Document:

exv10w12

Exhibit 10.12

Kvaerner Chemetics Building

1818 Cornwall Street

Vancouver, British Columbia

Purchase and Sale Agreement

Between

2725312 Canada Inc.

And

Lululemon Athletica Canada Inc.

December 22, 2010

 

 

Table of Contents

	 	 	 	 	 	 	 

	ARTICLE 1 INTERPRETATION	 	 	1	 
	 
	 	 	 	 	 	 
	1.1

	 	Definitions
	 	 	1	 
	1.2

	 	General Principles
	 	 	4	 
	1.3

	 	Schedules
	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE	 	 	6	 
	 
	 	 	 	 	 	 
	2.1

	 	Agreement of Purchase and Sale
	 	 	6	 
	2.2

	 	Purchase Price
	 	 	6	 
	2.3

	 	Payment of Purchase Price
	 	 	6	 
	2.4

	 	Investment of Deposit
	 	 	6	 
	2.5

	 	Application of Deposit
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 3 COMPLETION, POSSESSION AND ADJUSTMENTS	 	 	7	 
	 
	 	 	 	 	 	 
	3.1

	 	Completion
	 	 	7	 
	3.2

	 	Possession
	 	 	8	 
	3.3

	 	Adjustments
	 	 	8	 
	3.4

	 	Risk
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 4 VENDOR’S COVENANTS, REPRESENTATIONS AND WARRANTIES	 	 	10	 
	 
	 	 	 	 	 	 
	4.1

	 	Basic Covenants
	 	 	10	 
	4.2

	 	Vendor’s Representations and Warranties
	 	 	13	 
	4.3

	 	Survival of Representations
	 	 	16	 
	4.4

	 	Indemnity
	 	 	16	 
	4.5

	 	Estoppel Certificates
	 	 	16	 
	4.6

	 	Lease Changes
	 	 	17	 
	4.7

	 	Service Contract Changes
	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE 5 PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS	 	 	18	 
	 
	 	 	 	 	 	 
	5.1

	 	Purchaser’s Representations and Warranties
	 	 	18	 
	5.2

	 	As Is — Where Is
	 	 	18	 
	5.3

	 	Purchaser’s Covenants
	 	 	19	 
	5.4

	 	Service Contracts
	 	 	20	 
	5.5

	 	Indemnity
	 	 	20	 
	5.6

	 	Environmental and Physical Condition — Release
	 	 	20	 
	5.7

	 	Survival of Representations
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE 6 CONDITIONS PRECEDENT	 	 	21	 
	 
	 	 	 	 	 	 
	6.1

	 	Purchaser’s Conditions
	 	 	21	 
	6.2

	 	Waiver and Satisfaction
	 	 	22	 

 

(ii)

	 	 	 	 	 	 	 

	ARTICLE 7 PREPARATION OF CLOSING DOCUMENTS	 	 	22	 
	 
	 	 	 	 	 	 
	7.1

	 	Delivery of Closing Documents by the Vendor
	 	 	22	 
	7.2

	 	Delivery of Closing Documents by Purchaser
	 	 	23	 
	7.3

	 	Preparation of Closing Documents
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE 8 CLOSING PROCEDURE	 	 	23	 
	 
	 	 	 	 	 	 
	8.1

	 	Payment in Trust
	 	 	23	 
	8.2

	 	Registration
	 	 	24	 
	8.3

	 	Closing
	 	 	24	 
	8.4

	 	Concurrent Requirements
	 	 	24	 
	8.5

	 	Discharge of Encumbrances by Vendor
	 	 	24	 
	8.6

	 	Closing Deliveries
	 	 	25	 
	8.7

	 	Election
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE 9 MISCELLANEOUS	 	 	25	 
	 
	 	 	 	 	 	 
	9.1

	 	Time
	 	 	25	 
	9.2

	 	No Waiver
	 	 	25	 
	9.3

	 	Tender
	 	 	26	 
	9.4

	 	Fees and Expenses
	 	 	26	 
	9.5

	 	Harmonized Sales Tax
	 	 	26	 
	9.6

	 	Commission
	 	 	26	 
	9.7

	 	Entire Agreement
	 	 	27	 
	9.8

	 	Amendment
	 	 	27	 
	9.9

	 	Further Assurances
	 	 	27	 
	9.10

	 	No Merger
	 	 	27	 
	9.11

	 	Notices
	 	 	27	 
	9.12

	 	Assignment
	 	 	29	 
	9.13

	 	No Partnership
	 	 	29	 
	9.14

	 	Confidentiality
	 	 	29	 
	9.15

	 	Counterparts
	 	 	29	 
	9.16

	 	Binding Effect
	 	 	30	 
	9.17

	 	Execution by Electronic Means
	 	 	30	 
	 
	 	 	 	 	 	 
	SCHEDULE A LANDS AND PERMITTED ENCUMBRANCES	 	 	A-1	 
	 
	 	 	 	 	 	 
	SCHEDULE B ESTOPPEL CERTIFICATE	 	 	B-1	 

 

 

Purchase and Sale Agreement

This Agreement dated for reference December 22, 2010

Between:

2725312 Canada Inc.

Suite 1800 – 1055 Dunsmuir Street

Vancouver, British Columbia

V7X 1B1

(the “Vendor”)

And:

Lululemon Athletica Canada Inc.

1818 Cornwall Avenue

Vancouver, British Columbia

V6J 1C7

(the “Purchaser”)

Witnesses That Whereas:

A.     The Vendor is the legal and beneficial owner of the Lands (hereinafter defined); and

B.     The Vendor has agreed to sell and the Purchaser has agreed to purchase the Purchased Property
(hereinafter defined) on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements herein set forth in this
Agreement and other good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the Vendor and the Purchaser covenant and agree as follows:

ARTICLE 1

INTERPRETATION

	1.1	 	Definitions.
	 
	 	 	The following terms have the following meanings unless the subject matter or context
otherwise requires:

	 	(a)	 	“Architect” means an independent professional architect engaged by the Vendor
from time to time in connection with this Agreement;

	 	(b)	 	“Business Day” means a day which is not a Saturday, Sunday or statutory holiday
(as defined in the Employment Standards Act (British Columbia)) in British Columbia;

	 	(c)	 	“City” means the City of Vancouver;

	 	(d)	 	“Completion Date” means that day which is 30 days after the satisfaction or
waiver of the Purchaser’s Conditions;

	 	(e)	 	“Conditions Removal Date” means 5:00 p.m. (Vancouver time) on February 18,
2011;
	 
	 	(f)	 	"Confidential Information” means the confidential information set forth in
section 9.14;

 

- 2 -

	 	(g)	 	“Delivery Materials” means all information and material delivered to or
otherwise made available to the Purchaser pursuant to subsections 4.1(b) and (c);

	 	(h)	 	“Deposit” means, collectively, the amounts paid by the Purchaser pursuant to
subsections 2.3(a) and (b);

	 	(i)	 	“Effective Date” means December 22, 2010;

	 	(j)	 	“Environment” means humans, animals, plants and other living organisms and all
components of the earth, including air, land, soil, water (including surface and
underground water) and all other external conditions or influences under which humans,
animals, plants and other living organisms, live or are developed, and the interacting
natural systems that include any of the components referred to in this definition;

	 	(k)	 	“Environmental Laws” means all applicable common laws, statutes, regulations,
rules, standards, codes, protocols, policies, guidelines and bylaws of, or issued by or
under the direction or authority of, any Governmental Authority relating to or in
respect of the protection of the Environment or in respect of Hazardous Substances
including the Fisheries Act (Canada), the Canadian Environmental Protection Act
(Canada), the Transportation of Dangerous Goods Act (Canada) and the Environmental
Management Act (British Columbia);

	 	(l)	 	“Equipment” means all the chattels, personal property, goods, equipment,
inventory and supplies used by the Vendor or anyone on the Vendor’s behalf in
connection with the operation, use, enjoyment, maintenance or management of the Lands,
provided however that the Equipment must be owned by the Vendor or otherwise be subject
to a conditional sale agreement in favour of the Vendor as of the Effective Date;

	 	(m)	 	“Estoppel Certificates” means a certificate substantially in the form set out
in Schedule B addressed to the Purchaser and such other Persons as the Purchaser
requires or in any other form or forms which may be required or specified under the
terms of any of the Leases;

	 	(n)	 	“Governmental Authority” means any federal, provincial, regional, municipal or
local government, government authority, office or official having jurisdiction or other
political subdivision of any of them, or any entity, authority, agency or court or
person exercising executive, legislative, judicial, regulatory or administrative
functions on behalf of any such government, government authority, office or official
having jurisdiction or other political subdivision thereof;

	 	(o)	 	“Hazardous Substance” means any substance, material or thing or combination of
substances, materials or things which could cause an adverse effect on, or which is
dangerous or detrimental or potentially dangerous or detrimental to, any part of the
Environment, including a substance, material or thing included in or containing
components included in the definition or meaning of “biomedical waste”, “contaminant”,
“dangerous good”, “deleterious substance”, “hazardous product”, “nutrient”,
“pollutant”, “reportable substance”, “Special Waste” or “toxic substance” or any
variation of any such term, in any Environmental Law or which is prohibited, controlled
or regulated under any
Environmental Law and, in respect of the foregoing, is found in a material or
relevant concentration for the purpose of any Environmental Laws;

 

- 3 -

	 	(p)	 	“HST” has the meaning set forth in section 9.5;

	 	(q)	 	“HST Certificate” has the meaning set forth in section 9.5;

	 	(r)	 	“Lands” means that real property legally described in Schedule A, together with
all buildings, improvements (including parking structures) and fixtures thereon and all
rights and benefits appurtenant thereto (for greater certainty, such appurtenant rights
and benefits include the Leases);

	 	(s)	 	“Leases” means every written agreement, pursuant to which any person has any
interest in the Lands in the nature of a tenancy or a right to occupy premises,
including any modification or extension thereof, and “Lease” means any of such Leases;

	 	(t)	 	“LTO” means the Lower Mainland Land Title Office;

	 	(u)	 	“Lululemon Lease” means the lease dated May 21, 2010, as amended from time to
time, between the Vendor, as landlord, and the Purchaser, as tenant, in respect of the
Lands;

	 	(v)	 	“Order” means any written directive, decision, order, notice including a notice
of litigation or proceeding, letter or other written communication, that requires the
taking of any measures or actions or refraining from taking any measures or actions,
issued or made by any Governmental Authority under any Environmental Law;

	 	(w)	 	“Other Leases” means the Leases, excluding the Lululemon Lease;

	 	(x)	 	“Other Tenants” means the Tenants, excluding the Purchaser, as tenant under the
Lululemon Lease;

	 	(y)	 	“Parties” means, collectively, the Vendor and the Purchaser and “Party” means
either of the Vendor or the Purchaser;

	 	(z)	 	“Permitted Encumbrances” means the Leases and the legal notations, charges,
liens and interests listed in Schedule A attached hereto (except for any Leases listed
in Schedule A that pertain to premises that are no longer occupied by the applicable
Tenant), including any agreements entered into by the Vendor in accordance with
sections 4.5 and 4.6 and any other tenancy agreements, agreements, charges, liens, or
encumbrances expressly permitted in writing by the Purchaser prior to the Completion
Date;
	 
	 	(aa)	 	“Person” includes a firm, corporation or other entity;
	 
	 	(bb)	 	“Purchase Price” means the amount set out in section 2.2;
	 
	 	(cc)	 	“Purchased Property” means the Lands, the Leases, the Equipment, those of the
Service Contracts which are assigned to the Purchaser with effect on the Completion
Date pursuant to this Agreement, and all other rights and benefits to be granted or
transferred to the Purchaser under this Agreement;
	 
	 	(dd)	 	“Purchaser” means lululemon athletica canada inc.;
	 
	 	(ee)	 	"Purchaser’s Conditions” means the conditions precedent set forth in
subsections 6.1(a) and 6.1(b);

 

- 4 -

	 	(ff)	 	“Purchaser’s Solicitors” means the Vancouver office of McCarthy Tétrault LLP;
	 
	 	(gg)	 	“Quantity Surveyor” means an independent quantity surveyor approved by the
Purchaser, acting reasonably, and retained by the Vendor for the purposes of section
3.4;
	 
	 	(hh)	 	“Release” includes releasing, spilling, leaking, pumping, pouring, flowing,
depositing, emitting, emptying, discharging, escaping, leaching, disposing and dumping
and includes all matters included in the words “introduce waste into the environment”
in the Environmental Management Act (British Columbia), the word “deposit” in the
Fisheries Act (Canada) or the word “release” in the Canadian Environmental Protection
Act (Canada), in each case as in force on the date of this Agreement;
	 
	 	(ii)	 	“Replacement Estoppel Certificates” has the meaning set forth in section 4.5;
	 
	 	(jj)	 	"RJC Report” has the meaning set forth in section 4.1(b)(iv);
	 
	 	(kk)	 	“Service Contracts” means all written agreements entered into by or on behalf
of the Vendor with respect to the furnishing of supplies or services to the Lands or
with respect to the management or operation of the Lands (including agreements with
parking facility operators, janitors, building managers and other management or
maintenance personnel);
	 
	 	(ll)	 	“Statement of Adjustments” has the meaning set forth in subsection 3.3(c);
	 
	 	(mm)	 	“Tenants” means all persons holding an interest in the Lands pursuant to the
Leases and “Tenant” means any of such Tenants;
	 
	 	(nn)	 	“Tenant Receivables” has the meaning set forth in subsection 3.3(f);
	 
	 	(oo)	 	“Transfer” means the Freehold Transfer delivered to the Purchaser’s Solicitors
pursuant to subsection 7.1(a);
	 
	 	(pp)	 	“Vendor” means 2725312 Canada Inc.; and
	 
	 	(qq)	 	“Vendor’s Solicitors” means the Vancouver office of Stikeman Elliott LLP.

	1.2	 	General Principles.
	 
	 	 	For the purposes of this Agreement:

	 	(a)	 	“this Agreement” means this Agreement, including the Schedules hereto, as the
same may be supplemented or amended and in effect from time to time;

	 	(b)	 	any reference in this Agreement to a section, subsection, paragraph,
subparagraph or Schedule is a reference to the appropriate section, subsection,
paragraph, subparagraph or Schedule in or to this Agreement;

	 	(c)	 	if any provision of this Agreement or any part hereof is found or determined to
be invalid it will be severable and severed from this Agreement and the remainder of
this
Agreement will be construed as if such invalid provision or part had been deleted
from this Agreement;

 

- 5 -

	 	(d)	 	this Agreement and all matters arising hereunder will be governed by and
construed in accordance with the laws of British Columbia, which will be deemed to be
the proper law hereof, and the courts of British Columbia will have the non-exclusive
jurisdiction to entertain and determine all claims and disputes arising out of or in
any way connected with this Agreement and the validity, existence and enforceability
hereof;

	 	(e)	 	the headings used in and the organization of this Agreement are solely for
convenience of reference and will not in any way affect, limit, amplify or modify the
terms hereof and will not be construed in any way to be part of this Agreement in the
interpretation hereof;

	 	(f)	 	the words “herein”, “hereof” and “hereunder” and words of similar import refer
to this Agreement as a whole and not to any particular Article, section, subsection,
paragraph, subparagraph or other subdivision or Schedule hereof;

	 	(g)	 	the word “including”, when following any general statement, term or matter,
will not be construed to limit such general statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items or
matters, but will be construed to refer to all other items or matters that could
reasonably fall within the scope of such general statement, term or matter, whether or
not non-limiting language (such as “without limitation”, “but not limited to” or words
of similar import) is used with reference thereto;

	 	(h)	 	in the computation of periods of time from a specified date to a later
specified date, unless otherwise expressly stated, the word “from” means “from and
including” and the word “to” and “until” each mean “to but excluding”;

	 	(i)	 	words importing the masculine gender include the feminine or neuter gender and
words in the singular include the plural, and vice versa;

	 	(j)	 	any reference to a statute includes and is a reference to such statute and to
the regulations made pursuant thereto, with all amendments made thereto and in force
from time to time, and to any statutes or any regulations that may be passed which have
the effect of supplementing or superseding such statutes or regulations;

	 	(k)	 	all references to monetary amounts in this Agreement are references to Canadian
dollars; and

	 	(l)	 	any reference herein to “the knowledge of the Vendor”, “the awareness of the
Vendor” or “aware” (with reference to the Vendor) will mean the actual knowledge of
Chrystal Burns, Director, Investment Management and John Purcell, Senior Vice President
& Portfolio Manager, both of Bentall Kennedy (Canada) LP. For greater certainty, and
in furtherance of the “as is-where is” basis of this transaction, neither the Vendor,
Ms. Burns nor Mr. Purcell will be required to conduct or initiate any investigations or
inquiries of any kind whatsoever or to commission any independent or internal studies,
investigations or reports in connection with the Purchased Property or any matters
contemplated by or otherwise dealt with in this Agreement, except that each of Ms.
Burns and Mr. Purcell will consult with such asset managers, portfolio managers and
leasing managers within Bentall Kennedy (Canada) LP as may be reasonably necessary to
ensure
that they are fully informed regarding the matter that is qualified by the
“awareness” or “knowledge” of the Vendor.

