PHASED DEVELOPMENT AGREEMENT. This Agreement dated for reference the day of, 2008

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1 BETWEEN: AND WHEREAS PHASED DEVELOPMENT AGREEMENT This Agreement dated for reference the day of, 2008 REGIONAL DISTRICT OKANAGAN-SIMILKAMEEN 101 Martin Street Penticton, B.C. V2A 5J9 (the "Regional District") WILLOW BEACH (GLD) DEVELOPMENTS LTD. (#BC ) 1126 Richards Street Vancouver, B.C. V6B 3E6 (the "Developer") OF THE FIRST PART OF THE SECOND PART A. The Developer is, or is entitled to become the owner of land legally described as: PID Lot 675, District Lot 2450S, Similkameen Division Yale District, Plan 2066 except Plans 22229, and H9726 PID Lot 1, District Lot 2450S Similkameen Division Yale District, Plan PID Lot 1, District Lot 2450S, Similkameen Division Yale District, Plan (see Plan as to limited access) (the "Lands"); B. The Developer has applied to the Regional District for an amendment to the Regional District's Electoral Area "A" Official Community Plan Bylaw No. 2260, 2004 by way of the Electoral Area "A" Official Community Plan Amendment Bylaw No , 2008 (the "OCP Amendment Bylaw"), and has applied for

2 - 2 - an amendment to the Regional District's Electoral Area "A" Zoning Bylaw No. 2261, 2004 by way of Electoral Area "A" Zoning Amendment Bylaw No , 2008 (the "Zoning Amendment Bylaw"), to permit the development on the Lands as generally depicted in Schedule "A" to this Agreement; C. The Developer has undertaken to provide certain amenities in conjunction with the development of the Lands and the parties wish to ensure that the provisions of the Zoning Amendment Bylaw continue to apply to the Lands for the period more particularly set out in this Agreement, that the Lands are developed in the phases and in the sequence identified herein, and that the amenities are provided in conjunction with the development of the Lands and in the sequence provided for in this Agreement; D. The Board of the Regional District has, by bylaw, authorized the execution of this Agreement. NOW THEREFORE in consideration of the mutual promises set out in this Agreement, the Developer and the Regional District agree pursuant to section of the Local Government Act as follows: 1.0 DEFINITIONS AND INTERPRETATION 1.1 In this Agreement: "Amenities" means: the dedication of the lands required under section 8.0; the improvements to the Lands required under sections 11.0 through 13.0; and (c) the Developer's contribution to the Regional Sewage Treatment Service required under section 14.7 of this Agreement. "Conservation Areas" means that part of the Lands being approximately 8.74 hectares and labeled as "CA" on the plan attached hereto as Schedule "E". "Development" means the development of the Lands as generally depicted on the Site Plan attached as Schedule "A" to this Agreement. "Development Phase" or "Phase" means a phase of the development, including all services and amenities contemplated or required in connection with that Phase, as depicted on the Phasing Plan (the "Phasing Plan") attached as Schedule "B" to this Agreement.

3 - 3 - "Fire Hall Site" means that part of the lands being approximately 0.14 hectares and labeled as "Fire Hall Site" on the Site Plan attached hereto as Schedule "A". "Force Majeure" means any act reasonably beyond the control of the party seeking to invoke the benefit of Force Majeure under this Agreement including but without restricting the generality thereof, severe weather conditions, lightning, earthquakes, fires, floods and storms, strikes, lockouts and industrial disturbances, any acts, rules, regulations, order or directives of any government or agency thereof, civil disturbances, explosions, transportation embargoes, or failure or delays in transportation, breakdown or mechanical or operational failure of any technical facilities, excessive electrical power fluctuations, excessive water pressure fluctuations, the order of any Court, or any other causes either herein enumerated or otherwise not reasonably within the control of such party; provided that financial incapacity, insolvency and general economic conditions shall not in any event constitute or be deemed to constitute an event of Force Majeure. "Phase 1" means that Phase of the Development numbered as Phase 1 on the Phasing Plan. "Phase 2" means that Phase of the Development numbered as Phase 2 on the Phasing Plan. "Phase 3" means that Phase of the Development numbered as Phase 3 on the Phasing Plan. "Phase 4" means that Phase of the Development numbered as Phase 4 on the Phasing Plan. "Phase 5" means that Phase of the Development numbered as Phase 5 on the Phasing Plan. "Qualified Professional" means: in respect of the preparation of any plan for work or improvements within the Conservation Areas or the Waterfront Park, or in the case of an Environmental Impact Assessment, or in respect of the preparation of any plan for work or improvements within the ALR Buffer Zone, a Registered Professional Biologist or Agrologist in good standing; in the case of water or sewer services to the Development, and the Waterfront Park parking area improvements required under sections 12.5 to 12.7, a member of the Association of Professional Engineers and Geoscientists in good standing with experience in the design and construction of local government services.

