Document:

Exhibit 10.70

	

Exhibit 10.70

PROPERTY
PURCHASE AGREEMENT
OPG to Costco
Peacock Hill, Gig Harbor, Washington

        THIS
PROPERTY PURCHASE AGREEMENT (“Agreement”), dated for reference
purposes only as of December 22, 2003, is made by and between OPG PROPERTIES
LLC, a Washington limited liability company (“Seller”), and
COSTCO WHOLESALE CORPORATION, a Washington corporation
(“Purchaser”), and is effective as of the Effective Date (see
Section 26 below).

        To
provide for the purchase and sale of the property herein described, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Purchaser and Seller agree as follows:

        1.
PROPERTY TO BE CONVEYED.

	                a.
      Purchase and Sale. Seller shall sell to Purchaser, and Purchaser
      shall purchase from Seller, upon the terms and conditions hereinafter set
      forth, that certain parcel of unimproved land (the “Property”),
      consisting of approximately 18.28 acres, located in the City of Gig Harbor,
      Pierce County, Washington, legally described on Exhibit A attached
      hereto and as shown generally on the site plan attached hereto as Exhibit B
      (the “Approved Site Plan”). The parties acknowledge and
      agree that the description of the Property is subject to change after the
      Effective Date throughout the site planning process, subject to the mutual
      agreement of Seller and Purchaser.

	                b.
      Property Included. The Property shall include the real property legally
      described on Exhibit A and shown generally on the Approved Site
      Plan, and all rights, privileges and easements appurtenant to the real property,
      including, without limitation, all minerals, oil, gas and other hydrocarbon
      substances on and under the real property, as well as all development rights,
      air rights, water, water rights, riparian rights, and water stock relating
      to the real property and any rights-of-way or other appurtenances used in
      connection with the beneficial use and enjoyment of the real property, and
      all of Seller’s right, title and interest in and to all roads and alleys
      adjoining or servicing the real property.

	                c.
      Property Excluded. The Property is part of a shopping center, consisting
      of approximately 23.42 acres (the “Shopping Center”). The
      Shopping Center is legally described on Exhibit C attached hereto
      and is depicted generally on the Approved Site Plan. The Shopping Center
      is part of a 320-acre commercial and residential mixed-use development owned
      by Seller and known as “Peacock Hill.” The Shopping Center
      comprises both the Property and that portion of the Shopping Center to be
      retained by Seller (the “Residual Parcels”). The Residual
      Parcels are legally described on Exhibit D attached hereto and are
      depicted generally on the Approved Site Plan. The Property does not include
      the Residual Parcels. The parties acknowledge and agree that the descriptions
      of the Shopping Center, the Residual Parcels, and the Property, are subject
      to change after the Effective Date throughout the site planning process,
      subject to the mutual agreement of Seller and Purchaser.

	

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        2.
PURCHASE PRICE.

	                a.
      Purchase Price. The purchase price for the Property shall be Ten
      Dollars (US$10.00) per gross square foot of Property, payable at Closing
      in cash, or by certified, cashier’s or bank check or by wired funds,
      subject to the adjustments and pro-rations as provided for herein (“Purchase
      Price”). It is estimated that the Property contains 796,211 gross square
      feet and that the Purchase Price will be US$7,962,110. The amount of square
      footage of the Property and the total amount of the Purchase Price shall
      be determined pursuant to the Survey (as defined below).

	               b.
      Earnest Money. Upon full execution of this Agreement by Purchaser
      and Seller, Seller shall open an escrow with the Seattle National Accounts
      office of First American Title Insurance Company (“Title Company”)
      and, within ten (10) days thereafter, Purchaser shall wire transfer Two
      Hundred Fifty Thousand Dollars (US$250,000.00) to Title Company (“Earnest
      Money”). If Purchaser terminates this Agreement prior to the satisfaction
      or waiver of the conditions set forth in Sections 4, 5, 6, 7, or 17 of this
      Agreement, then the Earnest Money shall promptly be returned to Purchaser.
      Title Company shall place the Earnest Money in an interest-bearing escrow
      account as directed by Purchaser, with the interest to accrue to Purchaser.
      If this transaction closes as provided herein, the Earnest Money shall apply
      towards the Purchase Price at Closing. If this transaction does not close
      as a result of any reason other than default by Purchaser, the Title Company
      shall, upon demand by Purchaser, promptly return the Earnest Money to Purchaser.
      In the event that Purchaser fails, without legal excuse, to complete the
      purchase of the Property, then the Earnest Money shall be forfeited by Title
      Company to Seller as the sole and exclusive remedy available to Seller for
      such failure, as more particularly set forth in Section 21 hereof.

	

        3.
TITLE TO PROPERTY.

	                a.
      Condition of Title. Seller represents that title to the Property
      or any portion thereof shall be free of monetary encumbrances or defects
      at Closing except for the lien for ad valorem real property taxes with respect
      to the fiscal year of Closing not yet due and payable, which shall be prorated
      as of the Closing Date as provided hereinbelow. Seller shall satisfy or
      cause to be satisfied prior to Closing or at Closing from the Purchase Price
      all monetary encumbrances or defects except for prorated taxes as described
      hereinabove.

	

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	                b.
      Monetary Encumbrances. The phrase “monetary encumbrances or
      defects” as used herein means encumbrances or defects to title which
      by their terms require the payment of money, whether in installments or
      at a fixed time or otherwise, including, but not limited to, mortgages,
      deeds of trust, mechanic’s or materialmen’s liens, liens associated
      with public improvement districts and special assessments.

	                c.
      Nonmonetary Encumbrances. Nonmonetary encumbrances or defects in
      title (e.g., easements or restrictive covenants) shall be subject to Purchaser’s
      approval as provided in this Agreement.

	                d.
      Conveyance of Title. Title to the Property shall be conveyed as provided
      in Section 16.

	

        4.
PURCHASER’S CONTINGENCIES AND FEASIBILITY PERIOD. Purchaser’s
obligation to purchase the Property is contingent upon the conditions set forth
below being waived or satisfied on or before the dates provided for below.
Purchaser may terminate this Agreement by written notice to Seller if Purchaser
determines, in Purchaser’s sole and absolute discretion, that any of the
conditions set forth in this Section 4 will not be satisfied by the date
provided for herein for the satisfaction of such condition. In the event of such
determination, the Earnest Money shall be promptly returned to Purchaser. The
conditions provided for in this Section 4 shall be deemed not to be
satisfied unless Purchaser, by the date by which the particular condition is
required to be satisfied, notifies Seller in writing that such condition has
been satisfied or waived. In the event any condition is deemed not satisfied,
this Agreement shall automatically terminate and the Earnest Money shall be
promptly returned to Purchaser.

	                a.
      Project Approvals. By 5 p.m. (Pacific) on the date that is the later
      of: (1) the date that is fourteen (14) days after the date Purchaser
      receives Seller’s Project Approval Notice (as hereinafter defined),
      and (2) Friday, August 13, 2004 (“Purchaser’s Approvals
      Deadline,” subject to extension as provided below), Purchaser shall
      have obtained all discretionary zoning approvals, use permits, site plan
      approvals, environmental approvals and any other discretionary governmental
      approvals necessary or desirable to develop, construct and operate a membership
      warehouse club, a related tire, battery and automobile accessories sales
      and installation center, and a fueling facility on the Property (the “Project”)
      for Purchaser’s intended use in accordance with Purchaser’s requirements,
      including, but not limited to, conditional use permits, zoning approvals,
      site plan approvals, and environmental approvals, including any required
      pursuant to any federal, state or local environmental laws or regulations,
      but specifically excluding building permits, grading permits, and other
      similar nondiscretionary development permits (collectively “Purchaser’s
      Project Approvals”), all of which shall be in final and unappealable
      form. If Purchaser has not obtained the approvals described in this subsection 4(a)
      by Purchaser’s Approvals Deadline (or the extended Purchaser’s
      Approvals Deadline, as applicable), and if Purchaser is proceeding diligently
      and in good faith to obtain Purchaser’s Project Approvals, then Purchaser
      shall have the option to extend Purchaser’s Approvals Deadline (or
      the extended Purchaser’s Approvals Deadline, as applicable) for six
      (6) consecutive terms of two (2) months each (an “Extension Term”)
      by prior written notice to Seller accompanied by payment directly to Seller
      outside of escrow in the amount of Fifty Thousand Dollars (US$50,000.00)
      (an “Extension Fee”) for each two (2) month Extension Term. Each
      Extension Term shall end at 5 p.m. (Pacific) on the 13th of the month. All
      Extension Fees shall be nonrefundable to Purchaser (except in the case of
      Seller’s default hereunder), shall be deemed fully earned by Seller
      when paid, and shall apply to the Purchase Price at closing. For the purposes
      of this subsection, Purchaser’s Project Approvals shall not be deemed
      to have been “obtained” until each of the same has become final
      and non-appealable and any periods for challenge to the same (or other conditions
      to final effectiveness) shall have expired. Any conditions, requirements
      for on-site and off-site improvements or services, in-lieu fees or payments,
      dedication or reservation requirements, water rights acquisition costs,
      local improvement district costs, connection charges, assessments, mitigation
      fees, impact fees, permit fees and any other similar fees or charges imposed
      on the Project by any governmental entity or utility service provider shall
      be acceptable to Purchaser and shall be subject to Purchaser’s approval
      in its sole and absolute discretion.

	

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	                b.
      Studies. By 5 p.m. (Pacific) on the date that is three months after
      the date Purchaser receives Seller’s Board Approval Notice (as hereinafter
      defined) (the “Feasibility Deadline”), Purchaser shall
      have approved, in its sole and absolute discretion, all soils, engineering,
      hazardous waste, geotechnical, wetlands and other studies in connection
      with the Property and Purchaser’s proposed project. Purchaser hereby
      acknowledges receipt (from Seller) of one copy of the items listed on Exhibit E
      attached hereto (“Seller’s Reports”). Seller represents
      and warrants to Purchaser that the Seller’s Reports constitute all
      topographical and boundary surveys, environmental reports, engineering studies,
      soil-bearing test data, and any similar reports and studies, except Property
      valuations, income projections, and other documents containing confidential
      financial analysis with respect to the Property that Seller, or any affiliate
      of Seller, has in its possession, or to which Seller, or any affiliate of
      Seller, has access, through the exercise of commercially reasonable efforts.
      Upon Purchaser’s receipt of Seller’s Reports, Purchaser shall
      have the unrestricted right to use such reports and studies in connection
      with Purchaser’s review of the Property and Purchaser’s efforts
      to obtain its permits and approvals; provided, however, that Purchaser agrees
      to indemnify, defend and hold Seller harmless from and against any and all
      liability, loss, cost, damage or expense (including reasonable attorney’s
      fees) arising out of the use or reliance upon Seller’s Reports by Purchaser
      or by any person who obtains Seller’s Reports directly or indirectly
      from Purchaser. In the event Purchaser fails (for any reason) to purchase
      the Property, Purchaser shall promptly return Seller’s Reports to Seller
      and also shall furnish to Seller (without representation or warranty of
      any kind) a copy of all written inspections, studies, surveys and reports
      pertaining to the Property prepared by or for Purchaser, except Property
      valuations, income projections, and other documents containing confidential
      financial analysis (“Purchaser’s Reports”) at no expense
      to Seller; provided, however, that Seller agrees to indemnify, defend and
      hold Purchaser harmless from and against any and all liability, loss, cost,
      damage or expense (including reasonable attorney’s fees) arising out
      of the use or reliance upon Purchaser’s Reports by Seller or by any
      person who obtains Purchaser’s Reports directly or indirectly from
      Seller. The indemnification provisions set forth in this subsection shall
      survive the termination of this Agreement.

	

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	                In
      addition, Purchaser shall furnish to Seller immediately upon receipt by
      Purchaser copies of any topographic data relating to the Property obtained
      by Purchaser; at no expense to Seller; provided, however, that Seller agrees
      to indemnify, defend and hold Purchaser harmless from and against any and
      all liability, loss, cost, damage or expense (including reasonable attorney’s
      fees) arising out of the use or reliance upon such data by Seller or by
      any person who obtains such data directly or indirectly from Seller.

	                c.
      Feasibility. By the Feasibility Deadline, Purchaser shall have determined
      in Purchaser’s sole and absolute discretion, that the site plan, parking
      plan and access plan for the Property are acceptable, that utilities are
      of adequate capacity to serve the Property, that construction of the improvements
      contemplated by Purchaser will not require extraordinary, excessive or unusually
      costly design elements or construction techniques, that drainage of both
      surface and subsurface water can be accomplished by ordinary construction
      techniques not involving unusual or excessive costs, that the Property will
      satisfy Purchaser’s financial and competitive objectives in the trade
      area, and that the Property is economically and otherwise feasible for Purchaser’s
      intended use.

	                d.
      Title. By the Feasibility Deadline, Purchaser shall have approved,
      in its sole and absolute discretion, the condition of title based on a preliminary
      title commitment relating to the Property (the “Title Commitment”)
      obtained by Purchaser from the Title Company. If Purchaser gives Seller
      written notice of any objections to the title of the Property on or prior
      to the Feasibility Deadline, then Seller shall have ten (10) days after
      the receipt of Purchaser’s objections to give Purchaser written notice
      either that (i) Seller shall remove all objectionable exceptions from title
      prior to Closing at no cost to Purchaser, in which case Seller shall promptly
      provide Purchaser with evidence satisfactory to Purchaser of Seller’s
      ability to so remove such exceptions; or (ii) Seller elects not to cause
      such exceptions to be removed. If within such ten (10) day period Seller
      fails to give Seller written notice that Seller shall remove all objectionable
      exceptions from title prior to Closing at no cost to Purchaser and to provide
      Purchaser with evidence satisfactory to Purchaser of Seller’s ability
      to so remove such exceptions, then Purchaser shall have an additional ten
      (10) days (that is, until the date twenty (20) days after the date of delivery
      of Purchaser’s notice of title objections) to terminate this Agreement
      by written notice to Seller. If Purchaser shall fail to deliver timely written
      notice of termination, then Purchaser shall be deemed to have waived its
      objections, in which event this Agreement shall continue in full force and
      effect. Notwithstanding anything herein to the contrary, Seller shall remove
      monetary encumbrances or defects on or prior to Closing. In the event Purchaser
      terminates this Agreement pursuant to this subsection or any other provision
      of this Agreement, any cancellation fee or other costs of the Title Company
      shall be borne by Seller. Within 10 days after Seller’s written request,
      Purchaser shall provide copies of all preliminary title commitments (including
      exception documents) prepared by or for Purchaser relating to the Property,
      the Shopping Center, and Peacock Hill.

