Share Purchase Agreement by and among Village Farms International, Inc., ROSE LifeScience Inc. and the shareholders of ROSE LifeScience, dated November 15, 2021

ARTICLE 1 INTERPRETATION

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

1.10

1.11

1.12

ARTICLE 2 PURCHASED SHARES AND PURCHASE CONSIDERATION

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

2.10

2.11

2.12

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

3.14

3.15

3.16

3.17

3.18

3.19

3.20

3.21

3.22

3.23

3.24

3.25

3.26

3.27

3.28

3.29

3.30

3.31

3.32

3.33

3.34

3.35

3.36

3.37

3.38

3.39

3.40

3.41

3.42

3.43

3.44

3.45

3.46

3.47

3.48

3.49

3.50

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO THEMSELVES

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

5.10

5.11

5.12

5.13

5.14

5.15

ARTICLE 6 INDEMNIFICATION AND REMEDIES

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

6.9

6.10

6.11

6.12

ARTICLE 7 CLOSING

7.1

7.2

7.3

ARTICLE 8 CLOSING DELIVERABLES

8.1

8.2

8.3

ARTICLE 9 POST-CLOSING COVENANTS

9.1

9.2

9.3

9.4

9.5

9.6

9.7

ARTICLE 10 SELLERS’ REPRESENTATIVE

10.1

10.2

10.3

10.4

10.5

10.6

10.7

ARTICLE 11 MISCELLANEOUS

11.1

11.2

11.3

11.4

11.5

11.6

11.7

11.8

11.9

11.10

11.11  Expenses

11.12  Further Assurances

11.13  Counterparts

11.14  Language

EXHIBIT A SELLERS

EXHIBIT B PAYOFF CREDITORS

EXHIBIT C SHAREHOLDERS-CREDITORS

The Sellers are the sole registered and beneficial owners of the Common Shares in the capital of the Corporation set forth beside their respective names in Exhibit A hereto (the “Purchased Shares”), which Purchased Shares constitute all and not less than all of the issued and outstanding shares in the capital of the Corporation.

The Sellers wish to sell all of the Purchased Shares, and Purchaser wishes to purchase all of the Purchased Shares, on and subject to the terms and conditions set out in this Agreement.

Definitions

any Contract (or group of related Contracts) which involves or may reasonably be expected to involve the payment to or by the Corporation of more than $[***Redacted – Commercially Sensitive Information***] per year;

any Contract which contains minimum purchase commitments by the Corporation of more than $[***Redacted – Commercially Sensitive Information***] per year;

any Contract with the SQDC or with any of the 10 largest Customers of the Corporation;

any promissory note, debenture, loan agreement or other Contract for the borrowing of money, any currency exchange, commodities or other hedging or swap arrangement or any leasing transaction of the type required to be capitalized in accordance with IFRS, in each case for Indebtedness involving more than $[***Redacted – Commercially Sensitive Information***];

any power of attorney or similar agreements or grant of agency made by the Corporation in favour of another Person, other than Ordinary Course grants of power to act to directors, officers, financial and legal advisors of the Corporation;

any Contract with any Affiliate of the Corporation or any other Person with whom the Corporation or any of the Sellers does not deal at arm’s length;

any agreement of guarantee, support, indemnification or assumption or any similar commitment with respect to the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any other Person, other than the standard warranty and indemnification of customers and producers in the Ordinary Course;

any Contracts materially limiting or restricting in any manner whatsoever the Corporation’s use of any of its Property;

any Contract limiting the freedom of the Corporation to engage in any line of business, compete with any Person, solicit any Person, operate its assets at maximum production capacity or otherwise restricting its ability to carry on the Business, other than Ordinary Course non-disclosure agreements entered into by the Corporation;

any partnership, joint venture, or other similar Contract, or any Contract involving a sharing of profits with any Person or any Contract relating to the acquisition or disposition of any business (whether by merger, sale of shares, sale of assets or otherwise);

any Contract with any Governmental Authority;

any collective bargaining agreement or any other Contract with a labour or trade organization or union, employee association, works council, or other employee representative;

any Contract under which the Corporation is, or may become, obligated to provide or satisfy any retention bonus, change in control bonus or payment, severance pay, special compensation, transaction fee or other similar payment which may become payable, directly or indirectly, by reason of this Agreement or the transactions contemplated hereby (other than any such amount payable as a result of the actions of Purchaser after the Closing);

any Contract that (i) contains most favoured customer or supplier-vendor pricing provisions (other than Contracts entered into in the Ordinary Course) or (ii) grants any exclusive rights, rights of first refusal or rights of first negotiation to any Person;

any Contracts pursuant to which the Corporation must obtain consent from the counterparty in the event of a change of control of the Corporation;

any Contract for the acquisition or disposition of any real property;

any Contract mortgaging, pledging or otherwise placing an Encumbrance on any portion of the Property; or

any other Contract, the loss of which would reasonably be expected to have a Corporation Material Adverse Effect.

Gender and Number

Certain Phrases

“either” and “or” are not exclusive and “include”, “includes” and “including” are not limiting;

“hereof”, “hereto”, “hereby”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

“date hereof” refers to the date set forth in the initial caption of this Agreement;

“extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”;

when reference is made in this Agreement to information or documents having been “made available” to Purchaser, that shall include information and documents that were (i) contained in the Data Room no later than 5 p.m. on the day prior to the date of this Agreement, (ii) delivered to [***Redacted – Personally Identifying Information***]or [***Redacted – Personally Identifying Information***] or the Purchaser’s counsel, or (iii) the documents discussed between the Principals and the Purchaser’s executive team on [***Redacted – Commercially Sensitive Information***]1;

except as otherwise expressly provided for herein, a reference to any Person includes any Person that is a successor or permitted assign to such first Person;

all references to specific times shall be references to Eastern Time; and

when relevant (i) the words “personal property” shall be deemed to include “movable property”, (ii) the words “real property” shall be deemed to include “immovable property”, (iii) the words “tangible property” shall be deemed to include “corporeal property”, (iv) the words “intangible property” shall be deemed to include “incorporeal property”, (v) the words “security interest”, “mortgage” and “lien” shall be deemed to include a “hypothec”, “prior claim” and a “resolutory clause”, (vi) all references to “perfection” or “perfected” liens or security interests shall be deemed to include a reference to an “opposable” or “set up” lien or security interest as against third parties, (vii) any “right of offset”, “right of setoff” or similar expression shall be deemed to include a “right of compensation”, (viii) the word “goods” shall be deemed to include “corporeal moveable property”, other than chattel paper, documents of title, instruments, money and securities, (ix) an “agent” shall include a “mandatary”, (x) “gross negligence or willful misconduct” shall be deemed to include an “intentional or gross fault”, (xi) “beneficial ownership” shall be deemed to include “ownership on behalf of another as mandatary”, (xii) “priority” shall be deemed to include “prior claim”, (xiii) “survey” shall be deemed to include “certificate of location and plan”, (xiv) “fee simple title” shall be deemed to include “absolute ownership”, (xv) “leasehold interest” shall be deemed to include a valid lease, (xvi) the word “lease” shall be deemed to include a “leasing contract”, (xvii) the words “carrier’s, warehousemen’s, mechanics’, construction and materialmen’s Encumbrances” shall include “legal hypothecs”, (xviii) the words “guarantee” and “guarantor” shall be deemed to include “suretyship” and “surety”, and sentences and combination of words including such words shall have a similarly extended meaning.

Computation of Time Periods

the day marking the commencement of the deadline or time limit is excluded, but the day the deadline or time limit expires is included;

non-Business Days are included; however, where the deadline or expiry of the time limit falls on a non-Business Day, the deadline or time limit will be extended to the following Business Day and similarly if the deadline or expiry of the time limit for the issuance of any Village Farms Shares hereunder fall on a non-trading day, the deadline or time limit for such issuance will be extended to the following trading day;

in the Agreement, the word “month” means a calendar month; and

unless otherwise expressly provided in the Agreement, the term “year” means a calendar year.

Headings, etc.

Disclosure Schedule and Exhibits

If a matter is said to be set out, disclosed, listed, described or reflected in a particular section of the Disclosure Schedule, it is deemed to have been sufficiently disclosed to the Parties if such matter is fully and plainly described in that particular section of the Disclosure Schedule or if there is, in that particular section, a specific cross-reference to another section of the Disclosure Schedule. No such matter is considered to be sufficiently disclosed if it is set out in any other section of the Disclosure Schedule unless there is full and plain description in the cross-referenced section.

Nothing set out in the Disclosure Schedule establishes a standard of materiality.

The Disclosure Schedule and the Exhibits to this Agreement form an integral part of this Agreement.

The Disclosure Schedule contains confidential information and may not be disclosed unless (i) it is required to be disclosed pursuant to applicable Law unless such Law permits the Parties to refrain from disclosing the information for confidentiality or other purposes, or (ii) a Party needs to disclose it in order to enforce or exercise its rights under this Agreement.

Currency

Knowledge

if the Person is an individual, that Person; or

if the Person is a body corporate: (i) in the case of the Corporation, [***Redacted – Personally Identifying Information***]; and (ii) in all other cases, the current officers and directors of that Person,

Accounting Terms

Statutory References

No Presumption

Governing Law and Jurisdiction

This Agreement is governed by and is to be interpreted, construed and enforced in accordance with the Laws of the Province of Québec and the federal Laws of Canada applicable therein, without regard to conflict of law principles.

Each Party irrevocably attorns and submits to the exclusive jurisdiction of the courts of the province of Québec, district of Montréal, in any action or proceeding arising out of, or relating to, this Agreement. Each of the Parties waives objection to the venue of any action or proceeding in such court or any argument that such court provides an inconvenient forum.

Purchase and Sale

Subject to the terms and conditions of this Agreement, Sellers shall sell, assign, transfer and deliver to Purchaser and Purchaser shall purchase and acquire from Sellers on the Closing Date, with effect as of the Closing Time and in accordance with the allocation set out in Section 2.3, their Pro Rata Shares, free and clear of any Encumbrances, which shall constitute all of the issued and outstanding shares of the Corporation as at the Closing Time (it being understood for greater clarity, that [***Redacted – Commercially Sensitive Information***] Class “D” Shares will be issued to [***Redacted – Commercially Sensitive Information***] Inc. and [***Redacted – Commercially Sensitive Information***] Class “D” Shares will be issued to [***Redacted – Commercially Sensitive Information***] Inc. pursuant to the Minority Interest Subscription Agreements immediately thereafter).

Each of the Sellers and the Corporation hereby waives, with respect to the transfer of the Purchased Shares to Purchaser hereunder the share transfer restrictions set out in the Shareholders’ Agreement that would otherwise apply thereto.

Purchase Consideration

Subject to the terms and conditions of this Agreement and in particular, subject to Sections 2.2(c) and 2.12, the Purchase Consideration for all of the Purchased Shares shall be comprised of:

a number of Village Farms Shares (the “Share Tranche 1 Consideration”) corresponding to an aggregate issuance price of $22,100,000 divided by a price per Village Farms Share equal to the higher of (A) US$12.00 or (B) the ten (10)-day VWAP of Village Farms Shares traded on the NASDAQ or another exchange according to Bloomberg as of the last trading day prior to the Closing Date (the “Share Tranche 1 Issuance Price”), a portion of which equal to a number of Village Farms Shares corresponding to an aggregate purchase price of $2.5 Million divided by the Share Tranche 1 Issuance Price shall be held in escrow (the “Escrowed Shares”), plus

a number of Village Farms Shares (the “Share Tranche 2 Consideration” and together with the Share Tranche 1 Consideration, the “Share Consideration”) corresponding to (A) an aggregate issuance price of $10,000,000, divided by (B) a price per Village Farms Share equal to the ten (10)-day VWAP of Village Farms Shares traded on the NASDAQ or another exchange according to Bloomberg as of the last trading day prior to the Closing Date (the “Share Tranche 2 Issuance Price”), plus

cash in an amount equal to $19,900,000, minus (i) the Debt Cash Repayment, minus (ii) the Closing Transaction Expenses, minus (iii) $2.5 million, which amount shall be held in escrow in accordance with the Escrow Agreement (the “Escrowed Cash”), (collectively, the “Closing Cash Payment”).

Notwithstanding anything else in this Agreement, the Purchaser shall have the sole unfettered discretion to replace at any time any portion of the Share Consideration with an equivalent cash amount payable as at the same date as such Share Consideration is required to be paid pursuant to this Agreement.

Notwithstanding anything else in this Agreement, only whole Village Farms Shares (including for greater clarity the Escrowed Shares) shall be issued pursuant to this Agreement and the number of Village Farms Shares to be issued at any time to a Seller or to the Escrow Agent hereunder shall be rounded up or down to the nearest whole number, if applicable.

Allocation

Withholding Rights

Closing Payments and Share Issuances

On the Closing Date, the Purchaser shall:

pay the Closing Cash Payment;

issue to Sellers, the Village Farms Shares forming part of the Share Consideration (the “Closing Village Farms Shares”), which shall be allocated among such Sellers in accordance with the allocation set forth in Exhibit A, evidenced by restricted DRS advice statements from Purchaser’s transfer agent (or Purchaser shall alternatively provide evidence to Sellers of a signed and delivered irrevocable treasury direction of Purchaser to its transfer agent to promptly issue such restricted DRS advice statements to Sellers) or, at the Purchaser’s option, issue physical certificates evidencing such Closing Village Farms Shares, and such Closing Village Farms Shares shall remain restricted shares with the applicable legend(s) (as specified in Section 2.11) and a stop order placed thereon until the later of the date on which (A) the legend(s) thereon have been removed (or have expired) in accordance with the terms thereof and (B) they are no longer restricted shares;

issue the Escrowed Shares registered to the Sellers to the Escrow Agent evidenced by restricted DRS advice statements from Purchaser’s transfer agent (or Purchaser shall alternatively provide evidence to the Escrow Agent of a signed and delivered irrevocable treasury direction of Purchaser to its transfer agent to promptly issue such restricted DRS advice statements to the Escrow Agent) or, at the Purchaser’s option, issue physical certificates for the Escrowed Shares registered to Sellers in accordance with Exhibit A hereto and deliver physical certificates to the Escrow Agent, such Escrowed Shares to be, in each case, deposited in the Escrowed Shares Account in accordance with the Escrow Agreement and to be held and released by the Escrow Agent in accordance therewith, it being understood that such Escrowed Shares shall remain restricted shares with the applicable legend(s) (as specified in Section 2.11) and a stop order placed thereon until the later of the date on which (i) the legend(s) thereon have been removed (or have expired) in accordance with the terms thereof and (ii) they are no longer restricted shares;

pay the Escrowed Cash to the Escrow Agent, such Escrowed Cash to be held and released by the Escrow Agent in accordance with the Escrow Agreement; and

repay the Debt Amounts and the Closing Transaction Expenses pursuant to Section 2.6.

Payment of Indebtedness and Closing Transaction Expenses

On the Closing Date, Purchaser shall repay for and on behalf of the Corporation all Debt Amounts outstanding pursuant to the Shareholder Loans in accordance with Exhibit C (in each case, a “Shareholder Loan Outstanding Amount”) by making to each such Shareholder-Creditor a wire transfer of an amount equal to the Shareholder Loan Outstanding Amount of the Shareholder Loan of such Shareholder-Creditor in accordance with Section 2.7 up to the amount of the Closing Cash Payment (after taking into account the amount payable under subparagraphs (b) and (e) below).

On the Closing Date, immediately prior to Closing, Purchaser shall repay for and on behalf of the Corporation the Closing Transaction Expenses, as directed by the Sellers in writing in advance of Closing, by making to all applicable payees a wire transfer of the applicable amount.

The Corporation hereby irrevocably directs the Purchaser to make each payment set forth in this Section 2.6 in accordance herewith. Each payment made by Purchaser on behalf of the Corporation pursuant to this Section 2.6 shall be considered an advance made by the Purchaser to the Corporation to be evidenced by a non-interest bearing promissory note of a principal amount equal to the aggregate sum of Debt Amount paid in accordance with this Section 2.6 (the “Closing Promissory Note”).

Upon payment of the Debt Amount to any Shareholder-Creditor in accordance with this Section 2.6, such Shareholder-Creditor voluntarily, knowingly, irrevocably and unconditionally fully acquits, remises, releases and forever discharges the Corporation and the Corporation’s present and former subsidiaries, Affiliates, shareholders, directors, officers, Employees, partners, investors, related companies, agents, attorneys and representatives (collectively, the “Corporation Released Persons”, which term includes the Corporation’s successors and assigns), of and from all actions, causes of action, complaints, proceedings, suits, debts, dues, duties, accounts, bonds, covenants, Contracts, claims, executions, judgments, torts, damages, loss, cost, penalty, offsets, demands and any and all Liabilities or expenses, including reasonable professional fees and expenses and reasonable costs incurred in investing or pursuing any of the foregoing or defending any proceeding related to any of the foregoing, whatsoever, known or unknown, suspected or unsuspected, accrued or unaccrued, fixed or contingent, of every name and nature and at law or in equity that any such Shareholder-Creditor ever had, now has or may hereafter have against such Corporation Released Persons, or any of them, arising out of, relating to or connected with any cause, matter or thing whatsoever existing up to and including the date hereof in relation to, arising directly or indirectly by reason of or as a consequence of, the Shareholder Loan, as applicable, in favour of such Shareholder-Creditor, as applicable, and each such Shareholder-Creditor also agrees that it will not make any claim or take any proceedings with respect to any matter so released and discharged and confirms that upon payment of the relevant debt in accordance with this Section 2.6, it shall have no further interest in the Shareholder Loan, as applicable.