 

- 6 -

	1.3	 	Schedules.
	 
	 	 	The following are the Schedules to this Agreement, each of which is an integral part hereof:

	 	 	 

	Schedule A

	 	Lands and Permitted Encumbrances
	Schedule B

	 	Estoppel Certificate

ARTICLE 2

PURCHASE AND SALE

	2.1	 	Agreement of Purchase and Sale.
	 
	 	 	Subject to the terms and conditions of this Agreement and based on the warranties and
representations herein contained, the Vendor agrees to sell and the Purchaser agrees to
purchase the Purchased Property on the Closing Date for the Purchase Price, all on an “as
is-where is” basis.
	 
	2.2	 	Purchase Price.
	 
	 	 	The Purchase Price for the Purchased Property will be $65,000,000, exclusive of HST. The
Parties will use reasonable efforts to agree prior to the Completion Date on an allocation
of the Purchase Price among the Purchased Property. However, the Parties acknowledge and
agree that failure to agree on such an allocation prior to the Completion Date will neither
confer on any Party the right to terminate this Agreement nor result in the termination of
this Agreement.
	 
	2.3	 	Payment of Purchase Price.
	 
	 	 	The Purchase Price for the Purchased Property will be paid as follows:

	 	(a)	 	as to $1,000,000, by payment of such amount by the Purchaser to the Purchaser’s
Solicitors, in trust, and as a stakeholder under the Real Estate Services Act, within
two (2) Business Days after the Effective Date;

	 	(b)	 	as to $14,000,000, by payment of such amount by the Purchaser to the
Purchaser’s Solicitors, in trust, and as a stakeholder under the Real Estate Services
Act, within two (2) Business Days after the satisfaction or waiver of the Purchaser’s
Conditions; and

	 	(c)	 	as to the balance of the Purchase Price (subject to the adjustments made
pursuant to section 3.3), by payment of such amount by the Purchaser to the Vendor
pursuant to Article 8.

	2.4	 	Investment of Deposit.
	 
	 	 	The Deposit will be invested by the Purchaser’s Solicitors in an interest-bearing trust
account or certificate of deposit as approved by the Purchaser, with interest for the
account of the Purchaser unless the Deposit and interest is paid to the Vendor pursuant to
paragraph 2.5(a)(ii).

 

- 7 -

	2.5	 	Application of Deposit.
	 
	 	 	The amount paid at any time on account of the Deposit will be:

	 	(a)	 	paid to the Vendor:

	 	(i)	 	on the Completion Date on account of the Purchase Price, if the
Vendor and the Purchaser complete the sale and purchase of the Purchased
Property on the Completion Date; or

	 	(ii)	 	together with interest earned thereon, upon the default of the
Purchaser in completing the purchase of the Purchased Property on the
Completion Date (after the Purchaser’s Conditions have been satisfied or
waived), unless such default is expressly waived in writing by the Vendor, or
otherwise upon the Purchaser repudiating this Agreement, whereupon such amount
so paid to the Vendor will be absolutely forfeited to the Vendor as liquidated
damages as the Vendor’s sole and exclusive remedy and this Agreement will
terminate forthwith upon such payment being made. For greater certainty, the
Purchaser hereby acknowledges and agrees that such forfeiture of the Deposit
and accrued interest will not constitute a penalty and the Purchaser will
neither allege nor assert that such forfeiture is harsh, unconscionable or a
penalty; or

	 	(b)	 	paid to the Purchaser (less the $10.00 paid by the Purchaser to the Vendor
pursuant to section 6.1):

	 	(i)	 	if the Purchaser does not notify the Vendor of the satisfaction
or waiver of all of the Purchaser’s Conditions in the manner and within the
time provided therein; or

	 	(ii)	 	upon the default of the Vendor, without prejudice to any other
right or remedy of the Purchaser, if the Vendor is in default of its obligation
to complete the sale of the Purchased Property hereunder, unless such default
is expressly waived in writing by the Purchaser, or otherwise upon the Vendor
repudiating this Agreement and without prejudice to any other right or remedy
of the Purchaser, or the Purchaser has elected to complete the purchase of the
Purchased Property without prejudice to any other right or remedy of the
Purchaser; or

	 	(iii)	 	if this Agreement is terminated pursuant to subsection 3.4(b)
or if the Purchaser elects not to complete the purchase of the Purchased
Property pursuant to section 8.7.

ARTICLE 3

COMPLETION, POSSESSION AND ADJUSTMENTS

	3.1	 	Completion.
	 
	 	 	The completion of the purchase and sale of the Purchased Property contemplated by this
Agreement will occur on the Completion Date, or such other date as may be agreed in writing
by the Parties, and the place of closing will be the Vancouver offices of the Purchaser’s
Solicitors at 1300 – 777 Dunsmuir Street, Vancouver, British Columbia.

 

- 8 -

	3.2	 	Possession.
	 
	 	 	The Vendor will deliver to the Purchaser possession of the Purchased Property free from all
liens, claims, charges, encumbrances and legal notations other than the Permitted
Encumbrances immediately upon completion of the sale and purchase of the Purchased Property.
	 
	3.3	 	Adjustments.

	 	(a)	 	Adjustment Date.  Adjustments for the Purchased Property will be made
as of the Completion Date and the payment due pursuant to subsection 2.3(c) will be
adjusted accordingly. Except as otherwise provided in this Agreement, the Vendor will
be responsible for all expenses and will be entitled to all revenues accrued with
respect to the Purchased Property for the period ending on the day before the
Completion Date and, for the period from and including the Completion Date, the
Purchaser will be responsible for all expenses and will be entitled to all revenues
accruing with respect to the Purchased Property.

	 	(b)	 	Adjustment Items.  The adjustments with respect to the Leases will
include all current rents (including current basic rent, current additional rent and
other current charges), prepaid rents and other prepaid charges, security deposits and
all other items normally adjusted between a vendor and purchaser in respect of the sale
of property similar to the Lands. For greater certainty:

	 	(i)	 	pursuant to the Lululemon Lease, the Purchaser has prepaid the
basic rent payable for the first three years of the term thereof, and the
Purchaser will receive a credit on the Statement of Adjustments for the portion
of such basic rent that is attributable to the period from and after the
Completion Date; and

	 	(ii)	 	pursuant to the Lululemon Lease, the Vendor is obligated to
undertake certain future work in respect of the proposed lease expansion
scheduled to occur in 2011, and such obligations on the part of the Vendor will
be assumed by the Purchaser on the Completion Date.

	 	(c)	 	Statement of Adjustments.  A statement of adjustments (the “Statement
of Adjustments”) will be delivered to the Purchaser by the Vendor at least five (5)
Business Days prior to the Completion Date and will have annexed thereto details of the
calculations used to arrive at all debits and credits on the Statement of Adjustments.
The Vendor will give the Purchaser and its representatives reasonable access to all
working papers and back-up materials in order to verify the accuracy of the Statement
of Adjustments.

	 	(d)	 	Readjustment.  If the final cost or amount of an item which is to be
adjusted has not been determined as of the Completion Date, then an initial calculation
or adjustment for such item will be made as of the Completion Date and reflected on the
Statement of Adjustments. The amount of such item will be estimated by the Vendor and
agreed to by the Purchaser, each acting reasonably, as of the Completion Date on the
basis of the best evidence available at the Completion Date as to what the final cost
or amount of such item will be. In each case, when such cost or amount is determined
(such determination to be made as soon as possible and in any event prior to that day
which is one year after the Completion Date), the Purchaser will, within 30 days of
determination, provide a complete statement thereof to the Vendor and, within 30 days
thereafter, the Vendor and the Purchaser will make a final adjustment as of the
Completion Date for the item in

 

- 9 -

	 	 	 	question. In the absence of agreement by the Parties, the final cost or amount of
an item will be determined by independent auditors, acceptable to the Vendor and the
Purchaser, each acting reasonably, with the cost of such auditors’ determination
being shared equally between the Vendor and the Purchaser. On the Completion Date,
the Parties will execute an undertaking to further adjust between themselves to
confirm the agreement set out in this section 3.3.
	 
	 	(e)	 	Commissions,  Tenant Inducements and Landlord’s Work. With respect to:

	 	(i)	 	any Lease entered into by the Vendor prior to the Effective
Date, and subject only to the exception set forth in paragraph 3.3(b)(ii), the
Vendor will be responsible for the payment of all third party leasing
commissions, whether payable or accrued before or after the Completion Date, of
all tenant inducements and allowances, including lease take-over obligations
and free rent, payable or accrued with respect to such Lease, and of all costs
and expenses of any landlord’s work or improvements pursuant to such Lease. To
the extent that any such leasing commissions, tenant inducements and allowances
and costs of landlord’s work or improvements for which the Vendor is
responsible have not been paid by the Vendor as of the Completion Date, the
Purchaser will be credited with respect thereto on the Statement of
Adjustments; and

	 	(ii)	 	any Lease modified by the Vendor after the Effective Date or
any new lease entered into by the Vendor after the Effective Date, in each case
modified or entered into with the prior written approval of the Purchaser, the
Purchaser will be responsible for the payment of all third party leasing
commissions, whether payable or accrued before or after the Completion Date, of
all tenant inducements and allowances, including lease take-over obligations
and free rent, payable or accrued with respect to such Lease, and of all costs
and expenses of any landlord’s work or improvements pursuant to such
modification of Lease or new Lease and, for greater certainty, if the Purchaser
does not approve of any such modification, the Vendor will be responsible for
payment of all such amounts and the Purchaser will be credited with respect
thereto on the Statement of Adjustments.

	 	(f)	 	Tenant Receivables.  Any rental arrears and accounts receivable and any
other claims against a Tenant payable or accrued prior to the Completion Date and
unpaid on the Completion Date (the “Tenant Receivables”) will remain the property of
the Vendor and there will be no adjustment in favour of the Vendor on the Statement of
Adjustments for such amounts save and except for arrears under the Lululemon Lease,
which arrears will be adjusted on the Completion Date. Any amount of rent received or
collected by the Purchaser after the Completion Date from a Tenant that owes Tenant
Receivables to the Vendor will be credited, first, to current month’s rent, second, to
any arrears of rent owing and accruing from and after the Completion Date, and third,
to any Tenant Receivables owed to the Vendor. Any amount of rent received or collected
by the Vendor after the Completion Date from a Tenant that owes Tenant Receivables to
the Vendor will be credited, first, to such Tenant Receivables, and any surplus rent,
if any, received or collected by the Vendor will be promptly paid to the Purchaser.

 

- 10 -

	3.4	 	Risk.
	 
	 	 	The Lands and Equipment will be at the Vendor’s risk until the completion of the transaction
contemplated herein and thereafter at the risk of the Purchaser. If there is material loss
or damage to the Lands and Equipment before the completion of the sale and the purchase of
the Purchased Property, the following provisions will apply:

	 	(a)	 	if in the written opinion of the Quantity Surveyor the estimated cost to repair
such damage is less than $750,000, then the Vendor must elect, within ten (10) Business
Days of receipt of the Quantity Surveyor’s opinion, to either (A) repair the damage
with due dispatch following the delivery of such opinion and receipt of applicable
insurance proceeds or (B) assign to the Purchaser all insurance policies and proceeds
derived therefrom relevant to the damage to the Lands and the Equipment, and to pay to
the Purchaser on closing an amount equal to the deductible under such insurance
policies and to complete the sale and purchase of the Purchased Property;

	 	(b)	 	if in the written opinion of the Quantity Surveyor the estimated cost to repair
such damage is greater than $750,000, then the Purchaser will be entitled to elect,
within ten (10) Business Days of receipt of the Quantity Surveyor’s opinion, to either
(A) terminate this Agreement, in which event the Deposit and all interest earned
thereon will be returned to the Purchaser, and thereafter neither party will have any
further or continuing obligation to the other under this Agreement (except as otherwise
specifically provided for in this Agreement) or (B) require the Vendor to assign to the
Purchaser all insurance policies and proceeds derived therefrom relevant to the damage
to the Lands and the Equipment, and to pay to the Purchaser on closing an amount equal
to the deductible under such insurance policies and to complete the sale and purchase
of the Purchased Property;

	 	(c)	 	if necessary, the Completion Date will be extended until that day which is ten
(10) Business Days after the delivery of the Quantity Surveyor’s written opinion to the
Vendor and the Purchaser, subject to further extension of the Completion Date pursuant
to paragraph (d) below; and

	 	(d)	 	if the Vendor elects to repair pursuant to paragraph (a) above, the completion
of the purchase and sale of the Purchased Property following the occurrence of any such
damage will be the later of:

	 	(i)	 	the Completion Date as defined in this Agreement; and

	 	(ii)	 	the tenth (10th) Business Day after the date the
Purchaser receives from the Vendor a certificate of the Architect that the
damage to the Lands and the Equipment has been substantially repaired.

