LICENCE OF OCCUPATION - Island Corridor Foundation and Capital Regional District

6.3 If, in the second calendar year of the Term, that being the year 2008, the Grantor is not exempt from paying real property taxes associated with the Lands, despite having made reasonable efforts to obtain exemptions from the relevant authorities having jurisdiction to grant or apply real property tax exemptions, then the Grantee agrees to pay as a licence fee to the Grantor on or before the 15th of June an amount equivalent to the real property taxes associated with the Lands or a portion of the Lands for which exemptions or grants have not been obtained provided that beforehand the Grantor has provided to the Grantee a copy of the Real Property Tax Notice(s) confirming the amount of real property taxes owing with respect to the Lands.

6.4 Subject to 6.5, if, in the third calendar year or any calendar year after the third year of the Term or Renewal Term, the Grantor or Grantee is not exempt from paying real property taxes associated with the Lands, despite having made reasonable efforts to obtain such exemptions from the relevant authorities having jurisdiction to grant or apply real property tax exemptions then, at the option of the Grantee, the parties agree to convert this Licence of Occupation to a lease for the remainder of the Term and Renewal Term and each party must use reasonable efforts to apply to the relevant authorities having jurisdiction to grant or apply real property tax exemptions in accordance with the applicable legislation for each year of the Term or Renewal Term or any portion thereof permitted by law following the end of the first two years of the Term.

6.5 Despite sections 6.4, if, in the third calendar year or any calendar year after the third calendar year of the Term or Renewal Term, the Grantor or Grantee is not exempt from paying real property taxes associated with the Lands, despite having made reasonable efforts to obtain such exemptions from the relevant authorities having jurisdiction to grant or apply real property tax exemptions then, at the option of the Grantor this licence shall remain as a Licence of Occupation for the remainder of the Term and Renewal Term and the Grantor shall pay all and any real property taxes associated with the Lands, including the Regional Trail portion of the Lands.

6.6 In the event that circumstances under paragraph 6.4 occur, the Grantee will apply for a tax exemption in relation to the Regional Trail portion of the Lands and the Grantor will apply for a tax exemption in relation to the portion of the Lands excepting the Regional Trail portion.

6.7 If, in the third calendar year or any calendar year after the third calendar year of the Term or Renewal Term, the Grantor or Grantee is not exempt from paying real property taxes associated with the Lands, despite having made reasonable efforts to obtain such exemptions from the relevant authorities having jurisdiction to grant or apply real property tax exemptions then, the parties agree that the Grantee shall pay the real property taxes associated with the Lands or a portion of the Lands for which exemptions or grants have not been obtained.

6.8 The Grantee will not be responsible to pay real property taxes related to future Third Party licencees or lessees that may be granted rights by the Grantor to use the Lands, including rights granted under or over the Regional Trail area of the Lands.

6.9 In the event that the Grantee pays a licence fee to the Grantor under paragraphs 6.2, 6.3, or 6.7, the Grantee is not responsible to pay any real property taxes associated with the Lands, including the Regional Trail portion of the Lands and the Grantor shall pay the real property taxes for the applicable calendar year or years.

6.10 The parties agree that no further fees or charges whatsoever shall be owing from the Grantee to the Grantor in consideration of the Grantee's rights under this Agreement.

7.0 TERM

7.1 The term of the licence granted under this Agreement shall be the 1st day of September, 2007 to the 31st day of August, 2032 (the "Term"), with a right to renew for a further twenty-five (25) year term (the "Renewal Term"), unless earlier terminated pursuant to this Agreement.

8.0 GRANTEE'S COVENANTS

8.1 For the purposes of this paragraph:

(a) "Plans and Specifications" means the design drawings and specifications created for each phase of the Regional Trail construction:

(i) containing the construction specifications of the Regional Trail including its width, depth, and the material which will be used in its construction;

(ii) showing the location of the Regional Trail on the Lands; and

(iii) containing any requirements of the Grantor reasonably required during the construction, maintenance, repair, relocation or removal of the Regional Trail for the protection of its property or railway operation;

reduced copies of which shall be deemed to form part of this Licence and be attached hereto as Schedule "C" upon written agreement of the parties.