Immediately prior to the Closing Time, the Corporation has issued [***Redacted – Commercially Sensitive Information***] Inc. the [***Redacted – Commercially Sensitive Information***] Shares in partial payment of all Debt Amounts owed by the Corporation to [***Redacted – Commercially Sensitive Information***] (as assignee of [***Redacted – Commercially Sensitive Information***]) pursuant to the [***Redacted – Commercially Sensitive Information***] Loan Agreement the whole in accordance with the [***Redacted – Commercially Sensitive Information***] Compensation Agreement, which shares form part of the Purchased Shares. On the Closing Date, Purchaser shall repay to [***Redacted – Commercially Sensitive Information***] (as assignee of [***Redacted – Commercially Sensitive Information***]) for and on behalf of the Corporation an amount of $[***Redacted – Commercially Sensitive Information***] which represents all Debt Amounts outstanding pursuant to the [***Redacted – Commercially Sensitive Information***] Loan Agreement by making a wire transfer of such an amount.

As a result of the partial repayment made pursuant to subparagraph (d) above and upon payment of the amount in subparagraph (e) above, [***Redacted – Commercially Sensitive Information***] hereby voluntarily, knowingly, irrevocably and unconditionally fully acquits, remises, releases and forever discharges the Corporation Released Persons of and from all actions, causes of action, complaints, proceedings, suits, debts, dues, duties, accounts, bonds, covenants, Contracts, claims, executions, judgments, torts, damages, loss, cost, penalty, offsets, demands and any and all Liabilities or expenses, including reasonable professional fees and expenses and reasonable costs incurred in investing or pursuing any of the foregoing or defending any proceeding related to any of the foregoing, whatsoever, known or unknown, suspected or unsuspected, accrued or unaccrued, fixed or contingent, of every name and nature and at law or in equity that [***Redacted – Commercially Sensitive Information***] Partners or [***Redacted – Commercially Sensitive Information***] ever had, now has or may hereafter have against such Corporation Released Persons, or any of them, arising out of, relating to or connected with any cause, matter or thing whatsoever existing up to and including the date hereof in relation to, arising directly or indirectly by reason of or as a consequence of, the [***Redacted – Commercially Sensitive Information***] Loan Agreement and [***Redacted – Commercially Sensitive Information***] Partners also agrees that it will not make any claim or take any proceedings with respect to any matter so released and discharged and confirms that it shall have no further interest in the [***Redacted – Commercially Sensitive Information***] Loan Agreement.

Payments

Adjustment of Purchase Consideration

Within ninety (90) days after the Closing Date, Purchaser shall prepare and deliver, or cause to be prepared and delivered, at Purchaser’s expense, to Sellers’ Representative (i) a statement setting forth Purchaser’s calculation of the Working Capital as at the Closing Date, the Working Capital Deficit or the Working Capital Surplus, if any, the Debt Amount, the Shareholder Loan Outstanding Amount, the Transaction Expenses and the final cash payment reflecting the deduction or addition of the foregoing items from the Closing Cash Payment (the “Final Cash Payment”) (collectively, the “Closing Statement”), and (ii) all records and work papers reasonably necessary, in the determination of Sellers’ Representative, to compute and verify the information set forth in the Closing Statement to the extent such records and work papers differ from the ones previously delivered to the Purchaser.

If Sellers’ Representative, on behalf of Sellers, has any objections to the Closing Statement prepared by Purchaser, then Sellers’ Representative will deliver a detailed written statement (the “Objections Statement”) describing (i) which items on the Closing Statement have not been prepared in accordance with this Agreement, (ii) the basis for Sellers’ disagreement with the calculation of such items, and (iii) Sellers’ proposed dollar amount for each item in dispute, to Purchaser within thirty (30) days after delivery of the Closing Statement. If Sellers’ Representative fails to deliver an Objections Statement within such thirty (30) day period, then the Closing Statement shall become final and binding on all Parties. Sellers shall be deemed to have agreed with all amounts and items contained or reflected in the Closing Statement to the extent such amounts or items are not disputed in the Objections Statement.

If Sellers’ Representative delivers an Objections Statement within such thirty (30) day period, then Sellers and Purchaser will use commercially reasonable efforts to resolve any such disputes, but if a final resolution is not obtained within thirty (30) days after Sellers’ Representative has submitted any Objections Statements, any remaining matters which are in dispute will be resolved by [***Redacted – Commercially Sensitive Information***] (the “Accountants”). The Accountants will promptly, and in any event within thirty (30) days after the dispute is submitted to the Accountants, prepare and deliver a written report to Purchaser and Sellers’ Representative providing a proposed resolution of such unresolved disputes. The Accountants’ determination of such unresolved disputes will be final and binding upon all Parties, absent manifest error; provided, however, that no such determination shall be any more favorable to Purchaser than is set forth in the Closing Statement or any more favorable to Sellers than is proposed in the Objections Statement.

The Accountants, in undertaking the tasks to be performed by it as provided herein, shall act as an expert and not as an arbitrator. Purchaser and the Sellers’ Representative may within the delays set forth in this Section 2.8, present to the Accountants their respective positions regarding the dispute (provided that, for greater certainty, such presentations are limited to matters in dispute pursuant to the applicable Objections Statement), and each of Purchaser and the Sellers’ Representative shall have the right to present additional documents, materials and other information, and make an oral presentation to the Accountants, regarding such dispute and the Accountants shall consider such additional documents, materials and other information and such oral presentation. Any such other documents, materials or other information shall be copied to each of Purchaser and the Sellers’ Representative and each of the Sellers’ Representative and Purchaser (and their respective representatives) shall be entitled to attend any such oral presentation.

In resolving any disputed item, the Accountants (i) shall be bound to the principles of this Agreement and the definitions herein, (ii) shall limit its review to the unresolved matters specifically set forth in the applicable Objections Statement and (iii) shall review only the presentations and materials of Purchaser and the Sellers’ Representative provided to it in accordance with the guidelines and procedures set forth herein (i.e., not on the basis of an independent review).

The Sellers, on the one hand, and the Purchaser, on the other hand, will each bear the fees and expenses of their respective accountants, auditors or other advisors, if any, in preparing or reviewing, as the case may be, the Closing Statement. The fees and expenses of the Accountants shall be divided between the Sellers, on one hand, and the Purchaser, on the other hand, based on the percentage which the portion of the disputed items not awarded to each Party bears to the aggregate amount of the disputed items. However, the Sellers and the Purchaser will each bear their own fees and expenses in presenting their respective cases to the Accountants.

The final Closing Statement, however determined pursuant to this Section 2.8, will produce the Working Capital Deficit or the Working Capital Surplus, if any, Debt Amount, and amount of Transaction Expenses to be used to determine the Final Cash Payment.

All calculations of Working Capital under this Agreement, whether estimates or otherwise, shall be determined in accordance with Accounting Principles.

The determination of the Final Cash Payment in accordance with the provisions of this Section 2.8 do not limit or affect any other rights or causes of action which either Purchaser or Sellers may have with respect to the representations, warranties, covenants and indemnities in its favour contained in this Agreement or the Transaction Documents.

Adjustment of Cash Payment

Within five (5) Business Days after the Final Cash Payment becomes final and binding in accordance with Section 2.8:

If the Final Cash Payment exceeds the Closing Cash Payment, then:

the Escrow Agent shall hold the Aggregate Escrow in escrow until the Escrow Release Date, in accordance with the Escrow Agreement; and

the Purchaser shall pay to the Sellers, based on each Sellers’ Pro Rata Share, the amount by which the Final Cash Payment

exceeds the Closing Cash Payment.

If the Closing Cash Payment exceeds the Final Cash Payment, then such excess shall be paid as follows:

by the release by the Escrow Agent to the Purchaser from the Escrowed Cash the amount corresponding to such excess in accordance with the Escrow Agreement;

in the event the amount by which the Closing Cash Payment exceeds the Final Cash Payment is more than the Escrowed Cash, by the release by the Escrow Agent to the Purchaser from the Escrowed Shares the amount corresponding to such additional excess;

in the event the amount by which the Closing Cash Payment exceeds the Final Cash Payment is more than the Aggregate Escrow, by the payment by the Sellers to the Purchaser, based on each Sellers’ Pro Rata Share, of such additional excess.

If the Closing Cash Payment and the Final Cash Payment are the same, then the Escrow Agent shall hold the Aggregate Escrow in escrow until the Escrow Release Date, in accordance with the Escrow Agreement.

Purchaser and Sellers’ Representative shall provide a joint notice and direction to the Escrow Agent, pursuant to this Agreement and the Escrow Agreement, for the release of any Escrowed Cash in accordance with Section 2.9(a).

Non-Competition Agreements

Legends

All certificates issued in respect of or exchange for the Village Farms Shares that may be issued hereunder shall bear a legend (and Purchaser will make a notation on its transfer books to such effect)    prominently stamped or printed thereon reading substantially as follows, or the substance of which will otherwise be reflected on the Books and Records of the transfer agent of the Village Farms Shares with respect to book-entry shares:

All certificates issued in respect of or exchange for the Escrowed Shares that may be issued hereunder shall also bear a legend (and Purchaser will make a notation on its transfer books to such effect)    prominently stamped or printed thereon reading substantially as follows, or the substance of which will otherwise be reflected on the Books and Records of the transfer agent of the Escrowed Shares with respect to book-entry shares:

Limit on Share Consideration.

Incorporation and Corporate Power

Corporate Authorizations

has been duly authorized by all necessary corporate action on the part of the Corporation and all action on the part of the Corporation necessary for the authorization, execution and delivery of the Transaction Documents to which it is party and the performance of its obligations thereunder has been taken; and

does not (or would not with the giving of notice, the passage of time or the happening of any other event or circumstance) result in a breach or a violation of, or conflict with, or allow any other Person to exercise any rights under, any of its constating documents and governance documents, including shareholders’ agreements, articles, by-laws or resolutions of its board of directors or shareholders, and the transactions contemplated under such Transaction Documents are being completed in strict compliance with all requirements under the Shareholders’ Agreement.

No Conflict with Authorization or Applicable Law

result in a breach or a violation of, default under, conflict with, or cause the termination or revocation of, any Authorization held by the Corporation or necessary to the ownership of the Purchased Shares, the use of its Property or the operation of the Business;

result in or require the creation of any Encumbrance upon any of the Purchased Shares or any of its Property or any Liability;

result in a breach or a violation of, or conflict with, (i) any Order, or (ii) any Law applicable to the Corporation.

No Conflict with Material Contracts

the termination, cancellation, amendment or renegotiation of any Material Contract binding on the Corporation, the Purchased Shares or the Corporation’s Property;

the acceleration of any material debt or other obligation of the Corporation; or

the forfeiture or other loss, in whole or in part, of any material benefit which would otherwise accrue to the Corporation.

Authorizations and Consents from Governmental Authorities

Execution and Binding Obligation

Authorized and Issued Capital of the Corporation

No Other Agreements to Purchase

To the knowledge of the Corporation, the direct or indirect purchase or acquisition from any Seller of any of the Purchased Shares; or

the purchase, subscription, allotment or issuance of any of the unissued shares, equity interests or other securities in the capital of the Corporation.

Dividends and Other Distributions

Officers and Directors

Shareholder Agreements

Qualification

Corporate Records

Subsidiaries

Conduct of Business in Ordinary Course

sold, transferred or otherwise committed to divest or dispose of any Property outside of the Ordinary Course except assets which are obsolete and which, individually or in the aggregate, do not exceed $[***Redacted – Commercially Sensitive Information***], except for inventory adjustments and the HOL divesture;

granted or suffered any Encumbrance upon any Property other than a Permitted Encumbrance;

incurred any Liabilities outside of the Ordinary Course exceeding $[***Redacted – Commercially Sensitive Information***] in the aggregate per payee;

made any capital expenditures or commitments therefor outside of the Ordinary Course which individually or in the aggregate exceeded $[***Redacted – Commercially Sensitive Information***] respectively;

created, incurred, assumed, increased or guaranteed any Indebtedness or granted any security interests upon any of its Property or guaranteed or otherwise become liable for the Liabilities of any other Person or made or agreed to make any loan or advance to any Person, except in each case for Permitted Encumbrances;

declared, set aside or paid dividends or distributions in respect of its capital, or any split up or other recapitalization in respect of its capital or any direct or indirect redemption, purchase or other acquisition of any such capital, or any agreement to do any of the foregoing;

made any gifts to any Person exceeding individually or in the aggregate $[***Redacted – Commercially Sensitive Information***];

made any payment to an officer, director, former director, Employee, Key Employee, Consultant or Related Party other than at the regular rates payable by way of salary or other remuneration or for the reimbursement of expenses incurred in the Ordinary Course;

made or committed to any change in the compensation paid or payable by it to any of its Employees, officers, directors, agents or Consultants or granted any general increase in the rate of wages, salaries, bonuses or other remuneration of any Employees or Consultants;

adopted, amended, modified or terminated any Employee Plans or other bonus, profit sharing, incentive, severance or other plan, contract or commitment for the benefit of any of its Employees, directors, officers, agents or Consultants;

entered into any transaction or commitment with any of its senior Employees, Key Employees, Related Party or shareholders;

made any bonus or profit sharing distribution or made a commitment for a similar payment of any kind except in the Ordinary Course;

removed or appointed any auditor or director or terminated or hired any officer or other senior Person;

suffered any extraordinary loss, damage or destruction, whether or not covered by insurance;

terminated or suffered the termination of, or entered into, amended, assigned, subleased, granted any waiver under, exercised any option under, any Material Contract other than due to its expiration in accordance with its terms, other than as would not have a material effect on the Corporation, and not as a result of the potential completion of the transactions contemplated by the Transaction Documents to which the Corporation is a party;

except as set out in Section 3.15 of the Disclosure Schedule, written down the value of any Property owned or used by the Corporation, including inventory and capital lease assets;

waived or written off as uncollectible any Accounts Receivable or any portion thereof, other than as provisioned for in the Financial Statements, or amended, cancelled or waived any other debts or claims owed to it or any other rights of value to the Corporation, other than such items which are individually less than $[***Redacted – Commercially Sensitive Information***];

made any forward purchase commitments either in excess of the requirements of the Corporation for normal operating purposes or at prices higher than the current market prices;

received any notice from any Customer, supplier, Governmental Authority or any other Person, the results of which would reasonably be expected to materially impact the Business;

compromised or settled any litigation or claims, or suffered any judgments requiring payment by the Corporation or relating to the Property owned or used by the Corporation (including the Leased Properties) or the Business or granting injunctive relief or specific performance;

made any settlement or payment of any portion of any Liability to any of its Affiliates, or to any Person who is an Affiliate with any of its Affiliates, or settlement or payment of any of its other Liabilities, other than current trade payables provided for in the Financial Statements;

paid, discharged or satisfied in an amount in excess of $[***Redacted – Commercially Sensitive Information***] in the aggregate per payee, any Liabilities, other than the payment, discharge or satisfaction of Liabilities reflected or reserved against in the Financial Statements;

failed to pay or otherwise satisfy any of its material Liabilities presently due and payable except such Liabilities that are being contested in good faith by appropriate means or proceedings and that are immaterial in amount;

delayed or postponed the payment of accounts or other amounts payable or other obligations or Liabilities or accelerated the collection of any accounts or other amounts receivable outside the Ordinary Course;

cancelled or reduced any of the Corporation’s insurance coverage;

reduced the types and levels of insurance in effect in respect of the Property;

issued any equity interest (including any share) in it or any options, warrants or other rights to purchase an equity interest (including any shares) in it;

modified its constating documents or by-laws;

made any material change in any method of accounting or auditing practice except as required by IFRS or applicable Law;

made, changed or revoked any material Tax election, filed any amended Tax Return, settled or compromised any audit or other proceeding relating to Tax, entered into any closing agreement, extended the statute of limitations or prescription period for the assessment or collection of any amount of Tax, surrendered any right to claim a Tax refund or credit, or submitted an application for or entered into any voluntary disclosure agreement;

suffered any material shortage or any cessation or material interruption of inventory shipments, supplies or ordinary services, other than supply shortages caused by or otherwise relating to the COVID-19 Related Health Event;

made any change in the method of billing or the credit terms made available to the customers of the Business; or

authorized, agreed or otherwise committed to any of the foregoing.

No Material Adverse Effect

Compliance with Laws

Licenses

Section 3.18 of the Disclosure Schedule lists all the Authorizations relied upon by the Corporation in respect of the Business, including the names of the Material Licenses and their dates of expiration. The Material Licenses are the only licenses, permits, approvals or evidence of authority of any Governmental Authority required for the operation of the Business as currently conducted by the Corporation as at the Closing Date.

The Business has been and is being conducted by the Corporation in all material respects in accordance with all terms and conditions of the Material Licenses.

All of the Material Licenses are valid, in good standing, and in full force and effect, free and clear of all Encumbrances, all fees and charges with respect to such Material Licenses have been paid in full, the Corporation is not in violation of any term or provision or requirement of any Material License, and no person has threatened to revoke, amend or impose any condition in respect of, or commenced proceedings to revoke, amend or impose conditions in respect of, any Material License. No event has occurred (including execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby) that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, or limitation of any Material License. There are no investigations, inquiries, audits, complaints or other communications that suggest that a Material License is not in good standing, or may be suspended, revoked, not renewed or not issued.

Except as disclosed in Section 3.18 of the Disclosure Schedule, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall not (i) adversely affect any Material License or (ii) require the consent or approval of, or filing with or notice to, any Governmental Authority or other Person to assure the continued holding by the Corporation and good standing of any such Material License.

