Document:

ex_182337.htm

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into by and between Guaranty Federal Bancshares, Inc. (“Company”), a corporation organized under the laws of the state of Delaware, and Craig E. Dunn (“Employee”).

 

WHEREAS, Employee is presently a key employee of Company and the parties now desire to enter into this Agreement to reflect the terms and conditions of Employee’s continued employment with Company;

 

NOW, THEREFORE, in consideration of the premises and the terms and conditions set forth in this Agreement, Company and Employee hereby agree as follows:

 

1.          Employment. Company hereby employs Employee and Employee hereby agrees to continue his or her employment with Company upon the terms and conditions set forth in this Agreement.

 

2.          Term. This Agreement shall be effective on April 20, 2020 (“Effective Date”) and shall terminate on first anniversary of such date (“Initial Termination Date"), unless further extended or sooner terminated as hereinafter provided. This Agreement shall renew automatically for an additional one year beyond its Initial Termination Date and annually thereafter, unless Company notifies Employee in writing at least 60 days in advance of its intent not to extend the Agreement beyond then scheduled expiration date. However, Company and Employee reserve the right to negotiate a new Agreement, if mutually agreeable to both parties, with different terms and conditions at any time.

 

3.        Duties. Company hereby employs Employee as its Chief Commercial Banking Officer. Employee shall perform for or on behalf of Company such duties as Company’s President and Chief Executive Officer or Board of Directors shall assign from time to time; shall render such services primarily at the principal business offices of Company, which may be relocated from time to time; and shall perform such duties in accordance with Company’s policies and practices, including but not limited to its employment policies and practices, and subject only to such limitations, instructions, directions, and control as Company’s President and Chief Executive Officer or Board of Directors may specify from time to time at his discretion.

 

4.          Exclusive Services. Employee agrees to devote his or her full business time, energy and best efforts to the business and affairs of Company and its affiliates during the period of his or her employment by Company, and agrees not to engage, directly or indirectly, in any other business, investment, or activity that interferes with Employee's performance of his or her duties hereunder, is contrary to the interests of Company or any of its affiliates, or requires any significant portion of Employee's business time.

 

5.          Compensation and Benefits. Employee shall receive the compensation and benefits set forth in Appendix A to this Agreement as consideration for services rendered to Company. Such compensation and benefits shall be paid or earned in accordance with Company’s regular payroll practices.

 

 

 

 

6.          Reimbursement of Expenses. Company shall reimburse Employee for reasonable business expenses incurred by Employee in the performance of his or her duties for Company, subject to Company’s regular expense reimbursement policy and payroll practices.

 

7.           Termination of Employment. Employee’s employment with Company may be terminated as follows:

 

(a)     Company may terminate Employee’s employment at any time (i) for Cause upon written notice to Employee or (ii) without Cause upon 60 days written notice to Employee. For purposes of this Section 7 and elsewhere in this Agreement, Company shall have the right to terminate Employee’s employment for “Cause” upon the occurrence of one of the following events with respect to Employee: (1) conviction of, or plea of guilty or nolo contendere to, a felony or misdemeanor involving moral turpitude; (2) indictment for a felony or misdemeanor under the federal securities laws; (3) misconduct or negligence resulting in material financial or reputational harm to Company; (4) fraud, embezzlement, theft, or dishonesty against Company or any affiliate; or (5) any material and repeated violation of a policy or procedure of Company or directive of the Chief Executive Officer or the Board of Directors.

 

(b)     Employee may terminate his or her employment with Company at any time upon 60 days written notice to Company. Upon receipt of such notice, Company in its sole discretion may relieve Employee of Employee’s duties at any time prior to the expiration of such notice period. Except in the case of an intervening termination for Cause, Employee shall be compensated even if Company relieves Employee of Employee’s duties during such period.

 

(c)     Employee’s employment with Company shall terminate automatically in the event of Employee’s death or permanent disability. Employee shall be considered “permanently disabled” if Employee is unable to perform the essential duties of Employee’s job with a reasonable accommodation, should a reasonable accommodation exist, or without a reasonable accommodation should no reasonable accommodation exist, for a continuous period of 180 days as a result of a physical or mental impairment.

 

8.         Severance Prior to a Change in Control. Employee’s right to severance upon termination of employment with Company prior to a Change in Control shall be determined as set forth in (a) and (b) below:

 

(a)     If Employee’s employment with Company ends due to (i) termination by Company for Cause, (ii) Employee’s voluntary termination, or (iii) Employee’s death or permanent disability, in each case prior to a Change in Control, then Employee shall only be entitled to compensation and benefits accrued through the date of Employee’s termination of employment and shall not be entitled to any severance payments of any kind. Payment shall be paid within 30 days following Employee’s termination of employment.

