to plans and specifications
approved by Tenant and with architects and contractors approved by Tenant. Tenant therefore is familiar with and has accepted
and approved the design of the improvements and condition of the Leased Premises and the terms of the Permitted Exceptions as
of the Effective Date. Pursuant to the Construction Agreement, the Expansion and other improvements to the Leased Premises constructed
and/or installed by Landlord will be constructed or installed pursuant to plans and specifications approved by Tenant and with
architects and contractors approved by Tenant, and Tenant and will be presumed as of the Initial Term Commencement Date to have
accepted the Leased Premises in their then existing condition subject to the terms of the Permitted Exceptions. To the maximum
extent permitted by law, Tenant waives

 

    4 

    

    

any implied
or statutory warranty of suitability or fitness for a particular purpose related for the Leased Premises and Tenant acknowledges
that it has accepted the Leased Premises “as is,” in its current condition, with no representations, warranties or
covenants, express or implied, on the part of the Landlord with respect to the condition of the same or the suitability of the
Leased Premises for Tenant’s intended use. Landlord shall have no responsibility or liability for the design, construction
or condition of Leased Premises and makes no warranties with respect thereto, and Landlord shall not be required to make any repairs
or replacements of any kind whatsoever or to perform any maintenance whatsoever during the term of this Lease. Tenant acknowledges
that Landlord has no contractor and supplier warranties in its possession. Upon request, Landlord will transfer contract and supplier
warranties previously transferred by Tenant to Landlord to Tenant for the Term of this Lease which transferred warranties shall
revert back to Landlord upon termination of this Lease.

 

		5.	MAINTENANCE AND REPAIRS
BY TENANT.

 

Tenant agrees
at its expense (and Landlord shall have no obligation) to keep and maintain the entire Leased Premises, both Building and Land,
in good order, condition and repair, including but not limited to maintenance and repair of all structural or load-bearing elements,
roofs, walls, foundations, heating, ventilating and air conditioning systems, all building security and monitoring system, windows,
plate glass walls, doors, electrical systems and equipment, mechanical equipment, plumbing and all other components of the Building,
mowing of lawns, care of plantings, replacing, resurfacing and striping of walkways, driveways and parking areas, and adjacent
public sidewalks, removal of snow and ice from the Leased Premises and adjacent public sidewalks, removal of trash, maintenance
of utility lines and exterior lighting on the Land, and any maintenance, repairs or replacements (or fees or reserves therefor)
as may be required by any Permitted Exceptions.

 

All such
maintenance and repair shall keep the Leased Premises in a good state of repair and in a clean, safe, and sanitary condition and
in compliance with all applicable laws, statutes, rules, regulations, codes, ordinances, zoning restrictions, certificate of occupancy,
judicial orders and decisions, orders of governmental authorities and insurance regulations (collectively, “Laws”).
Tenant must make all repairs, corrections, replacements, improvements or alterations necessitated by age, Tenant’s use and
the elements or required pursuant to governmental order or mandate. Notwithstanding the foregoing, and as long as (1) no notices
have been received from any governmental authority as to the condition of the Leased Premises, and (2) Tenant is keeping the Leased
Premises in a condition that prevents waste to the value of the same, Tenant shall be solely responsible for the day-to-day maintenance
decisions for, and activities upon, the Leased Premises, including but not limited to all lawn care, trash removal, painting and
other cosmetic maintenance. Tenant expressly waives the benefit of any statute now or hereinafter in effect which would otherwise
afford Tenant the right to make repairs, corrections, improvements or alterations at Landlord’s expense or to terminate
this Lease because of Landlord’s failure to keep the Leased Premises in good order, condition or repair, or which would
otherwise require Landlord to make repairs, corrections, improvements or alterations. Any and all obligations that Landlord or
Tenant may incur under the Permitted Exceptions and any other agreements to which the Land may be subject as of the Commencement
Date and any amendments thereto or modification thereafter shall be the sole obligation of Tenant during the Term of the Lease
and any extensions thereof.

 

    5 

    

    

It is intended
by the Parties hereto that Landlord has no obligation, in any manner whatsoever, to repair and maintain the Leased Premises or
the equipment or fixtures therein or any part thereof, whether structural or non-structural, all of which obligations are intended
to be that of Tenant. In no event shall Landlord be obligated to pay for repairs or replacement of any part of the Leased Premises.

 

If Tenant
fails to perform its obligations under this Section or under another provision of this Lease, Landlord may at its option (but
shall not be required to) enter upon the Leased Premises after thirty (30) days prior written notice to Tenant (except in the
case of an emergency, in which case no notice shall be required), perform such obligations on Tenant’s behalf and put the
same in good order, condition and repair, and the cost thereof, shall become additional rent due and payable to Landlord with
Tenant’s next installment of Base Rent.

 

		6.	ABSOLUTE
                                         TRIPLE NET AND BONDABLE LEASE.

 

Tenant hereby
acknowledges that this Lease is intended to be what is commonly called an “absolute triple net lease” or “bondable
lease,” it being understood that Landlord shall receive the Rent set forth in Section 3 hereof, free and clear of
any and all other impositions, taxes, liens, charges or expenses of any nature whatsoever in connection with the ownership and
operation of the Leased Premises. In addition to the Rent reserved by Section 3, Tenant shall pay to the parties respectively
entitled thereto all impositions, insurance premiums, operating charges, maintenance charges, construction costs and any other
charges, costs and expenses which arise or may be contemplated under the Permitted Exceptions or otherwise, all maintenance and
repair expenses pursuant to Section 5 hereof, all utility expenses set forth in Section 7 hereof, all Real Property
Taxes pursuant to and as defined in Section 8 hereof, all premiums for insurance required by Section 10 hereof and
all other expenses, charges, assessments and costs associated with the operation, use, maintenance and ownership of the Leased
Premises or otherwise provided to be paid by Tenant pursuant to the terms of this Lease. All such charges, costs and expenses
shall constitute additional rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall
have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Base Rent including but
not limited to the remedies provided in Sections 16 and 23 hereof relating to Landlord’s right (but not obligation)
to perform Tenant’s obligations hereunder. It is the intention of the parties that, notwithstanding anything herein to the
contrary, (i) this Lease shall not be terminable for any reason by Tenant, (ii) Tenant shall in no event be entitled to (and hereby
waives any rights with respect to) any abatement of or reduction in Rent payable under this Lease or any defense, right of setoff
or counterclaim with respect to payment of Rent, and (iii) no event, condition or other occurrence of any kind or nature whatsoever
shall operate so as to relieve Tenant from its obligation to make timely and uninterrupted payment of Rent hereunder. In the event
of any conflict or inconsistency between the provisions of this Section 6 and any other provision of this Lease or any
Exhibit or addendum thereto, the provisions of this Section 6 shall be controlling. Any present or future law to the contrary
shall not alter this agreement of the parties

 

		7.	UTILITIES.

 

Tenant shall
pay on time and hold Landlord free and harmless from all bills or assessments for light,

 

    6 

    

    

heat, water,
gas, electric, telephone, sewer rentals or charges, and any other expenses arising out of or incidental to the occupancy of said
Building and Leased Premises. No full or partial utility deprivation including, but not limited to, blackout, brownout, or rationing,
nor any loss of or damage to improvements located in utility and drainage easements shall give rise to any abatement of Rent nor
give rise to any right of Tenant to offset Rent or to terminate the Lease

 

		8.	TAXES AND ASSESSMENTS.

 

As additional
rent, Tenant agrees and covenants to pay directly to the proper governmental agency, on or before the date each installment becomes
due and payable, an amount equal to all “Real Property Taxes,” as further defined below, which become due and payable
during the Term of this Lease. Landlord shall, (i) if possible, have the tax bills mailed directly to Tenant by the proper governmental
agency; and (ii) for the last Lease Year of the Term hereof, furnish an apportionment between Landlord and Tenant based on the
number of days of Tenant’s last Lease Year which fall within the then current calendar year. Tenant may, in good faith and
in a lawful manner and upon giving thirty (30) days’ prior written notice to Landlord of its intention so to do, contest
any tax assessment or charge against the Leased Premises, but all costs and expenses incidental to such contest shall be paid
by Tenant, and in case of an adjudication adverse to Tenant, then Tenant shall promptly pay such tax, assessment or charge including
penalties or late charges, if any. Tenant shall indemnify and save Landlord harmless against any loss or damage arising from such
contest and shall, if necessary to prevent a sale or other loss or damage to Landlord, pay such tax, assessment or charge under
protest and take such other steps as may be necessary to prevent any sale or loss.

 

No later
than the date that each installment of Real Property Taxes is due and payable without interest or penalty Tenant shall furnish
Landlord with satisfactory evidence that such installment of Real Property Taxes have been paid . If Tenant shall fail to pay
any Real Property Taxes when due and before any delinquency, penalty or interest is imposed on such taxes, Landlord shall have
the right to pay the same(together with any such penalty and interest), in which case Tenant shall repay in full such amount to
Landlord with Tenant’s next installment of Base Rent together with interest |at five percent (5%) per annum over the “Prime
Rate” established by the Wall Street Journal (or if the Wall Street Journal no longer publishes its Prime Rate, then the
Prime Rate announced by the Minneapolis office of Wells Fargo Bank N.A.) on the date of invoice from Landlord to Tenant (but in
no event more than the maximum rate then allowable by law) (the “Default Rate”).

 

As used
herein, the term “Real Property Taxes” shall include any form of ad valorem property tax, real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fees, rental tax, including without limitation, sales,
use, gross receipts or value added taxes levied on the Rent payable hereunder, improvement bond or other bonds, including all
interest in connection therewith, any levy or tax (other than inheritance, personal income or estate taxes) imposed on the Leased
Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable
interest of Landlord in the Leased Premises or in the real property of which the Leased Premises are a part together with all
interest payable therewith, as against Landlord’s right to Rent or other income therefrom, and as against Landlord’s
business of leasing the Leased Premises. To the extent that special assessments are levied against the Real

 

    7 

    

    

Property
at any time during the Lease Term, Tenant shall have the right to spread such assessment payments out over the longest period
of time allowed by the assessing authority, with Tenant responsible only for the payment of the installments of assessments which
are due and payable during the time that Tenant occupies the Premises. The term “Real Property Taxes” shall also include
any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge
included within the definition of “Real Property Taxes”, or (ii) the nature of which was previously included within
the definition of “Real Property Taxes”, or (iii) which is imposed as a result of a transfer, either partial or total,
of Landlord’s interest in the Leased Premises or which is added to a tax or charge included within the definition of “Real
Property Taxes” by reason of such transfer, or (iv) which is imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof.

 

Tenant shall
pay prior to delinquency all taxes assessed against and levied upon the Personal Property. When possible, Tenant shall cause the
Personal Property to be assessed and billed separately from the real property of Landlord. If any of Personal Property shall be
assessed with the Land, Tenant shall pay the taxes attributable to Tenant within ten (10) days after receipt of a written statement
setting forth the taxes applicable to Tenant’s property.

 

		9.	TENANT’S IMPROVEMENTS.

 

Without
the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, Tenant shall
not make any alterations to the Leased Premises that (a) impair or compromise the structural integrity of the Leased Premises,
(b) reduce the overall size or the footprint of the Building, (c) reduce the overall value of the Leased Premises, or (d) that
materially affect the appearance of the Leased Premises, provided, however that Tenant may, without Landlord’s consent,
alter, repair, remove and install at Tenant’s sole cost and expense (i) nonstructural leasehold improvements to the interior
of the Building, and (ii)the greenhouse facilities , fencing and outdoor installations as are or will be necessary for the operation
of Tenant’s business (the “Permitted Improvements”) as long the Permitted Improvements are removable,
not permanent in nature and do not require frost -safe footings.

 

At least
thirty (30) prior to Tenant commencing a structural alteration, Tenant shall submit to Landlord courtesy copies of a full and
complete set of drawings and plans depicting the structural alteration that Tenant intends to undertake (said drawings and plans
shall be reasonably detailed and, at minimum, shall be sufficient for Landlord to determine whether or not the proposed work complies
with the foregoing requirements of this Section 9.

 

Any alterations,
improvements and additions in, or about the Leased Premises that Tenant desires to make and which require the consent of Landlord,
shall be presented at least thirty (30) days in advance of commencing work to Landlord in written form, with proposed detailed
plans and specifications. Landlord’s consent shall be automatically granted if Landlord does not respond to or comment upon
Tenant’s request within thirty (30) days after Landlord’s receipt of such request, plans and specifications from Tenant.

 

    8 

    

    

Unless expressly
released by Landlord in writing, all improvements or alterations, excluding those involving Personal Property, shall be and remain,
at the time of expiration or other termination of this Lease, the property of Landlord without payment or offset unless such improvements
are not attached to the Leased Premises. Landlord may require that Tenant remove any or all alterations, improvements or additions
made by Tenant to the Leased Premises at the expiration of the Term and restore the Leased Premises to its prior condition, provided
however, that or any improvements or alterations which require Landlord consent, Landlord shall inform Tenant, at the time of
approval of the alterations or improvements, whether such alterations or improvements will need to be removed at the expiration
of the Term.

 

If Landlord
shall consent to the alterations, improvements and additions or approve of the drawings and specifications therefor, as the case
may be, the consent or approval shall be deemed conditioned upon Tenant acquiring a permit to do so from appropriate governmental
agencies, the furnishing of a copy thereof to Landlord prior to the commencement of the work and the compliance by Tenant of all
conditions of said permit in a prompt and expeditious manner. No alterations, improvements or other construction by Tenant shall
violate any lawful rule or regulation, plat or zoning construction or other law, ordinance or regulation applicable thereto, and
all alterations and improvements shall be done and performed in good and workmanlike manner, using new and first quality materials.
All costs of any such improvements shall be paid by Tenant and Tenant shall allow no liens for labor or materials to attach to
the Leased Premises by virtue thereof. Tenant shall give Landlord not less than ten (10) days’ notice prior to the commencement
of any work in, on or about the Leased Premises, and Landlord shall have the right to post notices of non-responsibility in or
on the Leased Premises as provided by law.

 

Upon completion
of any such work, Tenant shall submit to Landlord as-built plans of the improvements and alterations made (if applicable), a sworn
construction statement, lien waivers from all persons or entities providing materials, services or equipment for the work completed
and an endorsement to Landlord’s policy of title insurance confirming the absence of any liens or other matters of record
related to the work performed.

 

To the extent
that any alterations, improvements or additions result in the removal from the Building of any building components having salvage
value and such components have not been replaced with components having equal or greater value, such salvage value shall be paid
to Landlord.

