Document:

vff-ex1015_9.htm

EXECUTION VERSION

 

Exhibit 10.15

 

BDC LOAN AGREEMENT (DEMAND, NON-REVOLVING)

 

 

 

This Agreement dated December 30, 2020 is made between:

 

 

PURE SUNFARMS CORP.

 

- and -

 

BANK OF MONTREAL

 

 

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party, the parties agree as follows:

 

ARTICLE I - INTERPRETATION

 

1.01Definitions; Interpretation

 

	
 
	
(a)
	
Terms used in this Agreement as defined terms shall have the respective meanings set out in Schedule “A”. In addition to the terms defined in Schedule “A”, terms defined in the Credit Agreement in effect on the date hereof shall have the same meanings when used in a Loan Document. If any term is defined in a Loan Document and is also defined in the Credit Agreement, it shall have the meaning as defined in the relevant Loan Document and not as defined in the Credit Agreement.

 

	
 
	
(b)
	
If the Credit Agreement is terminated for any reason whatsoever (including any such termination following the full and final repayment and satisfaction by the Borrower of all Credit Agreement Obligations), all provisions of the Credit Agreement referenced herein shall continue to apply in respect of the BDC Facility as if the Credit Agreement had not been terminated.

 

	
 
	
(c)
	
All amounts referred to in this Agreement are in Canadian Dollars.

 

	
 
	
(d)
	
Whenever in this Agreement reference is made to a statute or regulations made pursuant to a statute, such reference shall, unless otherwise specified, be deemed to include all amendments to such statute or regulations from time to time and all statutes or regulations which may come into effect from time to time substantially in replacement of the said statutes or regulations.

 

	
 
	
(e)
	
Unless expressly qualified by the phrase "acting reasonably" or an equivalent phrase, any action to be taken or decision to be made by the Bank herein may be taken or made in the Bank’s sole and unfettered discretion.

 

 

2.
 
1.02Schedules and Exhibits

 

The following schedules and exhibits are attached to this Agreement and incorporated herein by reference:

 

	
 
	
Schedule “A”
	
Definitions

	
 
	
Schedule 4.01(c)
	
Additional Representations, Warranties and Covenants

	
 
	
Exhibit “A”
	
Draw Notice

	
 
	
 
	
 

 

ARTICLE II – THE FACILITY

 

2.01Establishment of BDC Facility

 

Subject to the terms and conditions in this Agreement, the Bank hereby establishes a demand, non-revolving credit facility for the Borrower (the “BDC Facility”) in the maximum principal amount of the BDC Facility Limit. The Borrower may request a single Advance under the BDC Facility, and any remaining availability thereafter shall be cancelled. The proceeds of the Advance under the BDC Facility shall be deposited into account #0004 1820-267 with the Bank.

 

2.02Purpose

 

All proceeds of the Advance made under the BDC Facility shall be used by the Borrower to exclusively fund the operational cash flow needs of the Borrower or any of its subsidiaries, and for no other purpose. For greater certainty, proceeds of the Advance under the BDC Facility may be used by the Borrower to (i) make scheduled interest payments in accordance with the terms of the Credit Agreement; (ii) make scheduled repayments of principal in accordance with the terms of the Credit Agreement, except where such schedule has been accelerated from and after March 1, 2020, (iii) repay any temporary advances or borrowing excesses incurred under the Credit Agreement from and after March 1, 2020, and (iv) satisfy ordinary course of business lease, equipment or supplier financing payments.

 

2.03Non-Revolving Nature

 

The BDC Facility is a non-revolving facility, and any repayments thereunder may not be re- borrowed.

 

2.04Interest and Fees

 

	
 
	
(a)
	
The Borrower agrees to pay to the Bank the following:

 

	
 
	
(i)
	
a non-refundable arrangement fee on the date of execution of this Agreement in the amount of eighteen thousand, seven hundred and fifty Canadian Dollars ($18,750) (being 30 basis points on the BDC Facility Limit) in respect of the establishment of the BDC Facility, whether or not the Advance is made hereunder. The Borrower hereby authorizes the Bank to debit any account maintained by it with the Bank in order to pay such arrangement fee on the date of execution of this Agreement; and

 

 

3.
 

	
 
	
(ii)
	
until demand is made by the Bank:

 

	
 
	
(A)
	
interest on the Outstanding Principal Amount at the Prime Rate plus the Applicable Margin, payable monthly in arrears on the first day of each and every month in respect of the immediately preceding month; and

 

	
 
	
(B)
	
an extension fee on each anniversary of the date of execution of this Agreement in the amount of fifteen thousand, six hundred and twenty-five Canadian Dollars ($15,625) (being 25 basis points on the BDC Facility Limit) in respect of the continued availability of the BDC Facility.

 

	
 
	
(b)
	
Upon the occurrence and during the continuance of an Event of Default, the applicable interest rate shall be increased by 200 basis points.

 

2.05Cancellation and Repayment

 

	
 
	
(a)
	
All outstanding BDC Facility Obligations are repayable on demand by the Bank. Notwithstanding any other provision of this Agreement, the Bank may, at any time, in its sole discretion on notice to the Borrower: (i) terminate any right to make requests for credit or advances under the BDC Facility; (ii) even if the Bank has not terminated such right to request credit or advances under the BDC Facility, decline any request for credit or advances under the BDC Facility, including requests for renewals or reissuances of any instruments or advances; (iii) demand repayment of all outstanding BDC Facility Obligations at any time, all upon such notice and otherwise in accordance with Applicable Law as the Bank may, in its absolute discretion, determine.

 

	
 
	
(b)
	
Until demand is made by the Bank (and without prejudice to the Bank’s unfettered right to demand accelerated repayment at any time):

 

	
 
	
(i)
	
the Borrower shall pay interest only (in accordance with Section 2.04 above) for the period commencing on the Closing Date and ending on December 30, 2021; and

 

	
 
	
(ii)
	
commencing on December 31, 2021, and on the first day of each and every month thereafter, the Borrower shall (in addition to paying interest on the then Outstanding Principal Amount in accordance with Section 2.04 above) repay the then Outstanding Principal Amount in equal repayment installments of $52,083.33 (being the result of amortizing the BDC Facility Limit monthly on a ‘straight line’ basis for a nominal period of ten (10) years).

 

	
 
	
(c)
	
Without prejudice to the Bank’s unfettered right to make demand for accelerated repayment at any time, the Borrower must pay and repay all outstanding BDC Facility Obligations by no later than the BDC Facility Maturity Date.

	
2.06
	
Voluntary Repayments

 

The Advance cannot be prepaid without the written consent of the Bank, except that the Borrower may, if it gives the Bank no less than 60 days’ prior written notice, prepay the Advance in full at any time.

 

 

4.
 
ARTICLE III - GENERAL CONDITIONS

 

3.01Matters relating to Interest

 

Interest on the Outstanding Principal Amount shall be calculated daily and shall be payable in accordance with Section 2.04. Interest on any overdue interest or fees shall be payable in the same manner at the rate set forth in Section 2.04(b). Any change in the Prime Rate shall cause an immediate adjustment of the interest rate applicable to the BDC Facility without the necessity of notice to the Borrower. Unless otherwise stated, in this Agreement if reference is made to a rate of interest, fee or other amount “per annum” or a similar expression is used, such interest, fee or other amount shall be calculated on the basis of a year of three hundred and sixty-five (365) or three hundred and sixty-six (366) days, as the case may be.

 

3.02Notice and Minimum Amounts

 

	
 
	
(a)
	
The Borrower shall provide written notice to the Bank in respect of the Advance under the BDC Facility by no later than 10:00 a.m. Toronto time on the day falling one (1) Business Day prior to the date of the proposed Advance.

 

	
 
	
(b)
	
Notice of the Advance shall be given in the form of the Draw Notice attached hereto as an Exhibit. All such notices shall be given to the Bank at the address set out in Section 9.04.

 

3.03Payments

 

If any payment of principal or interest is due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. Interest shall continue to accrue and be payable on such amounts as provided herein until the date on which payment is received by the Bank. The Borrower hereby irrevocably authorizes the Bank to debit any account maintained by the Borrower with the Bank from time to time in order to pay any amount of principal, interest, fees, expenses or other amounts payable by the Borrower pursuant to this Agreement, if such amount is not paid in full by the Borrower within thirty (30) days after receipt of a written request from the Bank for payment of such amount.

 

3.04Evidence of BDC Facility Obligations (Noteless Advance)

 

The Bank shall open and maintain, in accordance with its usual practice, accounts evidencing the BDC Facility Obligations, and the information entered in such accounts shall be deemed correct absent manifest error.

	
3.05
	
Anti-Money Laundering

 

The Borrower acknowledges that, pursuant to AML Legislation, the Bank may be required to obtain, verify and record information regarding the Credit Parties and their respective directors, authorized signing officers, direct or indirect shareholders, partners or other persons in control of the Credit Parties and the transactions contemplated hereby. The Borrower shall promptly provide all such information, including any supporting documentation and other evidence, as may be reasonably requested by the Bank, or any prospective assignee or participant of the Bank, in order to comply with any applicable AML Legislation.

 

 

5.
 
ARTICLE IV - REPRESENTATIONS AND WARRANTIES

 

	
4.01
	
Representations and Warranties

 

	
 
	
(a)
	
As separate and independent representations and warranties and (where applicable) with respect to this Agreement, the Loan Documents and the Security, the Borrower hereby makes in favour of the Bank as at the date hereof all the representations and warranties made by the Borrower in the Credit Agreement (however and wherever set out). For these purposes, the representations and warranties set out in the Credit Agreement are deemed to be incorporated into this Agreement and:

 

	
 
	
(i)
	
terms defined in the Credit Agreement (to the extent not defined herein) will be deemed to have the same meanings in this Agreement;

 

	
 
	
(ii)
	
any reference in those representations and warranties to:

 

	
 
	
(A)
	
a “Section” or a “Schedule” will be deemed to be to the relevant section of or schedule to the Credit Agreement as at the date hereof;

 

	
 
	
(B)
	
“this Agreement” will be deemed to be to this Agreement;

 

	
 
	
(C)
	
the “Security” will be deemed to be to the Security;

 

	
 
	
(D)
	
a “Loan Document” will be deemed to be to a Loan Document;

 

	
 
	
(E)
	
the “Agent” or the “Lenders” will be deemed to be to the Bank;

 

	
 
	
(F)
	
an “Advance” will be deemed to be to an Advance hereunder;

 

	
 
	
(G)
	
“Permitted Funded Debt” and “Permitted Liens” will be deemed to be to Permitted Funded Debt and Permitted Liens as defined herein; and

 

	
 
	
(H)
	
the “Amendment Closing Date” will be deemed to be to the Closing Date.

 

	
 
	
(b)
	
In addition to the representations and warranties made in accordance with paragraph (a) above, the Borrower hereby represents and warrants to the Bank that the Borrower satisfies all eligibility criteria set forth in Schedule 4.01(c) hereto. Without limiting the generality of the foregoing, the Borrower makes all of the representations and warranties set forth in Schedule 4.01(c) hereto.

 

	
 
	
(c)
	
The Borrower acknowledges that the Bank shall rely upon the representations and warranties made in accordance with this Article in connection with the establishment and continuation of the BDC Facility. Notwithstanding any investigations which may be made by the Bank, the said representations and warranties shall survive the execution and delivery of this Agreement until full and final payment and satisfaction of the BDC Facility Obligations.

 

	
 
	
(d)
	
The representations and warranties made in this Article IV are without prejudice to the Bank’s unfettered right to demand accelerated repayment at any time.

 

 

6.
 
ARTICLE V - COVENANTS

 

5.01Positive Covenants

 

	
 
	
(a)
	
The Borrower hereby covenants, agrees and undertakes in favour of the Bank that the Borrower will (as separate and independent undertakings and positive covenants in favour of the Bank and as if the same were set out in full herein) observe, perform and comply with all undertakings and positive covenants contained in the Credit Agreement (however and wherever set out but excluding those set out in sections 7.01(a) and 7.01 (l) of the Credit Agreement as at the date hereof). For these purposes, the undertakings and positive covenants set out in the Credit Agreement (excluding those set out in sections 7.01(a) and 7.01 (l) of the Credit Agreement as at the date hereof) are deemed to be incorporated into this Agreement and:

 

	
 
	
(i)
	
terms defined in the Credit Agreement (to the extent not defined herein) will be deemed to have the same meanings in this Agreement;

 

	
 
	
(ii)
	
any reference in those undertakings and positive covenants to:

 

	
 
	
(A)
	
a “Section” or a “Schedule” will be deemed to be to the relevant section of or schedule to the Credit Agreement as at the date hereof;

 

	
 
	
(B)
	
“this Agreement” will be deemed to be to this Agreement;

 

	
 
	
(C)
	
the “Security” will be deemed to be to the Security;

 

	
 
	
(D)
	
a “Loan Document” will be to a Loan Document;

 

	
 
	
(E)
	
the “Agent” or the “Lenders” will be deemed to be to the Bank;

 

	
 
	
(F)
	
an “Advance” will be deemed to be to an Advance hereunder;

 

	
 
	
(G)
	
“first mortgagee and loss payee” will be deemed to be “second mortgagee and loss payee”; and

	
 
	
(H)
	
 “Permitted Funded Debt” and “Permitted Liens” will be deemed to be to Permitted Funded Debt and Permitted Liens as defined herein.