8.2 The Grantee covenants and agrees to and with the Grantor that the Grantee:

(a) may, in accordance with the Plans and Specifications approved by the Grantor in writing, construct a Regional Trail and if constructed, shall maintain or cause to be maintained, the Regional Trail in a good and workmanlike manner in order to cause no unnecessary damage or disturbance to the Grantor or the Lands;

(b) shall insofar as it is practical, carry out construction, if it does, of the Regional Trail so as not to adversely affect the drainage of the Lands and to not redirect or increase the quality or velocity of surface water runoff or any streams into the Grantor's drainage system or upon the railway tracks or other lands and facilities of the Grantor;

(c) shall keep and maintain at its cost and expense the Regional Trail and all its parts in good order and condition and in a structurally sound manner such that the existence and use of the Regional Trail shall not interfere with the Grantor's use of its Lands and its railway operations on the Lands; and to do all repairs in all respects to a standard at least equal in quality of material and workmanship to the original material and work;

(d) shall remove and discharge or cause to be removed or discharged promptly at its cost and expense any lien, encumbrance or charge upon the Lands which arises out of the use of the Lands under this Licence by the Grantee or by reason of labour or material furnished or claimed to have been furnished for any construction maintenance or repair of the Regional Trail;

(e) shall prior to the Regional Trail being made accessible to members of the public, erect, and maintain fencing, railings or guard rails, and "no trespassing" and other public safety signs, such fencing, railings, guard rails and signs to be subject to prior written approval of the Grantor; and

(f) shall repair, at its sole risk and expense, any damage done to the track, the ballast or to any property of the Grantor by the operation, maintenance, repair, relocation or removal of the Regional Trail or any part thereof

9.0 RELEASE AND INDEMNITY

9.1 The Grantee:

(a) shall make no claim or demand against the Grantor or any of the Grantor's employees, representatives or agents, for any injury, loss or damage, including injury resulting in death, loss of or damage to property suffered or sustained by the Grantee or the Grantee's employees, representatives, agents or invitees, caused by or arising out of the Grantee's failure to:

(i) maintain fencing, railings, guard rails and "no trespassing" and other warning signs on the Lands in accordance with the provisions of section 8.2(e) above, and

(ii) follow its maintenance and inspection policies in connection with the maintenance and operation of a Regional Trail.

unless such injury, loss or damage is caused by or arises out of the negligence or wrongful act or omission of the Grantor or the Grantor's employees, representatives licensees, tenants or agents or a railway operation malfunction or accident not caused by the Grantor's negligence;

(b) shall indemnify and save harmless the Grantor from and against any and all claims, demands, awards, actions, proceedings and judgments by whomsoever made, brought or prosecuted (collectively "Claims"), and from and against any and all injury, loss, damage, costs or expense (collectively "Damages") suffered or incurred by the Grantor, the Grantor's employees, representatives, licensees, agents, tenants or invitees entering upon the Lands, and which are based upon, arise out of or are connected directly or indirectly with this Agreement or anything done hereunder or anything not done as required hereunder, unless such Claims or Damages are caused by or arise out of the negligence or the wrongful act or omission of the Grantor or the Grantor's employees, representatives licencees, tenants, invitees or agents.

10.0 INSURANCE

10.1 The Grantee is a public body and is self insured for claims up to and including two million dollars. In the event the Grantee ceases to be a self insured public body during the Term or Renewal Term of this Agreement, the Grantee will maintain at its sole cost and expense, in good standing for the Term or Renewal Term (or any extension thereof), liability insurance against the third party claims arising from the operation and use of the License Area with inclusive limits of not less than Two Million ($2,000,000.00) Dollars for bodily injury, including death and property damage, and in that event, the Grantee will, on request from the Grantor, provide the Grantor with evidence that such insurance is, at all times during the Term or Renewal Term (or any extension thereof), enforceable and in effect.

