ATTACHMENT 1

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of August ___, 2007 by and between the CITY OF OLYMPIA, a Washington municipal corporation (“Seller”), and COLPITTS DEVELOPMENT COMPANY, LLC, a Washington limited liability company, and/or its assign(s) (“Buyer”). Preliminary Statements WHEREAS, the City Council of the City of Olympia determined that it is in the public interest to surplus and sell the Property (as defined below) for a mixed-use residential development; and WHEREAS, the Property is impacted with certain hazardous substances the remedial cost of which is not yet determined; and, WHEREAS, Seller and Buyer wish to undertake additional investigation to determine the location of, and the estimated cost to remediate to cleanup standards compatible with a mixeduse residential development, the hazardous substances that may be located on or may be migrating onto or off of the Property to evaluate the Seller’s monetary contribution to such remediation as a condition to closing; and, WHEREAS, Buyer will develop a mixed-use residential development on the Property, which development shall contain approximately one hundred and twenty (120) market rate ownership units with associated parking and street level retail; and WHEREAS, Seller has agreed to sell, and Buyer has agreed to buy, the Property subject to the terms and conditions of this Agreement. Agreement NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, receipt of which is hereby acknowledged, Seller and Buyer hereby agree as follows: 1. Purchase and Sale. In consideration of their mutual covenants set forth in this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase and accept from Seller, for the Purchase Price (as defined in Section 2(a)) and on the terms and conditions set forth in this Agreement, the following: i. the land located in the City of Olympia, Thurston County, Washington, described on Exhibit A (the “Real Estate”); and ii. all hereditaments, privileges, benefiting easements, tenements and appurtenances belonging to the Real Estate, all right, title and interest of Seller in and to all open or proposed highways, streets, roads, avenues, alleys, easements,

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strips, gores and rights-of-way in, on, across, in front of, contiguous to, abutting or adjoining the Real Estate (“Appurtenances”). The Real Estate and Appurtenances are sometimes collectively referred to as the “Property.” No personal property is included in the sale. 2. Purchase Price.

a. The purchase price for the Property shall be Two Hundred Seventy Thousand and No/100 Dollars ($270,000.00) (“Purchase Price”). Not later than 10:00 a.m., Pacific time, on the Closing Date (as hereinafter defined), Buyer shall deposit with Thurston County Title Company (“Escrow Holder”), in immediately available funds, the sum necessary to make the total consideration paid to Seller at Closing equal to the Purchase Price, plus or minus prorations as hereinafter provided. b. Deposit. Buyer shall deposit a Ten Thousand and No/100 Dollars ($10,000.00) promissory note in the form and content as set forth in Exhibit B attached to this Agreement (the “Deposit”) with Escrow Holder within three (3) Business Days after the date hereof. A “Business Day” is any day the Escrow Holder is open for business to the public. The Deposit shall be converted to cash within one (1) Business Day following the waiver or satisfaction of Buyer’s Feasibility Contingency, and at Closing shall be applied to the Purchase Price. Following the conversion of the Deposit to cash and waiver or satisfaction of the Buyer’s Feasibility Contingency, the Deposit will become non-refundable, shall apply to the purchase price at Closing, or shall otherwise be distributed as provided in Section 13 below. 3. Development. Following Closing, Buyer shall develop the Property as a mixed used, multi-family, market rate development (the “Project”). a. Residential Component. There shall be approximately one hundred twenty (120) market rate residential ownership units within the Project with associated parking. b. Commercial Component. There shall be a commercial component located at the street level within the Project with associated parking. c. Deed Restriction. The requirement of the Buyer to develop the Project in the manner outlined above shall be evidenced by a deed restriction or recorded covenants encumbering the Property which shall be binding upon the Buyer following the Closing. The parties shall have until the expiration of the Contingency Period to negotiate a mutually acceptable form of deed restriction or recorded covenants. The deed restriction or recorded covenants shall provide a right of reversion to the Seller in the event the Project is not commenced (subject to a refund of the purchase price and payment of amounts due under Sections 14.c(iii), 14.d, and 14.f) and shall automatically terminate upon completion of the Project as evidenced by the issuance of a certificate of occupancy. d. Seller Development Restriction. Seller shall record a restrictive covenant against title to its property commonly known as 114 Columbia Street North restricting -2-

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use of that property to surface parking or other City uses for the Three (3) consecutive years following Closing of this transaction. Such restriction shall not be removed or modified during its term without the advance written consent of Buyer. The restrictive covenant shall provide by its terms that it expires upon the expiration of said three (3) year period without any further approval or action by Buyer or Seller, and Buyer shall cooperate with Seller to take any action as may be reasonably required by any title insurance company to confirm the removal of the restriction as an encumbrance on the title of the property after the expiration of its term. 4. Escrow; Closing.

a. Escrow. Buyer and Seller shall establish an escrow (“Escrow”) with Escrow Holder when the Deposit is made. Buyer and Seller shall execute and deliver to Escrow Holder such instructions as may be necessary or convenient to implement the terms of this Agreement and close the transaction contemplated by this Agreement, provided that they are not inconsistent with the terms of this Agreement. b. Deposit of Funds. The parties shall instruct the Escrow Holder to deposit the Deposit in one or more interest bearing “money market” accounts at financial institutions approved by Seller and whose accounts are insured by the FDIC. If, at any time, Escrow Holder receives notice that the accounts at any institution at which any portion of the funds has been deposited have ceased to be so insured, Escrow Holder shall withdraw any such funds deposited at such institution and deposit them in an institution whose accounts are so insured. All interest paid on the funds in these accounts shall be for the credit of Buyer, whose tax identification number is [_______]. All such interest shall be credited towards the Purchase Price at Closing. If Buyer defaults or Seller is otherwise entitled to receive the Deposit, all such interest shall be paid to Seller as provided in Section 12(b). c. Closing. The consummation of the purchase and sale of the Property and the recording of the deed described in Section 4(e) (“Closing”) shall take place on a date mutually agreed upon by the parties (the “Closing Date”), but not later than one hundred and twenty (120) days after the later to occur of: (i) Buyer obtaining approval from the Washington Department of Ecology of a remedial action plan for clean-up of the environmental contamination at the Property; or, (ii) the issuance of a Building Permit for the Project by Seller. If Closing has not occurred by December 31, 2008, either Buyer or Seller may terminate this Agreement by written notice to the other, and upon such termination, the Deposit shall be promptly paid to the Seller, and neither party shall have any further liability to the other with respect to this Agreement except with respect to those provisions which, by their terms, survive the termination of this Agreement and Seller’s reimbursement obligation under Section 14.d. d. Buyer’s Deliveries. At or before Closing, Buyer shall deposit into Escrow cash or other immediately available funds in the amount of the balance of the Purchase Price, together with Buyer’s share of closing costs and prorations as provided in this Agreement.