 

	
 
	
(b)
	
In addition to the undertakings and positive covenants given in accordance with paragraph (a) above, the Borrower hereby covenants and agrees with the Bank that it will:

 

	
 
	
(i)
	
Prompt Payment – pay all principal, interest, fees and other amounts due under this Agreement at the times and in the manner specified herein;

 

	
 
	
(ii)
	
Use of Advance – utilize the proceeds of the Advance under the BDC Facility only for the purposes described in Section 2.02 and not permit such proceeds to be used, directly or indirectly, by any other Person or for any other purpose; and

 

	
 
	
(iii)
	
Compliance with Program – comply with all applicable requirements under the Program (including without limitation any covenants set forth in Schedule 4.01(c) hereto), and execute all such documents and take all such actions and provide all such information as the Bank may reasonably require from time to time in order to 

 

7.
 

	
 
		
ensure the continued eligibility of the Borrower and of the BDC Facility under the Program and to avoid the revocation or termination of BDC’s participation thereunder.

 

	
5.02
	
Negative Covenants

 

	
 
	
(a)
	
The Borrower hereby covenants, agrees and undertakes in favour of the Bank that the Borrower will (as separate and independent negative covenants in favour of the Bank and as if the same were set out in full herein) observe and comply with the negative covenants contained in sections 7.02(i) to 7.02(p) (inclusive) of the Credit Agreement as at the date hereof. For these purposes, those negative covenants are deemed to be incorporated into this Agreement and:

 

	
 
	
(i)
	
terms defined in the Credit Agreement (to the extent not defined herein) will be deemed to have the same meanings in this Agreement;

 

	
 
	
(ii)
	
any reference in those undertakings and positive covenants to:

 

	
 
	
(A)
	
a “Section” or a “Schedule” will be deemed to be to the relevant section of or schedule to the Credit Agreement as at the date hereof;

 

	
 
	
(B)
	
“this Agreement” will be deemed to be to this Agreement;

 

	
 
	
(C)
	
the “Security” will be deemed to be to the Security;

 

	
 
	
(D)
	
the “Obligations” will be deemed to be to the BDC Facility Obligations;

 

	
 
	
(E)
	
a “Loan Document” will be to a Loan Document;

 

	
 
	
(F)
	
the “Agent” or the “Lenders” will be deemed to be to the Bank; and

 

 

8.
 

	
 
	
(G)
	
an “Advance” will be deemed to be to an Advance hereunder.

 

	
 
	
(b)
	
In addition to the negative covenants given in accordance with paragraph (a) above, the Borrower hereby covenants and agrees with the Bank that it will observe and comply with the negative covenants set out in Schedule 4.01(c) and will not:

 

	
 
	
(i)
	
Funded Debt - create, incur or assume any Funded Debt, except Permitted Funded Debt;

 

	
 
	
(ii)
	
Guarantees - become obligated under Guarantees, except: (i) Guarantees which comprise part of the Security; and (ii) Guarantees in respect of Permitted Funded Debt incurred by any other Company;

 

	
 
	
(iii)
	
Liens - grant or suffer to exist any Lien in respect of any of its property, except Permitted Liens;

 

	
 
	
(iv)
	
Disposition of Assets - directly or indirectly sell, transfer, assign, lease or otherwise dispose of any of its assets, except as expressly permitted in the Credit Agreement;

 

	
 
	
(v)
	
Investments - make or acquire any Investments, except as expressly permitted in the Credit Agreement;

 

	
 
	
(vi)
	
Certain Activities and Investments – directly or indirectly do any of the following, in each case, except as expressly permitted in the Credit Agreement:

 

	
 
	
(A)
	
engage or participate in any Medical Cannabis-Related Activities, or make or hold an Investment in any Person which engages or participates in any Medical Cannabis-Related Activities, in any jurisdiction other an Approved Medical Cannabis Jurisdiction;

 

	
 
	
(B)
	
engage or participate in any Non-Medical Cannabis-Related Activities, or make or hold an Investment in any Person which engages or participates in any Non-Medical Cannabis-Related Activities, in any jurisdiction other an Approved Non-Medical Cannabis Jurisdiction; or

 

	
 
	
(C)
	
own assets or carry on business in any jurisdiction which is not an Approved Jurisdiction;

 

	
 
	
(vii)
	
Distributions - make any Distribution, except as expressly permitted in the Credit Agreement;

 

	
 
	
(viii)
	
Certain Payments - make any payment in respect of principal, interest, fees or any other amounts in respect of Subordinated Debt, except payments of interest and principal on the Shareholder Loans to the extent such payments are permitted pursuant to paragraph (vii) above;

 

	
 
	
(ix)
	
Executive Compensation – pay any bonuses to its officers and directors, or increase the levels of salary and other forms of compensation payable to its officers and directors from the levels in effect immediately prior to the date of this Agreement, except that:

 

 

9.
 

	
 
	
(A)
	
the Borrower may pay such bonuses and make such increases in compensation levels if:

 

	
 
	
(1)
	
no Default is outstanding or would occur as a result of the payment of the bonus or increased compensation;

 

	
 
	
(2)
	
the payment of any such bonus or increased compensation has no adverse impact on the ability of the Borrower to comply with its obligations (financial and otherwise) as they fall due and otherwise to conduct its business as it was conducted prior to such payment; and

 

	
 
	
(3)
	
the bonuses and increases in compensation levels are (x) awarded in the ordinary course of business of the Borrower and in the ordinary course of the employment of such officers or directors, and (y) on commercially reasonable, market terms, in line with the Borrower’s past practice,

 

as certified in writing by an officer of the Borrower to the Lender; and

 

	
 
	
(B)
	
Village may, provided no Default is outstanding or would occur as a result of such payment or distribution, make payments or distributions (by way of cash or equity) in accordance with Village’s long term incentive plan (the “Village LTIP”) to any officer or director of the Borrower who participates in the Village LTIP.

 

5.03Reporting Requirements

 

The Borrower hereby covenants and agrees in favour of the Bank that the Borrower will (as separate and independent obligations) deliver or cause to be delivered to the Bank all the financial and other information which the Borrower is obliged to deliver under the Credit Agreement, at the times set out therein.   In addition, promptly upon request by the Bank from time to time the Borrower shall deliver or cause to be delivered to the Bank all other financial reports and information that the Bank may require so as to meet its administration, monitoring, servicing and reporting obligations under the Program.

 

5.04Without Prejudice

 

The undertakings, covenants and agreements set out in this Article V are without prejudice to the Bank’s unfettered right to demand accelerated repayment at any time.

 

ARTICLE VI – SECURITY, ETC.

 

6.01Security to be provided by the Companies

 

Subject to the terms of the Intercreditor Agreement, the Borrower agrees to provide (or cause the Subsidiaries to provide) the security listed below as continuing security for the payment of the BDC Facility Obligations:

	
 
	
(a)
	
unlimited Guarantees in respect of the BDC Facility Obligations from all present and future Subsidiaries of the Borrower;

 

	
 
	
(b)
	
general security agreements creating security interests in respect of all present and future property, assets and undertaking of the Companies (for greater certainty, specifically including all shares and other equity interests held by each Company in any other Company, provided that the certificates evidencing such shares and other equity interests shall not be 

 

10.
 

	
 
		
required to be delivered to the Bank unless and until requested in writing by the Bank);

 

	
 
	
(c)
	
an all-indebtedness mortgage from the Borrower in the principal amount of six million, two hundred and fifty thousand Canadian Dollars ($6,250,000), which shall include a general assignment of rents, over the D3 Property;

 

	
 
	
(d)
	
an all-indebtedness mortgage of leasehold interest from the Borrower in the principal amount of six million, two hundred and fifty thousand Canadian Dollars ($6,250,000), which shall include a general assignment of rents, over the D2 Property;

 

	
 
	
(e)
	
to the extent requested by the Bank acting reasonably, security agreements creating a specific assignment and security interest in all or any of the Material Agreements, together with acknowledgements and consents from the other parties thereto; provided however that if the assignment of any Material Agreement as security requires the consent of the other contracting party thereto, the Borrower shall use reasonable commercial efforts to obtain such consent but if such consent is not provided the assignment of such Material Agreement as security shall not be required;

 

	
 
	
(f)
	
to the extent requested by the Bank acting reasonably, security agreements creating a specific assignment and security interest in all or any of the Material Permits to the extent a security interest may be obtained therein, together with acknowledgements and consents from the issuers thereof to the extent available;

 

	
 
	
(g)
	
to the extent requested by the Bank acting reasonably, security agreements creating an assignment and security interest in respect of Intellectual Property of the Companies which the Bank considers to be material, together with any necessary consents from other Persons which may be required in connection with the granting of said assignments and security interests;

 

	
 
	
(h)
	
to the extent requested by the Bank acting reasonably, assignments of bank accounts maintained by the Companies with financial institutions other than the Bank, including deposit account control agreements in favour of the Bank;

 

	
 
	
(i)
	
assignments all policies of insurance in respect of the Companies (which requirement shall be satisfied if the Bank's interest as mortgagee and loss payee is recorded on such policies); and

 

	
 
	
(j)
	
such other security and further assurances as the Bank may reasonably require from time to time.

	
6.02
	
Security from other Persons

 

Subject to the Intercreditor Agreement, the Borrower agrees to obtain and provide to the Bank the following (and it shall constitute an Event of Default if any item of listed below is not provided to the Bank):

 

	
(a)
	
a several Guarantee in respect of the BDC Facility Obligations from Village (the “Village Guarantee”) limited to six million, two hundred and fifty thousand Canadian Dollars ($6,250,000) plus interest thereon after demand at the Prime Rate plus two percent (2.00%) per annum;

 

	
(b)
	
a subordination, postponement, assignment and standstill agreement from each Shareholder in respect of all present and future indebtedness of the Borrower to such Shareholder, which shall provide that payments of principal, interest, fees and other amounts in respect of such indebtedness shall not be made except to the extent expressly permitted under this Agreement;

 

11.
 
 

	
(c)
	
a subordination, postponement and standstill agreement from each holder of indebtedness which is intended to constitute Subordinated Debt other than Deeply Subordinated Debt;

 

	
(d)
	
Landlord Agreements with respect to the D2 Property and any other material leased properties identified to the Borrower by the Bank; and

 

	
(e)
	
such other security and further assurances as the Bank may reasonably require from time to time.

 

6.03General Provisions re: Security; Registration

 

The Security shall be in form and substance satisfactory to the Bank in its sole discretion. The Bank may require that any item of Security be governed by the Laws of the jurisdiction where the property subject to such item of Security is located. The Security shall be registered by the Borrower where necessary or desirable to record and perfect the charges contained therein, as determined by the Bank in its sole discretion, specifically including registrations in the Canadian Intellectual Property Office and, to the extent required by the Bank, fixture filings in respect of any personal property of the Companies affixed to Real Property.   Except to the extent such documents and instruments have been or are required to be delivered to the Bank as administrative agent under the Credit Agreement as security for the Credit Agreement Obligations, all share certificates evidencing issued and outstanding shares in the capital of each Company (other than the Borrower) shall be delivered to the Bank together with a stock transfer power of attorney executed in blank.

 

6.04Opinions re Security

 

The Borrower shall cause to be delivered to the Bank the opinions of the solicitors for the Companies regarding their corporate status, the due authorization, execution and delivery of the Security provided by them, all registrations in respect of the Security, the results of all corporate, personal property security and other customary searches in respect of the Companies, title to the Property and the results of all customary off-title enquiries relating thereto (such results to be satisfactory to the Bank) and the enforceability of such Security; all such opinions to be in form and substance satisfactory to the Bank and its counsel. In lieu of title opinions, the Borrower may at its option arrange for title insurance in respect of all of either or both Properties, the form and substance of which shall be satisfactory to the Bank.