	

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	                e.
      Survey. By the Feasibility Deadline, Purchaser shall have approved,
      in its sole and absolute discretion, a current ALTA survey of the Property
      and Residual Parcels (the “Survey”) to be obtained by Purchaser,
      at Purchaser’s cost, subject to reimbursement from Seller upon closing
      or earlier termination of the Purchase Agreement. The Survey shall be prepared
      by a surveyor licensed by the State of Washington selected by Purchaser
      (“Surveyor”), showing the location (by courses and distances)
      and the dimensions of the Property and Residual Parcels, the surface and
      subsurface structures and improvements, and the location and dimensions
      of all defects and encumbrances shown in the Title Commitment. The Survey
      shall bear a certification in the form of the certification attached hereto
      as Exhibit F and shall be in form and substance sufficient to
      permit Title Company to issue the Title Policy without boundary, encroachment
      or survey exceptions, and to delete from the Title Policy the standard exceptions
      as to unrecorded easements, visible and apparent easements, and other matters
      that would be disclosed by an inspection of the Property. The Surveyor shall
      certify to Purchaser and Seller the gross number of square feet of the Property,
      the Residual Parcels, and the Shopping Center. The number of square feet
      certified shall conclusively establish the basis for determining the Purchase
      Price absent a showing by either party of perceptible mistake or fraud on
      the part of the Surveyor. Within 10 days after Seller’s written request,
      Purchaser shall provide copies of all surveys prepared by or for Purchaser
      relating to the Property, the Shopping Center, and Peacock Hill.

	

        5.
SELLER’S BOARD APPROVAL CONTINGENCY. It shall be a condition
precedent to the obligations of Seller under this Agreement that by 5 p.m.
(Pacific) on the date that is fourteen (14) days after the Effective Date
(“Seller’s Board Approval Deadline”), Seller shall have
notified Purchaser in writing that the Board of Directors of Pope MGP, Inc., the
managing general partner of Pope Resources, the manager and sole member of
Seller, shall have approved the execution and delivery of this Agreement and the
performance by Seller of the transactions contemplated herein
(“Seller’s Board Approval Notice”). Purchaser acknowledges
and agrees that Seller’s Board Approval Notice shall not be interpreted to
mean that the Board of Directors has approved the Reciprocal Easement Agreement,
Site Development Agreement, Declaration of Restrictive Covenant, Off-Site Storm
Water Facility Maintenance Agreement, Off-Site Storm Water Facility Easement
Agreement, or any material amendments to this Agreement, each of which by their
terms shall be subject to such Board’s approval. The condition set forth in
this section is intended solely for the benefit of Seller, and if it is not
satisfied or waived by Seller in writing on or before Seller’s Board
Approval Deadline, then this Agreement shall terminate automatically, and if
Purchaser is not then in default under this Agreement, the Earnest Money shall
be returned to Purchaser and neither Purchaser nor Seller shall have any further
rights or obligations hereunder.

        6.
SELLER’S PROJECT APPROVALS CONTINGENCY. By 5 p.m. (Pacific) on
Friday, July 31, 2004 (“Seller’s Approval
Deadline”, subject to extension as provided below), Seller shall have
obtained all zoning approvals, use permits, site plan approvals, environmental
approvals and any other governmental approvals necessary or desirable to develop
and construct Seller’s Required Improvements (as hereinafter defined) in
accordance with Seller’s requirements, including, but not limited to,
building permits, conditional use permits, zoning approvals, site plan
approvals, and environmental approvals, including any required pursuant to any
federal, state or local environmental laws or regulations (collectively
“Seller’s Project Approvals”), all of which shall be in
final and unappealable form. If Seller has not obtained the approvals described
in this Section 6 by Seller’s Approvals Deadline (or the extended
Seller’s Approvals Deadline, as applicable), and if Seller is proceeding
diligently and in good faith to obtain Seller’s Project Approvals, then
Seller shall have the option to extend Seller’s Approvals Deadline (or the
extended Seller’s Approvals Deadline, as applicable) for six consecutive
terms of thirty days each (an “Extension Term”) by prior written
notice to Purchaser. For the purposes of this subsection, Seller’s Project
Approvals shall not be deemed to have been “obtained” until the
governmental decision to approve each of the same has become final and
non-appealable and Seller has approved the same, including without limitation
any conditions, requirements for on-site and off-site improvements or services,
in-lieu fees or payments, dedication or reservation requirements, water rights
acquisition costs, local improvement district costs, connection charges,
assessments, mitigation fees, impact fees, permit fees and any other similar
fees or charges imposed on the Project by any governmental entity or utility
service provider in connection with Seller’s Project Approvals, in
Seller’s sole and absolute discretion. Upon the satisfaction or waiver (by
Seller) of the contingency set forth in this Section 6, Seller shall
deliver written notice of such satisfaction or waiver to Purchaser
(“Seller’s Project Approvals Notice”). The condition
precedent described in this Section  6 shall be deemed not satisfied or
waived unless Seller, by the date by which the condition is required to be
satisfied or waived, notifies Purchaser in writing that such condition has been
satisfied or waived. In the event that the condition precedent is deemed not
satisfied or waived, then this Agreement shall automatically terminate and the
Earnest Money shall be promptly returned to Purchaser.

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        7.
MUTUAL CONTINGENCIES; ADDITIONAL AGREEMENTS. It shall be a condition
precedent to the obligations of both Purchaser and Seller under this Agreement
that by the Feasibility Deadline, Purchaser and Seller shall have negotiated and
agreed in writing upon the forms of the agreements described in this section:

	                a.
      Reciprocal Easement Agreement. By the Feasibility Deadline, Purchaser
      and Seller shall have agreed upon the form and substance of a reciprocal
      easement agreement (the “REA”) to be entered into at Closing,
      covering the Property and Residual Parcels. The REA shall provide for, among
      other things, reciprocal easements for parking and pedestrian and vehicular
      access, use restrictions, and minimum parking ratios as described generally
      on Exhibit G hereto. On or prior to Closing, the parties shall
      execute and record the REA in the real property records of Pierce County,
      Washington.

	                b.
      Site Development Agreement. By the Feasibility Deadline, Purchaser
      and Seller shall have agreed upon the form and substance of a site development
      agreement (“SDA”) to be entered into at Closing, covering
      the Property, the Residual Parcels, and related off-site improvements. The
      SDA shall provide for, among other things: (i) the obligations of Purchaser
      and of Seller to construct the “Required Improvements”
      (to be agreed upon by the parties during the feasibility period); (ii) a
      schedule for the completion by the applicable party of the Required Improvements;
      (iii) the conditions precedent to the obligations of each party to complete
      their Required Improvements; (iv) the establishment of mutually acceptable
      security for the performance of the applicable party’s obligation to
      construct the Required Improvements; (v) appropriate remedies for the parties
      in the event the other fails to timely complete the construction of the
      applicable Required Improvements, including without limitation, self-help
      remedies; (vi) an arbitration mechanism for the resolution of disputes between
      the parties; and (vii) the respective obligations of the parties to satisfy
      the conditions of any discretionary land use approvals affecting the Property
      after Closing. The Required Improvements, and the responsibilities for performance
      and costs with respect to such improvements, are described generally on
      Exhibit H. The parties acknowledge that Exhibit H
      is not an exclusive list of the Required Improvements, and that the list
      of Required Improvements is subject to change after the Effective Date during
      the SDA negotiation process. As used herein, “Seller’s Required
      Improvements” shall mean those Required Improvements for which
      Seller is responsible, and “Purchaser’s Required Improvements”
      shall mean those Required Improvements for which Purchaser is responsible.

	

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	                c.
      Declaration of Restrictive Covenant. By the Feasibility Deadline,
      Purchaser and Seller shall have agreed upon the form and substance of a
      declaration of restrictive covenant (“Restrictive Covenant”)
      to be entered into at Closing, covering the Property, Residual Parcels,
      and that portion of Peacock Hill designated for commercial development on
      the City of Gig Harbor’s current official comprehensive plan and zoning
      maps (the “Commercial Area”). The Restrictive Covenant
      shall provide, among other things, that for a period of five years following
      the earlier to occur of (1) the date Purchaser opens the Project for business
      to the public, or (2) the date that is one year after the Closing, neither
      Seller, nor any subsidiary, affiliate, parent or other entity that controls,
      is controlled by, or is under common control with Seller (collectively “Seller’s
      Entities”) shall allow any portion of the Commercial Area to be
      used or operated (A) as a wholesale or retail general merchandise facility
      which has a merchandising concept based upon a relatively limited number
      of stock keeping units in a large number of product categories (the “Merchandising
      Concept”), (B) to support a facility operating as a Merchandising
      Concept (i.e., for parking or other necessary improvements for such a facility),
      (C) as any business which operates as a warehouse club (other than a Costco
      Facility, as defined below), (D) as any business operated under the trade
      names of Sam’s, BJ’s, Jetro, or Price Smart, (E) as any business
      (other than a Costco Facility, as defined below) similar to those operated
      under the trade names Costco, Sam’s, BJ’s, Jetro, or Price Smart,
      or (F) as a “Wal-Mart” store or “Wal-Mart Supercenter”
      or any other store operated under the “Wal-Mart” brand; provided,
      however, that in no event shall any of the foregoing prohibitions preclude
      the Property from being used for or as a Costco Wholesale warehouse club
      or any other facility then operated by Costco or by any successor to Costco
      (collectively, a “Costco Facility”). Seller and Purchaser
      shall agree in the Restrictive Covenant on the applicable terms and conditions
      pertaining to the foregoing matters, including (without limitation) any
      conflict with matters of record. The Restrictive Covenant also shall provide
      (G) for a perpetual fifty (50) foot wide buffer of native vegetation shall
      be established along Borgen Boulevard, and (H) for a period of twenty (20)
      years after the date of Closing, the Property shall not be used for adult
      entertainment, heavy industrial uses, or noxious or offensive uses. On or
      prior to Closing, the parties shall execute and record the Restrictive Covenant
      in the real property records of Pierce County, Washington.

	

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	                d.
      Off-Site Storm Water Facility Maintenance Agreement. By the Feasibility
      Deadline, Purchaser and Seller shall have agreed upon the form and substance
      of the Off-Site Storm Water Facility Maintenance Agreement described at
      Section 11(d). On or prior to Closing, the parties shall execute, and record
      the Off-Site Storm Water Facility Maintenance Agreement in the real property
      records of Pierce County, Washington.

	                e.
      Off-Site Storm Water Facility Easement Agreement. By the Feasibility
      Deadline, Purchaser and Seller shall have agreed upon the form and substance
      of the Off-Site Storm Water Facility Easement Agreement described at Section
      11(e). On or prior to Closing, the parties shall execute and record the
      Off-Site Storm Water Facility Easement Agreement in the real property records
      of Pierce County, Washington.

	                f.
      Land Use Process. By the Feasibility Deadline, Purchaser and Seller
      shall have agreed in a written amendment to this Agreement upon a process,
      allocation of responsibilities and costs, and schedule to obtain (a) a zoning
      map amendment of the Property and Residual Parcels from PCD Business Park
      Zone to PCD Commercial Zone (the “Rezone”), (b) site plan
      approval of the Project (“Site Plan Approval”), and (c)
      any other discretionary land use approvals required by the City of Gig Harbor
      in connection with the Project (“Other Approvals”).

	

        8.
SUBDIVISION PROCESS. Purchaser and Seller hereby acknowledge and agree
that they have reviewed and approved the Approved Site Plan for the Shopping
Center attached hereto as Exhibit B, which generally depicts the
current size and configuration of the Property and the Residual Parcels.
Notwithstanding the foregoing, Purchaser and Seller shall reasonably cooperate
in good faith after the Effective Date to make mutually acceptable adjustments
from time to time in the precise size and configuration of the Property and the
Residual Parcels. Promptly following the delivery of Seller’s Board
Approval Notice, Seller shall, at Seller’s expense, but with the
cooperation of Purchaser (at no additional material expense), apply for and use
commercially reasonable efforts to obtain a lot line adjustment (or other
acceptable subdivision process) that creates the Shopping Center as a single
legal lot or parcel prior to the Feasibility Deadline. Following such lot line
adjustment (or other acceptable subdivision process), Purchaser shall, at
Purchaser’s expense, but with the cooperation of Seller (at no additional
material expense), apply for and use commercially reasonable efforts to obtain
the City of Gig Harbor’s final approval of a binding site plan or short
subdivision sufficient to establish the Property as a single lot or parcel and
the Residual Parcels as additional lots or parcels, the precise number of which
shall be determined by Seller in its sole discretion prior to the date Purchaser
makes its submittal for the initial binding site plan. Purchaser and Seller
shall reasonably cooperate with each other in seeking and obtaining the
foregoing approvals.

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        9.
[Intentionally Omitted]

        10.
UTILITIES. Prior to Closing, Seller shall construct and install domestic
water and sanitary sewer pipelines from City of Gig Harbor facilities to the
Property boundary, of sufficient capacity to serve the Project and the retail or
other commercial projects planned by Seller to be located on the Residual
Parcels. Seller shall coordinate with Purchaser and local utility service
providers for the extension of electric power, telephone, natural gas, and cable
television utility lines to the Property boundary by and at the expense of the
local utility service providers. Purchaser shall be solely liable for the
construction and installation of all utility lines within the Property and for
the payment of all utility connection, hook-up, and similar charges and fees
levied by the City of Gig Harbor and other utility service providers, whether
relating to domestic water, sanitary sewer, or other utility services.

