EXHIBIT "13" RESTRICTIVE COVENANT THIS indenture dated the 20th day of October, 2011 (the Effective Date ) BETWEEN: MATTERHORN VILLAGE DEVELOPMENTS INC. (Inc. # BC0151606) a body corporate incorporated under the laws of the Province of British Columbia and having address at 630 Terminal Ave North, Nanaimo, British Columbia, V9S 4K2 (hereinafter called the "Developer") PARTY OF THE FIRST PART AND: MATTERHORN VILLAGE DEVELOPMENTS INC. (Inc. # BC0151606) a body corporate incorporated under the laws of the Province of British Columbia and having address at 630 Terminal Ave North, Nanaimo, British Columbia, V9S 4K2 (hereafter called the "Bare Land Strata Lot Owner") PARTY OF THE SECOND PART AND: WHEREAS: MATTERHORN RV RESORT MANAGEMENT LTD. a body corporate incorporated under the laws of the Province of British Columbia and having address at 630 Terminal Ave North, Nanaimo, British Columbia, V9S 4K2 (hereafter called the "Manager") PARTY OF THE THIRD PART A. The Bare Land Strata Lot Owner is the legal and beneficial owner of lands and premises legally described as PID: 000-823-317, Lot C, Section 10, Range 6, Mountain District, Plan 2977, except that part in Plan 146 RW, which said lands are in the process of being subdivided into 149 bare land strata lots (the Strata Lots ); B. The Developer is the legal and beneficial owner of the lands and premises more particularly known and legally described as follows: PID: 000-823-317, Lot C, Section 10, Range 6, Mountain District, Plan 2977, except that part in Plan 146 RW (the Lands );
2 C. The Lands are zoned RV-1 and each Strata Lot may be rented to the public on a transient or a permanent basis pursuant to the terms and conditions of this Use Covenant as part of a recreational vehicle resort; D. It is desirable to limit the use and management of a Strata Lot by an owner by requiring the lease, rental or licence of a Strata Lot to be addressed exclusively through a Occupancy arrangement with the Manager to ensure consistent quality management for the benefit of the surrounding Strata Lots; E. Upon registration of the Bare Land Strata Plan in the Victoria Land Title Office and the subdivision of the property into 149 Bare Land Strata Lots, if the Manager in its sole and absolute discretion determines that a Management System is desirable, then the Manager will govern the lease, rental or licence of each Strata Lot to the public on behalf of the Strata Lot Owner or if rentals are no longer desirable in the sole discretion of the Manager, then it will cease to govern any lease, rental or licence of the Strata Lot until the Manager determines that it is once again desirable in its sole and absolute discretion to resume the lease, rental or licence of each of the Strata Lots; F. When not using their Strata Lot for Personal Use, the Strata Lot Owner may either leave the lot vacant or offer the Strata Lot for rent to the general public exclusively through the Manager s Management System provided such a system is desirable in the sole discretion of the Manager; G. The rental of an Owner s RV in RV Resort on the Lake to the general public is prohibited; H. It is further desirable that the Occupancy of a Strata Lot be regulated by a management agent to: (a) (b) (c) (d) (e) establish a marketing program for the lease, rental or licence of participating Strata Lots; control all Strata Lot rentals, leases and licences; take measures to ensure the conduct of and use of the Resort by members of the public does not unreasonably interfere with use of the Resort by other owners, renters, occupants and their guests; maintain the standard of the Resort as a whole so as to promote resort business; and, establish a uniform and consistent system for the rental of Strata Lots at all times;
3 NOW THEREFORE IN CONSIDERATION of the premises and in consideration of the sum of TEN ($10.00) DOLLARS now paid by each party to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions: The following terms used in this Agreement have the following meaning, except as otherwise provided or unless the context otherwise requires: Developer means the owner of the lands legally described as PID: 000-823-317, Lot C, Section 10, Range 6, Mountain District, Plan 2977, except that part in Plan 146 RW which said lands are in the process of being subdivided into 149 Bare Land Strata Lots; Immediate Family means a spouse of the owner, a parent or child of the owner, or a parent or child of the spouse of the owner. Spouse of the owner includes an individual who has lived and cohabited with the owner, for a period of at least two years at the relevant time, in a marriagelike relationship, including a marriage-like relationship between persons of the same gender; Manager means Matterhorn RV Resort Management Ltd. including its designated agents and/or employees and its successors and assigns from time to time, it being understood that a property agent may be delegated the right to carry out management services on behalf of the Manager; Management Agreement means the agreement between the Manager and each Strata Lot Owner from time to time governing Occupancy provided that a Management System is desirable and continues to be desirable as determined by the Manager, based on commercially reasonable terms for such an arrangement taking into consideration prevailing market conditions governing the Occupancy (excluding RV Rentals) or Personal Use of a Strata Lot consistent with this Use Covenant, as modified, amended, superseded or replaced from time to time; Management System means a management system exclusively provided by the Manager providing for the orderly, consistent and uniform management of the lease, rental or licence of Strata Lots (excluding RV Rentals) to the general public pursuant to a Management Agreement; Occupancy means the rental, lease or licence of a Strata Lot (eg. the vacant lot excluding an RV), by a member of the public, together with their RV, as part of a Management System for the purposes of carrying on the business of an RV Resort to the general public if desirable as determined by the Manager; Personal Use means the use of a Strata Lot, together with an RV, by a Strata Lot owner, members of his or her Immediate Family and includes a period or periods of time when the Strata Lot Owner elects to leave the Strata Lot vacant (with or without an RV) and is not available for Occupancy to the general public through a Management System and is not subject to a Management Agreement;