 

	
6.05
	
After-Acquired Property; Further Assurances

 

The Borrower shall execute and deliver from time to time, and cause each other Company to execute and deliver from time to time, all such further documents and assurances as may be reasonably required by the Bank from time to time, not inconsistent with the terms of this Agreement, in order to provide the Security contemplated hereunder, specifically including: supplemental or additional security agreements, assignments and pledge agreements which shall include lists of specific assets to be subject to the security interests required hereunder.

 

	
6.06
	
Bank may obtain Insurance

 

If the Borrower does not provide the Bank with evidence of continuing insurance coverage which satisfies the requirements of this Agreement, the Bank may, but shall have no obligation to, purchase such insurance in order to protect the interests of the Bank in the Collateral. Such insurance may also, but need not, protect the Companies’ interests in the Collateral. The Borrower agrees to immediately reimburse the Bank upon demand for all costs and expenses incurred by the Bank in respect of the purchase of any such insurance, and until so paid such expenses shall constitute part of the BDC Facility Obligations, shall bear 

 

12.
 
interest at the highest rate then applicable to the BDC Facility Obligations and shall be secured by the Security.

 

6.07Insurance Proceeds

 

Subject to the Intercreditor Agreement, if insurance proceeds become payable in respect of loss of or damage to any property owned by a Company:

 

	
 
	
(a)
	
if an Event of Default has occurred and is continuing at such time, such proceeds shall be applied against the BDC Facility Obligations; and

 

	
 
	
(b)
	
if no Event of Default has occurred and is continuing at such time, the Bank shall consent to the payment of such proceeds to such Company if:

 

	
 
	
(i)
	
such property has been repaired or replaced within one hundred eighty (180) days after the event giving rise to the proceeds and the proceeds will reimburse the Company for payments it has made for such purpose; or

 

	
 
	
(ii)
	
the Company confirms in writing to the Bank that it will forthwith use such proceeds to repair or replace such property.

 

ARTICLE VII - CONDITIONS PRECEDENT

 

7.01Conditions Precedent to the Advance

 

The Bank shall have no obligation to make the Advance under the BDC Facility unless all of the following conditions shall have been satisfied, in each case to the satisfaction of the Bank:

 

	
 
	
(a)
	
all conditions precedent listed in Section 7.02 shall have been satisfied;

 

 

13.
 

	
 
	
(b)
	
the Bank shall have received all documents referred to in Article VI herein, together with the Intercreditor Agreement, duly executed by all parties thereto;

 

	
 
	
(c)
	
the Bank shall have received a certificate of status, certificate of compliance or similar certificate for each Credit Party, issued by its governing jurisdiction and each other jurisdiction in which it carries on business or holds any material assets;

 

	
 
	
(d)
	
the Bank shall have received a certificate of an officer of the Borrower, including a certified copy of resolutions of its board of directors, concerning the due authorization, execution and delivery of this Agreement and all other documents provided by it pursuant to this Agreement, and such related matters as the Bank may reasonably require;

 

	
 
	
(e)
	
the Bank shall have received a certificate of an officer of each other Credit Party, including a certified copy of resolutions of its board of directors, concerning the due authorization, execution and delivery of all documents provided by it pursuant to this Agreement, and such related matters as the Bank may reasonably require;

 

	
 
	
(f)
	
the Bank shall have received an opinion from the Borrower’s counsel regarding each Credit Party’s corporate status, capacity, the due authorization, execution, delivery and enforceability of this Agreement and all other documents provided by it pursuant to this Agreement, and such other matters as the Bank may reasonably require; and

 

	
 
	
(g)
	
the Bank shall have received such additional evidence, documents or undertakings as it may reasonably require to complete the transactions contemplated hereby.

 

	
 
	
7.02
	
Further Conditions Precedent to Advance

 

The Bank shall have no obligation to make the Advance under the BDC Facility unless all of the following conditions shall have been satisfied, in each case to the satisfaction of the Bank:

 

	
 
	
(a)
	
all representations and warranties in Section 4.01 herein (including for greater certainty all representations and warranties contained in the Credit Agreement incorporated by reference herein) are true and correct in all material respects immediately prior to such requested Advance and will continue to be true and correct in all material respects immediately thereafter; and

 

	
 
	
(b)
	
no Default or Event of Default (excluding for greater certainty any Default or Event of Default which has been waived in writing by the Bank) shall have occurred and be continuing immediately prior to such requested Advance or would exist immediately thereafter.

 

Each request by the Borrower for an Advance under the BDC Facility shall be deemed to constitute a representation by the Borrower that the foregoing conditions are satisfied. Without limiting the generality of the foregoing, each request by the Borrower for an Advance under the BDC Facility shall be deemed to constitute a representation by the Borrower that the proceeds of such Advance shall be used only for the purposes set out in Section 2.02 herein.

 

 

14.
 
ARTICLE VIII – DEFAULT AND REMEDIES

 

	
 
	
8.01
	
Events of Default

 

Without prejudice to the Bank’s unfettered right to demand accelerated repayment and take enforcement and / or realization steps under the Security at any time, the occurrence of any one or more of the following events shall constitute an event of default under this Agreement (each, an “Event of Default”):

 

	
 
	
(a)
	
the Borrower or any other Credit Party fails to pay when due any principal, interest or other amount owing to the Bank hereunder;

 

	
 
	
(b)
	
any representation or warranty provided by a Credit Party to the Bank herein or in any other Loan Document was incorrect in any material respect when made;

 

	
 
	
(c)
	
the Borrower fails to perform or comply with any of its covenants or obligations contained in this Agreement;

 

	
 
	
(d)
	
any Loan Document shall for any reason (other than the fault of the Bank) cease to be in full force and effect or shall be declared in a final judgment of a court of competent jurisdiction to be null and void; or any Credit Party contests the validity or enforceability thereof or denies it has any further liability or obligation thereunder; or any document (other than a Guarantee) constituting part of the Security shall for any reason fail to create a valid and perfected security interest in and to the property purported to be subject thereto;

 

	
 
	
(e)
	
any Person which has provided a Guarantee in respect of the BDC Facility Obligations terminates or purports to terminate its liability under such Guarantee or its liability thereunder in respect of any future advances, or disputes the validity or enforceability of such Guarantee or any Security provided by it;

 

	
 
	
(f)
	
the BDC Participation is terminated, or BDC disputes the validity or enforceability of the BDC Participation;

 

	
 
	
(g)
	
a Material Adverse Change occurs and is continuing; or

 

	
 
	
(h)
	
the occurrence of any event which constitutes an “Event of Default” as such term is defined in the Credit Agreement or any other agreement delivered in connection therewith (excluding for greater certainty any such Event of Default (as defined therein) which has been waived in writing by the Bank).

 

	
 
	
8.02
	
Insolvency Events

 

Upon the occurrence of an Insolvency Event with respect to the Borrower, the BDC Facility Obligations shall become immediately due and payable and the Bank shall be entitled to exercise any and all rights and remedies hereunder, without the necessity of any demand upon or notice to the Borrower.

 

 

15.
 

	
 
	
8.03
	
Combining Accounts, Set-Off

 

In addition to and not in limitation of any rights now or hereafter granted under applicable law, the Bank may without notice to the Borrower at any time and from time to time: (i) combine, consolidate or merge any or all of the deposits or other accounts maintained with the Bank by the Borrower (whether term, notice, demand or otherwise and whether matured or unmatured) and the Borrower’s obligations to the Bank hereunder; and (ii) set-off, apply or transfer any or all sums standing to the credit of any such deposits or accounts in or towards the satisfaction of such obligations.

 

 

 

ARTICLE IX - GENERAL

 

	
 
	
9.01
	
Waivers

 

The failure or delay by the Bank in exercising any right or privilege with respect to the non- compliance with any provisions of this Agreement by the Borrower and any course of action on the part of the Bank, shall not operate as a waiver of any rights of the Bank unless made in writing by the Bank. Any such waiver shall be effective only in the specific instance and for the purpose for which it is given and shall not constitute a waiver of any other rights and remedies of the Bank with respect to any other or future non-compliance.

 

	
 
	
9.02
	
Governing Law

 

This Agreement shall be interpreted in accordance with the laws of the Province of British Columbia. Without prejudice to the right of the Bank to commence any proceedings with respect to this Agreement in any other proper jurisdiction, the parties hereby attorn and submit to the non-exclusive jurisdiction of the courts of the Province of British Columbia.

 

	
 
	
9.03
	
Expenses of the Bank

 

The Borrower agrees to pay, on demand by the Bank from time to time, all reasonable expenses incurred by the Bank in connection with this Agreement, specifically including: reasonable expenses incurred by the Bank in respect of due diligence, credit reporting and responding to demands of BDC or any other Governmental Authority, reasonable legal expenses in connection with the preparation and interpretation of this Agreement, the administration of the BDC Facility and the enforcement of all rights and remedies of the Bank hereunder. The Borrower hereby authorizes the Bank to debit any bank account maintained by the Borrower with the Bank in order to pay any such expenses which are not paid by the Borrower within ten (10) days after receipt by the Borrower of a written request from the Bank for payment of such expenses.

 

	
 
	
9.04
	
Notice

 

Without prejudice to any other method of giving notice, all communications provided for or permitted hereunder shall be in writing and provided in accordance with the provisions relating to notices as set out in the Credit Agreement.

 

 

16.
 

	
 
	
9.05
	
Severability

 

Any provision of this Agreement which is illegal, prohibited or unenforceable in any jurisdiction, in whole or in part, shall not invalidate the remaining provisions hereof; and any such illegality, prohibition or unenforceability in any such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

	
 
	
9.06
	
Time of the Essence

 

Time shall be of the essence of this Agreement.

 

	
 
	
9.07
	
Entire Agreement; Waivers and Amendments to be in Writing

 

This Agreement supersedes all discussion papers, term sheets and other writings which may have been issued by the Bank prior to the date hereof relating to the BDC Facility, which shall have no force or effect; and this Agreement (including the relevant provisions of the Credit Agreement incorporated by reference herein) and any other documents or instruments contemplated herein or therein shall constitute the entire agreement and understanding between the Borrower and the Bank relating to the subject-matter hereof. No provision of this Agreement, or any other document or instrument in existence among the parties may be modified, waived or terminated except by an instrument in writing executed by the party against whom such modification, waiver or termination is sought to be enforced.

 

	
 
	
9.08
	
Assignment and Participation

 

	
 
	
(a)
	
The Borrower may not assign any of its rights or obligations under this Agreement without the prior written consent of the Bank.

 

	
 
	
(b)
	
The Bank may grant participations in all or any portion of its rights under this Agreement from time to time without notice to or obtaining the prior written consent of the Borrower; provided that the Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower shall continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations under this Agreement; and the Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including the right to approve any amendment, modification or waiver of any provision of this Agreement.

 

	
 
	
(c)
	
If an Event of Default has occurred and is continuing, the Bank may from time to time assign all or any portion of the BDC Facility hereunder, together with all of its rights and obligations incidental thereto, to any other Person without notice to or obtaining the prior written consent of the Borrower, subject to compliance with all applicable restrictions contained in the Program if at such time BDC holds a participation in all or any portion of the BDC Facility.

 

	
 
	
(d)
	
If no Event of Default has occurred and is continuing, the Bank may from time to time assign all or any portion of the BDC Facility hereunder, together with all of its rights and obligations incidental thereto, to one or more financial institutions that are not non- residents of Canada for the purposes of the Income Tax Act (Canada) subject to (i) providing prior written notice to the Borrower; and (ii) compliance with all applicable

 

 

17.
 
restrictions contained in the Program if at such time BDC holds a participation in all or any portion of the BDC Facility.

 

	
 
	
(e)
	
If the Bank assigns all or any portion of its rights and obligations under this Agreement to an assignee in accordance with the provisions of this section, and if such assignee executes and delivers to the Borrower and the Bank a written agreement in form and substance satisfactory to the Borrower, acting reasonably, to assume and be bound by all or the assigned portion of the Bank's obligations hereunder, then immediately upon the said delivery of such agreement the Bank's said obligations hereunder shall automatically be released to the extent so assumed by such assignee.

 

	
 
	
(f)
	
The Borrower agrees to co-operate fully with the Bank in connection with any assignment or participation permitted pursuant to this section, and agrees to execute and deliver from time to time in favour of the Bank and any such assignee or participant such documents and assurances as may be reasonably required by the Bank or the assignee or participant in connection with such assignment or participation.