4 - 4 - "Specified Zoning Bylaw Provisions" means all those provisions of the Zoning Amendment Bylaw that are applicable to the Lands and that are adopted pursuant to section 903 of the Local Government Act. "Waterfront Park" means that part of the Lands being approximately 1.74 hectares and labeled as Area "P" on the plan attached hereto as Schedule "F". 1.2 The headings and captions are for convenience only and do not form a part of this Agreement and will not be used to interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. 1.3 The word "including" when following any general term or statement is not to be construed as limiting the general term or statement to the specific items or matters set forth or to similar terms or matters but rather as permitting it to refer to other items or matters that could reasonably fall within its scope. 1.4 A reference to currency means Canadian currency. 1.5 A reference to a statute includes every regulation made pursuant thereto, all amendments to the statute or to any such regulation in force from time to time, and any statute or regulation that supplements or supersedes such statute or any such regulation. 1.6 This Agreement shall be governed by and construed in accordance with and governed by the laws applicable in the Province of British Columbia. 1.7 A reference to time or date is to the local time or date in Penticton, British Columbia. 1.8 A word importing the masculine gender includes the feminine or neuter, and a word importing the singular includes the plural and vice versa. 1.9 A reference to approval, authorization, consent, designation, waiver or notice means written approval, authorization, consent, designation, waiver or notice A reference to a section means a section of this Agreement, unless a specific reference is provided to a statute. 2.0 SCHEDULES 2.1 The following Schedules are attached to and form part of this Agreement: Schedule "A" - Site Plan Schedule "B" - Phasing Plan Schedule "C" - Environmental Impact Assessment Report

5 - 5 - Schedule "D" - Riparian Enhancement Area Concept Plan/Riparian Enhancement Strategy and ALR Re-Vegetated Buffer Land Concept Plan Schedule "E" - Service Area for Conservation Area Schedule "F" - Service Area for Waterfront Park Schedule "G" - Waterfront Park Improvement Concept Plan Schedule "H" - Statutory Right of Way Schedule "I" - Section 219 Covenant for EIA 3.0 APPLICATION OF AGREEMENT 3.1 This Agreement applies to the Land and to no other land. 4.0 CONDITIONS PRECEDENT 4.1 Except for the Developer's and the Regional District's obligations under section 9.0, and except for the Developer's obligation under section 14.8, the obligations of the parties under this Agreement are subject to the Board of the Regional District Okanagan-Similkameen, in its sole and unfettered discretion, adopting both the OCP Amendment Bylaw and the Zoning Amendment Bylaw. 5.0 SPECIFIED ZONING BYLAW PROVISIONS 5.1 For the term of this Agreement, any amendment or repeal of the Specified Zoning Bylaw provisions shall not apply to the Land, subject to: (c) the express limits set out at section of the Local Government Act; the termination of this Agreement under section 7.0; and changes that the Developer agrees in writing shall apply. 6.0 TERM OF AGREEMENT 6.1 The term of this Agreement is ten (10) years from the date it is fully executed by the parties. 6.2 Subject to the approval of the Inspector of Municipalities being obtained pursuant to section 905.2(2)of the Local Government Act, prior to third reading of the Bylaw of the Regional District authorizing this Agreement, this Agreement may be extended by mutual consent of the Regional District and the Developer for up to two (2) additional renewal terms of five (5) years each provided that: the Developer is not in default of any of its obligations under this Agreement at the time of such extension;

6 - 6 - (c) the Regional District and the Developer agree in writing to an extension of this Agreement prior to the end of the Term, or renewal term as the case may be; and in no event shall the Term of this Agreement including all renewal terms be for a period of more than twenty (20) years. 6.3 In the event the approval of the Inspector of Municipalities is not obtained within the time contemplated under section 6.2, then this Agreement shall be for a period of ten (10) years only with no provision for renewal or extension. 7.0 TERMINATION 7.1 The parties may terminate this Agreement at any time by written agreement. 7.2 If the Developer does not comply with any of the provisions of sections 8.0 through 14.0 of this Agreement, the Regional District may at its option terminate this Agreement before the expiry of the Term by providing notice in writing to the Developer, provided that: (c) in the case of a failure on the Developer's part to pay a sum of money or to provide security for an obligation, the Regional District has, at least thirty (30) days prior to giving such notice, advised the Developer in writing of the alleged failure to pay or to provide the security (the "Default Notice") and the Developer has not corrected the failure to the reasonable satisfaction of the Regional District within that thirty (30) day period; in the case of any other failure on the Developer's part to comply with the provisions of sections 8.0 through 14.0 of this Agreement, the Regional District has, at least sixty (60) days prior to giving such notice, provided the Developer with a Default Notice in respect of such failure, and the Developer has not corrected the failure or deficiency in performance to the reasonable satisfaction of the Regional District, within that sixty (60) day period; or if a failure or deficiency (but for certainty, not including a failure to pay a sum of money or provide security as referred to in section 7.2 requires longer than sixty (60) days to remedy, the Developer has failed to substantially commence remedying such failure or deficiency within sixty (60) days after receipt of the Default Notice to the reasonable satisfaction of the Regional District and further has failed to diligently pursue remedying the failure or deficiency thereafter.