        11.
STORM WATER FACILITIES.

	                a.
      Generally. Generally, and subject to the terms and conditions described
      hereinbelow, (i) Purchaser will construct storm water facilities within
      the Property, (ii) Seller will construct storm water facilities within
      the Residual Parcels and off-site to serve the Shopping Center and other
      real property, (iii) storm water collected on the Residual Parcels
      will pass through the Property to off-site storm water facilities via storm
      water facilities constructed by Purchaser within the Property and via storm
      water facilities constructed by Seller outside the Property, and (iv) Purchaser
      and Seller will share off-site construction and maintenance costs as described
      hereinbelow.

	                b.
      On-Site. On or prior to the date Purchaser opens the Project for
      business to the public, Purchaser shall design, obtain any required governmental
      approvals and permits, construct, install, and obtain any required governmental
      acceptances, of pipelines, ditches, and other storm water management facilities
      within the Property but not within the Residual Parcels (“On-Site
      Storm Water Facilities”) sufficient to provide storm water conveyance,
      filtration, and other storm water management functions in perpetuity in
      connection with land development and use and in compliance with all applicable
      storm water management regulations. The On-Site Storm Water Facilities shall
      accommodate the complete build-out of the Property and shall accommodate
      the discharge of storm water from the Residual Parcels at or along the common
      boundary of the Property and Residual Parcels. Purchaser shall provide stub
      connections to the On-Site Storm Water Facilities at one or more collection
      points along the common boundaries of the Property and each of the Residual
      Parcels (that is, at least one stub shall be provided for each of the Residual
      Parcels). The design of the On-Site Storm Water Facilities shall be subject
      to Seller’s prior written approval, which shall not be unreasonably
      conditioned, delayed, or withheld. Purchaser shall bear the expense of designing,
      obtaining governmental approvals, constructing, and installing the On-Site
      Storm Water Facilities. Purchaser shall maintain the On-Site Storm Water
      Facilities in perpetuity.

	

-10-

	                c.
      Off-Site. On or prior to the date Purchaser opens the Project for
      business to the public, Seller shall design, obtain any required governmental
      approvals and permits, construct, install, and obtain any required governmental
      acceptances and approvals, of (i) pipelines, ditches, and other storm
      water conveyance facilities outside the Shopping Center (“Off-Site
      Storm Water Conveyance Facilities”), and (ii) ditches, ponds,
      and other storm water management facilities outside the Shopping Center
      (“Off-Site Storm Water Management Facilities”), sufficient
      to provide storm water conveyance, storage, filtration, evaporation, and
      other storm water management functions in perpetuity in connection with
      land development and use of the Shopping Center and other real property
      identified by Seller to be accommodated by the Off-Site Storm Water Facilities,
      in compliance with all applicable storm water management regulations. The
      Off-Site Storm Water Conveyance Facilities and the Off-Site Storm Water
      Management Facilities are collectively referred to herein as the “Off-Site
      Storm Water Facilities”. The Off-Site Storm Water Facilities shall
      accommodate the complete build-out of the Property, Residual Parcels, and
      other real property identified by Seller in its discretion. The design of
      the Off-Site Storm Water Facilities shall be subject to Purchaser’s
      prior written approval, which shall not be unreasonably conditioned, delayed,
      or withheld. Seller shall bear the expense of designing, obtaining governmental
      approvals, constructing, and installing the Off-Site Storm Water Facilities,
      provided, however, that Purchaser shall reimburse Seller Purchaser’s
      Share of the total actual labor and materials expense of constructing and
      installing the Off-Site Storm Water Management Facilities (but not the Off-Site
      Storm Water Conveyance Facilities). As used herein, “Purchaser’s
      Share” shall mean a fraction, the numerator of which shall be the
      gross square footage of the Property and the denominator of which shall
      be the gross square footage of the Shopping Center and the other real property
      identified by Seller to be accommodated by the Off-Site Storm Water Facilities.
      Seller shall maintain the Off-Site Storm Water Facilities until the City
      of Gig Harbor or other governmental authority accepts liability for such
      maintenance, provided, however, that as long as Seller maintains and Purchaser
      shares in the use of the Off-Site Storm Water Facilities, then Purchaser
      shall contribute to Seller Purchaser’s Share of the cost of maintaining
      the Off-Site Storm Water Facilities (including both the Off-Site Storm Water
      Conveyance Facilities and Off-Site Storm Water Management Facilities). For
      example, if the Property comprises 803,750 square feet, the Residual Parcels
      comprise 231,335 square feet, and other real property identified by Seller
      to be served by the Storm Water Facilities comprises 1,653,865 square feet,
      then Purchaser shall bear 29.89 percent, the owners of the Residual Parcels
      shall bear 8.60 percent, and the owners of the other real property identified
      by Seller to be accommodated by the Off-Site Storm Water Facilities shall
      bear 61.50 percent of the cost of maintaining the Off-Site Storm Water Facilities
      until the City of Gig Harbor or other governmental authority accepts liability
      for such maintenance. The Off-Site Storm Water Facilities will be constructed
      on off-site lands owned by Seller as of the date of Closing, and off-site
      lands over which Seller will hold a storm water facilities easement for
      the benefit of the Shopping Center and other real property as of the date
      of Closing (collectively, the “Off-Site Storm Water Parcels”).
      The Off-Site Storm Water Parcels are legally described on Exhibit I.

	

-11-

	                d.
      Recorded Maintenance Agreement. On or prior to Closing, the parties
      shall execute and record in the real property records of Pierce County,
      Washington, a perpetual “Storm Water Facility Maintenance Agreement”
      to implement and give public notice of the provisions of this Section
      11, in the form negotiated under subsection 7.d.

	                e.
      Recorded Easement. On or prior to Closing, the parties shall execute
      and record in the real property records of Pierce County, Washington, a
      perpetual “Off-Site Storm Water Facility Easement Agreement”
      in which Seller shall convey and quit claim to Purchaser a perpetual
      easement for storm water conveyance and storm water facility maintenance
      to and within the Off-Site Storm Water Parcels, in the form negotiated under
      subsection 7.e.

	                f.
      Dedication. Seller shall have the option, which may be exercised
      at any time before or after Closing, to dedicate fee ownership of all or
      any portion of the Off-Site Storm Water Parcels to the City of Gig Harbor
      or any other governmental authority that accepts liability for the maintenance
      of the Off-Site Storm Water Facilities.

	

        12.
TRAFFIC IMPACT FEES. Purchaser and Seller acknowledge that Seller has
made and will continue to make significant financial contributions to the
construction of Borgen Boulevard (a/k/a East West Road) under a local
improvement district to which Seller is obligated to contribute. Seller
understands that its local improvement district obligation may be reduced by the
amount of traffic impact fees paid by Seller, Purchaser, and others in
connection with the development of lots and parcels within Peacock Hill. The
parties acknowledge and agree that any traffic impact fees paid by Purchaser or
others in connection with the development of the Property shall be used to
reduce the obligation of Seller under its local improvement district obligations
to the City of Gig Harbor in connection with the development of Borgen
Boulevard, but only to the extent that (a) such reduction is permitted by the
City of Gig Harbor, and (b) Purchaser is not materially disadvantaged by such
cooperation with Seller.

        13.
SELLER’S REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller given in this Agreement are based upon the actual current
knowledge of Jon Rose, who is Seller’s President, and John Chadwell, who is
Seller’s Project Manager. Seller represents and warrants to Purchaser that
Mr. Rose and Mr. Chadwell are Seller’s employees most familiar with the
condition, use, operation, and development of the Property. Mr. Rose, Mr.
Chadwell, and Seller have no obligation under this Agreement to take any action
to acquire any knowledge regarding the Property. The information contained in
Seller’s Reports and Purchaser’s Reports shall not be imputed to Mr.
Rose, Mr. Chadwell, or Seller except to the extent that Mr. Rose or Mr. Chadwell
has actual knowledge of such information. Subject to the foregoing limitations,
Seller represents, warrants and covenants to Purchaser:

-12-

	                a.
      Power and Authority. Except for the approval of this Agreement and
      the other agreements between the parties described herein by the Board of
      Directors of Pope MGP, Inc., the managing general partner of Pope Resources,
      the manager and sole member of Seller, as described hereinabove, Seller
      has the authority and power to enter into this Agreement and to consummate
      the transaction provided for herein, and this Agreement and all other documents
      executed and delivered by Seller constitute legal, valid, binding and enforceable
      obligations of Seller, and there are no claims or defenses, personal or
      otherwise, or offsets whatsoever to the enforceability or validity of this
      Agreement.

	                b.
      No Violations and Actions. The execution, delivery and performance by Seller
      of its obligations under this Agreement will not conflict with or result
      in a breach of any law, governmental rule, regulations, judgment, decree
      or order by which the Seller or the Property is bound, or by any of the
      provisions of any contract to which Seller is a party or by which Seller
      or the Property is bound or, if Seller is not an individual, by Seller’s
      declaration of trust, certificate of incorporation, bylaws or partnership
      agreement, as the case may be. There is no action, suit, proceeding or investigation
      pending, or to Seller’s knowledge threatened, before any agency, court
      or other governmental authority which relates to the Property or the use
      thereof.

	                c.
      Condemnation. There is no condemnation proceeding affecting the Property
      or any portion thereof currently pending nor, to Seller’s knowledge,
      is any such proceeding threatened.

	                d.
      Compliance. The Property complies with all applicable governmental
      requirements in respect of the use, occupation and construction thereof,
      including but not limited to environmental, zoning, platting and other land
      use requirements, and Seller has received no notice of and has no knowledge
      of any violations or investigations relating thereto, and any violations
      thereof that occur before Closing, whether now noted or issued, shall be
      complied with by Seller, so that the Property shall be conveyed free of
      the same at Closing.

	                e.
      Default, Breach, Access and Utilities. There is no default or breach
      by Seller under any covenants, conditions, restrictions, rights-of-way,
      or easements which may affect the Property or any portion thereof.

	                f.
      Work. No work has been performed or is in progress at, and no materials
      have been furnished to, the Property which have not been paid for or will
      not be paid for in full by Seller prior to the Closing Date.

	

-13-

	                g.
      Assessments. No special or general assessments have been levied,
      other than as shown in the Title Commitment, or to Seller’s knowledge
      are threatened against all or any part of the Property.

	                h.
      Street Dedication. A perpetual easement for Borgen Boulevard, which
      adjoins the northerly boundary of the Shopping Center, has been dedicated
      to and accepted by the City of Gig Harbor, and a perpetual easement for
      the North South Road, which will adjoin the westerly boundary of the Shopping
      Center, will be dedicated to and accepted by the City of Gig Harbor (or
      the completion of construction of such roadway shall be bonded by Seller)
      prior to the date Purchaser opens the Project for business to the public,
      and the City of Gig Harbor has the responsibility to maintain such streets,
      roads, highways and avenues, except as may be disclosed otherwise by the
      Title Commitment or Survey.

	                i.
      Leases. There are no leases affecting all or any part of the Property.

	                j.
      Hazardous Substances. The Property has not been affected by the presence
      of, and there is not present, oil, hazardous waste, toxic substances or
      other pollutants or materials that could be a detriment to the Property
      or in violation of any local, state or federal law or regulation, and there
      are no potentially hazardous environmental conditions which would affect
      the Property, except as may be disclosed in Seller’s Reports. Without
      in any way limiting the generality of the foregoing provision, Seller specifically
      warrants that all prior uses of the Property or any part the Property known
      to Seller are listed on Exhibit J hereto; neither Seller nor
      any other user or occupant of any part of the Property known to Seller has
      ever been cited for violating any federal, state or local environmental
      law or regulation with respect to operations or activities on or about the
      Property; and all reports, test results, and other documents relating to
      the presence or absence of hazardous materials on or about the Property
      are being delivered to Purchaser concurrently herewith.

	                k.
      Foreign Person or Entity. Seller is not a foreign person, nonresident
      alien, foreign corporation, foreign partnership, foreign trust, or foreign
      estate, as those terms are defined in the Internal Revenue Code and the
      Income Tax Regulations promulgated thereunder. At Closing, Seller shall
      deliver to Purchaser a certificate of nonforeign status in form required
      by the Income Tax Regulations and reasonably acceptable to Purchaser. In
      the event Seller shall not deliver such certificate to Purchaser at Closing,
      or shall not otherwise sufficiently evidence Seller’s exemption from
      withholding requirements, Purchaser may withhold such amounts as may be
      required under applicable law in order for Purchaser to avoid any liability
      for Seller’s tax obligations.

	                l.
      Agreements and Contracts. There are no management agreements, service
      contracts or other agreements affecting the Property or the operation or
      maintenance thereof.

	

-14-

	                m.
      Soil Conditions; Flood and Mud Slide Hazard; Wetlands. There is not
      any soils condition adversely affecting the Property except as may be disclosed
      in Seller’s Reports.

	                n.
      Legally Subdivided Lot. As of Closing, the Property shall be a legally
      subdivided lot.

	                o.
      Buried Tanks. There are no underground storage tanks on the Property,
      nor have underground storage tanks been removed from the Property, except
      as may be disclosed in Seller’s Reports.

	                p.
      Bankruptcy Matters. Seller has not made a general assignment for
      the benefit of creditors, filed any voluntary petition in bankruptcy or
      suffered the filing of an involuntary petition by its creditors, suffered
      the appointment of a receiver to take possession of substantially all of
      its assets, suffered the attachment or other judicial seizure of substantially
      all of its assets, admitted its inability to pay its debts as they come
      due, or made an offer of settlement, extension or composition to its creditors
      generally.

	                q.
      Misrepresentation and Adverse Facts. Seller has made no untrue statements
      or representations in connection with this Agreement, and all items transferred
      to Purchaser on or before Closing are true and correct copies of what they
      purport to be. Said items have not been amended or modified, other than
      as also transferred to Purchaser, and no items that should have been set
      forth as exhibits hereto or transferred to Purchaser on or before Closing
      have not been so set forth or transferred. Seller has not failed to state
      or disclose any material fact in connection with the transaction contemplated
      by this Agreement. Seller knows of no facts, nor has Seller failed to disclose
      any fact, which would prevent Purchaser from using and operating the Property
      after Closing in the manner in which it is intended to be operated by Purchaser.

	                r.
      Marketable Title. Seller has, as of the Effective Date, and will
      have as of the date of Closing, good, marketable and indefeasible title
      to the Property subject only to the matters set forth in the Survey and
      Title Commitment that Seller has not agreed in writing to remove at or prior
      to Closing. Without in any way limiting the generality of the foregoing
      representation, Seller further represents and warrants to Purchaser (i) that
      no understanding, agreement (either express or implied), or reasonable expectancy
      of agreement with respect to sale, lease or other transfer of the Property
      exists between Seller and any third party, and (ii) that Seller is
      in no way restricted from negotiating and entering into an agreement with
      Purchaser and selling the Property to Purchaser.

	                s.
      Obligations. There are no obligations in connection with the Property
      which will be binding upon Purchaser after Closing, except for those matters
      set forth in the Title Commitment that Seller has not agreed in writing
      to remove at or prior to Closing.

	                t.
      Absence of Moratorium. No moratorium, statute, order, regulation,
      ordinance, legislation, judgment, ruling or decree of any court or governmental
      agency has been enacted, adopted, issued, entered, or is pending or in effect,
      that could materially and adversely affect the Property, Purchaser’s
      ability to develop and operate its Project, or both.

