Affidavit #1 of Andrew Masse

made November (3 . 2013

No. S137743 Vancouver Registry

IN THE SUPREME COURT OF BRITISH COLUMBIA

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. c-36, AS AMENDED

AND

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT, S.B.C. 2002, c. 57, AS AMENDED

AND

IN THE MATTER OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED

AND

IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF LEAGUE ASSETS CORP. AND THOSE PARTIES LISTED ON SCHEDULE "A"

PETITIONERS AFFIDAVIT

I, ANDREW MASSE, Banker, of Suite 200, 505 Burrard Street, in the City of

Vancouver, in the Province of British Columbia, MAKE OATH AND SAY AS FOLLOWS:

INTRODUCTION

1. I am a Senior Account Manager employed by Business Development Bank of

Canada ("BDC"), and as such have personal knowledge of the facts and matters hereinafter

deposed to save and except where stated to be upon information and belief and where so stated I

verily believe them to be true.

2. I am authorized by BDC to make this Affidavit.

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BACKGROUND

3. In or about April of 2009 BDC agreed to make available to Village Green a

construction loan facility in an amount not to exceed $6,000,000 (the "Facilities") for the

purpose of financing the construction by Village Green of a shopping center on certain lands and

premises (the "Lands") leased by Village Green from the Cowichan Band in or near Duncan,

BC.

4. Attached as Exhibit "A" to this my Affidavit is a Consent and Waiver entered into

among BDC, Her Majesty in Right of Canada and Village Green (the "Consent").

5. The Recitals to the Consent outline the history and current status of the Lease (as

defined in the Consent).

6. At the same time as the Facilities were made available to Village Green another

lender, Peace Hills Trust Company ("Peace Hills"), agreed to lend funds to Village Green for

similar purposes.

7. The Facilities were provided to Village Green as a "stand alone" borrower, and

BDC never intended or desired to deal with any entity other than Village Green.

8. BDC's loans were for the express (and sole) purpose of financing the stand alone

project that is called Village Green in Duncan and the ownership described below.

9. At the time the Facilities were approved and the funds advanced, BDC was

dealing with 5 individuals (through their separate companies and a partnership entity known as

PDG Investments).

10. None of those individuals were Arruda or Gant and, from a review of BDC's files,

none of those individuals had any connection, direct or indirect or otherwise, to Arruda, Gant or

League.

11. The personal covenantors of the Facilities are Messrs. McRae, Grassi, Rank, Coon

and Rosen.

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12. BDC and Peace Hills entered into an agreement with each other whereby they

agreed that their respective security would rank pari passu.

BDC SECURITY

13. Among other things, BDC took a mortgage (the "Mortgage") and an assignment

of rents (the "Assignment") as security for advances under the Facilities.

14. The Mortgage and Assignment were registered in the Indian Land Registry.

15. Attached as Exhibit "B" to this my Affidavit is a true copy of the Mortgage.

16. Attached as Exhibit "C" to this my Affidavit is a true copy of the Assignment.

2009 To PRESENT

17. In or about November 2010 BDC was first made aware of the intricate web that is

now described as the League Group, and BDC's nonconsensual involvement with League.

18. This arose from a transfer of ownership of the borrower that was done by the

original group involved with BDC, without the prior consent or knowledge of BDC.

19. In or about March of 2009 Village Green approached BDC and asked for its

consent to the granting of a subsequent mortgage on the Lands in favour of Cowichan Mini Mall.

20. BDC agreed to the granting of the charge for $1,250,000, on the condition that

Village Green entered into a subordination agreement with BDC (the "Subordination").

21. Attached as Exhibit "D" to this my Affidavit is a true copy of the relevant portions

of the Subordination.

22. Among other things, the Subordination prevented Village Green from repaying

Cowichan Mini Mart all or any of the amounts it owed to it without first paying BDC.

23. Village Green had made payments on the Facilities from the date of the initial

advance until October, 2013, when the cheque for the monthly mortgage payment to BDC was

dishonoured.

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24. Attached as Exhibit "E" to this my Affidavit is a true copy of Financial

Statements for Village Green Holdings Limited Partnership for the years ended 2011 and 2012

that were obtained through the Monitor in these proceedings.

25. Page 3 of those statements is a statement of Revenue and Expenses showing

Revenues for 2012 of $1,977,208 against (cash - i.e. not including Amortization, a non-cash

expense) expenses of $1,053,456.

26. The monthly mortgage payment to BDC varies because it is based on a floating

rate. Each month $25,000 must be paid on account of principal. The rest is interest. The

payment missed in October (Principal plus Interest) totaled $48,275.68.

27. According to the financial statements filed in these proceedings by the Petitioners,

the monthly payments to Peace Hills (Principal plus Interest) is $46,518 (page 1043 to the

Exhibits to Affidavit #1 of Adam Gant).

28. Given that both BDC and Peace Hills were current until the commencement of

these proceedings (and seeing positive cash flow in the statements attached as Exhibit "E"

hereto), I cannot understand where the excess cash is now going, since it is clearly not going to

BDC and Peace Hills.

29. Attached as Exhibit "F" to this my Affidavit is a true copy of a statement of the

amount owing by Village Green to BDC as at October 17, 2013.

30. That amount was $4,944,396.40. It does not include any amount for prepayment,

nor does it include any legal or other costs incurred by BDC directly or indirectly as a result of

these proceedings.

DEFAULTS

31. Aside from the default of the missed October payment outlined above, I have now

reviewed BDC's security and conducted various searches (such as property tax searches) and

determined the following defaults:

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a) Non-payment of property taxes for 2013. The amount owing is $442,000,

presumably plus interest and any penalties;

b) In breach of the Subordination Village appears to have made an

unauthorized $250,000 payment to Cowichan Mini Mall;

c) As a result of non-payment of the property taxes Village is now also in

default under the terms of the Lease, which is a further default under the BDC

security. As I understand it, the tenants pay their share of property taxes to

Village as part of their lease arrangements and, in spite of having received

those funds, Village has still not paid all or any part of the property taxes;

d) Village has not provided financial reporting to BDC as required under the

terms of the Facilities;

e) Commencement of these proceedings;

f) Change of ownership without prior consent.

THE DIP

32. BDC strenuously opposes any attempt by the Petitioners to obtain DIP financing

that would be granted priority over its security.

33. In the material currently filed by the Petitioners there are three stated purposes for

additional DIP financing:

i) Payment of Property taxes;

ii) Payout of TCC; and

iii) Keeping mortgages current,

i) Property Taxes

34. There is absolutely no reason to borrow money to pay property taxes where there

are financial institutions that can make those payments under their security as a protective

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35. BDC is prepared to do that and I verily believe that Peace Hills will do that as

well.

36. If BDC pays property taxes as a protective disbursement that protective

disbursement will accrue interest at the mortgage rate, and not at a "default rate".

37. Borrowing from a DIP lender to pay property taxes on Village Green, the effect of

which will be to "prime" BDC and Peace Hills with more expensive money is ludicrous.

38. And if other projects do not have sufficient equity to ensure that payments of

property taxes are not fully covered then they should not be made in any event - and certainly not

primed to the Village Green project over BDC's security.

ii) Payout of TCC

39. If funds are authorized to be advanced under the DIP facility for the purpose of

paying out the TCC (Trez) security (Duncan City Center) then there is no reason that other

projects need to be primed for that payout. The DIP lender can simply replace TCC and stand in

first position instead of TCC.

iii) Keeping Mortgages Current

40. As for keeping the mortgages current, once again it seems ludicrous to allow the

borrowing of funds at a stated rate of 8% from the DIP lender (when all the costs and fees are

added in the effective rate is more like 12 - 12.5%) in order to make payments on mortgages

(that of BDC and Peace Hills) that are accruing interest at the rates of 5.75% and 7%

respectively.

THE CCA PROCEEDINGS GENERALLY

41. For at least the above reasons, BDC has absolutely no faith in current management

and is absolutely not prepared to continue its relationship with Village or any of the other entities

that are part of the "League Group" and these proceedings.

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42. BDC will not support any plan of arrangement that sees its security being

"primed" or postponed to any priority charges or that does not see it paid 100% of the amounts

owing to it forthwith.

43. I believe that Village Green is 90% leased.

44. Given that Village is a stand-alone development with revenues that appear

sufficient to operate on a solvent basis it is the position of BDC that Village Green should be

"ring-fenced" and treated separately even if these proceedings continue in their current form.

45. This would entail, among other things, keeping the mortgages and other property

expenses (other than property taxes) current from the revenues generated from Village Green.

46. If there has been any intertwining of assets and entities in the League Group, that

intertwining has been done without the consent or even knowledge of BDC and should not cause

BDC to be dragged into the morass that has become these proceedings.

SWORN BEFORE ME at the City of Vancouver, in the ProY.ig.c_e of British (Columbia, |his day of November MO 1;

lis ill"

A

A Commissioner for taMng Affidavits for British Columbia.

Douglas B, Hyndman Barrister & Solicitor

1100 - 505 Burrard Street Vancouver, B.C. V7X IVJ5 Telephone; (604) 331-8300

ANDREW MASSE

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I

MORTGAGE CONSENT AGREEMENT

THIS AGREEMENT made as of the -1- day of April, 2009.

AMONG:

HER MAJESTY IN RIGHT OF CANADA, as represented by the Minister of Indian Affairs and Northern Development

AND:

(the "Lessor")

VILLAGE GREEN HOLDINGS #2 LTD., having an office at 717 - 10430 West Georgia Street, Vancouver, British Columbia, V6E 2Y3

(the "Lessee")

AND:

BUSINESS DEVELOPMENT BANK OF CANADA, BDC Tower, Suite 2100, . One Bentall Center, 505 Burrard Street, Vancouver, British Columbia, V7Z 1M6

(the "Bank")

WHEREAS:

A. Pursuant to a lease dated February 24,1969 (the "Initial Lease") registered in the Indian Land Registry (the ("ILR") on December 18,1969 under No. 15525, the Lessor leased certain lands in Cowichan Indian Reserve No. 1 to Village Green Hotel Ltd.;

B. Pursuant to an agreement dated July 12,1977 (the "First Amending Agreement") registered in the ILR on April 20, 1978 under No. 57511, the Initial Lease was amended;

C. Pursuant to an agreement dated December 27, 1978 (the "Second Amending Agreement") registered in the ILR on December 12, 1979 under No. 67017, the Initial Lease was further amended;

D. Pursuant to an agreement dated April 20, 1987 (the "Third Amending Agreement"), registered in the ILR on May 27,1987 under No. 112233, the Initial Lease was further amended;

E. Pursuant to an Assignment of Lease dated September 30, 2002 (the "2002 Assignment of Lease") registered in the ILR on November 1, 2004 under No. 322128, the Initial Lease was assigned from Village Green Inns Ltd. (formerly known as Village Green Hotel Ltd.) to Super 8 Centre Inc.; .This is Exhibit ** referred to in the

. affidavit

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F. Pursuant to an Assignment of Lease dated April 30, 2008 (the "2008 Assignment of Lease") registered in the ILR on August 29, 2008 under No. 358093, the Initial Lease was assigned from Super 8 Centre Inc. to the Lessee;

G. Pursuant to a modification and extension of lease dated October 23, 2008 (the "2008 Amendment") registered in the ILR on December 1, 2008 under no. 360084, the Initial Lease was further amended and extended over additional lands, and as a result, the lands then intended to be demised by the Initial Lease, as previously assigned and amended, comprised approximately 2.17 hectares, as shown outlined in bold on the sketch attached as Appendix "B-l" to the 2008 Amendment and now more particularly described as follows:

PIN: 90200175IS Lot 128 Parcel A Plan CLSR 55754

and

PIN: 902001747S Lot 128 Plan CLSR 53124

and that portion of:

PIN: 902513050 Lot 590 Plan CLSR 85664

shown cross-hatched on the plan attached as Appendix B to the 2008 Amendment.

