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DELIN `" LAW OFFICE ATTORNEYS AT LAW 30849 FIRST STREET PAUL J.SANDELIN P.O.Box 298 TELEPHONE(218)568-8481 STACY M.JOHNSON PEQUOT LAKES,MINNESOTA 56472 FAx(218)568-8444 www lakesarealaw com February 18, 2008 VIA FACSIMILE 405-749-6800 COPY Granite RE, Inc. FAX SENT Attn: Brad Tollefson 14001 Quailbrook Drive Oklahoma City, OK 73134 - Re: Trailside Estates Development LLLP Pequot Lakes, Minnesota Our File No. 25000.047 Dear Mr. Tollefson: I am in receipt of your letter dated February 15, 2008. For your information a representative from Pate Bonding Company in Minneapolis contacted me regarding this matter approximately 10 days ago. I believe they may be the agent in Minnesota that assisted with the issuance of the bond. Rather than addressing this matter with multiple parties perhaps the two of you could coordinate one response. I discussed my letter with the agent from Pate Bonding Company and explained the problem with the maintenance bond is that it is the incorrect type of bond required by the Development Agreement. The Pate Bonding Company agent was very helpful and indicated that the principal refused to sign a performance bond, which would replace the maintenance bond so it appears that the principal has made a decision to not cooperate with the City and cure the default under the Development Agreement. I requested a letter from Pate Bonding Company memorializing the fact that the principal refuses to cooperate with the issuance of a performance bond as required by the Development Agreement. To date I have not received that letter. You refer to the deadline of February 15, 2008 as a self-imposed deadline, in other words a deadline perhaps to be ignored. To be very clear, that is a deadline required by the City and the principal has been notified of that deadline. Whether or not the principal cures the default outlined in my letter is up to the principal.