11.0 TERMINATION

11.1 Except as hereinafter provided, upon breach by the Grantee of any of the provisions herein contained which breach is not remedied by the Grantee within sixty (60) days from the date of registered notice thereof mailed by the Grantor to the Grantee, the Grantor may bring a claim for damages or avail itself of any other remedy which it may have without further notice; or terminate this Agreement, if the breach continues for one hundred and twenty (120) days after written notice from the Grantor to the Grantee of its intention to terminate this Agreement, provided always that if the Grantee commences to remedy the breach within sixty (60) days of receipt of notice aforesaid and thereafter diligently and continuously proceeds with the remedial action, the Grantor shall not bring any claim or exercise any other remedies which it may have in respect of such breach.

12.0 NO ASSIGNMENT

12.1 The Grantee covenants and agrees to and with the Grantor that the Grantee shall not assign or sublet the right granted herein without the written consent of the Grantor.

13.0 COMPLIANCE WITH LAW

13.1 The Grantee shall abide by and comply with all the lawful bylaws, rules and regulations of the Province of British Columbia, every municipality or other lawful authority which in any manner relate to or affect the Lands and the right hereby granted insofar as the Grantee is subject hereto.

14.0 OWNERSHIP OF IMPROVEMENTS

14.1 Notwithstanding any rule of law or equity any Regional Trail improvements brought onto, laid or erected upon or buried under the Lands by the Grantee shall remain the property of the Grantee, and during the Term or Renewal Term of this Agreement the Grantee shall have the right at any time and from time to time to remove in whole or in part its Regional Trail.

15.0 REGISTERED INSTRUMENT

15.1 In the event that the Grantor intends to transfer or lease its Lands, the Grantor agrees to advise the prospective purchaser or Leasee of this Licence of Occupation and the Grantor agrees to register against title to the Lands a Lease in substantially the same terms as this Agreement for the remainder of the Term or Renewal Term for the purpose of a Regional Trail in favour of the Grantee in advance of the transfer or the leasing occurring. Further, the Grantor agrees to notify the Grantee in the event that the Grantor learns of any proceedings against it which may result in the Grantor losing its interest in the Lands and will, where possible, grant to the Grantee a Lease in substantially the same terms as this Agreement for the remainder of the Term or Renewal Term over its Lands for the purposes of the Regional Trail.

16.0 GENERAL PROVISIONS

16.1 Notices: It is hereby mutually agreed:

Any notice required to be given under this Agreement shall be deemed to be sufficiently given:

(a) to be delivered at the time of delivery and

(b) if mailed from any government post office in the Province of British Columbia by prepaid registered mail addressed as follows:

(i) if to the Grantor: Island Corridor Foundation 320 - 256 Wallace Drive Nanaimo, B.C. V9R 5B3

(ii) if to the Grantee: Capital Regional District P.O. Box 1000 Victoria, B.C. V8W 2S6

and any such notice shall be deemed to have been given to and received by the addressee on the date of personal delivery or three (3) days after the mailing thereof, postage prepaid and registered, as the case may be. Any party may at any time and from time to time notify the other in writing as to a change of address and the new address to which notices shall be given to it until further changed.

16.2 Removal Upon Termination of Agreement: The Regional Trail placed, erected or built on the Lands at the expense of the Grantee will if required by the Grantor, be removed from the Lands by the Grantee within sixty (60) days after termination or surrender of this Agreement and the Grantee will leave the Lands neat, clean, level, free and clear of all waste material, debris and rubbish all to the satisfaction of the Grantor. The Grantee covenants that if it is required to remove the Regional Trail it will make good all damage caused to the property of the Grantor by reason of such removal and if such Regional Trail is not so removed by the Grantee and the Lands not left neat, clean, level, free and clear of all waste material, including landscaping and trees, debris and rubbish as aforesaid within the said period of sixty (60) days, the Grantor may carry out such work and the Grantee will pay to the Grantor all costs and expenses reasonably incurred in so doing. In the event that the Grantor determines that the continued presence of the Regional Trail does not constitute a hazard of interference with the rail operations of the Grantor, then the Grantee may abandon the Regional Trail in place, in which case it will become the Grantor's unencumbered property.