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e. Seller’s Deliveries. At or before Closing, Seller shall cause to be delivered into Escrow the following documents: i. A bargain and sale deed (the “Deed”) in recordable form properly executed on behalf of Seller in favor of Buyer, subject to a deed restriction or recorded covenants as provided in Section 3(c) above. ii. An affidavit by Seller to the effect that Seller is not a “foreign person” as defined in Section 1445 of the Internal Revenue Code of 1986, as amended. iii. A recordable restrictive covenant in form acceptable to Buyer as provided in Section 3(d) above. f. Proof of Authority. Buyer and Seller each shall deliver such proof of authority and authorization to enter into this Agreement and consummate the transaction contemplated by this Agreement, and such proof of power and authority of the individual(s) executing and delivering any instruments, documents or certificates to act for and bind such party, as reasonably may be required by the Title Company. g. Other Documents. Buyer and Seller shall deliver such other documents or instruments as are reasonably required to consummate this transaction in accordance with this Agreement, including without limitation a real estate excise tax affidavit. h. Possession. Closing. Seller shall deliver possession of the Property to Buyer at

i. Disbursement and Other Actions. At the Closing, Escrow Holder promptly shall undertake all of the following in the manner indicated: i. Disburse all funds deposited with Escrow Holder by Buyer as follows: 1. Disburse the Purchase Price to Seller, net of the total amount chargeable to Seller, if any, as the result of prorations and credits pursuant to Section 10. 2. Pay all closing costs in accordance with Section 10. 3. Disburse the remaining balance of the funds, if any, to Buyer promptly following the Closing. ii. Cause the Deed and any other documents that the parties may mutually direct to be recorded in the Official Records of Thurston County, Washington, and obtain conformed copies thereof for distribution to Buyer and Seller. iii. Direct the Title Company to issue the Title Policy (as defined in Section 6 below) to Buyer in accordance with Section 6 below.

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iv. Deliver to Buyer any documents (or copies thereof) deposited into Escrow by Seller. v. Deliver to Seller any documents (or copies thereof) deposited into Escrow by Buyer. 5. Conditions Precedent to Closing.

a. Buyer’s Contingencies. For Buyer’s benefit (and waivable by Buyer, and only Buyer, at any time), the following are conditions precedent to Buyer’s obligation to consummate the transaction described in this Agreement (“Buyer’s Contingencies”). Unless otherwise indicated, each of the Buyer’s Contingencies shall be satisfied or waived prior to the expiration of the period that starts on the date this Agreement is fully executed by Buyer and Seller and ends one hundred-twenty (120) days thereafter (which 120-day period is the “Contingency Period”). If Buyer’s Contingencies are not satisfied or waived during the Contingency Period or such other period as set forth below, then the provisions of Section 4.c. shall apply. i. Inspections. During the Contingency Period, Buyer, at its sole expense, may conduct inspections and investigations as Buyer deems necessary to determine whether, in Buyer’s sole discretion, (A) the physical condition and use of the Property is satisfactory to Buyer; (B) the Project is economically feasible and (C) all other matters relating to the Property, including without limitation, the availability of financing, access, utility services, zoning, engineering and soils and environmental conditions are satisfactory to Buyer (collectively, the “Feasibility Contingency”). The Feasibility Contingency must be satisfied or waived by the end of the Contingency Period. If Buyer does not provide written notice to Seller of its approval or waiver of the Feasibility Contingency by the end of the Contingency Period, this Agreement shall terminate and the Deposit shall be promptly returned to Buyer. 1. Seller agrees to provide Buyer and its authorized contractors, consultants and agents reasonable access to the Property at all reasonable times upon at least twenty-four (24) hours prior notice to Seller, on Business Days during the Contingency Period (as defined above). Buyer agrees to coordinate any activities associated with such access to the Property with Seller to limit the impact of such access on Seller’s tenants. Buyer will perform soil exploration activities on weekends if possible and will provide Seller notice of such activities at least five business days prior to commencing such activities. Buyer agrees to indemnify Seller and to hold Seller, Seller’s agents and employees harmless from and against any and all losses, costs, damages, claims or liabilities including, but not limited to, mechanic’s and materialmen’s liens and attorneys’ fees, to the extent caused by Buyer’s entry upon the Property, including the conduct of Buyer’s Inspections, by Buyer or its contractors, consultants or agents under this Section 5(a)(i). This indemnity shall survive Closing.