7 DEDICATION OF LAND TO REGIONAL DISTRICT 8.1 The Developer covenants that prior to the adoption of the OCP Amendment Bylaw and the Zoning Amendment Bylaw, it shall transfer to the Regional District the fee simple title to the following lands, free and clear of any financial charges or encumbrances: (c) the Conservation Lands; the Waterfront Park; the Fire Hall Site. 8.2 The Developer shall at its sole cost prepare all plans, transfer forms and other documents necessary to give effect to the transfers required to be made under section 8.1. Those transfers shall be effected by the Developer, at the Regional District's sole option, by: (c) the registration of one or more reference plans pursuant to section 99(1)(h) of the Land Title Act, creating each of the Conservation Areas, the Waterfront Park and the Fire Hall Site as separate legal parcels, together with the filing of the necessary Form A Transfers in favour of the Regional District ; a subdivision of the Land pursuant to Part 7 of the Land Title Act, creating each of the Conservation Areas, the Waterfront Park and the Fire Hall Site as separate legal parcels, together with the filing of the necessary Form A Transfers in favour of the Regional District; or in the case of the Waterfront Park, the registration of a subdivision plan dedicating the Waterfront Park as park pursuant to section 941(14) of the Local Government Act, and section 107 of the Land Title Act. 8.3 The Developer shall satisfy all legal requirements and conditions necessary to effect the transfers required under section 8.1, and shall obtain all necessary approvals required for any subdivision of the Lands necessary to effect those transfers, all at the Developer's sole cost. 8.4 Nothing in this Agreement shall prevent the Regional District from transferring or conveying any right, title or interest in or to the Conservation Areas, the Waterfront Park or the Fire Hall Site to any other party following the transfers referred to in section 8.1, or making any other use that the Regional District in its sole discretion considers to be in the public interest provided that: the transfer complies with all legal requirements of the Local Government Act;

8 - 8 - in the case of the Conservation Areas, the transferee covenants to the Regional District's satisfaction not to develop the Lands for any purpose other than to service the Conservation Area. 8.5 In the event the OCP Amendment Bylaw and Rezoning Bylaw are not finally adopted by the Regional District within twelve (12) months of the execution of this Agreement, then the Developer may at its sole option withdraw its application to amend the Electoral Area "A", Official Community Plan Bylaw No and the Electoral Area "A" Zoning Bylaw No. 2261, 2004, and in that event the Regional District shall to the extent permitted by law, and subject to any statutory pre-conditions, make reasonable efforts to effect a re-conveyance of the Conservation Areas, the Waterfront Park and the Fire Hall Site to the Developer at its cost. 9.0 DEVELOPMENT AND DEVELOPMENT PHASING 9.1 The Developer covenants that it shall not develop the Lands, disturb the surface of the Lands, cut or damage vegetation on the Lands or subdivide the Lands except in accordance with the terms of this Agreement. 9.2 The Developer covenants to develop and construct the Development in the Phases shown in the Phasing Plan attached to this Agreement as Schedule "B", such that all Development Phases are substantially completed on or before the expiry of the Term. For certainty, the Developer is not obliged to develop and construct the Phases in the numerical sequence shown on the Phasing Plan, however, the Developer must ensure that at least twenty (20%) percent of the commercial site shown on the Phasing Plan is substantially completed by or before substantial completion of each Phase. 9.3 For the purpose of this Agreement, "substantially completed" or "substantial completion" means that all requisite occupancy permits for all construction that is to occur within a Development Phase have been issued by the authority having jurisdiction, and that with respect to that Development Phase, the Developer has completed and fulfilled all of the Developer's obligations under this Agreement with respect to subdivision, servicing of that Development Phase, the transfer or dedication of lands to the Regional District, the provision of amenities, enhancement of the surface of the Lands and landscaping of the Lands, all to the satisfaction of the Regional District. 9.4 Except as expressly provided in this Agreement, nothing in this Agreement shall relieve the Developer from any obligation or requirement arising under any applicable statute, bylaw or regulation in respect of the subdivision and development of the Lands, and without limiting the generality of the forgoing, the Developer shall remain fully responsible to ensure that the development of the Lands is in full compliance with all requirements of the bylaws of the Regional