 

(b)     If Company terminates Employee’s employment without Cause, then Employee shall be entitled to:

 

(x)      all compensation and benefits accrued through the date of Employee’s termination of employment; plus

 

(y)      severance equal to 6 months of Employee’s base salary then in effect.

 

 

 

 

Payment under (x) shall be paid within 30 days following Employee’s termination of employment and payments under (y) shall be payable in accordance with Company’s regular payroll practices (but in no event less frequently than monthly) with the first installment to commence not later than 30 days following Employee’s termination of employment; provided, however, Company’s obligation to pay Employee the amounts set forth in (y) shall be conditioned upon Employee’s execution and delivery to Company of a final and complete release in substantially the form attached hereto within 21 days following Employee’s termination of employment, and Company’s good faith belief that Employee is in full compliance with the restrictive covenants under Section 10 of this Agreement.

 

9.           Severance upon a Change in Control. Employee’s right to severance upon termination of employment with Company within 12 months following the occurrence of a Change in Control (as defined below) shall be determined as set forth in (a) through (d) below:

 

(a)     If Employee’s employment with Company ends due to (i) termination by Company for Cause, (ii) Employee’s voluntary termination without Good Reason (as defined below), or (iii) Employee’s death or permanent disability, then Employee shall only be entitled to compensation and benefits accrued through the date of Employee’s termination of employment and shall not be entitled to any severance payments of any kind. Payment shall be paid within 30 days following Employee’s termination of employment.

 

(b)     If (i) Company terminates Employee’s employment without Cause or (ii) Employee terminates employment with Good Reason, in each case within 12 months following the occurrence of a Change in Control, then Employee shall be entitled to:

 

(x)     all compensation and benefits accrued through the date of Employee’s termination of employment; plus

 

(y)     a lump sum payment equal to 24 months of Employee’s base salary then in effect (or, if greater, highest annual rate of base salary during the 12-month period immediately before the Change in Control); plus

 

(z)     a lump sum payment equal to Employee’s highest bonus opportunity for the bonus period then in effect (or, if greater, highest bonus opportunity for the 12-month period immediately before the Change in Control).

 

Payments under (x), (y) and (z) above shall be paid within 30 days following Employee’s termination of employment; provided, however, Company’s obligation to pay Employee the amounts set forth in (y) and (z) shall be conditioned upon Employee’s execution and delivery to Company of a final and complete release in a form that is acceptable and approved by Company within 21 days following Employee’s termination of employment, and Company’s good faith belief that Employee is in full compliance with the restrictive covenants under Section 10 of this Agreement.

 

(c)     For purposes of this Section 9 and elsewhere in this Agreement, a “Change in Control” means the occurrence of any one of the following events with respect to the Company:

 

(i)     a third party, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), purchases or otherwise acquires shares of the Company after the date of this Agreement that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;

 

 

 

 

(ii)     50% or more of the stock of Guaranty Bank or substantially all of the assets of Guaranty Bank are sold to a third party; or

 

(iii)     as the result of, or in connection with any cash tender or exchange offer, merger or other transaction, or contested election, or any combination of the foregoing transactions, the current members of the board of directors of the Company shall cease to constitute a majority of the board or any successor to the Company during any 12-month period.

 

(d)     Employee shall have the right to terminate employment for "Good Reason" within 12 months following a Change in Control, in the event Company (i) materially breaches its obligations to pay any salary, benefit, or bonus due to Employee under this Agreement; (ii) requires Employee to relocate more than 75 miles from Company’s principal place of business; or (iii) materially diminishes the functional responsibilities of Employee (it being understood that structural changes, such as a change in title, do not constitute changes in functional responsibilities); provided that Employee has given written notice to Company as to the details of the basis for such Good Reason within 30 days following the date on which Employee alleges the event giving rise to such Good Reason occurred and Company fails to provide a reasonable cure within 30 days after its receipt of such notice.

 

10.        Restrictive Covenants. In consideration of Employee’s employment and in further consideration of the position of trust and responsibility which Employee assumes and which will result in Employee’s access to Confidential Information and Company’s reliance on Employee to develop and/or maintain Company’s relationships with its customers (which includes any person or entity to whom Company has rendered or attempted to render any service, whether or not for compensation), employees, and other business associations, Employee specifically agrees to the following covenants, terms, and conditions:

 

(a)     Non-Disclosure and Return of Confidential Information.