(the "Lands")

(The Initial Lease, as subsequently amended, assigned and extended as aforesaid, is collectively referred to as the "Lease");

H. The Lessee has granted or has agreed to grant to the Bank a mortgage and assignment of rents (the "Mortgage") charging the Lease and all of the leasehold right, title and interest of the Lessee in and to the Lands arising thereunder as security for advances by the Bank to the Lessee under a construction loan credit facility (the "Facility") to finance the construction by the Lessee of the buildings and the improvements, as contemplated by amended section 7 of the Lease; and

I. The Lessor's consent is required for a mortgage of the Lease.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the Bank advancing funds to the Lessee under the Facility, the parties agree as follows:

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1. Status of Lease

The Lessor hereby represents and warrants to the Bank:

(a) to the best of the Lessor's knowledge but with no investigation on the part of the Lessor, the Lease is in good standing as of the date of this Mortgage Consent Agreement; and

(b) despite anything else that may be contained in this Mortgage Consent Agreement, the Lessor makes no representations or warranties with respect to the state of title to the Lands or matters contained within the ILR.

2. Representations of Bank

The Bank represents that the Mortgage:

(a) does not conflict with the Lease;

(b) expressly states that it is made subject to the rights of the Lessor under the Lease; and

(c) provides that proceeds of all property insurance required by the Lease will be first used to repair or replace any damaged or destroyed improvements on the Lands, unless the Lessor agrees otherwise in writing.

The Bank will not agree to any amendment to the Mortgage which would render these representations untrue.

3. Amendments to Lease

Without the prior written consent of the Bank, which consent must not be unreasonably withheld:

(a) the Lessee must not surrender, and the Lessor must not accept a surrender, of the Lease or any part of the Lands; and

(b) the Lessor and Lessee must not agree to any modification of the Lease that materially adversely affects the Bank's security under the Mortgage.

If the Bank does not provide consent, or notify the Lessor that it will not provide its consent, within 30 days of notification of a proposed surrender or modification, then the Bank will be deemed to have given consent.

4. Consent

The Lessor hereby consents to the Mortgage. This consent will not be deemed to:

(a) approve of any of the terms of the Mortgage; or

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19904.104710.DDA.3264088.7

(b) ensure that the Mortgage can be registered in the ILR or any provincial land title office.

5. Registration

The Bank agrees to register the Mortgage and this Mortgage Consent Agreement in the ILR.

6. Enforcement by Bank

The Lessor agrees that when the Bank enforces its remedies under the Mortgage, then so long as the rents reserved and any taxes and other monies payable under the Lease are paid and the other terms, covenants and conditions contained in the Lease (other than those related to the bankruptcy or insolvency of the Lessee or that otherwise may not reasonably or practicably be observed or performed by the Bank) are observed and performed:

(a) the Bank and any of its agents and any receiver, receiver-manager or receiver and manager (any one or more of them being hereinafter referred to as a "Receiver") upon entering into temporary possession of the Lands will attorn to the Lessor and will observe and perform all of the covenants and agreements to be observed or performed by the Lessee during such temporary possession, without incurring any liability under the Lease in respect of any portion of the term of the Lease beyond the period of actual possession of the Lands enjoyed by the Bank, its agents, or any Receiver, except in the event of negligent acts or omissions by the Bank, its agents, or Receiver during such temporary possession; and

(b) the Bank may (but shall be under no obligation to) acquire all of the Lessee's right, title and interest in the Lease upon agreeing to attorn to the Lessor and be bound by all of the terms and conditions of, and all obligations and covenants of the Lessee under, the Lease for the remainder of the term thereof. The Bank may also sell, assign or otherwise dispose of all but not less than all of the Lessee's right, title and interest in the Lease, to a third party with the prior written consent of the Lessor, which consent will not be unreasonably withheld, provided that the third party assumes and agrees to be bound by all of the terms' and conditions of, and all obligations and covenants of the Lessee under, the Lease for the remainder of the term thereof.

7. Default by Lessee

If the Lessor intends to terminate the Lease due to a default by the Lessee of any of its covenants and obligations under the Lease (excluding minor or non-material breaches of a non-recurring nature), the Lessor must first give the Bank written notice of such default, whereby:

(a) the Bank shall have 60 days from the date the default notice is delivered to cure such default; or

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19904.104710.D DA.326408S.7 .

(b) if the default cannot be cured within 60 days, provided that the Bank is diligently proceeding to cure such defaults and the Lessor's consent is first obtained in respect of a further period of time, which consent will not be unreasonably withheld, the Bank shall have such further period of time as may be reasonably required, having regard to the nature of the default and as consented to the Lessor, to remedy the default.

8. Subleases and Mortgages of Subleases

The Lessor acknowledges that:

(a) in the event the Lessee seeks the Lessor's consent to sublease the Lands or any part of the Lands, the Lessor's consent will not be unreasonably withheld. Such consent shall include, inter alia, the right of a subtenant to receive notices of default under the Lease and the right to cure such defaults, provided the subtenant has given the Lessor written notice of the subtenant's address for delivery and accepts that the sublessee is solely responsible for advising the Lessor of any subsequent changes to the subtenant's address for delivery;

(b) a subtenant has the right to quiet enjoyment of its subleasehold interest in the Lands notwithstanding that the Lessee may be in default under the Lease, so long as the subtenant is not in default under its sublease, unless and until the Lease has been terminated; and

(c) a subtenant may mortgage its interest in a sublease of the Lands or any part thereof without the consent of the Lessor.

9. Dispute Resolution

In the case of any dispute between the Lessor and the Lessee as to any matter contained in this Agreement, the dispute may be settled by referral, in the first instance, to the Federal Court and, in such circumstance, the decision of the Federal Court is considered final and binding upon the parties. If the Federal Court refuses jurisdiction or otherwise fails to determine the dispute, then the dispute may be referred by either party to any other court of competent jurisdiction and the parties may exercise any other right or remedy they may have under this Agreement or otherwise.

10. Conflicts

If there is any inconsistency between the Lease and this Agreement in respect of the rights and obligations of the Bank, Lessee or Lessor as they pertain to the Mortgage, the parties agree that the provisions of this Agreement shall prevail.

11- Notice

Any notice given hereunder shall be in writing and may be given by mailing the same by prepaid registered post in any government post office or by delivering the same to the party or an officer or director or agent of the party to whom the notice is intended to be given at the address as follows:

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19904.104710.DDA.3264088.7

(a) if to the Lessor:

Director, Lands and Trust Services Indian and Northern Affairs Canada 600 - 1138 Melville Street Vancouver, BC V6E4S3

Facsimile: (604)775-7149

(b) and if to the Bank:

Business Development Bank of Canada BDC Tower Suite 2100, One Bentall Centre 505 Burrard Street Vancouver, BC V7Z 1M6

Attention: Manager, Corporate Financing

Facsimile: (604) 666-1068

or to such other address or addresses as the parties shall advise the others in writing from time to time and any notice so given shall be deemed to be received by the party to whom it is given if delivered, when delivered, and if mailed by prepaid registered post, on the third business day following the day of mailing.

Miscellaneous

12. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

13. This Agreement may be executed in any number of counterparts, and may be delivered by facsimile transmission, each of which counterparts when delivered shall be deemed to be an original and all of which together shall constitute one and the same document.

[The remainder of this page has been intentionally left blank]

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19904.104710.DDA.3264088.7

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

HER MAJESTY IN RIGHT OF CANADA, VILLAGE GREEN HOLDINGS #2 LTD. as represented by the Minister of Indian Affairs and Northern Development

BU CA

EVELOPMENT BANK OF

Per:

Michael Tees Manage*. Co» r, Corporate Financing

Christopher Chan Area Manager,

Business Development

19904.104710.DDA.3264088.7

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PROOF OF EXECUTION BY CORPORATION

I CERTIFY that on the "h\ day of , 2009, at the City of , in the Province of British Columbia, L Am* y z f i u v t ,

who is personally known to me, appeared before me and acknowledged to me that he is the authorized signatory for Village Green Holdings #2 Ltd., and that he is the person who subscribed his name to the instrument, that he was authorized to subscribe his name to it and that the corporation existed at the date the instrument was executed by the corporation.

IN TESTIMONY of which I have set my hand at the City of Vancouver, in the Province of British Columbia, this day of M/He C.H , 2009.

A Commissioner for taking Affidavits within British Columbia

R. MAX COLLETT BARRISTER & SOLICITOR BULL, HOUSSER &TUPPER LLP #3000, 1055 WEST GEORGIA VANCOUVER, B.C. V6E 3R3 (604) 641-4912

19904.104710.DDA.3264088.7

PROOF OF EXECUTION BY CORPORATION

. I CERTIFY that on the day of |\A<7<$A , 2009, at the City of . I lo\/ , in the Province of British Columbia, MigUe ( hk-eJ ^CLwls .CUc^ who is personally known to me, appeared before me and acknowledged to me that he is the authorized signatory for Business Development Bank of Canada, and that he is the person who subscribed his name to the instrument, that he was authorized to subscribe his name to it and that the corporation existed at the date the instrument was executed by the corporation.

IN TESTIMONY of which I have set my hand at the City of Vancouver, in the Province of British Columbia, this "%?( day of {(\f\^(jJ[ , 2009.

.er for taking Affidavits within British goljggl bateman,

BARRISTER, SOLICITOR 6 NOTARY PUR I If

VANCOUVER, BC V7X 1M3

19904.104710.DDA.3264088.7

REGISTERED IN INDIAN LAND REGISTRY, OTTAWA

AS NUMBER _ THE

DAY OF J

PLEASE QUOTE ABOVE NUMBER IN ANY FURTHER TRANSACATIONS

x » v •

BDG MORTGAGE OF LEASE

2009. THIS AGREEMENT dated April _

BETWEEN:

VILLAGE GREEN HOLDINGS #2 LTD., (Incorporation No. BC0802621) having an office at 717 -1030 West Georgia Street, Vancouver, BC, V6E 2Y3

("Borrower") OF THE FIRST PART

AND:

BUSINESS DEVELOPMENT BANK OF CANADA, incorporated by Special Act of the Parliament of Canada, and having its head office at Montreal, Quebec, with a branch at One Bentall Centre, 505 Burrard Street, Suite 2100, P.O. Box 6, Vancouver, British Columbia, V7X 1M6

("BDC") OF THE SECOND PART

CONTENTS

1. Definitions 13. Notice to Borrower 2. Proviso for Redemption 14. Acceleration 3. Borrower's Representations 15. Cumulative Rights of BDC 4. Borrower's Covenants 16. No Obligation upon BDC to Advance 5. Insurance 17. BDC's Right to Pay Taxes and Other Charges 6. Taxes 18. Power to Release Premises 7. Maintenance and Improvements 19. Receiver 8. Borrower's Obligation under Prior Interests 20. No Waiver of BDC's Rights 9. Enlargement of Mortgage 21. Possession 10. Discharge 22. Multiple Obiigants 11. The Preservation of the Leasehold Interest 23. Interpretation 12. Multiple Securities

W H E R E A S :

A. By a certain Lease described in Schedule "A" hereto (the "Lease"), the landlord leased to the Borrower the Premises for the term mentioned therein;

B. BDC has agreed to advance a loan or loans to the Borrower on security of this Mortgage of lease;

C. The Borrower accepted the loan and has agreed to grant to BDC this Mortgage of the Lease;

NOW THIS AGREEMENT WITNESSES that in consideration of the premises and to secure the Obligations of the Borrower to BDC the Borrower demises, leases, and mortgages to BDC its leasehold interest in all and singular the Premises except the last day of the term thereof TO HAVE AND TO HOLD the.sarne unto, BDC ffem the date hereof for the unexpired term of the Lease save and except the last day thereof amrBgitn^wfi J-® 111 ^ie

iffidavit oL O M & J .