 

	
 
	
9.09
	
Execution and Counterparts

 

This Agreement may be signed electronically, including through DocuSign and similar applications. This Agreement may be signed in any number of counterparts (including counterparts by scanned or electronic signature) and each counterpart will be deemed an original; taken together, all counterparts will be deemed to constitute one and the same instrument. Delivery of a printed counterpart (whether or not the counterpart was signed electronically) and electronic delivery (including by email transmission or transmission over an electronic signature platform) of an executed counterpart of this Agreement are each as valid, enforceable and binding as if the signatures were upon the same instrument and delivered in person.

 

	
 
	
9.10
	
Binding Effect

 

This Agreement shall be binding upon and shall enure to the benefit of the parties and their respective successors and permitted assigns; “successors” includes any corporation resulting from the amalgamation of any party with any other corporation.

 

	
 
	
9.11
	
Language

 

The parties have requested that this Agreement and all documents contemplated hereby or relating hereto be drawn up in English. Les parties ont requis que cette convention ainsi que tous les documents qui y sont envisagés ou qui s'y rapportent soient rédigés en anglais.

 

	
 
	
9.12
	
Intercreditor Agreement

 

This Agreement and the rights and obligations of the parties hereto are subject to the Intercreditor Agreement.

 

 

 

[remainder of this page is intentionally blank; signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WIT

NESS WHEREOF the parties hereto have executed this Agreement.

this Agreement.

 

 

 

 

Pure Sunfarms

 

By: /s/ Miguel Martinez

Name: Miguel Martinez

Title: VP Finance

 

Bank of Montreal

 

By: /s/ Hassan Baig

Name: Hassan Baig

Title: Associate Director

 

By: /s/ Heather Rashotte

Name: Heather Rashotte

Title: Associate Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page - Credit Agreement

 

 

 

 

SCHEDULE “A” - DEFINITIONS

 

“Acceleration Event” means any one or more of: (i) the occurrence of an Insolvency Event; and (ii) the delivery by the Bank to the Borrower of a demand for payment of the BDC Facility Obligations following the occurrence and during the continuation of an Event of Default other than an Insolvency Event.

 

"Advance" means a loan under the BDC Facility made by the Bank to the Borrower.

 

“AML Legislation” means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and all other applicable anti-money laundering, anti-terrorist financing, government sanction and "know your client" laws, whether within Canada or elsewhere, including any guidelines or orders thereunder.

 

“Applicable Law” means, in respect of any Person, property, transaction or event, all applicable statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, in each case to the extent having the force of law, or any provisions of such laws, including general principles of common and civil law and equity or policies or guidelines, to the extent such policies or guidelines have the force of law.

 

“Applicable Margin” means 3.75% per annum.

 

“Bank” means Bank of Montreal and its successors and permitted assigns. “BDC” means Business Development Bank of Canada.

“BDC Facility” is defined in Section 2.01.

 

“BDC Facility Limit” means six million, two hundred and fifty thousand Canadian Dollars ($6,250,000).

 

“BDC Facility Maturity Date” means the date which is 10 (ten) years after the date of this Agreement or such later date as may be agreed to in writing by the Bank, in its sole discretion after having complied with all requirements of the Program, in which event “BDC Facility Maturity Date” shall mean such extended date.

 

“BDC Facility Obligations” means all indebtedness and other obligations of the Borrower to the Bank under or in connection with this Agreement, specifically including the Outstanding Principal Amount, all accrued and unpaid interest thereon, and all fees, expenses and other amounts payable pursuant to this Agreement.

 

“BDC Participation” means the participation in the BDC Facility to be purchased by BDC from the Bank. “Borrower” means the borrower shown on the first page of this Agreement.

“Business Day” means a day on which the branch of the Bank located at First Canadian Place, Toronto, Ontario is open for normal banking business, but in any event not including Saturday, Sunday or any other day that is a statutory holiday in Toronto, Ontario or Vancouver, British Columbia.

 

“Canadian Dollars” or “$” means the lawful money of Canada.

 

 
 

- 20 -
 
“Closing Date” means the earlier of (i) the date of the first Advance under the BDC Facility; and (ii) the date the Bank confirms in writing to the Borrower that all conditions precedent listed in Section 7.01 herein have been satisfied.

 

“Collateral” means all property, assets and undertaking of the Companies encumbered by the Security, together with all proceeds of the foregoing.

 

“Companies” means the Borrower and all of its Subsidiaries from time to time; and “Company” means any of them as the context requires.

 

“Credit Agreement” means the second amended and restated credit agreement dated June 30, 2020 and entered into between, among others, the Borrower, as borrower, and the Bank, as Administrative Agent and Lender, as amended pursuant to a first supplemental credit agreement dated October 30, 2020 and as the same may be otherwise amended, restated, supplemented or otherwise modified from time to time.

 

“Credit Agreement Obligations” means all present and future indebtedness and other obligations of the Borrower to the Bank under or in connection with the Credit Agreement, specifically including the principal amount thereof, all accrued and unpaid interest thereon, all obligations under interest rate hedging agreements, currency hedging agreements and service agreements contemplated therein, all fees, expenses and other amounts payable pursuant thereto, and all indemnity obligations contained therein.

 

“Credit Parties” means the Companies and, for so long as the Village Guarantee remains outstanding, Village; and “Credit Party” means any one of them as the context requires.

 

“Default” means an event which has occurred and which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

 

“Event of Default” is defined in Section 8.01.

 

“Funded Debt” in respect of any Person means obligations of such Person which are considered to constitute debt in accordance with Adjusted GAAP, including indebtedness for borrowed money (in the case of the Borrower, specifically including the then outstanding amount of the Credit Agreement Obligations, the Outstanding Principal Amount, Subordinated Debt, obligations secured by Purchase- Money Security Interests and obligations under Capital Leases), capitalized interest, and the redemption price of any securities issued by such Person having attributes substantially similar to debt (such as securities which are redeemable at the option of the holder); but excluding the following: accounts payable, payroll accruals, accruals in respect of normal business expenses and future income Taxes (both current and long-term).

 

“Governmental Authority” means any: (i) federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the foregoing; or (iii) any quasi-governmental, judicial or administrative body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing.

 

“Insolvency Event” means, in respect of any Person, the occurrence of any one or more of the following events:

 

 

- 21 -
 

	
 
	
(a)
	
such Person ceases to carry on its business, commences any proceeding under Insolvency Legislation including a proposal or an assignment in bankruptcy, petitions or applies to any tribunal for, or consents to, the appointment of any receiver, trustee or similar liquidator in respect of all or a substantial part of its property, admits the material allegations of a petition or application filed with respect to it in any proceeding commenced in respect of it under Insolvency Legislation, or takes any corporate action for the purpose of effecting any of the foregoing;

 

	
 
	
(b)
	
any proceeding or filing is commenced against such Person seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment or composition of it or its debts under any Insolvency Legislation, or seeking the appointment of a receiver, trustee, custodian or other similar official for it or any of its property or assets; unless (i) such Person is diligently defending such proceeding in good faith and on reasonable grounds as determined by the Bank and (ii) such proceeding does not in the opinion of the Bank materially adversely affect the ability of such Person to carry on its business and to perform and satisfy all of its obligations herein.

 

“Insolvency Legislation” means legislation in any applicable jurisdiction relating to reorganization, arrangement, compromise or re-adjustment of debt, dissolution or winding-up, or any similar legislation, and specifically includes for greater certainty the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), and the Winding-Up and Restructuring Act (Canada).

 

“Intercreditor Agreement” means the intercreditor agreement dated the date hereof and entered into between, among others, the Bank and Bank of Montreal as agent of the lenders party to the Credit Agreement from time to time, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Loan Documents” means collectively, this Agreement, the Security, any promissory notes issued by the Borrower to the Bank hereunder, any certificate completed and executed by or on behalf of any Credit Party and all other certificates, instruments, agreements and other documents delivered, or to be delivered, by or on behalf of any Credit Party to the Bank, under or in connection with this Agreement, and specifically including any agreements or letters entered into between a Credit Party and the Bank in respect of fees payable to the Bank.

 

“Material Adverse Change” means any change or event which: (i) constitutes a material adverse change in the business, operations, financial condition or properties of the Companies taken as a whole; or (ii) materially impairs the Companies' ability, taken as a whole, to timely and fully perform any of their material obligations under the Loan Documents, or (iii) materially impairs the ability of the Bank to enforce its rights and remedies under this Agreement or the Security.

 

“Mortgages” is defined in Section 6.09.

 

"Outstanding Principal Amount" means, at any time, the principal amount of the Borrower’s indebtedness under the BDC Facility.

 

“Permitted Funded Debt” means, without duplication: (i) the Credit Agreement Obligations; (ii)the BDC Facility Obligations; (iii) indebtedness of any Company to another Company; (iv) Subordinated Debt including the Shareholder Loan; and (v) Funded Debt of the Companies secured by Permitted Liens.

 

 

- 22 -
 
“Permitted Liens” means:

 

	
 
	
(a)
	
“Permitted Liens” as defined in the Credit Agreement; and

 

	
 
	
(b)
	
the Security.

 

“Person” means an individual, corporation, partnership, trust, unincorporated association, Governmental Authority or any combination of the foregoing.

 

“Prime Rate” means the rate of interest announced from time to time by the Bank as its reference rate then in effect for determining rates of interest on Canadian Dollar loans to its customers in Canada and designated as its prime rate.

 

“Program” means the loan participation program established by BDC to provide liquidity support to Canadian-based businesses in connection with the Covid-19 crisis, as it may be amended, supplemented or replaced from time to time.

 

"Related Person" means (i) a Person who has a direct or indirect equity interest in the Borrower, and (ii) any Person which is an affiliate or associate of the Borrower (such terms having the respective meanings ascribed thereto in the Canada Business Corporations Act).

 

“Security” means the Guarantees, security agreements, mortgages, debentures and other documents required to be provided pursuant to Article VI and all other documents and agreements delivered by the Credit Parties or any other Persons to the Bank from time to time as security for the payment and performance of the BDC Facility Obligations, and the Liens constituted by the foregoing.

 

“Subordinated Debt” means indebtedness of any Company to any Person to which the Bank in its sole discretion has consented in writing and in respect of which the holder thereof has entered into a subordination, postponement and standstill agreement in favour of the Bank in form and substance satisfactory to the Bank and registered in all places where necessary or desirable to protect the priority of the Security, which shall provide (among other things) that: (A) the maturity date of such indebtedness is later than the BDC Facility Maturity Date; (B) the holder of such indebtedness may not receive any payments on account of principal or interest thereon (except to the extent, if any, expressly permitted therein); (C) any security held in respect of such indebtedness is subordinated to the Security;

(D)the holder of such indebtedness may not take any enforcement action in respect of any such security (except to the extent, if any, otherwise expressly provided therein) without the prior written consent of the Bank; and (E) any enforcement action taken by the holder of such indebtedness will not interfere with the enforcement action (if any) being taken by the Bank in respect of the Security.

 

“Village Guarantee” is defined in Section 6.02(a).

 

 

 

SCHEDULE 4.01(c) – BORROWER’S REPRESENTATIONS AND WARRANTIES

 

Reference is made to   the   BDC   Loan   Agreement   (Demand,   Non-Revolving)   of   Bank   of Montreal (the “Lender”) dated December 30, 2020 and accepted by Pure Sunfarms Corp. (the “Borrower”) on December 30, 2020 pursuant to which the Lender has made available to the Borrower a demand loan in the amount of $6,250,000 (the “Financing”).

 

This Financing is made possible with the financial support of the Business Development Bank of Canada (“BDC”) and the Lender.

 

To   confirm   the   eligibility   criteria   to   the   BDC   $20,000,000,000    loan   participation   program (the “Program”), the Borrower represents and warrants to the Lender:

 

	
 
	
(a)
	
The Borrower is an entity incorporated or formed under the laws of Canada or of a Canadian provincial or territorial jurisdiction which business’s intent is to generate revenue from the sale of goods or services (either directly or through another Credit Party) and has business operations (either directly or through another Credit Party) in Canada.

 

	
 
	
(b)
	
The Lender is the Borrower’s Principal Senior Lender.

 

	
 
	
(c)
	
The Borrower is not benefiting (and is not in the process of benefiting) from the Program through another participating lender under the Program.

 

	
 
	
(d)
	
The Borrower has not benefited from the Program in the past except for term loans in the principal aggregate amount of Nil from the Lender.

 

	
 
	
(e)
	
The Borrower and the other Credit Parties do not have a revenue model economically dependent on non-commercial sources such as direct government funding or private donations.

 

	
 
	
(f)
	
The Borrower and the other Credit Parties have been, directly or indirectly, negatively impacted by the COVID-19 pandemic.