 

		10.	INSURANCE.

 

The Tenant
agrees to provide and keep in force during the Term of this Lease and at its own cost and expense the following insurance coverage
from an insurance company or companies authorized to do business in the state in which the Land is located:

 

a.       Property
Insurance. All risk property insurance covering all structures and improvements on the Leased Premises or constructed or maintained
in conjunction with the Building pursuant to any Permitted Exceptions with coverage for perils as set forth on the Causes of Loss
– Special Form in an amount not less than the Full Insurable Value (defined below), and to keep such insurance in full force
and effect for and during the time any Buildings and improvements are located on the Leased Premises during the term of this

 

    9 

    

    

Lease.
The coverage shall include all risks commonly insured for properties similar to the Leased Premises in the metropolitan area in
which the Land is located, including insurance against damage caused by tornado, windstorm, and other disasters for which insurance
is available in the state in which the Leased Premises is located (“Disaster Insurance”) in such areas where
such natural disasters are reasonably expected to occur. Such insurance shall contain an agreed valuation provision in lieu of
any co-insurance clause, an increased cost of construction endorsement, debris removal coverage and a waiver of subrogation endorsement
in favor of Landlord. While any portion of the Building is being rebuilt on the Land, Tenant shall provide such property insurance
in builder’s risk completed value form, including coverage available on the so-called “all-risk” non-reporting
form of policy in an amount equal to 100% of the full insurable replacement value of the Building or such portion as is being
rebuilt. For the purpose hereof, “Full Insurable Value” shall mean the replacement cost of the Building and
such improvements without allowance for depreciation but excluding, except where covered by Disaster Insurance, footings, foundations,
and other portions of improvements which are customarily not insurable. Such policy or policies shall insure Landlord as loss
payee, and shall contain a standard mortgagee clause providing for payment of proceeds to any Mortgagee (as defined in Section
17) having a lien or interest in the Leased Premises as its interest may appear. No parties other than Landlord, Mortgagees
and Tenant may be named as insureds or loss payees on such property insurance policies except that a holder of a permitted Tenant
Lien (as such term is defined in Section 18(f) hereof) may be named as a loss payee only with respect to Tenant’s
removable trade fixtures, equipment and inventory located on the Leased Premises.

 

b.       Public
Liability and Property Damage. Commercial general liability insurance, including contractual liability coverage with combined
single limit coverage of not less than Five Million Dollars ($5,000,000.00) for injury to persons or property and loss of life
or property in or about the Property arising out of any one occurrence. Such insurance shall be endorsed to provide that the insurance
shall be primary to and not contributory to any similar insurance carried by Landlord, shall contain a severability of interest
clause, and shall name Landlord and each Mortgagee as additional insureds thereunder. During
the Term, Landlord and each Mortgagee may require a reasonable increase in the amount of the aforesaid limit if such increase
is in keeping with the standard limit maintained by businesses comparable to Tenant as reasonably determined by Landlord or such
Mortgagee. Tenant may maintain the required liability and property insurance (described below) in the form of a blanket policy
covering other locations of Tenant in addition to the Leased Premises; provided, however, that Tenant shall provide Landlord with
a certificate of insurance for such coverages specifically naming the location of the Leased Premises and naming Landlord as required
in this Section 10, the limits of which coverages applicable to the Leased Premises are to be in the amounts set forth
in this Section 10.

 

c.       Business
Interruption. Business interruption insurance covering all Rent related to the Leased Premises for a minimum of twelve (12)
months.

 

d.       Insurance
Required by Permitted Exceptions. Such insurance as is required to be maintained by either Tenant or Landlord under the Permitted
Exceptions, meeting the

 

    10 

    

    

coverage,
insurance level, notice and certificate requirements of any applicable Permitted Exception (the “Covenant Insurance”).

 

e.       Worker’s
Compensation. Workers’ Compensation Insurance providing statutory benefits to employees of Tenant in Minnesota with
a waiver of subrogation in favor of Landlord and Employer’s Liability Insurance with limits of not less than $100,000 per
accident or disease and $500,000 aggregate by disease or such higher limits as may be required by applicable Laws.

 

f.       Tenant’s
Property Insurance. All Risk Property Insurance covering all of Tenant’s Personal Property from time to time in, on
or upon the Leased Premises, and all alterations, additions or changes made by Tenant pursuant to the terms of this Lease, in
an amount equal to at least eighty percent (80%) of the full replacement cost thereof, providing protection against perils included
within the standard all-risk form of fire and extended coverage insurance policy, together with insurance against sprinkler damage,
if applicable (but Landlord makes no representation that the Leased Premises is equipped with a sprinkler system), vandalism and
malicious mischief.

 

g.       Other.
Such other insurance against other insurable hazards as Landlord or any Mortgagee may from time to time reasonably require.

 

h.       General
Insurance Requirements. Each policy required hereunder shall contain a covenant that should such policies be cancelled, assigned
or materially changed during the policy period, the insurer will mail a notice thereof to Landlord, each Mortgagee and any other
parties required by any Permitted Exception to receive such notice, at least thirty (30) days in advance. All insurance policies
(except for Worker’s Compensation) required to be maintained under this Lease shall be procured from insurance companies
rated at (A-/IX) or better by the then current edition of Best’s Insurance Reports published by A.M. Best Co. and licensed
to do business in the State of Minnesota. Upon Landlord’s written request, Tenant shall furnish to Landlord the policies
or certificates of insurance showing the insurance referred to in this Section 10 to be in full force and effect. Certificates
of insurance evidencing the existence and amounts of such insurance, shall be delivered to Landlord by Tenant prior to Tenant’s
occupancy of any portion of the Leased Premises. No such policy shall be cancelable except after thirty (30) days written notice
to Landlord. Tenant shall, prior to the expiration of any such policy, furnish Landlord, each Mortgagee and any third party required
under any Permitted Exception to receive notices of insurance, with renewals or “binders” thereof together with evidence
of the payment of premiums therefor, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount
shall be paid by Tenant upon demand. The insurance, as to the interest of any Mortgagee therein, shall not be invalidated by any
act or neglect of Landlord, any Mortgagee, Tenant or any other occupant, owner or party with an interest in the Leased Premises,
nor by any foreclosure or any other proceedings or notices thereof relating to the Leased Premises, nor by any change in the title
or ownership of the Leased Premises nor by occupancy of the Leased Premises for purposes more hazardous than are permitted by
such policy. It shall be the responsibility of Tenant not to violate nor knowingly permit to be violated any condition

 

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of
the policies required under this Lease. Neither the issuance of any such insurance policy nor the minimum limits specified in
this Section 10 shall be deemed to limit or restrict in any way Tenant’s liability arising under or out of this Lease.

 

i.       Deductibles.
Subject to the requirements of any Covenant Insurance, the property insurance specified herein shall have a deductible no greater
than Ten Thousand Dollars ($10,000). Subject to the terms of any Covenant Insurance, the liability insurance specified herein
shall have a deductible no greater than Ten Thousand Dollars ($10,000). Provided, however, in the event Tenant’s “net
worth” (as defined by generally accepted accounting principles) should be greater than One Hundred Million Dollars ($100,000,000),
then the property insurance and liability insurance specified herein may have deductibles of up to One Hundred Thousand Dollars
($100,000). Tenant shall be liable for any deductible amount. The policies of insurance required to be carried by Tenant shall
be primary and not in excess of any other insurance available to Landlord.

 

j.       Waiver
of Subrogation. To the extent such waivers are permitted by insurance carriers, Landlord and Tenant waive their respective
right of recovery against the other and the officers, employees, agents and representatives of such other party for any direct
or consequential damage to the property of the other including its interest in the Leased Premises by fire or other casualty to
the extent such damage is insured against under a policy or policies of insurance to be maintained by Tenant hereunder. Each such
insurance policy carried by either Landlord or Tenant shall include a waiver of the insurer’s rights of subrogation. Such
waiver shall in no way be construed or interpreted to limit or restrict any indemnity or other waiver made by Tenant under the
terms of this Lease.

 

k.       No
Impairment of Coverage; Coverage Increases. Tenant shall not carry any stock of goods or do anything in or about the Leased
Premises, which will impair or invalidate the obligation of any policy of insurance on or in reference to the Leased Premises
or the Building. Landlord shall have the right to require that the amount or types of insurance coverage required of Tenant hereunder
be adjusted from time to time to reflect insurance customarily required by prudent landlords for similar properties in the Minneapolis
Metropolitan area.

 

		11.	DAMAGE, DESTRUCTION,
OBLIGATION TO REBUILD.

 

If the Leased
Premises are totally or partially damaged or destroyed by storm, fire, lightning, earthquake, or due to the acts or exercise of
rights of third parties or parties having easement rights over, under or across the Leased Premises (including but not limited
to utility companies), or from any other cause whatsoever, during the Term of this Lease whether or not such damage or destruction
is covered by any insurance required to be maintained under Section 10 hereof, or if any portion of the Building is required
to be relocated by court order or demand of adjacent property owners due to the fact that any part thereof encroaches into neighboring
properties or into easements for the benefit of others or violates applicable setback requirements, then Tenant shall, at its
sole expense, repair, restore, relocate and/or rebuild the Leased Premises in accordance with applicable building and zoning codes
at the time of rebuilding to substantially the same condition immediately

 

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prior to
such damages or destruction, and this Lease shall remain in full force and effect, provided, however, that Tenant shall have the
right, with the consent of Landlord (which shall not be unreasonably withheld) to replace the Leased Premises with a different
structure of comparable size and quality so long as (a) the value of the Leased Premises with such structure is no less than the
value of the Leased Premises immediately prior to the date of casualty and no less than the square footage of the Building as
of the date of this Lease, and (b) the new structure can be built and occupied under all then applicable Laws. Such repair, restoration,
relocation and rebuilding (all of which are herein called “repairs”) shall be commenced within a reasonable
time, not to exceed thirty (30) days after such damage or destruction has occurred and permits necessary to authorize such rebuilding
have been issued following reasonable pursuit of such permits by Tenant, and such repairs shall be diligently pursued to completion.
Notwithstanding the foregoing, however, if the Building is rendered untenantable due to damage or destruction that occurs within
the final twelve (12) months of the Term (and provided Tenant has not, prior to such damage or destruction, exercised an option
with respect to the next Renewal Term in compliance with Section 3 hereof), then either Landlord or Tenant may, at its
option, elect not to complete the repairs, in which event (i) Tenant shall secure the Leased Premises from damage, vandalism and
the deposit of refuse or waste in or about the Leased Premises and to reasonably protect persons in or about the Leased Premises
from death and personal injury, (ii) and all insurance proceeds (other than proceeds attributable to solely Tenant’s Personal
Property) shall be paid to Landlord, and (iii) there shall be no abatement of Rent for the remainder of the Term.

 

a.       Insurance
Proceeds. The proceeds of any insurance maintained under Section 10 hereof shall be made available to Tenant for payment
of costs and expense of repairs, provided however, that such proceeds may be made available to Tenant subject to reasonable conditions,
including, but not limited to, typical construction disbursing arrangements through a title insurance company satisfactory to
Landlord, architects’ certification of costs, retention of percentage of such proceeds pending final completion and delivery
of lien waivers, all at the expense of Tenant. In the event the insurance proceeds are insufficient to cover the cost of repairs,
then any amounts required over the amount of the insurance proceeds received that are required to complete said repairs shall
be promptly deposited by Tenant with Landlord or a title company acceptable to Landlord in advance of commencing repairs.

 

b.       Abatement
of Rent. Notwithstanding the partial or total destruction of the Leased Premises and any part thereof, and notwithstanding
whether the casualty is insured or not, there shall be no abatement of Rent or of any other obligation of Tenant hereunder including,
without limitation, payment of operating expenses, insurance premiums and Real Property Taxes, by reason of such damage or destruction.

 

c.       Waiver.
Tenant waives the provisions of any statutes that relate to termination of leases when the property leased is destroyed and agrees
that such event shall be governed by the terms of this Lease.

 

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		12.	ABATEMENT.

 

Tenant’s
obligations to pay Rent and to perform all of the other covenants and agreements which Tenant is bound to perform under the terms
of this Lease shall not terminate, abate or be diminished during any period that the Leased Premises or any part thereof are untenantable
regardless of the cause of such untenantability.

 

		13.	USE, COMPLIANCE WITH
LAWS, ETC.

 

Tenant shall
use the Leased Premises only as a corporate headquarters and research facility, and in the conduct of its business and activities,
shall at its own cost and expense secure and maintain all necessary licenses and permits required for the conduct of its business.
Tenant shall not use the Leased Premises or permit anything to be done in or about the Leased Premises which will in any way conflict
with any Laws now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, comply
with all Laws and the requirements of any board of fire underwriters (including all modifications and improvements required thereby)
now in force or which may hereafter be in force relating to or affecting the condition, use or occupancy of the Leased Premises,
including without limitation, the Americans With Disabilities Act. Tenant shall observe all plat and deed restrictions of record
and the Permitted Exceptions.

 

Tenant shall
notify Landlord in writing immediately of any threatened or actual notice, citation, warning or report regarding Tenant’s
alleged failure to cause the Leased Premises to comply with any Laws.

 

		14.	WASTE; NO LIENS;
PROHIBITED USES; NO HAZARDOUS MATERIALS OR USES.

 

		a.	No Waste; No Liens.
Tenant agrees that during the Term hereof it shall not do or suffer any waste to the Land, Building or Leased Premises, or cause,
suffer or permit any liens to attach to or to exist against the Land, Building or Leased Premises by reason of any act or omission
of Tenant or person claiming through Tenant or by reason of its failure to perform any act required of it hereunder. Tenant agrees
to save and hold harmless Landlord from and against any such lien(s) or claims of lien(s), provided, however, Tenant shall not
be required to pay or discharge any lien against the Leased Premises so long as Tenant has given Landlord notice of its intent
to contest such lien and Tenant is in good faith contesting the validity or amount thereof and has given to Landlord such security
as Landlord has reasonably requested to assure payment of such lien and to prevent the sale, foreclosure or forfeiture of the
Land, Building or Leased Premises by reason of non-payment. In the event that any lien does so attach, and is not released within
thirty (30) days after written notice to Tenant thereof or if Tenant has not indemnified Landlord against such lien within said
thirty (30) day period, Landlord, in its sole discretion, may pay and discharge the same and relieve the Leased Premises therefrom,
and Tenant agrees to repay and reimburse Landlord as additional rent upon demand for the amount so paid by Landlord. The existence
of any mechanic’s, laborer’s, materialmen’s, supplier’s or vendor’s lien, or any right in respect
thereof, shall not constitute a violation of this paragraph if payment is not yet due and payable upon the

 

    14 

    

    

contract or for the goods or services in respect of which any such lien has arisen. On final determination of the lien or claim
of lien Tenant will immediately pay any judgment rendered, and all costs and charges, and shall cause the lien to be released
or satisfied. In addition, Landlord may require Tenant to pay Landlord’s attorneys’ fees and costs in participating
in such action if Landlord shall decide it is in its best interest to do so.