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 1 tworrt befoije vtp riay ritHo t/£>M fi (£1

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* Commissioner for taking Affidavits within British Columbia

extension, replacement, or substitution thereof, save and except the last day thereof, subject to the provisions for redemption hereinafter contained.

1. DEFINITIONS

(a) "Costs" when used in relation to the fees of a solicitor means the cost and expense, chargeable as between a solicitor and his own client, of any solicitor engaged by BDC and actually paid by it.

(b) "The Lease" means the Lease described in Schedule "A" hereto and include, where the context so permits, any renewal, extension, replacement, or substitution thereof.

(c) "The Obligations" means all present and future debts, liabilities and obligations now or hereafter owing by the Borrower to BDC whether direct or indirect, absolute or contingent, joint or several, matured or not, extended or renewed, wherever and however incurred, of whatsoever nature or kind, whether or not provided for herein, and whether owed by the Borrower to BDC as principal, guarantor, indemnitor or otherwise including any and all principal advances made by BDC to the Borrower and any and all subsequent re-advances made by BDC to the Borrower and interest accruing on all such amounts at the rate equal to the floating base rate of BDC for commercial and industrial loans denominated in Canadian dollars announced from to time to time, plus 10.00% per year, calculated and payable monthly in advance, both before and after maturity, default and/or judgment; provided that if the Borrower and BDC have agreed in writing in any agreement which is then in effect, that a different interest rate will apply to all or part of the debts, liabilities and obligations then such different rate shall apply.

(d) "The Premises" mean the real property described in Schedule "A" hereto and includes any building, fixture, common, way, profit, privilege, right, easement, and appurtenance belonging to or with the said real property, or any part thereof.

(e) "Taxes" includes any tax, rate, levy, charge, rent, utility charge, assessment, Statute Labour and other imposition whatsoever, whether Federal, Provincial, Municipal or other, that may already or may hereafter be rated, charged, assessed or imposed upon the Premises or on the Borrower in respect to the Premises.

2. PROVISO FOR REDEMPTION

Provided that this Mortgage shall be void upon the due performance by the Borrower of its covenants hereunder and payment of the Obligations.

3. BORROWER'S REPRESENTATIONS

The Borrower covenants and represents to BDC:

(a) that it has good legal and beneficial title to its leasehold interest in the Premises;

(b) that it has the right, capacity and authority to convey its leasehold interest in the Premises to BDC;

(c) that on default BDC shall have possession of the Premises for the remainder of the term of the Lease free from all encumbrances, save any prior interest referred to herein and save the reservation to the Borrower referred to in paragraph 2 above;

(d) that it has done no act to encumber its leasehold interest in the Premises, save as referred to in Schedule "A" hereto;

(e) that the Borrower has'done no act or been guilty of any omission or laches whereby the Lease has become in any way impaired or invalid; and,

(f) that the rent reserved in the Lease has been duly paid and the covenants therein to be performed by the Borrower have been duly performed up to the date hereof.

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 2

4. BORROWER'S COVENANTS

The Borrower covenants with BDC:

(a) that it will pay, observe, perform and satisfy all of the Obligations as and when the same are required to be paid, observed, performed and satisfied;

(b) that it will execute such further assurance of its interest in the Premises as may be requisite;

(c) that it will comply with all environmental laws, regulations and orders affecting the Premises and that it will not allow environmentally hazardous materials to be brought on or stored on the Premises or to allow the Premises to become or remain contaminated;

(d) that it will abide by and fulfill all of the terms, conditions and covenants of this Mortgage.

5. INSURANCE

(a) During the continuance of this Mortgage, and unless the Lease requires that the Lessor shall insure and keep insured any building upon the Premises, the Borrower shall:

(i) insure and keep insured any building now or hereafter erected on the Premises to its full insurable value against loss or damage by fire including Extended Coverage Endorsement;

(ii) cause the policy relating to the insurance called for above to be assigned to BDC and also cause to be affixed to the policy a mortgage clause or a mortgage endorsement, as appropriate; and

(iii) pay any premium in connection with such insurance, to deliver evidence of payment forthwith upon each premium payment and deliver the said policy to BDC, if it so requires.

(b) If proceeds of any insurance required hereunder become payable, BDC may, in its absolute discretion apply such proceeds to such part or parts of the Obligations as BDC may see fit or BDC may release any such insurance proceeds to the Borrower for the purpose of repairing, replacing or rebuilding, but any release of insurance proceeds to the Borrower shall not operate as a payment on account of the Obligations or in any way affect this Mortgage.

(c) The Borrower will forthwith, on the happening of loss or damage to the Premises, notify BDC thereof and furnish to BDC at the Borrower's expense any necessary proof, and do any necessary act to enable BDC to obtain payment of the insurance money, but nothing herein contained shall limit BDC's right to submit to the insurer a proof of loss on its own behalf.

(d) The Borrower hereby authorizes and directs the insurer under any of the insurance called for above to include the name of BDC as a loss payee in any cheque or draft which may be issued with respect to a claim settlement under and by virtue of such insurance, and the production by BDC to any such insurer of a certified copy of this Mortgage shall be its full and complete authority for so doing.

(e) If default shall be made by the Borrower in the performance or observance of the covenants to insure herein, BDC, without notice to the Borrower, may in its discretion and in the manner of its choice, maintain or effect such insurance coverage (or so much thereof as BDC considers necessary for its protection) provided, however, that nothing herein shall make BDC liable for failure to insure as herein set out.

(f) In the event of the Borrower not maintaining insurance as required herein, BDC may effect and maintain insurance which protects its own interest and not that of the Borrower.

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 3

6. TAXES

The Borrower shall promptly pay as and when due all taxes and deliver a receipt therefor to BDC forthwith upon each payment. Notwithstanding the foregoing, if the Lease provides that the Landlord shall pay all or any part of the taxes, then the Borrower shall promptly deliver to BDC a copy of a receipt therefor, or with respect to such part of the taxes as are to be paid by the Landlord, forthwith after the due date for the payment by the Landlord of the taxes or of any part thereof.

7. MAINTENANCE AND IMPROVEMENTS

(a) The Borrower shall keep the Premises in good repair and condition.

(b) The Borrower shall not permit or commit any act of waste on the Premises including, but not limited to, allowing any environmentally hazardous materials or waste to be kept, stored or spilled upon the Premises or not removed from the Premises.

(c) BDC may, at such time as BDC may deem necessary and without the concurrence of any person, enter upon the Premises and may make any arrangement for completing the construction, repairing, or putting in order of any building or other improvement on the Premises, or for inspecting, appraising, taking care of, leasing, collecting the rent of and managing generally the Premises as BDC may deem expedient.

8. BORROWER'S OBLIGATION UNDER PRIOR INTERESTS

(a) If the Lease is subject to a prior leasehold mortgage, the Borrower shall punctually pay as it becomes due any money payable under such prior mortgage;

(b) The Borrower will observe, perform and carry out any term, covenant, provision and agreement contained in any prior charge upon the Lease and undertakes to indemnify and save harmless BDC from and against any and all loss and liability thereunder;

(c) Any default of payment of money due and payable under any prior charge, the Lease, or a head lease, if the Lease is a sublease, or in the observance, performance or carrying out of any term, covenant, provision and agreement therein contained, shall be a default hereunder.

9. ENLARGEMENT OF MORTGAGE

In the event that the Borrower, at any time, extends the size of the Premises or increases its interest in the Premises then this Mortgage shall become enlarged to be a mortgage of the increased size of the Premises or of the increased interest, as the case may be.

10. DISCHARGE

The Borrower shall pay to BDC a fee to be fixed by BDC for the preparation and execution, or the execution only, of any discharge or partial discharge of this Mortgage.

11. THE PRESERVATION OF THE LEASEHOLD INTEREST

(a) In the event of any renewal, extension, replacement or substitution of the Lease being created, the Borrower will immediately so advise BDC and provide BDC with particulars of the same as well as a true copy of the renewal, extension, replacement, or substitute instrument, and, when requested by BDC, will execute such further instrument as may be required by BDC.

(b) The Borrower shall not surrender the Lease without the prior consent in writing of BDC.

(c) The Borrower shall not, during the continuance of this Mortgage, modify or assign the Lease or the reversion thereof.

Mortgage of Unregistered Lease - B.C. Page 4 Rev. Oct 30, 2003

(d) The Borrower will well and faithfully observe and conform to and comply with each and every covenant, proviso and condition contained in the Lease, including the payment of the rent thereunder reserved, and will do no act or be guilty of any default which shall or which may cause the Lease to be forfeited or determined.

(e) The Borrower will henceforth stand possessed of the Premises for the residue of the term granted by the Lease in trust for BDC, and will assign and dispose thereof as BDC may direct, but subject to the same right of redemption as is hereby given to the Borrower with respect to the derivative term hereby granted. The Borrower hereby irrevocably appoints BDC as the Borrower's attorney during the continuance of this Mortgage, and for and on behalf of the Borrower to assign the Lease and convey its leasehold interest in the Premises (including the reversion following the derivative term hereby granted) as BDC shall at any time direct, and in particular, upon any sale made by BDC under a statutory power or the power of sale herein contained, to assign the Lease and convey its leasehold interest in the Premises including the said reversion, to the purchaser. BDC, or other person for the time being entitled to the money hereby secured, may at any time, by deed, remove the Borrower or any other person from being a trustee of the Lease under the declaration of trust and on the removal of the Borrower, or any future trustee of the Lease, may, by deed, appoint a new trustee in the Borrower's place.

(f) The Borrower shall, with respect to the Lease, at the request of BDC, but at the cost, charge and expense of the Borrower, grant and assign unto BDC, or whomsoever it may appoint, the last day of the term excepted and the last day of any renewal, extension, replacement or substitute thereof. Prior to such an assignment, in the event of BDC making any sale under a statutory power or the power of sale herein contained, the Borrower shall stand seized and possessed of the Premises for the last day of the term excepted, and for the iast day of any renewal, extension, replacement or substitution thereof, and of any right of renewal in trust for the purchaser.

12. MULTIPLE SECURITIES

Default under this Mortgage constitutes default under all security and obligations held by BDC in relation to this or any other indebtedness of the Borrower to BDC and default under such other security constitutes default hereunder.

13. NOTICE TO BORROWER

Any demand or notice herein referred to may be effectively given by BDC by personal delivery thereof or by mailing such demand or notice by prepaid post to the Borrower at the address set out above, or at such other address as may be given in writing by the Borrower to BDC. Delivery by fax transmission is deemed to be personal service and is deemed to be received on the day of transmission. Delivery by prepaid mail is deemed to be received 3 business days after mailing.

14. ACCELERATION

(a) If any default shall at any time be made of or in the payment of the Obligations, or any part thereof, at the time and in the amount provided, or in payment of any taxes, or under the covenants to insure herein given, or if any default shall have occurred under or upon the Lease, or, if any default shall have been made as to any other covenant, proviso, term or agreement herein contained, or if the Borrower breaches or commits an act of default under any other security provided by the Borrower to BDC, or if the Borrower becomes bankrupt or insolvent or makes an assignment for the benefit of its creditors or makes a proposal or takes advantage of any provision of the Bankruptcy and Insolvency Act or any other legislation for the benefit of insolvent debtors, or if the Borrower conveys or sells or agrees to convey or sell its interest in the Premises without the consent of BDC then and in every such case the Obligations, and every part thereof, at the option of BDC, shall immediately become due and payable without notice in like manner and with like consequence and effect to all intents and purposes whatsoever as if the time for payment had fully come and expired, and the provisions relating to default under this Mortgage by the Borrower shall be as set out herein and the Borrower shall not be relieved from the consequences of default by payment of any money of which default of payment, if any, has been made and costs and charges related thereto.