9 - 9 - District respecting land development, zoning, subdivision and building construction. 9.5 Without limiting the generality of section 9.4, in connection with any application for approval of subdivision or development of the Lands, the Developer must obtain all development permits required under the Electoral Area "A" Official Community Plan Bylaw No. 2260, 2004, as amended from time to time, and in respect of any subdivision must obtain the approval of the Approving Officer, and must comply with all applicable enactments and bylaws in connection with that subdivision. 9.6 The parties acknowledge that the Approving Officer is an independent statutory officer, and that nothing in this Agreement shall be interpreted as prejudicing or affecting the duties and powers of the Approving Officer in respect of any application to subdivide the Lands ENVIRONMENTAL IMPACT ASSESSMENT 10.1 The Developer acknowledges that the Lands and/or a portion of the Lands have been designated as a development permit area under the authority of section 919.1(1), and (e) of the Local Government Act. Accordingly, the Developer acknowledges its obligation to apply for and obtain development permit in accordance with the guidelines established under the Official Community Plan, prior to doing any of the following: (c) subdividing the Lands; constructing, adding to or altering any building or other structure on the Lands; altering the Lands in any way In addition to the requirements that may be imposed by the Regional District as a condition of the issuance of an environmentally sensitive development permit development permit, watercourse development permit or form and character development permit for each Phase of the Development, the Developer further covenants and agrees that in conjunction with any development permit or subdivision application made for the Lands, or any Development Phase, the Developer shall at its sole cost provide the Regional District with a detailed Environmental Impact Assessment Report (a "Detailed EIA") prepared by a Qualified Professional, analyzing and commenting on the activities proposed under the development permit application. The EIA must confirm, to the Regional District's sole satisfaction, that the proposal for the development of the Land contemplated under the development permit application substantially satisfies the general requirements for environmental protection of the Lands set out in the EIA that is attached to this Agreement as Schedule "C". Further, the

10 Developer must provide to the Regional District's satisfaction security for the Developer's obligation to develop the land in compliance with the approved Detailed EIA, such security to be provided prior to the issuance of any required development permit or any subdivision approval Without limiting the jurisdiction of the Regional District to impose conditions on any proposed development of the Lands or any Development Phase, pursuant to section 920(7) of the Local Government Act, the Regional District may require the Developer to take any measures or steps that are reasonably required, in the development of the Lands, in order to fulfill the conditions and recommendations of the EIA, and the Developer agrees to comply with any and all such conditions (whether the general EIA that is attached hereto or any EIA that is subsequently provided as contemplated herein) CONSERVATION AREA IMPROVEMENTS AND MAINTENANCE Riparian Area Enhancements 11.1 The Developer covenants and agrees to provide enhancements and improvements of the Conservation Areas in accordance with the following provisions of this Agreement Prior to any development or subdivision of a Development Phase, (for certainty, prior to the issuance of a development permit authorizing the subdivision or development of the first Phase to be developed), the Developer must provide the Regional District with a detailed riparian improvement plan for the Conservation Areas, prepared by a Qualified Professional, together with a detailed planting list and schedule of quantities and prices for the work certified by the Qualified Professional. The detailed riparian improvement plan must be generally in accordance with the Riparian Enhancement Area Concept Plan attached to this Agreement as Schedule "D", and generally in accordance with the EIA attached as Schedule "C", and must provide for construction of fencing along the full boundary of the Conservation Areas to the Regional District's satisfaction, and must be in a sufficiently detailed form to obtain all necessary regulatory approvals of the proposed riparian enhancement work, including but not limited to: an environmentally sensitive area development permit, watercourse development permit or form and character development permit from the Regional District; any necessary permits and approvals from the Ministry of Environment (British Columbia) ("MOE"), or Fisheries and Oceans Canada ("FOC") The detailed riparian improvement plan must be to the satisfaction of the Regional District, and must be accompanied by security in the form of an

11 irrevocable letter of credit, in a form satisfactory to the Regional District, and in the amount of one hundred, twenty (120%) percent of the estimated cost of completing the riparian improvement work, as certified by the Qualified Professional Upon the issuance of a development permit authorizing the riparian improvement work, and upon the receipt of all necessary permits or approvals from MOE and FOC, the Developer shall undertake the riparian improvement work and shall complete that work to the Regional District's satisfaction within twelve (12) months of all the said permits and approvals being issued. The Developer shall complete the riparian improvement work at its sole cost, and in full compliance with the terms and conditions of all such permits and approvals. In the event the Developer fails to complete the riparian improvement work within the time required under this section 11.4, the Regional District may draw upon the letter of credit provided under section 11.3 and may complete that work at the Developer's sole cost. Provided that in the event the Developer has with all due diligence pursued the completion of the riparian improvement work throughout the said twelve (12) month period and is prevented from completing that work within the time required due to an event of Force Majeure, the Developer may request that the Regional District consent to an extension of time of up to six (6) months for completion of that work, such consent not to be unreasonably withheld. Ongoing Maintenance of Conservations Areas 11.5 The Developer agrees to provide its approval, as the owner of the Lands, to the establishment of a Regional District service for the purpose of maintaining the Conservation Areas (and the riparian area improvements that are contemplated herein) provided that under the Service Establishment Bylaw: the maximum annual requisition for the Service does not exceed One Hundred Thousand ($100,000.00) Dollars; or the service area comprises the Lands shown on Schedule "E" hereto WATERFRONT PARK IMPROVEMENTS AND MAINTENANCE 12.1 The Developer covenants and agrees to provide enhancements and improvements of the Waterfront Park in accordance with the following provisions of this Agreement Prior to any development or subdivision of a Development Phase, ( for certainty, prior to the issuance of a development permit authorizing the subdivision or development of the first Phase to be developed), the Developer shall provide the Regional District with a detailed plan for the replanting of and the construction of amenities and improvements within the Waterfront Park, prepared by a Qualified