 

		b.	Prohibited Uses.
Tenant shall not permit the Leased Premises to be used (a) for uses that are dangerous to the Leased Premises or to the public;
(b) in any manner that violates any Permitted Exception or any applicable Laws; (c) occupancy by any governmental agency or authority;
(d) to conduct of auctions or gambling activities; (e) by any construction-related, maintenance, or repair companies (other than
executive offices); (f) as flea markets or swap meets; (g) as a theater; (h) as a massage parlor, adult book store (which shall
mean a store which sells or offers for sale sexually explicit printed materials, audio or videotapes or films and sexual devices);
(i) as a bar, ballroom, dance hall, discotheque or nightclub (other than incidental to a business operated primarily as a restaurant);
(j) as a funeral parlor; (k) as a facility for the sale of paraphernalia for use with illicit drugs; (l) as an off-track betting
parlor or bingo parlor; (m) as a new or used car dealership, gas station, auto repair shop or car wash; (n) for any use which
emits an obnoxious odor, noise or sound which can be heard or smelled outside of the Building, or which is in violation of any
law or constitutes a private or public nuisance; (o) for any use of flashing, traveling or rotating lights or signs, or the use
of loudspeakers, telephones, phonographs, radios or other audio or mechanical devices in a manner so that they can be heard outside
of the Leased Premises; or (p) for any other use inconsistent with a first-class corporate headquarters and research facility.
Tenant agrees that Tenant’s use of the Leased Premises and any assignee and/or sublessee of Tenant use of the Leased Premises
are limited by and subject to the Permitted Exceptions as more fully set forth on the attached Exhibit C.

 

Tenant
will not use or permit the use of the Land, Building or Leased Premises in any manner that would result or would with the passage
of time result in the creation of any easement or prescriptive right. Tenant shall not use or occupy the Leased Premises, or knowingly
permit them to be used or occupied, contrary to applicable Laws, or which would make void or voidable any insurance then in force
with respect thereto or which would make it impossible to obtain fire or other insurance thereon required to be furnished hereunder
at Tenant’s expense, or which would cause structural injury to the improvements or cause the value or usefulness of the
Leased Premises, or any portion thereof, to diminish (reasonable wear and tear excepted), or which would constitute a public or
private nuisance or waste, and Tenant agrees that it will promptly, upon discovery of any such use, take all necessary steps to
compel the discontinuance of such use.

 

		c.	Illegal Operations.
Tenant shall, at its sole cost and expense, immediately discontinue any use of the Leased Premises that is declared by any governmental
authority having jurisdiction to be a violation of any Laws. Tenant shall promptly comply, at its sole cost and expense, with
all Laws that shall impose any duty on Tenant or Landlord with respect to the Leased Premises.

 

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		d.	Reputable Operations;
Closures. Tenant shall at all times operate the business conducted in the Leased Premises in a reputable manner so as to enhance
the reputation and attractiveness of the Building and Property.

 

During
any period of time in excess of forty-eight (48) hours when the Building is not open for business, Tenant shall take appropriate
security and safety measures to reasonably guard the Leased Premises from damage, vandalism and the deposit of refuse or waste
in or about the Leased Premises and to reasonably protect persons in or about the Leased Premises from death and personal injury.
During such periods of time upon Landlord’s request, Tenant shall submit to Landlord a report of such safety and security
measures that have been taken by Tenant, confirming that Tenant has inspected the Leased Premises and reporting the condition
of the Leased Premises and any damage to the Leased Premises or any personal injuries known to Tenant that have occurred in or
about the Leased Premises.

 

		e.	Environmental Matters.
Tenant and Landlord acknowledge receipt of that Phase I Environmental Site Assessment of the Leased Premises, prepared by Vieau
Associates Inc., dated July 24, 2017 (the “ESA”).

 

To
the best of Tenant’s knowledge, information and belief, no above or below storage tanks, nor electronic transformers, light
fixtures or other equipment containing polychlorinated biphenyl are or were located on the Leased Premises at any time during
or prior to Tenant’s possession and occupancy thereof, except as disclosed in the ESA.

 

Tenant
hereby represents and warrants that Tenant shall not install any asbestos containing materials (“ACM”) or equipment
containing polychlorinated biphenyl (“PCBs”), or any Hazardous Materials (as hereafter defined) in amounts
in excess of those prescribed by law, in the Leased Premises, and to the extent any ACM, PCBs or other Hazardous Materials are
on or in the Leased Premises, the same shall be maintained, stored and used in accordance with all applicable Laws. Upon the termination
of this Lease, or sooner if required by law, Tenant shall at its sole cost and expense, remove and/or remediate any such toxins
or Hazardous Materials (as hereafter defined) and contaminated soil or ground water, if any, which may then be present upon the
Land.

 

For
purposes of this Lease, the term “Hazardous Materials” shall include, but not be limited to, any flammable
materials, explosives, radioactive materials, hazardous or toxic substances which are or become regulated by any local governmental
authority, the state in which the Land is located or the United States Government or which would require removal, treatment or
other remedial action. The term “Hazardous Materials” includes, without limitation, any material or substance which
is (i) listed or defined as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous
waste,” or “hazardous substance”, or the like, under any municipal, state or federal law, code or other regulation;
(ii) defined as “hazardous substances,” “hazardous materials,” or “toxic substances” in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq., The Hazardous
Materials Transportation Act 49 U.S.C. 1801, et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et
seq.; (iii) petroleum products;

 

    16 

    

    

(iv)
asbestos and asbestos containing materials; (v) polychlorinated biphenyl; (vi) designated as a “hazardous substance”
pursuant to Section 3.11 of the Federal Water Pollution Control Act (33 U.S.C. 1317); (vii) any substance which is subject to
the reporting requirements of the Federal Emergency Planning and Community Right-to-Know Act; (viii) defined as a “hazardous
substance” pursuant to the Toxic Substances Control Act, 15 U.S.C. 2601; or (ix) any substance which contaminates soil or
ground water and causes degradation of the soil and/or water to the extent that mitigation methods are needed to restore the soil
or water to its natural state. For clarity, Hazardous Materials shall exclude any and all laboratory and biological materials,
agricultural chemicals, or other research reagents, that are used, stored, kept, released, handled and disposed of in the ordinary
course of Tenant’s research and in compliance with all applicable Laws (hereinafter “Research Materials”),
provided that such materials and reagents are generally recognized as appropriate for use in the industry by similarly-situated
research institutions.

 

Tenant
hereby agrees to indemnify, defend, protect, and hold harmless Landlord, each Mortgagee, if any, and Landlord’s and each
Mortgagee’s employees, directors, managers, agents and representatives (each an “Indemnified Party”)
from and against any and all direct and indirect loss, damages (including response and remediation costs), costs and expenses
(including attorneys’ fees, expert witness fees and court costs) or liability, during the Term of the Lease regardless of
cause, including, without limitation, (i) those arising out of the use, generation, storage, transportation, treatment, release,
threatened release or disposal of Hazardous Materials or Research Materials occurring prior or after the date hereof upon, below,
above or about the Leased Premises, including diminution in value of the Leased Premises; and (ii) the cost of any required or
necessary repair, remediation, cleanup or detoxification and the preparation of any closure or other required plans or reports,
whether such action is required or necessary prior to, during or following expiration of the Term of this Lease. Tenant
shall first obtain Landlord’s approval of any proposed remedial action (such approval shall not be unreasonably withheld,
delayed, or conditioned) and shall keep Landlord informed during the process of remediation.

 

Tenant’s
duty to defend, hold harmless, and indemnify the Indemnified Parties hereunder shall survive the expiration or earlier termination
of this Lease. Tenant acknowledges that Tenant has an affirmative duty to notify Landlord immediately of any release or suspected
release of Hazardous Materials or Research Materials on or about the Leased Premises in violation of any applicable Laws. Tenant’s
duty to defend, hold harmless, and indemnify the Indemnified Parties hereunder shall not apply to circumstances of an
Indemnified Party’s own negligence.

 

		15.	TENANT REPRESENTATIONS.

 

Tenant acknowledges,
represents, and warrants to Landlord, each Mortgagee and their respective successors and assigns that:

 

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a.       Occupation
of Leased Premises. Tenant was the occupant of the Leased Premises immediately prior to Landlord’s purchase of the Leased
Premises from Tenant, and Tenant currently operates a business in the Leased Premises;

 

b.       No
Violation of Health and Safety Laws. Tenant has received no notice from any governmental authority claiming that the Leased
Premises is in violation of, and to the best of Tenant’s knowledge, the Leased Premises are not in violation of any Laws
relating to industrial hygiene, health and safety, or, to the best of its knowledge, information and belief, to the use, generation,
storage, transportation or disposal of Hazardous Materials or Research Materials on, under or about the Leased Premises, including,
but not limited to, soil and ground water condition;

 

c.       No
Hazardous Materials. Except as has been previously disclosed to Landlord in the ESA, neither Tenant nor, to the best of Tenant’s
knowledge, information and belief, any third party has at any time during or prior to Tenant’s possession and/or occupancy
of the Leased Premises used, generated, manufactured, stored or disposed of on, under or about the Leased Premises, or transported
to or from the Leased Premises, any Hazardous Materials or Research Materials in violation of any applicable Laws. Tenant shall
not conduct, nor permit, any of the foregoing activities to occur on the Leased Premises during the term;

 

d.       No
Asbestos. Tenant agrees that no asbestos containing materials will be installed within the Leased Premises or exposed or disturbed
in the Leased Premises through demolition, renovation or otherwise, at any time during or prior to Tenant’s possession and/or
occupancy thereof unless such exposure or disturbance is required in the course of remodeling or restructuring the Leased Premises
and is conducted in accordance with all applicable Laws;

 

e.       Signs.
All signs located on the Leased Premises have been approved and have been installed in accordance with applicable Laws and the
Permitted Exceptions as listed on the attached Exhibit C, to which the Land may be subject as of the Commencement Date;

 

f.       
No Unrecorded Instruments. Other than as disclosed in Exhibit C, Tenant has no knowledge of any encumbrance, sublease,
easement or other instrument affecting title, use, possession or rights with respect to the Leased Premises; and

 

g.       Authority.
The person executing this Lease on behalf of Tenant is fully and legally authorized to do so; Tenant is a corporation formed under
the laws of Delaware, and is and shall remain, during the Term, authorized to conduct business in and is in good standing in such
state; Tenant is and shall remain, during the Term, authorized to conduct business and is in good standing in the state in which
the Leased Premises is located.

 

		16.	LANDLORD’S
PERFORMANCE OF TENANT’S DUTIES.

 

a.       Performance
at Tenant’s Sole Expense. If Tenant should default in the performance of any covenant or agreement on its part to be
performed by virtue of any provision of this

 

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Lease,
Landlord may, after ten (10) days’ notice in the case of defaults in the payment of Rent, including any additional rent
or other monetary defaults, or after thirty (30) days’ notice in the case of non-monetary defaults (or, in the case of emergencies,
reasonable attempts at prior notice), perform the same for the account of Tenant, and Tenant hereby authorizes Landlord to come
upon the Leased Premises for such purposes and while on the Leased Premises to do all things reasonably necessary to accomplish
the correction of such default. If Landlord, at any time, is compelled to pay or elects to pay any sum of money by reason of the
failure of Tenant after ten (10) days’ notice to comply with any provision of this Lease, or if Landlord is compelled
to incur any expense, including reasonable attorneys’ fees and costs, in instituting, prosecuting or defending any action
or proceeding instituted by reason of any default of Tenant hereunder, the sum or sums so paid by Landlord with all interest at
the Default Rate and damages including any loss of Rent, shall be deemed to be additional rent hereunder.

 

All
covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s
sole expense and without abatement of Rent or setoff. If Tenant shall fail to observe and perform any covenant, condition, provision
or agreement contained in this Lease or shall fail to perform any other act required to be performed by Tenant, Landlord may,
upon notice to Tenant, without obligation, and without waiving or releasing Tenant from any default or obligations of Tenant,
make any such payment or perform any such obligation on Tenant’s part to be performed. All sums so paid by Landlord and
all costs incurred by Landlord, including reasonable attorneys’ fees and costs, shall be payable to Landlord on demand together
with interest thereon at the Default Rate, and Tenant covenants to pay any such sums, and Landlord shall have (in addition to
any other right or remedy hereunder) the same rights and remedies in the event of Tenant’s non-payment thereof as in the
case of default by Tenant in the payment of Rent.

 

b.       Interest
on Past Due Amounts. Any amount due from Tenant to Landlord which is not paid within five (5) days after said amount is due
shall bear interest at the Default Rate from the date that such payment is due until paid, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease.

 

c.       Late
Charge. Upon receipt by Tenant of written notice from Landlord that Tenant is more than ten (10) days late in paying any installment
of Base Rent or additional rent due under this Lease, Tenant shall pay to Landlord a late charge equal to ten percent (10%) of
each delinquent amount of Rent and any subsequent delinquent amount of Rent. The parties agree that the amount of such late charge
represents a reasonable estimate of the cost and expense that would be incurred by Landlord in processing each delinquent payment
of Rent by Tenant and that such late charge shall be paid to Landlord as liquidated damages for each delinquent payment, but the
payment of such late charge shall not excuse or cure any default by Tenant under this Lease.

 

d.       Purpose
of Interest and Late Charge. The parties agree that the payment of late charge and the payment of interest provided for in
this Section are distinct and separate from one another in that the payment of interest is to compensate Landlord for the use
of

 

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Landlord’s
money by Tenant, while the payment of a late charge is to compensate Landlord for the additional administrative expense incurred
by Landlord in handling and processing delinquent payments, but excluding attorneys’ fees and attorneys’ costs incurred
with respect to such delinquent payments.

 

		17.	NOTICE TO MORTGAGEE.

 

So long
as there is of record a mortgage, ground lease (in which Landlord is the ground lessor), or deed of trust or similar instrument
with respect to Landlord’s interest in the property (each an “Underlying Mortgage”), and Tenant has been
given written notice of the identity and address of the ground lessor, beneficiary of the deed of trust or other instrument or
the mortgagee named in the Underlying Mortgage (each a “Mortgagee”), Tenant shall give a duplicate notice of
each notice sent to Landlord to Mortgagee. Tenant agrees that if in any notice to Landlord the performance of some act is required
or compliance with some provision hereof is requested and Landlord does not, within the allotted time, perform such act or comply
with such provision, then the Mortgagee shall have thirty (30) days after Mortgagee’s receipt of such notice in which to
perform such act or comply with such provision for and on behalf of Landlord, and Tenant shall have no right to take action otherwise
permitted it, or to terminate this Lease, if the Mortgagee shall perform and comply within said thirty (30) days. In the event
the act or thing to be complied with within said thirty (30) day period cannot by its nature reasonably be completed within such
period, Mortgagee shall be deemed to have complied therewith in the event it commenced the performance of compliance within said
thirty (30) day period and thereafter completes the same with due diligence. The granting to the Mortgagee of additional time
in which to comply shall not be deemed in any manner to release or relieve Landlord from the obligations of Landlord under this
Lease. Any such Mortgagee is hereby authorized to enter upon the Leased Premises following reasonable notice to Tenant and while
thereon to do anything necessary to correct such default.