ARTICLE 4

VENDOR’S COVENANTS, REPRESENTATIONS AND WARRANTIES

	4.1	 	Basic Covenants.
	 
	 	 	The Vendor covenants and agrees with the Purchaser that the Vendor will:

	 	(a)	 	subject to the rights of the Other Tenants, permit the Purchaser and the
Purchaser’s employees, engineers, agents and advisors to enter onto the Lands and carry
out such

 

- 11 -

	 	 	 	inspections, tests, studies, surveys and investigations of the Lands and
Equipment as the Purchaser may reasonably require on twenty-four (24) hours’ written
notice, provided that the Purchaser’s access to the Lands for such purposes will be at
reasonable times scheduled by the Vendor at the Purchaser’s request and in accordance
with the terms of the Other Leases and, at the option of the Vendor, subject to the
Vendor’s supervision, will cause no material disruption to any of the Other Tenants or
other occupants of the Lands, will be at the Purchaser’s sole risk and expense and will
be subject to the Purchaser, at its cost, repairing any and all damage caused in
connection therewith and indemnifying the Vendor in accordance with section 5.5;
	 
	 	(b)	 	permit the Purchaser to have access during normal business hours to the
Vendor’s correspondence files with respect to the Other Tenants, (and will permit the
Purchaser to make such copies thereof, at the Purchaser’s cost, as the Purchaser may
reasonably require), and deliver to the Purchaser at its address herein on or before
the date which is three (3) Business Days after the Effective Date:

	 	(i)	 	original or true and complete copies of the Other Leases and of
any current drafts of any anticipated offers to lease any part of the Lands;

	 	(ii)	 	a true and complete “rent roll” in respect of the Leases,
consisting of a list of the Tenants, the monthly rental payable by each, the
date the tenancy commenced, particulars of any arrears of rent owing by or
outstanding dispute with any Other Tenant, particulars of any default under the
Other Leases (including material non-financial defaults), particulars of any
modification of any Other Leases, particulars of any prepayments or abatements
of rent, particulars of any security or damage deposits held by or on behalf of
the Vendor;

	 	(iii)	 	to the extent they are in the Vendor’s possession or control,
true and complete copies of all plans, drawings and specifications of the Lands
(including floor plans, elevation drawings, building cross-sections and site
plans), “as built” or other mechanical, electrical and plumbing drawings,
building inspection certificates, licences and permits issued in connection
with or pertaining to the Lands;

	 	(iv)	 	to the extent they are in the Vendor’s possession or control,
true and complete copies of all third party reports (including engineering,
geotechnical and environmental reports), surveys, plans, specifications,
drawings and permits concerning the Lands and the Equipment, and with respect
to the physical condition (excluding the environmental condition) of the
Equipment and the improvements located on the Lands, the Vendor will deliver
only the report prepared and issued by RJC Consultants in February 2008 (the
“RJC Report”), which the Vendor represents and warrants is the most recent
third party report examining the physical condition of the Equipment and the
improvements
located on the Lands that is in the Vendor’s possession and control. For
greater certainty, the Vendor will not be required to deliver to the
Purchaser any appraisals of the Lands or other like documents that purport
to establish the value (whether actual or based on assumptions) of any
component of the Purchased Property, or any third party reports or internal
reports examining the physical condition (excluding the environmental
condition) of the Equipment and/or the improvements located on the Lands
other than the RJC Report, but will be required to deliver all other third
party reports (including engineering,

 

- 12 -

	 	 	 	geotechnical and environmental
reports) which do not pertain to the physical condition (excluding the
environmental condition) of the Equipment and the improvements on the Lands,
as contemplated above;
	 
	 	(v)	 	to the extent they are in the Vendor’s possession or control,
true and complete copies of any documents indicating whether:

	 	A.	 	the building on the Lands encroaches onto
adjacent land or any buildings on adjacent land encroach onto the
Lands;

	 	B.	 	the Lands provide adequate support for adjacent
land, receive adequate support from adjacent land, or are unstable; and

	 	C.	 	the Lands suffer from or cause drainage,
erosion or flooding problems;

	 	(vi)	 	to the extent they are in the Vendor’s possession or control,
the originals or true and complete copies of all agreements and correspondence
with the City regarding development levies, if any, or local improvement
charges, if any, payable after the Completion Date, servicing agreements,
zoning, building restrictions, development permits and building permits related
to the development of the Lands;

	 	(vii)	 	a reasonably detailed inventory of the Equipment;

	 	(viii)	 	original or true and complete copies of the Service Contracts and a summary
of the state of accounts with respect to the Service Contracts as at the
Effective Date;

	 	(ix)	 	a list of all warranties in favour of the Vendor currently in
effect with respect to the Lands and the Equipment;

	 	(x)	 	property level operating statements with respect to the Lands
for 2008, 2009 and 2010 to date and a written statement of all budgeted
expenses for 2011;

	 	(xi)	 	current property tax statements for the Lands and particulars
of any current property tax appeals;

	 	(xii)	 	to the extent they are in the Vendor’s possession or control,
any other document or information which is within the scope of disclosure
described in paragraphs 4.1(b)(i) to (xi) and is requested in writing from time
to time by the Purchaser, acting reasonably, and which is relevant or material
to the operation and ownership of the Purchased Property; and

	 	(xiii)	 	all material information in the possession or control of the Vendor with
respect to any and all First Nation or aboriginal claims or issues associated
with the Lands;

	 	(c)	 	deliver to the Purchaser the original or a true and complete copy of any other
document of the type described above in subsection 4.1(b) which, after the Effective
Date, comes within the possession of the Vendor, such delivery to be made within three
(3) Business Days following such date of possession;

 

- 13 -

	 	(d)	 	subject to the overriding provisions of section 9.14 and subsection 5.3(b),
permit the Purchaser and its agents, representatives and consultants to make such
copies of the material referred to in subsections 4.1(b) and 4.1(c), at the Purchaser’s
cost, as the Purchaser may reasonably require in connection with its due diligence
review of the Purchased Property;

	 	(e)	 	from the Effective Date until the Completion Date, use its reasonable
commercial efforts to maintain the Lands and Equipment in the same general state of
repair and condition as exists as of the Effective Date, subject to reasonable wear and
tear;

	 	(f)	 	from the Effective Date until the Completion Date:

	 	(i)	 	enforce the terms of all Leases (however, in no event will the
Vendor be entitled to terminate any of the Leases except as permitted under
section 4.6 without the prior written consent of the Purchaser);

	 	(ii)	 	not modify existing Leases and not enter into any new Lease
except as permitted under section 4.6; and

	 	(iii)	 	not modify existing Service Contracts and not enter into any
new Service Contract except as permitted under section 4.7;

	 	(g)	 	maintain in force current insurance in respect of the Lands and the Equipment;

	 	(h)	 	cancel and terminate all existing property management agreements with respect
to the Lands, effective as of the Completion Date;

	 	(i)	 	cancel and terminate all other contracts which relate to the operation of the
Lands and the Equipment, including any Service Contracts which the Purchaser does not
advise the Vendor that the Purchaser wishes to assume in accordance with section 5.4,
effective as of the Completion Date;

	 	(j)	 	pay all amounts due, owing or payable pursuant to the Service Contracts to and
including the Completion Date;

	 	(k)	 	execute, or cause to be executed, and return to the Purchaser or the
Purchaser’s Solicitors as soon as is reasonably possible all consents or letters of
authority which it may be necessary for the Vendor or any director, officer or
shareholder thereof, to execute in order for the Purchaser to conduct such due
diligence searches with respect to the purchase of the Purchased Property as it
determines to be necessary; and

	 	(l)	 	forward to the Purchaser within two (2) Business Days of the Vendor’s receipt,
any search results from government offices which are directed to the Vendor in response
to any due diligence inquiries made by or at the request of the Purchaser.

	4.2	 	Vendor’s Representations and Warranties.
	 
	 	 	The Vendor hereby represents and warrants as representations and warranties that are true as
of the Effective Date and will be true at the Completion Date as follows:

 

- 14 -

	 	(a)	 	the Vendor has now, and will have good and marketable legal and beneficial
title to the Purchased Property on the Completion Date, free and clear of all liens,
claims, charges, encumbrances and legal notations save and except for the Permitted
Encumbrances;

	 	(b)	 	the Vendor is a body corporate duly incorporated and validly existing under the
laws of Canada and is duly qualified to own and sell the Purchased Property and has
full power, authority and capacity to enter into this Agreement and to carry out the
transactions contemplated herein;

	 	(c)	 	the Vendor has never been struck from the register of companies maintained by
its jurisdiction of incorporation;

	 	(d)	 	all necessary corporate action on the part of the directors and shareholders of
the Vendor has been taken to authorize and approve the execution and delivery of this
Agreement, the completion of the transactions contemplated herein and the performance
and observance of the Vendor’s obligations hereunder;

	 	(e)	 	there is no action or proceeding pending or, to the knowledge of the Vendor,
threatened against the Vendor before any court, arbiter, arbitration panel or
administrative tribunal or governmental agency which, if decided adversely to the
Vendor, might materially affect the Vendor’s ability to perform the Vendor’s
obligations hereunder;

	 	(f)	 	no consent or approval of, or registration, declaration or filing with any
governmental commission, board or other regulatory body is required for the execution
or delivery of this Agreement by the Vendor, the validity or enforceability of this
Agreement against the Vendor, or the performance by the Vendor or any of the Vendor’s
obligations hereunder;

	 	(g)	 	neither the Vendor entering into this Agreement nor the performance by the
Vendor of the terms hereof will result in the breach of or constitute a default under
any term or provision of any instrument, document, agreement, statute, bylaw,
regulation, or encumbrance to which the Vendor or the Purchased Property are bound or
subject or which would result in the creation of any lien, encumbrance or other charge
on the Purchased Property;

	 	(h)	 	the Vendor is not a “non-resident” of Canada within the meaning of the Income
Tax Act (Canada);

	 	(i)	 	the Vendor has no present or future obligation to construct or provide, or to
pay any amount to any person in connection with, off-site services, utilities or
similar services in connection with the Lands;

	 	(j)	 	there is no action, suit, claim or litigation pending or, to the knowledge of
the Vendor, threatened with respect to the Lands or the existing use or occupancy
thereof and, to the knowledge of the Vendor, no state of facts exists which could
constitute the basis of any such action, suit, claim or litigation;

	 	(k)	 	except as may otherwise be disclosed in the Delivery Materials, the Vendor has
not received and the Vendor is not aware of any notice, request, directive or order
from any Governmental Authority or official, requesting, requiring or ordering the
performance of any work or alteration in respect of the Lands. For the purposes of
this subsection,

 

- 15 -

	 	 	 	reference to any notice, request, directive or order means any written
notice, request, directive or order;
	 
	 	(l)	 	the Vendor has received no written notice of and the Vendor is not aware of any
proposed expropriation of the Lands or any part thereof;

	 	(m)	 	all local improvement, municipal, real property, school and other taxes and
assessments of any kind whatsoever levied by any Governmental Authority having
jurisdiction which are due or payable, are paid in full to the due date for payment
thereof except for current charges for utilities consumed in the Lands and, except as
disclosed to the Purchaser in writing, on the Completion Date will be paid in full to
the Completion Date;

	 	(n)	 	the Equipment will, on the Completion Date:

	 	(i)	 	be free and clear of all claims, liens, charges and
encumbrances; and

	 	(ii)	 	be assignable by the Vendor to the Purchaser,
	 
	 	 	 	except as disclosed by the Vendor to the Purchaser pursuant to subsection 4.1(b);

	 	(o)	 	there are no Other Leases, except those delivered to the Purchaser as part of
the Delivery Materials, and in respect of each of the Other Leases:

	 	(i)	 	each is a valid and subsisting lease and no default exists
thereunder, except as disclosed by the Vendor to the Purchaser pursuant to
subsection 4.1(b);

	 	(ii)	 	the rents and other payments reserved by each Other Lease have
not been demanded, collected, accepted or paid in advance of the time for
payment thereof, except as disclosed by the Vendor to the Purchaser pursuant to
subsection 4.1(b);

	 	(iii)	 	the Vendor is the absolute owner thereof and has not assigned,
mortgaged, pledged, hypothecated or otherwise dealt with such Other Lease or
rents payable thereunder and there is no existing right of defence, set off or
counterclaim against the Vendor on the part of the tenant therein or any
guarantor, indemnitor or covenantor in respect thereof;

	 	(iv)	 	all covenants on the part of the landlord in each of the Other
Leases has been observed and performed, except as disclosed by the Vendor to
the Purchaser pursuant to subsection 4.1(b); and

	 	(v)	 	there are no deposits held or prepayments of any rents, common
expenses or other payments in connection with any of the Other Leases, except
as disclosed by the Vendor to the Purchaser pursuant to subsection 4.1(b);

	 	(p)	 	each of the Service Contracts is in good standing and assignable to the
Purchaser or can be terminated by the Vendor on not more than 30 days’ notice, except
as disclosed by the Vendor to the Purchaser pursuant to subsection 4.1(b), and there is
no material default thereunder by the Vendor or the other contracting parties thereto
and contains the entire agreement between the parties identified therein. There are no
oral or partially oral and partially written Service Contracts;

 

- 16 -

	 	(q)	 	to the Vendor’s knowledge, all of the documents and other materials provided
pursuant to subsections 4.1(b) and 4.1(c) are true and complete copies;

	 	(r)	 	the Vendor is not now and has not been a party to any collective agreement or
subject to any collective bargaining obligation relating to the Purchased Property or
any business conducted thereon with any labour union or other association of employees;

	 	(s)	 	the Vendor has no employees in respect of the Vendor’s operation of the Lands
for whom the Purchaser will be responsible following the completion of the sale and
purchase of the Purchased Property;

	 	(t)	 	there are no rights of first refusal to purchase, options to purchase, rights
of first refusal to lease, options to lease or similar agreements which have been
granted by the Vendor in respect of any part of the Purchased Property other than any
such agreements which may be contained in the copies of the Leases delivered by the
Vendor to the Purchaser and except as disclosed by the Vendor to the Purchaser pursuant
to subsection 4.1(b); and

	 	(u)	 	the Vendor is not in default under any provision of any of the Permitted
Encumbrances or any agreement in any way related to the Lands and the Equipment, and
has performed all of its obligations with respect to all such encumbrances, charges and
agreements, except as disclosed by the Vendor to the Purchaser pursuant to subsection
4.1(b).

	 	 	The Vendor acknowledges and agrees that the Purchaser has entered into this Agreement in
reliance on the foregoing representations and warranties and the representation and warranty
in paragraph 4.1(b)(iv) with respect to the RJC Report.
	 
	4.3	 	Survival of Representations.
	 
	 	 	The representations and warranties by the Vendor expressed in section 4.2, or otherwise
expressed by the Vendor in this Agreement, will not merge on the Completion Date but will
survive the Completion Date for a period of two (2) years. The Purchaser will give written
notice of each breach of a representation or warranty to the Vendor, together with details
thereof, promptly after becoming aware of such breach and, in any event, no later than two
(2) years after the Completion Date. After the expiration of such two (2) years period, the
Vendor will be absolutely and unconditionally released from all obligations and liabilities
in respect of the representations and warranties expressed in section 4.2, or otherwise
expressed by the Vendor in this Agreement or in any document or certificate given to the
Purchaser in order to complete this transaction, save and except with respect to any claims
made by the Purchaser in writing prior to the expiration of such two (2) year period.
	 
	4.4	 	Indemnity.
	 
	 	 	The Vendor will indemnify the Purchaser against, and save the Purchaser harmless from, any
loss, cost or damage of any nature whatsoever sustained by the Purchaser directly or
indirectly by reason of a breach by the Vendor of any of its obligations under section 4.1
or any other provision of this Agreement or a breach of, or inaccuracy in, any of the
warranties or representations set forth in section 4.2 or any other provision of this
Agreement.
	 
	4.5	 	Estoppel Certificates.
	 
	 	 	Except as hereinafter provided, the Vendor will obtain and deliver to the Purchaser, prior
to the completion of the purchase and sale of the Purchased Property, Estoppel Certificates
from the Other Tenants. To the extent that the Vendor is unable to obtain and deliver to
the Purchaser

 

- 17 -

	 	 	prior to the Completion Date, Estoppel Certificates from all of the Other
Tenants despite using all reasonable commercial efforts to obtain the same, the Vendor will
execute and deliver to the Purchaser on the Completion Date certificates of the Vendor for
such Other Tenants certifying the information that would have been in the applicable
Estoppel Certificates (the “Replacement Estoppel Certificates”). The Replacement Estoppel
Certificates will be deemed for all purposes to be a representation and warranty hereunder
by the Vendor of the truth and accuracy of the matters set forth in the Replacement Estoppel
Certificates. The Purchaser will, for a period of sixty (60) days after the Completion
Date, return to the Vendor any Replacement Estoppel Certificate (which will be deemed null
and void except in the case of a material conflict of information contained in the Estoppel
Certificate and the Replacement Estoppel Certificate) for which the Vendor delivers to the
Purchaser an Estoppel Certificate in accordance with this section 4.5 for the same Other
Lease. For greater certainty, the Vendor will not be required to obtain an Estoppel
Certificate from the Purchaser in respect of the Lululemon Lease or to provide a Replacement
Estoppel Certificate in respect thereof.
	 
	 	 	The Vendor will deliver to the Purchaser for its information, at least 72 hours prior to the
Vendor forwarding them to the Other Tenants, drafts of all the Estoppel Certificates which
the Vendor proposes to deliver to the Other Tenants for execution.
	 