	

-15-

	                u.
      Storm Water Facilities. As of the date Purchaser opens the Project
      for business to the public, the Property will be benefited by fully-operational
      Off-Site Storm Water Facilities with adequate capacity sufficient to allow
      the construction, use, and maintenance of the proposed development of the
      Property, the Residual Parcels, and other real property owned and identified
      by Seller as provided hereinabove.

	                All
      of the representations, warranties, and covenants of the Seller contained
      in this Agreement (i) shall be true and correct as of the Effective Date
      and as of the Closing Date; and (ii) Purchaser’s rights to enforce
      such representations and warranties and covenants shall survive the Closing
      and such rights to enforce shall not be merged into any documents delivered
      by Seller at Closing. Seller shall indemnify, defend and hold Purchaser
      harmless from and against any cause, claim, loss, damage or expense, including
      attorneys fees, which Purchaser suffers as a result of a breach of the representations,
      warranties and covenants contained in this Agreement.

	                Notwithstanding
      the foregoing, Seller shall be liable for damages caused by or relating
      to Seller’s breach of any covenant, representation, or warranty given
      under this Agreement only if and to the extent that (x) the damages are
      actually incurred by Purchaser, (y) the damages are incurred by Purchaser
      within two (2) years after Closing, and (z) Purchaser asserts a claim for
      damages against Seller by the commencement of a civil judicial action against
      Seller within two (2) years after Closing. The foregoing limitations shall
      not apply to damages caused by or relating to Seller’s breach of any
      covenant, representation, or warranty given under the Statutory Warranty
      Deed delivered by Seller to Purchaser at Closing.

	

        14.
RELEASE AND DISCLAIMER. Purchaser acknowledges that Seller makes no
covenant, representation, or warranty as to the suitability of the Property for
any purpose or as to the condition of the Property except as otherwise expressly
set forth in this Agreement. Purchaser hereby waives all objections and
complaints regarding the condition of the Property, including without limitation
objections and complaints relating to surface and subsurface conditions, except
as provided in any covenant, agreement, representation, or warranty in this
Agreement. Purchaser agrees that it is purchasing the Property in its present
condition, AS IS, subject only to the covenants, agreements, representations,
and warranties expressly provided by Seller in this Agreement. Purchaser assumes
the risk that adverse conditions may not have been revealed by its own
investigation or by the Seller’s Reports. Except for and with respect to
Seller’s express covenants, agreements, representations, and warranties in
this Agreement, Purchaser hereby waives, releases, acquits, and forever
discharges Seller of and from any and all claims, actions, demands, rights,
damages, costs of response or remedial action, or expenses whatsoever, direct or
indirect, known or unknown, foreseen or unforeseen, including claims of third
parties, that now exist or that may arise in the future on account of or in
connection with the condition of the Property, including without limitation any
surface or subsurface contamination, but excluding claims for statutory right of
contribution toward third party claims under any state or federal hazardous
substance law or regulation.

-16-

	

        EXCEPT
AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER MAKES NO COVENANTS,
REPRESENTATIONS, OR WARRANTIES WITH RESPECT TO: (A) THE CONDITION OF THE
REAL OR PERSONAL PROPERTY OR ANY BUILDINGS, STRUCTURES, OR IMPROVEMENTS ON THE
REAL PROPERTY OR THE SUITABILITY OF THE REAL PROPERTY FOR HABITATION OR FOR
PURCHASER’S INTENDED USE OR FOR ANY USE WHATSOEVER; (B) ANY APPLICABLE
BUILDING, ZONING, OR FIRE LAWS OR REGULATIONS, OR WITH RESPECT TO COMPLIANCE
THEREWITH, OR WITH RESPECT TO THE EXISTENCE OF OR COMPLIANCE WITH ANY REQUIRED
PERMITS, IF ANY, OF ANY GOVERNMENTAL AGENCY; (C) THE AVAILABILITY OR EXISTENCE
OF ANY WATER, SEWER, OR OTHER UTILITIES OR UTILITY RIGHTS; (D) THE EXISTENCE OF
ANY WATER, SEWER OR OTHER UTILITY DISTRICT; OR (E) THE PRESENCE OF ANY HAZARDOUS
SUBSTANCES; (F) THE PRESENCE OF ANY UNDERGROUND STORAGE TANKS OR ASBESTOS; OR
(G) COMPLIANCE OF THE PROPERTY WITH THE TERMS OF THE AMERICANS WITH DISABILITIES
ACT. PURCHASER ASSUMES THE RISK OF ALL DEFECTS AND CONDITIONS IN THE PROPERTY,
INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT CANNOT BE OBSERVED BY CASUAL
INSPECTION; PROVIDING, THAT NOTHING HEREIN LIMITS OR IMPAIRS SELLER’S
COVENANTS, AGREEMENTS, REPRESENTATIONS, AND WARRANTIES HEREIN. PURCHASER
ACKNOWLEDGES THAT PURCHASER WILL HAVE THE OPPORTUNITY TO INSPECT THE PROPERTY
AND, EXCEPT FOR THE COVENANTS, AGREEMENTS, REPRESENTATIONS, AND WARRANTIES OF
SELLER HEREIN, IS RELYING ENTIRELY THEREON.

        15.
SELLER’S OBLIGATIONS PENDING CLOSING. During the continuance of this
Agreement, until Closing or termination of this Agreement as herein provided,
Seller covenants to perform in accordance with the following obligations:

	                a.
      Sell or Encumber Property. Seller shall not sell, assign, or convey
      any right, title, or interest whatever in or to the Property to any third
      party or create or permit to exist any lien, encumbrance, or charge thereon
      which will not be paid in full at Closing.

	                b.
      Representations and Warranties. Seller shall not take any action,
      or omit to take any action, which action or omission would have the effect
      of violating or rendering untrue any of its representations, warranties,
      covenants, and agreements contained herein.

	                c.
      Existing Financing. Seller shall continue to make all payments required
      under the terms of any existing financing on the Property and shall not
      suffer or permit a default to arise thereunder.

	

-17-

	                d.
      Governmental Orders. Seller shall not violate any lawful order or
      directive of a governmental agency with respect to the Property.

	                e.
      Legally Subdivided Lot. Prior to Closing, Seller at Seller’s
      sole cost and expense shall take any action required to confirm that the
      Property is, or to cause the Property to be, established as a legally subdivided
      lot.

	                f.
      Cooperation with Purchaser. Seller shall confer, coordinate and cooperate
      with Purchaser in every reasonable respect in connection with the satisfaction
      of the contingencies and approvals specified herein, including, without
      limitation, Purchaser’s efforts to obtain the Project Approvals, and
      Seller shall promptly execute all reasonably necessary documents in connection
      therewith upon request by Purchaser.

	                g.
      Payments. Seller shall make any and all payments due and owing with
      respect to the Property, including without limitation, real estate taxes,
      assessments, insurance premiums, service contracts, management fees, and
      payments for materials and materialmen, prior to the due date for such payment
      and will, upon Purchaser’s request, deliver to Purchaser evidence reasonably
      satisfactory to Purchaser of payment thereof.

	

        16.
ITEMS TO BE DELIVERED AT CLOSING. At Closing Seller shall deliver the
following items to Purchaser or to the Title Company. Drafts of all documents to
be executed and delivered at Closing shall be prepared by Purchaser’s
counsel and submitted to Seller’s counsel for review prior to the date of
Closing.

	                a.
      Statutory Warranty Deed. A duly executed and acknowledged statutory
      warranty deed conveying to Purchaser fee title to the Property subject to
      no encumbrances or defects except for the lien of real property taxes for
      the current year prorated to the Closing Date and such encumbrances or defects
      disclosed in the Title Commitment and Survey and approved or waived by Purchaser
      as set forth hereinabove.

	                b.
      Title Policy. The Title Company shall provide an ALTA owner’s
      extended coverage policy of title insurance, Form B 1970 (revised 10/17/70),
      with survey and legal lot endorsements (the “Title Policy”),
      insuring that fee title to the Property (together with any access easements)
      is vested in Purchaser, subject to no defects or encumbrances except for
      the lien of real property taxes for the current year and such matters as
      approved or waived by Purchaser as set forth hereinabove. The policy of
      title insurance shall be written in the amount of the Purchase Price.

	                c.
      Legally Subdivided Lot. Evidence satisfactory to Purchaser that the
      Property has been established as a legally subdivided lot.

	                d.
      Other Documents. All other documents or instruments that may be necessary
      or desirable to render this Agreement and the transaction contemplated herein
      legally and practically effective, including without limitation the Reciprocal
      Easement Agreement, Site Development Agreement, Declaration of Restrictive
      Covenant, Off-Site Storm Water Facility Maintenance Agreement, and Off-Site
      Storm Water Facility Easement Agreement.

	

-18-

	

        17.
PURCHASER’S CONDITIONS TO CLOSING. The obligation of Purchaser
hereunder shall be subject to the fulfillment of the following conditions on or
prior to the Closing Date, each of which shall continue as conditions until
Closing unless waived by Purchaser. Purchaser may, in Purchaser’s
reasonable discretion, terminate this Agreement at any time by written notice to
Seller if any of the conditions set forth in this section is not satisfied by
the Closing Date. In the event of such termination, the Earnest Money shall be
promptly returned to Purchaser.

	                a.
      Representations and Warranties. The representations and warranties
      of Seller contained herein shall be true and correct as of the Closing.

	                b.
      Performance by Seller. Seller shall have performed all agreements,
      undertakings and obligations and complied with all conditions required by
      this Agreement to be performed and/or complied with by Seller. The SDA may
      provide remedies, including without limitation the creation of one or more
      holdback escrow accounts at Closing, available to Purchaser in the event
      that Seller has not completed any of Seller’s Required Improvements
      due on or prior to Closing.

	                c.
      No Change to Property. As of the date of Closing there shall have
      been no material adverse change in the condition of the Property.

	                d.
      Contingencies Satisfied. The contingencies set forth here shall have
      been fulfilled or waived on or before the dates provided.

	                e.
      Absence of Moratorium. That no litigation, referendum, moratorium,
      statute, order, regulation, ordinance, legislation, judgment, ruling or
      decree has been enacted, adopted, issued or entered or shall be pending
      or in effect, that could adversely affect the Property, the Project Approvals
      or Purchaser’s ability to develop and operate its Project.

	

        18.
TIME AND PLACE OF CLOSING.

	                a.
      Closing Date. Subject to Section 17 above, the Closing shall
      take place on or before the date that is ten (10) business days after all
      the conditions precedent described herein have been satisfied or waived
      in writing by the party or parties to whose obligations such conditions
      relate (the “Closing Date” or “Closing”). If Closing
      does not occur by the Closing Date for any reason other than default by
      Purchaser, the Earnest Money shall be returned to Purchaser.

	

-19-

	                b.
      Closing Procedure. Closing shall occur at the Seattle, Washington,
      office of the Title Company. All documents and instruments required for
      Closing shall be delivered to the Title Company at least one day prior to
      the Closing Date. Funds required for Closing shall be delivered to the Title
      Company by 10:00 a.m. on the morning of the Closing Date. Each party
      agrees to execute and deliver to the Title Company closing escrow instructions
      to implement and coordinate the Closing as set forth in this Agreement.

	                c.
      Closing Date Extension. Notwithstanding any provision of this Agreement
      to the contrary except subsection 18.d, in the event that Purchaser is prepared
      to close this transaction pursuant to the terms of this Agreement, and if
      Seller has not fully performed its obligations hereunder and deposited all
      documents with Title Company necessary for Closing to timely occur, then
      Purchaser, in its sole and absolute discretion, and in addition to all other
      rights and remedies it may have, may, from time to time, notify Seller that
      Purchaser extends the Closing Date to such date or dates as Purchaser may
      elect to provide Seller with the additional time necessary for Seller to
      fully perform its obligations hereunder, and Purchaser may defer deposit
      of the balance of the Purchase Price pending Seller’s performance,
      provided, however, that the Closing Date shall not be extended more than
      thirty (30) days under this subsection. Seller’s failure to fully perform
      by such extended Closing Date(s) without legal excuse shall constitute a
      default by Seller under this Agreement.

	                d.
      Termination Date. Notwithstanding any provision of this Agreement
      to the contrary, if this transaction has not closed on or before December
      31, 2005, because any condition precedent to closing has not been satisfied
      or waived in writing by the party or parties to whose obligations such conditions
      relate, then this Agreement shall terminate automatically, the Earnest Money
      shall be returned to Purchaser, and neither Purchaser nor Seller shall have
      any further obligations or rights under this Agreement except those obligations
      and rights intended to survive the termination of this Agreement.

	

        19.
APPORTIONMENTS AND CLOSING COSTS.

	                a.
      Proration of Income and Expenses. The following items shall be adjusted
      or prorated between Seller and Purchaser at the Closing, as of the Closing
      Date:

	                        (i)
      Ad valorem and similar taxes (excluding assessments) for the then current
      tax year relating to the Property shall be prorated. If the Closing occurs
      before the tax rate is fixed for the then current tax year, the apportionment
      of taxes shall be made on the basis of the tax rate for the preceding tax
      year applied to the latest assessed valuation of the Property, and when
      the tax rate is fixed for the tax year in which the Closing occurs, Seller
      and Purchaser shall adjust the proration of taxes and, if necessary, refund
      or pay such sums to the other party as shall be necessary to affect such
      adjustment. If, at the time of Closing, the tax classification applicable
      to the Property is changed from a category that receives preferential tax
      treatment (e.g., open space), to a category that does not receive preferential
      tax treatment (e.g., commercial), then Seller (not Purchaser) shall be responsible
      for any and all ‘recapture’ taxes payable in connection with the
      change of the tax classification.

	

-20-

	                        (ii)
      All unpaid assessments, if any, existing as of the Closing Date, whether
      due and payable before or after such date and whether or not otherwise payable
      in installments, shall be paid by Seller in cash at the Closing to the assessing
      entity.