 

		18.	SUBLETTING AND ASSIGNMENT;
LEASEHOLD MORTGAGES.

 

Tenant may
assign its leasehold interest under this Lease only to: (a) any successor of Tenant resulting from a merger or consolidation of
or by Tenant, or an acquisition of all or substantially all of Tenant’s assets; (b) any entity under common control of Tenant;
(c) any permitted affiliate; or (d) any third party subject to the prior written approval of Landlord, which approval may be withheld
in Landlord’s sole discretion (each a “Permitted Assignment”). For purposes hereof the term “permitted
affiliate” means any corporation or other entity that directly or indirectly is controlled by or is under common control
with Tenant and the term “control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such corporation, whether through the ownership of voting securities or
by contract or otherwise.

 

At least
thirty (30) days prior to the effective date of any sublease of all or a portion of the Leased Premises or any assignment of Tenant’s
interest in this Lease, Tenant shall furnish to Landlord (for Landlord’s review of the same for compliance with the terms
of this Lease) a copy of the fully executed sublease or assignment document.

 

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a.       No
Release. No subletting or assignment of any form (other than an assignment to a successor of Tenant resulting from a merger
or consolidation of or by Tenant or an acquisition of all or substantially all of Tenant’s assets, or an assignment to a
third party approved by Landlord in its sole discretion) shall serve to release Tenant of any obligations hereunder or alter the
primary liability of Tenant for the payment of Rent and other sums due Landlord hereunder or for the performance of any other
obligations to be performed by Tenant under this Lease, whether or not the sublessee or the assignee has attorned to the Landlord.

 

b.       Acceptance
of Rent or Performance. Landlord may accept any Rent or performance of Tenant’s obligations from any person other than
Tenant and such acceptance of any Rent or performance shall not constitute a waiver or estoppel of Landlord’s rights to
exercise its remedies for the default or breach by Tenant of any of the terms, covenants or conditions of this Lease.

 

c.       No
Need to Exhaust Security. In the event of any default or breach of Tenant’s obligations under this Lease, Landlord may
proceed directly against Tenant, or anyone else responsible for the performance of Tenant’s obligations under this Lease,
including the sublessee or assignee, without first exhausting Landlord’s remedies against any other person or entity responsible
therefor, or any security held by Landlord or Tenant.

 

d.       Assumption.
Any assignment or subletting permitted hereunder shall be conditioned upon the assignee or sublessee assuming and agreeing in
a writing addressed to Landlord and each Mortgagee, if any, to conform and comply with each and every term, covenant, condition
and obligation herein or in any document related hereto to be observed or performed by Tenant during the term of said assignment
or sublease.

 

e.       Provisions
to be Included in Sublease. The following terms and conditions shall apply to any subletting by Tenant of all or any part
of the Leased Premises approved by Landlord and shall be deemed included in all subleases under this Lease whether or not expressly
incorporated therein.

 

(1)       Assignment
of Rents. Tenant hereby assigns and transfers to Landlord all of Tenant’s interest in all rents and income arising from
any sublease of all or a portion of the Leased Premises and Landlord may collect such rent and income and apply same toward Tenant’s
obligation under this Lease; provided, however, that except during any period in which a breach has occurred in the performance
of Tenant’s obligations under this Lease and remains uncured, Tenant may, except as otherwise provided in this Lease, receive,
collect and enjoy the rents accruing under such sublease. If Landlord collects such rents, Landlord shall pay to Tenant any portion
of such rents, collected from any sublessee that exceed the Rent and other monetary obligations then due from Tenant under the
Lease, less any costs incurred by Landlord to collect such rents. Landlord shall not, by reason of this assignment of rents or
any other assignment of sublease to Landlord, nor by reason of the collection of the rents from a sublessee, be deemed liable
to the sublessee for any failure of

 

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Tenant
to perform and comply with any of the Tenant’s obligations to such sublessee under such sublease. Tenant hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from Landlord stating that a default exists in the
performance of Tenant’s obligation under this Lease, to pay to Landlord the rents and other charges due and to become due
under the sublease. Sublessee shall rely upon any such statement and request from Landlord and shall pay such rents and other
charges to Landlord without any obligation or right to inquire as to whether such default exists, and notwithstanding any notice
from or claim from Tenant to the contrary, Tenant shall have no right or claim against said sublessee, or, until the default has
been cured, against Landlord, for any such rents and other charges so paid by sublessee to Landlord.

 

(2)       Attornment.
In the event of a breach by Tenant in the performance of its obligations under this Lease, and a resulting termination of Lease
by Landlord, Landlord, at its option and without any obligation to do so, may require any sublessee to attorn (i.e., agree to
become tenant to a new owner or landlord of the same property) to Landlord, in which event Landlord shall undertake the obligations
of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Landlord shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for
any prior defaults or breaches of such sublessor under such sublease.

 

(3)       Consent of Landlord Required. Any matter or thing requiring the consent of the sublessor under a sublease shall also require
the consent of Landlord herein, if Landlord’s consent is required under this lease.

 

(4)       Conditions of Sublease. Each sublease shall provide that (i) it is subject and subordinate to this Lease and any Underlying
Mortgage (defined in Section 17 above); (ii) Landlord may enforce the provisions of the sublease, including collection
of rent; (iii) if this Lease is terminated for any reason, Landlord may, at its option, either (A) terminate the sublease, or
(B) takeover all of the rights and interest of Tenant, as sublessor, under such sublease, in which case such sublessee shall attorn
to Landlord; and (iv) any notices to be given to Tenant, as sublessor, by the sublessee shall simultaneously be given to Landlord.
If Landlord elects to take over the rights and interest of Tenant, Landlord shall not (1) be liable for any previous act or omission
of Tenant under the sublease; (2) be subject to any defense or offset in favor of the sublessee against Tenant; or (3) be bound
by any modification to the sublease made without Landlord’s written consent or by any prepayment by sublessee of more than
one month’s rent.

 

f.       Tenant
Leasehold Financing. Except as permitted by this Section, Tenant shall not assign, collaterally or otherwise, nor pledge,
encumber or mortgage its interest in this Lease or in the Leased Premises without each Mortgagee’s and Landlord’s
prior written consent (which may be withheld in the discretion of such Mortgagee or Landlord); provided, however, that Tenant
may grant security interests in its Personal Property and operating

 

    22 

    

    

licenses
and permits (but not, without Landlord’s consent, in Tenant’s leasehold interest hereunder, nor in any walk-in built-in
cabinetry, light fixtures, hoods, vents, fan, HVAC, built-in countertops, plumbing fixtures, parking lot poles, site work or building
components), and UCC financing statements evidencing such security interests may be filed against the Tenant and identifying the
location thereof as the Leased Premises as long as Landlord is not named as a party thereto and provided that Landlord shall have
no obligation to execute any documentation in connection therewith. Any such assignment, pledge, encumbrance or mortgage requiring
Landlord’s consent is referred to herein as a “Tenant Lien.” Tenant further agrees to indemnify and hold
Landlord and each Mortgagees, and the successors and assigns of such parties, harmless from any and all claims, causes of action,
demands, judgments or awards (including all costs of defense and attorneys’ fees related thereto) alleged or made by any
holders or owners of any Tenant Lien, or in any way related to or arising from any Tenant Lien, the indebtedness secured thereby
or the rights of any party related thereto to make claim against the Tenant, the Landlord, any Mortgagee, or the Leased Premises.

 

		19.	EMINENT DOMAIN.

 

a.       Whole
Taking. If the whole of the Leased Premises is taken by condemnation, eminent domain or in any other manner for any public
or quasi-public purpose (a “Taking”), this Lease shall terminate as of the date the condemning authority takes
title or possession, whichever occurs first, provided, however, that Tenant’s obligation to pay all Rent due hereafter to
Landlord shall continue in full force and effect notwithstanding any technical termination of this Lease by virtue of such Taking
and Landlord shall have all remedies available hereunder in the event that Tenant fails to pay any such Rent when due notwithstanding
that the Taking occurred.

 

b       Partial
Taking. If less than the whole of the Leased Premises is so taken, this Lease shall terminate as to the part of the Leased
Premises so taken as of the date the condemning authority takes title or possession, whichever occurs first. This Lease shall
remain in full force and effect as to the portion of the Leased Premises remaining. No abatement or reduction in Rent shall occur,
except in accordance with Section 19(c)(i). Tenant is authorized to collect, settle and compromise the amount of any award
or payment resulting from a taking (an “Award”), and Landlord shall have the right to join with Tenant therein.

 

c       Proceeds.

 

(1)       Payable
to Landlord. Subject to the provisions of Section 19(c)(2) (Payable to Tenant), in the event of any Taking, partial
or whole, all of the proceeds of any award, judgment, or settlement payable by the condemning authority shall be the property
of Landlord, and Tenant hereby assigns to Landlord all of its right, title, and interest in any award, judgment, or settlement
from the condemning authority. Landlord shall first apply the proceeds of any Award to reduce the remaining principal amount outstanding
on the Loan. If required by the Mortgagee, the Award shall be paid directly to the Mortgagee. Rent shall be equitably reduced
(in a manner reasonably satisfactory to Landlord, Tenant, and the

 

    23 

    

    

Mortgagee)
to take into account the reduction of the Leased Premises arising from the Taking, provided however, that in no event shall Base
Rent, as reduced, be less than 105% of the Debt Service (as recalculated by the Mortgagee after taking into account application
of that portion of the Award to reduce the principal balance of the Loan). For purposes of this Lease, “debt service”
means the amount due and payable from time to time under the loan made by the Mortgagee to Landlord, including interest, late
charges, principal, escrows for real estate taxes, insurance premiums if required by the documents relating to the loan and any
“late charges,” which amount shall be calculated by the Mortgagee in its reasonable discretion taking into account
the terms of such loan documents.

 

(2)       Payable
to Tenant. Notwithstanding any contrary provision contained in this Lease, Tenant shall be entitled to claim, prove, and receive
from the condemning authority in the condemnation proceedings the following, to the extent that and so long as (i) Tenant shall
have the right to make, and does make, a separate claim therefor against the condemning authority and (ii) such claim does not
in any way reduce either the amount of the Award otherwise payable to Landlord or a Mortgagee for the Taking of Landlord’s
fee interest in the Leased Premises or the amount of such Award: (a) such portion of the Award as is equal to the unamortized
value of any leasehold improvements hereafter made by Tenant; and (b) such Awards as may be allowed for moving expenses, loss
of profit, and fixtures and other equipment installed by Tenant that shall not, under the terms of this Lease, be or become the
property of the Mortgagee at the termination hereof.

 

(3)       Proceedings.
Landlord and Tenant shall each have the right, at its own expense, to appear in any condemnation proceeding and to participate
in any and all negotiations, hearings, trials, and appeals therein.

 

d.       Tenant’s
Restoration. In the event of a Taking of the Leased Premises that does not result in a termination of this Lease, Tenant shall
at its sole cost and expense restore the remaining portion of the Leased Premises as nearly as practicable to its condition prior
to the condemnation or taking (assuming the Leased Premises to have been in the condition required by this Lease). Tenant shall
also be responsible at its sole cost and expense for the repair, restoration and replacement of Tenant’s Property and any
other leasehold improvements.

 

e.       Temporary
Construction Easements. Provided that this Lease is not terminated pursuant to this Section 19, Tenant shall be entitled
to any compensation for any temporary construction easements.

 

f.       Survival.
If this Lease is terminated under this Section 19, then the provisions of this Section 19 shall survive such termination.

 

g.       Sales
in Lieu of Condemnation. For the purposes of this Section 19, the term “condemnation or eminent domain proceedings”
shall include conveyances and grants made in anticipation of or in lieu of such proceedings.

 

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		20.	INDEMNIFICATION.

 

Tenant agrees
to indemnify and save harmless Landlord and each other Indemnified Party against and from any and all of the following hereof:
claims, causes of action, judgments, suits, damages and liability (collectively, “Claims”) arising from the
conduct or management of, from any business, activity, work or thing whatsoever done or not done in or about, or activities upon
or occupancy of the Leased Premises during the Term of this Lease (including the Permitted Exceptions), and will further indemnify
and save the Landlord and each other Indemnified Party harmless against and from any and all Claims arising from any breach or
default on the part of the Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant
to the terms of this Lease, or from any violation or failure to comply with any Laws or the Permitted Exceptions, or from any
willful or illegal conduct or negligence of the Tenant, or any of its agents, contractors, servants, employees, licensees, or
invitees or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation, occurring during
the Term of this Lease, in or about the Leased Premises upon or under the sidewalks, rights of way, alleys and lands adjacent
thereto, and from and against all costs, reasonable and necessary counsel and expert witness fees, expenses and liabilities incurred
in or about any such claim or action or proceeding brought thereon, and in case any action or proceeding is brought against any
Indemnified Party by reason of any such claim, the Tenant, upon notice from such Indemnified Party, covenants to timely and fully
resist or defend such action or proceeding by counsel reasonably satisfactory to the Landlord and each other Indemnified Party.
Tenant’s duty to defend, hold harmless, and indemnify the Indemnified Parties hereunder shall survive the expiration or
earlier termination of this Lease.

 

Landlord
agrees to indemnify and save harmless Tenant and each of employees, directors, managers, agents and representatives from, to the
extent not covered by insured against under a policy or policies of the insurance to be maintained by Tenant pursuant to the terms
of this Lease, any and all Claims arising from any willful or illegal conduct or gross negligence of the Landlord, or any of its
agents, contractors, servants, employees, licensees, or invitees and from and against all costs, reasonable and necessary counsel
and expert witness fees, expenses and liabilities incurred in or about any such claim or action or proceeding brought thereon,
and in case any action or proceeding is brought against Tenant by reason of any such claim, the Landlord, upon notice from Tenant,
covenants to timely and fully resist or defend such action or proceeding by counsel reasonably satisfactory to the Tenant. Landlord’s
duty to defend, hold harmless, and indemnify the Tenant hereunder shall survive the expiration or earlier termination of this
Lease.

 

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		21.	INSPECTION OF LEASED
PREMISES.