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 5

(b) In the event of enforcement of this Mortgage, or any other security provided by the Borrower, or in the event of acceleration of the Obligations as herein provided, BDC may:

(i) take possession of the Premises;

(ii) appoint a receiver pursuant to the provisions of paragraph 19 herein of the Premises and or rents and other appropriate undertaking of the Borrower;

(iii) sell the Premises and other assets of the Borrower over which BDC holds security;

(iv) collect the rents and benefits which accrue or arise from the Premises and other assets held as security by BDC; and

(v) enforce this mortgage security and any other security granted to BDC in accordance with the terms hereof and thereof.

15. CUMULATIVE RIGHTS OF BDC

(a) BDC in its sole discretion may realize upon this Mortgage and any other security provided by the Borrower or other persons in any order or concurrently whether such security is held by it at the date hereof or is provided at any time hereafter. No realization or exercise of any power or right hereunder or under any other security shall in anyway prejudice any further realization or exercise until the Obligations have been satisfied in full.

(b) The taking of a judgment on any covenant herein contained shall not operate as a merger of the said covenant, or affect BDC's right to receive interest at the rate and time aforesaid.

(c) This Mortgage shall not operate so as to create any merger or discharge of any of the Obligations, or any assignment, transfer, guarantee, lien, contract or security interest of any form held or which may hereafter be held by BDC from the Borrower or from any other person.

16. NO OBLIGATION UPON BDC TO ADVANCE

None of the execution or the registration of the Mortgage or the advance of monies hereunder binds BDC to make any advance or further advance.

17. BDC'S RIGHT TO PAY TAXES AND OTHER CHARGES

(a) BDC may from time to time pay in whole or in part:

(i) without taking or defending any action or proceeding to determine the rights or priorities of any claimant thereto, any lien (including a Builders' Lien), taxes, charge, encumbrance, government grant, cost of suit of matter relating to any such claim, in respect of the Premises;

(ii) the costs of any solicitor or appraiser engaged by BDC in respect of, or incidental to the taking, preparing, registration, assumption, modification, extension or release of this Mortgage and/or other security now or at any time hereafter securing in whole or in part the money hereby secured including the investigation, acquisition and perfection of the estate or title of the Borrower in the Premises and other property included in such other security;

(iii) the costs or commission of any solicitor engaged by BDC in enforcing the right of BDC against any party liable for the money due under this Mortgage, or in defending, taking, recovering or keeping possession of the Premises, the collection or attempted collection of the Obligations, whether or not any action or judicial proceeding has been taken, and generally in any other proceeding or otherwise in relation to this Mortgage;

(iv) the costs of any appraiser and any environmental investigator engaged by BDC to effect any inspection, appraisal, investigation or environmental audit of the Premises and the cost of any environmental rehabilitation, removal, or repair necessary to protect, preserve or remediate

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 6

n the Premises, including any fine or penalty BDC is obliged to incur by reason of any statute, order or direction by competent authority;

(v) any money for rent or otherwise that may be due under the Lease, or under a head lease if the Lease is a sublease, or which may be required to be paid to prevent a forfeiture of the Lease, or of a head lease if the Lease is a sublease, or which may be required to be expended to otherwise rectify and make good any default under the terms of the Lease, or of a head lease if the Lease is a sublease; and,

(vi) any insurance premium, or other money (including any reasonable cost, charge, expense, allowance, and disbursement incurred or to be incurred by BDC) required to make good any default of the Borrower in observing or performing any term of this Mortgage or of the Obligations (other than the covenant for payment of principal and interest), and BDC is expressly authorized, at its option, to expend such money as may be required to make good such default.

(b) Any money paid by BDC under paragraph 17 shall from the date of payment bear interest at the rate chargeable hereunder, shall be a charge on the leasehold interest of the Borrower in the Premises in favour of BDC and be secured hereunder and shall be payable forthwith to BDC.

18. POWER TO RELEASE PREMISES

BDC may release any part of the Premises at any time at its discretion, either with or without any consideration therefor, without responsibility therefor on any account, and without thereby releasing the Borrower from any covenant herein contained. •

19. RECEIVER

(a) If and whenever BDC becomes entitled hereunder to enter into possession of the Premises it may, in its discretion, by writing appoint a Receiver of them or any part thereof and of the rent and profit thereof and from time to time remove any Receiver and appoint another in its stead and in making any such appointment BDC shall be deemed to be the agent of the Borrower.

(b) Such appointment may be made either before or after BDC shall have entered into or taken possession of the Premises or any part thereof.

(c) The Receiver may, in the discretion of BDC, be vested with any power and discretion of BDC.

(d) BDC may from time to time fix the remuneration of the Receiver and direct the payment thereof out of the proceeds of the receivership.

(e) The Receiver shall, so far as concerns the responsibility for any act of omission by it, be deemed the agent of the Borrower and in no event the agent of BDC, and BDC in making or consenting to such appointment shall not incur any liability to the Receiver for its remuneration or otherwise howsoever.

(f) Any money from time to time received by such Receiver shall be paid by it FIRSTLY in payment of any costs, charge and expense of and incidental to the appointment of the Receiver and the exercise by it of any power aforesaid including the reasonable remuneration of the Receiver and any outgoings properly paid by it, SECONDLY in or towards payment to BDC of the Obligations with full power of appropriation to BDC, and THIRDLY any surplus shall be paid to the Borrower.

(g) The rights and powers conferred by this clause are in supplement and not in substitution for any right BDC may from time to time possess.

(h) The term "Receiver" as used in this paragraph includes, at the election of BDC, a Receiver-Manager.

20. NO WAIVER OF BDC'S RIGHTS

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 7

I?

No extension of time given by BDC to the Borrower, or anyone claiming under it, shall in any way affect or prejudice any right of BDC against the Borrower for the payment of the money hereby secured and, except as herein provided, any liability and obligation of the Borrower to BDC shall survive the execution and registration of this Mortgage and shall in no way merge herewith and shall in all respects remain in full force and effect.

21. POSSESSION

Until default of any condition herein on the part of the Borrower to be performed, the Borrower shall have quiet possession of the Premises.

22. MULTIPLE OBLIGANTS

Whenever the term "Borrower" includes more than one person:

(a) any covenant, liability, and obligation entered into or imposed on the Borrower herein shall be deemed to be joint and several;

(b) each of the parties is in fact as between them (as each hereby solemnly declares) in the position of a principal debtor in respect of the Obligations and interest and notwithstanding any subsequent change in their position inter se and notice thereof given to BDC shall for the benefit and protection of BDC and for all purposes of this security remain in the position of a principal debtor hereunder and BDC shall not be bound by or be under obligation to pay any attention to any such change or notice;

(c) BDC shall be at liberty to release or discharge any of the parties from the obligations of the Mortgage or to accept any compromise from or make any other arrangement with any of them or to release in whole or in part this Mortgage or any other security given to secure the Obligations without thereby prejudicing or affecting the right and remedy of BDC against the remaining parties or security;

(d) the Borrower agrees that it shall not be released nor shall its liability be in any way reduced by reason that BDC has done or concurred In the doing of any thing whereby a surety would or might be released in whole or in part.

23. INTERPRETATION

(a) Any paragraph title is inserted herein for convenience only, and shall not be taken into account or looked at for the purpose of interpreting and giving full effect to the true meaning and intent of any term of this Mortgage.

(b) The division of this Mortgage into paragraphs and sub-paragraphs has likewise been made for the purpose of convenience and such division shall not, unless the express provisions of this Mortgage provide, or the context clearly require, be taken into account for the purpose of interpreting and giving full effect to the true meaning of any term of this Mortgage.

(c) Any grant, covenant, proviso, and agreement, right, power, privilege, or liability contained in this Mortgage shall be read and held as made by, and with, and granted to, and imposed upon the respective parties hereto and their respective heirs, executors and administrators, successors and assigns as if the words "and its heirs, executors, administrators, successors and assigns" had been inscribed in all the necessary places.

(d) Words importing the singular include the plural, and words importing the neuter gender include the feminine and masculine genders where the context or the parties so require.

(e) Wherever in this Mortgage it is stated that the Borrower or BDC will or shall do or omit any act, then the Borrower or BDC shall be deemed to have covenanted with BDC or Borrower, as the case may be, that such act shall be done or omitted, as the case may be.

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 8

(f) Time is of the essence hereof,

(g) The doctrine of consolidation shall apply to this Mortgage to the extent permitted by statute.

(h) If an agreement is made to extend the term of repayment of this Mortgage and/or to Increase the rate of interest accruing hereunder, then this Mortgage shall secure the interest payable under the said agreement as well as otherwise hereunder.

(i) Any reference to a statute herein includes any amendment thereto and any statute intended to replace that statute.

(J) No charge upon the leasehold interest of the Borrower in the Premises shall take effect, except as between the Borrower and BDC, until the consent of the Lessor, if required by the terms of the Lease, has been given in the manner specified by the Lease or has been waived by the Lessor.

(k) Notwithstanding any provision contained herein, the rights and remedies of BDC hereunder are subject to the terms of a mortgage consent agreement (the "MCA") dated on or about the date hereof among the lessor (the "Lessor") under the Lease, the Borrower and BDC. In particular, and without limiting the generality of the foregoing:

(i) this Mortgage is subject to the rights of the Lessor under the Lease; and (ii) the proceeds of all property insurance required by the Lease and this Mortgage will first be

used to repair or replace any damaged or destroyed improvements on the Premises, unless the Lessor agrees otherwise.

IN WITNESS WHEREOF the Borrower has executed this Agreement as of the date first above written.

VILLAGE GREEN HOLDINGS #2 LTD. by itS 01 'thrn-i-Torl

Name:

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 9

This is Schedule "A" to

Mortgage of Lease

Description of Lease

1. Pursuant to a lease dated February 24,1969 (the "Initial Lease") registered in the Indian Land Registry (the ("ILR") on December 18, 1969 under No. 15525, Her Majesty in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development, as lessor, leased certain lands in Cowichan Indian Reserve No. 1 to Village Green Hotel Ltd.;

2. Pursuant to an agreement dated July 12,1977 (the "First Amending Agreement") registered in the ILR on April 20,1978 under No. 57511, the Initial Lease was amended;

3. Pursuant to an agreement dated December 27,1978 (the "Second Amending Agreement") registered in the ILR on December 12,1979 under No. 67017, the Initial Lease was further amended;

4. Pursuant to an agreement dated April 20, 1987 (the "Third Amending Agreement"), registered in the ILR on May 27,1987 under No. 112233, the Initial Lease was further amended;

5. Pursuant to an Assignment of Lease dated September 30, 2002 (the "2002 Assignment of Lease") registered in the ILR on November 1, 2004 under No. 322128, the Initial Lease was assigned from Village Green Inns Ltd. (formerly known as Village Green Hotel Ltd.) to Super 8 Centre Inc.;

6. Pursuant to an Assignment of Lease dated April 30, 2008 (the "2008 Assignment of Lease") registered in the ILR on August 29, 2008 under No. 358093, the Initial Lease was assigned from Super 8 Centre Inc. to Village Green Holdings #2 Ltd.;

7. Pursuant to a modification and extension of lease dated October 23, 2008 (the "2008 Amendment") registered in the ILR on December 1, 2008 under no. 360084, the Initial Lease was further amended and extended over additional lands, and as a result, the lands then intended to be demised by the Initial Lease, as previously assigned and amended, comprised approximately 2.17 hectares, as shown outlined in bold on the sketch attached as Appendix "B-1" to the 2008 Amendment and now more particularly described as follows:

PIN: 902001751S Lot 128 Parcel A Plan CLSR 55754 . and PIN: 902001747S Lot 128 Plan CLSR 53124 and that portion of: PIN: 902513050 Lot 590 Plan CLSR 85664 shown cross-hatched on the plan attached as Appendix B to the 2008 Amendment, (the "Lands")

(The Initial Lease, as subsequently amended, assigned and extended as aforesaid, is collectively referred to as the "Lease").

