The following is a letter from Keweenaw Land Association, Limited investor Ron Gutstein to shareholders:

Re: Validity of Supermajority Voting Provisions in the Company’s Articles of Incorporation and Bylaws

Dear Board of Directors:

We are writing because we believe Article X of the Articles of Incorporation and Article IX of the Bylaws of Keweenaw Land Association, Limited (the “Company”) may be invalid and should be repealed.

In 1999, the Board of Directors (the “Board”) asked shareholders to approve certain changes to the Company’s Articles of Incorporation and Bylaws. Among them, the Board recommended adoption of current Article X, which requires an 80% supermajority vote of outstanding voting shares to approve a merger or sale of the Company, and current Article IX, which similarly requires an 80% supermajority shareholder vote to amend, appeal, or adopt new Bylaws, unless first approved by 75% of the Board.

At the time these proposals were first put forth to shareholders, it is our understanding that a trust for the Ayer family controlled approximately 30% of the shares of the Company. Those shares are now controlled by Essex Street Associates (“Essex”). Essex is an investment company whose management includes Mr. David Ayer, President and Chairman of the Board, and Mr. James Totten, a Board director. Furthermore, Mr. Ayer, Mr. Totten, and certain other family members, acting through Essex, have the right to vote the Company’s shares in Company shareholder meetings.

The Company should have disclosed that Mr. Ayer was the beneficial owner of Company shares when the Board asked shareholders to approve the supermajority voting provisions. Because Mr. Ayer controls such a sizeable block of Company shares, it is mathematically impossible for unaffiliated shareholders to overcome the supermajority threshold. Mr. Ayer’s beneficial ownership of such a large voting interest was material information relevant to a shareholder’s voting decision whether to approve the supermajority provisions. Since they were not informed of Mr. Ayer’s beneficial ownership, unaffiliated shareholders cast their vote without full knowledge of the consequences of their actions.

These unaffiliated shareholders, had they known of the existence of Mr. Ayer’s controlling interest in the Company, probably would not have approved adoption of the Articles and Bylaws that installed the supermajority voting requirement. The supermajority provisions clearly have a negative impact on Company shares, as they severely limit the ability of shareholders to influence the management of the Company. They also limit the attractiveness of the Company to potential acquirers, which depresses the value of the Company’s stock. The supermajority voting provisions entrench the Company’s current management, and it is impossible for unaffiliated shareholders to effect any change without the consent of Mr. Ayer and his relatives.

We believe the Company’s failure to disclose Mr. Ayer’s controlling interest in the Company renders the supermajority voting provisions invalid. The Company obtained shareholder consent for these provisions without disclosing material information.

The Company should take immediate action to remedy this injustice. Since the supermajority provisions are invalid, the Board, in accordance with the Michigan Business Corporation Act, should (i) repeal Article X, in accordance with the Articles of Incorporation, and (ii) repeal Article IX, in accordance with the Bylaws.

Please call if you have any questions.

Very truly yours,

Ronald S. Gutstein

Keweenaw Land Association (PK) (USOTC:KEWL)
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