 

	
 
	
(g)
	
The Borrower and the other Credit Parties were financially viable prior to the impact of the COVID-19 pandemic.

 

	
 
	
(h)
	
Neither the Borrower nor any other Credit Party:

 

	
 
	
(i)
	
is a government organization or body (other than an indigenous entity or body);

 

	
 
	
(ii)
	
is an entity in which a government organization or body (other than indigenous entities or bands) owns 25% or more of the equity interests;

 

	
 
	
(iii)
	
is a union, charitable, religious or fraternal organization;

 

	
 
	
(iv)
	
is an entity in which a union, charitable, religious or fraternal organization owns 25% or more of the equity interests;

 

	
 
	
(v)
	
is a fundraising vehicle for charities;

 

 

- 24 -
 

	
 
	
(vi)
	
is an entity in which 25% or more of the equity interests are held by any single current member of the Parliament of Canada or any single current member of the Senate of Canada (except if the Borrower or any other Credit Party is publicly traded);

 

	
 
	
(vii)
	
promotes violence, incites hatred or discriminates on the basis of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability; or

 

	
 
	
(viii)
	
is a member of a Group which has benefited (or is in the process of benefiting) from the Program, except if (y) the ultimate Controlling entity of the Borrower (and the Credit Parties) is an institutional investor or any other Controlling entity for which BDC has provided its consent for multiple loans under the Program; or

(z) the aggregate initial principal amount of loans under the Program extended to one or more of the members of the Borrower’s Group by the Lender does not exceed in the aggregate $18,750,000.

 

	
 
	
(i)
	
The Financing will be incremental to the Lender’s (or another financial institution’s) current exposure with the Borrower and, subject to the Borrower’s covenant immediately below as to the use of proceeds of the Financing, not replace or refinance any of the Borrower’s existing credits or have the effect of reducing availability under such existing credits; for certainty, the application of the proceeds from the Financing to repay outstanding loans under an overdraft or operating facility will be permitted so long as the Lender’s (or another financial institution’s) commitment or authorized amount thereunder is not reduced (other than to the extent of Temporary Excesses (as defined below)).

 

	
 
	
(j)
	
The Financing together with the Borrower’s other sources of liquidity will enable a degree of continuity of the business of the Borrower during the current economic environment.

 

In order to comply with the eligibility criteria to, or requirements of, the Program, the Borrower further agrees to (i) use the proceeds of the Financing to exclusively fund the operational cash flow needs of the Borrower or of any of its subsidiaries (including normally scheduled principal and interest payments on the Lender’s existing debt, repayments of temporary advances or borrowing excesses (the “Temporary Excesses”) under Lender’s Other Facilities advanced since March 1, 2020 as well as to satisfy ordinary course of business lease, equipment or supplier financing payments and to repay outstanding overdraft or operating loans with the Lender which can be re-borrowed; for certainty, principal repayments will not include repayments which repayment schedule was accelerated after March 1, 2020); and (ii) to participate in post-funding surveys conducted by the Government of Canada or any of its agents.

 

For certainty, proceeds of the Financing may not be used directly or indirectly to reduce the Lender’s (or another financial institution’s) existing credits or lending position with the Borrower (including principal repayments on Lender’s Other Facilities) except as otherwise provided in the immediately preceding paragraph and sub-paragraph (i) above.

 

 

- 25 -
 
For the purpose hereof:

 

	
 
	
(a)
	
“Affiliate” means, with respect to a Person, any other Person that directly or indirectly Controls, or is Controlled by, or is under common Control with, that Person;

 

	
 
	
(b)
	
“Control” (including any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or trust interests, by contract or otherwise); without limiting the generality of the foregoing (i) a Person is deemed to Control a corporation if such Person (or such Person and its Affiliates) holds outstanding shares or other rights carrying more than 50% of the voting power in the election of the board of directors of the corporation; (ii) a Person is deemed to Control a partnership if such Person (or such Person and its Affiliates) holds more than 50% in value of the equity of the partnership; (iii) a Person is deemed to Control a trust if such Person (or such Person and its Affiliates) holds more than 50% in value of the beneficial interests in the trust; and (iv) a Person that controls another Person is deemed to Control any Person controlled by that other Person;

 

	
 
	
(c)
	
“Credit Party” means the Borrower and any guarantor of the Borrower under the Financing;

 

	
 
	
(d)
	
“Group” means, collectively, the Borrower and its Affiliates;

 

	
 
	
(e)
	
“Lender’s Other Facilities” means, at any time with respect to the Borrower, the operating, term loan or other facilities (other than the Financing) provided by the Lender to the Borrower at such time including for clarity Specific Property Financing;

 

	
 
	
(f)
	
“Person” means any natural person, corporation, company, partnership, joint venture, limited liability company, unincorporated organization, trust or any other entity;

 

	
 
	
(g)
	
“Principal Senior Lender” means except as set out in the following provision, the primary lender or account or cash management bank of the Borrower which holds (or will hold in connection with the Financing) a first ranking general security interest or hypothec on the personal or moveable property of the Borrower (or if the Borrower operates in the automotive dealership business, a second ranking general security interest or hypothec which ranks behind security held by the Borrower’s original equipment manufacturer (e.g. Ford Credit, Toyota Credit, etc.)); provided that if the Borrower has syndicated credit facilities or “club deal” credit facilities, (A) with respect to syndicated credit facilities, the Principal Senior Lender may be any eligible Lender that is the administrative agent, the lender holding the largest commitment or the lead arranger under such facilities, provided that the same Principal Senior Lender provides all term loans under the Program to the Borrower on a bilateral basis; or (B) with respect to “club deals” or other similar type of lending arrangements, the Principal Senior Lender will be the eligible Lender holding the largest commitment or outstanding loans under the Borrower’s bilateral credit facilities (or if more than one Lender holds the same largest amount of commitment (or outstanding loans), the Principal Senior Lender may be any one of those eligible Lenders), provided that the same Principal Senior Lender provides all term loans under the Program to the Borrower on a bilateral basis; and

 

 

- 26 -
 

	
 
	
(h)
	
“Specific Property Financing” means with respect to the Borrower:

 

	
 
	
(i)
	
any security agreement, real property mortgage or charge, movable or immovable hypothec, conditional sale agreement, title retention agreement or other form of lien or security interest granted in favour of the Lender or another Person against specific real (immovable) or specific personal (movable) property of the Borrower that secures (A) the financing or refinancing for all or any part of the purchase price of such property (whether now owned or hereafter acquired from time to time) including supplier financing and floor plan financing; or (B) a particular loan or credit facility now existing or hereinafter provided from time to time to the Borrower;

 

	
 
	
(ii)
	
any lease of, or leasing facility, (or similar arrangement), now existing or from to time hereafter entered into by the Borrower with respect to specified equipment, motor vehicles or other personal property; or

 

	
 
	
(iii)
	
any factoring, securitization or similar financing of the receivables of the Borrower.

 

 

- 27 -
 
EXHIBIT A

Draw Notice

 

TO:Bank of Montreal DATE: DECEMBER [ ], 2020

This Draw Notice is furnished to Bank of Montreal (the “Bank”) pursuant to the BDC loan

agreement dated as of December [ ], 2020, (as the same may be amended, restated, renewed or replaced from time to time, the “Credit Agreement”) entered into between Pure Sunfarms Corp. (the “Borrower”) and the Bank. Capitalized terms used but not defined herein have the meaning assigned to such terms in the Credit Agreement.

 

This Draw Notice is irrevocable and represents the Borrower’s request for an Advance.

 

	
 
	
1.
	
Drawdown Date: 

 

	
 
	
2.
	
Amount of Requested Advance: 

 

	
 
	
3.
	
Type of Advance: 

 

The Borrower, and the undersigned officer to the best of his/her knowledge in his/her capacity as an officer of the Borrower, each certify that all conditions precedent to this Advance contained in the Credit Agreement have been satisfied, as applicable.

 

[Remainder of page intentionally left blank]

 

 

 

IN WITNESS WHEREOF, this Draw Notice has been duly executed and delivered by a duly authorized officer of the undersigned as of the date first above written.

 

 

	
	
PURE SUNFARMS CORP.

	
 

By: Name:

Title:vff-ex1016_6.htm

Exhibit 10.16

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of November 5, 2020 (the “Effective Date”)

BETWEEN:

PURE SUNFARMS CORP., a corporation governed by the laws of British Columbia

(the “Company”)

AND:

MANDESH DOSANJH, of 12456 23A Ave., Surrey, BC V4A 9X6

(the “Employee”)

BACKGROUND FACTS: 

	
A.
	
The Employee has been employed by the Company since October 1, 2018.

	
B.
	
The Company and the Employee are party to an employment agreement dated August 20, 2018 (the “Original Agreement”).

	
C.
	
The Company wishes to make available to the Employee and the Employee wishes to accept updated terms and conditions of employment by amending and restating the Original Agreement.

	
D.
	
The new terms and conditions of employment that the Company will make available to the Employee through this Agreement include an increase in the Employee’s annual base salary, effective January 1, 2021; an increase in the Employee’s annual target bonus opportunity effective as of the Company’s fiscal year commencing on January 1, 2021; and eligibility for Performance-Based Restricted Share Units (as defined below), all in accordance with, and subject to, the terms of this Agreement.  The Employee acknowledges that such new terms and conditions of employment would not be provided to the Employee except pursuant to this Agreement.

	
E.
	
The Company and the Employee wish to enter into this Agreement that will commence on the Effective Date to set forth the amended and restated terms and conditions of employment that will apply between the Company and the Employee.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the mutual covenants and agreements set forth in this Agreement and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each of the parties), the parties hereby agree as follows:

	
1.
	
Commencement of Agreement

This Agreement becomes effective on the Effective Date.  However, the Company will recognize the Employee’s start date with the Company as October 1, 2018 for all applicable purposes under this Agreement.

	
2.
	
Term

 

2

 

The Employee will continue to be employed by the Company for an indefinite term (the “Term”) until the Employee’s employment is terminated in accordance with this Agreement.

	
3.
	
Position and Duties

	
 
	
(a)
	
The Company will continue to employ the Employee as President and Chief Executive Officer (“CEO”), reporting to the Board of Directors of the Company (the “Board”).  The Employee will be responsible for and perform the duties commensurate with the position of President and CEO, and any other duties as may reasonably be assigned by the Company to the Employee in its sole discretion that reasonably relate to the Employee’s position and office.  The Employee acknowledges and agrees that the Company may reasonably amend the Employee’s duties, responsibilities, title and reporting arrangements from time to time without causing breach of this Agreement, provided such amendments do not constitute constructive dismissal at law. 

	
 
	
(b)
	
The Employee will be employed at the Company’s offices in Delta, British Columbia, or such other location(s) as directed by the Company, provided that if the Company proposes to permanently relocate the Employee outside the Lower Mainland of British Columbia, such relocation will be subject to the mutual agreement of the parties, acting reasonably.  The Employee will also be expected to regularly travel for business purposes, as required by the Company. 

	
 
	
(c)
	
The Employee acknowledges and affirms that he will continue to be employed by the Company in a fiduciary capacity, and as such will owe full fiduciary duties to the Company.

	
 
	
(d)
	
The Employee agrees that the Employee’s hours of work will vary and be irregular and will be those hours required to perform the duties and responsibilities of the Employee’s position but, in any event, the Employee’s employment shall be on a full-time basis.

	
 
	
(e)
	
The Employee agrees and consents to act as a director of the Company if so requested and elected.  The Employee further agrees to act as a director and/or officer of any of the Company’s affiliates if so requested by the Board.  All such directorships or offices shall be without any additional compensation or benefits, unless otherwise agreed to by the Company, in its sole discretion.  Upon termination of the Employee’s employment for any reason whatsoever, the Employee will immediately resign all such directorships or offices held by the Employee in the Company or any affiliate, and the Employee agrees that the Employee will be deemed to have resigned such directorships and offices on the date that the Employee’s employment ends.  The Company is hereby authorized as the Employee’s attorney-in-fact to execute any documents necessary to complete such resignations, with the same force and effect as if executed and delivered by the Employee.  The Employee will not be entitled to receive any severance payment or other compensation or benefits for the resignation of such directorships or offices.

	
 
	
(f)
	
This Agreement will continue to apply in the event that the Employee is transferred or promoted to any other position with the Company and notwithstanding any changes in the Employee’s compensation, title, duties, reporting or other terms and conditions of employment.

	
4.
	