 

(i)     Acknowledgements. Employee acknowledges and agrees that in the conduct of Employee's duties, Employee may be exposed to, and, in some cases, to come into possession of certain documents, lists, databases, financial statements, contracts, agreements, personnel records (including evaluations, manuals, tests, etc.), research, policies, correspondence, plans, records, documents, materials and other information, all of which pertains to the business of Company, including its financial affairs, the terms of its agreements with certain customers and other parties, its customer lists, supply lists, marketing or product plans, contemplated or actual business plans, and certain creative works and/or processes prepared by or for Company. All such information is not generally available to the public, is a valuable, special, and unique asset of Company’s business and constitutes trade secrets/confidential proprietary information of Company (the “Confidential Information”). Employee further acknowledges the misappropriation or unauthorized disclosure of Confidential Information at any time is prohibited and will cause Company irreparable injury.

 

 

 

 

(ii)     Non-Disclosure. Employee expressly covenants and agrees that during and after the term of his or her employment by Company, he or she will not divulge any Confidential Information imparted to or obtained by him or her during the course of said employment except as directed by Company or by a court having jurisdiction and directing the disclosure of any such information by court order with appropriate provisions to protect the confidentiality of such records to the extent practicable.

 

(iii)     Non-Removal. Other than in the ordinary course of business, Employee shall not directly or indirectly copy, take, or remove from Company’s premises any of Company’s Confidential Information without the prior written consent of Company.

 

(iv)     Return of Documents and Property. At the request of Company or upon the termination of Employee’s employment with Company for any reason, Employee shall immediately return and surrender to Company originals and all copies of any Company property, including but not limited to its Confidential Information.

 

(b)     Non-Solicitation. 

 

(i)     Employee acknowledges that Company’s relationships with its customers, employees, and other business associations are among Company’s most important assets and that developing, maintaining, and continuing such relationships is one of Company’s highest priorities. Employee further understands Employee will be relied upon to develop and to maintain such relationships on behalf of Company throughout the course of Employee’s employment with Company.

 

(ii)     Employee agrees that for a period of 12 months after the termination of Employee’s employment with Company for any reason, Employee (1) will not employ, hire, or respond to any inquiry from any individual who is an employee of Company at the time Employee executes this Agreement or at any time thereafter; (2) will not assist, either directly or indirectly, in the employment or hiring of any individual who is an employee of Company at the time Employee executes this Agreement or at any time thereafter; and/or (3) will not recruit, solicit, or induce, or attempt to recruit, solicit, or induce any individual who is an employee of Company at the time Employee executes this Agreement or at any time thereafter to terminate his/her employment with, or otherwise cease a relationship with, Company for any reason.

 

(iii)     Employee agrees that for a period of 12 months after the termination of Employee’s employment with Company for any reason, Employee (1) will not have any business relation with any customers, licensors, or accounts of Company or any prospective customers, licensors, or accounts of Company other than on behalf of Company, and (2) will not solicit, divert, or take away, or attempt to divert, solicit, or take away, the business or patronage of any of the customers, licensors, or accounts of Company or any of the prospective customers, licensors, or accounts of Company.

 

(c)     Judicial Modification. Company and Employee have attempted to limit Employee’s rights in Section 10(a) and (b) above only as reasonably necessary to the extent permitted by applicable law and necessary to protect Company from unfair competition. In the event Company seeks to enforce the restrictions in Section 10(a) or (b), Employee agrees not to seek to avoid such enforcement on the ground such restrictions are unreasonable in scope and/or duration. Further, if a Court of competent jurisdiction determines the restrictions contained in Section 10(a) or (b) are too long in duration or too broad in geographic scope to be reasonable and enforceable, then the Court shall amend such a provision only so much as shall be necessary for the restrictions contained herein to be enforceable.

 

 

 

 

(d)     Legal and Equitable Relief. The restrictions contained in Section 10(a) and (b) are necessary for the protection of the legitimate business interests, goodwill, and privacy of Company and its customers (and their clients). Any breach of Section 10(a) or (b) will cause Company (and/or its customers) substantial and irrevocable damage. Further, in addition to such other remedies that may be available, including the recovery of damages from Employee, Company shall have the right to injunctive relief to restrain or enjoin any actual or threatened breach of the provisions of Section 10(a) or (b), without posting bond. If Company prevails in a legal proceeding to remedy a breach or threatened breach of this Agreement, then Company shall be entitled to recover its reasonable attorney’s fees, expert witness fees, and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief it may be granted. It is understood and agreed that Company’s customers and clients of such customers shall have rights of third party beneficiaries under this Agreement.

