Bobby N. Harmon, CPCU, ARM

May 12, 2005

VIA fax @ 808-585-3513

and Email: alison.quinlivan@marsh.com

Edwina Clarke, President

P&C Insurance Company, Inc.

c/o Alison Quinlivan

Marsh Management Services

745 Fort Street, Suite 800

Honolulu, HI 96813

RE:Claims Settlement Proposal - Dennis Fern, President, Kukui, Inc.

Dear Ms. Clarke:

As P&C Insurance Company, Inc. has not responded to my offer to attempt to negotiate a global settlement of all of my outstanding claims, I hereby make the following settlement proposal for all claims against Dennis Fern as President of Kukui, Inc., and as an individual:

To settle ALL OUTSTANDING CLAIMS against Dennis Fern, I will accept the SUM OF $1.00 (ONE DOLLAR).

For additional information regarding these outstanding claims, I refer you to the following Internet addresses:

www.the-catbird-seat.net/KSBE-INTERROGATORIES.htm

www.the-catbird-seat.net/Claims-By-Harmon.htm

www.the-catbird-seat.net/Methane.htm

Please report this settlement offer to your authorized, independent Claims Administrator for further action. Thank you.

Very truly yours,

Bobby N. Harmon, CPCU, ARM

cc:      Mary Lou Woo, c/o Steven Guttman, Kessner Duca Umebayashi, et al.

(via fax @ 808-529-7177 and Email: sguttman@kdubm.com)