4 RV means a recreational vehicle, park model trailer or a camper that meets or exceeds a CSA Z240 standard and which is self-contained with a washroom and kitchen and is capable of being hooked up to water and sewer services; Strata Lot Owner means the owner or owners from time to time registered in the Victoria Land Title Office of each of the 149 Bare Land Strata Lots, together with their proportionate share of the common property; Strata Plan means Strata Plan ; and, Use Covenant means this covenant which applies to the Owner of each Strata Lot in the Strata Plan, excluding the Developer and Strata Lot 130 and for greater certainty, the Developer and the Manager have the right to rent, lease or licence Strata Lot 130 and all of the Developer s unsold strata lots in the Strata Plan, with or without an RV, using their own forces or otherwise, without limitation or restriction. 1.2 Interpretation For the purposes of this Agreement or any amendment hereto, except as otherwise expressly provided or unless the context otherwise requires: (a) (b) (c) (d) (e) (f) This Agreement means this Use Covenant. All references in this Agreement to designated articles, paragraphs and other subdivisions are to the designated articles, paragraphs or other subdivisions of this Agreement. The words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular article, paragraph or subdivision. The headings are for convenience only and do not form part of this Agreement and will not be used to interpret, define or limit the scope, extent or intent of this Agreement or any provision of this Agreement. The word including when following any general statement, term or matter will not be construed to limit the general statement, term or matter to the specific items or matters set out immediately following the word or to similar items or matters, whether or not limiting language is used. The necessary grammatical changes required to enable the provisions in this agreement to apply in the plural and to corporations, associations, partnerships or individuals, whether male or female, are, where the context so requires, assumed to be fully expressed. If more than one person joins in and executes this Agreement as one party, then, unless otherwise expressly provided or the context so requires, the rights and obligations of these persons are joint and several.
5 (g) All terms and provisions of this Agreement will be deemed and construed to be covenants to be performed by the respective parties as though words specifically expressing or importing covenants and conditions were used in each separate term and provision of this Agreement. 1.3 Applicable Law This Agreement will be governed by, construed and enforced in accordance with the laws of the Province of British Columbia. ARTICLE 2.0 USE OF STRATA LOTS 2.1 Use The Strata Lot Owner covenants and agrees with the Developer and the Manager that this covenant will run with the land and shall burden each of the Strata Lots with the intent that this covenant shall be for the benefit of the Developer, the Manager, Strata Lot 130 and the Remaining Strata Lots. The Strata Lot Owner will not occupy, use or permit to be used and will not allow others to occupy, use or permit all or any portion of the Strata Lot to be occupied or used for any purpose whatsoever other than for Personal Use or alternatively, Occupancy to the general public, subject to Section 2.2, through a Management System exclusively operated by the Manager pursuant to the terms of a Management Agreement. 2.2 Negotiation or Termination of the Management System If Occupancy is not desirable as determined in the sole and absolute discretion of the Manager, or if all of the Management Agreements are terminated for any reason, then the Strata Lot Owner will only use his or her Strata Lot for Personal Use and will not offer the Strata Lot or an RV for rental or occupancy to the general public until a further Management System is implemented by the Manager. 2.3 Use of Advertising Material If the Strata Lot Owner is not a party to the Management Agreement with the Manager, then the Owner shall not use the name RV Resort on the Lake or any portion thereof without the prior written consent of the Manager. At the request of the Manager, the Strata Lot Owner shall discontinue the use of all signs, trade names, service marks, logos, stationary, advertising material, telephone listings, service manuals, and other material that would make it appear to the public that the Strata Lot is operating as part of an Occupancy Management System, RV Resort on the Lake and all such products and materials shall be returned to the Manager as property of the Manager. The Manager may also enter into the premises and remove all displays of trade names and any other materials of any kind which relate to, RV Resort on the Lake and the Manager shall have no liability to the Owners thereof, nor shall the Manager be accountable or be required to pay for such displays or materials.