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 10

3\ PROOF OF EXECUTION BY CORPORATION

I CERTIFY that on the Ar day of . , 2009, at the City of \ffir\Cckhie*rin the Province of British Columbia, Lnu )/ynce , who is

personally known to me, appeared before me and acknowledged to me that he is the authorized signatory for Village Green Holdings #2 Ltd., and that he is the person who subscribed his name to the instrument, that he was authorized to subscribe his name to it and that the corporation existed at the date the instrument was executed by the corporation.

IN TESTIMONY of which I have set my hand at the City of \jc\ nc ove - , in the Province of British Columbia, this V-S-V- day of Apr i > , 2009.

A Commissioner for taking Affidavits within British Columbia

R. MAX COLLETT BARRISTER cfe SOLICITOR BULL, HOUSSER &TUPPER UP

• #3000, 1055 WEST GEORGIA VANCOUVER, B.C. V6E 3R3 (604) 641-4912

Mortgage of Unregistered Lease - B.C. Rev. Oct 30, 2003

Page 11

REGISTERED IN INDIAN LAND REGISTRY, OTTAWA

AS NUMBER "£>£ *4 'XQ* on THE

o \ _ D A Y O F

PLEASE QUOTE ABOVE NUMBER IN ANY FURTHER TRANSACATIONS

$BDO

ASSIGNMENT OF RENTS

THIS ASSIGNMENT OF RENTS dated April

BETWEEN:

•3-. 2009.

VILLAGE GREEN HOLDINGS #2 LTD., (Incorporation No. BC0802621) having an office at 717 - 1030 West Georgia Street, Vancouver, BC, V6E 2Y3

("Assignor")

AND:

BUSINESS DEVELOPMENT BANK OF CANADA, incorporated by Special Act of the Parliament of Canada, and having its head office at Montreal, Quebec, with a branch at One Bentall Centre, 505 Burrard Street, Suite 2100, P.O. Box 6, Vancouver, British Columbia, V7X 1M6

("Bank")

WHEREAS:

A. The Assignor is the tenant under a head lease (the "Headlease") granted by Her Majesty in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development ("the Head Landlord") and as more particularly described in Schedule "A" attached hereto, in respect of lands in the Province of British Columbia as described in Schedule "A" attached hereto (the "Lands").

B. The Assignor, Village Green Holdings Limited Partnership and Village Green Holdings #3 Ltd. (collectively, the "Borrower") have requested that the Bank from time to time make available to them various credit facilities totalling up to $6,000,000 (the "Maximum Amount") to which request the Bank has agreed on the condition, among other things, that this Assignment be executed and delivered by the Assignor.

C. This Assignment is collateral to a mortgage of the Headlease dated ^ contemporarily herewith granted by the Assignor in favour of the BankThis is ExhibitM s referred to in :

affidavit of

• . sworn hep

19904.104710.CAR.3302289.1 stoner for taking Affidavits

'Within British Columbia

Page 2 of 12 Pages

THEREFORE in consideration of the premises and of other consideration (the receipt and sufficiency of which is hereby acknowledged by the Assignor) the parties agree as follows:

1. DEFINITIONS

In this Assignment, the following words and phrases have the meanings indicated:

"Assignor's Address" means the address of the Assignor described above or any other address that the Assignor may notify the Bank of in writing:

"Assignor's Interest" means the Assignor's presently held right, title and interest in and to the Lands and any other right, title or interest that the Assignor may in the future acquire in the Lands and includes, without limitation, all the Assignor's right, title and interest as tenant under the Headlease, and as sublessor under all Subleases;

"Bank's Address" means the address of the Bank described above or any other address that the Bank may notify the Assignor of in writing;

"Environmental Laws" means any and all international, federal, provincial, state, municipal or local laws, regulations, treaties, orders, judgements, decrees, ordinances, official directives and authorizations relating to the environment, Hazardous Materials or occupational health and safety from time to time having application to the Lands, the Assignor or the Assignor's Interest;

"Floating Base Rate" means the annual interest rate established from time to time by the Bank as the floating rate it will use to determine rates of interest payable by the Borrower on Canadian dollar loans made by the Bank in Canada and which rate is designated by the Bank as its floating base rate;

"Hazardous Materials" means all hazardous or toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives, chemicals known to cause cancer or reproductive toxicity, emissions, washes and all other chemicals, materials and substances, the handling, storage, release, transportation or disposal of which is or becomes prohibited, limited or regulated by any governmental or regulatory authority, or which, even if not so regulated, is or becomes known to pose a hazard to the health and safety of any person, including, without limitation, asbestos, petroleum and petroleum by­products, urea formaldehyde foam insulation, polychlorinated biphenyls, all substances from time to time designated as or considered to be a "contaminant", "waste", "hazardous substance", "hazardous material", "toxic substance" or a similar designation under any Environmental Law, including without limitation, the Canadian Environmental Assessment Act, having application to the Lands, the Collateral, the Assignor orthe Assignor's Interest;

"Indebtedness" means all present and future indebtedness and liability (whether absolute, contingent, direct, indirect, matured, unmatured, extended, renewed, joint or several) of the Assignor, the Borrower or any of them, to the Bank, wheresoever and howsoever incurred and any ultimate balance thereof, including, without limitation, all advances on current or running account, future advances and re-advances, Interest and all costs, expenses and other moneys payable to the Bank whether or not referred to in this Assignment;

19904.104710.CAR.3302289.1

Page 3 of 12 Pages

"Interest Rate" means the rate per annum equal to the aggregate of 10% and the Floating Base Rate in effect from time to time, and such rate shall change automatically, without notice to the Assignor, on each date the Floating Base Rate is changed by the Bank;

"Permitted Encumbrances" means charges affecting the Lands or the Assignor's Interest consented to in writing by the Bank;

"person" includes an individual, a corporation and a partnership of individuals or corporations or a combination thereof;

"Place of Payment" means the Bank's Address;

"Sublease" means any sublease of a portion of the residential housing development being constructed on the Lands from time to time granted by the Assignor, as sublessor, to third party sublessees;

2. ASSIGNMENT OF RENTS

2.1 The Assignor transfers and assigns to the Bank absolutely all rents and moneys (the "Rents") now due and payable or which may hereafter become due and payable under all existing and future Subleases, together with the benefit of all covenants and rights contained in the Subleases and the full power and authority to demand, collect, sue for, distrain for, recover, receive and give receipts for the Rents and to enforce payment thereof in the name of the Assignor, as security for payment of the Indebtedness.

2.2 The Assignor covenants and agrees with the Bank that:

(a) it has not and will not do or omit to do any act having the effect of terminating, cancelling or accepting surrender of any Sublease or of waiving, releasing, reducing or abating any rights or remedies of the Assignor or obligations of any other party thereunder or in connection therewith;

(b) none of such rights, remedies or obligations are or will be affected by any other agreement, document or understanding or by any reduction, abatement, defence, set-off, or counterclaim, except as herein expressly provided;

(c) no Sublease or the Assignor's rights thereunder including the right to receive the Rents, will be amended, assigned, encumbered or discounted;

(d) none of the remainder of the Rents has been or will be paid prior to the due date for payment thereof, except as may be provided in the Subleases;

(e). there is no existing default in payment of rent under any of the Subleases by any of the parties thereto;

(f) there is no outstanding dispute under any of the Subleases between the Assignor and any other party thereto; •

(g) the Assignor will observe and perform all of its obligations under the Subleases;

19904.104710.CAR.33O2289.1

Page 4 of 12 Pages

(h) a true copy of each Sublease will be delivered by the Assignor to the Bank upon demand by the Bank;

(i) the Assignor will execute such further assurances as may be required by the Bank from time to time to perfect this assignment;

(j) nothing herein contained shall have the effect of making the Bank responsible for the collection of the Rents, or for the performance of or in respect of any Sublease to be observed or performed by the Assignor and the mortgagee shall not, by virtue of this assignment or its receipt of the Rents become or be deemed a mortgagee in possession of the Lands and the Bank shall not be under any obligation to take any action or exercise any remedy in the collection or recovery of the Rents or to see to or enforce the performance of the obligations and liabilities of any person under or in respect of any Sublease and the Bank shall be liable to account only for such monies as shall actually come into its hands, less proper collection charges, and such monies may be applied on account of the Indebtedness; and

(k) upon demand by the Bank at any time, the Assignor shall, and the Bank, at any time, may notify each and every one of the parties so obligated to pay the Rents, that the same have been assigned to the Bank.

2.3 This Assignment will be void upon:

(a) payment to the Bank on demand of the principal amount of the Indebtedness up to the Maximum Amount;

(b) payment to the Bank on demand of Interest, both before and after maturity and before and after judgement, on the principal amount of the Indebtedness outstanding from time to time, up to the Maximum Amount;

(c) payment of all costs, expenses and other moneys to which the Bank is entitled by virtue of this Assignment as and when such moneys become due and payable; and

(d) observance arid performance of all covenants, provisos and conditions herein contained.

2.4 Every part into which the Assignor's Interest is or may hereafter be divided stands and shall stand charged with the whole of the Indebtedness and no person shall have any right to require the Indebtedness to be apportioned upon or in respect of such parts but the Bank may release any part or parts of the Assignor's Interest with or without sufficient consideration and without releasing the Assignor from this Assignment.

2.5 This Assignment is and shall be a continuing security to the Bankforthe payment of all present and future amounts owing in respect of the Indebtedness, notwithstanding that there shall have been:

(a) any apparent change in the nature, state or form of any account of the Assignor or the Borrower with the Bank;

19904.104710.CAR.3302289.1

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(b) any new advance or re-advance by the Bank to the Assignor or the Borrower, whether by ioan, discount, the drawing of a cheque by the Assignor or the Borrower or otherwise;

(c) any discount or acceptance by the Bank from or for the Assignor or the Borrower of any promissory note, bill of exchange, other negotiable instrument or other commercial paper;

(d) any credit of any amount to any account of the Assignor or the Borrower by reason of deposit of moneys or otherwise; or

(e) any renewal, replacement, substitution, alteration, reduction, satisfaction, payment, release or discharge of any promissory note, bill of exchange, other negotiable instrument or other commercial paper from time to time held by the Bank or any security held therefor;

and no such event shall be deemed to be a repayment on account of the Indebtedness or any part thereof or call for or require an application as payment on account of the Indebtedness or any part thereof, or in any way affect the security of this Assignment, unless some officer of the Bank shall give a written receipt to the Assignor to that express effect.

2.6 The charge intended to be created by this Assignment shall not become effective until, but shall become effective immediately when, all consents necessary for the validity and effectiveness of such charge have been obtained.

3. REPRESENTATIONS AND WARRANTIES

The Assignor represents and warrants to the Bank that:

(a) the Assignor has the right to grant this Assignment to the Bank, subject to the prior written consent of the Head Landlord;

(b) the Assignor has good title to the Assignor's Interest subject only to Permitted Encumbrances;

(c) the Assignor has done no act to encumber the Assignor's Interest except for Permitted Encumbrances; and

(d) there are no environmental risks or liabilities, or breaches or allegations of breaches of Environmental Laws, known to the Assignor o-to the Assignor's directors and officers, which have not been disclosed to t'le Bank;

(e) the Headlease is in good standing, all rents and other moneys payable under the Headlease have been paid and all other obligations thereunder of the Assignor have been performed or complied with.