Except as disclosed in Section 3.18 of the Disclosure Schedule, the Corporation has not been subject to any audit or inspection request or non-routine correspondence from any Governmental Authority relating to compliance with any applicable Laws, including without limitation, Cannabis Laws.

No Governmental Authority has commenced or initiated, or to the knowledge of the Corporation, threatened to commence or initiate any action to withdraw the Material Licenses. The Corporation has not ever received any notice or had any communication to such effect.

None of the Corporation or its Affiliates, or Employees or agents of the foregoing have made any false statements or untrue statements of a material fact on, or failed to disclose a material fact required to be disclosed in, any representations, reports or other submissions, whether oral, written, or electronically delivered, to any Governmental Authority or in or from any other records and documentation prepared or maintained to comply with the requirements of any Governmental Authority relating to any of the Material Licenses.

Sufficiency and Condition of Assets

Except for the Excluded Assets, the Business is the only business operation carried on by the Corporation and the Assets include all rights, assets and property necessary for the conduct of the Business after Closing substantially in the same manner as it was conducted prior to Closing. The tangible assets owned or leased by the Corporation (for clarity, including the Leased Properties and the Owned Real Property) are in good operating condition and repair having regard to their use and age, reasonable wear and tear excepted. None of such tangible assets is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs.

The Corporation does not own any material property, rights or other assets which are not necessary for the purpose of conducting the Business as it is currently being conducted.

Title to the Assets

No Options, etc.

Owned Real Property

Section 3.22 of the Disclosure Schedule sets forth a complete list of the Owned Real Property.

The Corporation is the legal and beneficial owner of the Owned Real Property, as principal and not as mandatary, prête-nom or nominee, with good and marketable title thereto, free and clear of all Encumbrances other than Permitted Encumbrances.

Except as disclosed in Section 3.22 of the Disclosure Schedule, there are no outstanding options, rights of first offer or rights of first refusal to purchase under which the Corporation is obligated to sell or any Person has a right to purchase any Owned Real Property, and the Corporation is not a party to any agreement or option to purchase any real property or interest therein.

There are no leases, subleases, licenses, concessions or other agreements, written or oral, granting to any Person or Persons the right of use or occupancy of any portion of any Owned Real Property.

To the knowledge of the Corporation, all improvements situate on or forming part of the Owned Real Property lie wholly within the boundaries of the Owned Real Property and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.

The Corporation has not received any notification of and has no knowledge of, any outstanding or incomplete work orders in respect of any of the buildings, improvements or other structures constructed on the Owned Real Property or of any current non-compliancy (other than non-compliances which are legal nonconforming under relevant zoning-bylaws) with applicable statutes and regulations or building and zoning by-laws and regulations.

To the knowledge of the Corporation, the current uses of the Owned Real Property are permitted under current zoning regulations.

To the knowledge of the Corporation, there are no structural deficiencies or latent defects affecting any of the improvements situate on or forming part of the Owned Real Property and, to the knowledge of the Corporation, there are no facts or conditions affecting any of such improvements which would, individually or in the aggregate, interfere in any material respect with the use or occupancy of such improvements or any portion thereof in the operation of the Business.

To the knowledge of the Corporation, there are no pending condemnation, expropriation, eminent domain or similar proceedings affecting all or any portion of the Owned Real Property and, to the knowledge of the Corporation, no such proceedings are contemplated.

The Corporation has such rights of entry and exit to and from the Owned Real Property as are reasonably necessary to carry on the Business upon the Owned Real Property.

Leases and Leased Properties

Section 3.23 of the Disclosure Schedule contains a true, correct and complete list of the Leased Properties and a true, correct and complete list of all of the Leases relating thereto (including all amendments, extensions and renewals) that are in effect on the date hereof. The Sellers have made available to the Purchaser a true, correct and complete copy of each Lease, including all amendments, extensions, renewals or additions thereto. The Corporation is not a party to, or under any agreement to become a party to, any real property lease other than the Leases.

Section 3.23 of the Disclosure Schedule sets out, in respect of each Lease, the identity of the lessor and the lessee, a description of the leased premises (by municipal address or legal description), the term of the Lease, the rental payments under the Lease (specifying any breakdown of base rent and additional rents), any rights of renewal and the term thereof, and any restrictions on assignment.

Each Lease is in good standing and is in full force and effect, and constitutes a legal, valid and binding obligation on the Corporation and is enforceable in accordance with its terms against the Corporation.

With respect to each Lease:

all rents and additional payments due and payable have been paid;

there are no defaults or breaches under any of the Leases and no event, act or circumstance (including the purchase of the Purchased Shares) exists which, with the giving of notice or the passage of time, would constitute a default or breach by the Corporation to any such Lease;

all of the covenants to be performed by the Corporation under such Lease have been fully performed and to the knowledge of the Corporation, all of the covenants to be performed by the other party under such Lease have been fully performed;

the Corporation has not received any written notice of any disputes between the Corporation and any of the lessors; and

to the knowledge of the Corporation, no outstanding rent credit, tenant improvement, allowance, or landlord work remains an outstanding obligation of any landlord party, running in favour of the Corporation as tenant under the subject Lease.

No third party sub-leases or otherwise occupies the Leased Properties.

The Corporation has not assigned, transferred, conveyed, mortgaged or encumbered or granted any other security interest in any Lease with respect to the Leased Properties.

Each of the Leased Properties and the Leased Structures are adequate and suitable for the purpose for which they are presently being used by the Corporation.

To the knowledge of the Corporation, the Leased Properties and its current use, occupancy and operation by the Corporation do not constitute a non-conforming use under any applicable building, zoning, subdivision or other land use or similar Laws.

The Corporation has adequate rights of ingress and egress to, from and over the Leased Properties for the operation of the Business in the Ordinary Course.

To the knowledge of the Corporation, none of the Leased Properties nor any of the Leased Structures, nor their use, operation or maintenance for the purpose of carrying on the Business, violate any restrictive covenant or any provision of any applicable Law.

There are no outstanding work orders from or required by any municipality, police department, fire department, sanitation department, health or safety department or other Governmental Authorities and there are no matters under discussion with or by the Corporation relating to work orders on or in respect of any of the Leased Properties or the Leased Structures.

Material Contracts

No Breach of Contracts

Except as disclosed in Section 3.25 of the Disclosure Schedule, the Corporation has performed in all material respects all of the material obligations required to be performed by it and is entitled to all benefits under, and is not alleged to be in default or breach of, and has not received any written notice of breach of, any Material Contract. Each of the Material Contracts is in full force and effect, unamended, and the Corporation is not, and to the knowledge of the Corporation, no other party thereto is, in breach in any material respect of any of its respective covenants under any Material Contract. To the knowledge of the Corporation, there exists no default or event of default or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any other event or circumstance, would become a breach of, or a default or event of default under, any Material Contract.

The Corporation has not violated or breached in any material respect the terms or conditions of any Contract (other than a Material Contract) and, to the knowledge of the Corporation, all of the covenants to be performed and the obligations to be fulfilled by any other party to each Contract (other than a Material Contract) entered into by or binding upon the Corporation have been fully performed and fulfilled in all material respects The Corporation has not been notified by any Governmental Authority or other party that such Governmental Authority or other party intends to cancel, terminate or modify any of such Material Contracts or the basis upon which the Corporation is paid thereunder, and there are no valid grounds for any such cancellation, termination or modification.

Except as set out in Section 3.25 of the Disclosure Schedule, no Consent is required for the Corporation to continue to have the benefit of each Material Contract after the Closing of the transactions contemplated hereunder.

Related Party Transactions

Except as set out in Section 3.26 of the Disclosure Schedule, the Corporation has not: (i) made any payment or loan to, or borrowed any monies from or otherwise been indebted to, any Related Party of the Corporation; or (ii) been a party to any Contract with any Related Party of the Corporation, other than independent contractor, employment or indemnification agreements entered into with officers or directors of the Corporation. All transactions between the Corporation and a Related Party have been completed on reasonable commercial terms that, considered as a whole, are not less advantageous to the Corporation than if the transaction had been with a Person dealing at arm’s length with the Corporation. Any amounts due and payable by the Corporation to any Affiliate of the Corporation or Sellers are recorded on the Books and Records at their fair market value. Since the Reference Date, there has been no repayment, forgiveness or other release of a debt owed by or to a Related Party.

Except as set out in Section 3.26 of the Disclosure Schedule, no Related Party: (i) directly or indirectly owns, or otherwise has any right, title, interest in, to or under, any property or right, tangible or intangible, that is used by the Corporation or otherwise related to the business of the Corporation; or (ii) provides services to the Corporation (other than services performed as a director, officer or Employee of the Corporation).

Intellectual Property

Section 3.27 of the Disclosure Schedule contains a true, correct and complete list and, where appropriate, a description of:

all Owned IP that has been issued, registered, applied for or filed by, to or with any Governmental Authority, including the respective issuance or application numbers, filing dates and the names of all registered owners, assignees, and licensees;

all Owned IP that is material to the Business that has not been issued, registered, applied for or filed by, to or with any Governmental Authority;

all Licensed IP that is material to the conduct of the Business as presently conducted (with the exception of Licensed IP which is licensed to the Corporation by a third party solely for use by the Corporation in the provision services by the Corporation to such third party, and any commercially available off-the-shelf software); and

all Material Contracts entered into by the Corporation in connection with the (y) Licensed IP listed at (iii); and (z) Owned IP.

The Corporation (i) is the sole and exclusive legal and beneficial owner of and has all right, title and interest in and to all of the Owned IP, and (ii) has valid and sufficient rights to use all of the Licensed IP, in each case of (i) and (ii), free and clear of any Encumbrance other than Permitted Encumbrances. Access to complete and correct copies of all agreements disclosed in Section 3.27 of the Disclosure Schedule have been provided or made available by the Corporation to the Purchaser. The Business IP owned by or licensed to the Corporation constitutes all of the Intellectual Property Rights used for the conduct of the Business as presently conducted and constitutes all of the Business IP necessary for the Corporation to operate the Business after the Closing in substantially the same manner as presently operated by the Corporation.

To the knowledge of the Corporation, all applications for registration of the Owned IP are in good standing, have been filed in a timely manner within the appropriate offices to preserve the rights thereto and assignments have been recorded in favour of the Corporation to the extent recordation within a timely manner is required to preserve the rights thereto. Except as disclosed in Schedule 3.27 of the Disclosure Schedule, the Corporation has maintained or caused to be maintained the rights to any of its registered Owned IP that it currently uses in full force and effect and, without limiting the generality of the foregoing, has renewed or has made application for renewal of any registered Owned IP.

Each Contract entered into in connection with the Licensed IP is valid, subsisting and in good standing and there is no material default by the Corporation or, to the knowledge of the Corporation, the other parties thereto, except for defaults that have been cured or would not reasonably be expected to be, individually or in the aggregate, material to the Corporation. The Corporation has not received any written notice of any such defaults. All such Contracts may be included and continued, without modification or loss of rights, for the full benefit of the Corporation following the Closing Time, without notice, additional cost or other requirement, in the transaction contemplated by this Agreement. Except as disclosed in Section 3.27 of the Disclosure Schedule, there are no restrictions on the ability of the Corporation or any successor to, or assignee from, the Corporation to use and exploit all rights in any Licensed IP that is material to the conduct of the Business in the manner presently conducted. None of the Business IP will be impaired or affected in any way by the transactions contemplated by this Agreement.

To the knowledge of the Corporation, no service rendered by the Corporation or product currently designed, formulated, manufactured, processed, produced, packaged, stored, distributed, marked or sold by the Corporation infringes upon any of the Intellectual Property Rights owned or held by any other Person. The Corporation has the full right and authority to use, and to continue to use after the Closing Time, the Business IP in connection with the conduct of the Business in the manner presently conducted and, to the knowledge of the Corporation, such use or continuing use does not infringe or otherwise violate or misappropriate. Except as disclosed in Section 3.27 of the Disclosure Schedule, the Corporation has not ever received any notice, complaint, threat or claim alleging any adverse ownership, interference, infringement, misappropriation of or violation with respect to any Intellectual Property of any other Person (including any claim that the Corporation and/or such Persons must license or refrain from using any Intellectual Property of any other Person) or give rise to any invalidity of or other opposition to the Business IP, nor, to the knowledge to the Corporation, are there any valid grounds for any such bona fide claims.

To the knowledge of the Corporation, and except as disclosed in Section 3.27 of the Disclosure Schedule, there is no and has not been any material unauthorized use, infringement, misappropriation or other violation of any Owned IP by any other Person. The Corporation has not covenanted or agreed with any Person not to sue or otherwise enforce any legal rights with respect to any of the Owned IP. There are no outstanding disputes or other disagreements with respect to any licenses or similar Contracts listed in Section 3.27 of the Disclosure Schedule.

The Corporation has, in accordance with industry practice, taken all reasonable and necessary steps to protect any material Business IP and to preserve the confidentiality of all material confidential information.

Except as disclosed in Section 3.27 of the Disclosure Schedule, all Employees, officers, directors and Consultants who contributed to the discovery, development, conception, creation or reduction to practice of any material Owned IP have entered into valid and enforceable written agreements containing confidentiality obligations and assignments of their interest in such Owned IP to the Corporation. To the knowledge of the Corporation, no such Employee, officer, director or Consultant is in default of any material term of any such agreement.

Accounts Receivable

Inventory

Books and Records

Financial Statements

No Undisclosed Liabilities

Bank Accounts and Powers of Attorney

all bank accounts of the Corporation, the name and address of each bank or caisse populaire branch in which the Corporation has an account or safety deposit box and the names of all Persons authorized to draw on the account or to have access to the safety deposit box; and

the names of all Persons holding powers of attorney or mandates for the Corporation.

Customers and Suppliers

Section 3.34 of the Disclosure Schedule sets out a true, correct and complete list of the 10 largest Customers of the Corporation and a true, correct and complete list of the 10 largest suppliers of the Corporation by dollar amount for the 12-month period ending September 30 2021. Such list includes the value of the sales and purchases for each such Customer and supplier during that time. Since the Reference Date (i) no supplier or Customer has adversely amended or ceased its relationship with or decreased the amount of business done with the Corporation; and (ii) the Corporation has not received any written or oral notice that (A) any such supplier or Customer plans to modify its relationship with the Corporation in a manner substantially different than as existing prior to the date of this Agreement, or cease its relationship with or decrease the amount of business done with the Corporation, including as a result of the transactions contemplated by this Agreement, or (B) any supplier has requested an increase in the prices to be paid by the Corporation. There are no outstanding material disputes with any of the Corporation’s suppliers or Customer.

The Corporation has obtained sufficient evidence that each cannabis supplier and producer with whom the Corporation has entered into an agreement or an arrangement, holds a valid Cannabis License, and, except as disclosed in Section 3.34 of the Disclosure Schedule, the Corporation has not received any notice that any such cannabis supplier and producer is not in compliance with applicable Laws, including Cannabis Laws.

Transaction Payments

Insurance

Litigation

no Legal Proceeding by any Person (including the Corporation) is in progress, pending, or, to the knowledge of the Corporation, threatened against or affecting the Corporation, any of its officers or directors (in their capacity as such), the Purchased Shares, the Business, any of the Corporation’s Property or any other property or assets used by the Corporation including the Leased Properties;

no event has occurred in the last five years or circumstance exists which would reasonably be expected to give rise to, or serve as a valid basis for, the commencement of any such Legal Proceeding;

the Corporation is not currently undergoing, any audit, assessment or re-assessment, review, inspection, investigation, survey or examination of any records by any Governmental Authority;

the Corporation is not subject to any Order nor has the Corporation in the past five years been subject to any Order or settled any Legal Proceeding prior to being sued or prosecuted or a judgment being given in respect of it; and

the Corporation is not the plaintiff in any Legal Proceeding.

Taxes

The Corporation has prepared and filed all Tax Returns which are required to be filed prior to the Closing Time within the prescribed period and with the appropriate Tax Authority in accordance with applicable Laws. The Corporation has reported all income and all other amounts and information required by applicable Law to be reported on each such Tax Return. Each such Tax Return is true, correct and complete in all material respects.

The Corporation has paid, within the prescribed period, all Taxes and instalments of Taxes, which are required to be paid prior to the Closing Time to any Tax Authority pursuant to applicable Law. No deficiency with respect to the payment of any Taxes or Tax instalments has been asserted against it by any Tax Authority. Since the Reference Date, except in the Ordinary Course, the Corporation has not:

incurred any liability for Taxes;

engaged in any transaction or event which would result in any liability for Taxes; or

realized any income or gain for Tax purposes.

Adequate provision has been made in the Books and Records for all Taxes payable for all taxable periods ending on or before the Closing Time, and where no taxable period ends or is deemed to end on or immediately prior to the Closing Time, for all Taxes in respect of any time or event prior to the Closing Time.

The Corporation has duly and timely withheld, deducted and collected all Taxes required by applicable Law to be withheld, deducted or collected by it prior to the Closing Time (including Taxes and other amounts required or permitted to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the account of any Person, including any present or former employees, officers or directors, and any Persons who are non-residents of Canada for the purpose of the Tax Act) and has duly and timely remitted to the appropriate Tax Authority all such Taxes as and when required by applicable Law.

There are not liens for Taxes against any of the assets of the Corporation other than Permitted Encumbrances.

The Corporation has not applied for, claimed or received a refund of Tax (or amount deemed for the purposes of the Tax Act to be an overpayment of Tax) or Tax credit to which it was not entitled pursuant to applicable Laws.

There are no proceedings, investigations or audits pending or threatened against the Corporation in respect of any Taxes. No event has occurred or circumstance exists which would reasonably be expected to give rise to or serve as a valid basis for the commencement of any such proceeding, investigation or audit. There are no matters under discussion, audit or appeal with any Tax Authority relating to Taxes.

