Proposal for

Proposal for Art Partnership Transaction As of June 18, 2012 U.S. TRUST 4W ft. of hoe. P.M VNOn W... EFTA01086534 Disclosure Any examples presented are hypothetical and do not reflect specific strategies we may have developed for actual clients. They are for illustrative purposes only. The availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. This material is current as of the date specified and is for informational purposes only. It is not a solicitation, or an offer to buy or sell any security or investment product, nor does it consider individual investment objectives or financial situations. While the information contained herein is believed to be reliable, we cannot guarantee its accuracy or completeness. U.S. Trust, Bank of America Private Wealth Management operates through Bank of America,.. a wholly owned subsidiary of Bank of America Corporation. Information in this material is not intended to constitute legal, tax or investment advice. You should consult your legal, tax and financial advisors before making any financial decisions. If any information is deemed "written advice" within the meaning of IRS Regulations, please note the following: IRS Circular 230 Disclosure: Pursuant to IRS Regulations, neither the information, nor any advice contained in this communication (including any attachments) is intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. 2 U.S. TRUST e Rank of America Private Wealth Management EFTA01086535 Overview of Art Partnership Transaction An art partnership would be formed ("BFAP") between Narrows Holdings LLC ("Narrows") and the Black 2006 Family Trust (the "2006 Trust") as limited partners and LB 2012 Family LLC as general partner (the "GP"). The GP would be owned 50% by Narrows and 50% by the 2006 Trust as non-managing members. Investment decisions for BFAP would be made by the GP's Class A Manager (Leon). Liquidation, withdrawal and distribution decisions would be made by the GP's Class B Manager (John Hannan). The 2006 Trust would contribute its interests in LBF Holdings ("LBF") and Black Family Partners ("BFP") and Narrows would contribute fine art of equal value. Each would be a 49.5% limited partner of BFAP. The GP would be a 1% general partner of BFAP. Over time, Narrows could redeem its capital in the form of cash or BFP interests and would reduce its ownership interest in BFAP. 3 U.S. TRUST e Bank of America Private Wealth Management EFTA01086536 Mechanics of Art Partnership Transaction Preliminaries: • LBF distributes to the 2006 Trust all interests it owns other than a 73.4% interest in BFP. • Debra gifts Leon her 1% membership interest in Narrows so that Narrows is wholly owned by Leon. Creation of Art Partnership: • Narrows and the 2006 Trust equally contribute assets to the GP (which may include some portion of the 2006 Trust's 1.8% direct interest in BFP). • The GP contributes its assets to BFAP in exchange for a 1% general partner interest. • The 2006 Trust contributes its interest in LBF and all of its 1.8% direct interest in BFP not contributed to the GP in exchange for a 49.5% limited partner interest. • Narrows contributes about $1 billion of fine art to BFAP in exchange for a 49.5% limited partner interest. Administration of Art Partnership: • BFAP makes pro-raw distributions of its income to the GP, Narrows and the 2006 Trust. • The GP makes distributions of its income to Narrows and the 2006 Trust. • Narrows makes distributions of its income to Leon. • If Leon and Debra need additional income, the Trustees of the 2006 Trust could make distributions to Debra. • BFAP may permit the 2006 Trust to use art owned by BFAP. The Trustees of the 2006 Trust may permit Debra, as a beneficiary, to enjoy BFAP art that the 2006 Trust is entitled to use. • Over time, Narrows could redeem its capital as cash or BFP interests and would reduce its ownership interest in BFAP. 4 U.S. TRUST igir Bank of America Private Wealth Management EFTA01086537 Overview of Art Partnership Transaction Pros: • Gives Leon immediate access to income from a 37.6% BFP interest via distributions from Narrows and the GP of 50% of BFAP's current income received by these entities. • After several years, Narrows (wholly owned by Leon) could redeem capital from BFAP in the form of cash or BFP interests. • Debra is eligible to receive discretionary distributions from the 2006 Trust, which may provide additional cash flow for Debra and Leon prior to any redemption of capital by Narrows. Cons: • Prior to redemption, if 37.6% of BFP income is inadequate, Debra may have to request a discretionary distribution from the 2006 Trust, which the Trustees could refuse. • Valuations will be required when Narrows wishes to redeem its interests in BFAP. • There may be insufficient liquidity in BFAP for Narrows to redeem in the form of cash. Other Considerations: • The 2006 Trust could rent art from BFAP (and allow Debra as a trust beneficiary to use it); the rental payments to BFAP would increase Leon and Debra's liquidity. • Leon could also rent art from BFAP (in effect, making additional "tax-free" gifts to the 2006 Trust). 5 U.S. TRUST 4* Bank of America Private Wealth Management EFTA01086538 Mechanics of Art Partnership Transaction Preliminaries LBF Holdings (retains 73.4% 8FF) Step 1 LBF distributes all assets other than BFP to the 2006 Trust 2006 Trust (1.806% BFP owned directly) 6 Narrows Holdings Step 2 Debra gifts a 1°/0 member interest in Narrows to Leon 1% member U.S. TRUST 0 Rank nf America Private Wealth Management EFTA01086539 Mechanics of Art Partnership Transaction Formation of GP Step 3 Narrows and the 2006 Trust each contribute assets to the GP 2006 Trust Narrows Holdings (Wholly owned by Leon) 7 50% non-managing member Contributes liquid assts BFAP GP LLC Contributes fine art 50% non-managing member Leon Black .Class A Manager. John Hannan. Class B Manger U.S. TRUST Bank of Amer*, Private Wealth Management EFTA01086540 Mechanics of Art Partnership Transaction Formation of BFAP Step 4 The GP, the 2006 Trust and Narrows each contribute assets to BFAP in exchange for ownership interests 8 BFAP GP LLC 1% general partner Contributes 1% liquid assets and fine art r Contributes a 75.2% BFP interest owned directly and via LBF BFAP 49.5% limited partner 49.5% limited partner 2006 Trust Contributes fine art Narrows Holdings U.S. TRUST s* Bank of America Private Wealth Management EFTA01086541 Mechanics of Art Partnership Transaction Administration of BFAP Step 5 9 2006 Trust Distributes 49.5% BFAP income (37.224% BFP income) IF Distributes 50% GP income BFAP GP LLC Distributes 1% BFAP income (.752% BFP income) BFAP (Receives income from 75.2% BFP interest) Distributes 50% GP income Narrows Holdings Distributes 49.5% BFAP income (37.224% BFP income) Distributes 100% Narrows income U.S. TRUST e Rank of America Private Wealth Management EFTA01086542 Mechanics of Art Partnership Transaction Discretionary Authority Step 6 10 2006 Trust he_ May permits the 2006 Trust to use art owned by BFAP BFAP (Owns fine art and 75.2% BFP) May permit Debra as a trust beneficiary to use BFAP art Possible discretionary distributions to Debra as a trust beneficiary Can be used to pay taxes • U. S. TRUST Rank of rif America Private Wealth Management EFTA01086543