	                        (iii)
      All other income and operating expenses for or pertaining to the Property,
      including, but not limited to, public utility charges, shall be prorated
      between Purchaser and Seller as of the Closing Date.

	                b
      Post-Closing Adjustments. To the extent items are prorated or adjusted
      at the Closing on the basis of estimates, or are not prorated or adjusted
      at the Closing pending actual receipt of information upon which such pro-rations
      or adjustments are to be based, Purchaser and Seller will, upon a proper
      accounting, pay to the other such amounts as may be necessary such that
      Seller will pay all expenses of the Property prior to the Closing Date and
      Purchaser will pay all expenses of the Property after the Closing Date to
      the extent required by subsection19(a). If Purchaser receives any bill or
      invoice which relates to periods prior to the Closing, Purchaser will refer
      such bill to Seller and Seller agrees to pay, promptly upon receipt, such
      a portion of the bill or invoice as relates to the period prior to the Closing
      Date for which it is responsible. If Seller does not pay such bill in a
      timely manner, Purchaser may, at his option, pay such bill or invoice and
      Seller shall become liable to Purchaser for the full amount of such payment,
      together with interest at the lesser of: (i) two percent (2%) per annum
      in excess of the “Prime Rate,” and (ii) the highest lawful rate.
      The “Prime Rate” shall be the rate announced as such from time
      to time by Bank of America (Seattle office) or its successor. If there shall
      be no such announced rate of such bank or its successor, then the “Prime
      Rate” shall be such equivalent rate as is charged from time to time
      by major money-center banks.

	                c
      Closing Costs. At Closing, Seller shall reimburse Purchaser the cost
      of the Survey and pay all conveyance and transfer taxes, the title insurance
      premium for a standard coverage policy of title insurance, and one-half
      of the escrow fee. Purchaser will pay one-half of the escrow fee, the additional
      premium for an extended coverage policy of title insurance, and the cost
      of any title insurance endorsements. Notwithstanding the foregoing, Purchaser
      and Seller shall each pay their own attorneys’, accountants’ and
      other professional fees.

	

        20.
CASUALTY LOSS AND CONDEMNATION.

	                a
      Casualty or Condemnation. If prior to the Closing the Property is
      damaged as the result of fire or other casualty or there is a loss of the
      Property by condemnation, Purchaser shall have the option to (i) accept
      title to the Property without any abatement of the Purchase Price, in which
      event at the Closing all of the insurance proceeds or condemnation awards
      shall be assigned by Seller to Purchaser and any moneys theretofore received
      by Seller in connection with such loss, fire or other casualty shall be
      paid over to Purchaser; or (ii) terminate this Agreement, in which event
      the Earnest Money shall be returned to Purchaser, and thereupon neither
      party shall have any further liability to the other.

	

-21-

	                b
      Settlement. During the existence of this Agreement, Seller shall
      not settle any fire or casualty loss claims or agree to any award or payment
      in condemnation or eminent domain or any award or payment in connection
      with the change in grade of any street, road, highway or avenue in respect
      of or in connection with the Property without obtaining Purchaser’s
      prior consent in each case.

	

        21.
SELLER’S REMEDY. SELLER AND PURCHASER HEREBY AGREE THAT THE
DAMAGES THAT WOULD BE SUFFERED BY SELLER IN THE EVENT OF A DEFAULT BY PURCHASER
HEREUNDER IN PURCHASING THE PROPERTY WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN, AND THAT THE EARNEST MONEY REPRESENTS THE REASONABLE
ESTIMATE BY THE PARTIES OF THE AMOUNT OF THE DAMAGES THAT SELLER WOULD SUFFER BY
REASON OF PURCHASER’S DEFAULT. PURCHASER AND SELLER UNDERSTAND AND AGREE
THAT THE VALUE OF PROPERTY IS SUBJECT TO CHANGE BY REASON OF GENERAL ECONOMIC
CONDITIONS, THE LOCAL REAL ESTATE MARKET, THE AVAILABILITY OF MORTGAGE
FINANCING, AND OTHER FACTORS BEYOND THE CONTROL OF PURCHASER AND SELLER, AND
THAT THE EARNEST MONEY IS A REASONABLE LIQUIDATED DAMAGE AMOUNT UNDER THE
EXISTING CIRCUMSTANCES. ACCORDINGLY, IN THE EVENT ESCROW DOES NOT CLOSE BECAUSE
OF A DEFAULT BY PURCHASER HEREUNDER, AND PROVIDED THAT ALL CONDITIONS TO
PURCHASER’S OBLIGATIONS HAVE BEEN SATISFIED AND SELLER HAS COMPLIED WITH
ALL OF ITS OBLIGATIONS HEREUNDER AND IS READY, WILLING AND ABLE TO CLOSE ESCROW,
SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE EARNEST MONEY THEN HELD BY
THE TITLE COMPANY AS LIQUIDATED DAMAGES, AND NOT AS A PENALTY OR FORFEITURE, AS
SELLER’S SOLE AND EXCLUSIVE REMEDY FOR PURCHASER’S DEFAULT AT LAW OR
IN EQUITY, AND UPON RECEIPT OF SUCH AMOUNT BY SELLER, PURCHASER AND SELLER SHALL
BE RELIEVED OF ANY FURTHER OBLIGATIONS OR LIABILITY HEREUNDER. PURCHASER AND
SELLER SHALL SIGN BELOW THIS PARAGRAPH INDICATING THEIR AGREEMENT TO THE
LIQUIDATED DAMAGE CLAUSE HEREIN CONTAINED.

	SELLER

__________	PURCHASER

__________

	

-22-

	

        22.
PURCHASER’S REMEDIES.

	                a.
      Seller’s Failure to Close. In the event of Seller’s failure
      to execute and deliver any Closing document when due or to take any other
      action that is required of Seller to complete the Closing contemplated by
      this Agreement, then Purchaser shall have the right to pursue all rights
      and remedies now or hereafter available at law or in equity or by statute,
      including, but not limited to, enforcing specific performance of this Agreement
      and bringing suit for monetary damages, provided, however, that in the event
      Purchaser elects to sue for monetary damages, Purchaser’s recovery
      shall be limited to the actual out-of-pocket costs incurred by Buyer in
      connection with the acquisition of the Property contemplated by this Agreement,
      and in no event shall Purchaser be entitled to recover damages based on
      lost profits or other consequential damages. Additionally, in the event
      of any material breach by Seller and without waiving any other rights or
      remedies, Purchaser shall have the right to terminate this Agreement by
      notice to Seller, and upon such notice of termination the Earnest Money
      and any Extension Fees previously paid by Purchaser to Seller shall be returned
      to Purchaser. Each remedy available to Purchaser shall be cumulative and
      shall be in addition to any other remedy given hereunder or now or hereafter
      existing at law or in equity or by statute. Purchaser, at its option, may
      elect to waive the performance of any condition, contingency or provision
      in Purchaser’s favor set forth in this Agreement. If any condition
      to Closing shall not be satisfied, Purchaser, at its option, may terminate
      this Agreement. In the event of such termination, the Earnest Money shall
      be returned to Purchaser.

	                b.
      Seller’s Other Defaults. In the event of Seller’s failure
      to perform any other obligation, or breach of any other provision, under
      this Agreement except as described in the foregoing subsection, including
      without limitation Seller’s breach of any representation or warranty
      given under this Agreement, then Purchaser shall have the right to pursue
      all rights and remedies now or hereafter available at law or in equity or
      by statute, including, but not limited to, enforcing specific performance
      of this Agreement and bringing suit for monetary damages, provided, however,
      that monetary damages shall not include lost profits or other consequential
      damages and shall not exceed the sum of One Million Dollars (US$1,000,000).
      Seller’s liability for breach of any covenant, representation, or warranty
      shall be further limited as provided under Section 13 hereof. Additionally,
      in the event of such breach by Seller and without waiving any other rights
      or remedies, Purchaser shall have the right to terminate this Agreement
      by notice to Seller, and upon such notice of termination the Earnest Money
      and any Extension Fees previously paid by Purchaser to Seller shall be returned
      to Purchaser. Purchaser, at its option, may elect to waive the performance
      of any condition, contingency or provision in Purchaser’s favor set
      forth in this Agreement. If any condition to Closing shall not be satisfied,
      Purchaser, at its option, may terminate this Agreement. In the event of
      such termination, the Earnest Money shall be returned to Purchaser.

	

        23.
NOTICES. All notices, demands, consents, approvals and other
communications which are required or desired to be given by either party to the
other hereunder shall be in writing and shall be hand delivered, transmitted via
telephonic facsimile, or sent by United States registered or certified mail,
postage prepaid, return receipt requested, addressed to the appropriate party at
its address set forth below, or at such other address as such party shall have
last designated by notice to the other. Notices, demands, consents, approvals,
and other communications shall be deemed given when delivered or three days
after mailing; provided, however, that if any such notice or other communication
shall be sent by telecopy or fax machine, such notice shall be deemed given at
the time and on the date of machine transmittal if the sending party receives a
written verification of delivery from its fax machine.

-23-

	 	To Seller:	OPG Properties LLC

19245 Tenth Avenue N.E.

Poulsbo, Washington 98370-7456

Attention: Jon Rose, President

Fax No.: 360-697-1156

	 	With a copy to: 	Marco de Sa e Silva

Davis Wright Tremaine LLP

2600 Century Square

1501 Fourth Avenue

Seattle, Washington 98101

Fax No.: 206-628-7699

	 	To Purchaser:	Costco Wholesale Corporation

999 Lake Drive

Issaquah, Washington 98027

Attention: Bruce Coffey

Fax No.: 425-313-8114

	 	With a copy to: 	Joseph E. Delaney

Foster Pepper & Shefelman PLLC

1111 Third Avenue, Suite 3400

Seattle, Washington 98101

Fax No.: 206-447-9700

	

-24-

	

        24.
ACCESS AND POSSESSION. Full possession of the Property shall be delivered
to Purchaser by Seller at Closing. Prior to Closing, Purchaser and its agents,
representatives and contractors shall have the right to enter upon the Property
during normal business hours for the purpose of conducting surveys, structural
measurements, wetland determinations, soil and environmental tests,
architectural and engineering studies, and/or any other investigations related
to determining the feasibility of the Property for Purchaser’s purposes.
Prior to the first entry onto the Property permitted hereunder, and prior to any
instance of invasive testing, Purchaser shall provide to Seller a list
(including contact person and telephone number) of the persons designated by
Purchaser to have access to the Property, together with a description of the
anticipated scope of work to be performed by such person(s). Further, as a
convenience to Seller, Purchaser will instruct the persons designated by
Purchaser to have access to the Property to contact Seller’s employee John
Chadwell (Telephone: 360-697-6626, or Fax: 360-697-1156) in advance of
such person’s entry onto the Property. All actions undertaken by Purchaser
and its agents, representatives and contractors pursuant to this Agreement shall
involve as little disruption of the Property as is reasonably possible. Invasive
testing, such as soil borings and building material sampling, will involve the
minimum sampling techniques reasonably calculated to provide Purchaser with the
necessary information. Purchaser and its agents, representatives and contractors
shall not conduct any invasive testing on the Property without obtaining
Seller’s prior written approval of the scope of work, which approval shall
not unreasonably be conditioned, delayed, or withheld. As consideration for
Seller’s permission to enter upon the Property as described above,
Purchaser agrees to restore the Property to substantially the same condition as
existed prior to such entry and to defend, indemnify, and hold Seller, its
affiliates, agents, contractors, directors, employees, managers, members,
officers, owners, parents, and subsidiaries harmless from and against any and
all liability, loss, cost, damage, or expense (including reasonable attorney
fees) arising from or relating to the entry onto the Property by any agent,
employee, associate, independent contractor, or anyone else entering at the
request, direction or invitation of Purchaser; provided, however, that
(i) this indemnity shall not apply to the extent such liability arises in
connection with the negligence or willful misconduct of the Seller; and
(ii) Purchaser shall have no liability to Seller or to any other person or
entity by reason of, nor shall Purchaser have any duty to indemnify, defend or
hold any person or entity harmless from or against, any claim, demand, damage,
loss, action, liability, cause of action or judgment, including, without
limitation, any claim for diminution in value of the Property or for
environmental remediation or clean-up costs, arising out of or in connection
with the mere fact of having discovered and/or reported (as may be required by
law) any adverse physical condition, title condition, or other defect with
respect to the Property. The information obtained by Purchaser pursuant to this
Agreement is intended to be used by Purchaser solely for its review of the
Property and its efforts to obtain the necessary permits and approvals
pertaining to Purchaser’s proposed development of the Property (the
“Approved Uses”). Neither Purchaser, nor its agents,
representatives or contractors will make any disclosure to any third party, or
any governmental agency for any purpose other than the Approved Uses, without
the prior written consent of Seller, which consent will not be unreasonably
withheld, conditioned, or delayed.

        25.
MISCELLANEOUS.

	                a
      Entire Agreement – No Oral Modifications. This Agreement and
      the exhibits hereto constitute the final and complete agreement, and supersede
      all prior correspondence, memoranda or agreements between the parties relating
      to the subject matter hereof. This Agreement cannot be changed or modified
      other than by a written agreement executed by both parties.

