DRAFT

EARNEST MONEY RECEIPT

AND

PURCHASE AGREEMENT

This Agreement is made on this _____ day of __________________, 2004, by and between CAROL GRISWOLD, a married woman, whose address is P.O. Box 1342, Seward, AK 99664-1342 and FRANK GRISWOLD, a single man, whose address is 519 Klondike Avenue, Homer, AK 99603 (hereinafter referred to as "SELLER") and the KENAI PENINSULA BOROUGH, an Alaska municipal corporation, whose address is 144 North Binkley Street, Soldotna, Alaska 99669 (hereinafter referred to as "KPB").

WHEREAS, SELLER is the owner of that real property located in the Seward Recording District, Third Judicial District, State of Alaska, (hereinafter referred to as "Property") and more particularly described as follows:

Lot __, Block __, ______ Subdivision, Plat Number _____, within the portion of U.S.S. 1864 described in Book 66 Page 482, Seward Recording District all within the W � Section 34, Township 1 North, Range 1 West, Seward Meridian, Alaska, Kenai Peninsula Borough, containing 12 acres more or less.

WHEREAS, KPB has offered to buy, and SELLER is willing to sell the above-described Property as evidenced by this Purchase Agreement;

NOW THEREFORE, in consideration of the promises herein contained, SELLER hereby agrees to sell to KPB, and KPB hereby agrees to buy from SELLER, the property on the terms and conditions as set forth below:

1. PURCHASE PRICE

The purchase price of the Property is Three Hundred Forty-five Thousand dollars and NO cents ($345,000.00). The purchase price shall be paid by KPB at time of closing. The purchase of the property and appropriation for the purchase are subject to borough assembly approval.

2. EARNEST MONEY RECEIPT

A down payment of $1,000.00 paid by KPB is being held in the trust account of First American Title of Alaska to be applied towards the purchase price of the Property.

3. TITLE

Title shall be delivered at time of closing by Warranty Deed, which shall be issued to KPB. SELLER warrants and covenants that at the time of closing there shall be no liens or judgments recorded against SELLER in the same recording district in which the Property subject to this purchase agreement is situated. Title shall be clear of liens and encumbrances except title is subject to reservations, easements, rights-of-way, covenants, conditions and restrictions of record.

4. ESCROW AND CLOSING COSTS

In addition to the purchase price, KPB agrees to pay for one-half closing costs in connection with this Agreement, including without limitation all taxes, escrow fees, title insurance charges, recording fees and bank charges. All costs will be paid in full at the time of closing.

5. CLOSING

Unless otherwise agreed in writing, closing will occur within 90 days of recordation of the subdivision plat referenced in Paragraph 3 of this Purchase Agreement. At closing, KPB will pay the balance of the purchase price. Both parties will execute all documents required to complete the Purchase Agreement and, if applicable, establish an escrow account.

6. POSSESSION

Possession shall be delivered to KPB at time of recording warranty deed.

7. HAZARDOUS MATERIAL

SELLER covenants to the best of SELLER'S knowledge, that as of the date of this Agreement, except as specifically identified herein, the Property is free of all contamination from petroleum products or any hazardous substance or hazardous waste, as defined by applicable state or federal law, and there are no under ground storage tanks or associated piping on the Property. SELLER agrees that no hazardous substances or wastes shall be located on or stored on the Property, or any adjacent Property by seller, owner or contractors, nor shall any such substance be owned, stored, used, or disposed of on the Property or any adjacent Property by SELLER, its agents, employees, contractors, or invitee's, prior to KPB'S ownership, possession, or control of the Property.

8. ENTIRE AGREEMENT

This Agreement and the documents referred to herein contain the entire agreement of the parties with respect to the subject matter hereof. Any changes, additions or deletions hereto must be made in writing and signed by both KPB and SELLER or their respective successors in interest. Provisions of this agreement, unless inapplicable on their face, shall be covenants constituting terms and conditions of the sale and of the agreement to finance the sale, and shall continue in full force and effect until the purchase price is paid in full, or this agreement is earlier terminated.