	4.6	 	Lease Changes.
	 
	 	 	Until the Purchaser’s Conditions have been satisfied or waived, the Parties acknowledge and
confirm that any modification of an existing Lease and all new proposed Leases will be
forwarded to the Purchaser for its review. From and after the Effective Date, and prior to
the satisfaction or waiver of all the Purchaser’s Conditions, all such modifications and all
such new proposed Leases will be subject to the prior written approval of the Purchaser,
which approval will not be unreasonably withheld. From and after the satisfaction or waiver
of all the Purchaser’s Conditions, approval may be given or withheld in the Purchaser’s sole
and unfettered discretion. The Purchaser agrees that it will respond to any request for
approval within three (3) Business Days after such request is made in writing to it and if
the Purchaser fails to respond within such time the Purchaser will be deemed to have
approved such modification or new proposed Lease. Notwithstanding the foregoing, the
Purchaser will not unreasonably withhold or delay its approval in connection with any
requests made by the Other Tenants for consents to assignments or sublets in connection with
Other Leases.
	 
	4.7	 	Service Contract Changes.
	 
	 	 	Until the Purchaser’s Conditions have been satisfied or waived, the Parties acknowledge and
confirm that any modification of an existing Service Contract and all new proposed Service
Contracts will be forwarded to the Purchaser for its review. From and after the Effective
Date,
and prior to the satisfaction or waiver of the Purchaser’s Conditions all such modifications
and all such new proposed Service Contracts will be subject to the prior written approval of
the Purchaser, which approval will not be unreasonably withheld. From and after the
satisfaction or waiver of the Purchaser’s Conditions, approval may be given or withheld in
the Purchaser’s sole and unfettered discretion. The Purchaser agrees that it will respond
to any request for approval within three (3) Business Days after such request is made in
writing to it and if it fails to respond within such time the Purchaser will be deemed to
have approved such modification or new proposed Service Contract. Notwithstanding the
foregoing, the Vendor may enter into any modification of an existing Service Contract or any
new Service Contract without requiring the Purchaser’s approval, if the term of same expires
prior to the Completion Date or if the relevant Service Contract is terminable by the Vendor
prior to the Completion Date.

 

- 18 -

ARTICLE 5

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

	5.1	 	Purchaser’s Representations and Warranties.
	 
	 	 	The Purchaser hereby represents and warrants as representations and warranties that are true
as of the Effective Date and will be true as of the Completion Date as follows:

	 	(a)	 	the Purchaser validly exists and is duly qualified to purchase and own the
Purchased Property and has full power, authority and capacity to enter into this
Agreement and carry out the transaction contemplated herein;

	 	(b)	 	there is no action or proceeding pending or to the Purchaser’s knowledge,
threatened against the Purchaser before any court, arbiter, arbitration panel,
administrative tribunal or agency which, if decided adversely to the Purchaser, might
materially affect the Purchaser’s ability to perform the Purchaser’s obligations
hereunder; and

	 	(c)	 	neither the Purchaser’s entering into this Agreement nor the performance of its
terms will result in the breach of or constitute a default under any term or provision
of any indenture, mortgage, deed of trust or other agreement to which the Purchaser is
bound or subject.

	5.2	 	As Is – Where Is.
	 
	 	 	The Purchaser agrees and acknowledges that:

	 	(a)	 	the Purchaser is acquiring the Purchased Property from the Vendor on an “as
is-where is” basis and the Purchaser will satisfy itself with respect to all matters
related to the Purchased Property that pertain, in any way, to:

	 	(i)	 	the suitability or fitness of the Lands and the Equipment for
the Purchaser’s purposes;

	 	(ii)	 	the physical and environmental condition of the Lands and the
Equipment;

	 	(iii)	 	the area or dimensions of the Lands, including the existence
of any encroachments;

	 	(iv)	 	the rights to develop, build on, subdivide or otherwise extract
value from the Lands;

	 	(v)	 	the existing or potential costs or obligations which might be
imposed on the Purchaser by any governmental authority (including the City)
including, and by way of example only, resulting from a determination that the
Lands:

	 	(A)	 	do not provide adequate support for adjacent
land, do not receive adequate support from adjacent land, or are
unstable;

	 	(B)	 	suffers from or causes drainage, erosion or
flooding problems; or

 

- 19 -

	 	(C)	 	the legal terms and conditions of, and the
existing and potential rights and obligations which arise from or may
arise from the Permitted Encumbrances;

	 	(b)	 	the Purchaser has entered into this Agreement relying solely and entirely upon
its own inspections and the limited representations and warranties of the Vendor
specifically set out herein. The Purchaser acknowledges that there are no
representations, warranties, guarantees, agreements or conditions, whether direct or
collateral, or express or implied, which induced the Purchaser to enter into this
Agreement or on which reliance is placed by the Purchaser, or which affects this
Agreement or the Purchased Property, other than as specifically set out in sections 4.2
and 4.3. The Vendor is not giving to the Purchaser, and the Purchaser is not requiring
from the Vendor, any express or implied warranties and representations regarding the
Lands including that, before or after the Effective Date or the Completion Date:

	 	(i)	 	the Lands and the surrounding Environment comply or do not
comply with Environmental Laws;

	 	(ii)	 	the Lands and the surrounding Environment are or are not free
from Special Waste or other Hazardous Substances;

	 	(iii)	 	any Hazardous Substances have or have not been released,
spilled, leaked, pumped, poured, emitted, emptied, discharged, dumped or
disposed of, or have or have not escaped, leached, or migrated, from the Lands
and the surrounding Environment to, on, or under adjacent lands or their
surrounding Environment; or

	 	(iv)	 	the Lands will or will not be environmentally or otherwise
suitable for any purpose including occupancy, development, or derivation of
revenue.

	 	(c)	 	it is the obligation of the Purchaser to satisfy itself that there is no
Special Waste or other Hazardous Substances on, in or about the Lands, and the
Purchaser understands and agrees that the Vendor has no obligation to make any
investigations, tests or studies with respect to the existence of any Special Waste or
other Hazardous Substances on, in or about the Lands;

	 	(d)	 	the Purchaser is relying on its own due diligence in reviewing the Delivery
Materials and the Delivery Materials are not intended to constitute a representation or
warranty as to any of the contents thereof on the part of the Vendor or as to the
accuracy and sufficiency thereof, other than as expressly represented and warranted by
the Vendor herein; and

	 	(e)	 	the Purchaser hereby waives, to the extent permitted by Laws, any requirement
for or obligations of the Vendor to obtain or provide to the Purchaser a “site profile”
or any
other environmental report for the Lands as may be required under any applicable
Environmental Laws.

	5.3	 	Purchaser’s Covenants.
	 
	 	 	The Purchaser covenants and agrees with the Vendor that the Purchaser will:

	 	(a)	 	keep the Delivery Materials in confidence pursuant to section 9.14; and

 

- 20 -

	 	(b)	 	return all copies of the Delivery Materials to the Vendor, including copies
made by or on behalf of the Purchaser pursuant to subsections 4.1(b) and 4.1(d), in the
event that the transactions contemplated herein are not completed for any reason other
than the default of the Vendor.

	5.4	 	Service Contracts.
	 
	 	 	Except for those of the Service Contracts which the Purchaser advises the Vendor, on or
before the date that the Purchaser’s Conditions are satisfied or waived in writing by the
Purchaser, that the Purchaser wishes to assume, the Vendor will cause the Service Contracts
to be terminated effective on or before the Completion Date.
	 
	5.5	 	Indemnity.
	 
	 	 	The Purchaser hereby covenants and agrees with the Vendor that the Purchaser will indemnify
the Vendor and save the Vendor harmless from and against any and all damages, losses,
liabilities, costs and expenses (including legal fees on a solicitor and own client basis)
at any time suffered or incurred by the Vendor as a result of any damage or injury to the
Lands or the Equipment or other property of the Vendor or of any occupant of the Lands
resulting from the exercise by the Purchaser of its rights under subsection 4.1(a) or any
breach by the Purchaser of any of its obligations under any provision of this Agreement or a
breach of, or inaccuracy in, any of the warranties or representations set forth in section
5.1 or any other provision of this Agreement.
	 
	5.6	 	Environmental and Physical Condition — Release.
	 
	 	 	Save and except for any and all liabilities, suits, actions, obligations, statutory or other
proceedings, judgments, investigations, demands, claims, losses, damages, consequential
damages, remediation cost recovery claims, remediation costs, fines, penalties, expenses,
and legal costs on a solicitor-client basis (collectively, the “Claims”) arising out of
section 4.2 and 4.3,

	 	(a)	 	each Party, from and after the Completion Date, hereby releases the other Party
from all Claims which a Party may assert against the other Party at law or in equity,
arising out of or in connection with the application of Environmental Laws to the
Lands, including:

	 	(i)	 	the non-compliance of the Lands or the surrounding Environment
with any Environmental Laws;

	 	(ii)	 	any investigation or claim of such non-compliance by any
Person;

	 	(iii)	 	the presence within the Lands or the surrounding Environment
of “Special Waste” or other Hazardous Substances; or

	 	(iv)	 	the leaching, escaping; or migrating of “Special Waste” or
other Hazardous Substances from the Lands or the surrounding Environment to
other lands or their surrounding Environment, whether or not any such event,
happening, or condition arose or arises before or after the Effective Date or
the Completion Date, and whether or not caused in whole or in part or directly
or indirectly by the Vendor; and

	 	(b)	 	from and after the Completion Date, the Purchaser hereby releases the Vendor
from all Claims which the Purchaser may assert against the Vendor at law or in equity,
arising out

 

- 21 -

of or in connection with the physical condition and state of repair of the
Lands and the buildings, improvements, structures and fixtures thereon.

	5.7	 	Survival of Representations.
	 
	 	 	The representations and warranties by the Purchaser expressed in section 5.1 will not merge
on the Completion Date but will survive the Completion Date for a period of two (2) years.
The Vendor will give written notice of each breach of a representation or warranty to the
Purchaser, together with details thereof, promptly after becoming aware of such breach and,
in any event, no later than two (2) years after the Completion Date. After the expiration
of such two (2) year period, the Purchaser will be absolutely and unconditionally released
from all obligations and liabilities in respect of the representations and warranties
expressed in section 5.1, or otherwise expressed by the Purchaser in this Agreement or in
any document or certificate given to the Vendor in order to complete this transaction, save
and except with respect to any claims made by the Vendor in writing prior to the expiration
of such two (2) year period.

ARTICLE 6

CONDITIONS PRECEDENT

	6.1	 	Purchaser’s Conditions.
	 
	 	 	The obligation of the Purchaser to complete the purchase of the Purchased Property on the
Completion Date is subject to each of the following Purchaser’s Conditions having been
waived by the Purchaser in writing or satisfied by the Purchaser, on or before the
Conditions Removal Date:

	 	(a)	 	the Purchaser will have conducted all of its due diligence searches with
respect to the Purchased Property and will have completed its review of the Delivery
Materials and, without limiting any of its rights or remedies under this Agreement,
have satisfied itself, in its sole discretion, as to all matters related to the
Purchased Property and the transactions contemplated hereby, including all matters
related to projected revenues and expenses, the Other Leases, the Service Contracts and
other relevant contracts, the geotechnical, engineering and environmental condition of
the Lands, the title to the Lands and the physical condition of the Lands and fitness
for use of the Purchased Property by the Purchaser; and

	 	(b)	 	the Purchaser will have obtained the approval of its Board of Directors to the
completion of the purchase of the Purchased Property pursuant to the terms of this
Agreement.

In consideration of the non-refundable sum of $10.00 paid by the Purchaser to the Vendor and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Vendor, the Vendor acknowledges and agrees that, although the
Purchaser’s obligation to complete the sale and purchase contemplated by this Agreement is subject to
satisfaction or waiver of the Purchaser’s Conditions, this Agreement is not void, voidable,
revocable or, otherwise capable of being terminated by the Vendor until the time limited for
the satisfaction or waiver of the Purchaser’s Conditions has expired.

For greater certainty, the Purchaser acknowledges and agrees that the $10.00 paid to the
Vendor pursuant to this paragraph is the absolute property of the Vendor and in no event
will the $10.00 be returnable to or paid to the Purchaser.

 

- 22 -

	6.2	 	Waiver and Satisfaction.
	 
	 	 	The Purchaser’s Conditions are for the Purchaser’s sole benefit and each may be waived
unilaterally by the Purchaser, at the Purchaser’s election. None of the Purchaser’s
Conditions will be considered satisfied unless the Purchaser confirms to the Vendor in
writing that such condition has been satisfied. If the Purchaser does not give the Vendor
notice of the satisfaction or waiver of each of the Purchaser’s Conditions by the Conditions
Removal Date then the Purchaser’s obligation to purchase, and the Vendor’s obligation to
sell, the Purchased Property pursuant to this Agreement will be at an end and the Deposit
and all interest accrued on it will be returned immediately to the Purchaser.

ARTICLE 7

PREPARATION OF CLOSING DOCUMENTS

	7.1	 	Delivery of Closing Documents by the Vendor.
	 
	 	 	On or before the Completion Date, the Vendor will cause the Vendor’s Solicitors to deliver
to the Purchaser’s Solicitors the following items, duly executed by the Vendor and all other
persons (other than the Purchaser) as appropriate and in registrable form wherever
appropriate, to be dealt with pursuant to Article 8:
	 
	 	 	Documents Transferring Lands:

	 	(a)	 	a Freehold Transfer (Land Title Act — Form A) conveying the Lands to the
Purchaser (or as otherwise directed by the Purchaser);

	 	(b)	 	an agreement pursuant to which the Vendor assigns to the Purchaser and the
Purchaser assumes the Leases and all deposits, guarantees, indemnities, covenants and
other security in respect of any of them;

	 	(c)	 	directions to the Other Tenants directing the Other Tenants to pay future
rentals to or as directed by the Purchaser;

	 	(d)	 	the Estoppel Certificates required pursuant to section 4.5 (and, if required,
the Replacement Estoppel Certificates);

	 	(e)	 	an agreement pursuant to which the Vendor assigns to the Purchaser and the
Purchaser assumes those of the Service Contracts (if any) in which the Purchaser has
elected pursuant to section 5.4 to assume;

	 	(f)	 	an agreement pursuant to which the Vendor assigns to the Purchaser and the
Purchaser assumes the Vendor’s right, title and interest and benefit in and to all
current warranties
which are assignable and which pertain to the Lands and the Equipment and in and to
all Delivery Materials and all trade marks, trade names and other intellectual
property used exclusively in connection with the Lands;
	 
	 	(g)	 	a discharge of Notice of Interest BM33815;

 

- 23 -

Documents Transferring Equipment:

	 	(h)	 	a bill of sale conveying and assuring to the Purchaser good and marketable
title in and to the Equipment, free and clear from any lien, claim, charge or
encumbrance of any kind or nature whatsoever;

Other Documents:

	 	(i)	 	a Statement of Adjustments prepared in accordance with section 3.3;

	 	(j)	 	a certificate of the Vendor, dated the Completion Date, that certifies that the
Vendor has complied with all of its obligations under this Agreement in all material
respects and that each of the warranties and representations of the Vendor set out
herein is true and accurate on the Completion Date in all material respects;

	 	(k)	 	a mutual undertaking to make final adjustments in accordance with section 3.3;
and

	 	(l)	 	such further documentation relating to the completion of the transaction
contemplated herein as the Purchaser or the Vendor may reasonably require.

	7.2	 	Delivery of Closing Documents by Purchaser.
	 
	 	 	On or before the Completion Date, the Purchaser will cause the Purchaser’s Solicitors to
deliver to the Vendor’s Solicitors the following documents to be dealt with pursuant to
Article 8:

	 	(a)	 	any documents contemplated by section 7.1 which require execution or delivery
by the Purchaser, executed by the Purchaser;

	 	(b)	 	the HST Certificate, executed by the Purchaser; and

	 	(c)	 	such further documentation relating to the completion of the transactions
contemplated herein as the Vendor may reasonably require.