12 Professional, together with a detailed planting list and schedule of quantities and prices for the work certified by the Qualified Professional. The detailed Waterfront Park improvement plan must be generally in accordance with the Waterfront Park Improvement Concept Plan attached to this Agreement as Schedule "G", and must be in a sufficiently detailed form to obtain all necessary regulatory approvals of the proposed Waterfront Park improvement plan work, including but not limited to: an environmentally sensitive area/watercourse development permit from the Regional District; any necessary permits and approvals from the MOE or FOC The detailed Waterfront Park improvement plan must be to the satisfaction of the Regional District, and must be accompanied by security in the form of an irrevocable letter of credit, in a form satisfactory to the Regional District, and in the amount of one hundred, twenty (120%) percent of the estimated cost of completing the Waterfront Park improvements as certified by the Qualified Professional (including the Waterfront Park parking area improvements referred to in sections 12.5 and 12.6) Upon the issuance of a development permit authorizing the Waterfront Park improvement work, and upon the receipt of all necessary permits or approvals from MOE or FOC, the Developer shall undertake the Waterfront Park improvement plan work and shall complete that work to the Regional District's satisfaction within twelve (12) months of all the said permits and approvals being issued. The Developer shall complete the Waterfront Park improvement work at its sole cost, and in full compliance with the terms and conditions of all such permits and approvals. In the event the Developer fails to complete the Waterfront Park improvement plan work within the time required under this section 12.4, the Regional District may draw upon the letter of credit provided under section 12.3 and may complete that work at the Developer's sole cost. Provided that in the event the Developer has with all due diligence pursued the completion of the Waterfront Park improvement work throughout the said twelve (12) month period and is prevented from completing that work within the time required due to an event of Force Majeure, the Developer may request that the Regional District consent to an extension of time of up to six (6) months for completion of that work, such consent not to be unreasonably withheld. Parking for Waterfront Park 12.5 As part of, and concurrently with the improvements of the Waterfront Park, the Developer covenants and agrees to develop and construct a Waterfront Park parking area on an area of the Lands immediately adjacent to the Waterfront Park, the location and siting of such area to be to the satisfaction of the Regional

13 District, acting reasonably. The parking area shall be developed and constructed in accordance with good engineering practice and must provide a minimum of forty (40) parking stalls Prior to commencing construction of the Waterfront Park parking area the Developer must submit to the Regional District for approval, detailed engineering drawings and specifications for the Waterfront Park parking area improvements, together with a detailed cost estimate, both prepared by a Qualified Professional The Developer covenants to grant a Statutory Right of Way to the Regional District for the purpose of providing for public access to and use of the Waterfront Park parking area, in the form attached as Schedule "H". Ongoing Maintenance of Waterfront Park 12.8 The Developer agrees to provide its approval, as the owner of the Lands, to the establishment of a Regional District service for the purpose of maintaining the Waterfront Park and the Waterfront Park improvements that are contemplated herein, provided that under the Service Establishment Bylaw: the maximum annual requisition does not exceed One Hundred Thousand ($100,000.00) Dollars; and the service area is comprised of the Lands shown on Schedule "F" hereto ALR BUFFER LANDS WITHIN CONSERVATION AREA 13.1 The Developer covenants and agrees to design and install a replanted and enhanced buffer zone on the Lands within the Conservation Areas ("ALR Buffer") for the purpose of providing screening and separation from the agricultural lands to the north of the Lands, in accordance with the following provisions of this Agreement Prior to any development or subdivision of a Development Phase, (for certainty, prior to the issuance of a development permit authorizing the subdivision or development of the first Phase to be developed), the Developer shall provide the Regional District with a detailed plan for the replanting of the ALR Buffer Zone, prepared by a Qualified Professional together with a detailed planting list and schedule of quantities and prices for that work certified by the Qualified Professional. The detailed ALR Buffer Land Plan must be generally in accordance with the ALR Re-Vegetated Buffer Land Concept Plan attached to this Agreement as Schedule "D", and must be in a sufficiently detailed form to obtain all necessary regulatory approvals of the proposed ALR Buffer land work, including but not limited to:

14 an environmentally sensitive area development permit from the Regional District (the Developer covenants and agrees as a term and condition of this Agreement that it must obtain a development permit from the Regional District to authorize the ALR Buffer Zone Land Plan work in compliance with the detailed ALR Buffer Zone Land Plan, whether or not the Regional District's Official Community Plan requires a development permit for that work; any necessary permits and approvals from the MOE or FOC The detailed ALR Buffer Land Plan must be to the satisfaction of the Regional District Concurrently with the issuance of a development permit authorizing the ALR Buffer Zone Land Plan work, the Developer must provide to the Regional District security in the form of an irrevocable letter of credit, in a form satisfactory to the Regional District, and in the amount of one hundred, twenty (120%) percent of the estimated cost of completing the ALR Buffer Zone Land Plan as certified by the Qualified Professional Upon the issuance of a Regional District development permit authorizing the ALR Buffer Zone Land Plan work, and upon the receipt of all necessary permits or approvals from MOE or FOC, the Developer shall undertake the ALR Buffer Zone Land Plan work and shall complete that work to the Regional District's satisfaction within twelve (12) months of all the said permits and approvals being issued. The Developer shall complete the ALR Buffer Zone Land Plan work at its sole cost, and in full compliance with the terms and conditions of all such permits and approvals. In the event the Developer fails to complete the ALR Buffer Zone Land Plan work within the time required under this section 13.4, the Regional District may draw upon the letter of credit provided under section 13.3 and may complete that work at the Developer's sole cost SERVICING FOR THE DEVELOPMENT 14.1 The Developer confirms and agrees that the Regional District does not currently, and is not legally obliged, to provide any or all of the following services to the Lands: (c) water; sanitary sewer (collection and treatment); or fire protection The Developer therefore covenants that it shall not subdivide the Lands (except as required under section 8.0 for the purpose of effecting the transfers required