All Tax Returns of the Corporation for taxation years ending on or before December 31, 2020 and have been assessed by the relevant Tax Authority. The Corporation has made available to the Purchaser a true copy of all Tax Returns filed by the Corporation and all material correspondence with any Governmental Authority relating to Taxes, including all notices of assessment or reassessment, for any taxation periods that remain open for assessment or reassessment as of the date hereof.

The Corporation has maintained and continues to maintain all books and records required to be maintained by it under the Tax Act and all other applicable Laws in respect of Taxes.

The Corporation has not requested, entered into any agreement or other arrangement, or executed any waiver providing for, any extension of time within which:

to file any Tax Return;

to file any elections, designations or similar filings relating to Taxes;

it is required to pay or remit any Taxes or amounts on account of Taxes; or

any Tax Authority may assess or collect Taxes.

The Corporation has not entered into any agreement with, or provided any undertaking to, any Person pursuant to which it has assumed liability for the payment of Taxes owing by such Person.

The Corporation has, at all relevant times, been and is a “taxable Canadian corporation” and “Canadian controlled private corporation” within the meaning of the Tax Act. The Corporation has not ever been required to file any Tax Return with, nor has ever been liable to pay any Taxes to, any Tax Authority outside Canada. No request to file a Tax Return has ever been made by a Tax Authority in a jurisdiction where the Corporation does not file Tax Returns.

The Corporation will not be required to include at or after the Closing Time any amount of net taxable income (after taking into account deductions claimed for such a period that relate to a prior period) attributable to income that accrued, or that was required to be reported for financial accounting purposes, in a prior taxable or fiscal period but that was not included in taxable income for that or another prior taxable or fiscal period, including as a result of (i) any change in method of accounting for a taxable or fiscal period ending on or prior to the Closing Time, and (ii) prepaid items or deferred revenue received on or prior to the Closing Time.

The Corporation has not claimed any reserve for tax purposes, if as a result of such claim any amount would be included in its or the Purchaser’s income for a taxation year ending after the Closing. The Corporation has not made any payment, nor is it obligated to make any payment, and is not a party to any agreement under which it could be obligated to make any payment which would otherwise be deductible under the Tax Act, that may not be deductible by virtue of section 67 of the Tax Act.

The Corporation has not filed any Tax elections pursuant to any Law.

No Person has ever acquired or had the right to acquire control of the Corporation for the purposes of the Tax Act (or any other applicable Law) and there has been no “loss restriction event”, as defined in the Tax Act, in respect of the Corporation, other than in accordance with this Agreement.

None of section 17, subsection 18(4), or sections 78, 79, 79.1, 80, 80.01, 80.02, 80.03 and 80.04 of the Tax Act, or any equivalent provision of the Laws of any other jurisdiction, has applied or will apply to the Corporation at any time on or before the Closing Time, and the Corporation does not have any unpaid amounts that may be required to be included in income under Section 78 of the Tax Act (or any equivalent provision of the Laws of any other jurisdiction), and there are no circumstances which exist and are expected to result in the application of sections 17, 78, 79, 79.1, 80, 80.01, 80.02, 80.03 or 80.04 of the Tax Act (or any equivalent provision of the Laws of any other jurisdiction) to the Corporation.

The Corporation has not: (i) made any election under section 85 of the Tax Act with respect to the acquisition or disposition of any property that is owned by it on the Closing Time; or (ii) under the provisions of the Tax Act, considered to have discontinued carrying on any business or changed the nature of any business in respect of which its non-capital losses (as such term is defined in the Tax Act), if any, were incurred.

The Corporation has not acquired property from a Person not dealing at “arm’s length” (within the meaning of the Tax Act) with the Corporation, for consideration, the value of which is less than the fair market value of the property, in circumstances which would subject it to a liability under section 160 of the Tax Act or section 325 of the Excise Tax Act (Canada) or any equivalent section in any other Laws relating to Taxes. The value of the consideration paid or received by the Corporation for the acquisition, sale, transfer or provision of property (including intangibles) or the provision of services (including financial transactions) from or to a non-arm’s length person is equal to the estimated fair market value of such property acquired, provided or sold or services purchased or provided and for all transactions between the Corporation and any person or entity that is not resident in Canada and with which the Corporation does not deal at arm’s length, the Corporation has made or obtained records or documents that meet the transfer pricing requirements of paragraphs 247(4)(a) to (c) of the Tax Act (or any analogous laws of any other applicable jurisdiction).

The Corporation has not entered into any agreements contemplated by section 191.3 of the Tax Act.

The Corporation has not received any requirement pursuant to section 224 of the Tax Act or the equivalent provision of any provincial law which remains unsatisfied in any respect.

The Corporation is duly registered under Part IX of the Excise Tax Act (Canada) with respect to the goods and services tax.

The Corporation has not made an “excessive eligible dividend designation” as defined in subsection 89(1) of the Tax Act in respect of any dividend paid, or deemed to have been paid on any class of shares of its capital.

The Corporation has not made a capital dividend election under subsection 83(2) of the Tax Act in an amount which exceeded the amount in its capital dividend account at the time such election was made.

The “low rate income pool” (“LRIP”) as defined in subsection 89(1) of the Tax Act of the Corporation pursuant to subsection 89(8) of the Tax Act immediately after the Closing Time as a consequence of the acquisition by the Purchaser of the Purchased Shares pursuant to this Agreement will not exceed $0.

No later than 5 months following the Closing Date, the Seller Representative shall notify Purchaser in writing of any positive LRIP amount of the Corporation as of the Closing, as well as any amount required to be added to the LRIP of the Corporation pursuant to subsection 89(8) of the ITA as a consequence of the acquisition by Purchaser of the Purchased Shares pursuant to this Agreement. The Seller Representative shall provide to Purchaser any documentation reasonably requested by Purchaser to support the determination of such amounts.

Environmental Matters

The Corporation and its operations are and have been in compliance in all material respects with all applicable Environmental Laws, including all Environmental Authorizations.

There is no Remedial Action, Order or Legal Proceeding pending or, to the knowledge of the Corporation, threatened against the Corporation or involving or related to the Business, the Huntingdon Facility or any current or former property owned, leased or used by the Corporation. The Corporation has not received and is not aware of any complaints, allegations, inspections or investigations related to odours arising from or associated with the Corporation’s operations, including any wastes produced.

The Corporation does not have any material liability with respect to any Hazardous Materials. To the knowledge of the Corporation, there has not been any release of any Hazardous Materials in, on or under the Huntingdon Facility, its production, crops or product, except as disclosed under Section 3.38 of the Disclosure Schedule and all inventory and production disclosed therein has been properly and adequately disposed of.

The Corporation has not retained or assumed, by contract or operation of applicable Law, any Liabilities or obligations of third parties under Environmental Law.

Employee and Consultant Matters

Section 3.40 of the Disclosure Schedule sets forth a complete list of all written Employment Agreements with Key Employees and Consultants entered into by the Corporation (collectively, the “Employee Material Contracts”).

True, correct and complete copies of all Employee Material Contracts have been made available to Purchaser, as well as handbooks and any other material policies, procedures or rules, which apply to any Person employed or engaged as a Consultant by the Corporation. Except as set forth in Section 3.40 of the Disclosure Schedule, no variation has been made to any of the terms of employment or engagement in any such Employee Material Contracts, including, inter alia, termination provisions, except for increases in salary, annual bonus targets, hourly wage rates and benefits in the Ordinary Course.

The Employee Material Contracts outline their fees and commissions paid since their execution, length of engagement with the Corporation and location of service. Each Consultant has been (i) properly classified, (ii) properly treated for all purposes, (iii) fully paid for any amount due as of the date hereof, and (iv) recorded in the Corporation Books and Records as Consultant and the Corporation has not received any notice from any Governmental Authority disputing the Corporation’s classifications of its Consultants as consultants.

All individuals characterized and treated by the Corporation as Consultants are listed in Section 3.40 of the Disclosure Schedule. Except as listed in Section 3.39 of the Disclosure Schedule, there is no litigation, claim or complaint pending or threatened at Law or in equity by or before any Governmental Authority that challenges (i) the Corporation’s compliance with any Laws relating to the retention or classification of the Consultants, (ii) the independent contractor nature of such Contracts or any Consultant’s work status, or (iii) other understandings or arrangements pertaining to any Consultant of any nature whatsoever.

Except as set forth in Section 3.39 of the Disclosure Schedule, the Corporation does not have any Liability with respect to (i) the misclassification of any person as a Consultant rather than as an Employee, or as eligible or not eligible for overtime pay, (ii) any source deductions and employer contributions owed to any Governmental Authority, (iii) participation in or exclusion from any Employee Plans, (iv) any temporary Employees, or (v) fully and timely paying or recording accurately in the Books and Records of the Corporation: all wages, salaries, wage premiums, bonuses, commissions, fees, vacation pay, leave of absence pay, and benefits under the Employee Plans and other compensation due and payable to its current and former Employees, Consultants, pursuant to applicable Laws, Contracts or policy.

Except as set out in Section 3.40 of the Disclosure Schedule and for the Employee Plans, the Corporation is not a party to, bound to, subject to, or affected by:

any written employment Contract;

any verbal employment Contract that is not terminable upon providing reasonable notice at common law or civil law;

any written Contract with a Person acting as a Consultant providing services to the Corporation;

any certification orders;

any collective agreement or relationship with any labour union, works council, trade association or other employee organization; or any other Contract with a labour or trade union, employee associations, works council, or other employee representative; or

any written policies, procedures, practices or programs that set out terms and

conditions of employment or engagement.

Section 3.40 of the Disclosure Schedule contains a complete and accurate list of the following information, to the extent applicable, with respect to each Employee, and Consultant of the Corporation: each Person’s employee number (if applicable), position or title with the Corporation, material terms and conditions of employment, status as full-time or part-time, hiring date, current wages, salaries or hourly rate of pay (whether monetary or otherwise) paid since the beginning of the most recently completed financial year or payable in the current financial year of the Corporation to such Person, the date upon which such wage, salary, rate or bonus became effective, the Employee Plans in which the Person participates, status with any union, age, absence rate and status with respect to leaves of absence, whether approved or not, including disability leaves, sick leaves, pregnancy, paternity or parental leaves, statutory leaves or other extended absences, location of employment, annual vacation entitlement in days, accrued and unused vacation days, and other paid time-off entitlement in days and accrued and unused days of such paid time-off.

Except as set forth in Section 3.40 of the Disclosure Schedule, no Employee is on a leave of absence, receiving benefits under workers compensation legislation or disability benefits under Employment Insurance, the Canadian Pension Plan or the Québec Pension Plan, or is otherwise an inactive Employee. Section 3.40 of the Disclosure Schedule includes an indication of any individual who is on leave of absence, together with the reason for the leave, their last date of active service and their expected date of return to work.

Except as set forth in Section 3.40 of the Disclosure Schedule, neither the execution of this Agreement nor any of the transactions contemplated hereby will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, Employee, or Consultant of the Corporation to termination notice, severance pay, pay in lieu, wrongful dismissal damages, bonus or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (iii) limit or restrict the right of the Corporation to merge, amend or terminate any Employee Plan; or (iv) increase the amount payable under or result in any other material obligation under any Employee Plan.

No Employee or Consultant has indicated that they will resign or retire or cease to provide work or services as a result of the completion of the transactions contemplated by this Agreement. To the knowledge of the Corporation, no Employee or Consultant has any plans to terminate or materially alter his or her respective employment or engagement with the Corporation.

Except as disclosed in Section 3.40 of the Disclosure Schedule, there are no outstanding or unaccrued assessments, penalties, fines, Encumbrances, charges, surcharges, or other amounts due or owing pursuant to any labour or workers’ compensation Laws. The Corporation has not been reassessed under such legislation during the past three years. To the knowledge of the Corporation, no audit of the Corporation is currently being performed under any applicable Laws. There are no claims or to the knowledge of the Corporation potential claims which may materially adversely affect the Corporation’s accident cost experience rating.

To the knowledge of the Corporation, no audit of the Corporation is currently being performed under any applicable Laws. There are no claims or, to the knowledge of the Corporation, potential claims which may materially adversely affect the Corporation’s cost experience rating with any Employee Plans. No Employee or Consultant has indicated that they will terminate, resign or retire or cease to provide work or services as a result of the completion of the transactions contemplated by this Agreement. To the knowledge of the Corporation, no Employee or Consultant has any plans to terminate or materially alter his or her respective employment or engagement with the Corporation.

Except as disclosed in Section 3.40 of the Disclosure Schedule, no complaint, grievance, claim, proceeding, civil action, work order or investigation has been filed, made or commenced against the Corporation in respect of, concerning or affecting any of the Employees.

All orders and inspection reports received by the Corporation in the past five years under occupational health and safety Laws have been provided to Purchaser. There are no outstanding prosecutions, fines, charges, penalties, assessments or orders issued under the occupational health and safety Laws relating to the Corporation and all current assessments under such applicable Laws in relation to the Corporation have been paid and properly accrued. There have been no workplace accidents within the last five years that would reasonably be expected to lead to prosecution. There are no facts, events or conditions that would result in a violation of any Laws governing occupational health and safety matters which relate to the Corporation. The Corporation is operating in material compliance with all employment standards Laws and, except as set forth in Section 3.40 of the Disclosure Schedule, has no prior convictions under any occupational health and safety Law.

The Corporation, in all material respects, is and has been in compliance with, is entitled to all benefits under, and is not alleged to be in default of, any Employee Material Contract. Each of the Employee Material Contracts is in full force and effect, unamended.

The Corporation is not in breach of any of its material obligations thereunder and there exists no default or event of default or event, occurrence, condition or act (including the purchase of the Purchased Shares) which, with the giving of notice, the lapse of time or the happening of any other event or circumstance, would become a material breach of, or a material default or event of default under, any Employee Material Contract.

The Corporation and its officers, directors and Employees (in their capacities as such) are, and since the formation of the Corporation, has been, in compliance in all material aspects of all Laws pertaining to employment and labour relations, including employment standards, labour standards, wages, hours of work, overtime, human rights, pay equity, employment equity, pensions, occupational health and safety, immigration, privacy, workers’ compensation, income tax withholding, payroll taxes, the Canada Pension Plan, Québec Pension Plan, Québec Parental Insurance Plan remittances or any other employment-related matter arising under applicable Laws, and there are no outstanding claims, complaints, investigations or orders under any such Laws.

To the knowledge of the Corporation, each Consultant is responsible for its own benefits insurance policy, including but not limited to, disability, life, health, medical, dental insurance in place, in all jurisdictions where such Consultant provides services for the Corporation.

Except as set forth in Section 3.40 of the Disclosure Schedule, the Corporation is not subject to any current or, to the knowledge of the Corporation, pending or threatened actions, class actions, investigations, claims, grievances, arbitrations, complaints, audits, or statutorily imposed self-assessments, administrative proceedings or other proceedings by any Person in respect of any employment matters, including the employment or engagement of any current or former director, Employee, volunteer, intern or Consultant of the Corporation, including any claim relating to wrongful dismissal, constructive dismissal, discrimination, unfair labour practices, equal employment opportunities, fair employment practices, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labour, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws. To the knowledge of the Corporation, no event has occurred or circumstance exists which would reasonably be expected to give rise to or serve as a valid basis for the commencement of any such action, suit, investigation, arbitration, administrative proceeding or other proceeding by or against the Corporation in respect of employment matters. To the knowledge of the Corporation, there are no pending or outstanding judgments or orders under any Laws or pending or outstanding settlements requiring the reinstatement of or requiring the taking of any action, or the refraining from taking any action, or which place a financial obligation upon the Corporation, in respect of any current or former officer, director, Employee, volunteer, intern or Consultant of the Corporation.

There are no outstanding assessments, penalties or fines, or other amounts due or owing pursuant to the Charter of the French Language (Québec) and its applicable regulation and the Corporation has not been audited with respect to the linguistic situation of the Corporation during the past four (4) years and no audit of the Corporation is currently being performed by any Governmental Authority with respect to the Corporation’s linguistic situation. The Office de la language française (Québec) has, during the past four (4) years, never refused, suspended or cancelled the attestation of implementation of any francization program required to be implemented by the Corporation.

Except as set out in Section 3.40 of the Disclosure Schedule, there is no labour strike, picketing, slow down, work stoppage, walkouts or lock out, existing or, to the knowledge of the Sellers and the Corporation, pending or threatened against or directly or indirectly affecting the Business, the Corporation or any of its operations. The Corporation has not, in the past five years, experienced any labour strike, picketing, slowdown, work stoppage, lock out or other collective labour action by or with respect to its Employees. To the knowledge of the Sellers or the Corporation it has not experienced any attempt to organize, certify or establish any labour union or employee association with respect to employees, threatened or actual, and no such activities are currently underway or, to the knowledge of the Corporation, threatened by, on behalf of or against any labour union, works council, trade association or other employee organization with respect to Employees of the Corporation. To the knowledge of the Corporation, there are no charges or complaints pending or threatened with respect to or relating to the Corporation before any Governmental Authority in relation to unlawful employment practices. The Corporation has not received any written notice from any such Governmental Authority responsible for the enforcement of labour or employment Laws of an intention to conduct an investigation of the Corporation or any of its Business concerning its employment practices, wages, hours and terms and conditions of employment and no such investigation is, to the knowledge of the Corporation, threatened. To the knowledge of the Sellers or the Corporation, its Employees, officers, directors or agents have not committed any act or omission giving rise to material Liability for any violation or breach described in this paragraph Section 3.40(u).