 

Tenant agrees
to permit Landlord and any Mortgagee and their agents to inspect the Leased Premises upon providing Tenant with at least two (2)
business days’ notice, and to come upon the Leased Premises if necessary to perform any act which Tenant has failed to perform,
as provided elsewhere in this Lease. Tenant shall be given at least two (2) business days’ notice of any such entry (except
in the case of emergency) and any such entry shall be undertaken in a manner that reasonably minimizes interference with Tenant’s
use and operations and in compliance with Tenant’s safety policies. Landlord acknowledges that Tenant’s business necessitates
the implementation of security measures and Tenant shall have the right to have one or more of its employees present during any
inspection or entrance into the Leased Premises by Landlord.

 

		22.	DEFAULT.

 

Tenant shall
be in default under this Lease if one or more of the following events (herein each called a “Default”) shall
happen and be continuing, namely:

 

a.       Failure
to pay any Rent within five (5) business days of the date that such Rent is due, including but not limited to any additional rent
or other monetary payment herein agreed to be paid;

 

b.       Tenant
shall have filed a petition in bankruptcy or prayed for any relief under any statute of federal bankruptcy law or made an assignment
for the benefit of creditors or consent to the entry of an order for relief in involuntary bankruptcy;

 

c.       An
attachment or execution shall have been levied upon the Tenant’s property in or interest under this Lease, which shall not
have been satisfied or released or the enforcement thereof stayed or superseded by an appropriate proceeding within thirty (30)
days thereafter;

 

d.       An
involuntary petition in bankruptcy or for reorganization or arrangement under any statute of federal bankruptcy law shall have
been filed against Tenant and either an order for relief is entered or such involuntary petition is not withdrawn, dismissed,
stayed or discharged within sixty (60) days from the filing thereof;

 

e.       A
Receiver or Trustee shall have been appointed for the property of Tenant or Tenant’s business or assets and the order or
decree appointing such Receiver or Trustee shall have remained in force undischarged or unstayed for thirty (30) days after the
entry of such order or decree;

 

f.       Tenant
admits in writing its inability to pay its debts as they become due;

 

g.       Tenant shall have failed to perform or observe any other covenant, agreement or condition to be performed or kept by the Tenant
under the terms and provisions of this Lease, and such failure shall continue for thirty (30) days after written notice thereof
has been given to Tenant by Landlord, unless Tenant shall have commenced corrective action within such

 

    26 

    

    

thirty
(30) days and thereafter diligently completes the same; the foregoing provision shall not require Tenant to occupy the Leased
Premises and Tenant shall be entitled to vacate the Leased Premises so long as it otherwise complies with its obligations hereunder,
unless the Permitted Exceptions otherwise provide; however said time period shall be inclusive of any and all statutory time periods
for nonpayment of Rent and breach of covenants in Lease.

 

		23.	LANDLORD’S
REMEDIES UPON DEFAULT.

 

Upon the
occurrence of any Default by Tenant, Landlord, at its option, may have one or more of the following remedies, in addition to all
of the rights and remedies provided at law or in equity.

 

a.       Entry
by Landlord. Landlord may cure the default for the account of Tenant, and Tenant hereby authorizes Landlord to come upon the
Leased Premises for such purposes and while on the Leased Premises to do all things reasonably necessary to accomplish the correction
of such Default. If Landlord, at any time, is compelled to pay or elects to pay any sum of money by reason of the occurrence of
a Default by Tenant or if Landlord is compelled to incur any expense, including reasonable attorneys’ fees and attorney’s
costs in instituting, prosecuting or defending any action or proceeding instituted by reason of any Default of Tenant hereunder,
the sum or sums so paid or incurred by Landlord shall be deemed to be additional rent and shall be immediately due and payable
upon demand by Landlord with interest thereon at the Default Rate from the date that falls five (5) days following the date of
demand and such action by Landlord shall not be deemed a waiver by Landlord of Tenant’s default or any other remedy available
to Landlord.

 

b.       Performance
By Landlord. Landlord may, upon notice to Tenant, without obligation, and without waiving or releasing Tenant from any Default
or obligations of Tenant, make any such payment or perform any such obligation on Tenant’s part to be performed. All sums
so paid by Landlord and all costs incurred by Landlord, including reasonable attorney’s fees and costs, shall be payable
to Landlord on demand together with interest thereon at the Default Rate, and Tenant covenants to pay any such sums, and Landlord
shall have (in addition to any other right or remedy hereunder) the same rights and remedies in the event of Tenant’s non-payment
thereof as in the case of default by Tenant in the payment of Base Rent.

 

c.       Repossession;
Damages. Landlord may without further notice repossess the Leased Premises and at any time thereafter may terminate this Lease
by written notice to Tenant. Upon such termination, Landlord shall be entitled to recover liquidated damages (in lieu of Tenant
paying any further deficiency amounts under Section 23(d) below) a sum of money equal to the total of (i) the cost of recovering
possession of the Leased Premises; (ii) the unpaid Rent earned at the time of termination, plus interest at the Default Rate thereon;
(iii) late charges on unpaid Rent; (iv) the present value of the balance of the Rent for the remainder of the Term using a discount
rate of six percent (6%), less the present value of the reasonable rental value of the Leased Premises for the balance of the
Term remaining after a one-year period following repossession using a discount rate of six percent (6%); (v) reasonable costs
of reletting and refurbishing the Leased Premises including, without

 

    27 

    

    

limitation,
leasing commissions paid, tenant improvement costs, rent concessions and repairs to the Leased Premises; and (vi) any other sum
of money and damages reasonably necessary to compensate Landlord for the detriment caused by Tenant’s Default.

 

d.       Termination
of Right of Possession. Landlord may immediately terminate Tenant’s right of possession of the Leased Premises by written
notice to Tenant, with or without terminating this Lease, and without notice or demand enter upon the Leased Premises or any part
thereof and take absolute possession of the same and expel or remove Tenant and any other person or entity who may be occupying
the Leased Premises in accordance with law. In the event that Landlord terminates Tenant’s right to possession without terminating
this Lease, Landlord shall engage a commercial real estate broker to relet the Leased Premises or any part thereof for such terms
and such rents as Landlord may reasonably elect. In the event Landlord shall elect to so relet, the rent received by Landlord
from such reletting shall be applied first to the payment of any sums owing from Tenant to Landlord hereunder other than Rent
due hereunder from Tenant to Landlord, second, to the payment of any reasonable cost of such reletting, including, without limitation,
refurbishing costs and leasing commissions, and third, to the payment of Rent due and unpaid hereunder, and Tenant shall satisfy
and pay any deficiency upon demand therefor from time to time. Any such entry into the possession of the Leased Premises by Landlord
under this Section shall be without liability or responsibility for damages to Tenant and shall not be in lieu of or in substitution
for any other rights of Landlord hereunder at law or in equity. Reletting of the Leased Premises shall not be construed as an
election on the part of Landlord to terminate this Lease and notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous breach and recover liquidated damages as of the date
of termination as set forth in Section 23(c) hereof.

 

e.       No
Termination Without Written Notice. No re-entry by Landlord or any action brought by Landlord to oust Tenant from the Leased
Premises after the occurrence of a Default shall operate to terminate this Lease unless Landlord shall give written notice of
termination to Tenant, in which event Tenant’s liability shall be as above provided.

 

f.       Suit
for Specific Performance, Injunctive Relief or Damages. Landlord may bring suit against Tenant for the specific performance
of this Lease by Tenant for an injunctive or restraining order against Tenant, or for damages directly or indirectly arising out
of Tenant’s breach of any term or covenant of this Lease.

 

g.      Right to Sublet. Notwithstanding the terms of this Section 23 or any other restrictions on subletting contained
in any other section of this Lease, Cellectis SA shall have the right to sublet all or substantially all of the Leased Premises
from Tenant upon the occurrence of a Default by Tenant, subject to all of the terms of this Lease and Landlord’s remedies
in the event of such Default (the “Option to Sublet”). Cellectis S.A. may exercise its Option to Sublet by
providing Landlord with written notice within fifteen (15) days of Tenant’s receipt of a notice of Default.

 

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h.      Remedies Are Cumulative. Tenant agrees that Landlord may file suit to recover any sums due Landlord under the terms of
this Section and that no recovery of any portion due Landlord hereunder shall be any defense to any subsequent action brought
for any amount not theretofore reduced to judgment in favor of Landlord. The rights and remedies given to Landlord in this Lease
are distinct, separate and cumulative remedies, and except as provided herein, shall not be deemed to be an exclusion of any of
the others. No right or remedy granted to Landlord herein is intended to be exclusive of any other right or remedy hereunder or
now or hereafter existing in law or equity or by statute. In the event of termination of Tenant’s right to possession, by
Landlord after the occurrence of a Default, Tenant waives any and all rights to redeem the Leased Premises either provided by
any statute now in effect or hereafter enacted.

 

		24.	CONDITION
                                         OF LEASED PREMISES ON TERMINATION.

 

Upon termination
of this Lease for any reason, Tenant covenants and agrees to remove all of its Personal Property, including fixtures and equipment
installed by Tenant upon the Leased Premises which are not permanently attached (except utility connections and equipment), and
Tenant shall repair any damage caused by such removal or alteration, and shall leave the Leased Premises in as good repair and
clean condition as at the commencement of this Lease, normal and reasonable wear and tear and usage excepted. If a freestanding
sign exists on the Leased Premises, Tenant may remove Tenant’s sign panel therefrom (but not the sign structure, sign base,
sign pole or any utility connections thereto). Tenant shall, at Landlord’s election, either (i) remove at Tenant’s
sole expense, any title encumbrances relating to the Leased Premises caused by Tenant’s interest in the Lease; or (ii) provide
Landlord with a bond for the total amount of said title encumbrance.

 

All fixtures
(other than trade fixtures and equipment not for the operation of the Building), improvements, alterations and equipment for the
operation of the Building now or hereafter permanently attached to the Leased Premises, including without limitation all plumbing,
electrical, and HVAC equipment and all doors, ceiling tiles and lighting fixtures, shall be and remain Landlord’s property
and shall not be removed from the Leased Premises without Landlord’s prior written consent. All movable fixtures and equipment
are and shall remain Tenant’s property, and Landlord agrees to sign any and all waivers reasonably required by Tenant in
order to complete any fixture financing arrangements relative to said movable fixtures and equipment. Landlord shall have no interest
in any movable fixtures and equipment owned by Tenant, or installed in or upon the Leased Premises solely at the cost and expense
of Tenant. In the event said property is thereafter removed from the Leased Premises by Tenant, or any party holding a lien on,
a security interest in, or a reversionary interest in the property, or by any agent or representative thereof or any purchaser
thereof, pursuant to the exercise or enforcement of any rights incident to the interests created, Tenant and the party holding
such interest shall jointly and severally be obligated to repair any damage necessitated by the removal of such property as may
be necessary to restore the Leased Premises to good condition and repair, excepting only reasonable wear and tear, without any
cost or expense to Landlord.

 

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		25.	SUCCESSORS AND ASSIGNS.

 

Subject
to Section 18, the obligations and responsibilities of the parties to this Lease shall be binding upon, and the rights
and benefits shall inure to the successors and assigns of the parties hereto; but the liabilities of any successor to the interest
of the Landlord hereunder shall be limited to the performance of those obligations which arise and accrue during the period of
ownership of the Leased Premises by any such successor. In the event that Landlord sells, assigns or transfers the Leased Premises,
and the buyer/transferee assumes in writing all obligations of Landlord under this Lease arising thereafter, then from and after
the effective date of such sale, assignment or transfer, Landlord shall have no further liability under this Lease.

 

		26.	NOTICES.

 

Unless otherwise
specifically provided herein, all notices and demands hereunder shall be in writing, and shall be deemed given (a) when personally
delivered or (b) the next business day after timely deposit with a reliable next-business day carrier service with all fees paid
by the sender, or (c) on the date of actual request if delivered in any other manner to Landlord or Tenant at the following addresses:

 

	 	If to Landlord:	NLD MOUNT RIDGE LLC
	 	 	50 South 6th Street, Suite 1480
	 	 	Minneapolis, MN 55402
	 	 	Attention:  Manager
	 	 	Telephone No.: (612) 313-2500
	 	 	 
	 	If to Tenant:	CALYXT, INC.
	 	 	600 County Road D W., Suite 8
	 	 	New Brighton, MN 55112
	 	 	Attention: Federico Tripodi
	 	 	Telephone No.: (651) 683-2807
	 	 	 
	 	With a copy to:	CALYXT, INC.
	 	 	600 County Road D W., Suite 8
	 	 	New Brighton, MN 55112
	 	 	Attention: Head of Legal
	 	 	Telephone No.: (651) 683-2807
	 	 	 
	 	With a copy to:	CELLECTIS S.A.
	 	 	430 East 29th Street
	 	 	New York, NY 10016

 

Tenant and
Landlord may designate an additional or another address upon giving notice to the other parties pursuant to this Section. Notice
given in any other manner other than as stated herein, shall be deemed effective only upon receipt by the party to whom such notice
is given.

 

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		27.	NO ORAL AGREEMENTS.

 

It is expressly
agreed between Landlord and Tenant that there is no verbal understanding or agreement which in any way changes the terms, covenants
and conditions herein set forth, and that no modification of this Lease and no waiver of any of its terms and conditions shall
be effective unless made in writing and duly executed by the authorized officers of the necessary parties or party.

 

		28.	MERGER.

 

Landlord
and Tenant hereby agree this Lease contains a complete and final agreement between the Parties, and supersedes any other oral
or written agreements between the parties on the same subject matter.

 

		29.	NO WAIVER.

 

The failure
of Landlord or Tenant to insist, in one or more instances, upon the strict performance by Tenant or Landlord of any of the provisions
of this Lease shall not be construed as a waiver of any right or remedy available for any future breach of such provisions. Receipt
by Landlord of Rent with knowledge of the breach of any provisions hereof shall not be deemed a waiver of any right or remedy
available for such breach.

 

		30.	WARRANTIES OF TENANT;
ESTOPPEL CERTIFICATE.

 

Tenant warrants
to and for the benefit of any Mortgagee that as of the date of execution of this Lease, Tenant neither has nor claims any defense
to this Lease nor any offset against the Rent payable or other obligations required of Tenant hereunder, and Tenant warrants that
it has not paid any Rent in advance for a period of more than one (1) month and covenants that it will not, without such Mortgagee’s
written consent, at any time during the term hereof prepay any Rent for a period longer than one month.