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2. Seller has, as of the date of this Agreement, delivered to Buyer copies of the reports identified on Exhibit C attached to this Agreement concerning the physical condition of the Property that have been prepared at the request of Seller (the “Reports”). Seller disclaims any responsibility for the accuracy of any information contained in the Reports and Buyer acknowledges that it uses the Reports at its own risk. If this Agreement terminates or the purchase and sale fails to close, Buyer promptly shall return the Reports (and all copies thereof) to Seller. ii. Approval of Deed Restriction. Prior to expiration of the Contingency Period, the form and content of the deed restrictions or recorded covenants, both described in Section 3 above, have been agreed to by the Buyer and Seller. iii. Title Policy. Prior to the expiration of the Contingency Period, the Title Company must be committed to issue the Title Policy to Buyer on the Closing Date in accordance with Section 6 of this Agreement. iv. Permits. Seller shall process Buyer’s land use and building permit applications, and prior to the expiration of the Contingency Period, Buyer shall have determined, in its sole discretion, that the permits necessary for the construction of the Project are available upon terms and conditions satisfactory to Buyer. v. Alley Vacation. Seller shall promptly upon expiration of the 120 day contingency period take all necessary action to vacate and shall have vacated the alley located on the Property prior to Closing. vi. Utility Relocation. Seller shall cooperate with Buyer in processing Buyer’s request for relocation of any utilities located on the Property including without limitation the existing sanitary sewer traversing the Property and Buyer shall have determined, in its sole discretion, that such relocation is available upon terms, costs and conditions satisfactory to Buyer. This contingency is not subject to the One Hundred and Twenty (120) day Contingency Period. Representations and Warranties. On the Closing Date, Seller’s vii. representations and warranties contained in Section 7(a) must be true and correct, as if made as of the Closing Date, except for immaterial variations described in a certificate delivered by Seller pursuant to Section 7(a). viii. Seller’s Performance. Seller must have duly and timely performed each and every material obligation to be performed by Seller under this Agreement prior to Closing.

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ix. Remedial Action Plan, Remedial Action Costs and Utility Relocation Costs. Buyer shall have reviewed and approved in its sole discretion: (1) the Remedial Action Plan, as defined in Section 14 below; and (2) the estimated costs which Seller will reimburse or otherwise fund to implement the Remedial Action Plan and relocate the existing utilities as provided for in Section 14.e. below. This contingency is not subject to the One Hundred and Twenty (120) day Contingency Period. Ecology Approved Remedial Action Plan. Prior to Closing, Buyer x. shall have received the Washington Department of Ecology’s approval of a Remedial Action Plan (as defined in section 14 below) satisfactory to Buyer in its sole and absolute discretion. This condition is not subject to the One Hundred and Twenty (120) day Contingency Period. xi. Acceptable “Buyer’s Area of Remediation” Definition. Buyer shall have reached agreement with Seller on “Buyer’s Area of Remediation”, as defined in Section 14.c. below, acceptable to Buyer in its sole and absolute discretion. This contingency is not subject to the One Hundred and Twenty (120) day Contingency Period. b. Seller’s Conditions. For Seller’s benefit (and waivable by Seller, and only Seller, at any time), the following are conditions precedent to Seller’s obligation to consummate this transaction (“Seller’s Conditions Precedent”) and must be satisfied or waived by the date or within the time period indicated: i. Buyer’s Representations and Warranties. Buyer’s representations and warranties set forth in Section 7(b) must be true and correct as if made as of the Closing Date, except for immaterial variations described in a certificate delivered by Buyer pursuant to Section 7(b). Buyer’s Performance. Buyer must have duly and timely performed ii. each and every material obligation to be performed by Buyer under this Agreement prior to Closing. iii. Approval of Deed Restrictions. The form and content of the deed restrictions or recorded covenants, described in Section 3 above, have been agreed to by the Buyer and Seller on or before expiration of the Contingency Period. iv. Remedial Action Plan, Remedial Action Costs and Utility Relocation Costs. Review and approval of: (1) the Remedial Action Plan, as defined in Section 14 below; and (2) the estimated costs which Seller will reimburse or otherwise fund to implement the Remedial Action Plan and relocate the existing sewer line as provided for in Section 14.e. below. This contingency is not subject to the One Hundred and Twenty (120) day Contingency Period.

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v. Ecology Approval of Remedial Action Plan. Prior to Closing, Seller shall have received the Washington Department of Ecology’s approval of a Remedial Action Plan (as defined in section 14 below) satisfactory to Seller in its sole and absolute discretion. This condition is not subject to the One Hundred and Twenty (120) day period. vi. Acceptable “Buyer’s Area of Remediation” Definition. Seller shall have reached agreement with Buyer on “Buyer’s Area of Remediation”, as defined in Section 14.c. below, acceptable to Seller in its sole and absolute discretion. This contingency is not subject to the One Hundred and Twenty (120) day Contingency Period. c. Seller’s and Buyer's Right to Terminate. In the event that Seller’s or Buyer's Contingencies set forth above are not satisfied in Seller’s or Buyer's sole and absolute discretion, Seller or Buyer, as the case may be, shall have the right to terminate this Agreement by sending written notice to the other and to the Escrow Agent (such notice referred to as a "Termination Notice"). If Seller or Buyer timely gives its Termination Notice to the other, the Escrow Agent shall disburse the Note or Deposit as the case may be to Buyer, and this Agreement shall terminate. If a Termination Notice is timely given as provided herein, upon disbursement by the Escrow Agent as provided herein, neither Buyer nor Seller shall have any further liability to the other under this Agreement except for Seller’s reimbursement obligation under Section 14.d. 6. Evidence of Title.