Except as set forth in Section 3.40 of the Disclosure Schedule, since the formation of the Corporation, there have not been (i) any allegations or formal or informal complaints made to or filed with the Corporation related to sexual harassment or sexual misconduct, (ii) any other claims initiated, filed or, to the knowledge of the Sellers or the Corporation, threatened, against the Corporation related to sexual harassment or sexual misconduct, or (iii) to the knowledge of the Sellers or the Corporation, any other allegations, formal or informal complaints or any other claims initiated, filed or threatened against any Person other than the Corporation related to sexual harassment or sexual misconduct, in each case by or against any current or former director, officer or senior level management Employee (acting in such functions). The Corporation has not entered into any settlement agreement related to allegations of sexual harassment or sexual misconduct by any current or former director, officer, Employee, Consultant, or individual contractor (acting in such functions) and there have not been, to the knowledge of the Sellers or the Corporation, any private settlement agreements related to allegations of sexual harassment or sexual misconduct by or against any current or former director, officer or senior level management Employee (acting in such functions) to which the Corporation is not a party. To the extent allegations of sexual harassment or sexual misconduct have been made, the Corporation has promptly, thoroughly and impartially investigated all such allegations and, where it was determined that such allegation had potential merit, the Corporation has taken prompt and appropriate action and the Corporation does not reasonably expect any material Liability related to such allegations.

Employee Benefit Plans

Section 3.41 of the Disclosure Schedule sets out a true, correct and complete list of all retirement, pension, trust, supplemental pension, savings, retirement savings, retiring allowance, bonus, profit sharing, stock purchase, stock option, phantom stock, share appreciation rights, equity or equity based compensation, deferred compensation, retention, severance or termination pay, change of control, life insurance, medical, hospital, dental care, vision care, drug, sick leave or paid time off plan, short term or long term disability, salary continuation, unemployment benefits, vacation, incentive, compensation or other employee benefit plan, program, arrangement, policy or practice whether written or oral, formal or informal, funded or unfunded, registered or unregistered, insured or self-insured that is maintained or otherwise contributed to, or required to be contributed to, by or on behalf of the Corporation or with respect to which the Corporation has or may have any Liability, other than government sponsored pension, employment insurance, parental insurance, workers’ compensation and health insurance plans (collectively, the “Employee Plans”). There is no Employee Plan that is a registered pension plan under the Tax Act.

Each Employee Plan:

has been maintained and administered in compliance with its terms and with the requirements of all applicable Laws in all material respects; and

is in good standing in respect of such requirements and Laws in all material respects.

All contributions or premiums required to be paid, deducted or remitted and all obligations required to be performed by the Corporation pursuant to the terms of any Employee Plan or by applicable Laws, have been paid, deducted, remitted or performed, as the case may be, in a timely fashion and there are no outstanding defaults or violations with respect to same.

No promises or commitments have been made by the Corporation to amend any Employee Plan, to provide increased benefits or to establish any new benefit plan, except as required by applicable Laws or as set out in Section 3.41 of the Disclosure Schedule.

To the knowledge of the Corporation, there are no actions, suits, claims, trials, demands, investigations, arbitrations or other proceedings pending or threatened with respect to the Employee Plans (other than routine claims for benefits) and no circumstances or event has occurred that would result in such a proceeding.

The Sellers have delivered to the Purchaser true and complete copies of all the text of the Employee Plans (where no text exists, a summary has been provided) and any related brochures, trust agreements, insurance contracts or other documents governing those plans, all as amended to the date hereof.

The Corporation has not, does not maintain, sponsor, contribute to, or has never had or have any obligation to contribute to, or has any obligation under or with respect to a defined benefit pension plan or arrangement. For greater certainty, no Employee Plan is or has been a defined benefit pension plan, has ever been part of a defined benefit pension plan, or has ever transferred assets to or accepted a transfer of assets from a defined benefit pension plan. No Employee Plan (i) contains a “defined benefit provision” as defined by subsection 147.1(1) of the Tax Act, (ii) is a “multi-employer plan” or a “specified multi-employer plan” as those terms are defined by subsection 147.1(1) of the Tax Act or section 11 of the Supplemental Pension Plans Act (Québec) or as such similar terms are defined in similar pension standards legislation of Canada or a province; or (iii) is a “registered pension plan” within the meaning of subsection 248(1) of the Tax Act.

To the knowledge of the Corporation, there is no pending termination or winding-up procedure in respect of any of the Employee Plans, and no event has occurred or circumstance exists under which any of the Employee Plans would reasonably be expected to be declared terminated or wound-up, in whole or in part.

Except as set out in Section 3.41 of the Disclosure Schedule, no Employee Plan has a deficit and the Liabilities of the Corporation in respect of all Employee Plans are properly accrued and reflected in the Financial Statements in accordance with IFRS.

Privacy Laws

During the three (3) year period immediately prior to the date of this Agreement, the Corporation has conducted and is conducting the Business in material compliance with all applicable Privacy Laws including in connection with its collection, use, disclosure, safeguarding and disposal of Personal Information.

Except as set out in Section 3.42 of the Disclosure Schedule, during the three year period immediately prior to the date of this Agreement, the Corporation has not: (i) received any complaint or notice or been the subject of any investigation by or from any Governmental Authority or third party concerning any breach or violation by the Corporation of any such Privacy Laws or of the Corporation’s privacy policies, or (ii) experienced any Security Incident.

All Personal Information held, handled or processed by the Corporation:

has been collected, used or disclosed with the consent of each individual to which such Personal Information relates (if such consent was required under applicable Privacy Laws) and in material compliance with the privacy policies of the Corporation and, if provided to the Corporation under a contract with a third party, then materially in accordance with the terms of such contract;

has been used only for the purposes for which the Personal Information was initially collected or for a subsequent purpose for which consent was subsequently obtained and in material compliance with the privacy policies of the Corporation and, if provided to the Corporation under a contract with a third party, then materially in accordance with the terms of such contract; or

if consent was not obtained by, or provided to, the Corporation by the individual that is the subject of such Personal Information, has been collected, used or disclosed for a purpose in respect of which consent may, under applicable Privacy Laws, be implied or unnecessary.

The Corporation has implemented reasonable administrative, technical and physical safeguards for maintaining the security of Personal Information collected, used and disclosed by the Corporation, including (i) the adoption of a written privacy policy and information security plan concerning such Personal Information, true and complete copies of which have been provided or made available to Purchaser, and (ii) requiring all third party contractors of the Corporation who are given Personal Information maintained by the Corporation to provide written assurances, agreements or safeguards for maintaining the security of Personal Information made available by the Corporation and for using such Personal Information only for the purposes for which it was made available to the Corporation.

The Corporation does not sell for commercial purposes, and has never sold for commercial purposes, any Personal Information maintained by the Corporation to any third parties, whether for monetary consideration or otherwise.

The consummation by the Corporation of the transactions contemplated by this Agreement will not result in a breach of any Privacy Laws applicable to the Corporation or any contractual or other legal obligations of the Corporation (including the Corporation’s privacy policies in effect on the date hereof, and when the relevant Personal Information was first collected or obtained by the Corporation) pertaining to Personal Information.

Anti-Spam Laws

Consummation of Transactions Contemplated by this Agreement

Anti-Corruption

Neither the Corporation, nor any of its Affiliates, its Employees or other Persons acting on its behalf has, directly or indirectly, offered, made, authorized or promised any contribution, payment, loan, rebate, gratuities, reward, benefit or gift of funds or property or anything else of value to any Governmental Authority or Government Official, or to any Person for the benefit of any Governmental Authority or Government Official or while knowing that all or a portion of such money or thing of value would or will be offered, given, or promised, directly or indirectly, to any Governmental Authority or Government Official, (i) for the purpose of (A) influencing any act or decision of such Governmental Authority or such Government Official in its or his official capacity, inducing such Governmental Authority or Government Official to do or omit to do any act in violation of its or his lawful duty, or (B) securing any improper advantage, or (C) inducing a Government Official to use its or his influence with a Governmental Authority to affect or influence any act or decision of such Governmental Authority, in each case, in order to assist the Corporation in obtaining or retaining business for or with, or directing business to any person; or (ii) where either the payment or giving or the purpose of such contribution, payment, loan, rebate, gratuities, reward, benefit or gift of funds or property or anything else of value was, is, or would be prohibited, where applicable, under the Cannabis Regulation Act (Québec), the Criminal Code of Canada, the Canada Corruption of Foreign Public Officials Act, the U.S. Foreign Corrupt Practices Act of 1977, and any related or similar rules, regulations or guidelines made, issued, administered or enforced by any Governmental Authority thereunder and any other applicable Laws of similar purpose and scope (collectively, “Anti-Corruption Legislation”).

Neither the Corporation, nor any of its Affiliates nor any director, Employee or other Person acting on its behalf has breached or violated any Anti-Corruption Legislation or any Law regulating lobbying, accounting, bids or conflicts of interest. No change, fact, event, circumstance, condition or omission has occurred in respect of the Corporation that would reasonably be likely to result in the Corporation being suspended or debarred from doing business with a Governmental Authority or otherwise prevent the Corporation from bidding on or applying for Contracts with a Governmental Authority after Closing.

Neither the Corporation, nor any of its Affiliates nor any director, Employee or other Person acting on its behalf is under investigation by any Governmental Authority for, or have been charged with, or convicted of an offence related to anti-money laundering, drug trafficking, terrorist related activities, or other serious crime.

No Brokers’ Fees, etc.

Competition Act

Regulatory Approvals.

Compliance with Laws; Product Liability.

The Corporation has complied and is complying with all applicable Laws with respect to the Business and past business and operations, its properties and assets, in all material respects. The Products have been manufactured, tested, packaged, labelled, held, distributed, marketed, and sold by the Corporation, as the case may be in compliance with all applicable Laws, all requirements under any Material License and in accordance with all requirements of the SQDC where applicable.

Except as disclosed in Section 3.49 of the Disclosure Schedule, there is no Legal Proceeding, notice of violation or investigation from, by or before any Governmental Authority, relating to any Product or claim or lawsuit involving any such Product which is, to the knowledge of the Corporation, pending or threatened, by any Person.

Except as set forth in Section 3.49 of the Disclosure Schedule, there has not been, nor is there under consideration by the Corporation any Product recall, field notification, post-market corrective action, or post-sale warning conducted by or on behalf of the Corporation concerning any Product whether made voluntarily, or at the request of any Governmental Authority. No Customer of the Corporation has requested any recall, removal, market withdrawal or corrective action with respect to any of the Products.

All Products have been produced using Good Production Practices as set out in the Cannabis Laws. None of the Corporation’s Products are or were contaminated, adulterated, mislabeled or misbranded, and there are no claims against the Corporation nor, to the knowledge of the Corporation, is there any basis for any claim with respect to the Corporation’s Products or resulting from an alleged defect in materials or workmanship of any such Product or any alleged failure to warn, or any alleged breach of implied warranties or representations of any such Product. The Products comply with all warranties, whether express or implied, provided to purchasers of the Products by the Corporation, its Affiliates or Employees.

The Corporation is in compliance in all material respects with all applicable record keeping and reporting requirements with respect to the Products, including, but not limited to, applicable adverse event reporting requirements in respect of the Products.

Section 3.49 of the Disclosure Schedule sets out all Contracts pursuant to which the Corporation has agreed to indemnify the counter-party for any Product liability issues.

Full Disclosure

Creation and Power

Corporate Authorizations

has been duly authorized by all necessary corporate or other action on the part of such Seller and all action on the part of such Seller necessary for the authorization, execution and delivery of the Transaction Documents to which it is a party and the performance of the obligations of such Seller thereunder has been taken; and

does not (or would not with the giving of notice, the passage of time or the happening of any other event or circumstance) result in a breach or a violation of, or conflict with, or allow any other Person to exercise any rights under, any of its constating documents and governance documents, including shareholders’ agreements, articles, by-laws or resolutions of its trustees, administrators, managers, board of directors, shareholders, partners, members, beneficiaries or other stakeholders, as applicable.

No Conflict

result in a breach or a violation of, default under, conflict with, or cause the termination or revocation of, any Authorization held by such Seller or necessary to the ownership of its Purchased Shares;

result in or require the creation of any Encumbrance upon any of its Purchased Shares;

result in a breach or a violation of, or conflict with, (i) any Order binding on such Seller, (ii) any Law applicable to such Seller, or (iii) any Contract binding on or affecting such Seller or its Purchased Shares; or

result in or give any Person the right to seek, or to cause the termination, cancellation, amendment or renegotiation of any Contract binding on or affecting such Seller or its Purchased Shares.

Authorizations and Consents

Execution and Binding Obligation

Title to Purchased Shares

No Other Agreements to Purchase

Except as disclosed in Section 4.7 of the Disclosure Schedule, and except for Purchaser’s rights under this Agreement, no Person has any written or oral agreement, option, warrant, understanding or commitment or any right or privilege (whether by Law, contractual or otherwise) capable of becoming such for the direct or indirect purchase or acquisition from such Seller of any of its Purchased Shares.

Except for the Purchased Shares set forth beside the name of such Seller in Exhibit A, such Seller does not have any written or oral agreement, option, warrant, understanding or commitment or right or privilege (whether by Law, contractual or otherwise) capable of becoming such for the purchase, subscription, allotment or issuance of any of the unissued shares or other securities of any Corporation.

Litigation

No Brokers’ Fees, etc.

Tax Status

Village Farms Shares

all Village Farms Shares issued as Share Consideration or otherwise under this Agreement will be issued pursuant to an exemption under Applicable Securities Laws and have not been qualified by any prospectus or registration statement in any jurisdiction;

it is not a “U.S. person” as defined in Regulation S under the U.S. Securities Act;

no securities regulatory authority has made any finding or determination as to the merit for investment in, or made any recommendation or endorsement with respect to, the Village Farms Shares;

all Village Farms Shares issued as part of the Share Consideration or otherwise under this Agreement are subject to the restrictions on resale set forth in Section 2.11;

the Village Farms Shares are not listed on any stock exchange or quotation system other than the TSX and the NASDAQ, and there is no guarantee that such Seller will be able to sell its Village Farms Shares at a price and within a time period that are acceptable to such Seller, or at all;

such Seller did not ask for, and was not provided with, any offering memorandum or other document or information in respect of the Village Farms Shares, other than documents that are publicly available and may be accessed on the Purchaser’s SEDAR profile at www.sedar.com;

the Purchaser makes no representation or warranty, express or implied, of any nature whatsoever with respect to the Purchaser or the Village Farms Shares, except as expressly set forth in this Agreement; and

such Seller has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Village Farms Shares.

Current Holdings of Village Farms Shares

Sellers Principals

Shareholder Loans

Related Party Transactions

Full Disclosure

Incorporation and Corporate Power

Corporate Authorizations

has been duly authorized by all necessary corporate action on the part of Purchaser and all action on the part of Purchaser that are necessary for the authorization, execution and delivery of the Transaction Documents to which it is a party and the performance of the obligations of Purchaser thereunder has been taken; and

does not (or would not with the giving of notice, the passage of time or the happening of any other event or circumstance) result in a breach or a violation of, or conflict with, or allow any other Person to exercise any rights under, any of its respective constating documents and governance documents, including shareholders’ agreements, by-laws or resolutions of the board of directors or shareholders.

No Conflict with Authorization or Applicable Law

result in a breach or a violation of, default under, conflict with, or cause the termination or revocation of, any Authorization held by Purchaser or necessary to the issuance from treasury of the Village Farms Shares to be issued pursuant to this Agreement;

result in or require the creation of any Encumbrance upon the Village Farms Shares to be issued pursuant to this Agreements;

result in a breach or a violation of, or conflict with, (i) any Order binding on Purchaser, (ii) any Law binding or affecting the Purchaser.

No Conflict with Material Contracts

the termination, cancellation, amendment or renegotiation of any material Contract binding on or affecting the Purchaser;

the acceleration of any material debt or other obligation of the Purchaser; or

the forfeiture or other loss, in whole or in part, of any material benefit which would otherwise accrue to the Purchaser.

Authorizations and Consents from Governmental Authorities

Authorizations and Consents with respect to Material Contracts

Execution and Binding Obligation

Reporting Issuer

Village Farms Shares

Applicable Securities Laws

Litigation and Proceedings

Continuous Disclosure Filings and Financial Statements

As of their respective effective dates, the Purchaser CD Documents complied in all material respects with the requirements of the Applicable Securities Laws applicable to such Purchaser CD Documents, and none of the Purchaser CD Documents as of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

The financial statements and notes of the Purchaser contained or incorporated by reference in the Purchaser CD Documents fairly present in all material respects the financial condition and the results of operations, changes in stockholders’ equity and cash flows of the Purchaser as at the respective dates of, and for the periods referred to in, such financial statements, all in accordance with: (i) US GAAP; and (ii) Regulation S-X, as applicable, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be material) and the omission of notes to the extent permitted by Regulation S-X, as applicable. The Purchaser has no off-balance sheet arrangements that are not disclosed in the Purchaser CD Documents. No financial statements other than those of the Purchaser are required by US GAAP to be included in the consolidated financial statements of the Purchaser.

The Purchaser has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the U.S. Exchange Act) that are designed to ensure that material information relating to the Purchaser is made known to the Purchaser’s principal executive officer and its principal financial officer, particularly during the periods in which the periodic reports required under the U.S. Exchange Act are being prepared. To the knowledge of the Purchaser, such disclosure controls and procedures are effective in timely alerting the Purchaser’s principal executive officer and principal financial officer to material information required to be included in the Purchaser’s periodic reports required under the U.S. Exchange Act. The Purchaser has established and maintained a system of internal controls and, to the knowledge of the Purchaser, such internal controls are sufficient to provide reasonable assurance regarding the reliability of the Purchaser’s financial reporting and the preparation of the Purchaser’s financial statements for external purposes in accordance with US GAAP.