 

(e)     No Conflicting Agreements. Employee represents to Company (1) there are no restrictions, agreements, or understandings whatsoever to which employee is a party that would prevent or make unlawful Employee’s execution or performance of this Agreement or his/her employment with Company, (2) Employee’s execution of this Agreement and employment with Company does not constitute a breach of any contract, agreement, or understanding, oral or written, to which Employee is a party or by which Employee is bound, and (3) Employee is not in possession of and will not use on behalf of Company any confidential and/or proprietary information of any other entity.

 

(f)     Disclosure of Agreement. In the event Company has reason to believe this Agreement has or may be breached, Employee acknowledges and consents that Company may disclose this Agreement, without risk of liability, to a current or prospective Company of Employee or other business entity.

 

11.         Treatment of Equity Awards Upon Change in Control. Notwithstanding any provision in the Guaranty Federal Bancshares, Inc. 2010 Equity Plan or any predecessor or successor plan or program or any outstanding equity award agreement held by Employee, in the event of a Change in Control, Employee’s outstanding restricted stock, stock options and other equity awards shall become fully vested and all holding periods and other restrictions shall immediately lapse (except as otherwise prohibited by applicable law) if: (i) the surviving entity does not agree prior to such Change in Control to substitute immediately after the Change in Control an economically equivalent right as appropriate under the circumstances; or (ii) Company terminates Employee’s employment without Cause or Employee terminates employment with Good Reason, in each case within 12 months following the occurrence of a Change in Control.

 

 

 

 

12.         Taxes; Compliance with Section 409A of the Internal Revenue Code. All payments and benefits payable pursuant to this Agreement shall be subject to all applicable taxes and withholdings. It is the intent of the parties that this Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Neither Company nor its directors, officers, employees, or advisers make any representations or warranties regarding the tax treatment of any payments or benefits under this Agreement and none of them shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee as a result of the application of Section 409A of the Code. Notwithstanding anything in this Agreement to the contrary, all payments and benefits under this Agreement that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code and that would otherwise be payable or distributable hereunder by reason of Employee’s termination of employment, will not be payable or distributable to Employee unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.” Further, to the extent the Employee is a “specified employee” within the meaning of Section 409A of the Code, then payment may not be made before the date which is six (6) months after the date of separation from service (or, if earlier, the date of death of Employee). If Employee is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Employee’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of Employee to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit. As permitted by Section 409A of the Code, any installment payment made or benefit provided hereunder subject to Section 409A shall be treated as separate payment for purposes of Section 409A. In no event shall Employee have the right to determine, directly or indirectly, the year of any payment under this Agreement. Further, if the consideration period described in any release agreement Employee is required to execute as a condition of receiving payments under this Agreement begins in one taxable year and ends in a second taxable year, any payments that would have been made in the first taxable year shall be made in the second taxable year to the extent required by Code Section 409A and the regulations and guidance issued thereunder. Notwithstanding anything contained in this Agreement to the contrary, to the extent that any amounts payable under this Agreement or otherwise (the “Total Payments”) would be subject to Section 4999 of the Code, then the Total Payments shall be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Total Payments to be subject to the excise tax imposed by Section 4999 of the Code but no such reduction shall apply unless the actual amount of Total Payments to be received by the Employee after such reduction is greater than the amount the Employee would receive if no such reduction were made to the Total Payments and the Employee were subject to the tax imposed by Section 4999 of the Code. If applicable, the Company shall reduce or eliminate the Total Payments that are included in parachute payments under Section 280G of the Code in the following order and manner, in each case, in reverse chronological order within each category beginning with the Total Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code, and in proportion to the extent to which each type of payment within each category constitutes a parachute payment: (1) by reducing or eliminating the payment of any cash severance under Section 9 of this Agreement; (2) by not accelerating the payment of any restricted stock, restricted stock units, performance shares, performance share units, or stock options; (3) by not accelerating the vesting of any restricted stock, restricted stock units, performance shares, performance share units, or stock options; and (4) by reducing or eliminating any other payments or benefits that constitutes a parachute payment under Section 280G of the Code. The provisions of this paragraph shall take precedence over the provisions of any other plan, arrangement or agreement governing the Employee’s rights and entitlements to any benefits or compensation under this Agreement or otherwise. Any determination that Total Payments to the Employee must be reduced or eliminated in accordance with this paragraph and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s Board of Directors in the exercise of its reasonable, good faith discretion based upon the advice of such professional advisors it may deem appropriate in the circumstances.