15 thereunder), and that it shall not construct any buildings, improvements or structures on the Lands (except for the improvements and enhancements required under sections 11.0, 12.0 and 13.0 of this Agreement, and except for structures such as roads, pipes, mains, pumps, and all related facilities and equipment as may be necessary to provide water, sanitary sewer and fire suppression services to the Lands- in accordance with an EIA, an Environmentally Sensitive Development Permit, a Watercourse Development Permit or a Form and Character Development Permit) until the conditions outlined in this section 14.0 are fulfilled. Water Service 14.3 The Developer covenants and agrees to provide water service to the Lands in accordance with the following provisions: (c) (d) (e) the Developer must enter into a fully binding agreement with the Town of Osoyoos for the provision of potable water and water for fire suppression sufficient to accommodate all of the Development on the Lands; the Board of the Regional District must have consented to the provision of water services to the Development by the Town of Osoyoos, under the terms of the Agreement referred to in subparagraph, pursuant to section 13(1) of the Community Charter; the Developer must at its sole cost construct all on-site services and offsite services necessary for the supply of water to the Development by the Town of Osoyoos, and the distribution of water within the Development; all on-site services and off-site services, as referred to in subparagraph (c) must be designed and constructed in accordance with the standards and requirements of the Regional District Okanagan-Similkameen Subdivision Servicing Bylaw No. 2000, 2002; the off-site services shall be sized, and designed and constructed, so as to accommodate the potential development of the lands lying between the boundaries of the Town of Osoyoos and the Lands and in respect of the design and construction of any excess capacity in the said off-site services, the Developer agrees to waive any entitlement to latecomer fees, or any other form of compensation, recovery or reimbursement in respect of a use or development existing or permitted under the Regional District's land use bylaws as of the date of this Agreement, such waiver to be provided in a form that is to the satisfaction of the Regional District.

16 Fire Protection Services 14.4 The Developer covenants to arrange for fire protection services to the Development in accordance with the following provisions: the Developer must enter into a fully binding agreement with the Osoyoos Rural Fire Protection District #194 for the provision of fire protection services to the Development; the boundaries of the Osoyoos Rural Fire Protection District #194 must have been expanded under the provisions of the Local Government Act to include the Lands. Sanitary Sewer Collection and Treatment Services 14.5 The parties agree that sanitary sewer collection and treatment services for the Development shall be provided in accordance with the following provisions. Regional District Sewage Treatment Service 14.6 The Regional District may, at any time give thirty (30) days' notice to the Developer of the Regional District's intention to establish a Regional District service for the collection and treatment of sewage from lands that include the Lands (the "Regional Sewage Treatment Service"), provided that the provisions of section and governing the provision of sewer services to the Development through the Municipal Option have not been fulfilled at the time such notice is given. It is understood and agreed that by the provision of such notice, the Regional District shall be under no obligation to proceed with the establishment of the Regional Sewage Treatment Service, and that the establishment of such Service shall always remain subject to the requirements of the Local Government Act, including the adoption of the requisite service establishment bylaw by the Regional Board, and the approval of that bylaw by the Inspector of Municipalities. If within the thirty (30) day period following the provision of the Regional District's notice the provisions of sections and are fulfilled, then notwithstanding the Regional District's notice of intention, the Developer may pursue the Municipal Option under section In the event the Regional District provides notice of its intention to establish a Regional Sewage Treatment Service to the Developer, pursuant to section 14.6 of this Agreement, and in the event the provisions of section and are not fulfilled within the thirty (30) day period referred to in section 14.6, the Developer shall contribute by way of donation a total of TEN MILLION ($10,000,000.00) DOLLARS to the Regional District, towards the following:

17 design and construction costs associated with the development of a Regional Sewage Treatment Service, including, but not limited to, a sewage treatment facility; design and construction of all off-site services required to convey sewage from the boundaries of the Lands to the Regional treatment facility The Developer's contribution shall be paid to the Regional District in accordance with the following schedule: within sixty (60) days after the execution of this Agreement and in any event prior to the final adoption of the Zoning Amendment Bylaw, the sum of SEVEN MILLION, FIVE HUNDRED THOUSAND ($7,500,000.00) DOLLARS (for certainty, this payment is to be made whether or not the Regional District has by the time the payment is due given notice under section 14.6, and if this payment is made prior to the giving of such notice, the Regional District shall hold such payment as partial security for the Developer's obligation under section 14.7); within fourteen (14) days after the expiry of the thirty (30) day period referred to in section 14.6, the sum of TWO MILLION, FIVE HUNDRED THOUSAND ($2,500,000.00) DOLLARS The Regional District shall hold the Developer's contribution in trust (and not in a reserve fund established for the purpose of the Regional Sewage Treatment Service) until final adoption of the Regional Sewage Treatment Service Establishment Bylaw, at which point the Regional District may transfer the said funds into a reserve fund established pursuant to the provisions of the Community Charter In the event that: (c) the Regional District provides notice to the Developer that it does not intend to proceed with the Regional Sewage Treatment Service; having given notice of its intention to proceed with the establishment of a Regional Sewage Treatment Service, the Regional District Board does not adopt the requisite Service Establishment Bylaw within [twelve (12) months of the provision of such notice; the Regional District fails to finally adopt the OCP Amendment Bylaw and Zoning Amendment Bylaw within twelve (12) months of the execution of this Agreement; or

18 (d) the provisions of sections and are fulfilled within the time frame that this Agreement requires in order for the Developer to proceed with the Municipal Option. the Developer shall be entitled to the return of any portion of its $10,000, contribution that has been paid by that time, without interest In the event the Regional District provides the Developer with notice of its intention to establish the Regional Sewage Treatment Service, and in the event the provisions of section and are not fulfilled within the thirty (30) day period following such notice, the Developer agrees to give its approval as owner of the Lands to the establishment of that Service The Developer waives any and all entitlement, right or claim to latecomer fees or charges under the Local Government Act in respect of a use or development existing or permitted under the Regional District's land use bylaws as of the date of this Agreement, or any other compensation, recovery or reimbursement in respect of the donation under section 14.7 of this Agreement except for return of the amount donated in accordance with section Sewage Treatment - Municipal Option Except where the Regional District has given notice of its intention to establish a Regional Sewage Treatment System under section 14.6, and further where the provisions of sections and have not been fulfilled within thirty (30) days following the provisions of that notice (in which case the Developer must provide sewage treatment services to the Development through the Regional Sewage Treatment Service), the Developer may provide sewage treatment services to the Development in accordance with the following provisions: (c) (d) the Developer must enter into a fully binding agreement with the Town of Osoyoos for the provision of sewage treatment services to all of the Development; the Board of the Regional District must have consented to the provision of sewage treatment services by the Town of Osoyoos, under the terms of the Agreement referred to in subparagraph, pursuant to section 13(1) of the Community Charter; the Developer must at its sole cost construct all necessary on-site and offsite services required for the collection of sewage from the Development and the conveyance of that sewage to the Town of Osoyoos trunk main or treatment plant, as agreed to between the Developer and the Town; all on-site services and off-site services, as referred to in subparagraph (c) must be designed and constructed in accordance with the standards and

19 requirements of the Regional District Okanagan-Similkameen Subdivision Servicing Bylaw No. 2000, 2002; (e) the off-site services shall be sized, and designed and constructed, so as to accommodate the potential development of the lands lying between the boundaries of the Town of Osoyoos and the Lands and in respect of the design and construction of any excess capacity in the said off-site services, the Developer agrees to waive any and all entitlement, right or claim to latecomer fees or charges, or any other form of compensation, recovery or reimbursement in respect of a use or development existing or permitted under the Regional District's land use bylaws existing as of the date of this Agreement, such waiver to be provided in a form that is to the satisfaction of the Regional District SECTION 219 COVENANT 15.1 The Developer shall execute the Covenant that is in the form attached as Schedule "I" to this Agreement, prior to the adoption of the Zoning Amendment Bylaw and the OCP Amendment Bylaw, with the intention that the Covenant shall be registered against title to the Lands pursuant to section 219 of the Land Title Act, in order to secure the Developer's obligations to develop the Lands in accordance with the provisions of this Agreement INDEMNITY AND RELEASE 16.1 The Developer shall indemnify and keep indemnified the Regional District from any and all claims, causes of action, suits, demands, fines, penalties, costs, deprivation, expenses or legal fees whatsoever, whether based in law or equity, whether known or unknown, which anyone has or may have against the Regional District or which the Regional District incurs as a result of any loss, damage or injury, including economic loss or deprivation, arising out of or connected with this Agreement, including the restrictions and requirements of this Agreement, or any breach by the Developer of any covenant in this Agreement The Developer hereby releases, saves harmless and forever discharges the Regional District of and from any claims, causes of action, suits, demands, fines, penalties, costs, deprivation, expenses or legal fees whatsoever which the Developer can or may have against the Regional District, whether based in law or equity, whether known or unknown, for any loss, damage or injury, including economic loss or deprivation, that the Developer may sustain or suffer arising out of or connected with this Agreement, including the restrictions and requirements of this Agreement, the provisions of the amenities and the development of the Lands as contemplated under this Agreement, or any breach by the Developer of any covenant in this Agreement.