Since the date of the latest Form 10-Q of the Purchaser filed with the SEC, there has not been any change, development, condition, occurrence, event or effect relating to the Purchaser that, individually or in the aggregate, resulted in, or would reasonably be expected to result in, a Purchaser Material Adverse Effect for the Purchaser.

Listing

Tax Status

No Brokers’ Fees, etc.

Indemnification by Sellers

any inaccuracy, incorrectness in or breach of any representation or warranty of the Corporation contained in Article 3 or the Sellers contained in Article 4 of this Agreement or in any other Transaction Document;

any breach or any non-fulfilment of any covenant or agreement on the part of the Sellers contained in this Agreement or in any other Transaction Document;

any Indemnified Taxes, except to the extent that such Indemnified Taxes have been taken into account in the final Closing Statement and have reduced the Purchase Consideration; or

any Excluded Liabilities.

Indemnification by Purchaser

any inaccuracy, incorrectness in or breach of any representation or warranty made by Purchaser in Article 5 of this Agreement or in any other Transaction Document;

any breach or non-fulfillment by Purchaser of any covenant, agreement, condition or obligation of Purchaser contained in this Agreement or in any other Transaction Document; or

brokerage or finder’s fees, commissions or similar payments based upon any agreement or understanding made by such Person with Purchaser (or any Person acting on its behalf) in connection with any of the transactions contemplated in this Agreement.

Expiry and Limitation of Claims

The representations and warranties of the Corporation and Sellers contained in this Agreement will survive Closing and continue in full force and effect for a period of twelve (12) months following the Closing Date (the “Survival Period”), except that:

the representations and warranties of the Corporation contained in Section 3.1 (Incorporation and Corporate Power), Section 3.2 (Corporate Authorizations) Section 3.3 (No Conflict with Authorization or Applicable Law), Section 3.5 (Authorizations and Consents from Governmental Authorities), Section 3.6 (Execution and Binding Obligation), Section 3.7 (Authorized and Issued Capital of the Corporation) and Section 3.8 (No Other Agreements to Purchase) (the “Corporation’s Fundamental Representations”) will survive indefinitely;

the representations and warranties of the Sellers contained in Section 4.1 (Creation and Power), 4.2 (Corporate Authorizations), 4.3 (No Conflict), 4.5 (Execution and Binding Obligation), 4.6 (Title to Purchased Shares) and 4.7 (No Other Agreements to Purchase) (the “Sellers’ Fundamental Representations”) will survive indefinitely;

any claim involving Indemnified Taxes (including, without limitation, the representations and warranties of the Corporation contained in Section 3.38) and any claim involving the representations and warranties of an individual Seller contained in Section 4.10, will survive for the full period within which the Corporation or the Purchaser may be assessed or reassessed for Taxes that are the subject of such claim under applicable Laws plus ninety (90) days;

the representations and warranties of the Corporation contained in Section 3.39 (Environmental Matters) will survive for 18 months following the Closing Date; and

any claim involving fraud, intentional misconduct, fraudulent, or deliberate or willful misconduct will survive Closing and continue in full force and effect indefinitely.

The representations and warranties of Purchaser contained in this Agreement will survive Closing and continue in full force and effect for a period of twelve (12) months following the Closing Date, except that:

the representations and warranties of Purchaser contained in Section 5.1 (Incorporation and Corporate Power), Section 5.2 (Corporate Authorizations), Section 5.3 (No Conflict with Authorizations or Applicable Law), Section 5.5 (Authorizations and Consents from Governmental Authorities), and Section 5.7 (Execution and Binding Obligation) will survive and continue in full force and effect indefinitely; and

any claim involving fraud, intentional misconduct, fraudulent, or deliberate or willful misconduct will survive Closing and continue in full force and effect indefinitely.

The obligations of indemnification set out in Section 6.1 and Section 6.2 will survive Closing and continue in full force and effect without limitation of time, subject however to the limitations and other provisions set out in this Article 6.

The Sellers and Purchaser will not be liable with respect to any claim for the breach of any representation or warranty pursuant to Section 6.1 (relating to the Sellers) and Section 6.2 (relating to Purchaser) unless written notice of a claim thereof is delivered by the Party making the claim to the other Party during the Survival Period (or other applicable survival period set out in Section 6.3(a), as the case may be) in accordance with Section 6.7.

An obligation to indemnify for Damages will continue after the end of the applicable Survival Period if a claim for indemnification with respect to such Damages was made in accordance with this Agreement before the end of the Survival Period (or other applicable survival period set out in Section 6.3(a), as the case may be).

Limitations on Liability

Tipping Basket. Subject to Section 6.4(c), Sellers shall not be liable for any claim under Section 6.1(a), unless and until the accumulated aggregate Damages of Purchaser Indemnified Persons in connection with all such claims exceeds $[***Redacted – Commercially Sensitive Information***] (the “Basket Amount”), in which case the Sellers shall be liable to indemnify the Purchaser Indemnified Persons for the full amount of all such accumulated aggregate Damages, including the Basket Amount thereof.

Indemnity Cap. Subject to Sections 6.4(c) and 6.10, (i) the aggregate liability of each Seller in respect of claims of Purchaser Indemnified Persons for Damages under Section 6.1(a) shall not exceed such Seller’s Pro Rata Share of [***Redacted – Commercially Sensitive Information***] and (ii) the aggregate liability of all Sellers in respect of claims of Purchaser Indemnified Persons for Damages under Section 6.1(a) shall not exceed, in the aggregate, [***Redacted – Commercially Sensitive Information***].

Exclusions to Basket Amount and Indemnity Cap. Sections 6.4(a) and 6.4(b) shall not apply in respect of any claim of Purchaser Indemnified Persons for Damages under 6.1(a) against any Seller with respect to (A) the breach or inaccuracy of any of the Corporation’s Fundamental Representations, (B) the breach or inaccuracy of any of the Sellers’ Fundamental Representations, (C) Indemnified Taxes, or (D) any claim involving the fraud, intentional misrepresentation, or deliberate or willful misconduct by such Seller. Section 6.4(b)(i) shall not apply in respect of any claim of Purchaser Indemnified Persons for Damages for which Purchaser seeks recourse from the Escrow Account pursuant to the Escrow Agreement.

Duplication. Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty or covenant.

Materiality

Indemnification Sole Remedy

Subject to Section 11.7, the rights and remedies that a Party may have against the other Party for any inaccuracy in or breach of any representation, warranty, covenant or obligation under this Agreement, are exclusively governed by this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement, and for any failure to fulfill or perform any covenants under this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement, except for the enforcement of payment obligations in connection with the transactions contemplated by this Agreement.

The Parties agree that, notwithstanding anything herein to the contrary, no incorrectness of any representation or warranty given in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement, or failure to fulfill or perform any covenant contained under this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement, will give rise to any right on the part of any Party, (i) to rescind this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement or any of the transactions contemplated hereby or thereby, or (ii) to avoid the limitations of liability set forth in this Article 6 by seeking indemnification for breach of contract, extra-contractual fault or pursuant to any other theory of liability.

Notification

Promptly upon obtaining knowledge thereof, the Indemnitee Representative shall notify the Indemnitor Representative, of any cause which the Indemnitee Representative has determined has given or could give rise to indemnification under this Article 6 (an “Indemnification Notice”) specifying, to the extent possible to do so, the amount of the Damages claimed by the Indemnified Person and specifying in reasonable detail the individual items of such Damages, the date each such item was paid, or properly incurred or arose, and the nature of such item. The failure to notify, or delay in notifying, the Indemnitor Representative, shall not relieve the Indemnifying Party from any duty to indemnify and hold harmless that otherwise might exist with respect to such cause unless (and only to that extent) the failure to notify or delay in notifying materially prejudices the ability of the Indemnifying Party to exercise its right to defend provided in this Article 6.

Upon receipt of an Indemnification Notice by an Indemnifying Party, the provisions of Sections 6.8 and 6.10 will apply to any Direct Claim, and the provisions of Sections 6.9 and 6.10 will apply to any Third Party Claim.

Indemnification Procedure — Direct Claims

Following receipt of an Indemnification Notice pursuant to Section 6.7(a) relating to a Direct Claim, the Indemnitor Representative has 60 days to investigate the Direct Claim and respond in writing. For purposes of the investigation, the Indemnified Person shall make available to the Indemnitor Representative the information relied upon by the Indemnified Person to substantiate the Direct Claim, together with such other information as the Indemnitor Representative may reasonably request.

If the Indemnitor Representative disputes the validity or amount of the Direct Claim, the Indemnitor Representative shall (i) pay the portion (if any) of the Damages claimed to which it does not object in accordance with Section 6.10, and (ii) provide written notice of the dispute to the Indemnitee Representative within the 60-day period specified in Section 6.8(a). The notice must describe in reasonable detail the nature of the Indemnitor Representative’s dispute. During the 20-day period immediately following receipt of a notice by the Indemnitor Representative, the Indemnitor Representative and the Indemnitee Representative shall attempt in good faith to resolve the dispute. If the Indemnitor Representative fails to respond in writing to the Direct Claim within the 60-day period specified in Section 6.8(a) or indicates in writing that it does not dispute the Direct Claim, Indemnified Party shall be free to pursue such remedies as may be available to it.

Indemnification Procedure — Third Party Claims

If a Third Party Claim is made or commenced against an Indemnified Person in respect of which the Indemnified Person proposes to demand indemnification pursuant to this Agreement, the Indemnitee Representative shall give an Indemnification Notice to that effect together with particulars of the Third Party Claim to the Indemnitor Representative with reasonable promptness. The failure to give, or delay in giving, the Indemnification Notice, unless the Indemnification Notice is given after the expiration of the applicable time limit, if any, as set out in Section 6.3, will not relieve the Indemnifying Party of its obligations except and only to the extent of any prejudice caused to the Indemnifying Party by such failure or delay. From the time the Indemnified Person learns of the Third Party Claim, the Indemnified Person and the Indemnitee Representative shall protect their rights and the rights of the Indemnifying Party in respect of such Third Party Claim.

The Indemnitor Representative may, at the Indemnifying Party’s expense and by notice to the Indemnitee Representative given not later than 30 days after receipt of the Indemnification Notice described in Section 6.9(a), assume control of the defence, compromise or settlement of the Third Party Claim provided that:

the Third Party Claim involves only money damages and does not seek any injunctive or other equitable relief;

the Indemnifying Party unconditionally acknowledges in writing its obligation to indemnify and hold the Indemnified Person harmless with respect to the Third Party Claim;

if the named parties in any Third Party Claim include both the Indemnifying Party and the Indemnified Person, representation by the same counsel would, in the judgment of the Indemnitee Representative, still be appropriate notwithstanding any actual or potential differing interests between them (including the availability of different defences);

settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the judgment of the Indemnitee Representative, likely to establish a precedent, custom or practice adverse to the continuing business interests of the Indemnified Person; and

if the Third Party Claim is in respect of Indemnified Taxes, and if (A) it relates solely to a Pre-Closing Tax Period and is not reasonably expected to have a material adverse impact upon Taxes for any other Tax period, and (B) the Indemnifying Party has paid to the applicable Tax Authority all amounts required to be paid in order to contest the Third Party Claim.

Upon assumption of control by the Indemnitor Representative:

the Indemnitor Representative shall actively and diligently proceed with the defence, compromise or settlement of the Third Party Claim at its sole cost and expense, retaining counsel reasonably satisfactory to the Indemnitee Representative;

the Indemnitor Representative shall keep the Indemnitee Representative fully advised with respect to the status of the Third Party Claim (including supplying copies of all relevant documents promptly as they become available) and shall arrange for its counsel to inform the Indemnitee Representative on a regular basis of the status of the Third Party Claim; and

the Indemnitor Representative shall not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim unless consented to by the Indemnitee Representative (which consent may not be unreasonably or arbitrarily withheld or delayed).

The Indemnified Person may retain separate co-counsel at its sole cost and expense and may participate in the defence of the Third Party Claim.

Provided all the conditions set forth in Section 6.9(b) are satisfied and the Indemnitor Representative is not in breach of any of its other obligations under this Section 6.9, the Indemnified Person and the Indemnitee Representative shall, at the expense of the Indemnifying Party, cooperate with the Indemnitor Representative and use commercially reasonable efforts to make available to the Indemnitor Representative all relevant information in their possession or under their control (provided that it does not cause either of them to breach any confidentiality obligations) and shall take such other steps as are, in the reasonable opinion of counsel for the Indemnitor Representative, necessary to enable the Indemnitor Representative to conduct such defence; provided always that:

no admission of fault may be made by or on behalf of any Purchaser Indemnified Person without the prior written consent of its Indemnitee Representative;

no admission of fault may be made by or on behalf of any Sellers Indemnified Person without the prior written consent of the Sellers’ Indemnitee Representative;

the Indemnitee Representative and the Indemnified Person are not obligated to take any measures which, in the reasonable opinion of the Indemnitee Representative’s legal counsel, could be prejudicial or unfavourable to the Indemnified Person; and

the Indemnified Person receives, as part of any compromise or settlement, a legally binding and enforceable unconditional release, which is in form and substance satisfactory to the Indemnitee Representative, acting reasonably, from any and all Liabilities it may have with respect to the Third Party Claim.

If (i) the Indemnitor Representative fails to give the Indemnitee Representative the notice required in Section 6.9(b) or otherwise fails to comply with any of the conditions in Section 6.9(b), or (ii) the Indemnitor Representative breaches any of its other obligations under this Section 6.9, the Indemnitee Representative may assume control of the defence, compromise or settlement of the Third Party Claim and retain counsel as in its sole discretion may appear advisable, the whole at the Indemnifying Party’s sole cost and expense, subject to the right of the Indemnifying Party to dispute that an indemnification is required pursuant to this Agreement. Any settlement or other final determination of the Third Party Claim will be binding upon the Indemnifying Party subject to the right of the Indemnifying Party to dispute that an indemnification is required pursuant to this Agreement. The Indemnitor Representative shall, at the Indemnifying Party’s sole cost and expense, cooperate fully with the Indemnitee Representative and use its commercially reasonable efforts to make available to the Indemnitee Representative all relevant information in its possession or under its control as are, in the reasonable opinion of counsel for the Indemnitee Representative necessary to enable the Indemnitee Representative to conduct the defence. The Indemnifying Party shall reimburse the Indemnitee Representative and the Indemnitor Representative for the costs of defending against the Third Party Claim (including reasonable legal fees and expenses), and shall remain responsible for any Damages the Indemnified Person and the Indemnitee Representative may suffer resulting from, arising out of, or relating to, the Third Party Claim to the fullest extent provided in this Article 6, subject to the right of the Indemnifying Party to dispute that an indemnification is required pursuant to this Agreement. Regardless of whether the Indemnified Person, the Indemnitor Representative, the Indemnifying Party or the Indemnitee Representative shall assume the defense of the claim, the Indemnified Person and the Indemnifying Party agree to cooperate fully with one another in connection therewith and to keep each other reasonably informed of the status of the claim and any related proceeding and the Indemnified Person shall take no action or make any admissions or statements not required by applicable Law which would adversely affect the defense of any such claim.

Payment of Indemnification

Any indemnification owing pursuant to this Article 6 by any Seller shall be paid as follows: (i) first, to the extent there are sufficient funds in the Escrowed Cash, by release of funds to the Purchaser Indemnified Persons from the Escrow Account in accordance with the terms and conditions of the Escrow Agreement, (ii) second, to the extent there are sufficient Escrowed Shares in the Escrowed Shares Account, by release of Escrowed Shares from the Escrowed Shares Account to the account of the Purchaser in accordance with the terms and conditions of the Escrow Agreement, and (iii) third, to the extent the Escrowed Cash and Escrowed Shares in the Escrow Account are insufficient to pay any remaining sums due to the Purchasers Indemnified Persons, by payment by such Seller of any such amount by wire transfer of immediately available funds to the Purchaser Indemnified Persons, within five (5) Business Days after the determination of the amount of such losses thereof.

Except as otherwise required by applicable Law, any payment on account of Damages made by any Seller as an Indemnifying Party pursuant to Article 6 (including without limitation any payment made by release or cancellation of Escrowed Shares to the Purchaser) will constitute a dollar-for-dollar decrease of the Purchase Consideration and any payment made by Purchaser as an Indemnifying Party pursuant to this Article 6 will constitute a dollar-for-dollar increase of the Purchase Consideration.

Any indemnification owing pursuant to this Article 6 by any Seller to Purchaser Indemnified Persons shall be reduced by the amount of any insurance proceeds or payments from responsible third parties actually received by the Purchaser Indemnified Persons in connection therewith (net of any costs incurred by the Purchaser Indemnified Person to obtain any such insurance proceeds or third party payments and net of any deductible and any increase in the annual insurance premium of said insurance policies for any subsequent period resulting from the filing and collection of such insurance claim); provided, however, that such reduction shall not preclude or be a precondition to the right of the Purchaser Indemnified Persons to make any claims pursuant to the indemnity provisions of this Article 6.

All indemnity obligations under this Article 6 for shall be (i) reduced by any Tax Benefits actually realized by any party seeking indemnification hereunder arising from the matter giving rise to indemnification in the taxable year such matter occurred or the two successive taxable years following the taxable year such matter occurred, and (ii) increased to take account of any net Tax cost incurred by the Indemnified Person arising from the receipt of indemnity payments hereunder (grossed up for such increase). The amount for which the Purchaser is entitled to be indemnified under Article 6 shall not be reduced by the amount of any loss, credit, deduction or other Tax attribute incurred or generated in a Tax period that is not a Pre-Closing Tax Period. For these purposes, a “Tax Benefit” means the amount by which the Tax liability of the Indemnified Person actually is reduced by a deduction, reduction of income or entitlement to refund or credit.

