A sale to an IDGT results in greater value for heirs than if the asset were held outright Cash flow example: Scenario 1 Scenario 2: Sell asset to IDGT Year Hold asset Grantor Cost of taxes Trust 0 Asset held/sold to trust* $64,285,714 $64,285,714 Coverage 5,000,000 5,000,000 Gift tax on coverage - 5 Assets from initial funding 100,544,702 7,570,535 (37,615,685) 130,589,853 Assets from cascading GRATS 72,558,032 59,045,460 (28,009,827) 41,522,399 Assets held/sold to trust** 533,859,416 533,859,416 20 ~=—Value of assets 2,066,664,527 763,711,690 (3,447,134,919) 4,750,087,756 | Estate tax*** (1,136,115,490) (420,041,430) 1,895,924,205 - Net wealth to beneficiaries 930,549,037 343,670,261 (1,551,210,713) 4,750,087,756 Total value to beneficiaries $930,549,037 $3,542,547,303 Value added by IDGT $2,611,998,266 a 1. Assets do not receive a step up in basis upon death * Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $45,000,000 ** Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $373,701,591 *** In scenario 1 an estate tax exemption of $1,000,000 is applied. This is the lesser of the $5,000,000 gift tax exemption applied to scenario 2 and the $1,000,000 applicable estate tax exemption in year 20 Assumptions: The arithmetic return of asset years 1-20=15%;of which ordinary income/short term capital gains = 15%;interest rate paid to grantor = 2.89%; annual interest payment=$1,300,500; valuation discount = 30%; transfer tax rate (for transfers at the end of year 20) = 55%. Numbers have been rounded for convenience, are only estimates for illustrative purposes and should not be relied upon. Corporate insiders should consult with securities counsel as to any reporting issues under SEC Section 16 of the Securities Exchange Act of 1934 associated with receiving shares in-kind. Note: These materials should not be construed as providing legal, ta