Ltrs re contractors no longer working on hse

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LEONARD, STREET AND DEINARD PROFESSIONAL ASSOCIATION May 22, 2002 Robert J. Huber 612-335-1714 Bob.Huber@leonard.com BY E-MAIL ONLY James O'Connor Maslon Edehnan Borman& Brand 3300 Wells Fargo Center Minneapolis, MN 55402 Re: 1520 Bohns Point Road Orono, Minnesota Dear Jim: Following several conversations with Jim Killian about the dispute between the Dalveys and Paragon, I now understand that you will now be handling this matter. While our position is fundamentally unchanged from our prior conversations with Jun, it may be of assistance to you to inform you of the Dalveys position so that you hear it directly from me. The Dalveys wish to resolve the issue quickly so that they may continue their homebuilding project, but they simply feel they have the right to understand the amount they are being asked to pay. Additionally, there remains a small amount of unfinished work for which Paragon is asking for full payment, but the resolution here should have been simple. Regarding the payment of the final draw request, as previously mentioned to Jim, the Dalveys would be willing to make an unmediate interim payment of$127,256.64 pending the completion of the audit and negotiations. This would be sufficient to pay off all of Paragon's subs and suppliers except Shaw Lumber and Vogt, whom Dalveys feel may have overcharged them for the services and products they received. Should this interim payment be acceptable, full lien waivers from those subs and suppliers would be exchanged for payment as well as the required warranties for the work and materials these subs and suppliers have furnished. Other than the windows and the small amount of plumbing work done so far, the Dalveys have no other disputes with the subcontractors. Once these two amounts are known, the Dalveys intend to resolve the appropriate Paragon fee amount payable at that time as well. The unfinished work involves only the removal of unbonded mortar from the foundation walls and their tuckpointing and the negotiation of related charges. The Dalveys expect Paragon to honor its contractual and statutory warranties with the qualification that the warranty will be voided if the new builder modifies Paragon's work. 150 SOUTH FIFTH STREET SUITE 2300 MINNEAPOLIS, MINNESOTA SS402 TEL 612-335-I500 FAX 612-335-1657 22'�62g1V1 LAW OFFICES IN MINNEAPOLIS, SAINT PAUL, MANKATO, SAINT CLOUD AND WASHINGTON, D.C.