 

 

 

 

13.       Cooperation. Employee agrees that, during the period of Employee’s employment and after termination of Employee’s employment for any reason by either Company or Employee, Employee will make himself or herself reasonably available to consult with Company regarding any investigations, inquiry, audit or potential or actual dispute affecting Company arising out of events occurring during Employee’s employment, and to participate and/or testify in any such matter if necessary or required. If Employee’s cooperation under this Section is sought following Employee’s termination of employment, Company will make reasonable efforts to avoid interference with Employee’s then-current professional activities and will compensate Employee at a reasonable hourly rate equal to an equivalent hourly rate of Employee’s base salary in effect at the time of Employee’s termination of employment.

 

14.        Subsequent Litigation Costs. In the event of any legal proceeding in which one party alleges that the other party has breached this Agreement, the prevailing party shall recover his or her or its litigation costs (including, without limitation, reasonable attorneys’ fees, witness fees, and costs) incurred in connection with the dispute underlying such legal proceeding.

 

15.         General Provisions.

 

(a)     Governing Law and Consent to Jurisdiction. This Agreement and all disputes relating to Employee’s employment with Company shall be subject to, governed by, and construed in accordance with the laws of the State of Missouri, irrespective of any choice of law and/or of the fact that one or both of the parties now is or may become a resident of a different state. Employee hereby expressly submits and consents to the exclusive personal jurisdiction and exclusive venue of the federal and state courts of competent jurisdiction in the State of Missouri.

 

(b)     Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid, or unenforceable, then such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and still be legal, valid or enforceable.

 

(c)     Construction of Agreement. This Agreement provides the exclusive severance and benefits to which Employee shall be entitled under certain circumstances following his termination of employment with Company and supersedes all prior agreements or understandings, whether written or oral, with respect to the subject matter hereof. Employee shall not be entitled to participate in any other severance plans and policies of Company presently in effect or which may be hereafter adopted or amended. No terms, conditions, warranties, other than those contained herein, and no amendments or modifications hereto shall be binding unless made in writing and signed by the parties hereto. This Agreement shall not be strictly construed against either party.

 

 

 

 

(d)     Survival. The provisions of Section 10 of this Agreement shall survive any termination of this Agreement by Company or the Employee.

 

(e)     Binding Effect. This Agreement shall extend to and be binding upon and inure to the benefit of the parties hereto, their respective heirs, representatives, successors, and assigns. This Agreement may not be assigned by Employee, but may be assigned by Company to any person or entity that succeeds to the ownership or operation of the business in which Employee is primarily employed by Company.

 

(f)     Waiver. The waiver by either party hereto of a breach of any term or provision of this Agreement shall not operate or be construed as a waiver of a subsequent breach of the same provision by any party or of the breach of any other term or provision of this Agreement.

 

(g)     Titles. Titles of the paragraphs herein are used solely for convenience and shall not be used for interpretation or construing any work, clause, paragraph, or provision of this Agreement.

 

(h)     Notices. Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid, with return receipt requested.

 

(i)     Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of the last date in the signature block below.

 

	 	EMPLOYEE:	 	COMPANY:
	 	 	 	 	 	 
	 	/s/ Craig Dunn                    	 	By:	/s/ Shaun A. Burke 
	 	 	 	 	 	 
	 	Date:	April 20, 2020	 	Title:	President and CEO
	 	 	 	 	 	 
	 	 	 	 	Date:	April 20, 2020 

                         

 

 

 

APPENDIX A TO

EMPLOYMENT AGREEMENT

FOR

Craig Dunn

 

	
			Base Salary

				
			$225,000 (minimum) per year

			 

			During the term of this Agreement, such rate shall not be reduced except as agreed by the parties or except as part of a general salary reduction program imposed by Company applicable to all officers of Company.

			
	
			Incentive Pay

				
			Employee shall be eligible to participate in such bonus or incentive plans available to other executive-level employees of Company, subject to their terms and conditions.