4. DEFAULT

Unless waived by the Bank in writing, each of the following shall be an event of default under this Assignment:

19904.104710.CAR.3302289.1

• at

Page 6 of 12 Pages

(a) default of payment of the Indebtedness, or any part thereof, when due;

(b) breach by the Assignor of any other covenant or agreement herein contained which breach is not rectified within 10 days of notice thereof to the Assignor;

(c) default of payment of any moneys payable under, or in the observance or performance of any covenant, agreement, term or condition of, any charge on the Assignor's Interest or any instrument creating or pertaining to the Assignor's Interest;

(d) breach by the Assignor or the Borrower of any covenant or agreement in any other agreement between the Bank and any of them which breach is not rectified within the time provided for therein or, if no such time for rectification is specified, within 10 days of notice thereof to the Assignor or the Borrower, as the case may be;

(e) the Assignor or the Borrower makes an assignment for the benefit of its creditors, is declared bankrupt, makes a proposal or otherwise takes advantage of provisions for relief under the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act or similar legislation in any jurisdiction, or makes an authorized assignment;

(f) a Receiver of all or any part of the Assignor's Interest is appointed;

(g) an order of execution against the Assignor's Interest or any part thereof remains unsatisfied for a period of 10 days;

(h) any representation or warranty, whether or not contained herein, by or on behalf of the Assignor or the Borrower to the Bank is untrue;

(i) without the prior written consent of the Bank, the Assignor creates or permits to exist any mortgage, lien or charge on, claim against, or security interest in, the Assignor's Interest;

0) the holder of any other mortgage, lien or charge on, claim against, or security interest in, the Assignor's Interest does anything to enforce or realize on such mortgage, lien, charge, claim or security interest;

(k) all or any portion of the Assignor's Interest is expropriated;

(I) an order is made or an effective resolution is passed for winding up the Assignor or the Borrower;

(m) the Assignor or the Borrower enters into an amalgamation, a merger or other similar arrangement with any other person, without the prior written consent of the Bank;

(n) the Assignor or the Borrower ceases, or threatens to cease, to carry on its business;

(o) there is a change in control of the Assignor or the Borrower; or

19904.104710.CAR.3302289.1

Page 7 of 12 Pages

(p) there is a default by the Assignor under the Headlease.

5- GENERAL COVENANTS

5.1 The Assignor will execute such further assurances as the Bank may require.

5.2 The Assignor will forthwith pay or cause to be paid all costs, charges, expenses and legal fees (between solicitor and his own client) which may be incurred by the Bank in:

(a) inspecting and investigating the Lands;

(b) investigating title to the Assignor's Interest;

(c) negotiating, preparing and registering this Assignment and other necessary instruments;

(d) all other actions and proceedings taken in connection with or to realize on the security of this Assignment, or to protect or enforce the Bank's rights hereunder (including the Bank's cost of the time and services of the Bank's employees); and

(e) preparing and executing a discharge of this Assignment

5.3 The taking of a judgment or judgments on any of the covenants herein contained shall not operate as a merger of such covenants or affect the Bank's right to Interest and any such judgement shall provide that interest thereon be computed at the same rate or rates and in the same manner as herein provided until that judgement has been fully paid and satisfied.

5.4 Any portion of the Indebtedness may be advanced or re-advanced by the Bank in one or more sums at any future date or dates by:

(a) direct advances to the Assignor or the Borrower;

(b) the issue of letters of credit or letters of guarantee at the request of the Assignor or the Borrower and payment under such letters of credit or letters of guarantee to the beneficiaries thereof; or

(c) the acceptance of bills of exchange issued by the Assignor or the Borrower and payment of such bills of exchange to the holders thereof;

and the amount of such advances, re-advances and payments when so made shall be secured by this Assignment and be repayable with Interest and this Assignment shall be deemed to be taken as security for the ultimate balance of the Indebtedness, whether arising from the current and running accounts represented by advances, re-advances and payments as aforesaid by the Bank to the Assignor or the Borrower under a line of credit or a current loan, or otherwise, and the mortgage and security interest created by this Assignment shall take effect forthwith on the execution of this Assignment. If this Assignment is redeemed by the Assignor, it shall be cancelled and shall not be re-issued but:

19904.104710.CAR.3302289.1

Page 8 of 12 Pages

(d) any partial payment made thereon by the Assignor or the Borrower to the Bank; or

(e) any ceasing by the Assignor or the Borrower to be indebted to the Bank;

shall be deemed not to be a redemption or cancellation pro tanto or otherwise, and this Assignment shall be and remain valid security for any subsequent advance or re-advance by the Bank to the same extent as if such advance or re-advance had been made on the execution of this Assignment.

5.5 Except to the extent that the Bank issues letters of credit or letters of guarantee or accepts bills of exchange or other negotiable instruments at the request of the Assignor or the Borrower and is required to make payments thereunder:

(a) neither the execution nor the registration of this Assignment shall bind the Bank to advance any moneys;

(b) the advance of moneys or any part thereof under this Assignment shall be in the sole discretion of the Bank;

(c) the advance of moneys from time to time shall not bind the Bank to advance any further moneys.

5.6 Any and all payments made in respect of the Indebtedness and the moneys or other proceeds realized from any securities held therefor (including this Assignment) may be applied, and re-applied, notwithstanding any previous application, on such part or parts of the Indebtedness or such other indebtedness and liability of the Assignor or the Borrower to the Bank as the Bank may see fit.

5.7 This Assignment shall not nor shall anything herein contained operate so as to create any merger, rebate or discharge of any debt owing to the Bank or of any lien, bond, promissory note, bill of exchange, guarantee or other security held by or which may hereafter be held by the Bank from the Assignor or the Borrower or from any other person or persons whomsoever, and this Assignment shall not in any way prejudicially affect any security held or which may hereafter be held by the Bank for such indebtedness or the Indebtedness or any part or parts thereof or the liability of any endorser or any other person or persons upon any such lien, bond, promissory note, bill of exchange, guarantee or other security or any renewal thereof or replacement or substitution therefor held by the Bank for or on account of such indebtedness or the Indebtedness or any part or parts thereof.

5.8 The taking of this Assignment shall not operate as a merger of the remedies of the .Bank for payment of the Indebtedness or of the remedies of the Bank under any lien, bond, promissory note, bill of exchange, other negotiable instrument, other commercial paper or guarantee and notwithstanding this Assignment or anything contained herein such remedies shall remain intact and be capable of enforcement against the Assignor any Customer and all other persons liable for the Indebtedness or any part or parts thereof in the same manner and to the same extent as if this Assignment had not been executed.

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Page 9 of 12 Pages

5.9 The Bank may grant time, renewals, extensions, indulgences, releases and discharges to, may take securities from and give the same and any and all existing securities up to, may abstain from taking securities from or from perfecting securities of, may accept compositions from, and may otherwise deal with, the Assignor, the Borrower and all other persons and securities as the Bank may see fit without prejudicing the rights of the Bank under this Assignment.

5.10 No sale or other dealing by the Assignor with the equity of redemption in the Assignor's Interest shall in any way change the liability of the Assignor or in any way alter the rights of the Bank as against the Assignor, the Borrower or any other person liable for payment of the Indebtedness.

5.11 The Assignor will observe and perform all covenants, agreements, terms and conditions in all instruments creating or pertaining to the Assignor's Interest, including, without limitation, the Headlease and the Subleases.

5.12 The Assignor will adhere to and comply with all laws, regulations, rules, notices and orders of Canada, British Columbia or any municipality or other authority (including, without limitation, the Band Council of the Cowichan Indian Band) having or claiming jurisdiction over the Lands and affecting the Lands or the Assignor's Interest including, without limitation, Environmental Laws.

5.13 The Assignor shall indemnify the Bank, and its officers, directors, employees, agents and shareholders, in their capacities as such, and hold each of them harmless from and against any and all losses, liabilities, damages, costs, expenses and claims of any and every kind whatsoever, including, without limitation: '

(a) the cost, liability or damage arising out of defending, counterclaiming or claiming over against third parties in respect of any action or matter;

(b) any cost, liability or damage arising out of a settlement of any action or proceeding entered into by the Bank; and

(c) the costs of complying with the order, direction or request of any governmental or regulatory authority having jurisdiction;

which at any time or from time to time may be paid, incurred or asserted against any of them for, with respect to or as a result of:

(d) the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release from the Lands or into or upon any land, the atmosphere or any watercourse, body of water or wetlands of any Hazardous Material where it has been proven that the source of the Hazardous Material is the Lands; and

(e) any Environmental Laws.

This clause 5.13 shall survive the repayment of the Indebtedness and all other amounts owing under this Assignment and the granting of an order absolute of foreclosure of the Lands and shall continue in full force and effect so long as any possibility of any such

19904.104710.CAR.3302289.1

Page 10 of 12 Pages

liability, claim or loss exists and shall apply notwithstanding any knowledge which any of the foregoing persons may have concerning such liabilities, claims or losses either now or in the future.

6. INTERPRETATION AND MISCELLANEOUS

6.1 Every certificate signed by an officer of the Bank purporting to show:

(a) the amount of Indebtedness at any particular time due and payable under this Assignment shall be prima facie evidence as against the Assignor of the amount due and payable at such time under this Assignment; and

(b) the Floating Base Rate at any particular time shall be conclusive evidence of the Floating Base Rate at that time.

6.2 The invalidity or unenforceability of the whole or any part of any clause of this Assignment shall not affect the validity or enforceability of any other clause or the remainder of such clause.

6.3 The headings for clauses of this Assignment have been inserted for reference only and do not define, limit, alter or enlarge the meaning of any provision of this Assignment.

6.4 Time shall be of the essence hereof.

6.5 The Bank may from time to time and at any time waive in whole or in part the benefit to it of any provision in this Assignment or any default by the Assignor, but such waiver on any occasion shall be deemed not to be a waiver of such provision thereafter or of any subsequent default but no waiver shall be binding on the Bank unless it is in writing.

6.6 In accordance with the Property Law Act, the doctrine of consolidation is not abolished with respect to this Assignment.

6.7 All provisions hereof shall have effect to the maximum extent permitted by law, notwithstanding any agreement to the contrary.

6.8 Whenever the singular or masculine is used in this Assignment the same shall be deemed to include the plural or the feminine or the body corporate as the context may require.

6.9 This Assignment shall enure to the benefit of and be binding upon the parties hereto and their successors and assigns.

6.10 Any demand or notice herein referred to, or any notice or document relating to any action or other proceeding concerning this Assignment, may be effectively given to the Assignor by the Bank:

(a) by delivering the same or mailing the same by prepaid registered post to the Assignor at the Assignor's Address;

(b) by delivering the same or mailing the same by prepaid registered post to the Assignor at its registered office; or

19904.104710.CAR.3302289.1

Page 11 of 12 Pages

(c) by publishing the same twice in some newspaper published or circulating in the county or district in which the Lands are situate;

and to the Bank by the Assignor by mailing such notice by prepaid registered post to the Bank at the Bank's Address.

6.11 The Assignor waives all rights to receive from the Bank a copy of any financing statement or financing change statement filed, or any verification statement received, at any time in respect of this Assignment.

IN WITNESS WHEREOF the Assignor has executed this Agreement as of the date first above written.

