AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of May 7, 2021

ARTICLE 1 INTERPRETATION                                                                                                            

1

Section 1.1

Definitions

1

Section 1.2

Business Day

36

Section 1.3

Accounting Principles and Calculations

36

Section 1.4

Conflict

37

Section 1.5

Currency

37

Section 1.6

Time of Essence

37

Section 1.7

Headings and Table of Contents

37

Section 1.8

General Interpretation

37

Section 1.9

Computation of time Periods

38

Section 1.10

Severability

38

Section 1.11

Schedules and Exhibits

38

ARTICLE 2 CREDIT FACILITY

39

Section 2.1

Facility

39

Section 2.2

Advances

39

Section 2.3

Availments

39

Section 2.4

Purpose of Advances

40

Section 2.5

Borrowing Procedures

40

Section 2.6

Reserves

41

Section 2.7

Bank Products

42

Section 2.8

Conversion of Loans

42

Section 2.9

Conversion and Rollover Not Repayment

43

Section 2.10

Deposit of Proceeds of Advances

43

Section 2.11

43

ARTICLE 3 INTEREST, FEES AND EXPENSES

43

Section 3.1

Interest on Loans

43

Section 3.2

Overdue Amounts

44

Section 3.3

Confirmation of Certain Rates

44

Section 3.4

Inability to Determine Rates

45

Section 3.5

Payment of Interest

45

Section 3.6

Renewal Fee

47

Section 3.7

Standby Commitment Fee

47

Section 3.8

Renewal Fee

47

Section 3.9

Field Examination Expenses

47

Section 3.10

Monthly Administration Fee

47

Section 3.11

Termination Fee

48

Section 3.12

Fees for Hedging Arrangements

48

Section 3.13

Indemnity

48

Section 3.14

Breakage Costs

49

Section 3.15

Change in Circumstances

49

Section 3.15

Illegality

51

ARTICLE 4 CDOR LOANS

51

Section 4.1

Minimum Advance

51

Section 4.2

Term

51

Section 4.3

Rollover of CDOR Loans

51

Section 4.4

Substitute Basis of Advance – CDOR Loans

52

ARTICLE 5 LETTERS OF CREDIT

53

Section 5.1

Letter of Credit

53

Section 5.2

Drawings

54

Section 5.3

Rollover

54

Section 5.4

Fees for Letters of Credit

54

ARTICLE 6 LIBOR LOANS

54

Section 6.1

Minimum Advance

54

Section 6.2

Term

54

Section 6.3

Rollover of Libor Loans

55

Section 6.4

Effect of Benchmark Transition Event

55

ARTICLE 7 HEDGING ARRANGEMENTS

57

Section 7.1

Hedging Arrangements

57

ARTICLE 8 MASTERCARD ADVANCES

58

Section 8.1

MasterCard Advances

58

Section 8.2

Maturity of MasterCard Advances

58

ARTICLE 9 PAYMENTS AND REPAYMENTS OF FACILITIES

58

Section 9.1

Place and Application of Payments and Collections

58

Section 9.2

Maturity of Revolving Loans

59

Section 9.3

Mandatory Repayments

59

Section 9.4

Payments Generally

60

Section 9.5

Taxes

60

Section 9.6

No Set-Off

61

ARTICLE 10 PAYMENTS AND REPAYMENTS OF FACILITIES

61

Section 10.1

Collateral

61

Section 10.2

Collateral Proceeds

61

Section 10.3

Security Documents

62

Section 10.4

Additional Credit Parties

62

ARTICLE 11 CONDITIONS PRECEDENT

63

Section 11.1

Conditions Precedent to Disbursements of Advances

63

Section 11.2

Conditions Precedent to All Advances

65

Section 11.3

Waiver of any Condition Precedent

65

ARTICLE 12 REPRESENTATIONS AND WARRANTIES

66

Section 12.1

Representations and Warranties of the Credit Parties

66

Section 12.2

Deemed Repetition

75

ARTICLE 13 COVENANTS

75

Section 13.1

Affirmative Covenants

75

Section 13.2

Negative Covenants

83

Section 13.3

Financial Covenants of the Borrower

87

ARTICLE 14 DEFAULT AND ENFORCMENT

88

Section 14.1

Events of Default

88

Section 14.2

Rights upon Default and Event of Default

91

Section 14.3

Waiver

92

ARTICLE 15 REMEDIES

92

Section 15.1

Remedies Cumulative

92

Section 15.2

Remedies Not Limited

92

Section 15.3

Set-Off

92

Section 15.4

Lender May Perform Covenants

93

ARTICLE 16 GENERAL PROVISIONS

93

Section 16.1

Assignment

93

Section 16.2

Amendments

94

Section 16.3

Notice

94

Section 16.4

Disruption of Postal Service

94

Section 16.5

Environmental Indemnity

95

Section 16.6

Further Assurances

95

Section 16.7

Judgment Currency

95

Section 16.8

Waivers

96

Section 16.9

Reimbursement of Expenses

96

Section 16.10

Governing Law

96

Section 16.11

Submission to Jurisdiction

96

Section 16.12

Waiver of Trial by Jury

96

Section 16.13

Counterparts

97

Section 16.14

Excluded Subsidies

97

Section 16.15

Entire Agreement

97

Section 16.16

Acknowledgement

97

Section 16.17

Previous Consent – PSF

97

Section 16.18

Previous Consent

98

Section 16.19

Amendment and Restatement of Original Agreement

98

SCHEDULES AND EXHIBITS

SCHEDULE 12.1(d)