			
	
			Benefits

				
			Employee shall be eligible to participate in Company’s retirement, health, and other insurance benefit plans available to other executive-level employees of Company; provided that (a) Company shall have no obligation with respect to any plan or program if Employee is not eligible for coverage thereunder, and (b) Employee acknowledges that any stock or equity participation awards are to be granted in the discretion of Company’s board of directors and that Employee has no right to receive any such stock or equity participation awards or any particular number or level of such stock or equity participation awards, if any.EX-10.1

 Exhibit 10.1 

INDEMNIFICATION AGREEMENT 

THIS AGREEMENT is made as of this
                     day of April, 2020, 
 B
E T W E E N: 
 VILLAGE FARMS INTERNATIONAL, INC., a corporation existing under the Canada Business Corporations Act 

(the “Corporation”) 

- and - 
 ∎ [Name of
director/officer] 
 (the “Indemnified Party”) 

RECITALS: 
  

	A.	 The Canada Business Corporations Act (the “CBCA”) permits, and in some cases requires,
the Corporation to indemnify individuals who are or were directors and officers of the Corporation, or who act or acted at the Corporation’s request as directors or officers or in a similar capacity of other entities (an “Other
Entity”, a term which, for the purposes of this indemnification agreement (the “Agreement”) shall include a corporation or other entity that becomes an Other Entity in the future). In this Agreement: 

 

	 	(i)	 all such individuals, including those acting in a capacity similar to a director and/or officer of an Other
Entity, are referred to as “Directors” and “Officers”, respectively, and the phrase “Director and Officer” means an individual who is or was either, or both, a Director and/or an Officer;

  

	 	(ii)	 unless the context otherwise requires, words importing the singular include the plural and vice versa and words
importing gender include all genders; and 

  

	 	(iii)	 unless otherwise indicated, references to sections are to sections in this Agreement; 

 

	B.	 The Corporation’s By-Laws require the Corporation to indemnify
Directors and Officers; 

  

	C.	 It is generally agreed that, because of the uncertainties in relying upon an indemnity in a corporation’s by-laws, it is desirable for Directors and Officers to obtain a contractual indemnity from the corporations they serve; 

  

	D.	 It is in the best interests of the Corporation to attract and retain responsible and capable Directors and
Officers, and the entering into of an agreement containing broad indemnification provisions of the kind contained in this Agreement is of vital importance to achieving these goals. Accordingly, the Corporation and the Indemnified Party wish to enter
into this Agreement, and in so doing affirm that they intend that all the provisions of this Agreement be given legal effect to the full extent permitted by applicable law. 

 NOW THEREFORE in consideration of the sum of $1.00 now given by the Indemnified Party
to the Corporation, and of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows: 

 

	1.	 Subject to sections 2 and 3, the Corporation agrees to indemnify and save harmless the Indemnified Party:

 1.1    from and against all costs, charges and expenses reasonably incurred by the Indemnified Party
in respect of any civil, criminal, administrative, investigative or other proceeding to which the Indemnified Party is involved by reason of being or having been a Director and Officer; and 

1.2    from and against all liabilities, damages, costs, charges and expenses whatsoever that the Indemnified Party may
sustain or incur as a result of serving as a Director and Officer in respect of any act, matter, deed or thing whatsoever made, done, committed, permitted or acquiesced in by the Indemnified Party as a Director and Officer, whether before or after
the effective date of this Agreement. 
  

	2.	 Indemnification under section 1 shall be made only if the Indemnified Party: 

2.1    acted honestly and in good faith with a view to the best interests of either the Corporation or the Other Entity, as
the case may be; and 
 2.2    in the case of a criminal or administrative proceeding that is enforced by a monetary
penalty, the Indemnified Party had reasonable grounds for believing that the Indemnified Party’s conduct was lawful. 

Sections 2.1 and 2.2 are referred to in this Agreement as the “Standards of Conduct”. 

 

	3.	 In respect of an action by or on behalf of the Corporation or an Other Entity to procure a judgment in its
favour to which the Indemnified Party is made a party by reason of being or having been a Director and Officer of the Corporation or the Other Entity, indemnification under section 1, including the making of Expense Advances under section 7, shall
be made only after obtaining approval of the court having jurisdiction. 