	7.3	 	Preparation of Closing Documents.
	 
	 	 	Except for the Statement of Adjustments, which will be prepared by the Vendor pursuant to
section 3.3, the closing documents contemplated in sections 7.1 and 7.2 will be prepared by
the Purchaser’s Solicitors, for approval by the Vendor’s Solicitors, acting reasonably, and
delivered to the Vendor’s Solicitors by the Purchaser’s Solicitors at least two (2) Business
Days prior to the Completion Date. All documents referred to in sections 7.1 and 7.2 will
be in form and substance reasonably satisfactory to the solicitors for the party entitled to
delivery thereof.

ARTICLE 8

CLOSING PROCEDURE

	8.1	 	Payment in Trust.
	 
	 	 	On or before the Completion Date, the Purchaser will pay to the Purchaser’s Solicitors in
trust the amount due to the Vendor pursuant to subsection 2.3(c), as adjusted pursuant to
section 3.3, less the amount to be advanced to the Purchaser on the Completion Date under
any mortgage financing arranged by the Purchaser.

 

- 24 -

	8.2	 	Registration.
	 
	 	 	Forthwith following the payment in section 8.1 and after receipt by the Purchaser’s
Solicitors of the documents referred to in section 7.1 and after receipt by the Vendor’s
Solicitors of the documents referred to in section 7.2, the Purchaser will cause the
Purchaser’s Solicitors to file in the LTO on the Completion Date the Transfer, the discharge
of Notice of Interest BM33815 and any security documents applicable to any mortgage
financing arranged by the Purchaser in connection with the purchase of the Purchased
Property.
	 
	8.3	 	Closing.
	 
	 	 	Forthwith following the filings referred to in section 8.2 and upon the Purchaser’s
Solicitors being satisfied as to the title to the Lands after conducting a post filing for
registration check of the property index for the Lands disclosing only the following:

	 	(a)	 	the existing title number to the Lands;

	 	(b)	 	Permitted Encumbrances;

	 	(c)	 	pending numbers assigned to the instruments referred to in section 8.2; and

	 	(d)	 	any other charges granted by the Purchaser against the Lands,

	 	 	the Purchaser will cause the Purchaser’s Solicitors, forthwith upon receipt by them of the
proceeds of any mortgage financing arranged by the Purchaser, to initiate a wire transfer,
in accordance with wire transfer instructions to be provided by the Vendor’s Solicitors on
the Completion Date for the aggregate of the Deposit and the amount due to the Vendor
pursuant to subsection 2.3(c), as adjusted pursuant to section 3.3, and concurrently
therewith the Purchaser’s Solicitors will be entitled to release the documents referred to
in section 7.1 to the Purchaser, the Vendor’s Solicitors will be entitled to release the
documents referred to in section 7.2 to the Vendor and the Purchaser’s Solicitors will be
entitled to (and will be directed by the parties to) release to the Purchaser all interest
earned on the Deposit (unless such interest has been adjusted for on the Vendor’s Statement
of Adjustments, in which event the interest will be paid to the Vendor).
	 
	8.4	 	Concurrent Requirements.
	 
	 	 	It is a condition of this Agreement that all requirements of sections 8.1 to 8.3 are
concurrent requirements and it is specifically agreed that nothing will be completed on the
Completion Date until everything required to be paid, executed and delivered on the
Completion Date has been so paid, executed and delivered and until the Purchaser’s
Solicitors have satisfied themselves as to title pursuant to section 8.3.
	 
	8.5	 	Discharge of Encumbrances by Vendor.
	 
	 	 	If on the Completion Date there are any judgments, liens, claims of lien or any other
financial charges against title to the Lands which are not Permitted Encumbrances, the
Vendor will not be required to clear the title to the Lands prior to the receipt of the net
sales proceeds of the Purchased Property, but will be obligated to do so forthwith following
receipt of such net sales proceeds and, in that event, the Purchaser’s Solicitors will pay
the net sales proceeds to the Vendor’s Solicitors on the condition that the Vendor’s
Solicitors undertake to hold such amount of the net sales proceeds in trust as is sufficient
to secure the discharge of any such non-Permitted

 

- 25 -

	 	 	Encumbrances, and not to release such
amount to the Vendor until such charges have been so released.
	 
	8.6	 	Closing Deliveries.
	 
	 	 	To the extent that the Vendor has not already delivered such items to the Purchaser and such
items are within the possession or control of the Vendor, the Vendor will deliver to the
Purchaser, within three (3) Business Days after the Completion Date, the items listed below:

	 	(a)	 	originally executed copies of the Leases and all guarantees, indemnities and
covenants in respect thereof;

	 	(b)	 	originally executed copies of the written Service Contracts assigned to the
Purchaser;

	 	(c)	 	all keys and like devices for the Lands and the Equipment which are in the
possession or control of the Vendor;

	 	(d)	 	all files, manuals, plans and other relevant documents in the possession or
control of the Vendor pertaining to the Lands and reasonably required by the Purchaser
for the future continuous operation of the Lands;

	 	(e)	 	all instructions, manuals, plans and other documents associated with any of the
Equipment or any of the improvements on the Lands which are in the possession or
control of the Vendor; and

	 	(f)	 	to the extent they are in the Vendor’s possession or control, duplicates of the
documents referred to in subsections 4.1(b) and (c).

	8.7	 	Election.
	 
	 	 	If on the Completion Date any of the representations or warranties made by the Vendor is
untrue in any material respect or the Vendor is in default in a material way under any of
the covenants and agreements to be observed or performed by the Vendor under this Agreement,
the Purchaser may elect not to complete the purchase of the Purchased Property hereunder or
to complete the purchase of the Purchased Property hereunder, in either case without
prejudice to any rights or remedies the Purchaser may have in respect of the Vendor’s breach
or default.

ARTICLE 9

MISCELLANEOUS

	9.1	 	Time.
	 
	 	 	Time will be of the essence of this Agreement and will remain of the essence notwithstanding
the extension of any of the dates hereunder.
	 
	9.2	 	No Waiver.
	 
	 	 	No failure or delay on the part of either party in exercising any right, power or privilege
under this Agreement will operate as a waiver thereof, nor will any single or partial
exercise of any right, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. Except as may be limited herein,
either party may, in its sole discretion, exercise any and all rights, powers, remedies and
recourses available to it under this

 

- 26 -

	 	 	Agreement or any other remedy available to it and such
rights, powers, remedies and recourses may be exercised concurrently or individually without
the necessity of making any election.
	 
	9.3	 	Tender.
	 
	 	 	It is agreed that any tender of documents or money may be made upon the respective
solicitors for the parties and that it will be sufficient to tender a solicitor’s certified
trust cheque rather than cash.
	 
	 	 	Notwithstanding the foregoing or any other provision of this Agreement, the parties agree
that, if the Purchaser is required by applicable legislation to cause the adjusted Purchase
Price to be paid by electronic transfer, then the Purchaser will make all commercially
reasonable efforts to ensure that such an amount will be transferred to and received by the
Vendor’s Solicitors on or before 3:00 p.m. (Vancouver time) on the Completion Date. If for
any reason out of the control of the Purchaser (which, for greater certainty, will not
include any event which is a default by the Purchaser under this Agreement), the Purchaser
cannot ensure that such an amount will be received by the Vendor’s Solicitors on or before
the time and date set out above, then the Purchaser will be entitled to pay such amount on
or before 3:00 p.m. (Vancouver time) on the next Business Day following the Completion Date
so long as, in addition to such amount, the Purchaser also pays to the Vendor at the same
time interest on such amount, at a rate equal to the Prime Rate plus one percent (1%) per
annum, for each day from and including the Completion Date to but not including the day such
payment is made. “Prime Rate”, as used herein, means that variable annual rate of interest
quoted by the main branch of Royal Bank of Canada, Vancouver, British Columbia, from time to
time as the rate of interest used by it as a reference rate for setting rates of interest on
Canadian dollar loans in Canada repayable on demand and commonly referred to by such Bank as
its “prime rate”.
	 
	9.4	 	Fees and Expenses.
	 
	 	 	Each party will pay its own legal fees. The Purchaser will be responsible for all
registration fees and transfer taxes payable in connection with the registration of the
Transfer and any mortgage security arranged by it and for any HST payable in connection with
the Purchaser’s acquisition of the Purchased Property.
	 
	9.5	 	Harmonized Sales Tax.
	 
	 	 	On or before the Completion Date, the Purchaser will provide the Vendor with a certificate
(the “HST Certificate”) stating that the Purchaser is registered with Canada Revenue Agency
or any successor thereto for the purposes of the federal/provincial harmonized sales tax
(“HST”) and
setting out its HST registration number, failing which the Purchaser will pay to the Vendor
the HST applicable to the purchase and sale of the Purchased Property on the Completion
Date.
	 
	9.6	 	Commission.
	 
	 	 	Any commission or brokerage fees payable to CBRE, to a maximum of $975,000, plus applicable
HST, will be paid by the Vendor upon the due completion of the transactions contemplated
herein. Any commissions or brokerage fees payable to CBRE in excess of $975,000, plus
applicable HST, and any commission or brokerage fees payable to any other third party in any
amount will be the sole responsibility of the Purchaser. The Vendor confirms that it has
not engaged any third party broker in connection with the purchase and sale of the Purchased
Property.

 

- 27 -

	9.7	 	Entire Agreement.
	 
	 	 	This Agreement and the agreements, instruments and other documents entered into pursuant to
this Agreement set forth the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings among the
parties with respect to the matters herein and there are no oral or written agreements,
promises, warranties, terms, conditions, representations or collateral agreements
whatsoever, express or implied, other than those contained in this Agreement.
	 
	9.8	 	Amendment.
	 
	 	 	This Agreement may be altered or amended only by an agreement in writing signed by the
parties hereto.
	 
	9.9	 	Further Assurances.
	 
	 	 	Each of the parties hereto will at all times and from time to time and upon reasonable
request do, execute and deliver all further assurances, acts and documents for the purpose
of evidencing and giving full force and effect to the covenants, agreements and provisions
in this Agreement.
	 
	9.10	 	No Merger.
	 
	 	 	Except where specifically set out in this Agreement, none of the provisions of this
Agreement will merge in the transfer of the Purchased Property or any other document
delivered on the Completion Date, and the provisions of this Agreement will survive the
Completion Date.
	 
	9.11	 	Notices.
	 
	 	 	Any demand or notice which may be given pursuant to this Agreement will be in writing and
delivered, transmitted by facsimile or electronic mail or sent by postage prepaid mail and
addressed to the parties as follows:
	 
	 	 	to the Purchaser:

lululemon athletica canada inc.

1818 Cornwall Avenue

Vancouver, British Columbia

V6J 1C7

Attention:      Wynn Spencer

	 	 	 

	Fax No.:

	 	(604) 874-6124
	Email:

	 	wspencer@lululemon.com

 

- 28 -

with a copy to:

McCarthy Tétrault LLP

Barristers and Solicitors

1300 – 777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

Attention:      Scott Smythe

	 	 	 

	Fax No.:

	 	(604) 622-5752
	Email:

	 	ssmythe@mccarthy.ca

to the Vendor:

2725312 Canada Inc.

c/o Bentall Kennedy (Canada) LP

Suite 1800, Four Bentall Centre

1055 Dunsmuir Street

P.O. Box 49001

Vancouver, British Columbia

V7X 1B1

Attention:      Chrystal Burns

	 	 	 

	Fax No.:
	 	(604) 646-2805
	Email:
	 	cburns@bentallkennedy.com

with a copy to:

Stikeman Elliott LLP

Barristers and Solicitors

1700 – 666 Burrard Street

Vancouver, British Columbia

V6C 2X8

Attention:      Ross MacDonald

	 	 	 

	Fax No.:

	 	(604) 631-1367
	Email:

	 	rmacdonald@stikeman.com

or at such other address, fax number or electronic mail address as either party may specify
in writing to the other. The time of giving and receiving any such notice will be deemed to
be on the day of delivery or transmittal if delivered or sent by facsimile or electronic
mail (so long as such delivery or transmittal was carried out prior to 5:00 p.m. on a
Business Day, failing which such notice will be deemed to have been given and received on
the next succeeding Business Day), or on the third Business Day after the day of mailing
thereof if sent by mail. In the event of any disruption of mail services, all notices will
be delivered or sent by facsimile or electronic mail rather than mailed.

 

- 29 -

	9.12	 	Assignment.
	 
	 	 	The Purchaser may assign its legal and beneficial interests in this Agreement to any other
person (including, but not limited to, a corporation or partnership formed for such
purpose), provided that any such legal or beneficial assignment by the Purchaser will not
release the Purchaser from any of its obligations under this Agreement. For greater
certainty, the Purchaser will also be entitled to direct the Vendor to transfer legal and
registered title to the Lands to a corporation acting as nominee and bare trustee on behalf
of the Purchaser.
	 
	9.13	 	No Partnership.
	 
	 	 	Nothing in this Agreement will be construed to create a partnership or joint venture between
the parties with respect to the Purchased Property or the transactions contemplated
hereunder.
	 
	9.14	 	Confidentiality.
	 
	 	 	Unless the sale and purchase of the Purchased Property contemplated by this Agreement is
completed, the parties will not disclose to any third party the existence, contents or
effect of this Agreement or any documents, materials or information (including the results
of any due diligence tests, assessments or searches) provided pursuant to or obtained in
relation to this Agreement, (collectively, “Confidential Information”) without the prior
written consent of the other party, except that each party may disclose the same to its
employees, inspectors, lenders, agents, advisors, consultants, potential investors and such
other persons as may reasonably be required and except that Confidential Information will
not include:

	 	(f)	 	information which is required by law, or any regulatory disclosure requirements
to be disclosed in connection with the proposed sale and purchase of the Purchased
Property;

	 	(g)	 	information which is known to the recipient or is in the recipient’s possession
prior to its receipt thereof from the other party hereto;

	 	(h)	 	information which is obtained by a recipient from a person or entity which is
not, to the knowledge of the recipient, prohibited from disclosing such information to
the recipient by any contractual, legal, or fiduciary obligation to the other party
hereto;

	 	(i)	 	information which is or becomes publicly available through no fault of the
recipient.

	 	 	Until such time as the transaction contemplated by this Agreement is completed, the Vendor
and the Purchaser also agree that neither of them will issue any press or other publicity
release or communication to the general public concerning the proposed purchase and sale of
the Purchased
Property without the prior written approval of the other party, unless any such disclosure
is otherwise required by law.
	 
	9.15	 	Counterparts.
	 
	 	 	This Agreement may be executed in any number of original counterparts, with the same effect
as if all the parties had signed the same document, and will become effective when one or
more counterparts have been signed by all of the parties and delivered to each of the other
parties. All counterparts will be construed together and evidence only one agreement, which
will be deemed to be dated the reference date set out above.

 

- 30 -

	9.16	 	Binding Effect.
	 
	 	 	This Agreement will enure to the benefit of and be binding upon the successors and assigns
of the parties, as applicable.
	 
	9.17	 	Execution by Electronic Means.
	 
	 	 	This Agreement may be executed by the parties and transmitted by facsimile or other
electronic means and if so executed and transmitted this Agreement will be for all purposes
as effective as if the parties had delivered an executed original Agreement.

IN
WITNESS WHEREOF the Parties have executed this Agreement on the 22nd day of December, 2010.

	 	 	 	 	 
	
 
LULULEMON ATHLETICA CANADA INC.

