MAUI LAND & PINEAPPLE COMPANY, INC.
P.O. BOX 187 KAHULUI, HAWAII 96733-6687
September 2, 2003
Mr. Dwight P. Fawcett
Executive Vice President
Heitman Capital Management LLC
191 N. Wacker Drive, Suite 2500,
Chicago, IL 60606
Re: ERS Approval for Partnership
Issues Relating to Sale of
the Queen Kaahumanu Center, Kahului, Maui, Hawaii
Dear Mr. Fawcett:
This letter is to confirm the agreement between Maui
Land & Pineapple Company, Inc., ("MLP")
and Heitman Capital
Management LLC ("Heitman"), as agent for
the Employees'
Retirement System of the State of Hawaii,
("ERS") relating to
the sale of the Queen Kaahumanu Shopping
Center ("the Center").
As you know, MLP and ERS entered into that certain
Limited Partnership Agreement of Kaahumanu
Center Associates,
dated June 23, 1993, as amended by
instruments dated April 27,
1995 ("the First Amendment"), and December
30, 2002 ("the Second
Amendment"), (said agreement and amendments
are hereafter
referred to as "the L. P. Agreement"), to
form a limited
partnership ("the Partnership") to expand,
own and operate the
Center. Heitman has been engaged by ERS to
advise on matters
relating to the L. P. Agreement and
operation of the Center and
act on behalf of ERS with respect to
certain Partnership matters
which have by agreement been delegated to
Heitman by ERS.
In the course of negotiating the closing of the sale of
the Center by the Partnership to Somera
Investment Partners,
LLC., a California limited liability
company, ("Somera"), and the
winding up of the affairs of the
Partnership, MLP and Heitman
have reached an agreement with respect to
the following matters:
1. Sale of the Property. The Partnership may sell the
Center to Somera for a purchase price of
SEVENTY-FIVE MILLION
FIFTY THOUSAND DOLLARS ($75,050,000),
pursuant to the terms and
conditions of that certain Shopping Center
Purchase and Sale
Agreement, dated July 21, 2003, as amended
by instruments dated
July 31, 2003, August 7, 2003, and August
13, 2003, respectively
("the Purchase Agreement").
2. ERS Option. ERS
will not exercise its option to
purchase MLP's partnership interest, as set
forth in Section 2 of
Second Amendment to the L.P. Agreement,
provided the sale of the
Center is completed to Somera pursuant to
the Purchase Agreement.
3. Distribution of Proceeds: Establishment of Reserves.
Pursuant to Section 9.4.3 of the L.P.
Agreement, as amended by
Section A.5.b. of Second Amendment to the
L.P. Agreement, the
Partnership shall establish a reserve
amount of NINE HUNDRED
THOUSAND DOLLARS ($900,000) ("the Reserve
Fund"), to be funded
from the net sale proceeds from the sale of
the Center and held
for a period of thirteen (13) months
following the closing of the
sale of the Center to pay for any
contingent or unforeseen
liabilities or obligations to third parties
of the Partnership,
including post closing liability to Somera
as provided for under
the Purchase Agreement. MLP shall be
authorized to pay such claims
from the Reserve Fund which are provided
for under the Purchase
Agreement or which are hereafter authorized
by the Partnership.
The Reserve Fund shall be deemed funded by
the partners, and any
balance remaining in the Reserve Fund upon
its distribution shall
be disbursed to the partners, in the
following shares: one
third
(1/3) for MLP and two thirds (2/3) for
ERS.
4. Adjustment to Partnership Distribution. The repayment
of the $830,000 equity contrib