Business and Operations

SCHEDULE 12.2(e)

Approvals

SCHEDULE 12.1(j)

Litigation

SCHEDULE 12.1(l)

Taxes

SCHEDULE 12.1(m)

Equity Interests

SCHEDULE 12.1(s)

Intellectual Property

SCHEDULE 12.1(t)

Real Property and Locations of Collateral

SCHEDULE 12.1(u)(i)

Environmental Matters

SCHEDULE 12.1 (w)

Material Contracts and Licences

SCHEDULE 12.1(x)

Existing Debt

SCHEDULE 12.1(hh)

Deposit Accounts

SCHEDULE 12.1(ii)

Hemp Joint Venture Agreements

SCHEDULE 12.1(jj)

AVGG Hemp Joint Venture Agreements

SCHEDULE 12.1(kk)

Permitted Investments

SCHEDULE 13.1(4)

Insurance

SCHEDULE 13.2(8)

Transactions with Affiliates

EXHIBIT “A”

Form of Borrowing Base Certificate

EXHIBIT “B”

Compliance Certificate

EXHIBIT “C”

Drawdown Notice

EXHIBIT “D”

Rollover/Conversion Notice

EXHIBIT “E”

Permitted Liens

(1)

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

(2)

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

Section 1.1

  Definitions

(1)

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

(2)

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

(3)

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

(1)

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

(a)

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

(b)

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

(2)

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

(1)

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

(2)

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

(3)

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

(4)

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

(1)

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

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

(2)

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

(3)

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

(a)

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

(b)

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

(c)

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

(d)

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

(e)

all Reserves (other than Priority Payables); minus

(f)

all Priority Payables.

(a)

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

(b)

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

(c)

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

(d)

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

(a)

all indebtedness of such Credit Party for borrowed money;

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

any Capital Lease by which such Credit Party is bound.

(1)

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

(2)

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

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

(h)

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

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

(i)

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

(j)

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

(k)

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

(l)

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

(m)

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

(n)

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

(o)

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

(p)

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

(q)

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

(r)

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

(s)

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

(t)

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

(u)

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

(a)

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

(b)

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

(c)

no Interest Period shall extend beyond the Maturity Date.

(a)

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

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

(b)

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

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

(h)

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

(i)

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

(a)

Liens created by the Security documents;

(b)

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

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

(h)

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

(i)

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

(j)

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

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

(k)

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

(l)

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

(m)

Liens arising in respect of any PACA Priority Payables; and

(n)

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

(a)

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

(b)

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

(c)

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

Section 1.2

  Business Day

Section 1.3

  Accounting Principles and Calculations

Section 1.4

  Conflict

Section 1.5

  Currency

Section 1.6

  Time of Essence

Section 1.7

  Headings and Table of Contents

Section 1.8

  General Interpretation

Section 1.9

  Computation of Time Periods

Section 1.10

  Severability

Section 1.11

  Schedules and Exhibits

Schedule

Description

Schedule 12.1(d)

Business and Operations

Schedule 12.1(e)

Approvals

Schedule 12.1(j)

Litigation

Schedule 12.1(l)

Taxes

Schedule 12.1(m)

Equity Interests

Schedule 12.1(s)

Intellectual Property

Schedule 12.1(t)

Real Property and Locations of Collateral

Schedule 12.1(u)(i)

Environmental Matters

Schedule 12.1(w)

Material Contracts and Licences

Schedule 12.1(x)

Existing Debt

Schedule 12.1(hh)

Deposit Accounts

Schedule 12.1(ii)

Hemp Joint Venture Agreements

Schedule 12.1(jj)

AVGG Hemp Joint Venture Agreements

Schedule 12.1(kk)

Permitted Investments

Schedule 13.1(4)

Insurance

Schedule 13.2(8)

Transactions with Affiliates

Exhibit

Description

Exhibit “A”

Borrowing Base Certificate

Exhibit “B”

Compliance Certificate

Exhibit “C”

Drawdown Notice

Exhibit “D”

Rollover/Conversion Notice

Exhibit

Description

Exhibit “E”

Permitted Liens

Section 2.1

  Facility

Section 2.2

  Advances

Section 2.3

  Availments

Section 2.4

  Purpose of Advances

(a)

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

(b)

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

Section 2.5

  Borrowing Procedures

(1)