	

-25-

	                b
      Successors Bound. Subject to the restrictions on assignment contained
      in the following subsection, the provisions of this Agreement shall extend
      to, bind and inure to the benefit of the parties hereto and their respective
      personal representatives, heirs, successors, and assigns.

	                c
      Assignment. Neither Seller nor Purchaser shall assign this Agreement
      without the prior written consent of the other; provided, however, that
      Purchaser shall be entitled to assign Purchaser’s interest under this
      Agreement without Seller’s consent to an affiliate of Purchaser that
      is owned by, or under common control with, Purchaser.

	                d
      Brokers. Seller and Purchaser each represent and warrant to the other
      that no real estate agent or broker was involved in negotiating the transaction
      contemplated herein except for HDR Investments, Inc. (d/b/a R-K Real Estate
      Services) (“Seller’s Broker”) and Northwest-Atlantic
      Partners, Inc. (“Purchaser’s Broker”), whose commissions
      of Two and One Half Percent (2.5%) of the Purchase Price each shall be paid
      by Seller out of the Purchase Price at Closing. The total commission payable
      shall be five percent (5%) of the Purchase Price. The payment to Purchaser’s
      Broker shall be by certified check or wire transfer payment, and Purchaser
      is hereby authorized to deduct such payment from the Purchase Price and
      pay same directly to Purchaser’s Broker. In the event any other claims
      for real estate commissions, fees or compensation (collectively “Compensation”)
      arise in connection with this transaction, the party so incurring or causing
      such claims shall indemnify, defend and hold harmless the other party from
      any loss or damage, including attorneys’ fees, which said other party
      suffers because of said claims. Neither Purchaser nor Seller shall have
      any liability to Seller’s Broker or Purchaser’s Broker if this
      transaction should fail to close for any reason whatsoever. Seller’s
      Broker and Purchaser’s Broker (i) hereby waive any rights to any
      other Compensation from Purchaser or Seller in connection with the sale
      of the Property; and (ii) shall execute this Agreement in the place
      provided on the final pages solely to evidence their agreement to the terms
      of this subsection; provided, however, that this Agreement shall be binding
      upon Purchaser and Seller if either Seller’s Broker or Purchaser’s
      Broker, or both, fail to so execute this Agreement.

	                e
      Governing Law. This Agreement shall be governed by and construed
      in accordance with the laws of the State of Washington.

	                f
      Counterparts. This Agreement may be executed in more than one counterpart,
      each of which shall be deemed an original, and all of which together shall
      constitute one and the same instrument.

	                g
      Attorneys’ Fees. In the event that either party hereto brings
      an action or proceeding for a declaration of the rights of the parties under
      this Agreement, for injunctive relief, or for an alleged breach or default
      of this Agreement, or any other action arising out of this Agreement or
      the transactions contemplated hereby, the prevailing party in any such action
      shall be entitled to an award of reasonable attorneys’ fees and any
      court costs incurred in such action or proceeding, in addition to any other
      damages or relief awarded, regardless of whether such action proceeds to
      final judgment.

	

-26-

	                h
      Severability. If any term or provision of this Agreement shall, to
      any extent, be held invalid or unenforceable, the remaining terms and provisions
      of this Agreement shall not be affected thereby, but each remaining term
      and provision shall be valid and enforced to the fullest extent permitted
      by law.

	                i
      Captions. The captions of this Agreement are inserted solely for
      convenience of reference only and do not define, describe or limit the scope
      or intent of this Agreement or any term hereof.

	                j
      Exhibits. All exhibits attached hereto are hereby incorporated herein
      by reference and made a part hereof.

	                k
      Construction. Seller and Purchaser acknowledge that each party and
      its counsel have reviewed and revised this Agreement and that the normal
      rule of construction to the effect that any ambiguities are to be resolved
      against the drafting party shall not be employed in the interpretation of
      this Agreement (including the exhibits) or any amendments thereto, and the
      same shall be construed neither for nor against Seller or Purchaser, but
      shall be given a reasonable interpretation in accordance with the plain
      meaning of its terms and the intent of the parties.

	                l.
      Computation of Time. If the time for performance of any provision
      of this Agreement ends on a Saturday, Sunday or federal, state or legal
      holiday, then such date shall automatically be extended until 5:00 p.m.
      Pacific Time on the next day which is not a Saturday, Sunday or federal,
      state or legal holiday.

	                m.
      Survival of Terms. The terms and provisions of this Agreement shall
      survive the Closing and shall remain in full force and effect thereafter
      except as limited by the express terms hereof or applicable law.

	

-27-

	

        26.
EFFECTIVE DATE. In the event the parties do not sign this Agreement
simultaneously, this Agreement shall be considered an offer made by the party
first executing and delivering this Agreement to the other party. In such event,
said offer shall expire at 11:59 p.m. (Seattle time) on the seventh
(7th) day following execution by the offering party, unless prior to
such deadline one copy of this Agreement, accepted (without change) and executed
by the party to whom the offer has been made, shall have been delivered to the
party making the offer. If the party receiving the offer changes the terms of an
offer, such offer shall be deemed rejected and a new offer shall be deemed made
by the party making such changes. The “Effective Date” shall be the
date upon which this Agreement is accepted (without change), executed and
delivered by the party to whom the offer is made.

        IN
WITNESS WHEREOF this Property Purchase Agreement is executed by the parties,
intending to be legally bound, as of the date set forth beside their signatures.

	        SELLER:		OPG
      PROPERTIES LLC

      

      

      By:

             —————————————

      Name:

                 ————————————

      Title:

                ————————————

      

	

        Date of execution by Seller:

        ____________, 2003

	        PURCHASER:		COSTCO
      WHOLESALE CORPORATION

      

      

      By:

              ——————————————

      Name:

                  —————————————

      Title:

               ——————————————

      

	

        Date of execution by Purchaser:

        ____________, 2003

-28-

        We
hereby consent to the terms of Section 25(d):

	SELLER’S BROKER:		HDR INVESTMENTS,
      INC. (D/B/A R-K REAL ESTATE SERVICES)

      

      

      By:

              ——————————————

      Name:

                 —————————————

      Title:

                —————————————

      

	PURCHASER’S BROKER:		NORTHWEST-ATLANTIC
      PARTNERS, INC.

      

      

      By:

             ——————————————

      Name:

                 —————————————

      Title:

                —————————————

      

	

EXHIBITS:

      
      	A	- 	Legal
      Description of the Property
	B	 -	Site
      Plan of the Property and Residual Parcels
	C	-	Legal
      Description of the Shopping Center
	D	-	Legal
      Description of the Residual Parcels
	E	 -	Seller’s
      Reports
	F	-	Form
      of Survey Certification
	G	-	Description
      of REA Matters
	H	 -	Description
      of Required Improvements
	I	-	Legal
      Description of Off-Site Storm Water Parcels
	J	 -	Historical
      Use of the Property

	     
        
      

-29-

	

EXHIBIT A

Legal Description of the
Property

THAT PORTION OF THE NORTHEAST
QUARTER OF THE NORTHWEST QUARTER OF SECTION 31,  TOWNSHIP 22 NORTH, RANGE 2 EAST, W.M.,
PIERCE COUNTY, WASHINGTON DESCRIBED AS  FOLLOWS:

COMMENCING  AT THE NORTHWEST
CORNER OF SAID SECTION; THENCE ALONG THE NORTH LINE OF SAID  SECTION SOUTH 88o29’18” EAST
1250.66 FEET TO THE NORTHWEST CORNER  OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER
OF SAID SECTION; THENCE ALONG  THE WEST LINE OF SAID NORTHEAST QUARTER SOUTH 01o19’55” WEST
273.27 FEET TO THE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID WEST LINE  SOUTH 01o19’55” WEST
1050.99 FEET TO THE SOUTH LINE OF SAID  NORTHEAST QUARTER; THENCE ALONG SAID SOUTH LINE
SOUTH 88o22’24” EAST 467.71 FEET; THENCE NORTH 17o17’40” EAST
188.05 FEET; THENCE  SOUTH 88o22’24” EAST 83.15 FEET;
THENCE NORTH  14o26’00” EAST
429.62 FEET; THENCE NORTH 65o18’14” EAST 159.94 FEET; THENCE SOUTH 34o41’01” EAST
325.45 FEET; THENCE  SOUTH 88o22’24” EAST 170.63 FEET TO A NON-TANGENT
INTERSECTION  WITH AN ARC CONCAVE TO THE SOUTHWEST FROM WHENCE ITS CENTER BEARS SOUTH  64o07’12” WEST
760.00 FEET DISTANT; THENCE NORTHWESTERLY 70.62  FEET ALONG THE ARC OF SAID CURVE THROUGH
A CENTRAL ANGLE OF  5o19’25"; THENCE NORTH 31o12’13” WEST
122.03 FEET;  THENCE NORTH 40o00’55” WEST 16.04 FEET; THENCE NORTH  32o50’36” WEST
32.29 FEET; THENCE NORTH 33o57’52” WEST 76.44 FEET; THENCE NORTH 59o53’46” WEST
109.69 FEET; THENCE  NORTH 02o56’32” WEST 35.72 FEET; THENCE NORTH  88o29’18” WEST
107.54 FEET; THENCE NORTH 01o19’55” EAST 231.49 FEET; THENCE SOUTH 88o29’18" EAST
113.02 FEET TO A  NON-TANGENT INTERSECTION WITH AN ARC CONCAVE TO THE EAST FROM WHENCE
ITS CENTER  BEARS NORTH 82o18’06” EAST 1040.00 FEET DISTANT; THENCE
NORTHERLY  40.41 FEET ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF  2o13’34";
THENCE NORTH 88o29’18” WEST 362.14 FEET;  THENCE NORTH 01o19’55” EAST
235.50 FEET TO THE SOUTHERLY  RIGHT-OF-WAY MARGIN OF BORGEN BOULEVARD; THENCE ALONG SAID
SOUTHERLY MARGIN  SOUTH 89o27’25” WEST 43.02 FEET; THENCE SOUTH  01o19’55” WEST
233.96 FEET; THENCE NORTH 88o29’18” WEST 218.82 FEET; THENCE NORTH 01o19’55” EAST
20.46 FEET; THENCE  NORTH 88o29’18" WEST 309.11 FEET TO THE POINT OF
BEGINNING;

CONTAINING 796,211 SQUARE FEET, OR 18.28 ACRES, MORE OR LESS.

	

EXHIBIT B

Approved Site Plan of the
Property and Residual Parcels

•    See
the page following this page.

	

EXHIBIT C

Legal Description of the
Shopping Center

THAT PORTION OF THE NORTHEAST
QUARTER OF THE NORTHWEST QUARTER OF SECTION 31,  TOWNSHIP 22 NORTH, RANGE 2 EAST, W.M.,
PIERCE COUNTY, WASHINGTON DESCRIBED AS  FOLLOWS:

        COMMENCING
AT THE NORTHWEST CORNER OF SAID SECTION; THENCE ALONG THE NORTH LINE OF SAID
SECTION SOUTH 88o29’18” EAST 1250.66 FEET TO THE NORTHWEST CORNER
OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION; THENCE ALONG
THE WEST LINE OF SAID NORTHEAST QUARTER SOUTH 01o19’55” WEST 98.64
FEET TO THE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID WEST LINE SOUTH
01o19’55” WEST 1225.62 FEET TO THE SOUTH LINE OF SAID NORTHEAST
QUARTER; THENCE ALONG SAID SOUTH LINE SOUTH 88o22’24” EAST 467.71
FEET; THENCE NORTH 17o17’40” EAST 188.05 FEET; THENCE SOUTH
88o22’24” EAST 83.15 FEET; THENCE NORTH 14o26’00”
EAST 429.62 FEET; THENCE NORTH 65o18’14” EAST 159.94 FEET; THENCE
SOUTH 34o41’01” EAST 325.45 FEET; THENCE SOUTH
88o22’24" EAST 170.63 FEET TO A NON-TANGENT INTERSECTION WITH AN
ARC CONCAVE TO THE SOUTHWEST FROM WHENCE ITS CENTER BEARS SOUTH
64o07’12” WEST 760.00 FEET DISTANT; THENCE NORTHWESTERLY 70.62
FEET ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
5o19’25"; THENCE NORTH 31o12’13” WEST 122.03 FEET;
THENCE NORTH 40o00’55” WEST 16.04 FEET; THENCE NORTH
32o50’36” WEST 32.29 FEET; THENCE NORTH 33o57’52”
WEST 76.44 FEET; THENCE NORTH 59o53’46” WEST 109.69 FEET; THENCE
NORTH 02o56’32” WEST 51.19 FEET; THENCE NORTH
38o14’16” EAST 57.97 FEET; THENCE NORTH 07o38’01”
WEST 119.43 FEET TO A NON-TANGENT INTERSECTION WITH AN ARC CONCAVE TO THE EAST
FROM WHENCE ITS CENTER BEARS NORTH 79o24’13” EAST 1040.00 FEET
DISTANT; THENCE NORTHERLY 136.01 FEET ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 7o29’35"; THENCE NORTH 03o06’12”
WEST 75.10 FEET; THENCE NORTH 02o58’43” WEST 63.37 FEET; THENCE
NORTH 13o52’23” WEST 42.72 FEET; THENCE NORTH
50o39’12” WEST 39.82 FEET TO THE SOUTHERLY RIGHT-OF-WAY MARGIN OF
BORGEN BOULEVARD; THENCE ALONG SAID SOUTHERLY RIGHT-OF-WAY MARGIN SOUTH
89o27’25” WEST 629.13 FEET TO A POINT OF CURVATURE OF A 1550.00
FOOT RADIUS CURVE CONCAVE SOUTH; THENCE WESTERLY 248.78 FEET ALONG THE ARC OF
SAID CURVE THROUGH A CENTRAL ANGLE OF 09o11’46" TO THE POINT OF
BEGINNING;

CONTAINING 1,020,105 SQUARE FEET,
OR 23.42 ACRES, MORE OR LESS.

	

EXHIBIT D

Legal Description of the
Residual Parcels

THAT PORTION OF THE NORTHEAST
QUARTER OF THE NORTHWEST QUARTER OF SECTION 31,  TOWNSHIP 22 NORTH, RANGE 2 EAST, W.M.,
PIERCE COUNTY, WASHINGTON DESCRIBED AS  FOLLOWS:

COMMENCING  AT THE NORTHWEST
CORNER OF SAID SECTION; THENCE ALONG THE NORTH LINE OF SAID  SECTION SOUTH 88o29’18” EAST
1250.66 FEET TO THE NORTHWEST CORNER  OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER
OF SAID SECTION; THENCE ALONG  THE WEST LINE OF SAID NORTHEAST QUARTER SOUTH 01o19’55” WEST
98.64  FEET TO THE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID WEST LINE SOUTH  01o19’55” WEST
174.63 FEET; THENCE SOUTH 88o29’18” EAST 309.11 FEET; THENCE SOUTH 01o19’55” WEST
20.46 FEET; THENCE  SOUTH 88o29’18” EAST 218.82 FEET; THENCE NORTH  01o19’55” EAST
233.96 FEET TO THE SOUTHERLY RIGHT-OF-WAY MARGIN OF  BORGEN BOULEVARD; THENCE ALONG SAID
SOUTHERLY RIGHT-OF-WAY MARGIN SOUTH  89o27’25” WEST 281.15 FEET TO A POINT
OF CURVATURE OF A 1550.00  FOOT RADIUS CURVE CONCAVE TO THE SOUTH; THENCE WESTERLY 248.78
FEET ALONG THE  ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 09o11’46” TO
THE  POINT OF BEGINNING;

CONTAINING 110,555 SQUARE FEET, OR
2.54 ACRES, MORE OR LESS.