a. Commitment. Within twenty (20) days after the date hereof, Buyer will obtain and deliver to Seller a preliminary title commitment for an extended ALTA owner’s policy of title insurance (“Commitment”), together with the underlying documents forming the basis of the exceptions, issued by Chicago Title Insurance Company (the “Title Company”). Buyer shall have until ten (10) Business Days after receipt of the Commitment to object to any matter disclosed in the Commitment by giving written notice (the “Title Defect Notice”) of the objection to Seller. If, after the initial issuance of the Commitment and giving of the initial Title Defect Notice, the Title Company amends the Commitment by adding a new exception thereto, or by amending the Commitment in any way, Buyer shall be entitled to give a Title Defect Notice to such new matter within ten (10) Business Days after receipt of the amendment. Any matters not referenced in a timely Title Defect Notice shall be deemed approved by Buyer and are referred to herein as “Permitted Exceptions.” Within ten (10) days after receiving a Title Defect Notice, Seller shall notify Buyer in writing of any disapproved exception(s) that Seller declines to cure. Buyer shall have ten (10) days after receiving Seller’s notice to either waive its objection to the exception Seller has declined to cure (which thereafter shall constitute a Permitted Exception), or to terminate this Agreement. Seller shall use its best efforts to cure before Closing any disapproved exceptions Seller has not declined to cure, and if Seller fails to cure the exception by Closing, Buyer may waive its objection to the exception that has not been cured or terminate this Agreement. If Buyer terminates this Agreement as a result of Seller refusing or failing to cure an exception to which Buyer has objected, the Escrow Holder shall deliver to Buyer the Deposit and any

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interest accrued thereon notwithstanding the expiration of the Contingency Period, and neither party shall have any further liability to the other except for those obligations which specifically survive the termination of this Agreement. Issuance of Policy. At Closing, the Title Company shall be prepared to b. issue an extended ALTA owner’s policy in the amount of the Purchase Price insuring Buyer and subject only to (1) a lien for real property taxes, not then delinquent; (2) Permitted Exceptions approved or deemed approved by Buyer and as defined in accordance with Section 6(a); and (3) matters affecting the condition of title to the Property created by or with the written consent of Buyer (the “Title Policy”). c. Buyer’s Acts. Anything to the contrary in this Agreement notwithstanding, Seller shall have no affirmative obligation to expend any funds or incur any liabilities in order to cause any title exceptions to be removed from the Commitment (or any update thereto) or insured over except that Seller shall pay or discharge any lien or encumbrance voluntarily created, permitted or assumed by Seller (except current taxes and assessments) and not created by or resulting from the acts of Buyer or other parties not related to Seller. 7. Representations and Warranties. Seller. Seller represents and warrants that as of the date it executes this

a. Agreement:

i. Seller has the legal power, right and authority to enter into this Agreement and all documents required to be executed by Seller under this Agreement and to consummate the transaction contemplated by this Agreement. ii. To Seller’s actual knowledge there are no pending or threatened (in writing) actions, suits, arbitrations, claims or proceedings, at law or in equity, adversely affecting the Property or in which Seller is a party by reason of Seller’s ownership of the Property, including any eminent domain proceeding. iii. Seller has not entered into any oral or written leases, subleases, or rental agreements with respect to the Property or any portion thereof that would encumber the Property or bind Buyer after Closing. iv. Seller has not received any notices from any governmental authority with respect to any violation of any statute, ordinance or regulation with which the Property must comply. Seller shall promptly notify Buyer of any new event or circumstance of which Seller has actual knowledge that occurs or arises after the date hereof and that makes any representation or warranty of Seller under this Agreement materially untrue in any respect. The foregoing representations and warranties shall be deemed made as of and shall survive Closing except to the extent modified by a certificate delivered to Buyer by Seller at Closing notifying Buyer of any changes arising prior to Closing, in which case, Buyer may terminate this Agreement and the Escrow Holder shall deliver to Buyer the -9-

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Deposit and any interest accrued thereon notwithstanding the expiration of the Contingency Period, and neither party shall have any further liability to the other except for those obligations which specifically survive the termination of this Agreement. Buyer. Buyer represents and warrants that as of the date it executes this b. Agreement and as of Closing: i. Buyer has the legal power, right and authority to enter into this Agreement and the documents required to be executed by Buyer under this Agreement, and to consummate the transactions contemplated by this Agreement. ii. All requisite action (corporate, partnership, limited liability company or otherwise) has been taken by Buyer in connection with the entering into this Agreement and the documents required hereby to be executed by Buyer, and the consummation of the transactions contemplated hereby. 8. As Is. EXCEPT FOR SELLER’S OBLIGATION CONCERNING ENVIRONMENTAL REMEDIATION AND SEWER RELOCATION AS SET FORTH IN SECTION 14 BELOW, BUYER ACKNOWLEDGES THAT THE PURCHASE PRICE HAS BEEN NEGOTIATED TO REFLECT THE CURRENT CONDITION OF THE PROPERTY, “AS IS” AND “WHERE IS.” BUYER REPRESENTS TO SELLER THAT: (A) SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 7(a), BUYER WILL HAVE DILIGENTLY EXAMINED AND INVESTIGATED TO BUYER’S FULL SATISFACTION DURING THE CONTINGENCY PERIOD THE PHYSICAL CONDITION OF THE PROPERTY, SELLER’S DISCLOSURE DOCUMENTATION (IF ANY) AND ALL OTHER MATTERS THAT IN BUYER’S JUDGMENT AFFECT BUYER’S USE OF THE PROPERTY. (B) EXCEPT AS SET FORTH IN THIS AGREEMENT AND ANY EXHIBITS ATTACHED, NEITHER SELLER NOR ANY REAL ESTATE BROKER, AGENT OR OTHER REPRESENTATIVE OF SELLER HAS MADE ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER REGARDING THIS TRANSACTION OR ANY FACT RELATING THERETO, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES CONCERNING THE PHYSICAL CONDITION OF THE PROPERTY, ACCESS, ZONING LAWS, ENVIRONMENTAL MATTERS, UTILITIES, OR ANY OTHER MATTER AFFECTING THE PROPERTY OR THE USE THEREOF. BUYER IS RELYING AND WILL RELY SOLELY ON SELLER’S REPRESENTATIONS IN SECTION 7(a) AND BUYER’S OWN INSPECTIONS, TESTS, AUDITS, STUDIES AND INVESTIGATIONS. (C) BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, ITS USE, COMPLIANCE