 

Tenant shall
at any time and from time to time upon not less than ten (10) business days prior written notice by Landlord, execute, acknowledge
and deliver to Landlord (or to such other parties as Landlord may designate) a statement in writing certifying that this Lease
is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as
modified and stating the modifications), that all of Tenant’s representations and warranties set forth herein remain true
and in full force and effect (or stating with specificity those that are not so), that the Lease has not been collaterally assigned,
the dates to which the Base Rent and any other charges have been paid in advance, if any, confirming the Term and extension terms
of the Lease, stating that the Tenant has accepted the Leased Premises in their then current condition and is in possession of
the Leased Premises, stating whether or not to the best knowledge of Tenant, Landlord is in default in the performance of any
covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which Tenant may have knowledge,
stating that the Tenant has no right of set-off against past or future Rents due under the Lease, that no Rent has been prepaid
for more than one (1) month in advance, and containing any other information and certifications which reasonably may be requested
by Landlord, the holder of any Underlying Mortgage (as defined in

 

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Section
17 hereof) or any prospective purchaser or mortgagee of the Leased Premises. Any such statement delivered pursuant to this
Section may be relied upon by any party to which it is addressed, by any prospective or current mortgagee of the Leased Premises
or by any prospective purchaser of the Leased Premises or any assignee of any of the same.

 

		31.	CARDING AND LANDLORD’S
RIGHT OF ENTRY.

 

Landlord
may place signs at the Leased Premises “For Rent” or “For Sale” 270 days before the termination of this
Lease. Upon two (2) business days’ advance notice, Landlord may enter the Leased Premises at reasonable hours and upon reasonable
notice to exhibit Leased Premises to prospective purchasers, tenants and mortgagees and to inspect or make repairs and any such
entry shall be undertaken in a manner that reasonably minimizes interference with Tenant’s use and operations and in compliance
with Tenant’s safety policies. Landlord acknowledges that Tenant’s business necessitates the implementation of security
measures and Tenant shall have the right to have one or more of its employees present during any inspection or entrance into the
Leased Premises by Landlord.

 

		32.	LANDLORD AND TENANT.

 

This Lease
shall create the relationship of landlord and tenant between Landlord and Tenant.

 

		33.	TIME OF ESSENCE.

 

Time is
of the essence with this Lease.

 

		34.	DEFINITION.

 

“Landlord”
as used in this Lease shall include the original Landlord hereunder, its successors and assigns. “Tenant” shall include
the original Tenant hereunder, its successors, and if this Lease shall be validly assigned or sublet, shall include also Tenant’s
assignee or sublessee, as to premises covered by such assignment or sublease. “Landlord” and “Tenant”
include male and female, singular and plural, corporation, partnership or individual, as may be appropriate for the particular
parties.

 

		35.	MORTGAGE.

 

Landlord
shall have the right to place and record Underlying Mortgages against the Leased Premises as security for loans or other consideration
obtained or to be obtained by Landlord, and Tenant agrees to execute such documents as may be reasonably required by any Mortgagee,
including commercially reasonable attornment agreements and subordination agreements in a form consistent with the terms of this
Lease (each an “SNDA”), and Landlord and Tenant hereby approve the form of SNDA attached hereto as Exhibit
D.

 

This Lease
is subject and subordinate to all Underlying Mortgages, and to all renewals, modifications, consolidations, replacements and extensions
of any such Underlying Mortgages

 

    32 

    

    

provided
that the holder of such Underlying Mortgage, Tenant and Landlord shall execute an SNDA consistent with the terms of this Lease
as required by such Underlying Mortgages.

 

If Landlord’s
interest in the Leased Premises is sold or conveyed upon the exercise of any remedy provided for in any Underlying Mortgage, or
otherwise by operation of law, then, so long as Tenant is not in default hereunder: (a) this Lease (and any amendments, modifications
and extensions thereof) will not be affected in any way, and Tenant will attorn and recognize the new owner as Tenant’s
landlord under this Lease and Tenant will confirm such attornment in writing within ten (10) days after request; and (b) the new
owner shall not be (i) liable for any act or omission of Landlord under this Lease occurring prior to such sale or conveyance;
or (ii) subject to any defense or offset, abatement or reduction of Rent because of any default of Landlord under this Lease occurring
prior to such sale or conveyance; (iii) liable to Tenant for any Rent paid more than one (1) month in advance; or (iv) bound
by any amendment or modification of this Lease made without the Mortgagee’s consent.

 

		36.	ZONING.

 

Tenant represents
to Landlord that the Leased Premises is zoned properly so as to enable Tenant to operate the Leased Premises for the use described
in Section 13 hereof.

 

		37.	LANDLORD’S
CONSENT.

 

In all matters
referred to in this Lease, where Landlord’s consent or approval is required, Landlord agrees that Landlord will not unreasonably
withhold, condition or delay Landlord’s consent or approval, except where this Lease indicates that Landlord may act in
its discretion.

 

		38.	LEGAL EXPENSE; WAIVER
OF JURY TRIAL.

 

a.         Legal
Expense. If Landlord retains the services of attorneys and successfully recovers possession of the Leased Premises, or successfully
recovers any sum due but not paid after proper notice has been given by Landlord prior to any suit being filed, then all such
costs and expenses, including reasonable attorneys’ fees and costs, incurred by Landlord shall be paid by Tenant. If any
action, arbitration or proceeding (including any appeal thereof) is brought by Landlord or Tenant (whether or not such action
is prosecuted to judgment) to enforce its respective rights under this Lease or to enforce a judgment (“Action”),
(i) the unsuccessful party therein shall pay all costs incurred by the prevailing party therein, including reasonable attorneys’
fees and costs; and (ii) as a separate right, severable from any other rights set forth in this Lease, the prevailing party therein
shall be entitled to recover its reasonable attorneys’ fees and costs incurred in enforcing any judgment against the unsuccessful
party therein, which right to recover such post-judgment attorneys’ fees and costs shall be included in any such judgment.
The right to recover post-judgment attorneys’ fees shall (i) not be deemed waived if not included in any judgment; (ii)
survive the final judgment in any Action; and (iii) not be deemed merged into such judgment. The rights and obligations of the
parties under this Section shall survive the termination of this Lease.

 

    33 

    

    

b.         Waiver of Right to Jury Trial. LANDLORD AND TENANT HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, ACTION, PROCEEDING, OR COUNTERCLAIM BY EITHER PARTY AGAINST THE OTHER ON ANY MATTERS ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, AND/OR TENANT’S USE OR OCCUPANCY
OF THE PREMISES (INCLUDING ANY CLAIM OF INJURY OR DAMAGE OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY CURRENT OR FUTURE LEGAL REQUIREMENT).

 

		39.	TITLE OF LANDLORD.

 

Landlord
expressly covenants and agrees that as of the Commencement Date of the Term of this Lease, it will be the owner of the fee simple
title to the Land and Building and other improvements subject to the Permitted Exceptions and to the Underlying Mortgages and
documents related thereto, if any, and subject to any liens, encumbrances or restrictions arising from or existing, prior or during
Tenant’s previous ownership of the Leased Premises. Landlord further covenants that Tenant, on paying the Rent when due
hereunder and observing and timely performing all other terms and conditions contained in this Lease, shall have quiet and peaceful
possession of the Leased Premises for the full Term, or extensions thereof subject to the provisions of this Lease and the Permitted
Exceptions.

 

		40.	LIMITATIONS ON LANDLORD’S
LIABILITY.

 

It is expressly
understood and agreed that if Tenant obtains a money judgment against Landlord resulting from any default or other claim arising
under this Lease, that judgment shall be satisfied only out of Landlord’s right, title and interest in the Leased Premises,
and no other real, personal or mixed property of Landlord (or any of the officers, directors, stockholders or partners, as applicable,
which comprise Landlord, if any, or any distributions made to any of the same) wherever situated, shall be subject to levy to
satisfy such judgment.

 

		41.	FINANCIAL STATEMENTS.

 

From time
to time upon request of Landlord, but in no event more than twice per each calendar year unless Tenant is in default hereunder
(in which event there shall be no limitation on the number of Landlord’s requests), Tenant shall furnish to Landlord, at
no cost to Landlord, a copy of the audited financial statements of Tenant and Cellectis S.A. (“Guarantor”),
for Tenant’s and Guarantor’s fiscal year and calendar quarter just ended (or, if either Tenant or Guarantor is publicly
traded, Tenant shall furnish a copy of the quarterly and annual audited financial statements last publicly released for such publicly
traded party). Tenant acknowledges that this undertaking is of substantial value to Landlord because Landlord’s rights to
such financial statements may affect the availability or cost of Landlord’s financing.

 

		42.	GOVERNING LAW.

 

    34 

    

    

This
Lease shall be performed, construed and enforced in accordance with the laws of the state in which the Leased Premises are located,
provided, however, that the choice of law rule or doctrine shall not apply or otherwise
operate so as to cause the application of the laws of another state.

 

		43.	HEADINGS.

 

The headings
used in this Lease are for convenience only and shall not have any bearing or meaning with respect to the content or context of
this instrument.

 

		44.	HOLDING OVER.

 

Tenant shall
have no right to retain possession of the Leased Premises beyond the expiration or earlier termination of the Lease.

 

If Tenant
holds over after the expiration of the Term, with or without the express or implied consent of Landlord, such tenancy shall be
from month-to-month only, and not a renewal hereof or an extension for any further Term, and such month-to-month tenancy shall
be subject to each and every term, covenant and agreement contained herein; provided, however, that Tenant shall pay as Base Rent
during any holding over period, an amount equal to one hundred fifty percent (150%) of the Base Rent payable immediately preceding
the expiration of the Term. Nothing in this Section shall be construed as a consent by Landlord to any holding over by Tenant,
and Landlord expressly reserves the right to require Tenant to surrender possession of the Leased Premises upon the expiration
of the Term or upon the earlier termination hereof and to assert any remedy in law or equity to evict Tenant and/or collect damages
in connection with such holding over.

 

		45.	RIGHTS
                                         ARE CUMULATIVE.

 

All rights,
powers and privileges conferred hereunder upon the parties shall be cumulative, but not restricted to those given by law.

 

		46.	MEMORANDUM OF LEASE.

 

Either party
may, at its sole cost, prepare and record a Memorandum of Lease in the form attached hereto as Exhibit E.

 

		47.	AUTHORITY TO SIGN
LEASE.

 

The person
executing this Lease on behalf of Tenant represent and warrant to Landlord that he or she is duly authorized to execute and deliver
this Lease on Tenant’s behalf in accordance with all required member, shareholder, board or other company action. Landlord
warrants to Tenant that the person or persons executing this Lease on behalf of Landlord are duly authorized to execute and deliver
this Lease on Landlord’s behalf.

 

    35 

    

    

		48.	INVALIDITY.

 

If any term
or provision of this Lease, the deletion of which would not adversely affect the receipt of any material benefit by either party
hereunder, shall be held invalid or unenforceable to any extent, the remaining terms, conditions and covenants of this Lease shall
not be affected thereby and each of said terms, covenants and conditions shall be valid and enforceable to the fullest extent
permitted by law.

 

		49.	CONDITIONS AND COVENANTS;
PERMITTED EXCEPTIONS.

 

Each provision
of this Lease performable by Tenant shall be deemed both a covenant and a condition.

 

Landlord
and Tenant hereby acknowledge that the Leased Premises are subject to the Permitted Exceptions. Tenant hereby agrees to assume,
for the Term of this Lease (including any extensions thereof) all of the rights and obligations of the owner of the Leased Premises
pursuant to said covenants, conditions and restrictions, and Landlord shall cooperate (but without out-of-pocket expense to Landlord)
with Tenant in Tenant’s enforcement of any rights thereunder. Tenant shall promptly furnish to Landlord any notices or mailings
Tenant receives related to the Permitted Exceptions.

 

Tenant will
pay as additional rent hereunder throughout the Term of this Lease (and will indemnify and hold Landlord harmless from any obligation
to pay the same) all Landlord’s share of the costs and expenses of the maintenance and operation of any such parking and
other common areas, at the times, in the amounts and in the manner set forth in the Permitted Exceptions.

 

		50.	SECURITY.

 

Tenant hereby
assumes responsibility for and shall take all reasonable security measures for the Leased Premises.

 

		51.	INTERPRETATION.

 

The Lease
has been fully negotiated and no provision shall be construed for or against either Tenant or Landlord, and this Lease shall be
interpreted in accordance with its general tenor in an effort to reach an equitable result.

 

		52.	NO BROKERS.

 

Landlord
and Tenant represent and warrant to each other that they have not engaged any broker, sales consultant, real estate agent or other
person or entity to whom or to which a fee, commission or charge is payable with respect to negotiation and execution of this
Lease, and Landlord and Tenant hereby agree to indemnify and hold the other harmless from any claims, demands, judgements, costs
and attorney’s fees alleged against or incurred by the other party with respect to any broker, sales consultant, real estate
agent or other persons or entity retained by the indemnifying party with respect

 

    36 

    

    

to this
Lease or the transactions contemplated hereby.

 

		53.	GUARANTY.

 

Concurrently
with the full execution and delivery of this Lease and as a condition to the effectiveness of this Lease, Tenant shall cause Cellectis
S.A. to enter into and deliver to Landlord the Guaranty in the form attached hereto as a part hereof as Exhibit F.

 

		54.	SALE OF LEASED PREMISES;
RIGHT OF FIRST REFUSAL.

 

		a.	Commencing on the date
that is eighteen (18) months following the Initial Term Commencement Date, Landlord hereby grants Tenant a right of first refusal
for the remainder of the Term of this Lease and any extension thereof, to purchase the Leased Premises (which, for purposes of
this Section 54, shall include Landlord’s interest in this Lease) upon the terms and conditions set forth herein,
if Landlord intends to accept an offer to purchase the Leased Premises from a Third Party (as hereafter defined) (the “Right
of First Refusal”). A “Third Party” shall be any party other than (a) an affiliate of Landlord, a
member, partner, officer, director or shareholder of Landlord, (b) an heir, successor, or family member of a member, partner or
shareholder of Landlord, (c) a trust formed by or for the benefit of a family member, an heir or successor of a member, partner
or shareholder of Landlord, or (d) an entity having at least fifty percent (50%) of the same shareholders, members or partners
as Landlord’s shareholders, members or partners. If Landlord receives a bona fide Third Party offer acceptable to Landlord
to purchase the Leased Premises (the “Offer”), Landlord shall provide Tenant (at Tenant’s address for
notice purposes under this Lease) with a written notice of the Offer, together with a copy of the Offer, by certified mail with
return receipt requested (the “Landlord Notice”). If Tenant decides to purchase the Leased Premises from Landlord
on the same terms and conditions as provided in the Landlord Notice, Tenant may deliver written notice to Landlord that Tenant
exercises its Right of First Refusal (the “Tenant Notice”) within fourteen (14) days after Tenant’s receipt
of the Landlord Notice. For purposes of this Section 54, Tenant shall be deemed to have received the Landlord Notice on
the date of delivery or attempted delivery of the Landlord’s Notice, as the case may be. If Tenant exercises its Right of
First Refusal prior to the expiration of such fourteen (14) day period, Tenant shall purchase the Leased Premises on the same
terms and conditions as set forth in the Offer. Tenant shall be deemed to have exercised its Right of First Refusal on the date
of delivery or attempted delivery of the Tenant’s Notice. Failure of Tenant to deliver the Tenant Notice strictly in compliance
with the terms of this Section 54, shall be deemed an irrevocable waiver by Tenant of its Right of First Refusal, and Landlord
shall be free to sell the Leased Premises following such fourteen (14) day period. In the event Landlord conveys the Leased Premises
to a Third Party, or the transaction subject to the Offer fails to close pursuant to the terms described above, Tenant’s
Right of First Refusal shall thereafter continue throughout the term of this Lease, and be binding upon any successors in interest
to Landlord.