If any Governmental Authority is entitled to take collection action in respect of any claim in respect of Taxes in connection with which Purchaser asserts any right of indemnity against Sellers, notwithstanding the defense relating thereto, or if an amount has to be paid in order to advance the claim in respect of Taxes, Sellers shall pay or cause to be paid such amount that is subject to such collection action or that is required to be so paid to the relevant Governmental Authority within the time required by applicable Law.

Upon the occurrence of a Tax indemnification event, (i) to the extent that the total of the amounts previously paid by the Sellers in respect of the relevant Indemnified Taxes is less than the amount so determined to be the amount of the Indemnified Taxes, the Sellers shall forthwith (and, in any event, within fifteen (15) days of the time that the Purchaser notifies the Sellers of the occurrence of the Tax indemnification event) pay to Purchaser the amount of the Indemnified Taxes less the total of the amounts previously paid, and (ii) to the extent that the total of the amounts previously paid by the Sellers in respect of such Indemnified Taxes exceeds the amount so determined to be the amount of the Indemnified Taxes, Purchaser shall forthwith upon receipt or confirmation of any refund or credit of such Indemnified Taxes (and, in any event, within fifteen (15) days of the receipt or confirmation of such refund or credit) pay to the Sellers the amount of such refund or credit (including any interest paid or credited with respect thereto but net of any Taxes payable by the Purchaser in respect of such refund, credit or interest).

Release of the Aggregate Escrow Amount and the Escrowed Shares

Right of Set-Off

Date, Time and Place of Closing

Effective Time

Non Merger

Closing Deliveries of the Sellers and the Corporation.

a factual certificate of an officer of the Seller containing (A) the articles and by-laws of such Seller, including all amendments thereto, (B) the resolutions of the directors of such Seller approving the entry into and completion of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, and (C) a list of the officers and directors authorized to sign agreements on behalf of such Seller, together with their specimen signatures, all in form and substance satisfactory to the Purchaser, acting reasonably;

a factual certificate of an officer of the Corporation containing (A) the articles and by laws of the Corporation, including all amendments thereto, (B) a resolution of the directors of the Corporation approving the entry into and completion of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, and (C) a list of the officers and directors authorized to sign agreements on behalf of the Corporation, together with their specimen signatures, all in form and substance satisfactory to the Purchaser, acting reasonably;

a certificate of good standing with respect to the Corporation issued by the appropriate Governmental Authority of its jurisdiction of incorporation;

the [***Redacted – Commercially Sensitive Information***] Subscription Agreement duly executed by [***Redacted – Commercially Sensitive Information***];

the [***Redacted – Commercially Sensitive Information***] Subscription Agreement duly executed by [***Redacted – Commercially Sensitive Information***];

the Closing Shareholders Agreement duly executed by the Corporation, [***Redacted – Commercially Sensitive Information***] Inc. and [***Redacted – Commercially Sensitive Information***] Inc.;

evidence, in form and substance reasonably satisfactory to Purchaser, that all Encumbrances, other than Permitted Encumbrances and Encumbrances which shall be discharged following Closing in accordance with the undertakings from the applicable Payoff Creditor, on any Property have been released and validly discharged, including any security interests registered in connection with any Shareholder Loan;

the [***Redacted – Commercially Sensitive Information***] Agreement duly executed by [***Redacted – Commercially Sensitive Information***], [***Redacted – Commercially Sensitive Information***] and the Corporation;

evidence, in form and substance reasonably satisfactory to Purchaser, of the issuance of the Grow Capital Shares to Grow Capital Partners in partial repayment of the Grow Capital Debt in accordance with the Grow Compensation Agreement;

evidence, in form and substance reasonably satisfactory to Purchaser, that the Payoff Letters have been signed and delivered in such manner as may be directed by each Payoff Creditor in accordance with Section 2.6 including an undertaking from each Payoff Creditor that they will discharge the security interests relating to the debt;

the Books and Records and the Corporate Records, which the Sellers shall cause to be located at the Montreal offices of the Corporation’s legal counsel, Blake, Cassels & Graydon LLP, which shall constitute delivery of the Books and Records and the Corporate Records hereunder, as well as all keys and passcodes or security codes to access the Property, including any Leased Properties, of the Corporation;

irrevocable stock transfer powers of attorney executed in blank by each of the Sellers in connection with their respective Purchased Shares, certificates representing the Purchased Shares issued to Purchaser, duly executed by the required officer(s) and/or director(s) of the Corporation and the cancelled share certificates representing the Purchased Shares, together with evidence satisfactory to Purchaser that Purchaser has been entered into the Corporate Records as the holder of record of the Purchased Shares;

all Required Consents and Authorizations, in form and substance acceptable to the Purchaser, acting reasonably;

the Non-Competition Agreements, duly executed by the Corporation, the Principals and the Sellers;

the Lock-up Agreements duly executed by the Sellers;

the Escrow Agreement duly executed by the Sellers and the Escrow Agent;

mutual release between the Principals and Sellers, on one hand, and the Corporation, on the other hand, in each case in a form satisfactory to the Purchaser, acting reasonably;

resignation and mutual releases, effective as of the Closing Date, duly executed by each of the directors and/or officers of the Corporation, in each case in a form satisfactory to the Purchaser, acting reasonably;

the Employment Agreements duly executed by [***Redacted – Personally Identifying Information***];

the termination of [***Redacted – Personally Identifying Information***] consulting agreement with the Corporation;

the Closing Promissory Note duly executed on behalf of the Corporation;

evidence of the [***Redacted – Commercially Sensitive Information***] Divestiture, in form and substance satisfactory to the Purchaser, acting reasonably;

a release executed by each of the employees who received a Transaction Bonus Payment, in form and substance satisfactory to the Purchaser, acting reasonably;

evidence of termination of the [***Redacted – Personally Identifying Information***] Agreement, in form and substance satisfactory to the Purchaser, acting reasonably, including the termination of all obligations that survive the termination of the agreement;

evidence of termination of the Options and that the Corporation is fully released by all former holders of any such Options of any obligation or liability with respect to such terminated Option, in form and substance satisfactory to the Purchaser, acting reasonably;

evidence of the termination of the Shareholders’ Agreement;

Electronic copies of all of the documents uploaded to the Data Room established by or on behalf of the Corporation, including those documents uploaded thereto as of the date of this Agreement; and

a duly executed receipt by each Seller with respect to the Purchase Consideration payable at Closing.

Closing Deliveries of the Purchaser.

a factual certificate of the officer of the Purchaser containing (A) the articles and by-laws of the Corporation, including all amendments thereto, (B) the resolutions of the directors of the Corporation approving the entry into and completion of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, and (C) a list of the officers and directors authorized to sign agreements on behalf of the Corporation, together with their specimen signatures, all in form and substance satisfactory to the Purchaser, acting reasonably;

a certificate of good standing with respect to Purchaser issued by the appropriate Governmental Authority of its jurisdiction of incorporation;

the Escrow Agreement duly executed by the Purchaser;

the Minority Interest Subscription Agreements duly executed by the Corporation;

the Closing Shareholders Agreement duly executed by the Purchaser;

the Non-Competition Agreements duly executed by the Purchaser;

the Lock-up Agreements duly executed by the Purchaser;

evidence of the TSX Approval and of the NASDAQ Notification in respect of the issuance and listing of the Village Farms Shares issuable pursuant to this Agreement;

evidence of the issuance of the DRS advice statements with respect to the Closing Village Farms Shares (or Purchaser shall alternatively provide evidence to Sellers of a signed and delivered irrevocable treasury direction of Purchaser to its transfer agent to promptly issue such restricted DRS advice statements to Sellers), or, to the extent physical share certificates are issued with respect to the Closing Village Farms Shares, Sellers shall receive PDF copies of the originally executed share certificates evidencing such Closing Village Farms Shares at the Closing, with originals to be delivered to the Sellers’ Representative within five (5) Business Days following Closing;

evidence of the issuance of the DRS advice statement to the Escrow Agent with respect to the Escrowed Shares (or Purchaser shall alternatively provide evidence to Sellers of a signed and delivered irrevocable treasury direction of Purchaser to its transfer agent to promptly issue such restricted DRS advice statement to Escrow Agent), or, to the extent physical share certificates are issued with respect to the Escrowed Shares, Sellers shall receive PDF copies of the originally executed share certificates evidencing such Escrowed Shares at the Closing, with originals to be delivered to the Escrow Agent within five (5) Business Days following Closing;

a duly executed receipt by Purchaser for the Purchased Shares; and

the payment and share issuances referred to at Section 2.5.

Delivery of Escrow Agreement, the Escrowed Cash and Escrowed Shares.

Post-Closing Filings and Authorizations

Use of Name

Transferred Information

After the completion of the transactions contemplated by this Agreement, the Recipient agrees to:

use and disclose the Transferred Information under its control only for those purposes for which the Transferred Information was initially collected, permitted to be used or disclosed, unless:

the Disclosing Party or Recipient have first notified the individual about whom the Transferred Information related of any additional purpose, and where required by applicable Law, obtained the consent of such individual to such additional purpose, or

such use or disclosure is permitted or authorized by applicable Law, without notice to, or consent from, such individual;

protect the Transferred Information under its control by making reasonable security arrangements against such risks as unauthorized access, collection, use, disclosure, copying, modification, disposal or destruction; providing, however, that such arrangements include, at a minimum, safeguards that are appropriate to the sensitivity of such Transferred Information; and

give effect to any withdrawal of consent made by an individual to whom the Transferred Information under its control relates.

Where required by applicable Law, the Purchaser further agrees to promptly notify the individuals about whom the Transferred Information relates that the transactions contemplated by this Agreement and the Transaction Documents have taken place and that their Transferred Information has been disclosed.

Preparation of Tax Returns and Tax Covenants

The Sellers’ Representative shall prepare, and Purchaser shall cause the filing of, all Tax Returns for the Corporation due after the Closing Date in respect of all Pre-Closing Tax Periods other than Straddle Periods (for which Tax Returns have not been filed as of the Closing Date) (collectively, the “Stub Period Returns”). All Stub Period Returns must be prepared and filed on a timely basis consistent with the Corporation’s existing procedures for preparing such Tax Returns and in a manner consistent with prior practice with respect to the treatment of specific items on the Tax Returns (unless such treatment is, in the reasonable determination of the Sellers’ Representative or Purchaser, contrary to applicable Law), provided that, notwithstanding any prior practice, the maximum amount of any discretionary deductions, allocations or credits shall be claimed but no provision or reserve (including in respect of deferred revenues, warranties, doubtful accounts and unpaid amounts) shall be claimed if any amount in respect thereof would be required to be included in the income of any Purchaser Indemnified Person in any Tax period other than a Pre-Closing Tax Period, except to the extent of such amount in respect thereof that is reflected in the final Closing Statement. No later than thirty (30) days in the case of an income Tax Return, and ten (10) days in the case of any other Tax Return, prior to the due date for filing such Tax Return with the appropriate Governmental Authorities, Sellers’ Representative shall provide Purchaser with a substantially final draft of the Stub Period Return (the “Draft Return”), except in the case of Stub Period Return not in respect of income taxes which shall be provided to the Purchaser in a timely manner. Purchaser and its accountants have the right to review the Draft Return and any working papers relating to its preparation and the Sellers’ Representative shall incorporate their reasonable comments in the Stub Period Returns. After the date that Purchaser receives the Draft Return and within 120 days following the Closing Date (but in no event later than 30 days prior to the due date of any such Stub Period Return), or, in the case of a Stub Period Return not in respect of income taxes, in a timely manner, Purchaser shall advise Sellers’ Representative in writing that it either:

agrees that the Draft Return was prepared in accordance with the principles set out above; or

does not agree that it was so prepared, in which case Purchaser shall set out, in reasonable detail, the basis for such disagreement.

If Purchaser notifies Sellers’ Representative of a disagreement pursuant to Section 9.4(a)(ii), Sellers’ Representative and Purchaser shall attempt to resolve such disagreement; provided, however, that if Sellers’ Representative and Purchaser fail to reach agreement, then the disagreement shall be resolved by the Accountants. The fees and expenses of the Accountants in making any such determination will be borne 50% by Sellers and 50% by Purchaser. Such disagreement shall otherwise be resolved in accordance with the procedure set forth in Section 2.8(c) mutatis mutandis. The decision as to whether or not to make an election under Subsection 256(9) of the Tax Act in respect of the taxation year of the Corporation ending as a result of the completion of the transaction of purchase and sale contemplated in this Agreement is within the control of Purchaser.

Purchaser shall pay, as an adjustment to the Purchase Consideration, to the Sellers’ Representative for the benefit of Sellers within five Business Days of receipt, the amount of any refund of Taxes or credit against Taxes payable, other than any (i) refund of Taxes or credit against Taxes payable taken into account in the final Closing Statement, (whether actually received or applied as a credit or offset against Taxes payable) (plus the after tax amount of any interest paid thereon and net of any reasonable expenses incurred directly by Purchaser or the Corporation in connection therewith), where such refund or credit is a refund or credit of Taxes paid or incurred in a Pre-Closing Tax Period of the Corporation and (ii) any SRED Amount. At the reasonable request of the Sellers’ Representative, Purchaser and the Corporation shall, and shall cause each of their respective Affiliates to, execute such documents and take reasonable additional actions and otherwise reasonably cooperate as may be necessary for Purchaser, the Corporation or any of their respective Affiliates to receive and obtain all such refunds or credits, subject to reimbursement by Sellers of any reasonable expenses incurred directly in connection therewith. Purchaser and the Corporation shall not, and shall not permit any of their respective Affiliates to, voluntarily forfeit, fail to collect or otherwise minimize any such refund or credit. Notwithstanding anything in this Agreement to the contrary, in the event that all or any portion of any such refund or credit is subsequently disallowed by any Governmental Authority, the Sellers’ Representative shall promptly return an amount equal to any such disallowed amounts (plus any interest in respect of such disallowed amounts owed to a Governmental Authority) to the Purchaser. Nothing herein shall require that the Purchaser make any payment to the Sellers with respect to (a) any refund or credit of Taxes that is the result of the carrying back of any net operating loss or other Tax attribute or tax credit incurred or generated at or after the Closing Time; (b) any refund or credit of Taxes resulting from the payment of Taxes made on or after the Closing Time to the extent that such payments are in relation to Taxes arising on or after the Closing Time for which the Sellers have not indemnified the Purchaser or the Corporation for such Taxes; or (c) any refund or credit of Taxes that gives rise to a payment obligation by the Corporation to any Person (other than to the Sellers) under Law or pursuant to a provision of a Contract or other agreement entered (or assumed) by the Corporation on or prior to the Closing Time and for greater certainty, any such refund or credit, or portion thereof, shall be for the sole benefit of the Purchaser or the Corporation, as applicable.

If the Corporation receives a SRED Amount after the Closing Time that has not been taken into account in the final Closing Statement, then Purchaser shall remit to the Sellers’ Representative an amount equal to such SRED Amount for distribution to the Sellers based on their Pro Rata Share of the Purchase Consideration as per allocation in Exhibit A, less any reasonable out-of-pocket costs incurred in connection with such receipt and net of any Taxes incurred or to be incurred by the Corporation with respect to such SRED Amount. Notwithstanding anything in this Agreement to the contrary, in the event that all or any portion of such SRED Amount is subsequently disallowed by any Governmental Authority, the Sellers’ Representative shall promptly return an amount equal to any such disallowed amounts (plus any interest in respect of such disallowed amounts owed to a Governmental Authority) to the Purchaser. All payments made under this Section 9.4(d) shall constitute an adjustment to the Purchase Consideration on a dollar-for-dollar basis to the extent permitted by applicable Law.

Purchaser and the Corporation shall not, without the prior written consent of the Sellers’ Representative which shall not be unreasonably withheld or delayed, amend any Tax Return in respect of a Pre-Closing Tax Period.

The Purchaser shall (and shall cause the Corporation and their respective Representatives to) and the Sellers shall (and shall cause the Sellers’ Representative to): (a) provide the other Party and its Representatives with such assistance as may be reasonably requested in connection with the preparation of any Tax Return, including the filing of any claim for refund or credit resulting from a carry-back of any Tax losses, or any audit or other examination by any Governmental Authority or judicial or administrative proceeding relating to Taxes with respect to the Corporation; (b) retain and provide the other Party and its Representatives with reasonable access to all records or information that may be relevant to such Tax Return, audit, examination or proceeding, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided thereunder, provided that the foregoing shall be done at the expense of the Party making such request and in a manner so as not to interfere unreasonably with the conduct of the business of the Parties; and (c) provide any information necessary or reasonably requested to allow compliance with any information reporting or withholding requirements contained in Laws.

If it is determined that the Corporation or any of the Subsidiaries made an “excessive eligible dividend designation” (as defined in subsection 89(1) of the Tax Act), the Sellers hereby concur (or shall cause the recipient of the relevant dividend to concur) in the making of an election under subsection 185.1(2) of the Tax Act in respect of the full amount thereof, and such election shall be made by the Corporation in the manner and within the time prescribed by subsections 185.1(2) and 185.1(3) of the Tax Act.

