To: Jeffrey Epsteir[jeeyacation©gmaii.com] Cc: Eileen Alexandersonant Alan S. Halperin[ O, From: Ada Clapp Sent: Wed 10/2/2013 2:19:45 PM Subject: GRAT Plan Hi Jeffrey, Eileen and I spoke with Alan yesterday and we wanted to touch base with you on the plan for the GRAT. As we understand it, the plan would work as follows: • Leon would transfer all his BFP interests to a 2-year GRAT this month (roughly $2 billion). • The GRAT would provide for his annuity to be paid quarterly so that Leon can meet his cash flow needs. • The annuity would be paid to Leon first with cash from the distributions and next with BFP interests. o o There could also be a pro rata distribution in kind from BFP during the GRAT term. The distribution would consist of BFP's investment partnership interests in other entities as well as marketable securities (about $150 MM--with no valuation discount applied to them). These assets could be used to fund the GRAT remainder, allowing Leon to take back more BFP as his annuity payments. • Each quarter Leon could roll his annuity payment (roughly $230 million) to a new GRAT. (Leon may opt to re-GRAT twice a year instead). • At the end of the GRAT term, the remainder would pass either to an existing trust, such as the Heritage Trust (with the assets to be later decanted when we revise the Heritage Trust), or to a new trust to be created by Leon (which will later be decanted to the revised Heritage Trust). o o Please let us know what you are thinking in this regard. If there will be a new trust—have you discussed the terms of the new trust with Leon? Issues to consider: • This is not necessarily the best time to GRAT-- when the value of the asset is high. Given that we are doing quarterly or semiannual payments, if the BFP goes down in value, Leon still has a chance to re-GRAT some BFP at the lower value but he will have lost the opportunity to do more at a lower value. It does not appear that we can take advantage of