 

		b.	Notwithstanding the
foregoing, this Section 54 shall have no application whatsoever to, and Tenant shall have no Right of First Refusal in
connection with any voluntary sale by deed in lieu of foreclosure or involuntary sale, conveyance or other involuntary transfer
of the Leased

 

    37 

    

    

Premises
to a Mortgagee or its affiliates or assignees, whether pursuant to sheriff’s sale, trustee’s sale, deed in lieu of
foreclosure, or other judicial or non-judicial foreclosure proceedings authorized by law.

 

		c.	In the event of any
sale or transfer of the Leased Premises by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability
under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence
or omission, occurring after the consummation of such sale. In the event of any sale or transfer of this Lease, the Landlord shall
be relieved of all existing obligations and liabilities hereunder provided that the purchaser or transferee assumes in writing
such liabilities and obligations.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW]

 

    38 

    

    

IN WITNESS
WHEREOF, the parties have caused this Lease to be duly executed as of the day and year first written above.

 

	 	LANDLORD:	 
	 	 	 
	 	NLD
    MOUNT RIDGE LLC,	 
	 	A
    Delaware limited liability company	 
	 	 	 	 
	 	By:
    JAM MN LLC, a Delaware limited liability company	 
	 	Its:
    Manager 	 
	 	 	 	 
	 	By:
    	 /s/ Allison
    F. Morgan	 
	 	 	Allison
    F. Morgan, its Manager	 
	 	 	 	 
	 	TENANT:	 
	 	 	 	 
	 	CALYXT, INC., a Delaware
    corporation	 
	 	 	 	 
	 	By:
    	/s/
    Federico
    Tripodi 	 
	 	 	Federico
    Tripodi	 
	 	 	Its
    Chief Executive Officer	 

    39 

    

    

EXHIBIT
A

 

LEGAL
DESCRIPTION

 

Real property
in the City of Roseville, County of Ramsey, State of Minnesota, described as follows:

 

Parcel A:

 

Lots 1,
2, 3 and 4, Block D, Twin View, except the West 10.00 feet of said Lots 1, 2, 3 and 4.

 

Parcel B:

 

Lots 5,
6, 7, 8 and 9, Block D, Twin View, except the West 10.00 feet of said Lots 5, 6, 7, 8 and 9, and also except that part of the
East 57 feet of said Lots 5, 6, 7, 8 and 9 that lies North of the South 89.32 feet of said Lot 9, and also except the West 240
feet of the East 297 feet of said Lots 5 and 6, and also except that part of the West 240 feet of the East 297 feet of said Lot
7 that lies North of the South 78.15 feet of said Lot 7.

 

     

    

    

EXHIBIT
B

 

SITE PLAN
OF LEASED PREMISES

 

(See attached)

 

     

    

    

 

     

    

    

EXHIBIT
C

 

PERMITTED
EXCEPTIONS

 

		1.	Real estate taxes and installments
                                         of special assessments payable therewith.

		2.	Building and zoning laws, ordinances,
                                         and state and federal regulations.

		3.	Any reservation of mineral rights.

		4.	Underlying Mortgages and instruments
                                         related thereto, such as assignments of leases and rents, fixture financing statements
                                         and similar instruments, evidencing or securing indebtedness of the Landlord.

		5.	Utility and drainage easements as
                                         of the date of the Lease.

		6.	Access and other easements, rights-of-way,
                                         covenants or restrictions without effective forfeiture provisions and which do not interfere
                                         with existing or planned improvements or the use of the Leased Premises as currently
                                         used; provided, however, that this exception shall not extend to any easement, right-of-way,
                                         covenant or restriction which requires the expenditure of funds by Tenant now or in the
                                         future other than expenses, repairs or replacement obligations arising out of easements,
                                         rights-of-way, covenants or conditions which also benefit the Leased Premises.

		7.	Such encroachments on or from the
                                         Leased Premises, easements, and other matters, if any, as disclosed by the Survey of
                                         the Leased Premises prepared by Henry D. Nelson dated August 4, 2017.

		8.	Any liens, encumbrances or restrictions
                                         arising from or existing prior or during Tenant’s previous ownership of the Leased
                                         Premises or arising from Tenant’s actions during the Term of this Lease.

		9.	Easement for sanitary sewer purposes
                                         as shown in the Findings of Fact, Conclusions of Law and Order, dated November 8, 1958,
                                         filed November 21, 1958 with the Ramsey County District court and recorded February 26,
                                         2016 as Document No. A04596685 in the office of the Ramsey County Recorder.

		10.	Terms and conditions of Declaration
                                         for Maintenance of Stormwater Facilities dated March 9, 2016, filed March 9, 2016, as
                                         Document No. 4598209.

		11.	Terms and conditions of Resolution
                                         No. 11285, approving agricultural research plots as a conditional use (PF15-024) filed
                                         March 11, 2016, as Document No. 4598501.

		12.	Terms and conditions of Resolution
                                         No. 126, approving a variance filed December 19, 2016, as Document No. 4638804.

 

(All recorded
documents have been recorded in Ramsey County, Minnesota.)

 

     

    

    

EXHIBIT
D

 

SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT

AGREEMENT
AND TENANT’S ESTOPPEL CERTIFICATE

 

THIS
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT AND TENANT’S ESTOPPEL CERTIFICATE (this “Agreement”)
is made this ____ day of ___________, 201__, by and between __________________________, a ____________________, whose address
is ________________________________________________ (“Tenant”) and _________________________, a ________________________,
whose address is ________________________________________________ (“Mortgagee”).

 

RECITALS:

 

______________________________,
a ______________________ (“Landlord”), is the fee owner of the real estate described in Exhibit A attached
hereto and made a part hereof (the “Real Estate”). Landlord has requested and Mortgagee has agreed to make
a loan (the “Loan”) to Landlord secured in part by a Mortgage and Security Agreement and Fixture Financing
Statement dated _____________, 201__ (the “Mortgage”) which covers the Real Estate and all buildings and other
improvements located thereon. The Mortgage was recorded in the office of the __________________ in and for _______________ County,
__________________ on ____________, 201__ as document no. __________.

 

Tenant is
the lessee of a portion of the improvements located on the Real Estate pursuant to a Lease between it and Landlord dated ______________,
201__ (the “Lease”). A Memorandum of the Lease was recorded in the office of the ______________________ in
and for ________________ County, ____________________ on ______________, 201__ as document no. __________.

 

Mortgagee
has required the execution of this Agreement as a condition precedent to making the Loan to Landlord.

 

Accordingly,
the parties hereby agree as follows:

 

		1.	Subordination.
                                         Except as otherwise provided in paragraphs 2 and 3 of this Agreement, the Lease, and
                                         all rights of Tenant under the Lease and to the Real Estate, including without limitation
                                         any option to purchase or otherwise acquire title to the Real Estate, are hereby subjected
                                         and subordinated, and shall remain in all respects and for all purposes subject and subordinate,
                                         to the lien of the Mortgage and to the rights and interest of Mortgagee and its successors
                                         and assigns, as fully and with the same effect as if the Mortgage had been duly executed,
                                         acknowledged and recorded, and the indebtedness secured thereby had been fully disbursed
                                         prior to the execution of the Lease or possession of the Real Estate by Tenant, or its
                                         predecessors in interest.

 

     

    

    

		2.	Mortgagee
                                         Not to Disturb Tenant. Mortgagee agrees that so long as Tenant is not in default
                                         (beyond any period given Tenant under the Lease to cure such default) in the payment
                                         of rent or additional rent or in the performance of any of the terms, covenants or conditions
                                         of the Lease on Tenant’s part to be performed, Mortgagee will not join Tenant as
                                         a party defendant in any action or proceeding foreclosing the Mortgage unless required
                                         to foreclose the Mortgage and then only for such purpose and not for the purpose of terminating
                                         the Lease, and further, that in the event of a foreclosure Tenant’s possession
                                         of the Real Estate and Tenant’s rights and privileges under the Lease, or any extensions
                                         or renewals thereof which may be effected in accordance with the Lease, shall not be
                                         diminished or interfered with by Mortgagee and Tenant’s occupancy of the Real Estate
                                         shall not be disturbed by Mortgagee.

 

		3.	Tenant
                                         to Attorn to Mortgagee. If the interest of Landlord shall be transferred to and owned
                                         by Mortgagee by reason of foreclosure of the Mortgage or other proceedings brought by
                                         it in lieu of or pursuant to a foreclosure, or in any other manner, and Mortgagee succeeds
                                         to the interest of Landlord under the Lease, Tenant shall be bound to Mortgagee under
                                         all of the terms, covenants and conditions of the Lease for the balance of the term thereof
                                         remaining and any extensions or renewals thereof which may be effected in accordance
                                         with any option therefor in the Lease, with the same force and effect as if Mortgagee
                                         were originally the landlord under the Lease, and Tenant does hereby attorn to Mortgagee
                                         as its landlord, such attornment to be automatically effective immediately upon Mortgagee’s
                                         succeeding to the interest of Landlord under the Lease without the execution of any further
                                         instruments on the part of any of the parties hereto. The respective rights and obligations
                                         of Tenant and Mortgagee upon such attornment, to the extent of the then remaining balance
                                         of the term of the Lease and any such extensions and renewals thereto, shall be and are
                                         the same as now set forth in the Lease, the terms of which are hereby fully incorporated
                                         herein by reference and made a part of this Agreement.

 

		4.	Mortgagee
                                         Not Bound by Certain Acts of Landlord. If Mortgagee shall succeed to the interest
                                         of Landlord under the Lease, Mortgagee shall not be liable for any act or omission of
                                         Landlord; nor subject to any offsets or defenses which Tenant might have against Landlord;
                                         nor bound by any rent or additional rent which Tenant might have paid for more than the
                                         then current installment; nor bound by any amendment or modification of the Lease which
                                         changes the termination date, required rental payments, size of the demised premises
                                         or any other economic term of the Lease that were made without Mortgagee’s consent.
                                         In no circumstances shall Mortgagee be liable for any failure of Landlord to complete
                                         construction of the Leased Premises subject to the Lease.

 

		5.	Payment
                                         of Rent After Default. If an Event of Default occurs under the Mortgage, Mortgagee
                                         may demand all rents due pursuant to the Lease be paid directly to it and, upon such
                                         demand in writing, Tenant will remit all such rent payments as and when due to Mortgagee,
                                         or its order, until further notice.

 

		6.	Tenant’s
                                         Estoppel. Tenant hereby represents and warrants to and covenants with Mortgagee as
                                         follows:

 

    2 

    

    

		(a)	The
                                         Lease is presently in full force and effect and has not been amended. Except as stated
                                         below, there is presently no default thereunder by Landlord, and there exists no event
                                         or occurrence of which Tenant is aware which would, with the passage of time, constitute
                                         a default by Landlord.

 

		(b)	Tenant
                                         has paid no rent under the Lease for a period of more than one month in advance.

 

		(c)	Tenant
                                         has no charge, lien or claim of offset under the Lease or otherwise, against rent or
                                         other amounts due to Landlord under the Lease.

 

		(d)	Except
                                         as stated in the Lease, Tenant has no right to any rent concession or rent abatement.
                                         Tenant has no purchase, renewal or extension option for the Leased Premises subject to
                                         the Lease except as provided in the Lease. The term of the Lease expires as provided
                                         in the Lease.

 

		(e)	Tenant
                                         has deposited with Landlord the full amount of the security deposit required by the Lease,
                                         if any. Deposit amount: NONE

 

		(f)	All
                                         contributions to be paid by Landlord to date for improvements to the Leased Premises
                                         subject to the Lease have been paid in full and all of Landlord’s obligations with
                                         respect to tenant improvements have been fully performed. Tenant has accepted the Leased
                                         Premises subject to the Lease, with no conditions other than those set forth in the Lease.

 

		(g)	There
                                         are no actions, whether voluntary or otherwise, pending against Tenant or any guarantor
                                         of Tenant’s obligations under the Lease pursuant to the bankruptcy or insolvency
                                         laws of the United States or any state.

 

		(h)	Tenant
                                         shall not exercise any right that it may have to terminate the Lease upon the default
                                         of Landlord without first giving Mortgagee at least 30 days’ written notice of
                                         the default and an opportunity to cure the same.

 

		(i)	Tenant
                                         shall not amend the Lease in a manner which changes the termination date, required rental
                                         payments, size of the demised premises, or any other economic term of the Lease without
                                         first receiving Mortgagee’s written consent to the proposed amendment.

 

		7.	Successors
                                         and Assigns. This Agreement and each and every covenant, agreement and other provision
                                         hereof shall be binding upon the parties hereto and their successors and assigns, including
                                         without limitation each and every holder of the Lease or any other person having an interest
                                         therein and shall inure to the benefit of Mortgagee, and its successors and assigns.

 

		8.	Choice
                                         of Law. This Agreement is made and executed under and in all respects is to be governed
                                         and construed by the laws of the State of Minnesota.

 

    3 

    

    

		9.	Captions
                                         and Headings. The captions and headings of the various sections of this Agreement
                                         are for convenience only and are not to be construed as confining or limiting in any
                                         way the scope or intent of the provisions hereof. Whenever the context requires or permits,
                                         the singular shall include the plural, the plural shall include the singular.

 

		10.	Notices.
                                         Any notices which any party hereto may desire or may be required to give to any other
                                         party shall be in writing and the mailing thereof by certified mail, or equivalent, to
                                         the addresses as set forth above, or to such other places and parties as any party hereto
                                         may by notice in writing designate shall constitute service of notice hereunder.