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

Type of Advance

Notice

Prime Rate Loans

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

Base Rate Loans

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

US Prime Rate Loans

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

CDOR Loans

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

LIBOR Loans

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

Letters of Credit

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

(2)

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

(3)

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

(4)

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

(a)

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

(b)

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

(c)

Section 3.4 would be applicable to such Advance;

(d)

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

(e)

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

(5)

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

Section 2.6

  Reserves

Section 2.7

  Bank Products

Section 2.8

  Conversion of Loans

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

Section 2.9

  Conversion and Rollover Not Repayment

Section 2.10

  Deposit of Proceeds of Advances

Section 2.11

  Evidence of Obligations

Section 3.1

  Interest on Loans

(1)

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

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(2)

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

(3)

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

Section 3.2

  Overdue Amounts

(1)

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

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

Section 3.3

  Confirmation of Certain Rates

(1)

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

(2)

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

Section 3.4

  Inability to Determine Rates

(1)

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

(2)

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

Section 3.5

  Payment of Interest

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

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

(a)

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

(b)

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

(6)

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

Section 3.6

  Standby Commitment Fee

Section 3.7

  Renewal Fee

Section 3.8

  Cash Management Fees

Section 3.9

  Field Examination Expenses

Section 3.10

  Monthly Administration Fees

Section 3.11

  Termination Fee

(1)

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

(2)

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

(3)

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

Section 3.12

  Fees for Hedging Arrangements

Section 3.13

  Indemnity

(1)

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

(2)

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

(3)

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

Section 3.14

  Breakage Costs

(1)

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

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

(2)

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

(3)

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

Section 3.15

  Change in Circumstances

(1)

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

(2)

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

(a)

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

(b)

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

(3)

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

Section 3.16

  Illegality

Section 4.1

  Minimum Advance

Section 4.2

  Term

Section 4.3

  Rollover of CDOR Loans

(a)

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

(b)

repay the maturing CDOR Loan; or

(c)

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

Section 4.4

  Substitute Basis of Advance – CDOR Loans

(1)

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

(b)

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

(c)

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

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

(d)

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

(2)

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

(3)

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

(4)

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

(a)

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

(b)

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

(5)

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

(6)

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

Section 5.1

  Letter of Credit

Section 5.2

  Drawings

Section 5.3

  Rollover

Section 5.4

  Fees for Letters of Credit

Section 6.1

  Minimum Advance.

Section 6.2

  Term.

Section 6.3

  Rollover of Libor Loans.

(a)

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

(b)

repay the maturing Libor Loan.

Section 6.4

  Effect of Benchmark Transition Event

(a)

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

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

(b)

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

(c)

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

(d)

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

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

(e)

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

(f)

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

Section 7.1

  Hedging Arrangements

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

Section 8.1

  MasterCard Advances

Section 8.2

  Maturity of MasterCard Advances

Section 9.1

  Place and Application of Payments and Collections

(1)

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

(2)

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

(3)

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

(4)

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

Section 9.2

  Maturity of Revolving Loans

Section 9.3

  Mandatory Repayments

(1)

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

(2)

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

(3)

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

Section 9.4

  Payments Generally

Section 9.5

  Taxes

(1)

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

(2)

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

(3)

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

(4)

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

Section 9.6

  No Set-Off

Section 10.1

  Collateral

Section 10.2

  Collateral Proceeds

Section 10.3

  Security Documents

(a)

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

(b)

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

(c)

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

(d)

a Guarantee, executed by each Guarantor; and

(e)

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

Section 10.4

  Additional Credit Parties

Section 11.1

  Conditions Precedent to Disbursements of Advances

(a)

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

(i)

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

(ii)

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

(iii)

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

(iv)

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

(v)

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

(vi)

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

(vii)

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

(viii)

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

(ix)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

Section 11.2

  Conditions Precedent to All Advances

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

Section 11.3

  Waiver of any Condition Precedent

Section 12.1

  Representations and Warranties of the Credit Parties

(a)

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

(b)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

(h)

Financial Statements; Financial Condition; Undisclosed Liabilities.

(i)

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

(ii)

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

(i)

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

(j)

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

(k)

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

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

(l)

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

(m)

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

(n)

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

(o)

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

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

(p)

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

(q)

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

(r)

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

(s)

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

(t)

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

(u)

Environmental Matters.

(i)

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

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

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

(v)

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

(w)

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

(x)

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

(y)

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

(z)

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

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

(aa)

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

(bb)

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

(cc)

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

(dd)

Solvency. Each Credit Party is Solvent.

(ee)

Default. No Default or Event of Default has occurred which is continuing.

(ff)

Receivables.

(i)

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

(ii)

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

(iii)

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

(iv)

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

(v)

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

(gg)

Inventory.

(i)

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

(ii)

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

(hh)

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

(ii)

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

(i)

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

(jj)

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

(i)

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

(kk)

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

Section 12.2

  Deemed Repetition

Section 13.1

  Affirmative Covenants

(1)

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

(2)