16.3 Grantee's Right Non-Exclusive: The Grantee agrees that its right to use the Lands pursuant to this Agreement is non-exclusive and acknowledges that the Grantor has in the past, and may in the future, enter into agreements with other persons ("Third Parties") to occupy and use the Lands for any and all additional purposes, for communication purposes, for the installation of utilities and cables (below and above ground), for landscaping, and for vehicular use and driveways, and that such Third Parties may be permitted to occupy portions of the Lands provided that all such uses shall not create hazards or unreasonably interfere with or prohibit the use of the Lands by the Grantee, its elected officials, officers, employees, contractors, licensees, agents and members of the public as contemplated under this Agreement.

16.4 Temporary or Permanent Relocation to Accommodate Third-Party Uses: If the Grantor enters into agreements with Third Parties to occupy and use the Lands and requests that the Grantee relocate temporarily or permanently all or part of the Regional Trail, such temporary or permanent relocation will be at the cost of the Grantor, and only if the design requirements of the Regional Trail can be met and the continuity of the Regional Trail preserved.

16.5 Third Party Indemnity: If the Grantor enters into agreements with Third Parties to occupy and use the Regional Trail or a portion of the Regional Trail, the Grantor agrees to require that the Third Parties indemnify the Grantee in the Agreements from claims, demands, suits, actions, awards, proceedings and judgments arising from the Third Parties' use of the Regional Trail.

16.6 Gender and Construction: Wherever the singular or masculine is used in this Agreement the same shall be deemed to include the plural or the feminine, or the body politic or corporate, also the heirs, executors, administrators, successors and assigns of the parties hereto and each of them (where the context or the parties so require).

16.7 Time of Essence: Time is to be the essence of this Agreement.

16.8 Enurement: This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, executors, successors, and permitted assignees.

16.9 Waiver: The waiver by a party of any failure on the part of the other party to perform in accordance with any of the terms or conditions of this Agreement is not to be construed as a waiver of any future or continuing failure, whether similar or dissimilar.

16.10 Headings: The headings in this Agreement are inserted for convenience and reference only and in no way define, limit or enlarge the scope or meaning of this Agreement or any provision of it.

16.11 Remedies Cumulative: No remedy under this Agreement is to be deemed exclusive but will, where possible, be cumulative with all other remedies at law or in equity.

16.12 Applicable Law: This Agreement is to be construed in accordance with and governed by the laws applicable in the Province of British Columbia.

16.13 No Partnership, Etc.: No provision of this Agreement shall be construed to create a partnership or joint venture relationship, an employer-employee relationship, a landlord-tenant, or a principal-agent relationship.

16.14 Amendments: This Agreement may not be modified or amended except by the written agreement of the parties.

16.15 Entire Agreement: This Agreement contains the entire agreement and understanding of the parties with respect to the matters contemplated by this Agreement and supersedes all prior and contemporaneous agreements between them with respect to such matters.

16.16 Survival of Representations: All representations and warranties set forth in this Agreement and all provisions of this Agreement, the full performance of which is not required prior to a termination of this Agreement, shall survive any such termination and be fully enforceable thereafter.

16.17 Notification of Violation: Each party shall promptly notify the other party of any matter which is likely to continue or give rise to a violation of its obligations under this Agreement.

16.18 Whole Agreement: The whole agreement between the parties is set forth in this document and no representations, warranties or conditions, express or implied, have been made other than those expressed.

16.19 Severability: Each article of this Agreement shall be severable. If any provision of this Agreement is held to be illegal or invalid by a Court of competent jurisdiction, the provision may be severed and the illegality or invalidity shall not affect the validity of the remainder of this Agreement.

16.20 Counterparts: This Agreement may be executed in counterpart with the same effect as if both parties had signed the same document. Each counterpart shall be deemed to be an original. All counterparts shall be construed together and shall constitute one and the same Agreement.

IN WITNESS WHEREOF the parties hereto have set their hands and seals as of the day and year first above written.

ISLAND CORRIDOR FOUNDATION by its authorized signatories:

(Signature) Print Name: Mary Ashley

(Signature) Print Name: Judith Sayers

CAPITAL REGIONAL DISTRICT by its authorized signatories:

(Signature) Name: Denise Blackwell

(Signature) Name: Carmen Thiel

Schedule "A"

E&N Rail Trail Lands

Schedule "C"

Plans and Specifications

(To be attached pursuant to section 8.1 upon written agreement of the Parties)