  

	4.	 For the purposes of this Agreement: 

4.1    “proceeding” shall include a claim, demand, suit, action, proceeding or investigation, whether
anticipated, threatened, pending, commenced, continuing or completed, and any appeal or appeals therefrom; 

 4.2    “costs, charges and expenses” shall include:

 4.2.1    subject to section 10, an amount paid to settle an action or satisfy a judgment, except in respect of an
action to which section 3, above, is applicable; 
 4.2.2    a fine, penalty, levy or charge paid to any domestic or
foreign government (federal, provincial, state, municipal or otherwise) or to any regulatory authority, agency, commission or board of any domestic or foreign government, or imposed by any court or any other law, regulation or rule-making entity
having jurisdiction in the relevant circumstances (collectively, a “Governmental Authority”), including as a result of a breach or alleged breach of any statutory or common law duty imposed on directors or officers or of any law,
statute, rule or regulation or of any provision of the articles, by-laws or any resolution of the Corporation or an Other Entity; 

4.2.3    an amount paid to satisfy a liability arising as a result of the failure of the Corporation or an Other Entity to
pay wages, vacation pay and any other amounts that may be owing to employees or to make contributions that may be required to be made to any pension plan, retirement income plan or other benefit plan for employees or to remit to any Governmental
Authority payroll deductions, income taxes or other taxes, or any other amounts payable by the Corporation or an Other Entity; and 

4.2.4    legal costs on a solicitor and his own client basis, including those incurred in enforcing the Indemnified
Party’s rights under this Agreement; and 
 4.3    the Indemnified Party shall be considered to be
“involved” in any proceeding if the Indemnified Party has any participation whatsoever in such proceeding, including merely as a witness. 
  

	5.	 Upon the Indemnified Party becoming aware of any proceeding which may give rise to indemnification under this
Agreement, the Indemnified Party shall give written notice to the Corporation, directed to its Chief Executive Officer, as soon as is practicable, provided, however, that failure to give notice in a timely fashion shall not disentitle the
Indemnified Party to indemnification unless the Corporation suffers actual prejudice by reason of the delay. 

  

	6.	 The Corporation may conduct any investigation it considers appropriate of any proceeding of which it receives
notice under section 5, and shall pay all costs of that investigation. 

  

	7.	 The parties wish to facilitate the payment by the Indemnified Party of ongoing costs in connection with matters
for which indemnification under this Agreement is provided. Accordingly, the parties agree as follows: 

7.1    subject to section 7.2 below, the Corporation shall, upon demand, make advances (“Expense
Advances”) to the Indemnified Party of all reasonable amounts for which the Indemnified Party seeks indemnification under this Agreement before the final 

 
disposition of the relevant proceeding. In connection with such demand, the Indemnified Party shall provide the Corporation with a written affirmation of the Indemnified Party’s good faith
belief that the Indemnified Party has met the Standards of Conduct, along with sufficient particulars of the costs, charges and expenses to be covered by the proposed Expense Advance to enable the Corporation to make an assessment of its
reasonableness; 
 7.2    the Corporation shall have no obligation to make Expense Advances to the Indemnified Party
unless and until a majority of those members of the Corporation’s board of directors who have no interest in the relevant proceeding, authorize the making of such advances to the Indemnified Party. The board of directors may, before authorizing
Expense Advances, retain independent counsel or make any inquiries it considers appropriate in the circumstances for the purpose of confirming the Indemnified Party’s compliance with the Standards of Conduct and entitlement to indemnity. The
board of directors shall have discretion in deciding whether or not to authorize such advances, but shall exercise its discretion reasonably, in light of all relevant circumstances, and in good faith; and 

7.3    the Indemnified Party shall repay to the Corporation, upon demand, all Expense Advances if and to the extent that it
is determined, either by the Corporation’s board of directors or by a court of competent jurisdiction, that the Indemnified Party had not met the Standards of Conduct or is otherwise not entitled to indemnification. 

 

	8.	 The indemnities in section 1 shall not apply in respect of any proceeding initiated by the Indemnified Party
against: 

 8.1    the Corporation or an Other Entity, unless it is brought to establish or enforce any
right under this Agreement; 
 8.2    any Director or Officer unless the Corporation or the Other Entity, as the case may
be, has joined in or consented to the initiation of such proceeding; or 
 8.3    any other corporation, partnership,
trust, joint venture, unincorporated entity or person, unless it is a counterclaim. 
  

	9.	 The Corporation shall be entitled to participate, at its own expense, in the defence of the Indemnified Party
in any proceeding. If the Corporation so elects after receipt of notice of a proceeding, or the Indemnified Party in that notice so directs, the Corporation shall assume control of the negotiation, settlement or defence of the proceeding, in which
case the defence shall be conducted by counsel chosen by the Corporation and reasonably satisfactory to the Indemnified Party. If the Corporation elects to assume control of the defence, the Indemnified Party shall have the right to participate in
the negotiation, settlement or defence of the proceeding and to retain counsel to act on the Indemnified Party’s behalf, provided that the fees and disbursements of that counsel shall be paid by the Indemnified Party. The Indemnified Party and
the Corporation shall cooperate fully with each other and their respective counsel in the investigation related to, and defence of, any proceeding and shall make available to each other all relevant books, records, documents and files and shall
otherwise use their best efforts to assist each other’s counsel to conduct a proper and adequate defence. 