20 The indemnity and release provisions of sections 16.1 and 16.2 shall survive the expiry or termination of this Agreement NO RECOVERY OF AMENITIES 17.1 The Developer covenants and agrees that expiry of the Agreement and any termination in accordance with section 7.0 or otherwise, does not entitle the Developer to recover any portion of the Amenities provided prior to termination, or to seek restitution in relation thereto or in relation to any other obligation of the Developer as performed prior to such termination (and the Developer specifically agrees that the Specified Zoning Bylaw Provisions of this Agreement for the period prior to expiry or termination provides sufficient consideration for the Amenities) and the release and indemnity provisions under sections 16.1 to 16.2 apply in this regard The Developer covenants and agrees it will not commence or advance a legal proceeding of any kind to seek to quash, set aside, hold invalid this Agreement, or the OCP Amendment Bylaw, or the Zoning Amendment Bylaw, or to recover any portion of the Amenities provided under this Agreement, or seek restitution in relation to any of the Amenities provided under this Agreement, and if the Developer does any of the foregoing, the Regional District may provide this Agreement to the Court as a full and complete answer DEVELOPMENT OF LAND FOLLOWING TERMINATION 18.1 Following termination of this Agreement development of the Land shall be governed by the section 219 Covenant attached as Schedule "K" ASSIGNMENT OF AGREEMENT 19.1 Except as provided in section 19.2, the Developer may only assign this Agreement if the Regional District consents in writing to the assignment. To the extent that it may lawfully do so under the provisions of the Local Government Act, the Regional District agrees that its consent to an assignment will not be withheld unreasonably The Regional District's consent will not be required for any assignment of this Agreement to an affiliate (as defined in the Business Corporations Act (British Columbia)) of the Developer AMENDMENT OF AGREEMENT 20.1 The parties may in writing agree to minor amendments to this Agreement, and for that purpose a "minor amendment" is a change or amendment to any of Schedules "A" through "I" of this Agreement.

21 DISPUTE RESOLUTION 21.1 If a dispute arises between the parties in connection with this Agreement, the parties agree to use the following procedure as a condition precedent to any party pursuing other available remedies: (c) either party may notify the other by written notice ("Notice of Dispute") of the existence of a dispute and a desire to resolve the dispute by mediation; a meeting will be held promptly between the parties, attended by individuals with decision-making authority regarding the dispute, to attempt in good faith to negotiate a resolution of the dispute; if, within forty-eight (48) hours after such meeting or such further period as is agreeable to the parties (the "Negotiation Period"), the parties have not succeeded in negotiating a resolution of the dispute, they agree to submit the dispute to mediation and to bear equally the costs of mediation; d) the parties will jointly appoint a mutually acceptable mediator (who must be an expert in the subject matter of the dispute), within forty-eight (48) hours of the conclusion of the Negotiation Period; (e) (f) the parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days following appointment of the mediator or for such longer period as the parties may agree. If the parties are not successful in resolving the dispute through mediation or if the mediation has not commenced within fourteen (14) days following the appointment of the mediator or if the parties cannot agree upon the mediator appointment, then the parties agree that the dispute will be settled by a single arbitrator in accordance with the Commercial Arbitration Act, R.S.B.C. 1996, Chapter 55, as amended. The decision of the arbitrator will be final and binding and will not be subject to appeal on a question of fact, law, or mixed fact and law; and the costs of mediation or arbitration will be awarded by the mediator or arbitrator in his or her absolute discretion In no event shall the foregoing be construed as impeding or affecting the Regional District's authority to enforce its zoning and other regulatory bylaws NOTICE 22.1 Any notice permitted or required by this Agreement to be given to either party must be given to that party at the address set out above, or to any other address

22 POWERS PRESERVED 23.1 Except as expressly set out in this Agreement, nothing in this Agreement shall prejudice or affect the rights and powers of the Regional District in the exercise of its powers, duties or functions under the Community Charter or the Local Government Act or any of its bylaws, all of which may be fully and effectively exercised in relation to the Lands as if this Agreement had not been executed and delivered to the Developer, subject only to section of the Local Government Act REGIONAL DISTRICT'S REPRESENTATIVE 24.1 Any opinion, decision, act or expression of satisfaction or acceptance of the Regional District provided for in this Agreement may be taken or made by the Chief Administrative Officer or his or her designate, unless expressly provided to be taken or made by another official of the Regional District PERMITS 25.1 The Developer acknowledges that the Regional District may, despite any public law limitations on the withholding of building permits and occupancy permits, withhold building permits and occupancy permits for the purpose of ensuring compliance with and administering the terms of this Agreement CONFLICT 26.1 In the event of a conflict between the terms of this Agreement and the provisions of the Regional District Official Community Plan or Zoning Bylaw applicable to the Lands, the Official Community Plan or Zoning Bylaw will prevail, except insofar as section 905.1(5) of the Local Government Act applies to a bylaw adopted after the date of execution of this Agreement by the Regional District TIME 27.1 Time is to be the essence of this Agreement BINDING EFFECT 28.1 This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, executors, successors, and permitted assignees.

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