	

EXHIBIT E

Seller’s
Reports

	Environmental Check List	2/26/01
	Environmental Check List	10/3/00
	Biological Assessment	10/12/99
	Noise Impact Evaluation	10/__/98
	Mitigated Determination of Non-Significance	3/31/99
	Peacock Hills Constraints Map by ESM	10/17/01
	Peacock Hills Record of Survey by ESM	4/11/01
	Boundary Survey	5/12/89
	Traffic Analysis by The Transpo Group	9/19/02
	Comp Plan Text Amend Application Review
	         Comments by the Shea Group	9/27/02
	Site Specific Comprehensive Plan Text
	         Amendment w/ map Designation	5/23/03
	Olympic Property Group – Gig Harbor Rezone
	         Traffic Study	6/13/03
	Preliminary Geologic Hazards and Geotechnical
	         Feasibility Evaluation	7/29/97
	Stream typing and salmon issues on the
	         Peacock Hill property	5/29/98
	Downstream Analysis – Peacock Hills Site (West)	8/19/03
	Sewer
      Stub by First Western Development Serv.	7/21/00
	Burnham Drive Sanitary Sewer Capacity Report
	         By
      ESM Consulting Eng.	4/23/98
	Review of Submitted Comp Plan Amendment
	         Applications from Olympic Property Group	6/23/03
	Peacock Hills Encumbrance Exhibit by ESM	2/4/02
	Stormwater Pond Infiltration Analysis proposed	8/23/02
	         Home Depot Store by Geo Engineers
	Wetland Assessment Home Depot Gig Harbor	9/__/00
	         Project by Theresa Henson Consulting
	Preliminary Stormwater Management Report	10/5/00
	         By Pacific Land Design
	Home Depot Storm Report Review by ESM	9/12/02
	Geotechnical Engineering Services Proposed	11/13/00
	         Home Depot Gig Harbor by Geo Engineers
	Wetland Inventory by Raedeke Associates	8/17/01
	Topographic Survey by MulvannyG2	10/13/02

	

	

EXHIBIT F

Form of Survey
Certification

SURVEYOR’S
CERTIFICATION

	TO: 	Costco
Wholesale Corporation and
First
American Title Insurance Company

	

        This
is to certify that this map or plat of survey is based on a field survey made on
________________,
200__, by me or directly under my
supervision in accordance with “Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys,” jointly established and adopted by ALTA and
ACSM in 1997 and:

	 	(a) 	correctly
represents the facts found at the time of survey;

	 	(b) 	except
as shown on the survey map, there are no discrepancies between the boundary  lines of the
subject property as shown on the survey map and as described in the  legal description of
record;

	 	(c) 	the
boundary line dimensions as shown on the survey map form a mathematically  closed figure
within + 0.01 foot;

	 	(d) 	except
as shown on the survey map, the boundary lines of the subject property  are contiguous
with the boundary lines of all adjoining parcels, roads,  highways, streets, or alleys as
described in their most recent respective legal  descriptions of record;

	 	(e) 	the
field survey meets the accuracy requirements of a Class A survey as  defined
therein; and

	 	(f) 	except
as shown on the survey map, no fences, waterways, arroyos, ditches,  ponds, building
restrictions, party walls, or set-back lines exist which affect  the subject property
(or, if set-back lines exist, the lines have not been  violated).

	

	

EXHIBIT G

Description of REA
Matters

We need a Site Plan
that depicts and identifies:

	 	•	 Initial
layout of improvements

	 	•	 Common
Area

	 	•	 Building
Areas

	 	•	 Envelope
Areas

	 	•	 Parcel
and Pad subdivision lines

	 	•	 Shared
Sign location(s), if any

	 	•	 Parking
lanes and parking bays, including widths

	 	•	 Staging/Prohibited
Staging Areas

	 	•	 Perpetual
50’buffer along Borgen Blvd. for native vegetation

	

Construction Matters:

	 	•	 Developer
Common Area

	 	•	 Costco
Common Area

	 	•	 Shared
Common Area

	 	•	 Applicable
Plans and Specs

	 	•	 Non-interference

	 	•	 Construction
Indemnities

	 	•	 Responsible
for own costs

	 	•	 Signage
Rights:

	 	•	 Costco
election regarding signage

	 	•	 Pro
rata portion

	 	•	 Costco
in top-most panel

	 	•	 Staging
Areas

	 	•	 Temporary
license for construction access

	

Easements:

	 	•	 Access

	 	•	 No
shared parking

	 	•	 Drainage

	 	•	 Utilities

	 	•	 Unimpeded
access

	 	•	 Use
by Permittees

	 	•	 Unauthorized
use/closure to protect

	 	•	 Prohibition
against granting easements for property not in Project

	

Development
Restrictions:

	 	•	 Building
Area

	 	•	 Envelope
Area

	

	 	•	 Common
Area

	 	•	 Separate
Operation

	 	•	 Parking
Ratios

	 	•	 Retail
= 5/1000

	 	•	 Fast
food = 10/1000

	 	•	 Sit-down
restaurant = 15/1000

	 	•	 Building
height

	 	•	 Unlimited
area building set back (60’)

	 	•	 Drive-up
Stacking (excluding Costco’s fueling facility)

	

Use Restrictions:

	 	•	 Prohibited
uses (obnoxious uses)

	 	•	 Including
adult entertainment and heavy industrial uses

	 	•	 Non-interference
with Common Area

	

Maintenance

	 	•	 Buildings

	 	•	 Common
Area

	 	•	 Certain
standards

	 	•	 Drive
and parking areas

	 	•	 Debris
and refuse

	 	•	 Signs
and markers

	 	•	 Lighting

	 	•	 Obstructions

	 	•	 Sidewalks

	 	•	 Landscaping

	

Damage to
Improvements:

	 	•	 Restoration
of Common Area

	 	•	 Restoration
of Buildings

	 	•	 Clearing
of Premises

	

Miscellaneous:

	 	•	 Realty
Taxes and Assessments

	 	•	 Indemnification

	 	•	 Insurance

	 	•	 Remedies,
including lien

	 	•	 Personal
obligation

	 	•	 Notices

	 	•	 Binding
effect

	 	•	 Mortgagee
protection

	 	•	 Attorney
fees

	 	•	 Estoppel
certificate

	 	•	 Mechanic’s
Liens

	 	•	 Boilerplate

	

	

EXHIBIT H

Description  of
Required Improvements

Off-Site
Improvements

	
      

    
	 	 	Item Description	 	Task Responsible	 	Cost Responsible
	
      

    
	1	 	Widen and Improve
      Borgen Blvd. to City of Gig Harbor standards, including 2 through lanes
      each way from Burnham Drive, east to the proposed Round-A-Bout at the new
      North-South Road.	 	OPG	 	OPG
	
      

    
	2	 	Construct a 2-lane
      Round-A-Bout to City of Gig Harbor standards, at the intersection of Borgen
      Blvd. and the new North-South Road.	 	OPG	 	OPG
	
      

    
	3	 	Construct new North-South
      Road to City of Gig Harbor standards from Borgen Blvd., south to the proposed
      Round-A-Bout at the most southerly Costco entry.	 	OPG	 	OPG
	
      

    
	4	 	Construct a 2-lane
      Round-A-Bout to City of Gig Harbor standards, at the intersection of the
      new North-South Road and the most southerly Costco entry.	 	OPG	 	OPG/ Costco

      (Pro-rata)
	
      

    
	5	 	Construct a 1-lane
      Round-A-Bout to City of Gig Harbor and Pierce County standards, at the intersection
      of Borgen Blvd. and Peacock Hill Ave N.W.	 	OPG	 	OPG
	
      

    
	6	 	Construct water storage
      tank to City of Gig Harbor standards in accordance with the City’s
      Comprehensive Water Plan.	 	OPG	 	OPG
	
      

    
	7	 	Construct water main
      from water tank to easterly end of existing water line located in Borgen
      Blvd. Extend new waterline to south end of proposed North-South Road as
      described above, including water main lateral(s) stubbed to the Shopping
      Center property line.	 	OPG	 	OPG
	
      

    
	8	 	Provide land for storm
      drainage facility (pond).	 	OPG	 	OPG
	
      

    
	9	 	Construct storm drain
      conveyance line from the proposed Shopping Center property line, southerly
      to the proposed storm drainage treatment facility (pond) site.	 	OPG	 	OPG
	
      

    
	10	 	Construct storm drainage
      treatment facility (pond) at the site provided approximately 660-feet southerly
      of the Shopping Center property.	 	OPG	 	OPG/ Costco

      (Pro-rata)
	
      

    
	11	 	Coordinate extension
      of dry utilities (power, gas, telephone, cable TV) to the Shopping Center
      boundary.	 	OPG	 	Utility Providers
	
      

    

	

	

On-Site
Improvements

	
      

    
	 	 	Item Description	 	Task Responsible	 	Cost Responsible
	
      

    
	1		Topographic Mapping
      of Shopping Center.		Costco		Costco
	
      

    
	2		Costco (Property)
      site planning.		Costco		Costco
	
      

    
	3		Residual Parcel’s
      site planning.		OPG		OPG
	
      

    
	4		Segregation creating
      Shopping Center parcel.		OPG		OPG
	
      

    
	5		Rezone Application
      for Shopping Center.		Costco		Costco
	
      

    
	6		Site Development Application
      / Design Review Board for Shopping Center.		Costco		Costco/ OPG

      (Pro-rata)
	
      

    
	7		SEPA Application for
      Shopping Center.		Costco		Costco/ OPG

      (Pro-rata)
	
      

    
	8		Binding Site Plan
      for Shopping Center.		Costco		Costco
	
      

    
	9		Costco (Property)
      Building Permits.		Costco		Costco
	
      

    
	10		Residual Parcel’s
      Building Permits.		OPG		OPG
	
      

    
	11		On-site construction
      for the Property including clearing, grading, erosion control, paving, and
      utilities; for structures, drive approaches, access drives, parking lots,
      pedestrian walkways and open space.		Costco		Costco
	
      

    
	12		On-site construction
      for the Residual Parcels limited to clearing, grading to pad-ready, and
      erosion control.		Costco		OPG
	
      

    
	13		On-site construction
      of water main lines for fire suppression and domestic water, sewer lines,
      and dry utilities service lines to serve Costco’s (Property) proposed
      building sites.		Costco		Costco
	
      

    
	14		On-site construction
      of water main lines for fire suppression and domestic water, sewer lines,
      and dry utilities service lines to serve Residual Parcel’s proposed
      building sites.		OPG		OPG
	
      

    
	15		Storm drainage collection
      and conveyance system to serve Costco site and stubbed to Residual Parcel
      sites. This system intended to connect to downstream storm drain conveyance
      system described above in Off-site improvements (#9).		Costco		Costco
	
      

    

	

	

EXHIBIT I

Legal  Description
of Off-Site Storm Water Parcels

THE WEST HALF OF THE SOUTHEAST
QUARTER OF THE NORTHWEST QUARTER OF SECTION  31, TOWNSHIP 22 NORTH, RANGE 2 EAST, W.M.,
PIERCE COUNTY, WASHINGTON; EXCEPT  THE NORTH 660 FEET THEREOF; ALSO EXCEPT THE SOUTH 180
FEET THEREOF;

TOGETHER  WITH A STRIP OF LAND 20
FEET IN WIDTH, THE CENTERLINE OF WHICH IS DESCRIBED AS  FOLLOWS: COMMENCING AT THE
NORTHEAST CORNER OF THE ABOVE DESCRIBED PARCEL;  THENCE ALONG THE EAST LINE OF SAID
PARCEL SOUTH 01o15’21” WEST  26.64 FEET TO THE POINT OF BEGINNING OF SAID
STRIP CENTERLINE; THENCE SOUTH  88o44’39” EAST 10.00 FEET; THENCE ALONG A
LINE 10 FEET EASTERLY OF  AND PARALLEL WITH THE WEST LINE OF THE EAST HALF OF THE
SOUTHEAST QUARTER OF THE  NORTHWEST QUARTER OF SAID SECTION NORTH 01o15’21” EAST
668.78  FEET; THENCE NORTH 22o41’53” WEST 197.34 FEET TO THE TERMINUS OF
SAID CENTERLINE.

THE  SIDELINES OF SAID STRIP TO BE
SHORTENED OR LENGTHENED AS NECESSARY TO INTERSECT  AT INTERIOR AND EXTERIOR ANGLE POINTS.

CONTAINING 340,955 SQUARE FEET, OR
7.83 ACRES, MORE OR LESS.

	

EXHIBIT J

Historical  Use of
Property

To  Seller’s knowledge, the
only historical use of the property has been as a  tree farm. This would inlclude such
activities as cutting and filling to  construct timber roads, planting, thinning,
harvesting, the use of herbicides to  control undesirable species, and fertilizer to
encourage tree growth.Exhibit 10.71

	

Exhibit 10.71

EMPLOYMENT
AGREEMENT

Between

Pope Resources, A
Delaware Limited Partnership
and
Thomas M. Ringo

        The
purpose of this Agreement is to confirm the terms of the employment relationship
between Pope Resources, A Delaware Limited Partnership (hereinafter
referred to as “the Company”), and Thomas M. Ringo (hereinafter
referred to as the “Executive”).

        1.
Term of Agreement. Company and Executive agree that the Executive will be
employed by the Company for a term of three (3) years beginning January 1, 2003
(the “Effective Date”), unless employment is sooner terminated as
provided herein.

        2.
Position and Duties. Company and Executive agree that Executive will be
employed as Vice President and Chief Financial Officer of Employer, and shall
report to the Chief Executive Officer. Executive’s responsibilities and
duties shall include management and control of the Company’s financial
affairs, records, and accounting and shall further include such other managerial
responsibilities and executive duties as may be assigned to him from time to
time by the Chief Executive Officer and/or the Board of Directors of the
Company. It is understood that from time to time Executive may be assigned other
duties in addition to those described above that are generally consistent with
those of a Vice President and Chief Financial Officer, and that Executive’s
responsibilities may be modified or expanded at any time by the Company in order
to accommodate its needs.

	                2.1
      Executive agrees to devote his full-time efforts to his duties with the
      Company and further agrees that he will not, directly or indirectly, engage
      or participate in any activities while employed with the Company that would
      conflict with the best interests of the Company.