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WITH LAW OR OTHERWISE RELATING THERETO MADE OR FURNISHED BY SELLER OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING, EXCEPT THE REPRESENTATIONS AND WARRANTIES OF SELLER AS SPECIFICALLY SET FORTH IN THIS AGREEMENT. 9. Taxes. All property taxes arising from and after Closing shall be the sole responsibility of Buyer. Any property taxes existing prior to Closing shall be the sole responsibility of Seller. 10. Costs and Expenses. Seller shall pay (a) the premium for the standard portion of the Title Policy, (b) one-half (1/2) of all Escrow fees and costs, and (c) Seller’s share of prorations. Buyer shall pay for (d) the premiums for any additional title insurance coverage or endorsements, (e) all costs of any survey of the Property ordered by Buyer, (f) any document recording charges, (g) one-half (1/2) of all Escrow fees and costs, and (h) Buyer’s share of prorations. Because Seller is a public entity, no real estate transfer excise tax will be due on the Sale. Seller shall be responsible for the payment of the real estate excise tax if the sale to Buyer is not an exempt transaction. Buyer and Seller shall each pay their own legal and professional fees and fees of other consultants. All other costs and expenses shall be allocated between Buyer and Seller in accordance with the customary practice in the City of Olympia, County of Thurston, State of Washington. If the transaction is terminated by either party on account of default by the other, the defaulting party shall pay all escrow and title costs billed by the Escrow Holder. 11. Condemnation. If before the Closing Date any condemnation or eminent domain proceedings are initiated that might result in the taking of any part of the Property and that might result in diminishing the value of the Project in excess of $50,000.00 or more or might result in the taking or closing of any right of access to the Property, (a “Material Taking”), Buyer may: i. terminate this Agreement by written notice to Seller whereupon the parties shall proceed in accordance with Section 13; or ii. proceed with the Closing, in which event Seller shall assign to Buyer all of Seller’s right, title and interest in and to any award made in connection with such condemnation or eminent domain proceedings. Seller shall immediately notify Buyer in writing of the commencement or occurrence of any condemnation or eminent domain proceedings. If such proceedings would result in a Material Taking of any of the Property, Buyer shall then notify Seller, within thirty (30) Business Days of Buyer’s receipt of Seller’s notice, whether Buyer elects to exercise its rights under clause (i) or clause (ii) of this Section 11(a). If Buyer timely makes an election to proceed under subparagraph (ii) within such thirty (30) day period, Closing shall be delayed, if necessary, until the later to occur of (i) the Closing Date or (ii) five (5) Business Days after the expiration of the 30-day period. If Buyer fails to timely elect to proceed under this Section 11(a), then this Agreement shall terminate, the Deposit shall be returned to Buyer and the parties shall have no

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further obligation to one another. If a taking is not a Material Taking, the parties shall proceed in accordance with clause (ii) above. 12. Legal and Equitable Enforcement of this Agreement.

Default by Seller. If the Closing does not occur by reason of any default a. by Seller, Buyer shall have the right to pursue any remedy available to it at law or equity, including the specific performance of this Agreement. Notwithstanding the foregoing, if Buyer elects to pursue a damages remedy, its damages shall be limited to an amount equal to its reasonable attorneys fees and out-of-pocket costs actually incurred in connection with the planning and designing the Project, including, but not limited to, architectural fees, engineering fees, survey costs, travel costs and any loan or financing fees paid in anticipation of obtaining financing commitments for the Project. b. Default by Buyer. It is expressly understood and agreed that if Seller terminates this Agreement due to a default by Buyer in the performance by Buyer of any obligation of Buyer hereunder then due, Seller will incur certain costs and other damages in an amount that would be extremely difficult or impractical to ascertain, and Seller shall be entitled: i. to the immediate return to Seller of all documents, materials, information and instruments provided by Seller to Buyer or deposited by Seller with the Escrow Holder, upon demand by Seller; ii. to sell the Property to any other person free of any claim of Buyer in or to the Property; and iii. to retain the Deposit and all interest thereon as liquidated damages, which damages shall be the sole legal or equitable remedy of Seller hereunder if Buyer breaches or defaults under this Agreement; provided, however, that the Deposit shall be in addition to and not in lieu of any amounts owed to Seller by Buyer as a result of any indemnification of Seller by Buyer pursuant to the terms of this Agreement; and iv. to the immediate provision of all documents, materials, reports and information (in electronic form if possible) concerning any environmental investigation or remediation performed by Buyer on or related to the Property. 13. Termination. If this Agreement terminates before Closing occurs, then:

a. If the termination occurs as the result of Buyer’s material breach, then Escrow Holder shall disburse the Deposit and any accrued interest to Seller. b. If the termination occurs as the result of Seller’s material breach, then Escrow Holder shall disburse the Deposit and any accrued interest to Buyer.

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c. If the termination occurs for any other reason, including the failure of a condition precedent, then Escrow Holder shall disburse the Deposit and any accrued interest to Buyer. d. After the termination of this Agreement, neither party shall have any further obligations to the other except those which this Agreement states survive termination. 14. Environmental Remediation, Utility Relocation and Post-Closing Obligations