 	 	 
	By:  	/s/  John Currie
 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 
	 
	
2725312 CANADA INC.

 	 	 
	By:  	/s/  Chrystal Burns
 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 
	 
	 	 	 
	By:  	/s/  John Purcell
 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 
	 

 

 

SCHEDULE A

LANDS AND PERMITTED ENCUMBRANCES

Lands

Parcel Identifier 007-095-333

Lot A

Block 197

District Lot 526

Plan 18728

Permitted Encumbrances

The Lands are subject to the following Permitted Encumbrances:

Legal Notations

None.

Charges, Liens and Interests

	 	(a)	 	Indemnity Agreement 20400M;

	 	(b)	 	Easement and Indemnity Agreement H43448;

	 	(c)	 	Easement and Indemnity Agreement J50476;

	 	(d)	 	Easement and Indemnity Agreement J67896;

	 	(e)	 	Easement and Indemnity Agreement K44250;

	 	(f)	 	Lease BF251950;

	 	(g)	 	Lease BF263707;

	 	(h)	 	Lease BM231324;

	 	(i)	 	Lease BT176245; and

	 	(j)	 	Lease BV389720.

 

 

SCHEDULE B

ESTOPPEL CERTIFICATE

			
	TO:	 	•

			
	AND TO:	 	•

			
	AND TO:	 	•

			
	RE:	 	The lease between _________________________ (the “Landlord”) and
the undersigned, as tenant dated _____________________ (the
“Lease”) of certain premises (the “Premises”) described in the
Lease which Premises are located in the Kvaerner Chemetics
Building, Vancouver, British Columbia (the “Property”)

 

We understand that  •  will be purchasing the Property and that  •  has requested certain information
concerning the Lease. In connection with this request and knowing that you and your respective
successors and assigns intend to rely on this Certificate, we certify to you and to any other
person referred to above that:

	1.	 	The Lease has been validly executed and delivered by the undersigned, the undersigned has
unconditionally accepted the possession of the Premises except as set out in item 4 of the
Notes herein and the undersigned is in possession of the Premises.

	2.	 	The Lease contains the entire and only agreement between the undersigned and the Landlord
pertaining to the undersigned’s occupation of the Premises. The Lease has not been altered,
amended or assigned by the undersigned nor has all or any part of the Premises been sublet by
the undersigned except as set out in item 1 of the Notes herein.

	3.	 	The rent payable pursuant to the Lease has been paid through the period ending
________________________, 201__. No rent is prepaid to the Landlord except for the current
month’s rent nor has the undersigned deposited any security with the Landlord except as set
out in item 2 of the Notes herein.

	4.	 	The undersigned is not claiming any deduction, abatement or set-off against the Landlord with
respect to the undersigned’s obligations to pay rent and additional rent pursuant to the Lease
except as set out in item 4 of the Notes herein.

	5.	 	The term of the Lease will end on _____________________. There is no right to renew or
extend the term except as set out in item 3 of the Notes herein. The monthly minimum rental
is ___________. The monthly additional rent (being charged for operating costs and realty
taxes), exclusive of harmonized sales tax, is presently _______________. The monthly minimum
rental and the monthly additional rent are calculated on the basis that the leasable area of
the Premises has been accepted as being ______________ square feet.

	6.	 	The Premises conform to the Landlord’s obligations under the Lease.

	7.	 	There is no existing default under the Lease on the part of the undersigned or, so far as the
undersigned is aware, on the part of the Landlord.

 

B-2

	8.	 	The undersigned does not have any right of first refusal or option either to purchase the
Property or lease any space in the Property except as set out in item 5 of the Notes herein.

	9.	 	The undersigned has no claims against the Landlord, financial or otherwise, except as set out
in item 4 of the Notes herein.

NOTES:

	10.	 	Sublet:

	11.	 	Security Deposit:

	12.	 	Renewals:

	13.	 	Claims:

	14.	 	Other Matters:

DATED the ______ day of _______________________, 201__.

(Tenant)

	 	 	 	 	 
	 	 
 	 
	By:  	 	 	 
	 	Authorized Signing Officer 	 	 
	 	 	 	 
	 

 

AMENDMENT TO PURCHASE AND SALE AGREEMENT

THIS AGREEMENT is dated for reference February 11, 2011.

BETWEEN:

	 	 	 	2725312 CANADA INC.

	 	 	 	(the “Vendor”)

AND:

	 	 	 	LULULEMON ATHLETICA CANADA INC.

	 	 	 	(the “Purchaser”)

WHEREAS:

	A.	 	By a purchase and sale agreement dated for reference December 22, 2010 between the Vendor and
the Purchaser (the “Purchase Agreement”), the Vendor agreed to sell and the Purchaser agreed
to purchase, among other things, the lands and premises located at 1818 Cornwall Avenue,
Vancouver, British Columbia and legally described as Parcel Identifier: 007-095-333, Lot A,
Block 197, District Lot 526, Plan 18728, on the terms and conditions set out in the Purchase
Agreement; and

	B.	 	The parties have agreed to amend the Purchase Agreement in accordance with the terms of this
Agreement.

THEREFORE in consideration of $1.00 now paid by each party to the other and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties,
the parties agree as follows:

	1.	 	Amendments. The Vendor and the Purchaser agree that, effective as of the date of this
Agreement, the Purchase Agreement is amended as follows:

	 	(a)	 	by deleting subsection 1.1(d) and replacing it with the following:

	 	“(d)	 	“Completion Date” means March 1, 2011;”; and

	 	(b)	 	by deleting subsection 3.3(a) and replacing it with the following:

	 	“(a)	 	Adjustment Date. Adjustments for the Purchased
Property will be made as of the Completion Date and the payment due pursuant to
subsection 2.3(c) will be adjusted accordingly. Except as otherwise provided
in this Agreement, the Vendor will be responsible for all expenses and will be
entitled to all revenues accrued with respect to the Purchased Property for the
period ending at 11:59:59 p.m. on the day before the Completion Date and, for
the period from and after 12:00:01 a.m. on the Completion Date, the Purchaser
will be responsible for all expenses and will be entitled to all revenues
accrued with respect to the Purchased Property.”.

 

 

	2.	 	Construction. The parties agree that this Agreement will, from the date hereof, be read and
construed together with the Purchase Agreement and be treated as part thereof, and the
Purchase Agreement, as amended by this Agreement, will continue in full force and effect in
accordance with the terms thereof and hereof.

	3.	 	Conflict. In case of any conflict between the terms and conditions of the Purchase Agreement
and the terms or conditions of this Agreement, the terms and conditions of this Agreement will
prevail.

	4.	 	Further Assurances. Each of the parties hereto will at all times and from time to time and
upon reasonable request do, execute and deliver all further assurances, acts and documents for
the purpose of evidencing and giving full force and effect to all the provisions in this
Agreement.

	5.	 	Counterparts. This Agreement may be executed in any number of original counterparts, with
the same effect as if all the parties had signed the same document, and will become effective
when one or more counterparts have been signed by all the parties and delivered to each of the
other parties. All counterparts will be construed together and evidence only one agreement
which, notwithstanding the dates of execution of any counterparts, will be deemed to be dated
the date first above written.

	6.	 	Execution by Electronic Means. This Agreement may be executed by the parties and delivered
by fax or other electronic means and if so executed and delivered this Agreement will be for
all purposes as effective as if the parties had executed and delivered an executed original of
this Agreement.

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

	 	 	 	 	 	 	 

	2725312 CANADA INC.	 	LULULEMON ATHLETICA CANADA INC.
	 
	 
	By:

	 	/s/  Chrystal Burns
	 	By:
	 	/s/  David Negus
	 

	 	 
	 	 	 	 
	 

	 	Authorized Signatory
	 	 	 	Authorized Signatory
	 
	 
	By:

	 	/s/  John Purcell
	 	By:
	 	/s/  John Currie
	 

	 	 
	 	 	 	 
	 

	 	Authorized Signatory
	 	 	 	Authorized Signatory

2exv10w26

Exhibit 10.26

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of January 1, 2011,
between Bank of Commerce, (hereinafter referred to as “Employer”), and Robert C. Oberg (hereinafter
referred to as “Executive”).

WITNESSETH:

     WHEREAS, Employer desires to employ Executive in the capacity hereinafter stated, and
Executive desires to continue in the employ of Employer in such capacity, for the period and on the
terms and conditions set forth herein:

     NOW, THEREFORE, in consideration of the promises and of the mutual covenants and conditions
herein contained, the parties hereto, intending to be legally bound do hereby agree as follows:

     1. EMPLOYMENT DUTIES AND AUTHORITY

Employer hereby employs Executive as its Chief Risk Officer, and Executive accepts such
employment. Executive agrees to perform the duties that are customarily performed by a Chief Risk
Officer of a financial services holding company and a state chartered banking institution and
accepts all other duties described herein or as prescribed by the Employer’s Board of Directors,
and agrees to discharge the same faithfully and to the best of his ability and the highest and best
standards of the banking industry, in accordance with the policies of the Employer’s Articles of
Incorporation, Bylaws, Policies and Procedures. Executive shall devote his full business time and
attention to the business and affairs of Employer for which he is employed and shall perform the
duties thereof to the best of his ability. Except as permitted by the prior written consent of the
Employer’s Board of Directors, Executive shall not directly or indirectly render any services of a
business, commercial or professional nature to any other person, firm or corporation, whether for
compensation or otherwise, which are in conflict with Employer’s interests. Executive shall have
such responsibility and duties and such authority to transact business on behalf of Employer, as
are customarily incident to the office of Chief Risk Officer of a financial services holding
company and a state chartered banking institution.

     2. TERM

Employer hereby employs Executive, and Executive hereby accepts employment with Employer for
the period of three years, and automatically extending for a one-year period (the “Term”),
commencing January 1, 2011 with such Term being subject to prior termination as herein provided.
Where used herein, “Term” shall refer to the entire period of employment of Executive by Employer,
whether for the period provided above, or whether terminated earlier as hereinafter provided, or
extended by mutual agreement in writing by Employer and Executive.

     3. EXECUTIVE COMPENSATION

In consideration for all services to be rendered by Executive to Employer, Employer agrees to
pay Executive a starting base salary of $172,000.00 per year. The President and Chief Executive
Officer of the Company will present to the Directors Executive Compensation Committee for approval
any increases in Executive’s base salary annually following an annual performance evaluation.
Executive’s salary shall be paid semi-monthly. Employer shall deduct there from all taxes which
may be required to be deducted or withheld under any provision of the law (including, but not
limited to, social security payments and income tax withholding) now in effect or which may become
effective anytime during the term of this Agreement.

Executive shall be entitled to participate in any and all other employee benefits and plans that
may be developed and adopted by Employer and in which Executive is eligible to participate under
the terms of such plans, including Employer’s Cash Incentive (“Profit Sharing”) Plan. Employer
agrees to reimburse Executive for all ordinary and customary expenses for entertainment, meals,
travel, cellular phone, and incidental business expense in accordance with Employer’s policy.
Reasonable costs incurred for professional education, publications, seminars, meetings and special
social entertainment shall also be reimbursed in accordance with Employer’s policy.

3

 

     4. INSURANCE

Employer agrees to provide Executive with health and life insurance benefits that are now or
may hereinafter be in effect for all other full-time employees subject to the eligibility
requirements of the plans. Employer may also obtain a “key-man” life insurance policy on the life
of Executive which shall be a general asset of the employer and to which Executive and the
Executive’s beneficiary will have no preferred or secured claim.

     5. VACATION

Executive shall be entitled to the current accrual rate for vacation during each year of which
at least two (2) weeks must be taken in a consecutive period. Vacation benefits shall not accrue
above six weeks at any time. Once this six week maximum is reached, vacation will stop accruing
until vacation is taken.

     6. TERMINATION

Employer shall have the right to terminate this Agreement for any of the following reasons by
serving written notice upon Executive:

	 	a.	 	Breach of, habitual neglect of, failure to perform, or inability to
perform, Executive duties and obligations as Chief Risk Officer.
	 
	 	b.	 	Illegal conduct, constituting a crime involving moral turpitude,
conviction of a felony, or any conduct detrimental to the interests of the Employer.
	 
	 	c.	 	Physical or mental disability rendering Executive incapable of performing
his duties for a consecutive period of 180 days (during which time Executive shall
continue to receive his base salary and other benefits, provided his accrued sick
leave has first been exhausted), or by death; or
	 
	 	d.	 	Determination by Employer’s Board of Directors that the continued
employment of Executive is detrimental to the best interests of the Employer, or for
any reason whatsoever as determined by Employer’s Board of Directors and in the sole
and absolute discretion of the Employer’s Board of Directors.

In the event this Agreement is terminated for any of the reasons specified in the paragraphs (a) or
(b), above (determined to be ‘cause’), Executive shall only be paid any accrued salary calculated
as of the date of the Executive’s termination, plus vacation accrued to, but not taken as of date
of the termination.

In the event this Agreement is terminated for any reason specified in paragraphs (c) or (d)
above, Executive shall be entitled to severance pay in an amount equal to twelve months of
Executive’s then total compensation package to be paid in one lump sum.

Total compensation package is defined as current salary, cash incentive profit sharing, insurance.

The total compensation package and benefits referenced in the preceding paragraph are collectively
referred to herein as “Severance.” Executive acknowledges and agrees that any Severance provided
upon termination is in lieu of all damages, payments and liabilities on account of the early
termination of this Agreement and is the sole and exclusive remedy for Executive other than rights,
if any, to exercise any of the stock options vested prior to such termination, and shall only be
paid subject to Executive’s execution of a complete release of all claims Executive may have
against the Employer, its officers, directors, agents, employees, predecessors, successors,
parents, subsidiaries, and affiliates. If upon termination of employment Executive chooses to
arbitrate any claims pursuant to Section 15, Executive shall be deemed to have waived Executive’s
right, if any, to severance.

Executive shall give ninety (90) days prior notice, in writing, to Employer in the event Executive
resigns or voluntarily terminates employment, or takes early retirement.

4

 

     7. CHANGE OF CONTROL BENEFITS

In the event there is a Change of Control and in the event of diminution in salary or job
duties, the Bank shall pay to the Executive severance equal to one (1) year’s salary at that salary
rate being paid to Executive at the time of the Change in Control together with an amount equal to
one (1) year’s profit sharing, with the amount of such profit sharing payment to be that amount
which is the average profit sharing received by the Executive for the three (3) prior years.
Executive shall also receive at the Bank’s expense, a continuation of health benefits then being
provided to the Executive for a period of one (1) year. Executive acknowledges and agrees that
such payment is in lieu of all damages, payments and liabilities on account of the early
termination of this Agreement and is the sole and exclusive remedy for Executive (other than
rights, if any, to exercise any of the stock options vested prior to such termination), and shall
only be paid subject to Executive’s execution of a complete release of all claims Executive may
have against the Employer, its officers, directors, agents, employees, predecessors, successors,
parents, subsidiaries, and affiliates. If upon termination of employment Executive chooses to
arbitrate any claims pursuant to Section 15, Executive shall be deemed to have waived Executive’s
right, if any, to severance.

Change in Control” means (i) a Change in the Ownership of the Relevant Corporation, (ii)
a Change in the Effective Control of the Relevant Corporation, or (iii) or a Change in the
Ownership of a Substantial Portion of the Assets of the Relevant Corporation. The events giving
rise to the Change in Control must be objectively determinable, and the Board, in a ministerial
capacity, shall certify there is a Change in Control only when the events giving rise to the Change
in Control are objectively determinable. The Board shall not have any discretionary authority to
certify that there has been a Change in Control except as provided in the preceding sentence.
Notwithstanding anything to the contrary, (i) the term “Change in Control” shall be interpreted in
accordance with Section 409A; (ii) any event which constitutes a “Change in Control” under Section
409A shall constitute a “Change in Control” for purposes of this Agreement; (iii) and any event
which does not constitutes a “Change in Control” under Section 409A shall not constitute a “Change
in Control” for purposes of this Agreement.

Excess Parachute Payment. Notwithstanding any provision of this Agreement to the contrary, the Bank
shall not pay any benefit under this Agreement to the extent the benefit would create an excise tax
under the excess parachute rules of Section 280G of the code.