	                2.2
      All policies published by the Company or delivered to the Executive prior
      to or following this Agreement regarding employment policies, required behavior
      by employees and other similar matters (collectively referred to as “Company
      Policies”) are incorporated within this Agreement as though fully set
      forth in this Agreement. The Executive agrees to be bound by and adhere
      to all such Company Policies as presently exist or as may be hereafter issued
      or modified by the Company. Without limiting the foregoing, the Executive
      agrees to conduct business on behalf of the Company in a manner consistent
      with proper and ethical business practices and consistent with the best
      interests of the Company. To the extent any Company Policies are inconsistent
      with or contrary to the provisions of this Agreement, this Agreement shall
      prevail.

	

        3.
Compensation. For all services rendered by Executive under this
Agreement, Company shall pay Executive a gross salary of One Hundred Fifty
Thousand Dollars ($150,000.00) per annum. Executive shall be paid this salary on
the same basis applicable to executive employees generally, minus all lawful and
agreed upon payroll deductions. Executive’s compensation shall be reviewed
annually by Human Resources Committee of the Board of Directors in accordance
with normal Company salary review procedures, but may not be decreased during
the term of this Agreement.

	

        4.
Business Expenses. Company agrees to reimburse Executive for all
reasonable business expenses incurred by Executive while on Company business,
subject to the Company’s normal business expense policies. Executive shall
maintain such records as will be necessary to enable the Company to properly
deduct such items as business expenses when computing the Company’s federal
income tax.

        5.
Bonuses: Executive will also be eligible for consideration for a bonus in
accordance with the Company’s normal bonus program, as it may be
implemented or amended from time to time. Under the Company’s bonus
program, Executive shall be eligible for an annual target bonus equal to 35% of
Executive’s base salary during the prior year. Actual bonus paid in the
subsequent year will be based on a combination of Company and Executive’s
performance during the year, as determined by the Board of Directors in its
discretion. Executive will also be eligible for participation in the
Company’s Investor Portfolio Management Business Incentive Plan (“IPMB
Plan”). Such participation shall be in accordance with, and subject to, the
terms and conditions of the IPMB Plan as it currently exists and as it may be
amended from time to time.

        6.
Fringe Benefits. Company and Executive agree that during the term of this
Agreement, Executive will be eligible to participate in the Company’s
employee benefit plans of general application, including without limitation,
those plans covering medical, disability and life insurance in accordance with
the rules established for individual participation in any such plan and under
applicable law.

        7.
Vacation. Executive shall be entitled to his current earned paid vacation
accrual of four (4) week’s paid vacation per calendar year, which will be
adjusted based on Executive’s tenure with the Company, in accordance with
the Company’s vacation policy as such policy now exists and as it may be
amended from time to time. Vacation shall be scheduled by Executive at a time
mutually convenient to both the Company and Executive.

	                7.1
      Accrued and Unused Vacation at Termination. Upon the termination
      of this Agreement, Executive shall be paid for all previously accrued and
      unused vacation time.

	

        8.
Restrictive Covenants.

	                8.1
      Executive’s Acknowledgement. Executive agrees and acknowledges
      that in order to assure the Company that it will retain its value and that
      of the Business (as defined below) as a going concern, it is necessary that
      Executive undertake not to utilize his special knowledge of the Business
      and his relationships with customers and suppliers to compete with the Company.
      Executive further acknowledges that: (a) the Company is and will be
      engaged in the Business; (b) Executive will occupy a position of trust
      and confidence with the Company, and during Executive’s employment
      with the Company, Executive has and will continue to become familiar with
      the Company’s trade secrets and with other proprietary and confidential
      information concerning the Company and the Business; (c) the agreements
      and covenants contained in this Article 8 are essential to protect
      the Company and the goodwill of the Business; and (e) Executive’s
      employment with the Company has special, unique and extraordinary value
      to the Company and the Company would be irreparably damaged if Executive
      were to provide services to any person or entity in violation of the provisions
      of this Agreement. As used herein, “Business” means the ownership
      and/or management of timberlands, consulting regarding the management of
      timberlands, and activity meeting the definition of the “Investor Portfolio
      Management Business” as set forth in the Company’s governing documents.
      For the purposes of this Article 8, “the Company” shall include
      its subsidiaries, affiliates and assignees and any successors in interest
      of its subsidiaries and/or affiliates.

	

2

	                8.2
      Non-Compete. Executive hereby agrees that for a period
      commencing on the date hereof and ending three (3) years later, regardless
      of whether Executive is employed by the Company or not (the “Restricted
      Period”), he shall not, directly or indirectly, as employee, agent,
      consultant, member, stockholder, director, partner or in any other individual
      or representative capacity, own, operate, manage, control, engage in, invest
      in or participate in any manner in, act as a consultant or advisor to, render
      services for (alone or in association with any person, firm, corporation
      or entity), or otherwise assist any person or entity (other than the Company)
      that engages in or owns, invests in, operates, manages or controls any venture
      or enterprise that directly or indirectly engages or proposes to engage
      in the Business anywhere in North America (the “Territory”); provided,
      however, that nothing contained herein shall be construed to prevent Executive
      from investing in the stock of any competing corporation listed on a national
      securities exchange or traded in the over-the-counter market, but only if
      Executive is not involved in the business of said corporation and if Executive
      and his associates (as such term is defined in Regulation 14(A) promulgated
      under the Securities Exchange Act of 1934, as in effect on the date hereof),
      collectively, do not own more than an aggregate of five (5%) percent of
      the stock of such corporation.

	                8.3
      Interference with Relationships. During the
      Restricted Period, Executive shall not, directly or indirectly, as employee,
      agent, consultant, stockholder, member, director, co-partner or in any other
      individual or representative capacity render assistance to any other person
      or entity who attempts to: (i) employ or engage, recruit or solicit
      for employment or engagement, any person who is or becomes employed or engaged
      by the Company during the Restricted Period, or otherwise seek to influence
      or alter any such person’s relationship with the Company, or (ii) solicit
      or encourage any present or future customer of the Company, to terminate
      or otherwise alter his, her or its relationship with the Company

	                8.4
      Confidential Information. It is understood and agreed that as a result
      of Executive’s employment with Employer, Executive has acquired and
      will continue to acquire and make use of confidential information about
      the Company and its Business, and the Company’s suppliers and customers,
      such information constituting trade secrets. During the course of his employment
      with Company and thereafter, Executive shall keep secret and retain in strictest
      confidence, and shall not, without the prior written consent of the Employer,
      furnish, make available or disclose to any third party (except in furtherance
      of the Company’s business activities and for the sole benefit of the
      Employer) or use for the benefit of himself or any third party, any Confidential
      Information. As used in this Agreement, “Confidential Information”
      shall mean any information relating to the business or affairs of the Company
      or its business, including but not limited to information relating to financial
      statements, customer identities, potential customers, employees, suppliers,
      servicing methods, equipment, programs, strategies and information, analyses,
      profit margins, or other proprietary information used by the Company in
      connection with its business; provided, however, that Confidential Information
      shall not include any information which is in the public domain or becomes
      known outside the Company by persons who are not associated with the Company
      and do not have an obligation of confidentiality to the Company with respect
      to such information through no wrongful act on the part of Executive. Executive
      acknowledges that the Confidential Information is vital, sensitive, confidential
      and proprietary to the Company. Executive further agrees that on termination
      of this Agreement, or at any time on request by the Employer, he shall deliver
      possession to the Company of all Confidential Information and all documents,
      writings, and other things of every kind and description prepared or acquired
      in connection with Company business or at Company expense or in the course
      of Employee’s employment or that contain Company proprietary information
      including all copies of the same.

	

3

	                8.5
      If any arbitrator pursuant to Section 11.8 of this Agreement, or any court
      of competent jurisdiction, shall at any time deem the term of this Agreement
      or any particular Restrictive Covenant (as defined) too lengthy or the Territory
      too extensive, the other provisions of this Article 8 shall nevertheless
      stand, the Restrictive Period herein shall be deemed to be the longest period
      permissible by law under the circumstances, and the Territory herein shall
      be deemed to comprise the largest territory permissible by law under the
      circumstances. The court in each case shall reduce the time period and/or
      Territory to permissible duration or size.

	

        9.
Termination. This Agreement shall be terminated upon the occurrence of
any one of the following events:

	 	        9.1  Death
of Executive.

	                9.2  If
      Executive shall have been incapacitated from illness, accident or other
      disability and unable to perform his normal duties hereunder for a cumulative
      period of three (3) months, upon Company or Executive giving the other party
      not less than thirty (30) days’ written notice.

	                9.3  Expiration
      of this Agreement or any renewal or extension thereof.

	                9.4  Immediately
      by a majority vote of the Human Resources Committee of the Board of Directors
      for cause, as a result of the occurrence of one or more of the following:

	                        (a)
      Executive’s willful and continued failure substantially to perform
      his duties under this Agreement (other than as a result of total or partial
      incapacity due to physical or mental illness), including Executive’s
      refusal to comply in any material respect with the legal directives of the
      Company’s Chief Executive Officer and/or Board of Directors so long
      as such directives are not inconsistent with the Executive’s position
      and duties, and such refusal to comply is not remedied within 20 working
      days after written notice, which written notice shall state that failure
      to remedy such conduct may result in Termination for Cause; or

	

4

	                       (b)
      Dishonest or fraudulent conduct, a deliberate attempt to do an injury to
      the Company, or conduct that materially discredits the Company, including
      conviction of or plea of nolo contendere to a felony or any crime involving
      dishonesty or fraud.

	                 9.5
      By the Company without cause upon notice to the Executive, which
      determination may be made by the Company at any time at the Company’s
      sole discretion, for any or no reason.

	                In
      such event of termination without cause pursuant to this Section 9.5, Executive
      shall be entitled to receive his base salary for the balance of the term
      of the Agreement, payable in accordance with then-applicable normal Company
      payroll procedures, plus a pro rata share of his bonus for the calendar
      year in which termination occurs, with such bonus to be calculated on the
      target bonus amount and based on the number of days of such calendar year
      that Executive was employed prior to his termination. In addition, Executive
      shall be entitled to continued paid health insurance benefits for the lesser
      of the remaining term of this Agreement or the period during which Executive
      has rights under COBRA to obtain such insurance through the Company. Executive
      shall not be entitled to receive any additional bonuses or any other benefits
      under this Agreement for the balance of such term.

	

        10.
Effect of Termination. Upon termination of Executive’s employment
with Employer, Company agrees to pay Executive all salary which is due and owing
to Executive as of the date of termination, less legal deductions or offsets
Executive may owe to Company for such items as salary advances or loans. Except
as otherwise provided pursuant to Section 9.5 with respect to a termination
without cause, Executive shall not be entitled to any other or additional
compensation upon termination. Executive agrees that his signature on this
Agreement constitutes his authorization for all such deductions. Executive
agrees to return to Company all of Employer’s property of any kind which
may be in Executive’s possession. In the event of termination of this
Agreement, the terms and provisions of this Agreement shall also terminate, with
the exception of the restrictive covenants contained in Section 8 and any other
provisions that expressly address post-termination issues. Such provisions shall
continue in full force and effect according to their terms.

        11.
Construction of Agreement.

	                11.1  Essential
      Terms and Modification of Agreement. It is understood and agreed that
      the terms and conditions described in this Agreement constitute the essential
      terms and conditions of the employment arrangement between the Company and
      Executive, all of which have been voluntarily agreed upon. The Company and
      Executive agree that there are no other essential terms or conditions of
      the employment relationship that are not described within this Agreement,
      and that any change in the essential terms and conditions of this Agreement
      will not be effective until it is written down in a supplemental agreement
      which shall be signed by both the Chief Executive Officer, pursuant to authorization
      of the Board of Directors, and the Executive.

	                11.2  Severability.
      If any term, covenant, condition or provision of this Agreement or the application
      thereof to any person or circumstance shall, at any time, or to any extent,
      be determined invalid or unenforceable, the remaining provisions hereof
      shall not be affected thereby and shall be deemed valid and fully enforceable
      to the extent permitted by law.

	

5

	                11.3  Notices.
      Any notice hereunder shall be sufficient if in writing and delivered to
      the party or sent by certified mail, return receipt requested and addressed
      as follows:

	 	a.	If to the Company:	David L. Nunes

Chief Executive Officer

Pope Resources

19245 Tenth Avenue NE

Poulsbo, WA 98370

	 		With a copy to:	Greg F. Adams

Davis Wright Tremaine

2600 Century Square

1501 Fourth Avenue

Seattle, WA 98101-1688

	 	b.	If to Executive:	Thomas M. Ringo

	

Either  party may change the
address herein specified by giving to the other, written  notice of such change as
provided in this Section 11.3.

	                11.4  Governing
      Law. This Agreement is made and shall be construed and performed under
      the laws of the State of Washington.

	                11.5  Waiver
      of Agreement. The waiver by the Company of a breach of any provision
      of this Agreement by Executive shall not operate or be construed as a waiver
      by the Company of any subsequent breach by Executive.

	                11.6  Captions.
      The captions and headings of the sections and subsections of this Agreement
      are for convenience and reference only and are not to be used to interpret
      or define the provisions hereof.

	                11.7  Assignment
      and Successors. The rights and obligations of Company under this Agreement
      shall inure to the benefit of and be binding upon the successors and assigns
      of Employer. The rights and obligations of Executive hereunder are nonassignable.
      Company may assign its rights and obligations to any entity in which Company
      or a company affiliated with Company has a majority ownership interest.

	                11.8
      Arbitration. Any dispute or claim arising out of or in connection
      with this Agreement will be finally settled by binding arbitration in Seattle,
      Washington in accordance with the rules of the American Arbitration Association
      by one arbitrator appointed in accordance with said rules. The arbitrator
      shall apply Washington law, without reference to rules of conflicts of law
      or rules of statutory arbitration, to the resolution of any dispute. Judgment
      on the award rendered by the arbitrator may be entered in any court having
      jurisdiction thereof. Each party shall bear their own legal fees in connection
      with any such arbitration. Notwithstanding the foregoing, the parties may
      apply to any court of competent jurisdiction for preliminary or interim
      equitable relief, or to compel arbitration in accordance with this section,
      without breach of this arbitration provision. The parties, their representatives,
      other participants and the mediator or arbitrator shall hold the existence,
      content and result of any arbitration in confidence. This Section 11.8 shall
      not be construed to prohibit either party from seeking injunctive relief
      for actual or threatened violations of Section 8 of this Agreement.

	

6

	

        Executed
this 10th day of December, 2003, retroactively effective as of the Effective
Date of January 1, 2003.

	THOMAS M. RINGO

——————————————

		POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP

——————————————
By    David L. Nunes
Its    Chief Executive Officer

	

7

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