a. Additional Investigation and Remedial Action Plan. During the Feasibility Contingency, Buyer shall develop and implement a supplemental Phase II investigation of the Property. Buyer shall promptly provide Seller with any written report prepared documenting the supplemental Phase II. After completion of the supplemental Phase II, Buyer shall prepare a remedial action plan and cost estimate to respond to the contamination (the “Remedial Action Plan”) at the “Site” as that term is defined in the Washington Model Toxics Control Act (“MTCA”), RCW 70.105D and its regulations, including the remediation necessary to reach concentrations which allow for a mixed-use residential development under MTCA at the Property. b. Seller, Buyer and Department of Ecology Review of Remedial Action Plan. Buyer will promptly provide the Remedial Action Plan to Seller for review. Seller and Buyer shall meet and confer during the Contingency Period concerning the Remedial Action Plan and the associated cost estimate and shall develop a mutually acceptable Remedial Action Plan for submission to the Washington Department of Ecology for its review and approval. On or before expiration of the Contingency Period, Buyer shall submit the mutually acceptable Remedial Action Plan to Ecology for review and approval under the Voluntary Clean-Up Program. Buyer shall request an “opinion” letter from Ecology approving the Remedial Action Plan as likely to meet the substantive requirements of MTCA. The Remedial Action Plan so approved by Ecology shall be known as the “Approved Remedial Action Plan.” c. Definition of “Buyer’s Area of Remediation” and Allocation of Seller and Buyer Remedial Work. During Seller and Buyer’s review, negotiation and approval of the Remedial Action Plan, Seller and Buyer shall negotiate in good faith to establish the area within the Site for which Buyer shall have the obligation post-Closing to undertake the response actions to secure an opinion letter from Ecology that MTCA’s requirements for the proposed mixed-use residential development have been reached within that area of the Site. The agreed upon boundary of the area within in the Site for which Buyer shall have the obligation to undertake the response actions shall be known as the “Buyer’s Area of Remediation.” Upon reaching agreement on the Buyer’s Area of Remediation, Seller and Buyer shall attach a diagram depicting the Buyer’s Area of Remediation to this Agreement as Exhibit D. i. Minimum and Maximum Buyer’s Area of Remediation: The minimum Buyer’s Area of Remediation shall be that area bounded by the four corners of the Property. The maximum Buyer’s Area of

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Remediation shall be that area bounded by the four corners of the Property and up to and including the center-line of any abutting public street. The existence of these minimum and maximum Buyer’s Areas of Remediation shall not preclude Seller or Buyer from exercising their respective termination rights hereunder if the remediation obligation within such minimum and maximum Buyer’s Areas of Remediation is unacceptable to Seller or Buyer as the case may be. ii. Allocation of Seller’s & Buyer’s Remedial Obligations: Buyer shall be responsible for implementation of the Remedial Action Plan for those areas within the Buyer’s Area of Remediation. Seller shall be responsible for implementation of the Remedial Action Plan for all areas outside of the Buyer’s Area of Remediation. iii. Allocation of Remedial Action Costs: Seller shall be responsible for the cost of implementation of the entire Approved Remedial Action Plan outside of the Buyer’s Area of Remediation. Seller shall be responsible for up to Two Hundred and Seventy Thousand Dollars ($270,000.00) of the cost to design and implement the Approved Remedial Action Plan (inclusive of any utility reimbursement provided in Section 14.f.) for all areas inside of the Buyer’s Area of Remediation or such other larger amount that the parties may agree to as part of the Buyer’s Area of Remediation determination. d. Seller’s Reimbursement of Supplemental Phase II and Remedial Action Plan Costs. Seller shall reimburse Buyer for the actual cost of the supplemental Phase II and preparation of the Remedial Action Plan up to a maximum amount of Thirty Thousand Dollars ($30,000.00). Seller shall reimburse the costs by means of a credit for Buyer against the Purchase Price at Closing or, if Seller exercises its termination right pursuant Section 14.g. below, then Seller shall reimburse the costs up to the $30,000 maximum concurrent with Seller’s written notice of such termination. Any amount that is credited against the purchase price of $270,000 for work associated with developing the Remedial Action Plan will be subtracted from the total $270,000 amount, or such larger amount as the parties may agree to, the Seller will reimburse the Buyer under Sections 14.c(iii) and 14.f for remediation costs within Buyer’s Area of Remediation and utility relocation costs. e. Post-Closing Remediation of Property. After Closing and in conjunction with construction of Buyer’s Project, Buyer shall implement that portion of the Approved Remedial Action Plan concerning contamination located within Buyer’s Area of Remediation. Buyer shall request an “opinion” letter from Ecology concerning completion of its portion of the Approved Remedial Action Plan. Seller shall be solely responsible for implementation of that portion of the Approved Remedial Action Plan to address any contamination located outside of Buyer’s Area of Remediation. f. Utility Relocation. Seller shall reimburse Buyer for the cost of relocating the existing utilities, including without limitation the sanitary sewer located on the

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Property, to a new location that is mutually agreeable to the parties as a part of Seller’s reimbursement of up to Two Hundred and Seventy Thousand Dollars ($270,000.00), or such other larger amount that the parties may agree to, for remedial action costs within Buyer’s Area of Remediation. During the Contingency Period, Buyer shall investigate and develop a utility relocation plan and cost estimate for the City’s review. Buyer shall provide to Seller copies of contracts, invoices and other items that the Buyer may reasonably request to substantiate the costs and expenses incurred in completing the utility relocation. Seller shall pay all reimbursable costs within thirty (30) days of receiving Buyer’s invoices for the same, from time to time. g. Seller’s and Buyer’s “Area of Remediation” Termination Rights. i. First Termination Right. If the estimated cost to develop and implement the Remedial Action Plan within Buyer’s Area of Remediation plus the estimated cost of the utility relocation reimbursement set forth in Section 14.f. above exceeds $270,000.00, then the Seller or Buyer may terminate this Agreement upon written notice to the other party on or before expiration of the Contingency Period. ii. Second Termination Right. If, after the expiration of the Contingency Period, the estimated cost to develop and implement the Approved Remedial Action Plan within Buyer’s Area of Remediation plus the estimated cost of the utility relocation reimbursement set forth in Section 14.f. above exceeds $270,000.00, then the Seller or Buyer may terminate this Agreement upon written notice to the other party on or before twenty (20) days after receipt of Ecology’s letter approving the Remedial Action Plan. iii. Effect of Timely Notice. If any party timely exercises its first or second termination right, then Escrow Agent shall disburse the Note or Deposit as the case may be to Buyer, and this Agreement shall terminate and upon disbursement by the Escrow Agent as provided herein, neither Buyer nor Seller shall have any further liability to the other under this Agreement except for Seller’s reimbursement obligation under Section 14.d. h. Environmental Indemnity. Seller shall indemnify, defend and hold Buyer harmless from and against any and all claims, liabilities, losses, penalties and any remediation or response costs and expenses (including without limitation attorney and consultant fees and costs), that Buyer may incur or have asserted against it as a result of the presence, release, or threatened release of Hazardous Substances which are located outside of the Buyer’s Area of Remediation except for any release of such Hazardous Substances caused by Buyer after Closing. This indemnification shall survive closing and transfer of all or any part of the Property by Buyer. For purposes of this Agreement, "Hazardous Substances" means any substance or