If it is determined that the Corporation has made an election under subsection 83(2) of the Tax Act in respect of the full amount of any dividend payable by it on shares of any class of its capital stock and the full amount of such dividend exceeded the amount of such corporation’s “capital dividend account” (as defined in the Tax Act) immediately before the dividend became payable, the Sellers hereby concur (or shall cause the recipient of the relevant dividend to concur) in the making of an election under subsection 184(3) of the Tax Act in respect of such dividend.

The Purchaser shall prepare and cause the filing of all Tax Returns for the Corporation due after the Closing Date in respect of all Straddle Periods (collectively the “Straddle Period Returns”). All Straddle Period Returns must be prepared and filed on a timely basis and in a manner consistent with the Corporation’s prior practices (unless such practices are, in the reasonable determination of the Purchaser, contrary to applicable Law) and consistent in all respects with the representations and warranties in respect of tax matters contained herein.

At least thirty (30) days prior to the date on which any such Straddle Period Returns are due to be filed, the Purchaser shall provide the Sellers’ Representative with a substantially final draft of such Straddle Period Returns, except in the case of Straddle Period Returns not in respect of income Taxes which shall be provided to the Purchaser in a timely manner. The Sellers’ Representative shall have the right to review such draft returns and provide the Purchaser with comments no later than five days prior to the date on which such Straddle Period Returns are due to be filed.

The Purchaser shall incorporate the Sellers’ Representative reasonable comments in the Straddle Period Returns prior to filing.

The Sellers shall pay all Taxes that are payable as determined with reference to the Stub Period Returns or that are payable with reference to the portion of any Straddle Period Return for the Pre-Closing Tax Period (as determined under Section 9.4(m)), except to the extent such Taxes were reflected in the final Closing Statement or in respect of which the Sellers have indemnified the Purchaser pursuant to Section 6.1(c).

In the case of Taxes that are payable with respect to a Straddle Period, the portion of any such Tax that is allocable to the Pre-Closing Tax Period will be:

in the case of Taxes that are either (i) based upon or related to income or receipts or (ii) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), deemed equal to the amount which would be payable if the taxable period ended immediately prior to the Closing Time; and

in the case of Taxes that do not fall within (i) above, multiplied by a fraction the numerator of which is the number of calendar days in the Straddle Period prior to the Closing Time and the denominator of which is the number of calendar days in the entire relevant Straddle Period.

Rollover Elections.

At the request of a Seller, the Parties covenant and agree to execute and deliver in a timely manner (i) a rollover agreement and (ii) elections pursuant to subsection 85(1) or 85(2), as the case may be, of the Tax Act and under the comparable provisions of any applicable provincial income tax legislation in respect of the transfers contemplated by this Agreement at such elected amount requested by such Seller (the “Rollover Shareholder”), subject to the limitations set forth in the Tax Act and under comparable provisions of any applicable provincial income tax legislation, and to otherwise cooperate in such regard with the intention that the election will result in the disposition of the Purchased Shares on a partially or totally tax-deferred basis to such Seller for purposes of the Tax Act and under the comparable provisions of any Canadian provincial income tax legislation. In connection with the foregoing:

Purchaser agrees that provided two signed copies of the necessary election forms, duly completed with the details of the property transferred in respect of which such Rollover Shareholder is making an election, are delivered by a Seller desiring to make such an election on or before 90 days after the Closing Date to Purchaser, and the applicable elected amount for purposes of the election in respect of such property, subject to such election form complying with applicable Law, such forms will be signed by an appropriate signing officer of Purchaser, and returned to such Seller within 30 days for filing by such Seller with the relevant Governmental Authority.

Each Rollover Shareholder desiring to make such an election and Purchaser shall, file each of the elections referred to in this Section 9.5, as described above, in time and form required by applicable Law.

Notwithstanding the foregoing, Purchaser shall not have any responsibility whatsoever and shall not in any way be obligated to indemnify Sellers in respect of any loss or damage that may be suffered by reason of any inaccuracy or incompleteness of any election forms and any Seller who files such an election shall not have any responsibility whatsoever and shall not in any way be obligated to indemnify Purchaser in respect of any loss or damage that may be suffered by reason of any inaccuracy or incompleteness of any election forms.

Access to Books and Records

Registration Statement

The Purchaser has filed a Registration Statement on Form S-3 (the “Registration Statement”) registering the resale from time to time of Village Farms Shares by selling security holders generically. The Purchaser shall file a prospectus supplement (pursuant to Rule 424(b) under the U.S. Securities Act) to the Registration Statement identifying the Sellers as selling securityholders of Registrable Shares (each, a “Prospectus Supplement”) within four (4) months of the later of (i) the date on which such Registrable Shares are issued to and acquired by the Sellers, or (ii) the date that the Sellers have furnished (y) in writing to the Purchaser such information regarding such Seller, the Registrable Shares held by such Seller and the intended method of disposition of the Registrable Shares in the form as shall be reasonably acceptable to the Purchaser, and (z) such executed documents from such Seller that are necessary for compliance with SEC rules and regulations in connection with such registration and/or otherwise customary of a selling shareholder in similar situations (such later date, the “Prospectus Supplement Filing Deadline”). The Purchaser shall provide prompt notice to the Sellers’ Representative of the filing of the applicable Prospectus Supplement. The obligations of the Purchaser in this Section (a) shall be subject to the timely cooperation of the Sellers in providing the information and executing any documents as contemplated in the immediately preceding sentence, and any Seller who fails to provide all requested information for purposes of disclosure in the applicable Prospectus Supplement, as applicable, by the Prospectus Supplement Filing Deadline may be excluded from such Prospectus Supplement. As of the date of the applicable Prospectus Supplement, the Registration Statement (together with such Prospectus Supplement) will comply in all material respects with the provisions of the U.S. Securities Act, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not false or misleading (a “Material Misstatement”); provided, however, that none of the provisions of the preceding sentence shall apply to statements in or omissions from the Registration Statement (together with any applicable Prospectus Supplement) made in reliance upon and in conformity with information furnished solely by the Sellers for use in the Registration Statement and/or any applicable Prospectus Supplement. As soon as practicable after a Prospectus Supplement being filed with the SEC, the Purchaser will issue and deliver to the Purchaser’s transfer agent an irrevocable treasury order authorizing such transfer agent, as the registrar and transfer agent for the Village Farms Shares, to remove all legends on the Village Farms Shares that are included as Registrable Shares in such Prospectus Supplement. Notwithstanding the foregoing, the Purchaser’s sole obligation with respect to such legend removal shall be the delivery of such treasury order, and the Purchaser shall have no liability to any Seller or any other Party, and shall not be deemed to have made any representation or assurance, with respect to the actual time elapsed between the submission of such treasury order and the removal of any such applicable legends. It is understood and acknowledged that the only evidence that the Sellers whose legends are so removed shall be unlegended DRS advice statements issued by the Purchaser’s transfer agent and, accordingly, it is the sole responsibility of any such Sellers to instruct their respective securities brokers to move such unlegended DRS advice positions into electronic book-entry positions to facilitate open market transactions over the NASDAQ or the TSX.

The Purchaser shall (i) give the Sellers’ Representative the opportunity to review and comment on each Prospectus Supplement, any amendments to each such Prospectus Supplement, and, to the extent not prohibited by Law, related written correspondence with the SEC before the applicable Prospectus Supplement and any such amendment is filed with or provided to the SEC in final form, (ii) notify the Sellers’ Representative promptly of the time when any supplement or amendment to the Registration Statement that relates to resales of Registrable Shares by the Sellers has been filed, and of the issuance of any stop order or suspension of the registration under the U.S. Securities Act of the Village Farms Shares to be resold under the Registration Statement, (iii) if applicable, make all necessary filings under the U.S. Securities Act and applicable state securities or “Blue Sky” laws and the rules and regulations thereunder for the issuance of Village Farms Shares under this Agreement, and timely obtain any actions, consents approvals or waivers required in connection therewith, and (iv) if applicable, notify NASDAQ of the Village Farms Shares to be issued pursuant to this Agreement in accordance with NASDAQ rules and regulations.

Each Seller shall comply with all U.S. and/or Canadian federal, state and/or provincial securities Laws applicable to such Seller in connection with the resale of Registrable Shares pursuant to the Registration Statement and/or the applicable Prospectus Supplement. The Purchaser shall notify each Seller promptly upon the Purchaser’s reasonable determination in its good faith judgment that the Registration Statement or any supplement to any prospectus forming a part of the Registration Statement (including any Prospectus Supplement) contains a Material Misstatement. In the case of any such notice, the Purchaser shall use best efforts to supplement or amend such prospectus as promptly as practicable so that such prospectus will not contain such Material Misstatement and shall provide a copy of such supplemented or amended prospectus to each Seller as promptly as practicable, but no later than three (3) Business Days following the filing thereof with the SEC. Upon being notified by the Purchaser of any Material Misstatement, each Seller shall refrain from selling any Registrable Shares pursuant to the Registration Statement until such holders of Village Farms Shares receive from the Purchaser copies of a supplemented or amended prospectus prepared and filed by the Purchaser, or until the Purchaser notifies such Sellers in writing that the then current prospectus may be used.

Following the effectiveness of the Registration Statement, the Purchaser shall use commercially reasonable efforts to cause the Registration Statement to be continuously effective until earlier of (i) July 11, 2024 (the expiration date of the Registration Statement) and (ii) such time as the Registrable Shares represent less than one percent (1%) of the outstanding Village Farms Shares (such period, the “Registration Period”). If the Registration Statement ceases to be effective under the U.S. Securities Act for any reason at any time during the Registration Period, the Purchaser shall use its best efforts to promptly cause such Registration Statement to again become effective under the U.S. Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Registration Statement), and in any event shall within thirty (30) days of such cessation of effectiveness, amend such Registration Statement in a manner reasonably expected to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement or, file an additional registration statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the U.S. Securities Act registering the resale from time to time by Sellers thereof of all securities that are Registrable Shares as of the time of such filing. If such an additional registration statement is filed, the Purchaser shall use its reasonable efforts to (a) cause such additional registration statement to become effective under the U.S. Securities Act as promptly as is reasonably practicable after such filing, and (b) keep such additional registration statement (or another additional registration statement) continuously effective until the end of the Registration Period. The Purchaser shall supplement and amend the Registration Statement or additional registration statement contemplated hereunder if required by the rules, regulations or instructions applicable to the registration form used by the Purchaser for such registration statement if required by the U.S. Securities Act or as reasonably requested by the Sellers.

From the date of this Agreement until the end of the Registration Period, the Purchaser shall use best efforts to make and keep public all of the issuer information contemplated by Rule 144 under the U.S. Securities Act, and file with the SEC in a timely manner all reports and other documents required to be filed by the Purchaser under the U.S. Securities Act and the U.S. Exchange Act, in each case in order to permit resale of the Village Farms Shares issued as the Share Consideration in compliance with Rule 144 under the U.S. Securities Act.

All expenses (other than Registrable Shares Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 9.7, including all registration, filing, and qualification fees, printers’ and accounting fees, and fees and disbursements of counsel for the Purchaser shall be borne and paid by the Purchaser. All Registrable Shares Selling Expenses relating to Registrable Shares registered pursuant to this Section 9.7 shall be borne and paid by the Sellers according to their Pro Rata Shares.

To the extent permitted by law, the Purchaser will indemnify and hold harmless each Seller named in the Registration Statement and/or a Prospectus Supplement, and ; legal counsel and accountants for each such Seller; any underwriter (as defined in the U.S. Securities Act) for each such Seller; and each Person, if any, who controls each such Seller or underwriter within the meaning of the U.S. Securities Act, against any liabilities under the U.S. Securities Act from the offer and sale of any the Village Farms Shares pursuant to the Registration Statement and/or the applicable Prospectus Supplement, and the Purchaser will pay to each such Seller, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any Legal Proceeding from which such liabilities under the U.S. Securities Act may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 9.7(g) shall not apply to amounts paid in settlement of any such Legal Proceeding if such settlement is effected without the consent of the Purchaser, which consent shall not be unreasonably withheld, nor shall the Purchaser be liable under this Section 9.7(g) to the extent that they arise out of or are based upon actions or omissions (i) made in reliance upon and in conformity with written information furnished by or on behalf of any such Seller, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with the Registration Statement and/or the applicable Prospectus Supplement, or (ii) due to any Seller’s failure to deliver an amended or supplemental prospectus furnished to such Seller by the Purchaser, if required by Law to have been delivered, if such loss, liability, claim, damage, judgment or expense would not have arisen had such delivery occurred.

To the extent permitted by law, each Seller named in the Registration Statement and/or a Prospectus Supplement, severally and not jointly, will indemnify and hold harmless the Purchaser, and each of its directors, each of its officers who has signed the Registration Statement, each Person (if any), who controls the Purchaser within the meaning of the U.S. Securities Act, legal counsel and accountants for the Purchaser, any underwriter (as defined in the U.S. Securities Act), each other Seller, and any controlling Person of any such underwriter or other Seller, against any liabilities under the U.S. Securities Act arising from the offer and sale of any the Village Farms Shares pursuant to the Registration Statement and/or the applicable Prospectus Supplement, in each case only to the extent that such liabilities under the U.S. Securities Act arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such Seller expressly for use in connection with such Registration Statement and/or Prospectus Supplement; and each such Seller will pay to the Purchaser and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any such Legal Proceeding from which such liabilities under the U.S. Securities Act may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 9.7(h) shall not apply to amounts paid in settlement of any such Legal Proceeding if such settlement is effected without the consent of such applicable Seller, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by such Seller by way of indemnity or contribution under this Section 9.7(h) exceed the proceeds from the offering received by such Seller (net of any selling expenses paid by such Seller), except in the case of fraud or willful misconduct by such Seller.

The Sellers hereby agree and acknowledge that (i) nothing in this Section 9.7 shall confer upon Sellers any piggyback registration rights with respect to any Village Farms Shares, and the Purchaser shall have no obligation to conduct any underwritten offerings in respect of any resales of Village Farms Shares under the Registration Statement; and (ii) the Purchaser shall have no obligation to deliver any legal opinions, negative assurance disclosure letters or comfort letters in connection with any such resales (except for any legal opinions customarily required by the transfer agent of the Purchaser to facilitate the removal of legends upon filing of the applicable Prospectus Supplement).

Designation of Sellers’ Representative

Sellers do hereby irrevocably appoint [***Redacted – Commercially Sensitive Information***] as their representative, true and lawful attorney-in-fact, mandatary, fondé de pouvoir and agent (the “Sellers’ Representative ”), with full power of substitution or re-substitution, to act for and on behalf of Sellers with respect to all matters of Sellers under this Agreement, the other Transaction Documents to which any of the Sellers is a party and the Sellers’ Representative hereby accepts such appointment., and in connection therewith, Sellers’ Representative is authorized for and on behalf of Sellers to do or refrain from doing all such further acts and things, and to execute all such documents as Sellers’ Representative shall deem necessary or appropriate in connection with the transactions contemplated by this Agreement, including the power:

to act for Sellers with regard to matters pertaining to indemnification referred to in this Agreement, including the power to compromise any indemnity claim on behalf of Sellers and to transact matters of litigation, and to act for Sellers under the Escrow Agreement;

to act for Sellers with respect to matters pertaining to the Closing Statement and the final Closing Statement and resolution of any disputes in connection therewith;

to execute and deliver all amendments, waivers, ancillary agreements, stock transfer powers, certificates and documents that Sellers’ Representative deem necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents to which any of the Sellers is a party;

to receive funds, make payments of funds, and give receipts for funds;

to receive funds for the payment of expenses of Sellers and apply such funds in payment for such expenses;

to do or refrain from doing any further act or deed on behalf of Sellers that Sellers’ Representative deem necessary or appropriate in their sole discretion relating to the subject matter of this Agreement as fully and completely as Sellers could do if personally present; and

to receive and provide notices in connection with any claims under this Agreement.

All notices required to be made or delivered by Purchaser to Sellers described in this Agreement shall be made to Sellers’ Representative for the benefit of Sellers.

Sellers hereby confirm all that Sellers’ Representative shall do or cause to be done by virtue of its appointment as the representative of Sellers hereunder.

Sellers’ Representative shall act for Sellers on all of the matters set forth in this Agreement in the manner Sellers’ Representative believe to be in the best interest of Sellers and consistent with the obligations of Sellers under this Agreement, but Sellers’ Representative shall not be responsible to any Seller for any loss or Damages which such Seller may suffer by the performance of Sellers’ Representative’s duties under this Agreement, other than loss or Damages arising from willful violation of the Law or gross negligence in the performance of such duties under this Agreement. Sellers’ Representative shall not have any duties or responsibilities except those expressly set forth in this Agreement, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or shall otherwise exist against Sellers’ Representative.

Reliance

Indemnification

Expenses of Sellers’ Representative

Reliance by Purchaser

Replacement

Survival

Notices

to Purchaser at:

to each Seller, at the address indicated on its signature page;

to Sellers’ Representative at:

Entire Agreement

Amendments

Press Release and Related Public Filings

Waiver

Severability

Other Remedies

Assignments

This Agreement will become effective when executed by the Parties and thereafter will be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.

Except as otherwise provided in this Section 11.7, neither this Agreement nor any of the rights, duties or obligations under this Agreement are assignable or transferable by a Party without the prior written consent of the other Parties. Any attempt to assign any of the rights, duties or obligations in this Agreement without such written consent is void.

Purchaser may, upon giving written notice to the Sellers, at any time on or prior to the Closing Time, assign its rights and obligations under this Agreement to an Affiliate, provided that no such assignment or transfer shall relieve the Purchaser of its obligations under this Agreement and that the Purchaser and its Affiliate shall remain solidarily bound by the terms and conditions of this Agreement so assigned.

Third Party Beneficiaries

Time is of the Essence