9. BREACH REMEDY

Prior to closing of the sale, in the event that KPB or SELLER fails to make any payment required, or fails to submit or execute any and all documents and papers necessary for closing and transfer of title within time period specified in this agreement, the SELLER or KPB may terminate this agreement.

10. MISCELLANEOUS

A. Time. Time is of the essence in performance of this Agreement.

B. Cancellation. This agreement, while in good standing may be canceled in whole or in part, at any time, upon mutual written agreement by SELLER and the mayor. This purchase agreement is subject to cancellation in whole or in part if improperly issued through error in procedure or with respect to material facts.

C. Notice. Any notice or demand, which under the terms of this agreement or under any statute must be given or made by the parties thereto, shall be in writing, and be given or made by registered or certified mail, addressed to the other party at the address shown on the contract. However, either party may designate in writing such other address to which such notice of demand shall thereafter be so given, made or mailed. A notice given hereunder shall be deemed received when deposited in a U.S. general or branch post office by the addressor.

D. Interpretation. This Agreement shall be deemed to have been jointly drafted by both parties. It shall be constructed according to the fair intent of the language as a whole, not for or against any party. The interpretation and enforcement of this Agreement shall be governed by the laws of the State of Alaska. The titles of sections in this Agreement are not to be construed as limitations of definitions but are for identification purposes only.

11. SPECIAL PROVISIONS

This agreement is subject to the following special provisions.

A. The Kenai Peninsula Borough agrees to install a 6' high chain link fence on the northern and western boundaries of the subject 12.00 acre parcel as shown on Attachment A. The Kenai Peninsula Borough will pay for all costs associated with installation of the fence.

B. The Kenai Peninsula Borough has the option to purchase Lot __, Block __, ______ Subdivision, Plat Number _____, containing approximately 8 acres directly adjacent to the subject 12.00 acres for sixty-six cents (.66) per square foot. This option will be valid for one year from the date of authorization by the Kenai Peninsula Borough Assembly for the purchase of the subject 12.00 acres. If this option is exercised, KPB agrees to install a 6' high chain link fence along the northern boundary of said 8 acres.

C. The SELLER agrees to grant a 15' wide easement by document as necessary for installation and maintenance of a water line substantially as shown on Attachment A. This easement will be granted at no cost to the KPB.

a. A 6' high fence with an access gate will be installed at the intersection of said 15' easement and the south boundary of the Hemlock Street right-of-way. The fence will be a minimum of 25' long, centered on the middle of said 15' easement.

b. All debris created during construction of the water line shall be removed and disposed of off-site.

c. No overhead utilities shall be permitted within said 15' wide easement.

D. The SELLER may elect to participate in an IRC Section 1031 Tax Deferred Exchange. In such case, buyer agrees to cooperate in the exchange closing procedure and sign any documentation necessary to conclude the IRC 1031 Tax Deferred Exchange. Buyer shall incur no costs or liability for participating in the exchange process.

This Agreement has been executed by the parties on the day and year first above written.

KENAI PENINSULA BOROUGH:

__________________________

Dale L. Bagley, Mayor

Dated: _____________

SELLER(S):

___________________________ ___________________________

Carol Griswold Frank Griswold

Dated: _______________ Dated: _______________

ATTEST: APPROVED AS TO LEGAL FORM

AND SUFFICIENCY:

_______________________ ______________________________

Linda S. Murphy, Colette Thompson,

Borough Clerk Borough Attorney

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

)ss

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ________day of

_______________________, 2004, by Dale L. Bagley, Mayor of the Kenai Peninsula Borough, an Alaska municipal corporation, for and on behalf of the corporation.

_______________________________

Notary Public in and for Alaska

My commission expires: ___________

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

)ss

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ________day of

_______________________, 2004, by Carol Griswold.

______________________________

Notary Public in and for Alaska

My commission expires: __________

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

)ss

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ________day of

_______________________, 2004, by Frank Griswold.

______________________________

Notary Public in and for Alaska

My commission expires: __________