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material the presence of which poses a hazard to the health or safety of persons; which requires management, removal or remediation under any applicable law, rule, regulation or ordinance, including, without limitation, any substance which is toxic, explosive, flammable, radioactive, or otherwise hazardous; and any material, substance or thing now or hereafter defined or regulated as a hazardous substance, hazardous waste, solid waste, toxic substance, pollutant or contaminant under any federal, state, tribal or local law, rule regulation or ordinance including without limitation: (i) any "hazardous substance", "hazardous waste", "solid waste", pollutant, irritant or contaminant under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601, et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; or the Washington Model Toxics Control Act, ("MTCA"), R.C.W. 70.105D et seq. (ii) those substances listed as hazardous substances in the United States Department of Transportation Table (49 CFR 172.101) and amendments thereto or by the Environmental Protection Agency (or any successor agency) (40 CFR Part 302) and amendments thereto; and (iii) any material, waste or substance which is (a) petroleum or any constituent or fraction thereof, (b) asbestos or asbestos containing material, (c) polychlorinated biphenyls, (d) designated as a "hazardous substance" pursuant to Section 307 of the Clean Water Act (33 U.S.C. 1317); (e) flammable or explosive; or (f) radioactive materials which are now considered to be "hazardous substances" under any applicable law, rule or regulation. i. Construction. Upon acquisition of the Property, Buyer shall immediately commence construction of the Project and diligently pursue the construction to completion, subject to matters beyond Buyer’s reasonable control. j. Books and Records. Buyer will, upon Seller’s request, make available to Seller to assist Seller in its promotion of the development of other market rate housing and mixed use projects information reasonably requested by Seller and related to (i) the per square foot cost of development of the Project, (ii) the per square foot cost of construction of the garage and (iii) the per unit cost of construction of the residential component of the Project, all in reasonable detail as may be readily available to Buyer. Buyer will provide such information so long as providing the information does not materially impact Buyer’s marketing and sale of the residential units. All information provided to Seller pursuant to this Section 14(j) shall be treated as confidential and not disclosed to any third party except as required by law. k. Frontage Improvements. The Seller may request that Buyer install, as part of the Project, street frontage improvements that are in excess of those required under applicable land use and building codes. If Seller requests additional frontage improvements, and the improvements are acceptable to Buyer, then Seller shall reimburse

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to Buyer the added material cost of the extra frontage improvements and any additional labor costs incurred in installing the extra frontage improvements. 15. Notice. All notices required or permitted hereunder shall be in writing and shall be served on the parties at the following addresses: If to Seller: City of Olympia 837 – 7th Avenue, SE Olympia, Washington 98507-1967 Steven Friddle, Community Services Manager FAX: 360-753-8087 Olympia City Attorney's Office, Attn: Tom Morrill 900 Plum Street, Olympia, WA 98507-1967, FAX 360-709-2791

With a Copy to:

If to Buyer:

Colpitts Development Company, LLC Attn: Richard Senseney 2256 38th Place E. Seattle, WA 98112 FAX: (206) 568-8589

With a Copy to:

Houlihan Law Attn: John J. Houlihan, Jr. 3401 Evanston Ave., N., Suite C Seattle, WA 98103 FAX: (206) 547-1958

Any such notices shall be either (a) sent by certified mail, return receipt requested, in which case notice shall be deemed delivered three (3) days after deposit, postage prepaid in the U.S. mail, (b) sent by a nationally recognized overnight courier, in which case notice shall be deemed delivered when actually delivered pursuant to the records of such courier, (c) sent by facsimile transmission to the party and its counsel, receipt of which has been confirmed by telephone, and by regular mail, in which case notice shall be deemed delivered on the next Business Day following confirmed receipt, or (d) hand delivered, in which case notice shall be deemed delivered on the date of the hand delivery. The above addresses and phone numbers may be changed by written notice to the other party; provided, however, that no notice of a change of address shall be effective until actual receipt of such notice. Copies of notices are for informational purposes only, and a failure to give or receive copies of any notice shall not be deemed a failure to give notice. 16. Time of Essence. Time is of the essence of this Agreement.

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17. Governing Law. The validity, meaning and effect of this Agreement shall be determined in accordance with the laws of the State of Washington. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 19. Captions. The captions in this Agreement are inserted for convenience of reference and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof. 20. Assignability. Buyer shall not assign its rights under this Agreement without the prior written consent of Seller, except to an affiliate of Buyer. 21. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. 22. Modifications; Waiver. No waiver, modification, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment, discharge or change is sought occurs immediately prior to the Closing. 23. Entire Agreement. This Agreement contains the entire agreement between the parties relating to the transactions contemplated hereby and all prior or contemporaneous agreements, understandings, representations or statements, oral or written, are superseded hereby. 24. Partial Invalidity. Any provision of this Agreement which is unenforceable or invalid or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement shall be of no effect, but all the remaining provisions of this Agreement shall remain in full force and effect. 25. Survival. The indemnities contained in Sections 5(a)(i) , and 28 shall survive the termination or expiration of this Agreement and shall survive the Closing. The obligations of Seller and Buyer contained in Sections 3 and 14 shall survive the Closing. Except for the foregoing provisions and except as specifically stated in this Agreement, all other agreements of the parties contained in this Agreement shall terminate upon Closing. 26. No Personal Liability of Officers or Directors.

a. Seller. Buyer acknowledges that this Agreement is entered into by Seller as a municipal corporation and Buyer agrees that no individual officer or director or representative of Seller shall have any personal liability under this Agreement or any document executed in connection with the transactions contemplated by this Agreement. b. Buyer. Seller acknowledges that this Agreement is entered into by Buyer as a corporation and Seller agrees that no individual officer, trustee or director, member or representative of Buyer shall have any personal liability under this Agreement.