6 2.4 Strata Lot Resale In order to ensure consistency in marketing and sales activities at RV Resort on the Lake while the Developer is selling unsold strata lots in the Strata Plan (the Remaining Strata Lots ), each Strata Lot owner covenants and agrees to retain the services of the Developer s licenced real estate agent from time to time to advertise, market and sell their interest in a Strata Lot to a bona fide purchaser for value until such time as the Developer has conveyed all of its unsold Strata Lots in the Strata Plan, excluding Strata Lot 130. ARTICLE 3 POSTPONEMENT/NO MORTGAGE 3.1 No mortgage, assignment of rents or other security shall be registered by a Strata Lot Owner against title to the Strata Lot including any renewals, modifications or extensions thereof (collectively, the Security ) which ranks in priority to this Use Covenant. This provision does not apply to Strata Lots owned by the Developer or the Manager. ARTICLE 4 GENERAL MATTERS 4.1 The Strata Lot Owner, the Developer and the Manager shall each do and cause to be done all such things and execute or cause to be executed all plans, documents and other instruments which may be necessary to give the effect to the intention of this Use Covenant or the development of the Lands. 4.2 Without limitation, a Strata Lot Owner who is party to a Management Agreement for any Strata Lot will, prior to and as a condition of the sale, transfer or assignment of the Strata Lot or any portion of an interest therein, require the purchaser, transferee or assignee to duly execute and deliver to the Manager an agreement whereby such purchaser, transferee or assignee agrees to assume the Strata Lot Owner s responsibilities under the Agreement or, if required by the Manager, a new management agreement in a form determined by the Manager from time to time or if the purchaser, transferee, or assignee chooses not to assume the Agreement, then the Owner will on or before the Completion date of the sale to the proposed purchaser, transferee or assignee provide proper notice and take all steps necessary or required to terminate the Management Agreement and any Occupancy Agreement. 4.3 No amendment to this Use Covenant is valid unless made in writing and executed by all Strata Lot owners in a form satisfactory for registration at the Land Title Office. 4.4 It is understood and agreed that the Management Agreement may be modified, amended, superseded or replaced from time to time in the sole discretion of the Manager. 4.5 All provisions of this Use Covenant are to be construed as covenants and should any section or part thereof of this Use Covenant be held invalid or unenforceable by a court of competent jurisdiction, the invalid or unenforceable part shall be severed and the remainder shall remain binding on the Strata Lot Owner and shall charge the Strata Lots and shall otherwise be enforceable to the fullest extent of the law.
7 4.6 Time is of the essence for all purposes. 4.7 This Use Covenant shall enure to the benefit of, be annexed to, and shall run with the Strata Lot and the land and the intent is that the burden of this covenant shall be binding upon the Bare Land Strata Lot, the Bare Land Strata Lot Owner, for himself or herself, their successors, executors, administrators and assigns for the benefit of the Remaining Strata Lots. The Strata Lot Owner shall not lease, rent or sublease the Strata Lot or grant a license or a sublicense for the use of the Strata Lot to any person or body corporate, except on the terms set out in this Use Covenant. 4.8 It is expressly understood and agreed that the covenants and agreements herein shall run with the Strata Lot and the Remaining Strata Lots and each parcel of land into which any such lands may be subdivided or re-subdivided and the covenants and agreements herein shall be binding upon the Bare Land Strata Lot Owner and all persons claiming through, under or in trust for him and, for the purpose of ensuring that the said covenants shall continue to run with the land, the Bare Land Strata Lot Owner further covenants with the Developer and the Manager that he or she, and his or her heirs, executors, administrators, successors and assigns, will, in every conveyance, lease, licence or other assurance of the Strata Lot or any part thereof, give to the occupant, lessee or purchaser thereof express notice of the said covenants and agreements above mentioned. 4.9 The restrictions and stipulations herein contained shall not be deemed to be exclusive of any requirements of the bylaws of the City of Nanaimo or the obligations or liabilities imposed by statute or the common-law on owners or occupiers of land, all of which shall be duly observed and complied with. 4.10 For a violation or a breach of any of these restrictions by any person claiming by, through or under the Developer, or by virtue of any judicial proceedings, the owners from time to time of any parcel of land in part comprising the Remaining Strata Lots, or any of them severally, shall have the right to proceed at law or in equity to compel compliance with the terms hereof and to prevent the violation or breach of any term hereof. 4.11 The failure to promptly enforce any of the restrictions herein contained shall not bar their enforcement. 4.12 This Use Covenant does not apply to the Developer or the Manager renting Strata Lots on behalf of the Developer or to Strata Lot 130, and for greater certainty, the Developer shall have the right to rent, lease or licence all unsold strata lots in the Strata Plan on any other basis, with or without an RV, using its own forces without limitation or restriction. 4.13 The Bare Land Strata Lot Owner covenants and warrants that he or she will comply at all times with this Covenant failing which he or she will pay liquidated damages of $500.00 per day to the Developer or the Manager for each day that the said Owner acts in violation of the terms of this Covenant.