EFTA01919470.pdf

To: jeffrey EMeevacationiagmail.comj Cc: Eileen Alexanderson From: Ada Clapp Sent Mon 7/14/2014 3:24:57 PM Subject Schwitters Joint Purchase Good morning Jeffrey, Before I go back to Herrick, I want to be sure I understand your instructions regarding Leon and Ronald's ownership of the Schwitters. I have outlined what I believe is the proposal below. Please give me your thoughts on the details noted. Step I: Herrick should create a non-NY (presumably Delaware) LLC. Each of Leon and Ronald will 50/50 Members and each will contribute funds sufficient to cover 1/2 the purchase price of the painting plus /2 the sales tax. The LLC will then acquire the painting. The LLC will have as its business purpose the management of the Schwittcrs to be held as investment property. • Before Herrick starts drafting--Has Leon spoken to Ronald about this arrangement and is Ronald in agreement? Please note that we will need the LLC formed and funded by each of Ronald and Leon in time to pay Christie's. • • I assume the LLC will be a member managed entity and that decisions must be unanimous? Please confirm. • To bolster the LLC's status as an independent investment entity: o The terms of use of partnership property should be included in the LLC operating agreement; o The LLC should have a separate insurance policy and require capital calls for payment of insurance and other expenses relating to the painting EFTA_R1_00361719 EFTA01919470  • Leon's current agreements with the Neue provide that each party insures under its own blanket policy so Leon and Ronald may prefer to include that provision in the LLC agreement—though Heather and I think that creates a weaker argument that the purpose of the LLC is the manage the investment of the painting; o The LLC should request an annual appraisal for insurance purposes to establish that it is keeping a good eye on its investment. • What shall we call the LLC? Step 2: Ronald and Leon will enter into a separate Buy Sell Agreement (or we could put this directly in the LLC agreement) whereby: • The survivor of them has the right within 6 months of the death of the first to die (the "FTD") to purchase the FTD s Membership interest from the estate of the FTD at fair market value as finally determined for estate tax purposes in the estate of the FTD. • If the survivor does not exercise the right to purchase, the FTD's estate has the right to put the FTD's Membership interest to the survivor for a stated period of time (same price as above). • If the survivor does not wish to purchase the FTD s Membership interests then the FTD's estate may force a liquidation of the LLC and a sale of the painting. Please let me know if you want me to discuss any of the above with Leon directly. Thank you. Ada Clapp Elysium Management LLC EFTA_R1_00361720 EFTA01919471 445 Park Avenue Suite 1401 New York, New York 10022 Direct Dial: Fax: Email: This communication and any attachment is for the intended recipient(s) only and may contain information that is privileged, confidential and/or proprietary. If you are not the intended recipient, you are hereby notified that further dissemination of this communication and its attachments is prohibited. Please delete all copies of this communication and its attachments and notify me immediately that you have received them in error. Thank you. EFTA_R1_00361721 EFTA01919472