VILLAGE GREEN HOLDINGS #2 LTD. by its authorized signatory:

Name: lAvofi&tfte /fy)AJj£~

19904.104710.CAR.3302289.1

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SCHEDULE A Description of Lease

1. Pursuant to a lease dated February 24,1969 (the "Initial Lease") registered in the Indian Land Registry (the ("ILR") on December 18, 1969 under No. 15525, Her Majesty in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development, as lessor, leased certain lands in Cowichan Indian Reserve No. 1 to Village Green Hotel Ltd.;

2. Pursuant to an agreement dated July 12,1977 (the "First Amending Agreement") registered in the ILR on April 20,1978 under No. 57511, the Initial Lease was amended;

3. Pursuant to an agreement dated December 27,1978 (the "Second Amending Agreement") registered in the ILR on December 12,1979 under No. 67017, the initial Lease was further amended;

4. Pursuant to an agreement dated April 20,1987 (the "Third Amending Agreement"), registered in the ILR on May 27,1987 under No. 112233, the Initial Lease was further amended;

5. Pursuant to an Assignment of Lease dated September 30, 2002 (the "2002 Assignment of Lease") registered in the ILR on November 1, 2004 under No. 322128, the Initial

. Lease was assigned from Village Green Inns Ltd. (formerly known as Village Green Hotel Ltd.) to Super 8 Centre Inc.;

6. Pursuant to an Assignment of Lease dated April 30, 2008 (the "2008 Assignment of Lease") registered in the ILR on August 29, 2008 under No. 358093, the Initial Lease was assigned from Super 8 Centre Inc. to Village Green Holdings #2 Ltd.;

7. Pursuant to a modification and extension of lease dated October 23, 2008 (the "2008 Amendment") registered in the ILR on December 1, 2008 under no. 360084, the Initial Lease was further amended and extended over additional lands, and as a result, the lands then intended to be demised by the Initial Lease, as previously assigned and amended, comprised approximately 2.17 hectares, as shown outlined in bold on the sketch attached as Appendix "B-1" to the 2008 Amendment and now more particularly described as follows:

PIN: 902001751S Lot 128 Parcel A Plan CLSR 55754 and PIN: 902001747S Lot 128 Plan CLSR 53124 and that portion of: PIN: 902513050 Lot 590 Plan CLSR 85664 shown cross-hatched on the plan attached as Appendix B to the 2008 Amendment. (the "Lands")

(The Initial Lease, as subsequently amended, assigned and extended as aforesaid, is collectively referred to as the "Lease").

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PROOF OF EXECUTION BY CORPORATION

I CERTIFY that on the 1^- day of Ap-\ 1 2009, at the City of Vancouver, in the Province of British Columbia,

P^p>Vc , who is personally known to me, appeared before me and acknowledged to me that he is the authorized signatory for Village Green Holdings #2 Ltd., and that he is the person who subscribed his name to the instrument, that he was authorized to subscribe his name to it and that the corporation existed at the date the instrument was executed by the corporation.

IN TESTIMONY of which I have set my hand at the City of Vancouver, in the Province of British Columbia, this \-&>r day of A-pv\ > , 2009.

A Commissioner for taking Affidavits within British Columbia

R. MAX COLLETT BARRISTER & SOLICITOR BULL, HOUSSER & TUPPER LLP

#3000, 1055 WEST GEORGIA VANCOUVER, B.C. V6E 3R3 (604) 641-4912

19904.104710.CAR.3302289.1

REGISTERED IN INDIAN LAND REGISTRY, OTTAW,

AS NUMBER d>€ H Q, > "7 pn TH.

Qf DAY OF

PLEASE QUOTE ABOVE NUMBER IN ANY FURTHER TRANSACATIONS

31

THIS PRIORITY, POSTPONEMENT and STANDSTILL AGREEMENT is dated as of the day of March, 2009.

BETWEEN:

COWICHAN MINI MALL LTD, #200 - 44 Queens Road, Duncan, B.C. V9L 2W4

(the "Grantor")

AND: •

BUSINESS DEVELOPMENT BANK OF CANADA BDC Tower, One Bentall Center, Suite 2100 505 Burrard Street, Vancouver, B.C. V7X 1M6

(the "Senior Creditor")

1. DEFINITIONS AND INTERPRETATION

1.1. Unless the context otherwise requires, the following terras will have the following meanings herein: ,

"Charge" means any security interest, mortgage, charge (fixed or floating), pledge, lien (statutory or otherwise), assignment, lease, conditional sale or other title retention agreement, trust or other encumbrance of any nature however arising, including, in the case of the Grantor, any right of first refusal or option to purchase granted by the Debtor in respect of its interest in the Lands.

"Debtor" means Village Green Holdings Limited Partnership and Village Green Holdings #2 Ltd., or either of them.

"Debtor/Grantor Loan Agreement" means the Loan Agreement dated January 30, 2009 between the Grantor, as lender, and Village Green Holdings Limited Partnership, as borrower, concerning a term loan of $1,250,000.

"Debtor's Property" means all present and after-acquired real and personal property and other assets and undertaking of the Debtor, and all direct and indirect proceeds thereof of whatever nature or kind, now or hereafter subject to the Senior Creditor's Security, including, without limitation the leasehold interest in the Lands pursuant to the Lease held by Village Green Holdings #2 Ltd., as nominee, agent and bare trustee for Village Green Holdings Limited Partnership, and any reference to "Debtor's Property" will unless otherwise provided be deemed to refer to the Debtor's Property as a whole or any parts thereof.

This is Exhibit referred to in the '/)£ew,

188D4.104710.8Ba.328mO,8

affidavit of.

sworn befor^ me /thi

A Cornmissiofierfor raking Affidavits within British Columbia'

"Debtor to Grantor Liabilities" means all present and future debts, liabilities and other obligations, whether absolute or contingent, matured or unmatured, at any time or from time to time owing or otherwise due by the Debtor to the Grantor, including, without limitation all obligations (inoluding a right of first refusal and option to purchase) owing by the Debtor to the Grantor pursuant to a loan agreement dated January 30, 2009, a copy of which is attached as Schedule B hereto.

"Debtor to Senior Creditor Liabilities" means all present and future debts, liabilities and other obligations, whether absolute or contingent, matured or unmatured, at any time or from time to time owing or otherwise due by the Debtor to the Senior Creditor.

"Grantor's Security" means all present and future Charges on the Debtor's Property in favour of or held by the Grantor (or any predecessor thereof), including, without limitation one or more mortgages charging the Debtor's legal and beneficial interest in and to the Lease and the Lands.

"Lands" means the lands so described in Schedule A.

"Lease" means the lease so described in Schedule A.

"Senior Creditor's Security" means all present and future Charges on the Debtor's Property in favour of or held by the Senior Creditor (or any predecessor thereof) , including, without limitation one or more mortgages charging the Debtor's legal and beneficial interest in and to the Lease and the Lands.

1.2. This Agreement will be governed by the laws in effect in British Columbia.

1.3. This Agreement will enure to the benefit of and be binding upon the parties and their respective heirs, personal representatives, successors and permitted assigns,

1.4. The invalidity or unenforceability of any provision of this Agreement will not affect the remaining provisions or the remainder of the impugned provision,

1.5. Unless the context otherwise requires, words importing the singular will include the plural and vice versa, and words importing gender will include all genders,

1.6. Headings have been inserted for convenience of reference only and are not to affect interpretation.

1.7. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all oral agreements, undertakings and understandings among the parties with respect to the subject matter hereof.

sa0?178,a

2. GRANT OF PRIORITY

2.1. In consideration of the Senior Creditor extending credit to or to the order of the Debtor on the security of the Senior Creditor's Security and other good and valuable consideration, the Grantor grants priority to the Senior Creditor's Security over the Grantor's Security with respect to the Debtor's Property to the intent that the interests of the Grantor in and to the Debtor's Property pursuant to the Charges created by the Grantor's Security shall be subordinate and subject in all respects to the interest of the Senior Creditor in the Debtor's Property pursuant to the Charges created by the Senior Creditor's Security.

2.2. All proceeds arising from the Debtor's Property received by the Grantor in connection with any enforcement of or realization on the Grantor's Security, and ail payments and other assets received by the Grantor on account of the Debtor to Grantor Liabilities, whether upon a receivership, bankruptcy, winding-up, liquidation, reorganization or other insolvency proceedings, will be held by the Grantor in trust for the Senior Creditor so as to give effect to the priorities provided for herein and will be paid over or otherwise provided to the Senior Creditor forthwith upon demand.

2.3. If any person, firm or corporation other than a party hereto is found by a court of competent jurisdiction to have a right to the Debtor's Property in priority to the Senior Creditor but not in priority to the Grantor, then this Agreement will not apply so as to diminish the rights (as those rights would have been but for this Agreement) of the Grantor with respect to such Debtor's Property unless the Senior Creditor is diligently contesting such finding and has provided the Grantor with a satisfactory indemnity.

2.4. The grant of priority provided for herein will apply in all events and circumstances regardless oft

(a) the dates of execution, delivery and registration, of the Grantor's Security and the Senior Creditor's Security, and the dates of creation, attachment, perfection and existence of the Charges ereated thereby;

(b) the dates of all past, present and future advances, re-advances and other extensions of credit made by the Grantor or the Senior Creditor for the benefit of the Debtor, and the dates of all other past, present and future liabilities incurred by the Debtor in favour of the Grantor or the Senior Creditor;

(c) the dates of any past, present or future defaults by the Debtor under the Grantor's Security or the Senior Creditor's Security, and the dates of crystallization of any floating charges created thereby;

(d) the dates any demands for payment are made, the dates any notices are given, and any failure to make or give any such demands or notices;

18904.164710.SSB.32871 W.S

(e) any contrary intention expressed in the Senior Creditor's Security, the Grantor's Security or any other documents; and

(f) any priority granted by any principle of law or equity or any statute, including the Bank Act and applicable personal property security legislation.

2.5, In order to give notice in the Personal Property Registry of the grant of priority provided for herein, the Grantor authorizes the Senior Creditor's solicitors to sign and file financing change statements) amending the financing statement(s) filed in respect of the Grantor's Security by adding the following text as an "Amendment/Other Change":

"Subordination Agreement dated as of March , 2009 granting priority to the Senior Creditor's security interests perfected by base registration number • over the Grantor's security interests perfected by base registration number •.

2.6. The rights, remedies and powers of the Grantor in connection with the Grantor's Security are hereby modified in accordance with the provisions hereof, and the terms and conditions of the Grantor's Security are hereby modified accordingly.

3. POSTPONEMENT

3.1. Subject to section 3.2, the Grantor postpones payment of the Debtor to Grantor Liabilities to the prior payment and satisfaction in full of the Debtor to Senior Creditor Liabilities and for the puiposes hereof assigns to the Senior Creditor all of the Debtor to Grantor Liabilities. Without the prior written consent of the Senior Creditor, the Grantor shall not receive from the Debtor any payments, whether of principal, interest, fees, costs or expenses under the Debtor to Grantor Liabilities, while any of the Debtor to Senior Creditor Liabilities remains outstanding.

3.2. The consent of the Senior Creditor to payment of any Debtor to Grantor Liabilities will be conditional upon the Senior Creditor being satisfied, in its sole discretion, that:

(a) the Debtor is not in default of any of the Debtor to Senior Creditor Liabilities or under any of the Senior Creditor's Security; and

(b) the making of any such payment of Debtor to Grantor Liabilities will not render the Debtor in default of any Debtor to Senior Creditor Liabilities or under any of the Senior Creditor's Security.

4. ENFORCEMENT

4.1. The Grantor hereby agrees that until repayment and satisfaction of all Debtor to Senior Creditor Liabilities, the Grantor will not, without the prior written consent of the Senior Creditor, make any demand for payment or accelerate payments required under or in connection with any credit agreement, promissory note or similar agreement, present or future, between the Debtor and the Grantor, or under or in connection with the Grantor's

199Q4.10471Q.SEB.32B7170.3

Security, or commence any proceeding to enforce any of its remedies under or in connection with any such credit agreement, promissory note or similar agreement or the Grantor's Security, unless and until the Senior Creditor has commenced to enforce the Senior Creditor's Security against the Debtor's Property, and even then only while the Senior Creditor is continuing to so enforce.

4.2. The Senior Creditor may, but is not obliged, prior to making any demand for payment on the Debtor or commencing any proceeding to enforce any of the Senior Creditor's Security, to give the Grantor written notice of any default (a "Default") under any of the Debtor to Senior Creditor Liabilities or any of the Senior Creditor's Security. The Grantor shall have the right to cure any Default which is a curable Default, within 5 business days of the notice being given.