     8. CONFIDENTIAL INFORMATION AND NONDISCLOSURE

          (a) Confidential Information. Employer has and will develop and own certain Confidential
Information, which has a great value in its business. Employer also has and will have access to
Confidential Information of its customers.

“Customers” shall mean any persons or entities for whom Employer performs services or from whom
Employer obtains information. Confidential Information includes information disclosed to Executive
during the course of his employment, and information developed or learned by Executive during the
course of his employment. Confidential Information is broadly defined and includes all information
which has or could have commercial value or other utility in Employer’s business or the businesses
of Employer’s customers. Confidential Information also includes all information which could be
detrimental to the interests of Employer or its customers if it were disclosed.

By example and without limitation, Confidential Information includes all information concerning
loan information, Customer data, including but not limited to Customer and supplier identities,
Customer characteristics or agreements and Customer lists, applicant data, employment categories,
job classifications, employment histories, job analyses and validations, preferences, credit
history, agreements, and any personally identifiable information related to Customers; any
information provided to Executive by a Customer, including but not limited to electronic
information, documents, software, and trade secrets; historical sales information; advertising and
marketing materials and strategies; financial information related to Employer, Customers,
Customer’s employees or any other party; labor relations strategies; research and development
strategies and results, including new materials research; pending projects and proposals;
production processes; scientific or technological data, formulae and prototypes; employee data;
pricing and product information; computer data information; inventory levels and products; supplier
information and data; testing techniques; processes; formulas; trade secrets; inventions;
discoveries; improvements; specifications; data, know-how, and formats; marketing plans; pending
projects and proposals; business plans; computer processes; computer programs and codes;
technological data; strategies; forecasts; budgets; and projections.

5

 

          (b) Protection of Confidential Information. Executive agrees that at all times during
and after his employment by Employer, Executive will keep confidential and not disclose to any
third party or make any use of the Confidential Information of Employer or its customers, except
for the benefit of Employer or its customers and in the course of his employment. In the event
Executive is required by law to disclose such information described in this paragraph, Executive
will provide Employer and its legal counsel with immediate notice of such request so that Employer
may consider seeking a protective order. For purposes of this Agreement, the disclosure of any
Confidential Information, at any time except as required by law shall be considered to be “unfair
competition”. Executive also agrees not to remove or permit the removal of Confidential
Information from Employer’s place of business without the express written authorization of an
Officer of Employer or its authorized representative. Executive acknowledges that he is aware that
the unauthorized disclosure of Confidential Information of Employer or its customers may be highly
prejudicial to their interests, an invasion of privacy, and an improper disclosure of trade secrets
and financial information in violation of state and federal law.

          (c) Return of Property. In the event Executive’s employment with Employer is terminated
(voluntarily or otherwise), Executive agrees to inform Employer of all documents and other data
relating to his employment which is in his possession and control and to deliver promptly all such
documents and data to Employer.

          (d) Sanctions for Unauthorized Taking of Trade Secrets. Executive understands that taking of
Employer’s trade secrets is a crime under California Penal Code section 449(c) and could also
result in civil liability under California’s Uniform Trade Secrets Act (Civil Code sections
3426-3426.11), and that willful misappropriation may result in an award against Executive of triple
the amount the Employer’s damages and Employer’s attorney fees for collecting such damages.

          (e) Injunctive Relief. Executive acknowledges that breach of this Section may cause Employer
irreparable harm for which money is inadequate compensation. Executive therefore agrees that
Employer will be entitled to injunctive relief, without the necessity of posting a bond, to enforce
this Section and this Agreement, in addition to damages and other available remedies, and Executive
consents to such injunctive relief pursuant to Section 15 below.

          (f) Solicitation of Bank Customers. Executive agrees that in the event his employment with the
Bank shall terminate for any reason, he shall not, for a period of one year, make known to, or call
on, solicit or take away, or attempt to call on, solicit or take away on behalf of any person, firm
or corporation which is in competition, either directly or indirectly, with the Bank, any existing
customers of the Bank or individuals or entities with whom the Bank is negotiating for the Bank’s
services. This provision may be enforced either through injunction or specific performance of this
Agreement by the Bank. In the event of a Change in Control, Executive shall be unconditionally
released from all of his duties and obligations under this paragraph.

     9. INDEMNIFICATION 

To the extent permitted by law, Employer shall indemnify Executive if he was or is a party or
is threatened to be made a party in any such action brought by a third party against Executive
(whether or not Employer is joined as a party defendant) against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred with said action if Executive acted
in good faith and in a manner Executive reasonably believed to be in the best interest of Employer
(and with respect to a criminal proceeding if Executive had no reasonable cause to believe his
conduct was unlawful), provided that the alleged conduct of Executive arose out of and was within
the course and scope of his employment as an officer or employee of Employer.

     10. NOTICES 

Any notice, request, demand, or other communication required or permitted hereunder shall be
deemed to be properly given when personally served in writing, when deposited in the U.S. mail,
postage prepaid, or when communicated to a public telegraph company for transmittal, addressed as
follows:

	 	 	 	 	 

	 

	 	To Employer:
	 	Redding Bank of Commerce
	 

	 	 	 	1901 Churn Creek Road
	 

	 	 	 	Redding, California 96002
	 

	 	 	 	Attention: Board of Directors
	 
	 	 	 	 
	 

	 	To Executive:
	 	Robert C. Oberg
	 

	 	 	 	4464 Rose Terrace Drive
	 

	 	 	 	Redding, California 96001

6

 

     Any party hereto may change its or his address for purposes of this Section by giving notice in
accordance herewith.

     11. BENEFIT OF AGREEMENT 

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.

     12. APPLICABLE LAW 

This Agreement is made and entered into in the State of California, and the laws of said State
shall govern the validity and interpretation hereof.

CAPTIONS AND PARAGRAPH HEADINGS

Captions and paragraph headings used herein are for convenience only and are not a part of this
Agreement and shall not be used in construing it.

     13. INVALID PROVISIONS 

Should any provision of this Agreement for any reason be declared invalid, void, or
unenforceable by a court of competent jurisdiction, the validity and binding effect of any
remaining portions shall not be affected and the remaining portions of this Agreement shall remain
in full force and effect as if this Agreement had been executed with said provision eliminated.

     14. ENTIRE AGREEMENT 

This Agreement and the Executive Salary Continuation Agreement, and contain the entire
Agreement of the parties and supersede any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by Employer, except to the
extent that it is contemplated that Executive and Employer may enter into a stock option agreement.
Each party to this Agreement acknowledges that no representations, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any party, which is not
embodied herein, and that no other agreement, statement, or promise not contained in this Agreement
shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but
only by an agreement in writing signed by the Employer and Executive.

     15. NEGOTIATION — MEDIATION

The parties will attempt in good faith to resolve promptly any dispute, controversy, or claim
arising out of or relating to this contract or any claimed breach thereof by direct negotiation
between principals of the parties who have authority to settle the controversy. To facilitate such
negotiations, it is agreed that a disputing party shall give the other party written notice of the
dispute providing reasonable particularity with respect to all issues deemed to be controverted or
disputed. Within ten (10) days after such notice is given, the principals of the parties shall
meet at a mutually acceptable time and place, and thereafter as often as those individuals
reasonably deem necessary to exchange relevant information and attempt to resolve all disputes.

If the disputes have not been resolved within thirty (30) days after the disputing party gives
notice, or if the party receiving notice declines to meet, either party may initiate mediation of
the controversy, claim or dispute in accordance with the following mediation provisions. Upon
failure of the negotiations as set forth above, the parties to this contract agree to mediate any
dispute, controversy or claim arising out of this contract or relating to the work undertaken
pursuant to this contract prior to resorting to arbitration as hereinafter provided. Mediation is
a process in which parties attempt to resolve a dispute by submitting it to an impartial, neutral
mediator who is authorized to facilitate the resolution of the dispute, but who is not empowered to
impose a settlement on the parties.

The parties shall attempt to mutually agree upon an impartial mediator, which mediator shall be
appointed jointly and compensated equally by the parties. In the event the parties are unable to
agree on an impartial mediator, then and in that event each party shall submit to the other a list
with two (2) names of retired judges who will mediate in Shasta County, and have no ongoing
professional or business relationship with either of the parties.

From the lists, the parties shall, in turn, beginning with the Executive, cross unacceptable names
from the list until such time as a potential mediator remains. The potential remaining mediator
shall then be contacted to determine if he/she is available

7

 

and willing to act as mediator. Should none of the original list of mediators be available, new
lists shall be prepared and the process again undertaken.

Following mediation or in the event that for any reason no mediation has been held, all disputes,
controversies or claims shall be resolved by binding arbitration as hereinafter set forth. If a
party commences an arbitration or court action based on a dispute or claim as to which this section
applies, without first attempting to resolve the matter through mediation, then and in that event,
such party shall not be entitled to recover attorney’s fees, costs or expert fees, even if they
would otherwise be available to that party in any such arbitration or court action.

     16. ARBITRATION

Any controversy among parties arising from or relating to the performance or interpretation of
this contract is subject to binding arbitration. The parties hereto are bound, each to the other,
by this arbitration clause. The parties therefore agree that any dispute, controversy or claim, in
law or equity, arising between themselves out of this contract pursuant to this contract which is
not settled through mediation must be decided by neutral binding arbitration and not by court
action, except as provided by the California Law for Judicial Review of Arbitration Proceedings.

On the demand of the arbitrator or any party to an arbitration initiated under the arbitration
provisions of this contract, each party hereto shall be bound by this arbitration provision and
agrees to join in, become a party to, and be bound by such arbitration.

Arbitration shall be conducted under and pursuant to the provisions of California Code of Civil
Procedure § 1280, et seq., including the provisions of § 1283.05, as are in effect at the time of
the arbitration, and judgment may be entered on the award as therein provided.

If any party refuses or neglects to appear at or participate in arbitration after reasonable
notice, the arbitrator may decide the controversy in accordance with whatever evidence is presented
by the party or parties who do participate. The arbitrator may award any remedy that is just and
equitable in the arbitrator’s opinion. The arbitrator will award to the prevailing party or parties
such sums as are proper to compensate for the time, expense, and trouble of arbitration, including
arbitration fees, attorney fees and costs, and expert fees. The arbitrator will retain jurisdiction
of a controversy even if a party or parties to the dispute will not or cannot be joined in the
arbitration proceedings.

     17. ATTORNEYS’ FEES AND COSTS 

In the event of litigation, arbitration or any other action or proceeding between the parties
to interpret or enforce this Agreement or any part thereof or otherwise arising out of or relating
to this Agreement, the prevailing party shall be entitled to recover its costs related to any such
action or proceeding and its reasonable fees of attorneys, accountants and expert witnesses
incurred by such party in connection with any such action or proceeding. The prevailing party
shall be deemed to be the party which obtains substantially the relief sought by final resolution,
compromise or settlement, or as may otherwise be determined by order of a court of competent
jurisdiction in the event of litigation, an award or decision of one or more arbitrators in the
event of arbitration, or a decision of a comparable official in the event of any other action or
proceeding.

8

 

EXECUTIVE AND EMPLOYER AGREE THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE AND EMPLOYER
KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO A TRIAL BY A JUDGE OR JURY.

	 	 	 	 	 	 	 

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

	 	EXECUTIVE:	 	 	 	 
	 
	 	 	 	 	 	 
	BANK OF COMMERCE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:   /s/ Kenneth R. Gifford, Jr
 

	 	/s/ Robert C. Oberg
 

	 	 	 	 
	         Name: Kenneth R. Gifford, Jr.

	 	Robert C. Oberg	 	 	 	 
	         Title:   Chairman

	 	 	 	 	 	 

9

 

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of January 1, 2011,
between Bank of Commerce, (hereinafter referred to as “Employer”), and Linda J. Miles (hereinafter
referred to as “Executive”).

WITNESSETH:

     WHEREAS, Employer desires to employ Executive in the capacity hereinafter stated, and
Executive desires to continue in the employ of Employer in such capacity, for the period and on the
terms and conditions set forth herein:

     NOW, THEREFORE, in consideration of the promises and of the mutual covenants and conditions
herein contained, the parties hereto, intending to be legally bound do hereby agree as follows:

     1. EMPLOYMENT DUTIES AND AUTHORITY

Employer hereby employs Executive as its Chief Operating Officer, and Executive accepts such
employment. Executive agrees to perform the duties that are customarily performed by a Chief
Operating Officer of a financial services holding company and a state chartered banking institution
and accepts all other duties described herein or as prescribed by the Employer’s Board of
Directors, and agrees to discharge the same faithfully and to the best of her ability and the
highest and best standards of the banking industry, in accordance with the policies of the
Employer’s Articles of Incorporation, Bylaws, Policies and Procedures. Executive shall devote her
full business time and attention to the business and affairs of Employer for which he is employed
and shall perform the duties thereof to the best of her ability. Except as permitted by the prior
written consent of the Employer’s Board of Directors, Executive shall not directly or indirectly
render any services of a business, commercial or professional nature to any other person, firm or
corporation, whether for compensation or otherwise, which are in conflict with Employer’s
interests. Executive shall have such responsibility and duties and such authority to transact
business on behalf of Employer, as are customarily incident to the office of Chief Operating
Officer of a financial services holding company and a state chartered banking institution.

     2. TERM 

Employer hereby employs Executive, and Executive hereby accepts employment with Employer for
the period of three years, and automatically extending for a one-year period (the “Term”),
commencing January 1, 2011 with such Term being subject to prior termination as herein provided.

Where used herein, “Term” shall refer to the entire period of employment of Executive by Employer,
whether for the period provided above, or whether terminated earlier as hereinafter provided, or
extended by mutual agreement in writing by Employer and Executive.

     3. EXECUTIVE COMPENSATION 

In consideration for all services to be rendered by Executive to Employer, Employer agrees to
pay Executive a starting base salary of $210,000.00 per year. The President and Chief Executive
Officer of the Company will present to the Directors Executive Compensation Committee for approval
any increases in Executive’s base salary annually following an annual performance evaluation.

Executive’s salary shall be paid semi-monthly. Employer shall deduct there from all taxes which
may be required to be deducted or withheld under any provision of the law (including, but not
limited to, social security payments and income tax withholding) now in effect or which may become
effective anytime during the term of this Agreement.

Executive shall be entitled to participate in any and all other employee benefits and plans that
may be developed and adopted by Employer and in which Executive is eligible to participate under
the terms of such plans, including Employer’s Cash Incentive (“Profit Sharing”) Plan.

Employer agrees to reimburse Executive for all ordinary and customary expenses for entertainment,
meals, travel, cellular phone, and incidental business expense in accordance with Employer’s
policy. Reasonable costs incurred for professional education, publications, seminars, meetings and
special social entertainment shall also be reimbursed in accordance with Employer’s policy.

10

 

The Employer may pay Executive a bonus or bonuses in such amount as the Board of Directors, in its
discretion, determines is appropriate.

     4. INSURANCE 

Employer agrees to provide Executive with health and life insurance benefits that are now or
may hereinafter be in effect for all other full-time employees subject to the eligibility
requirements of the plans. Employer may also obtain a “key-man” life insurance policy on the life
of Executive which shall be a general asset of the employer and to which Executive and the
Executive’s beneficiary will have no preferred or secured claim.

     5. VACATION 

Executive shall be entitled to accrue five (5) weeks vacation during each year of which at
least two (2) weeks must be taken in a consecutive period. Vacation benefits shall not accrue
above six weeks at any time. Once this six week maximum is reached, vacation will stop accruing
until vacation is taken.