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27. No Third Party Rights. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 28. Broker. Seller and Buyer represent each to the other that each has had no dealings with any broker, finder or other party concerning Buyer’s purchase of the Property. Seller agrees to indemnify and hold Buyer harmless from all loss, cost, damage or expense (including reasonable attorneys’ fees) incurred by Buyer as a result of any claim arising out of the acts of Seller for a commission, finder’s fee or similar compensation made by any broker, finder or any party who claims to have dealt with Seller. Buyer agrees to indemnify and hold Seller harmless from all loss, cost, damage or expense (including reasonable attorneys’ fees) incurred by Seller as a result of any claim arising out of the acts of Buyer for a commission, finder’s fee or similar compensation or made by any broker, finder or any party who claims to have dealt with Buyer except Brokers. The indemnities contained in this Section 28 shall survive the Closing or the termination of this Agreement. 29. Attorneys’ Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement (including, without limitation, enforcement of any obligation to indemnify, defend or hold harmless), or because of an alleged dispute, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover the reasonable attorneys’ fees, charges and other costs incurred in connection with that action or proceeding, in addition to any other relief to which it may be entitled. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year last written by the signatures below.

BUYER: COLPITTS DEVELOPMENT COMPANY, LLC, a Washington limited liability company

SELLER: CITY OF OLYMPIA, a Washington municipal corporation

By Name Its

By Name Its
APPROVED AS TO FORM:

__________________________________ CITY ATTORNEY

List of Exhibits Exhibit A Legal Description of Property Exhibit B Deposit Note

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Exhibit C Exhibit D

Reports Buyer’s Area of Remediation

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STATE OF COUNTY OF

) ) ss. )

I certify that I know or have satisfactory evidence that _________________________________ is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the __________________________________________ of ____________________________________________ to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: ________________________

Notary Public Print Name My commission expires

(Use this space for notarial stamp/seal)

STATE OF WASHINGTON COUNTY OF PIERCE

) ) ss. )

I certify that I know or have satisfactory evidence that _________________________________ is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the _____________________________________________ of CITY OF OLYMPIA, a Washington municipal corporation, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: ________________________

Notary Public Print Name My commission expires

(Use this space for notarial stamp/seal)

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EXHIBIT “A” Legal Description

Those portions of Block 5 of Sylvester’ Plat of Olympia as recorded in Volume 1 of Plats, Page 14, records of Thurston County, Washington, described as follows: Lot 1, Block 5 of said plat excepting therefrom the East 20 feet. ALSO, Lot 4, Block 5 of said plat excepting therefrom the easterly 2 feet thereof; and subject to an agreement providing for right-of-way and easement over the westerly 2 feet of said Lot 3 and easterly 8 feet of Lot 4 in Block 5 for the joint and common use of the parties thereto for the benefit of the owners of Lots 2, 3, and 4 and the easterly 20 feet of Lot 1 in said block, made by Loy Wing and others, dated June 15, 1926, and recorded in Volume 123 of Deeds, Page 427. ALSO, Lots 5 & 8, Block 5 of said plat excepting therefrom the easterly 5 feet for alley.

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EXHIBIT “B” Form of Deposit Note DEPOSIT NOTE $10,000.00 Olympia, Washington June __, 2007

On demand, and pursuant to that certain Purchase and Sale Agreement dated June __, 2007, in reference to the real property located at _______________________________, Olympia, Washington, dated July ___, 2005, by and between the City of Olympia as “Seller” and the undersigned as “Buyer,” without grace, the undersigned promises to pay to Title Insurance Company, Olympia, Washington, the sum of Ten Thousand and No/100 Dollars ($10,000.00), with no interest thereon. This note shall bear interest at the maximum legal rate after maturity and if this note shall be placed in the hands of an attorney for collection or if suit shall be brought to collect any of the principal or interest of this note, we promise to pay reasonable attorneys’ fees. COLPITTS DEVELOPMENT COMPANY, LLC, a Washington limited liability company

By: Print Name: Print Title:

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EXHIBIT C List of Reports 1. Site Survey, by Olympia Public Works Survey Division

2. March 4, 2004 - City of Olympia, Downtown Mixed-Use Feasibility Study; by Pyatok Architects & Urban Advisors 3. February 13, 2004 - Request for Qualifications; Mixed-Use Housing in Downtown Olympia 4. December 29, 2003 - City of Olympia Downtown Housing Market Study; by Real Vision Research Inc. 5. July 20, 2002 - Preliminary Subsurface Investigation - Council Downtown Mixed-Use Development; by David Strong, L.E.G. with Bradley-Noble Geotechnical Services 6. July 3, 2002 - Phase I/II Environmental Site Characterization for the Old Senior Center Site and the Columbia Street Parking Lot; Prepared by Mark Robinson, Engineering Geologist, with Northwest Testing Company 7. June 13, 2001 - City of Olympia Downtown Housing Market Study; by Real Vision Research Inc.

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EXHIBIT “D” BUYER’S AREA OF REMEDIATION {insert diagram}

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PURCHASE AND SALE AGREEMENT

by and between CITY OF OLYMPIA, a Washington municipal corporation as “Seller”

and COLPITTS DEVELOPMENT COMPANY, LLC a Washington limited liability company as “Buyer”

Dated: August __, 2007