5. REPRESENTATIONS, COVENANTS OF GRANTOR

5.1. The Grantor represents and warrants that it is the legal and beneficial holder of the Grantor's Security and the Charges created thereby and the Debtor to Grantor Liabilities, in each case free and clear of all Charges (except for a financing extended by Peace Hills Trust to the Grantor in respect of which the Grantor granted a general security agreement to Peace Hills Trust), and that, to the best of the Grantor's knowledge, there is no outstanding default by the Debtor under the Grantor's Security, .

5.2. The Grantor has good right, full power and lawful authority to enter into this Agreement and to agree to the grant of priority and postponement provided for herein, and all necessary resolutions have been passed and all other necessary steps have been taken to authorize the execution and delivery of this Agreement.

5.3. The Grantor consents to, and waives any default under the Grantor's Security that may otherwise have occurred by reason solely of the execution, delivery and registration of the Senior Creditor's Security and the creation, attachment, perfection and existence of the Charges created thereby, and the incurring of the Debtor to Senior Creditor Liabilities.

5.4. The Grantor will not assert in any action, suit or proceeding whatsoever the invalidity, unenforceability or ineffectiveness of this Agreement or any of the Senior Creditor's Security, or participate in or co-operate with any other party to pursue any such action, suit or proceeding, it being understood and agreed that, regardless of the validity, effectiveness or enforceability of any Senior Creditor's Security, as between the Grantor and the Senior Creditor, the Senior Creditor shall have first and prior rights of payment as contemplated in this Agreement.

19904.104710.SEB.3297170.3

5.5. The Grantor will not sell, assign, or otherwise dispose of any interest in the Grantor's Security or the Charges created thereby or the Debtor to Grantor Liabilities except upon giving 10 days' prior written notice to the Senior Creditor and upon the proposed transferee executing and delivering to the Senior Creditor an agreement to be bound by the provisions of this Agreement.

5.6. Without the prior written consent of the Senior Creditor, which may be withheld in the sole discretion of the Senior Creditor, the Grantor will not agree to any amendment to the Debtor/Grantor Loan Agreement that has the effect of increasing the principal amount or the annual fee payable thereunder, or otherwise changes any of the terms of payment thereunder, other than extensions of time for payment.

5.7. The Grantor acknowledges and agrees that if it fails to comply with this Agreement, the Senior Creditor, in addition to all other remedies available to it at law or in equity, shall be entitled, as a matter of right, to apply to a court of competent jurisdiction for a restraining order, injunction, order for specific performance or other such equitable relief as is appropriate to ensure compliance with this Agreement. The Grantor hereby waives any defence based on the adequacy of a remedy at law which might be asserted as a bar to any such restraining order, injunction, order for specific performance or other such equitable relief.

6. GENERAL

6.1. The Grantor will forthwith at all times, execute and deliver such further documents and do such other acts as the Senior Creditor requires in order to give effect to the intent of this Agreement.

6.2. The Senior Creditor may grant time, renewals, extensions, releases and discharges to, accept compositions from and otherwise deal with the Debtor as it may see fit, the whole without notice to any other party to this Agreement and without prejudice to or in any way limiting or affecting the rights of the Senior Creditor under this Agreement; provided that if the Senior Creditor amends its letter of offer entered into with the Debtor in respect of the Debtor to Senior Creditor Liabilities, it shall use its commercially reasonable efforts to provide notice of such amendment to the Grantor subject to the Senior Creditor not being liable for any reason whatsoever in the event that it fails to provide such notice to the Grantor.

6.3. No failure on the part of the Senior Creditor to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right, nor shall any single or partial exercise of any right preclude any other or further exercise of the right or the exercise of any other right, No waiver of any provision of this Agreement nor consent to any departure by the Grantor or the Debtor therefrom shall be effective unless the same is in writing and signed by the Senior Creditor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. These remedies are cumulative and not exclusive of any remedies provided by law,

19904,10471O.SEB.3297170.3

6.4. Neither the taking of any judgment nor the exercise of any power of seizure or sale shall operate to extinguish the liability of the Debtor or the Grantor under this Agreement, nor shall the acceptance of any payment or alternate security constitute or create any novation, and it is further agreed that the taking of a judgment or judgments under any of the covenants contained in this Agreement shall not operate as a merger of such covenants. .

6.5. Neither this Agreement nor any provision hereof may be amended, waived or terminated in any respect except by an instrument in writing executed by the party against whom enforcement of the amendment, waiver or termination is sought.

6.6. No notice, consent or other communication in connection herewith will be effective unless it is in writing and is executed by the party giving the same or the party's authorized agent. Any such communication may be given by delivery or fax to the address for the intended party set out on the first page hereof, or a corresponding fax number, or such other address or fax number as the intended party may have given notice of.

IN WITNESS WHEREOF the Grantor has executed this Agreement.

COWICHAN MINI MALL LTD.

Per: Authorized Signatory

Dannylu " Manager. Corporate Financing

19900.104710.SEB.3297170.3

Description of Lease

1. Pursuant to a lease dated February 24,1969 (the "Initial Lease") registered in the Indian Land Registry (the ("ILR") on December IS, 1969 under No. 15525, Her Majesty in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development, as lessor, leased certain lands in Cowichan Indian Reserve No. 1 to Village Green Hotel Ltd.;

2. Pursuant to an agreement dated July 12, 1977 (the "First Amending Agreement") registered in the ILR on April 20,1978 under No. 57511, the Initial Lease was amended;

3. Pursuant to an agreement dated December 27, 1978 (the "Second Amending Agreement") registered in the ILR on December 12,1979 under No. 67017, the Initial Lease was further amended;

4. Pursuant to an agreement dated April 20,1987 (the "Third Amending Agreement"), registered in the ILR on May 27,1987 under No. 112233, the Initial Lease was further amended;

5. Pursuant to an Assignment of Lease dated September 30,2002 (the "2002 Assignment of Lease") registered, in the ILR on November 1,2004 under No. 322128, the Initial Lease was assigned from Village Green Inns Ltd. (formerly known as Village Green Hotel Ltd.) to Super 8 Centre Inc.;

6. Pursuant to an Assignment of Lease dated April 30,2008 (the "2008 Assignment of Lease") registered in the ILR on August 29,2008 under No, 358093, the Initial Lease was assigned from Super 8 Centre Inc. to Village Green Holdings #2 Ltd.;

7. Pursuant to a modification and extension of lease dated October 23,2008 (the "2008 Amendment") registered in the ILR on December 1, 2008 under no. 360084, the Initial Lease was further amended and extended over additional lands, and as a result, the lands then intended to be demised by the Initial Lease, as previously assigned and amended, comprised approximately 2.17 hectares, as shown outlined in bold on the sketch attached as Appendix "B-l" to the 2008 Amendment and now more particularly described as follows:

PIN: 90200175IS Let 128 Parcel A Plan CLSR 557S4

and

i8mi04?ie.sea.3gi?i?o,3

PIN: 902001747S Lot 128 Plan CLSR 53124

and that portion of:

PIN: 902513050 Lot 590 Plan CLSR 85664

shown cross-hatched on the plan attached as Appendix B to the 2008 Amendment,

(the "Lands")

(The Initial Lease, as subsequently amended, assigned and extended as aforesaid, is collectively referred to as the "Lease").

19904,104710,866.3297170,3

SCHEDULE B

[Attach Loan Agreement between the Grantor and the Debtor dated January 30,2009]

19904.104710.SEB.3297170.3

HI

Unaudited Financial Statements of

VILLAGE GREEN HOLDINGS LIMITED PARTNERSHIP

For the Periods Ended December 31, 2011 and 2012

(Prepared by management)

This is Exhibit "'t® referred to in the

affidavit of.

sworrs before/ me ihls^JLL.

of, # H o y MS

A Commis&jj/ne within Br

„o.ay

z*zoJ2i

Mining Affidavits Columbia

Village Green Holdings Limited Partnership

As at December 31, 2012 December 31, 2011

ASSETS Non-current assets

Income producing properties $ 14,836,221 $ 15,262,325

Deferred costs 713,085 869,578

15,549,306 16,131,903

Current assets Accounts receivable 72,629 159,670

Prepaid expenses 5,602 22,824

Cash and cash equivalents 38,127 109,952

116,358 292,446

Total assets $ 15,665,664 $ 16,424,349

LIABILITIES and PARTNERS' EQUITY Non-current liabilities

Mortgages payable $ 9,915,920 $ 10,429,774

Loans payable 1,000,000 1,250,000

10,915,920 11,679,774

Current liabilities Mortgages payable $ 486,288 $ 473,902

Advances from related parties 819,680 393,774

Tenants' security deposits and prepaid rents 21,350 31,119

Accounts payable and accrued liabilities 215,249 223,619

1,542,567 1,122,414

Total liabilities 12,458,487 12,802,188

Partners' equity 3,207,177 3,622,161

Total liabilities and unitholders' equity $ 15,665,664 $ 16,424,349

Village Green Holdings Limited Partnership

Year ended December 31, 2012 2011

Revenue: Rental revenue $ 1,268,001 $ 1,094,816 Operating recoveries 709,148 568,106 Other income 59 39,986

1,977,208 1,702,909

Operating expenses: Amortization of income producing property 574,071 524,218

and deferred costs Property operating costs 250,707 232,623 Property taxes 427,396 372,936 Property management fees 88,967 84,635 Bad debts 83,432 17,024 Ground rent 202,954 202,954

1,627,527 1,434,390

Income from operations 349,681 268,519

Other expenses General and administrative fees 7,360 32,120 Interest expense 757,305 718,987

764,665 751,107

Net loss $ (414,984) $ (482,588)

•DO

BDG October 30, 2013

Mr. Doug Hyndman Kornfeld LLP 1100 One Bentall Centre 505 Burrard Street, Box 11 Vancouver, BC V7X 1M5

Dear Mr. Hyndman

Re: BDC Loan-Village Green Holdings LP et al. Loan Account #051734-01

We confirm that the payout figures for the above account, as of October 18,2013* are as follows:

Loan 01 Principal $4,925,000.00 Interest up to and including October 17, 2013 $ 19,396.40 Total $4,944,396.40 Current Per Diem (subject to change) Current Interest rate - floating base +0.75% variance

$ 775.86 5.75%

Amortization schedule (monthly payment) $ 25,000.00 Maturity Date February 23, 2030

Please note that the per diem will change upon any change in the floating rate. In addition to the amounts shown above any additional professional or other fees and protective disbursements incurred must be paid.

Interest is calculated up to and including the date immediately preceding the date indicated above,

BDC primary security consists of: - First Mortgage of lease and assignment of rents at 141 Trans-Canada Highway, Duncan, BC. - General Security Agreement from Village Green Holdings #2 - General Security Agreement from Village Green Holdings #3 - General Security Agreement from Village Green Holdings Limited Partnership - Guarantee of PDG Investments supported by a General Security Agreement

*The last payment due on October 23,2013 has not been honoured, and the account is now in arrears as of October 28, 2013.

This is Exhibit " e

'!' referred to in the

g , ! , q affidavit

TanyaLee sworn befc«WnWthis. Analyst, Special Accounts 0j> /Vc! £ MB (604)666-2657 *

Andre<V Masse Senior Account Manager, Special Accounts (604) 666-7880

witfnn British Columbia Business Development Bank of Canada Special Accounts One Bentall Centre 505 Burrard Street, Suite 200, RO. Box 6 Vancouver, British Columbia V7X i M3

Banque de d6veloppementdu Canada Comptes speciaux One Bentall Centre 505, rue Burrard, bureau 200, CR 6 Vancouver (Coiomble-Britannlque) V7X IM3

F 604 666-7251 www.bdc.ca Canada