Service to Company

At all times during the Employee’s employment with the Company, the Employee will:

 

3

 

	
 
	
(a)
	
well and faithfully serve the Company; 

	
 
	
(b)
	
act in, and promote, the best interests of the Company; 

	
 
	
(c)
	
devote the whole of the Employee’s working time, attention and energies to the business and affairs of the Company;

	
 
	
(d)
	
comply with all rules, regulations, policies and procedures of the Company as promulgated by the Company and amended from time to time; and

	
 
	
(e)
	
comply with all laws pertaining to the Employee’s employment with the Company. 

	
5.
	
Base Salary

The Employee’s base salary will be $345,000 per annum (the “Base Salary”).  Subject to the Employee’s continued employment hereunder and commencing effective January 1, 2021, the Base Salary will be increased to $400,000 per annum.  The Company will pay the Employee’s Base Salary in accordance with the Company’s payroll practices, as amended from time to time.  The Company will prorate the Base Salary for any partial calendar years that the Employee is employed by the Company.  

	
6.
	
Annual Bonus 

	
 
	
(a)
	
The Employee shall be eligible to receive an annual discretionary incentive payment (the “Annual Bonus”) under the Company’s annual bonus plan based on a target bonus opportunity of 40% of the Employee’s Base Salary, payable based upon the attainment of one or more pre-established Company and personal performance goals (the “Performance Goals”), as established by the Company in consultation with the Employee prior to the commencement of the relevant fiscal year; provided that the actual amount of any Annual Bonus shall be entirely within the discretion of the Company.  Effective as of the Company’s fiscal year commencing on January 1, 2021, the Employee’s annual target bonus opportunity will be increased from 40% of the Employee’s Base Salary to 80% of the Employee’s Base Salary.  Any Annual Bonus is not earned until the date that such Annual Bonus is actually determined to be payable to the Employee (but subject to the Employee’s continued employment with the Company on the date of payment).  Subject to paragraph 6(b) of this Agreement, in the event that the Employee’s employment with the Company terminates for any reason whatsoever, the Employee will cease to be eligible for payment of any portion of an Annual Bonus, prorated or otherwise, for a fiscal year effective the Employee’s “Disqualification Date”, unless otherwise required by the British Columbia Employment Standards Act (the “ESA”).  The Annual Bonus shall not form any part of the Employee’s remuneration package, and is solely discretionary in nature.

	
 
	
(b)
	
In the event that the Company terminates the Employee’s employment without cause pursuant to either paragraph 13 or paragraph 14 of this Agreement, the Employee will remain eligible for only the following:

	
 
	
(i)
	
If the Termination Date or COC Termination Date (as defined in paragraph 13 and paragraph 14 of this Agreement), as applicable is after the end of the most recently completed fiscal year but prior to the date of either the Company’s determination of whether any Annual Bonus is payable to the Employee for such most recently completed fiscal year or the payment date for any Annual Bonus actually awarded by the Company to the Employee for such most recently completed fiscal year, the 

 

4

 

	
 
		
Employee will remain eligible for an Annual Bonus for such most recently completed fiscal year (“Final Full Fiscal Year Annual Bonus”) in accordance with, and subject to, the terms herein.  If the Company has not yet determined whether any Final Full Fiscal Year Annual Bonus is payable to the Employee for such most recently completed fiscal year, the Company will assess the Performance Goals in accordance with its Annual Bonus review process in a manner consistent with any other eligible recipients.  For greater certainty, if as of the Termination Date or COC Termination Date, the Company has awarded a Final Full Fiscal Year Annual Bonus to the Employee but not yet paid it to him, the Employee will receive such Final Full Fiscal Year Annual Bonus.  Any Final Full Fiscal Year Annual Bonus awarded by the Company to the Employee will be paid at the same time as when the Company employed the Employee; and 

	
 
	
(ii)
	
A prorated Annual Bonus (“Prorated Annual Bonus”) for the fiscal year in which the Employee’s employment with the Company is terminated without cause prorated for the number of months that the Employee is employed by the Company and discharging his employment duties for the Company in such fiscal year up to the Termination Date or COC Termination Date, as applicable, in accordance with, and subject to, the terms herein.  The Company will determine whether any Prorated Annual Bonus is payable to the Employee after the completion of the fiscal year in which the Employee’s employment is terminated by the Company.  The Company will assess the Performance Goals in accordance with its Annual Bonus review process in a manner consistent with any other eligible recipients.  Any Prorated Annual Bonus awarded by the Company to the Employee will be paid at the same time as when the Company employed the Employee. 

For the purposes of this Agreement, the parties agree that “Disqualification Date” means the earlier of: 

	
 
	
(i)
	
the date the Employee gives or receives notice of termination of employment; and

(ii)the last day the Employee discharges his employment duties for the Company.

Subject to any express requirements under the ESA, the Employee agrees that: 

	
 
	
(i)
	
the Disqualification Date will not be extended by any period of notice of termination or pay in lieu of notice that may be applicable to the Employee, whether statutory, contractual, or otherwise; and 

	
 
	
(ii)
	
no Annual Bonus payment (or portion thereof) shall be paid or payable to the Employee in respect of or attributable to any period of notice of termination or pay in lieu of notice that may be applicable to the Employee following the Disqualification Date, regardless of whether such period of notice of termination (or pay in lieu thereof) arises pursuant to statute, contract, or otherwise.  

	
7.
	
Long Term Incentives

	
 
	
(a)
	
In lieu of the right to receive any Shares pursuant to the Share Grant (as these terms are defined in the Original Agreement), the Employee will be eligible to receive restricted share units subject to performance vesting conditions (the “Performance-Based Restricted Share Units”) from the Company’s affiliate, Village Farms International, Inc. 

 

5

 

	
 
		
(“Village”) in accordance with, and subject to, the terms, conditions and restrictions of the Performance-Based Restricted Share Unit Agreement between the Employee and Village dated November 5, 2020 (the “Share Unit Agreement”), together with the provisions of the Share-Based Compensation Plan, as referenced in the Share Unit Agreement (the “Plan”) and as such Plan may be amended.  For greater certainty, in the event that the Employee’s employment with the Company terminates for any reason whatsoever, the Employee’s rights, if any, in respect of the Performance-Based Restricted Share Units will be governed by the terms, conditions and restrictions of the Share Unit Agreement and the Plan.  The Employee hereby represents and warrants that the Employee has read the Share Unit Agreement and the Plan, including the consequences of ceasing to be an employee of the Company.  The Company draws the Employee’s attention to section 5.3 of the Plan and the definition of “Termination Date” in the Plan, and the Company also draws the Employee’s attention to the fact that the Performance-Based Restricted Share Units will vest over a particular period of time and as such, the Company makes no promise to the Employee that the Employee will receive all or any of the Performance-Based Restricted Share Units subject to the Share Unit Agreement.

	
 
	
(b)
	
The Employee acknowledges and agrees that: (i) the Employee was never issued any Shares pursuant to the Share Grant; (ii) the Share Grant is hereby cancelled and of no further force or effect; (iii) the Employee does not own any direct or indirect interest in the Company; and (iv) the Employee’s eligibility to receive the Performance-Based Restricted Share Units, in accordance with, and subject to, the terms set out above in paragraph 7(a) is being provided to the Employee in lieu of any rights in respect of the Shares and the Share Grant.  In furtherance of the foregoing, the Employee hereby does, remise, release, and forever discharge the Company and its past and present affiliates (together with their respective predecessors, successors and assigns, the “Covered Parties”), with respect to (i) any right, entitlement or interest in or with respect to any of the Shares; (ii) any right, entitlement or interest in or with respect to the Share Grant (or any portion thereof); and (iii) any claim of any nature or kind whatsoever related to any of the Shares and/or the Share Grant (or any portion thereof).  The Employee agrees that each Covered Party is intended to be a third-party beneficiary of this paragraph 7(b), and this paragraph 7(b) may be enforced by each Covered Party in accordance with the terms hereof in respect of the rights granted to such Covered Party hereunder.  For greater certainty, the Employee acknowledges and agrees that this paragraph 7(b) shall survive the termination of the Employee’s employment for any reason whatsoever.   

	
 
	
(c)
	
In the event that the Employee qualifies for the full amount of the Performance-Based Restricted Share Units in accordance with the terms of the Share Unit Agreement and the Plan and the Employee remains employed by the Company as CEO as of October 1, 2021 (the “LTIP Completion Date”), the Employee will be eligible to participate in a new long term incentive plan upon terms and conditions as mutually agreed upon by the Company and the Employee on or around the time of the LTIP Completion Date. 

	
8.
	
Benefit Plans

	
 
	
(a)
	
The Employee will continue to be eligible to participate in the Company’s insurance health benefits plans (the “Benefit Plans”) that the Company may make available to its executives from time to time in its discretion, subject to the terms and conditions of the plan documents and the Employee’s ability to qualify for such plans.

	
 
	
(b)
	
The Employee acknowledges and agrees that the Company may amend or modify the 

 

6

 

	
 
		
Benefit Plans (or any benefits provided pursuant to the Benefit Plans) at its sole discretion from time to time with or without notice and, for greater certainty, the foregoing shall not constitute a constructive dismissal.  The Employee understands and agrees that the Company is not liable or responsible in the event that the Employee is denied coverage for any benefits – in such circumstances the Employee agrees that the Employee has no legal recourse against the Company.  

	
 
	
(c)
	
The Employee agrees that the Company may deduct the Employee’s share of any benefit premiums in accordance with the Benefit Plans from the Employee’s pay in accordance with the Company’s established payroll practices.

	
 
	
(d)
	
The Employee will continue to be eligible to be covered by the Company’s directors and officers liability insurance policy that is in effect, subject to the terms and conditions of the policy document(s) and the Employee’s ability to qualify for such coverage.

	
9.
	
Expenses

The Employee will be reimbursed by the Company for all reasonable business expenses incurred in the course of the Employee’s employment in accordance with Company policy.  In order to be eligible for reimbursement for business expenses, the Employee must submit valid receipts at the time and in the form designated by the Company. 

	
10.
	
Vacation

The Employee will continue to be entitled to five (5) weeks of paid vacation per annum consistent with the Company’s practices in effect immediately prior to the Effective Date.  The Employee will take vacation at times approved by the Company.  All vacation entitlement must be taken by the Employee in the year it is earned, unless otherwise approved by the Company in its sole discretion.   

	
11.
	
No Other Compensation or Benefits

The Employee expressly acknowledges and agrees that unless otherwise expressly agreed in writing by the Company subsequent to execution of this Agreement by the parties hereto, the Employee will not be entitled by reason of the Employee’s employment by the Company to any remuneration, compensation or benefits other than as expressly set forth in this Agreement.  The Employee further acknowledges that the compensation provided to the Employee in this Agreement represents compensation for all hours worked by the Employee in the performance of the Employee’s duties for the Company.  

	
12.
	
Termination by the Employee

	
 
	
(a)
	
The Employee may resign at any time, but only by giving the Company three months’ prior written notice of the effective date of such resignation (the “Resignation Effective Date”).  In the event that the Employee resigns the Employee’s employment, the Company will continue to pay the Employee the Base Salary up to the Resignation Effective Date; pay the Employee the value of any unused accrued vacation entitlement pro-rated for that portion of the calendar year up to the Resignation Effective Date or as may be required by the minimum provisions of the ESA; and reimburse the Employee for any unpaid business expenses.  The Employee will not be entitled to any further compensation or payments from the Company.  For greater certainty, a notice of resignation provided by the Employee to the Company pursuant to this paragraph 12(a) will be deemed to be a notice of termination given by the Employee for the purposes of the definition of Disqualification 

 

7

 

	
 
		
Date in paragraph 6, above.  

	
 
	
(b)
	
The Company may waive the Employee’s resignation notice provided pursuant to paragraph 12(a) of this Agreement, in whole or in part, and in such circumstances, the Employee’s employment with the Company will end on the date specified by the Company and the Company will continue to provide the Employee with the following: (i) Base Salary payments in accordance with the Company’s payroll practices through to the Resignation Effective Date; and (ii) benefit coverage under the Benefit Plans (except any benefit coverage which the Company’s insurer(s) do not agree to extend following the end of the Employee’s employment with the Company) through to the Resignation Effective Date. 

	
13.
	
Termination By the Company Without Cause

	
 
	
(a)
	
The Company may, at any time, terminate the Employee’s employment without cause immediately on written notice to the Employee (where the date of such notice is defined as the “Termination Date”).  In the event that the Company terminates this Agreement without cause, the Company shall provide the Employee with only the following amounts, subject to the conditions specified in this paragraph 13: 

	
 
	
(i)
	
the Employee’s Base Salary up to the Termination Date; the value of any unused accrued vacation entitlement of the Employee pro-rated for that portion of the calendar year up to the Termination Date or as may be required by the ESA; and reimbursement to the Employee for any unpaid business expenses (with such accrued amounts owing by the Company to the Employee as of the end of the Employee’s employment with the Company defined as the “Accrued Obligations”); and 

	
 
	
(ii)
	
an aggregate amount equal to 12 months of the Employee’s Base Salary in effect on the Termination Date, less all applicable deductions and withholdings (the “Severance Amount”).