 

	 	Tenant:	 
	 	 	 	 
	 	 	 
	 	 	 	 
	 	By	 	 
	 	 	 	 
	 	Its:
    	 	 

 

 

TENANT’S
ACKNOWLEDGMENT

 

	STATE
    OF __________	)
	 	)
    ss.
	COUNTY
    OF _________	)

 

The foregoing
instrument was acknowledged before me this ____ day of _______________, 201__, by ______________________________, the ______________________________
of ________________

 

______________,
a _____________________, on behalf of the _____________________.

 

 

	 	 	 
	 	Notary
    Public	 

 

    4 

    

    

 

	 	Mortgagee:
	 
	 	 	 	 
	 	 	 
	 	 	 	 
	 	By	 	 
	 	 	 	 
	 	Its:
    	 	 

 

 

MORTGAGEE’S
ACKNOWLEDGMENT

 

	STATE
OF MINNESOTA	)
	 	)
    ss.
	COUNTY
    OF  HENNEPIN	)

 

The foregoing
instrument was acknowledged before me this ____ day of ________________, 201__, by ______________________________, the ________________________
of ___________________________________, a ___________________, on behalf of the ________________.

 

 

	 	 	 
	 	Notary
    Public	 

 

    5 

    

    

LANDLORD’S
CONSENT

 

Landlord
hereby consents to all of the provisions of the foregoing Subordination, Non-Disturbance and Attornment Agreement and Tenant’s
Estoppel Certificate.

 

	 	 	 
	 	 	 	 
	 	By	 	 
	 	 	 	 
	 	Its:
    	 	 

 

LANDLORD’S
ACKNOWLEDGMENT

 

	STATE
    OF __________	)
	 	)
    ss.
	COUNTY
    OF _________	)

 

The foregoing
instrument was acknowledged before me this ____ day of ________________, 201__, by ______________________________, the ______________________________
of ______________________________, a _____________________, on behalf of the _____________________.

 

 

	 	 	 
	 	Notary
    Public	 

 

 

THIS INSTRUMENT
WAS DRAFTED BY: 

Malkerson
Gunn Martin LLP (KMM)

220 South
Sixth Street, Suite 1900 

Minneapolis,
MN 55402-4511

 

    6 

    

    

EXHIBIT
A

 

DESCRIPTION
OF REAL ESTATE

 

    7 

    

    

EXHIBIT
E

 

MEMORANDUM
OF LEASE

 

This Memorandum
of Lease (this “Memorandum”) executed as of __________________, 201__, by and between _________________________
LLC, a Delaware limited liability company (“Landlord”), and _________________________, a ______________________
(“Tenant”).

 

WITNESSETH:

 

That
Landlord and Tenant have entered into a Lease (the “Lease”) dated as of this date, the terms, provisions and
conditions of which are incorporated herein by reference to the same extent as if recited in their entirety herein, whereby Landlord
has leased to Tenant and Tenant has leased from Landlord certain real property and located therein, situated in _______________County,
State of ____________, (the “Leased Premises”), said Leased Premises being more particularly described on Exhibit
“A” attached hereto.

 

Special
reference is hereby made to the following terms and provisions of the Lease:

 

1.       Subject
to the terms and conditions of the Lease, the Term has commenced, and, unless earlier terminated in accordance with the provisions
of the Lease or law, shall continue until the Expiration Date set forth in the Lease. Tenant shall have the right to extend the
Term of the Lease for four (4) additional consecutive ________ (___) year periods (collectively, the “Renewal Terms”
and individually, an “Renewal Term”) by giving Landlord written notice of its election to exercise such
right of extension at least two hundred seventy (270) days before the expiration of the Initial Term or any Renewal Term of the
Lease, as the case may be. In order for such notice to be effective, Tenant shall not then be in default under any terms or provisions
contained in the Lease. In the event of the exercise of the right to extend the Lease for Renewal Terms, all terms and conditions
of the Lease shall continue during each such Renewal Term. If Tenant fails to exercise within the applicable time period its right
to extend the term of the Lease for any of the Renewal Terms, the Term of the Lease shall expire at the end of the Initial Term
or the Renewal Term, as the case may be.

 

2.       Upon
the expiration or sooner termination of the Lease, at the request of either party, Landlord and Tenant shall enter into and record
a memorandum evidencing such termination in a form reasonably satisfactory to both parties.

 

This
Memorandum is executed for the purpose of recordation in the Official Records of the County, in order to give notice of the terms
and provisions of the Lease and is not intended and shall not be construed to define, limit or modify the Lease. This Memorandum
may be executed in counterpart.

 

     

    

    

	 	LANDLORD:	 
	 	 	 
	 	_________________________________ LLC,	 
	 	A Delaware limited liability company	 
	 	 	 
	 	 	 	 
	 	By: 	 	 
	 	 	____________________, its ______________	 

 

	STATE
    OF MINNESOTA	)
	 	)
    ss.
	COUNTY
    OF HENNEPIN	)

 

 

On
________________, 201__, before me, a Notary Public in and for said County and State, personally appeared ____________________,
the ________________ of ________________________, a Delaware limited liability company, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to
me that he executed the same on behalf of the limited liability company.

 

 

	 	 	 
	 	Notary
    Public	 

 

    2 

    

    

	 	TENANT:	 
	 	 	 
	 	_________________________________, a	 
	 	______________________________	 
	 	 	 
	 	 	 	 
	 	By: 	 	 
	 	 	____________________, its ______________	 

 

 

	STATE
    OF MINNESOTA	)
	 	)
    ss.
	COUNTY
    OF HENNEPIN	)

 

 

On
________________, 201__, before me, a Notary Public in and for said County and State, personally appeared _____________________,
the ______________________ of _____________________, a ______________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that
he executed the same on behalf of the ___________________________.

 

 

	 	 	 
	 	Notary
    Public	 

 

THIS INSTRUMENT
WAS DRAFTED BY:

Malkerson
Gunn Martin LLP (KMM)

220 South
Sixth Street, Suite 1900

Minneapolis,
MN 55402-4511

 

    3 

    

    

EXHIBIT
A

 

LEGAL
DESCRIPTION

 

    4 

    

    

EXHIBIT
F

 

LEASE
GUARANTY

 

WHEREAS,
a certain Lease Agreement (the “Lease”), dated as of the _____ day of ____________, 2017, has been executed
by and between _________________________, a _________________ (“Landlord”) and Calyxt, Inc., a Delaware corporation
(“Tenant”), covering certain Premises located at ____________________________________________ in the City of
Roseville, County of Ramsey, State of Minnesota, on property legally described in Exhibit A attached hereto (the “Property”);

 

WHEREAS,
Landlord has agreed to construct additional improvements to the Property pursuant to that certain Construction Agreement, dated
as of the _____ day of ____________, 2017, by and between Landlord and Tenant (the “Construction Agreement”).

 

WHEREAS,
as a condition to Landlord’s entering into the Lease and the Construction Agreement with Tenant, Landlord required that
___________________________, a ____________________ (“Guarantor”), guarantee all liabilities, obligations and
duties of Tenant under the Lease and the Construction Agreement;

 

WHEREAS,
Guarantor is benefited by the economic success of Tenant and Guarantor desires to induce Landlord to enter into the Lease and
the Construction Agreement with Tenant.

 

NOW,
THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor hereby agrees that:

 

1.       The
terms and definitions used in the Lease shall have the same meaning in this Guaranty.

 

2.       Subject
to the terms of Section 12 hereof, Guarantor hereby absolutely, unconditionally and irrevocably guarantees the truth and
accuracy of all representations, warranties and certifications of Tenant set forth in the Lease and the Construction Agreement,
full, complete and prompt payment of all Rent (as defined in the Lease) and the performance by Tenant of all obligations of Tenant
under the Lease and the Construction Agreement from the effective date thereof through the end of the Term of the Lease, including
any option terms, renewal terms or extensions thereof (collectively, the “Obligations”).

 

3.       Guarantor
hereby waives (a) notices of acceptances of this Guaranty and of Tenant’s default in the Obligations; (b) notices of amendments
or modifications of the Lease or the Construction Agreement; (c) presentment and demand for payment or performance; (d) notice
of any and all acts of Landlord to be done to establish the liability of the Guarantor hereunder; (e) demand, protest, notice
of any indulgence or extensions granted to Tenant; (f) any requirement of diligence or promptness on the part of Landlord in the
enforcement of the

 

     

    

    

Lease
or the Construction Agreement and any notice thereof; and (f) any other notice whereby to charge the Tenant thereunder.

 

4.       The
liability of Guarantor hereunder shall in no way be affected by: (i) the release or discharge of Tenant in any creditors’,
receivership or bankruptcy proceeding; (ii) any alteration of or amendment to the Lease or the Construction Agreement; (iii) any
sale, assignment or sublease, or any pledge or mortgage of the rights of Tenant under the Lease or the Construction Agreement;
(iv) any application or release of any security or other guaranty given for the performance and observance of the covenants and
conditions in the Lease or the Construction Agreement on Tenant’s part to be performed and observed; (v) the execution of
any subordination and non-disturbance agreement by Tenant in favor of any lender of Landlord; (vi) any one or more extensions
or renewals of the Lease; or (vii) any full or partial release of, settlement with, or agreement not to sue Tenant or any other
guarantors or other party liable with respect to any of the Obligations. The liability of Guarantor hereunder is primary and independent
of any and every other guarantor or party, whether or not suit is brought against Tenant, any other guarantor or any other party,
and whether or not Tenant or any other guarantor or party be joined in such action or actions.

 

5.       In
amplification of the foregoing, Guarantor hereby consents to any assignment or subletting by Tenant or its successors or assigns,
and agrees that the same shall in no way relieve it from any liability under this Guaranty, and hereby expressly consents to Landlord
proceeding directly against Guarantor on this Guaranty without first exhausting any remedy or remedies which Landlord may have
against Tenant.

 

6.       Additionally,
in amplification of the foregoing, Guarantor agrees that Landlord shall not be required to first resort for payment or performance
to Tenant or other persons or entities or their properties or estates, or to any collateral, property, liens or other rights or
remedies whatsoever.

 

7.       Guarantor
will not exercise or enforce any right of contribution, reimbursement, recourse or subrogation available to Guarantor against
any person liable for payment of the Obligations, or as to any collateral security therefor, unless and until all of the Obligations
shall have been fully paid and discharged. No payment by the Guarantor pursuant to any provision hereof shall entitle the Guarantor,
by subrogation to the rights of Landlord or otherwise, to any payment by Tenant, or out of the property of Tenant except after
payment in full of all Obligations.

 

8.       Any
indebtedness of Tenant now or hereafter held by the Guarantor is hereby subordinated to the indebtedness of Tenant to Landlord.
Any such indebtedness of Tenant to the Guarantor, if Landlord so requests, shall be collected, enforced and received by the Guarantor
as trustee for Landlord to be paid over to Landlord on account of the Obligations, but without reducing or affecting in any manner
the liability of the Guarantor under the other provisions of this Guaranty.

 

    2 

    

    

9.       Guarantor
agrees to pay all costs and expenses, including reasonable attorney’s fees, incurred by Landlord in connection with the
protection, defense or enforcement of this Guaranty.

 

10.       This
Guaranty shall inure to the benefit of the Landlord and its successors and assigns and any assignee of the Landlord’s interest
in the Lease, and shall be binding upon Guarantor and its successors and assigns, personal representatives, devisees and heirs.

 

11.       Guarantor
hereby agrees to indemnify and hold harmless Landlord from any loss, cause of action, claim, costs, expense or fee (including
but not limited to attorneys’ fees) suffered or occasioned by the failure of Tenant to satisfy the Obligations. The obligations
of Guarantor under this paragraph shall be primary and independent of any other guarantor or party liable with respect to any
of the Obligations. The agreement to indemnify Landlord contained in this paragraph shall be enforceable notwithstanding the invalidity
or unenforceability of the Lease or the invalidity or unenforceability of any other paragraph or paragraphs contained herein.

 

12.       Provided
Tenant has maintained a tangible net worth of at least Three Hundred Million Dollars ($300,000,000.00), as determined in accordance
with generally accepted accounting principles, for two (2) consecutive calendar years and such net worth is evidenced by audited
financial statements of the Tenant provided to Landlord, this Guaranty shall expire on the last day of the second such consecutive
calendar year, but Guarantor’s obligations for any and all Obligations which arise and accrue prior to the last day of the
second such consecutive calendar year shall survive the expiration of the Lease and this Guaranty.

 

13.       Guarantor
shall furnish Landlord with annual audited financial statements (including income statements and balance sheets) as of the end
of each calendar year by no later than March 31 of each year (or, if Guarantor is publicly traded, such later date as said statements
are released to the public), and year-to-date as of the end of each calendar quarter within 30 days after the end of each such
quarter (or, if Guarantor is publicly traded, such later date as said statements are released to the public), and if the financial
statements are unaudited, then the statements shall be certified as true and correct by an officer, managing partner or managing
member of Guarantor.

 

14.       Guarantor
hereby irrevocably agrees that any legal action or proceedings against it with respect to
this Guaranty may be brought in the state courts of the State of Minnesota or in any United States District Court in the State
of Minnesota, and by the execution and delivery of this Guaranty, Guarantor hereby irrevocably submits to the jurisdiction of
each such court and hereby irrevocably waives any and all objections that Guarantor may have as to jurisdiction or venue in any
of such courts. Guarantor acknowledges that it has received sufficient consideration for any inconvenience which may be caused
by any legal action brought in the State of Minnesota and agrees that the enforcement of the provisions of this

 

    3 

    

    

paragraph
against Guarantor would not be unreasonable or unfair under all the circumstances of the Lease or this Guaranty.

 

15.       Landlord
agrees to use commercially reasonable efforts to provide Guarantor notice of any Default by Tenant under the Lease, pursuant to
the notice provisions of Section 26 of the Lease, and in the event of any such Default, Guarantor shall have to Option
to Sublet set forth in Section 23 of the Lease.

 

[Remainder
of this page intentionally left bank; signatures follow:]

 

IN
WITNESS WHEREOF, Guarantor has duly executed this Guaranty effective as of the ________ day of ________________________, 2017.

 

	 	__________________________________,
        a

__________________________

         
	 
	 	By
    	 	 
	 	Name	_________________________________	 
	 	Its	_________________	 

 

Signed and acknowledged in the

presence of:

 

WITNESSES:

 

___________________________________

 

Printed Name________________________

 

 

___________________________________

Printed Name________________________

 

 

	STATE
    OF __________	)
	 	)
    ss.
	COUNTY
    OF _________	)

 

The foregoing
instrument was acknowledged before me this ____ day of _____________, 2017, by ______________________________, the ______________________________
of ________________________________, a ________________________, on behalf of the _______________________.

 

 

	 	 	 
	 	Notary
    Public	 

 

    4 

    

    

EXHIBIT
A

 

LEGAL
DESCRIPTION

 

 

 

    5

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