     6. TERMINATION 

Employer shall have the right to terminate this Agreement for any of the following reasons by
serving written notice upon Executive:

	 	a.	 	Breach of, habitual neglect of, failure to perform, or inability to
perform, Executive duties and obligations as Chief Operating Officer.
	 
	 	b.	 	Illegal conduct, constituting a crime involving moral turpitude,
conviction of a felony, or any conduct detrimental to the interests of the Employer.
	 
	 	c.	 	Physical or mental disability rendering Executive incapable of performing
her duties for a consecutive period of 180 days (during which time Executive shall
continue to receive her base salary and other benefits, provided her accrued sick
leave has first been exhausted), or by death; or
	 
	 	d.	 	Determination by Employer’s Board of Directors that the continued
employment of Executive is detrimental to the best interests of the Employer, or for
any reason whatsoever as determined by Employer’s Board of Directors and in the sole
and absolute discretion of the Employer’s Board of Directors.

In the event this Agreement is terminated for any of the reasons specified in the paragraphs (a) or
(b), above (determined to be ‘cause’), Executive shall be paid six months total compensation
package calculated as of the date of the Executive’s termination, plus any accrued profit sharing
and vacation accrued to, but not taken as of date of the termination.

In the event this Agreement is terminated for any reason specified in paragraphs (c) or (d)
above, Executive shall be entitled to severance pay in an amount equal to twelve months of
Executive’s then total compensation package to be paid in one lump sum.

Total compensation package is defined as current salary, cash incentive profit sharing, insurance.
In the event this agreement is terminated for any of the reasons specified above, the Executive
agrees to resign from all board memberships of the Company immediately.

The total compensation package and benefits referenced in the preceding paragraph are collectively
referred to herein as “Severance.” Executive acknowledges and agrees that any Severance provided
upon termination is in lieu of all damages, payments and liabilities on account of the early
termination of this Agreement and is the sole and exclusive remedy for Executive other than rights,
if any, to exercise any of the stock options vested prior to such termination, and shall only be
paid subject to Executive’s execution of a complete release of all claims Executive may have
against the Employer, its officers, directors, agents, employees, predecessors, successors,
parents, subsidiaries, and affiliates. If upon termination of employment Executive chooses to
arbitrate any claims pursuant to Section 15, Executive shall be deemed to have waived Executive’s
right, if any, to severance.

Executive shall give ninety (90) days prior notice, in writing, to Employer in the event Executive
resigns or voluntarily terminates employment, or takes early retirement.

11

 

     7. CHANGE OF CONTROL BENEFITS 

In the event there is a Change of Control and in the event of diminution in salary or job
duties, the Bank shall pay to the Executive severance pay equal to two (2) year’s of total
compensation package calculated as of the date of the Executive’s termination. Executive shall also
receive at the Bank’s expense, a continuation of health benefits then being provided to the
Executive for a period of one (1) year. Executive acknowledges and agrees that such payment is in
lieu of all damages, payments and liabilities on account of the early termination of this Agreement
and is the sole and exclusive remedy for Executive (other than rights, if any, to exercise any of
the stock options vested prior to such termination), and shall only be paid subject to Executive’s
execution of a complete release of all claims Executive may have against the Employer, its
officers, directors, agents, employees, predecessors, successors, parents, subsidiaries, and
affiliates. If upon termination of employment Executive chooses to arbitrate any claims pursuant
to Section 15, Executive shall be deemed to have waived Executive’s right, if any, to severance.

Change in Control” means (i) a Change in the Ownership of the Relevant Corporation, (ii) a Change
in the Effective Control of the Relevant Corporation, or (iii) or a Change in the Ownership of a
Substantial Portion of the Assets of the Relevant Corporation. The events giving rise to the
Change in Control must be objectively determinable, and the Board, in a ministerial capacity, shall
certify there is a Change in Control only when the events giving rise to the Change in Control are
objectively determinable. The Board shall not have any discretionary authority to certify that
there has been a Change in Control except as provided in the preceding sentence. Notwithstanding
anything to the contrary, (i) the term “Change in Control” shall be interpreted in accordance with
Section 409A; (ii) any event which constitutes a “Change in Control” under Section 409A shall
constitute a “Change in Control” for purposes of this Agreement; (iii) and any event which does not
constitutes a “Change in Control” under Section 409A shall not constitute a “Change in Control” for
purposes of this Agreement.

Excess Parachute Payment. Notwithstanding any provision of this Agreement to the contrary, the Bank
shall not pay any benefit under this Agreement to the extent the benefit would create an excise tax
under the excess parachute rules of Section 280G of the code.

     8. CONFIDENTIAL INFORMATION AND NONDISCLOSURE 

          (a) Confidential Information. Employer has and will develop and own certain Confidential
Information, which has a great value in its business. Employer also has and will have access to
Confidential Information of its customers.

“Customers” shall mean any persons or entities for whom Employer performs services or from whom
Employer obtains information. Confidential Information includes information disclosed to Executive
during the course of her employment, and information developed or learned by Executive during the
course of her employment. Confidential Information is broadly defined and includes all information
which has or could have commercial value or other utility in Employer’s business or the businesses
of Employer’s customers. Confidential Information also includes all information which could be
detrimental to the interests of Employer or its customers if it were disclosed.

By example and without limitation, Confidential Information includes all information concerning
loan information, Customer data, including but not limited to Customer and supplier identities,
Customer characteristics or agreements and Customer lists, applicant data, employment categories,
job classifications, employment histories, job analyses and validations, preferences, credit
history, agreements, and any personally identifiable information related to Customers; any
information provided to Executive by a Customer, including but not limited to electronic
information, documents, software, and trade secrets; historical sales information; advertising and
marketing materials and strategies; financial information related to Employer, Customers,
Customer’s employees or any other party; labor relations strategies; research and development
strategies and results, including new materials research; pending projects and proposals;
production processes; scientific or technological data, formulae and prototypes; employee data;
pricing and product information; computer data information; inventory levels and products; supplier
information and data; testing techniques; processes; formulas; trade secrets; inventions;
discoveries; improvements; specifications; data, know-how, and formats; marketing plans; pending
projects and proposals; business plans; computer processes; computer programs and codes;
technological data; strategies; forecasts; budgets; and projections.

          (b) Protection of Confidential Information. Executive agrees that at all times during and
after her employment by Employer, Executive will keep confidential and not disclose to any third
party or make any use of the Confidential Information of Employer or its customers, except for the
benefit of Employer or its customers and in the course of her employment. In the event Executive
is required by law to disclose such information described in this paragraph, Executive will provide
Employer and its legal counsel with immediate notice of such request so that Employer may consider

12

 

seeking a protective order. For purposes of this Agreement, the disclosure of any Confidential
Information, at any time except as required by law shall be considered to be “unfair competition”.
Executive also agrees not to remove or permit the removal of Confidential Information from
Employer’s place of business without the express written authorization of an Officer of Employer or
its authorized representative. Executive acknowledges that he is aware that the unauthorized
disclosure of Confidential Information of Employer or its customers may be highly prejudicial to
their interests, an invasion of privacy, and an improper disclosure of trade secrets and financial
information in violation of state and federal law.

          (c) Return of Property. In the event Executive’s employment with Employer is terminated
(voluntarily or otherwise), Executive agrees to inform Employer of all documents and other data
relating to her employment which is in her possession and control and to deliver promptly all such
documents and data to Employer.

          (d) Sanctions for Unauthorized Taking of Trade Secrets. Executive understands that taking of
Employer’s trade secrets is a crime under California Penal Code section 449(c) and could also
result in civil liability under California’s Uniform Trade Secrets Act (Civil Code sections
3426-3426.11), and that willful misappropriation may result in an award against Executive of triple
the amount the Employer’s damages and Employer’s attorney fees for collecting such damages.

          (e) Injunctive Relief. Executive acknowledges that breach of this Section may cause Employer
irreparable harm for which money is inadequate compensation. Executive therefore agrees that
Employer will be entitled to injunctive relief, without the necessity of posting a bond, to enforce
this Section and this Agreement, in addition to damages and other available remedies, and Executive
consents to such injunctive relief pursuant to Section 15 below.

          (f) Solicitation of Bank Customers. Executive agrees that in the event her employment with the
Bank shall terminate for any reason, he shall not, for a period of one year, make known to, or call
on, solicit or take away, or attempt to call on, solicit or take away on behalf of any person, firm
or corporation which is in competition, either directly or indirectly, with the Bank, any existing
customers of the Bank or individuals or entities with whom the Bank is negotiating for the Bank’s
services. This provision may be enforced either through injunction or specific performance of this
Agreement by the Bank. In the event of a Change in Control, Executive shall be unconditionally
released from all of her duties and obligations under this paragraph.

     9. INDEMNIFICATION 

To the extent permitted by law, Employer shall indemnify Executive if he was or is a party or
is threatened to be made a party in any such action brought by a third party against Executive
(whether or not Employer is joined as a party defendant) against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred with said action if Executive acted
in good faith and in a manner Executive reasonably believed to be in the best interest of Employer
(and with respect to a criminal proceeding if Executive had no reasonable cause to believe her
conduct was unlawful), provided that the alleged conduct of Executive arose out of and was within
the course and scope of her employment as an officer or employee of Employer.

     10. NOTICES 

Any notice, request, demand, or other communication required or permitted hereunder shall be
deemed to be properly given when personally served in writing, when deposited in the U.S. mail,
postage prepaid, or when communicated to a public telegraph company for transmittal, addressed as
follows:

	 	 	 	 	 

	 

	 	To Employer:
	 	Redding Bank of Commerce
	 

	 	 	 	1901 Churn Creek Road
	 

	 	 	 	Redding, California 96002
	 

	 	 	 	Attention: Board of Directors
	 
	 	 	 	 
	 

	 	To Executive:
	 	Linda J. Miles
	 

	 	 	 	8471 Churn Creek Road
	 

	 	 	 	Redding, California 96002

     Any party hereto may change its or her address for purposes of this Section by giving notice
in accordance herewith.

13

 

     11. BENEFIT OF AGREEMENT 

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.

     12. APPLICABLE LAW 

This Agreement is made and entered into in the State of California, and the laws of said State
shall govern the validity and interpretation hereof.

     CAPTIONS AND PARAGRAPH HEADINGS 

Captions and paragraph headings used herein are for convenience only and are not a part of this
Agreement and shall not be used in construing it.

     13. INVALID PROVISIONS 

Should any provision of this Agreement for any reason be declared invalid, void, or
unenforceable by a court of competent jurisdiction, the validity and binding effect of any
remaining portions shall not be affected and the remaining portions of this Agreement shall remain
in full force and effect as if this Agreement had been executed with said provision eliminated.

     14. ENTIRE AGREEMENT 

This Agreement and the Executive Salary Continuation Agreement, and contain the entire
Agreement of the parties and supersede any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by Employer, except to the
extent that it is contemplated that Executive and Employer may enter into a stock option agreement.
Each party to this Agreement acknowledges that no representations, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any party, which is not
embodied herein, and that no other agreement, statement, or promise not contained in this Agreement
shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but
only by an agreement in writing signed by the Employer and Executive.

     15. NEGOTIATION — MEDIATION

The parties will attempt in good faith to resolve promptly any dispute, controversy, or claim
arising out of or relating to this contract or any claimed breach thereof by direct negotiation
between principals of the parties who have authority to settle the controversy. To facilitate such
negotiations, it is agreed that a disputing party shall give the other party written notice of the
dispute providing reasonable particularity with respect to all issues deemed to be controverted or
disputed. Within ten (10) days after such notice is given, the principals of the parties shall
meet at a mutually acceptable time and place, and thereafter as often as those individuals
reasonably deem necessary to exchange relevant information and attempt to resolve all disputes.

If the disputes have not been resolved within thirty (30) days after the disputing party gives
notice, or if the party receiving notice declines to meet, either party may initiate mediation of
the controversy, claim or dispute in accordance with the following mediation provisions. Upon
failure of the negotiations as set forth above, the parties to this contract agree to mediate any
dispute, controversy or claim arising out of this contract or relating to the work undertaken
pursuant to this contract prior to resorting to arbitration as hereinafter provided. Mediation is
a process in which parties attempt to resolve a dispute by submitting it to an impartial, neutral
mediator who is authorized to facilitate the resolution of the dispute, but who is not empowered to
impose a settlement on the parties.

The parties shall attempt to mutually agree upon an impartial mediator, which mediator shall be
appointed jointly and compensated equally by the parties. In the event the parties are unable to
agree on an impartial mediator, then and in that event each party shall submit to the other a list
with two (2) names of retired judges who will mediate in Shasta County, and have no ongoing
professional or business relationship with either of the parties.

From the lists, the parties shall, in turn, beginning with the Executive, cross unacceptable names
from the list until such time as a potential mediator remains. The potential remaining mediator
shall then be contacted to determine if he/she is available and willing to act as mediator. Should
none of the original list of mediators be available, new lists shall be prepared and the process
again undertaken.

14

 

Following mediation or in the event that for any reason no mediation has been held, all disputes,
controversies or claims shall be resolved by binding arbitration as hereinafter set forth. If a
party commences an arbitration or court action based on a dispute or claim as to which this section
applies, without first attempting to resolve the matter through mediation, then and in that event,
such party shall not be entitled to recover attorney’s fees, costs or expert fees, even if they
would otherwise be available to that party in any such arbitration or court action.

     16. ARBITRATION

Any controversy among parties arising from or relating to the performance or interpretation of
this contract is subject to binding arbitration. The parties hereto are bound, each to the other,
by this arbitration clause. The parties therefore agree that any dispute, controversy or claim, in
law or equity, arising between themselves out of this contract pursuant to this contract which is
not settled through mediation must be decided by neutral binding arbitration and not by court
action, except as provided by the California Law for Judicial Review of Arbitration Proceedings.

On the demand of the arbitrator or any party to an arbitration initiated under the arbitration
provisions of this contract, each party hereto shall be bound by this arbitration provision and
agrees to join in, become a party to, and be bound by such arbitration.

Arbitration shall be conducted under and pursuant to the provisions of California Code of Civil
Procedure § 1280, et seq., including the provisions of § 1283.05, as are in effect at the time of
the arbitration, and judgment may be entered on the award as therein provided.

If any party refuses or neglects to appear at or participate in arbitration after reasonable
notice, the arbitrator may decide the controversy in accordance with whatever evidence is presented
by the party or parties who do participate. The arbitrator may award any remedy that is just and
equitable in the arbitrator’s opinion. The arbitrator will award to the prevailing party or parties
such sums as are proper to compensate for the time, expense, and trouble of arbitration, including
arbitration fees, attorney fees and costs, and expert fees. The arbitrator will retain jurisdiction
of a controversy even if a party or parties to the dispute will not or cannot be joined in the
arbitration proceedings.

     17. ATTORNEYS’ FEES AND COSTS 

In the event of litigation, arbitration or any other action or proceeding between the parties
to interpret or enforce this Agreement or any part thereof or otherwise arising out of or relating
to this Agreement, the prevailing party shall be entitled to recover its costs related to any such
action or proceeding and its reasonable fees of attorneys, accountants and expert witnesses
incurred by such party in connection with any such action or proceeding. The prevailing party
shall be deemed to be the party which obtains substantially the relief sought by final resolution,
compromise or settlement, or as may otherwise be determined by order of a court of competent
jurisdiction in the event of litigation, an award or decision of one or more arbitrators in the
event of arbitration, or a decision of a comparable official in the event of any other action or
proceeding.

15

 

EXECUTIVE AND EMPLOYER AGREE THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE AND EMPLOYER
KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO A TRIAL BY A JUDGE OR JURY.

	 	 	 	 	 	 	 

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

	 	EXECUTIVE:	 	 	 	 
	 
	 	 	 	 	 	 
	BANK OF COMMERCE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:   /s/ Kenneth R. Gifford, Jr
	 	 /s/
Linda J. Miles
 

	 	 	 	 
	 

        Name: Kenneth R. Gifford, Jr.

	 	Linda J. Miles	 	 	 	 
	        Title:   Chairman

	 	 	 	 	 	 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}]]