The Severance Amount shall be paid in equal installments for a period (the “Severance Period”) of one year in accordance with the Company’s established payroll practices at the time of the Employee’s termination (the “Severance Payments”).  Except for Accrued Obligations, the Severance Payments shall be paid only if the Employee executes and provides the Company with an effective and irrevocable general release of all claims arising from the Employee’s employment with the Company and the termination of the Employee’s employment with the Company in a form acceptable to the Company (the “General Release”).  If the Employee does not sign the General Release, the Employee agrees that the Employee will not be entitled to the Severance Amount or Severance Payments and in such circumstances the Employee will receive only such minimum notice of termination or pay in lieu of notice, as may be required by the ESA.

	
 
	
(b)
	
The Employee agrees that upon the Employee’s termination without cause the Employee will only be entitled to the amounts and entitlements set forth in this paragraph 13(a).  Without limiting the generality of the foregoing, the Employee agrees that the Employee will not be entitled to any Annual Bonus payment or other bonus or incentive payment (other than the Employee’s eligibility for the Final Full Fiscal Year Annual Bonus and the Prorated Annual Bonus as set out in paragraph 6(b) of this Agreement), vacation pay, benefits, or any other amount or entitlement during the Severance Period or otherwise except as specifically set forth in paragraph 13(a).  

 

8

 

	
 
	
(c)
	
The Employee understands that by complying with this paragraph 13 the Company satisfies its entire obligation under common law and statute to provide notice or pay in lieu of notice to the Employee in the event that the Employee’s employment is terminated without cause and the Employee hereby waives any claim to any other payments or benefits from the Company.

	
 
	
(d)
	
For greater certainty, this paragraph 13 shall not apply to, and shall have no effect in connection with, any termination of the Employee’s employment by the Company to which paragraph 14 of this Agreement applies.

	
14.
	
Termination Upon Change of Control

For the purposes of this Agreement, “Change of Control” means the occurrence, after the Effective Date, of one or more of the following:

	
 
	
(i)
	
a merger, a consolidation, a reorganization, an amalgamation or an arrangement that results in a transfer of more than 51% of the total voting power of the Company’s outstanding securities (on a fully-diluted basis) to a person or a group of persons different from a person or a group of persons holding those securities immediately prior to such transaction (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company); or

	
 
	
(ii)
	
a direct or indirect sale or other transfer of beneficial ownership of securities of the Company, possessing more than 51% of the total combined voting power of the Company’s outstanding securities (on a fully-diluted basis), to a person or a group of persons different from a person or a group of persons holding those securities immediately prior to such transaction (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company),

provided however, that a Change of Control shall be deemed not to have occurred if the Board, in good faith, determines that a Change of Control was not intended to occur in the particular circumstances in question.

	
 
	
(a)
	
This paragraph 14 applies only in circumstances where the Company terminates the Employee’s employment without cause during the period commencing upon the consummation of a Change of Control and ending 180 days thereafter (the “COC Period”).  For greater certainty, in the event that the Company terminates the Employee’s employment without cause within the COC Period, the Employee will only be entitled to the payments set forth in this paragraph 14, and the Employee will not also be eligible for the payments set forth in paragraph 13 of this Agreement.

	
 
	
(b)
	
The Company may, at any time, terminate the Employee’s employment without cause within the COC Period immediately on written notice to the Employee (where the date of such notice is defined as the “COC Termination Date”).  In the event that the Company terminates this Agreement without cause within the COC Period, the Company shall provide the Employee with only the following amounts, subject to the conditions specified in this paragraph 14:

	
 
	
(i)
	
the Accrued Obligations up to the COC Termination Date; and 

 

9

 

	
 
	
(ii)
	
an aggregate amount equal to 24 months of the Employee’s Base Salary in effect on the COC Termination Date, less all applicable deductions and withholdings (the “COC Severance Amount”).

The Company will pay the Employee the COC Severance Amount as a lump sum.   Except for the Accrued Obligations, the Company’s payment of the COC Severance Amount will be conditional upon the Employee executing and providing to the Company an effective and irrevocable general release of all claims arising from the Employee’s employment with the Company and the termination of the Employee’s employment with the Company in a form acceptable to the Company (the “COC General Release”).  If the Employee does not execute the COC General Release, the Employee agrees that the Employee will not be entitled to the COC Severance Amount and in such circumstances the Employee will receive only such minimum notice of termination or pay in lieu of notice, as required by the ESA.

	
 
	
(c)
	
The Employee agrees that upon the Employee’s termination without cause during the COC Period the Employee will only be entitled to the amounts and entitlements set forth in paragraph 14(b).  Without limiting the generality of the foregoing, the Employee agrees that the Employee will not be entitled to any Annual Bonus payment or other bonus or incentive payment (other than the Employee’s eligibility for the Final Full Fiscal Year Annual Bonus and the Prorated Annual Bonus as set out in paragraph 6(b) of this Agreement), vacation pay, benefits, or any other amount or entitlement arising from the Employee’s termination without cause during the COC Period, except as specifically set forth in paragraph 14(b).  

	
 
	
(d)
	
The Employee understands that by complying with this paragraph 14 the Company satisfies its entire obligation under common law and statute to provide notice or pay in lieu of notice to the Employee in the event that the Employee’s employment is terminated without cause and the Employee hereby waives any claim to any other payments or benefits from the Company.

	
15.
	
Termination for Cause

The Company may terminate the Employee’s employment with the Company at any time for cause without any notice, severance or other payments except Accrued Obligations owing by the Company to the Employee up to the effective date of his termination for cause.  If the Company terminates for cause, and an adjudicator later determines that the Company did not have cause, the Employee agrees that the Employee will only be entitled to damages in the amount that would have been payable on termination without cause under paragraph 13.

	
16.
	
Termination by Death of Employee

If the Employee dies, this Agreement will be considered frustrated at law and terminated by that death and the Company will not be required to pay any amounts to any heir or estate of the Employee except the Accrued Obligations owing by the Company to the Employee up to the date of the Employee’s death.  

	
17.
	
Return of Property and Cessation of Benefits

	
 
	
(a)
	
Forthwith upon the termination of the Employee’s employment with the Company for any reason whatsoever, or at any other time upon the request of the Company, the Employee will return to the Company and deliver up to the Company all of the Company’s property 

 

10

 

	
 
		
that is within the Employee’s possession or control. 

	
 
	
(b)
	
Subject to any requirements imposed by the ESA or unless otherwise specified in this Agreement, upon termination of the Employee’s employment for any reason whatsoever, (including, without limitation, the Employee’s termination without cause pursuant to either paragraph 13 or paragraph 14 of this Agreement), the Employee’s entitlement to benefits from the Company pursuant to the Benefit Plans (or otherwise) will end effective the last day of the Employee’s employment with the Company, which date will not be extended by any period of pay in lieu of notice of termination (whether statutory, contractual, or otherwise).    

	
18.
	
Outside Engagements & Conflicts of Interest

During the Term, the Employee agrees that:

	
 
	
(a)
	
the Employee will not carry on or engage in any other business or occupation or become a director, officer, employee, consultant, independent contractor, or agent of, or hold a position or office with, any other company, organization, entity, or person, without the prior written consent of the Board;

	
 
	
(b)
	
the Employee will not, without the Board’s prior written consent, hold any office, acquire any property or enter into any contract, arrangement, understanding or transaction with any other person or entity that would in any way conflict or interfere with the Employee’s duties or obligations under this Agreement or that would otherwise prevent the Employee from performing the Employee’s obligations hereunder; and

	
 
	
(c)
	
the Employee will promptly, fully and frankly disclose to the Board in writing:

	
 
	
(i)
	
the nature and extent of any interest the Employee has or may have, directly or indirectly, in any contract, arrangement, understanding or transaction or proposed contract, arrangement, understanding or transaction with the Company or any subsidiary or affiliate of the Company; and 

	
 
	
(ii)
	
every office he may hold or acquire, and every property he may possess or acquire, whereby directly or indirectly a duty or interest might be created in conflict with the interests of the Company or the Employee’s duties and obligations under this Agreement;

and following such disclosure the Board may, in its sole discretion, determine that a conflict of interest exists and require the Employee to eliminate such conflict of interest.

	
19.
	
Confidential Information

In this Agreement, “Confidential Information” means any and all information in any form (whether written, electronic, graphic or otherwise) relating to the business, property, assets or operations of the Company or any of its affiliates, licensors, licensees, customers, investors, distributors, suppliers, or persons who have supplied information on a confidential basis to the Company or its affiliates, including, without limitation, business opportunities (including markets which have been investigated); trade secrets; intellectual property; methods, including production methods and techniques; models; passwords; financial information; product or proposed product information; prototypes; formulas; recipes; processes; marketing or business plans and strategies, forecasts, and pricing information;  employee, licensor, licensee, customer, 

 

11

 

investor, distributor, and supplier information and records; computer software programs; agreements and contracts; customer lists; customer contacts; the buying habits and special requirements of customers; the types of products purchased from the Company or its affiliates by customers; financial or business projections; and any information from which the Company or its affiliates derives economic value or the disclosure of which could cause harm to the Company or its affiliates.  For sake of clarity, the phrase “Confidential Information” is intended by the parties to be construed broadly and to encompass all information that has or could have commercial value to the Company or its affiliates.  Notwithstanding the foregoing, “Confidential Information” will not include:

	
 
	
(a)
	
information that is lawfully and generally available to the public other than as a result of disclosure, fault or negligence of the Employee;

	
 
	
(b)
	
information the Employee can establish by written records was in the Employee’s possession prior to the Employee’s employment by the Company and was not subject to any obligation of confidentiality; and

	
 
	
(c)
	
information the Employee can establish by written records was received without an obligation of confidentiality from a third party who did not acquire or hold such information under any obligation of confidentiality.

	
20.
	
Obligation of Confidentiality

	
 
	
(a)
	
The Employee acknowledges and agrees that during the course of the Employee’s employment with the Company the Employee will have access to, acquire and develop Confidential Information, and that the unauthorized use or disclosure of Confidential Information could have a material adverse effect on the financial, legal, commercial and competitive position and interests of the Company and its affiliates. 

	
 
	
(b)
	
During the Employee’s employment with the Company and at all times thereafter the Employee will:

(i)maintain the strict confidentiality of all Confidential Information;

	
 
	
(ii)
	
not use the Confidential Information or disclose the Confidential Information except during the Employee’s employment with the Company and only as strictly required to carry out the Employee’s duties and responsibilities for the Company and on a confidential basis, and for no other purpose and in no other manner; and

	
 
	
(iii)
	
take all precautions necessary to prevent unauthorized access to or use, disclosure or reproduction of the Confidential Information.

	
 
	
(c)
	
The Employee will, at the Company’s direction during the Employee’s employment, or upon the termination of the Employee’s employment with the Company for any reason whatsoever, immediately return all Confidential Information in the Employee’s possession or control, in whatever form, to the Company.  Upon the termination of the Employee’s employment with the Company for any reason the Employee will, if directed by the Company, permanently delete and destroy all Confidential Information and related records contained in the Employee’s computers and computer systems and in any other electronic or IT systems of the Employee.

 

12

 

	
 
	
(d)
	
Nothing in this paragraph 20 will prevent the Employee’s disclosure of Confidential Information that is required to be disclosed under applicable laws or legal process, provided that the Employee first gives the Company as much notice as is reasonably and lawfully possible in the circumstances before making any such disclosure and the Employee reasonably cooperates with the Company to obtain a protective order or other means of limiting the disclosure or use of the Confidential information.

	
21.
	
Intellectual Property

For the purpose of this Agreement, “Intellectual Property” includes any and all products, materials, information, programs, designs, artwork, data, correspondence, discoveries, concepts, software, know-how, inventions, methods, trademarks, trade names, plans, training and marketing materials, strategies, trade secrets, improvements, modifications, derivative works, ideas, developments, and other intellectual property, whether or not they may be patented, copyrighted, trademarked or otherwise protected, which are disclosed to, made, developed, conceived, contributed to or worked upon by the Employee in connection with or arising from the Employee’s duties or otherwise in the course of the Employee’s employment by the Company, including without limitation, any materials and inventions: (i) that have been substantially facilitated by the use of the Company’s intellectual property or resources, or (ii) the idea for which was gained during the Employee’s employment with the Company.

