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May 15, 2006 Mr. Michael Mornson City Manager City of St. Anthony 3301 Silver Lake Road S t. Anthon y, iiN- T 5 5 418 Re: Amcon Development Dear Mr. Mornson: J'EROME P. GILLIGAN (612) 340-2962 FAX (612) 340-2643 gilligan.jerome@dorsey.com The City of St. Anthony and Amcon St. Anthony LLC (the "Developer") entered into a Development Agreement dated November 3, 2003, pursuant to when the City sold certain land to the Developer and the Developer agreed, among other things, to construct certain improvements on such land. Included in the improvements to be constructed on the land conveyed by the City was a restaurant (the "Restaurant"). The Development Agreement provides that the Restaurant is required to be constructed by September 1, 2005. Pursuant to Section 2.3 of the Development Agreement, the City was granted an option to purchase from the Developer, the Restaurant site identified in the Development Agreement for $100, exercisable at any time after September 1, 2005) if the lease for the Restaurant has not then commenced or the Restaurant has not then opened the business pursuant to such lease. The Developer failed to construct the restaurant by September 1, 2005 which resulted in a default under the Development Agreement, and in September 2005, the City and the Developer entered into a First Amendment to Development Agreement, pursuant to which the Developer paid the City $50,000 as liquidated damages for the Developer's default under the Development Agreement, and the City extended the required completion date for the Restaurant to June 1, 2006. In addition, Section 3 of the First Amendment to Development Agreement provides that if the Developer fails to cause a certificate of occupancy to be issued for the Restaurant on or before June 1, 2006, the Restaurant site automatically reverts to the City, unless the City elects in writing to waive such reversion. The City has been advised by the Developer that a certificate of occupancy will not be issued for the Restaurant by June 1, 2006, and the Developer has requested a 30 -day extension to obtain such certificate of occupancy. Under the Development Agreement, as amended by the First Amendment to Development Agreement, if such certificate of occupancy is not issued by June 1, 2006, the Restaurant site automatically reverts to the City unless the City waives such reversion. DORSEY & WHITNEY LLP ® WWW.DORSEY.COM ® T 612.340.2600 ® F 612.340,2868 SUITE 1500 - 50 SOUTH SIXTH STREET ® MINNEAPOLIS, MINNESOTA 55402-1498 USA CANADA EUROPE ASIA 7