AMENDMENT NO. 1 TO OPTION AGREEMENT

                VI.            PHASE 1 SURVEY.  The Phase 1 survey, as described in Section 4 of the Agreement, is not yet complete. Optionee covenants to cause the Phase 1 survey to be completed as soon as possible. Optionee estimates but does not covenant that the Phase 1 survey will be completed and delivered to Optionee and Optionor on or before July 31, 2004.

                VII.           PHASE 1 APPRAISAL.  Optionee has obtained the Phase 1 Appraisal, which comprises both the initial appraisal and review appraisal, in accordance with Section 5 of the Agreement. The initial appraisal is dated April 30, 2004, and was prepared by Stephen Shapiro and Anthony Gibbons, of Bainbridge Island, Washington. The review appraisal is dated May 13, 2004, and was prepared by James Nowadnick, of Bainbridge Island, Washington. Optionee and Optionor have reviewed and approved the Phase 1 Appraisal.

                VIII.          PHASE 1 PURCHASE PRICE.  The purchase price of Phase 1, which is based on the estimated Phase 1 acreage, the Phase 1 Appraisal, and a unit price per acre of Four Thousand Three Hundred Ninety Dollars (US$4,390.00), shall be One Million Eight Hundred Seventy Thousand Six Hundred Twenty-three Dollars (US$1,870,623), payable in cash at closing.

                IX.            PHASE 1 CLOSING DATE.  The closing of the purchase and sale of Phase 1 shall occur on or before June 30, 2004.

                X.              PHASE 1 POST-CLOSING ADJUSTMENTS.  

                                A.  Actual Acreage Less than Estimate. If the Phase 1 survey prepared by or for Optionee, as described in Section 4 of the Agreement, discloses that Phase 1 comprises fewer acres than the Estimated Phase 1 Acreage, and if Optionor does not show proof by a preponderance of the evidence that the Phase 1 survey is clearly erroneous, then within sixty (60) days after mutual receipt of the Phase 1 survey Optionor shall refund to Optionee that portion of Purchase Price equal to the unit price per acre set forth in Section VIII hereof multiplied by the number of deficit acres.

                                B.  Actual Acreage More than Estimate.  If the Phase 1 survey prepared by or for Optionee, as described in Section 4 of the Agreement, discloses that Phase 1 comprises more acres than the Estimated Phase 1 Acreage, and if Optionee does not show proof by a preponderance of the evidence that the Phase 1 survey prepared by or for Optionee is clearly erroneous, then within sixty (60) days after mutual receipt of the Phase 1 survey Optionee shall at its option either (1) pay to Optionor an amount equal to the unit price per acre set forth in Section VIII hereof multiplied by the number of surplus acres, or (2) if possible, make agreement with Optionor on the form of a Correction Deed, for execution, acknowledgment, and recording by the parties in the real property records of Kitsap County, Washington, which shall be in the form of the Deed except for the removal of such portion of Phase 1 as the parties may mutually approve, the effect of which shall be to reduce the actual acreage of Phase 1 to the Estimated Phase 1 Acreage, provided, however, that if the parties do not make agreement on the form of the Correction Deed within (60) days after Closing, then Optionee shall have no option except to pay to Optionor an amount equal to the unit price per acre set forth in Section VIII hereof multiplied by the number of surplus acres.

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