The Employee agrees as follows: 

	
 
	
(a)
	
the Company is the exclusive owner of all right, title and interest in and to the Intellectual Property, including without limitation, all copyrights, patent rights, trade-marks, trade names, industrial designs, trade secrets and other intellectual property in and to all the Intellectual Property;

	
 
	
(b)
	
for greater certainty, and to the extent that the Intellectual Property is not already owned by the Company pursuant to the preceding subsection or otherwise, the Employee hereby irrevocably and unconditionally assigns to the Company or its nominee all right, title and interest throughout the world that the Employee may have in any Intellectual Property, including without limitation, all copyrights, patent rights, trade-marks, trade names, industrial designs, trade secrets and other intellectual property in and to all the Intellectual Property, effective at the time each is created;

	
 
	
(c)
	
if the Employee has any rights to the Intellectual Property that cannot be assigned to the Company, the Employee unconditionally and irrevocably waives the enforcement of such rights, and all claims and causes of action of any kind against the Company with respect to such rights, and agrees, at the Company’s request and expense, to consent to and join in any action to enforce such rights.  Without limiting the generality of the foregoing, the Employee hereby unconditionally waives any and all moral rights that the Employee may have in the Intellectual Property, including the right to the integrity of the work, the right to be associated with the work or identified as its author, the right to restrain or claim damages for any distortion, mutilation or other modification of them, and the right to restrain their use or reproduction in any context or in connection with any product, service, cause or institution;

	
 
	
(d)
	
to the extent that a formal transfer or assignment of any rights of the Employee in any of the Intellectual Property is required, or the consent of the Employee to the registration of any right in any Intellectual Property is required, the Employee will execute and deliver or, as applicable, will cause to be so executed and delivered, any further assignments, 

 

13

 

	
 
		
documentation and other instruments as may be reasonably required by the Company to effect the transfer, assignment or registration; and

	
 
	
(e)
	
notwithstanding anything in this Agreement to the contrary if, due to the Employee’s unavailability, mental or physical incapacity, or for any other reason, the Company is unable to secure the Employee’s signature on any assignment agreement, patent application or any other document, application or other instrument contemplated by this paragraph, including without limitation any document required in order to apply for or to pursue any application for any Canadian, United States or foreign patent or copyright registrations covering any Intellectual Property assigned to the Company as per this Agreement, the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Employee’s agent in fact, to act for and on the Employee’s behalf and stead to execute and, as necessary, file any such agreements, applications, instruments or other documents, and to do all other lawfully permitted acts to further the prosecution and issuance of patents and copyright registrations thereon with the same legal force and effect as if executed by the Employee.

	
22.
	
Restrictive Covenants

	
 
	
(a)
	
The Employee acknowledges and agrees that due to the nature of the Employee’s position (including the Employee’s overall responsibility for customer relationships), the broad range of Confidential Information to which the Employee has had (and will continue to have) access to, and because the use of, or even the appearance of the use of, the Confidential Information in certain circumstances may cause irreparable damage to the Company and its reputation, or to investors or customers of the Company, it is necessary for the Company and the Employee to enter into certain post-employment restrictions.  Accordingly, in exchange for the Employee’s eligibility for the incentive compensation specified in paragraph 6 and the long term incentives specified in paragraph 7, the terms in respect of the Employee’s termination without cause specified in paragraph 13, the terms in respect of the Employee’s termination without cause within the COC Period as specified in paragraph 14, and other good and valuable consideration, respectively, the receipt and sufficiency of which are hereby acknowledged, the Employee agrees to the post-employment restrictions set forth herein which will apply in circumstances where the Employee’s employment terminates for any reason.

	
 
	
(b)
	
The Employee covenants and agrees that for a period of 12 months from the date that the Employee’s employment with the Company ends for any reason whatsoever, the Employee will not (except with the prior express written consent of the Company), directly or indirectly, engage in, be employed by, perform services for, or participate in the ownership or operation of, any Competitive Business, in an executive, management or similar capacity, or as a member of a board of directors.  For purposes hereof, the Company and the Employee agree that “Competitive Business” means: any business carried on in British Columbia or Ontario (other than the business of the Company) that grows, cultivates, extracts, produces, sells, and/or distributes cannabis for medical or non-medical purposes.  

	
 
	
(c)
	
The Employee covenants and agrees that for a period of 12 months from the date that the Employee’s employment with the Company ends for any reason whatsoever, the Employee will not (except with the prior express written consent of the Company), directly or indirectly:  

	
 
	
(i)
	
solicit any person or entity who is a customer of the Company that the Employee 

 

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dealt with in the course of discharging the Employee’s duties and responsibilities on behalf of the Company during the Employee’s employment with the Company for or in connection with any purpose involving growing, cultivating, extracting, producing, selling and/or distributing cannabis for medical or non-medical purposes;

	
 
	
(ii)
	
solicit any person or entity who is a customer of the Company that the Employee dealt with in the course of discharging the Employee’s duties and responsibilities on behalf of the Company during the Employee’s employment with the Company for the purpose of inducing that person or entity to reduce or terminate the person’s or entity’s level of business with the Company; or

	
 
	
(iii)
	
seek to recruit or solicit any employee of the Company to leave their employment with the Company.

	
23.
	
Non-disparagement

During the Employee’s employment with the Company and after the termination of the Employee’s employment with the Company for any reason whatsoever, the Employee agrees that, except as may be required by law, the Employee will not take any action or make any statement or disclosure, written or oral, that is intended or reasonably likely to disparage the Company or its affiliates, or any of their past or present employees, officers or directors.

	
24.
	
Remedies

The Employee acknowledges and agrees that any breach or threatened breach of paragraphs 19-23 inclusive of this Agreement would cause or result in irreparable harm, loss and damages to the Company for which the Company could not be adequately compensated by the Company’s recovery of monetary damages, and that in the event of a breach or threatened breach of any of such paragraphs, the Company will have the right to seek an injunction, specific performance or other equitable relief or other relief, including an accounting of all the Employee’s profits or benefits arising out of any such breach, and the Employee waives all defences to the strict enforcement of this Agreement.  It is further acknowledged and agreed that the remedies of the Company specified in this paragraph are in addition to, and not in substitution for, any rights or remedies of the Company at law or in equity and that all such rights and remedies are cumulative and not alternative and that the Company may have recourse to any one or more of its available rights or remedies as it shall see fit.  The Employee acknowledges and agrees that paragraphs 19 through 23 of this Agreement shall survive the termination of the Employee’s employment for any reason whatsoever.  In the event that the Employee breaches or threatens to breach any provision of this Agreement, including but not limited to paragraphs 19 through 23, or commences any legal proceedings challenging the validity or enforceability of any of paragraphs 19 through 23, any remaining Severance Payments due to the Employee under paragraph 13(a) of this Agreement that are in excess of the Employee’s entitlements under the ESA will immediately cease and the Company may seek return of any payments previously made to the Employee under paragraph 13(a), except any amount that the Employee is entitled to receive pursuant to the ESA.

	
25.
	
Notification to Future Employers

The Employee agrees that the Employee will inform the Employee’s prospective or subsequent employers or principals (the “Future Employers”) of the terms and conditions of this Agreement or any other policy or agreement between the Employee and the Company that may be in effect at, or survive, the termination of the Employee’s employment (the “Surviving Obligations”).  If the Employee fails to satisfy 

 

15

 

the Company that the Employee has complied with the Employee’s disclosure obligations under this provision, the Employee agrees that the Company may, at its discretion, contact any Future Employer and inform them of the Surviving Obligations.

	
26.
	
Warranty By Employee

The Employee represents and warrants that the Employee is not a party to any agreement, or otherwise bound by any duty to another person or entity, that may restrict the Employee’s ability to enter into this Agreement or perform the duties and responsibilities contemplated by this Agreement.  The Employee further agrees that in the performance of the duties and responsibilities contemplated by this Agreement the Employee will not disclose or use any confidential or proprietary information belonging to any prior employer or other persons or entities.

	
27.
	
Governing Law

This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

	
28.
	
Minimum Standards

If any provision of this Agreement provides for a lesser benefit to the Employee than the minimum standards contained in any applicable legislation, the minimum standard contained in any such legislation will prevail and be deemed to apply to the extent of the inconsistency.

	
29.
	
Dispute Resolution

	
 
	
(a)
	
The parties agree that subject to the exceptions specified below in subparagraph (b), all claims or disputes arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the provisions of the Arbitration Act (British Columbia).  The parties agree that prior to invoking arbitration under this provision, they will, for a period of up to 30 days after issuance of notice of the dispute or claim from one party to the other party, attempt to negotiate a resolution to such dispute or claim.  The arbitration shall take place in Vancouver, British Columbia and shall be conducted in the English language.  The arbitration award shall be given in writing and shall be final and binding on the parties.  The award shall give reasons and shall deal with the question of costs of arbitration and all related matters.  The parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions and any awards) shall not be disclosed beyond the arbitrator, the parties, their counsel and any person necessary to the conduct of the proceeding, except as may lawfully be required in judicial proceedings relating to the arbitration or otherwise.  The parties may waive this arbitration agreement by mutual agreement, in which case the parties will attorn to the exclusive jurisdiction of the courts of the province of British Columbia.

	
 
	
(b)
	
The parties agree that the Company may enforce the terms of paragraphs 19-23 inclusive of this Agreement by seeking injunctive or other relief in a court of competent jurisdiction in respect thereof.

	
30.
	
Entire Agreement

 

16

 

The terms and conditions of this Agreement are in addition to, and not in substitution for, the obligations, duties and responsibilities imposed by law on employees of corporations generally, and the Employee agrees to comply with such obligations, duties and responsibilities.  Subject to the foregoing, this Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.  This Agreement supersedes and replaces all prior written and oral agreements, offer letters, and representations made by either party in respect of the subject matter hereof, including, without limitation, the Original Agreement, and all such agreements, offer letters, and representations are hereby cancelled and of no further force and effect, and both parties renounce any reliance on them.  This Agreement may only be varied by further written agreement signed by the Employee and the Company.  

	
31.
	
Affiliates

The parties agree that for the purposes of this Agreement, “affiliate” means when used with respect to the Company, another person that either directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of equity, voting or other interests, as trustee or executor, by contract or otherwise.

	
32.
	
Further Assurances

The parties will execute and deliver to each other such further instruments and assurances and do such further acts as may be required to give effect to this Agreement.

	
33.
	
Surviving Obligations

The termination of the Employee’s employment with the Company for any reason whatsoever will not prejudice the rights and obligations of the parties under this Agreement.

	
34.
	
Currency, Deductions and Withholdings

All payments by the Company to the Employee under this Agreement will be made in Canadian funds and will be subject to all required statutory deductions and withholdings.

	
35.
	
Assignment

The Employee agrees that this Agreement may be assigned by the Company to any of its affiliates or, with the Employee’s consent, to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company.  The Employee shall not be entitled to any payment or other consideration or to any advance notice of any such assignment and, for greater certainty, such assignment shall not constitute a constructive dismissal.  The Employee may not assign or delegate the Employee’s duties under this Agreement without the prior written consent of the Company.  

	
36.
	
Severability

If any provision of this Agreement or any part thereof will for any reason be held to be invalid or unenforceable in any respect, then such invalid or unenforceable provision or part will be severable and severed from this Agreement and the other provisions of this Agreement will remain in effect and be construed as if such invalid or unenforceable provision or part had never been contained herein.

 

17

 

	
37.
	
Waiver

Any waiver of any breach or default under this Agreement will only be effective if in writing signed by the party against whom the waiver is sought to be enforced, and no waiver will be implied by any other act or conduct or by any indulgence, delay or omission.  Any waiver will only apply to the specific matter waived and only in the specific instance in which it is waived.

	
38.
	
Counterparts

This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement.  Electronic and pdf copies of signed signature pages shall be binding originals.  

	
39.
	
Independent Legal Advice

The Employee hereby acknowledges and confirms having the full opportunity to seek independent legal advice prior to signing this Agreement, and further acknowledges that the Employee has read, understood, and agreed to be bound by all of the terms and conditions contained herein.

[execution page follows]

 

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IN WITNESS WHEREOF the parties have entered into this Agreement as of the day and year first above written.

PURE SUNFARMS CORP.
 

Per:/s/ Michael A. DeGiglioAuthorized Signatory

 

			
	
Signed by MANDESH DOSANJH in the presence of: 

Witness Signature

Name

Address

Occupation
	
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/s/ Mandesh Dosanjh
MANDESH DOSANJH

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