	10.	 The parties wish to encourage the settlement of any proceeding. Accordingly, the parties agree as follows:

 10.1    the Corporation may, with the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld or delayed), enter into an agreement to settle any proceeding; 
 10.2    if the
Indemnified Party refuses after requested by the Corporation, acting reasonably, to give consent to the terms of a proposed settlement which is otherwise acceptable to the Corporation, the Corporation may require the Indemnified Party to negotiate
or defend the Claim independently of the Corporation. In that case, any amount recovered by the claimant in excess of the amount for which settlement could have been made by the Corporation shall not be recoverable under this Agreement, and the
Corporation will only be responsible for costs, charges and expenses up to the time at which settlement could have been made; 

10.3    the Corporation shall not be liable for any settlement of any proceeding effected without its prior written consent
(which consent shall not be unreasonably withheld or delayed); 
 10.4    the Indemnified Party shall have the right to
negotiate a settlement in respect of any proceeding, provided that unless the Corporation has approved the settlement, the Indemnified Party shall pay any compensation or other payment to be made under the settlement and the costs of negotiating and
implementing the settlement, and shall not seek indemnity from the Corporation in respect of such compensation, payment or costs; and 

10.5    the settlement of a proceeding shall not create a presumption that the Indemnified Party did not meet or would not
have met the Standards of Conduct. 
  

	11.	 The Corporation shall make reasonable best efforts to ensure that all liabilities of the Corporation under this
Agreement are at all times covered by directors’ and officers’ liability insurance with a responsible insurer. In this regard, the parties agree that: 

11.1    the responsibility for obtaining and maintaining directors’ and officers’ liability insurance shall rest
with a senior manager of the Corporation, who shall retain an insurance broker or other person having expertise and experience in directors’ and officers’ liability insurance; 

11.2    the Corporation shall provide to the Indemnified Party a copy of each policy of insurance providing the coverages
contemplated by this section 11 promptly after such coverage is obtained, and shall promptly notify the Indemnified Party if the insurer cancels or refuses to renew such coverage (or any part of such coverage); 

 11.3    coverage need not be obtained by of the Corporation if the
coverage is not generally available from responsible insurers, or is available from one or more responsible insurers but at a cost which, in the opinion of the Corporation, acting reasonably and taking into account the financial condition and size
of the Corporation and the nature of its business, is excessive (for greater certainty, the board of directors of the Corporation determined that, effective as of April 30, 2020, coverage would not be obtained for the reason of excessive cost);
and 
 11.4    the Corporation shall not do any act or thing (including changing insurers) or fail to do any act or
thing, that could cause or result in a denial of insurance coverage or of any claim under such coverage; without limiting the generality of the foregoing, the Corporation shall give prompt and proper notice to the insurer of any claim against the
Indemnified Party. 
  

	12.	 Should any payment made pursuant to this Agreement, including the payment of insurance premiums or any payment
made by an insurer under an insurance policy, be deemed to constitute a taxable benefit or otherwise be or become subject to any tax or levy, then the Corporation shall pay any amount as may be necessary to ensure that the amount received by or on
behalf of the Indemnified Party, after the payment of or withholding for such tax, fully reimburses the Indemnified Party for the actual cost, expense or liability incurred by or on behalf of the Indemnified Party. 

 

	13.	 Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of
law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable
provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 

  

	14.	 This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and
the laws of Canada applicable therein. 

  

	15.	 The obligations of the Corporation under this Agreement shall continue after the Indemnified Party ceases to be
a Director or Officer and shall survive indefinitely. 

  

	16.	 Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided. 

  

	17.	 This Agreement shall enure to the benefit of the Indemnified Party and the Indemnified Party’s heirs,
administrators, executors and personal representatives and shall be binding upon the Corporation and its successors. 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above. 
  

					
	VILLAGE FARMS INTERNATIONAL, INC.
		
	by:	 	 
		 	Name:	 	Stephen C. Ruffini
		 	Title:	 	Senior Vice-President and Chief Financial Officer
		
		 	 
		 	[Insert name of applicable Director/Officer here]

  
 [Signature page to
Director/Officer Indemnity Agreement of VFF]

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