1034-00004 · Group Strathmore Corp · GRAT Documents

assignment-stonecrest-interest-grat-b.docx DOCUMENT M&A / Corporate

21 / 75 ← → ✕

ASSIGNMENT OF MEMBERSHIP INTEREST IN STONECREST REALTY HOLDINGS LLC

From Jonathan R. Caldwell, individually, to Jonathan R. Caldwell, as Trustee of the Caldwell 2023 Realty GRAT

Dated as of May 1, 2023

This ASSIGNMENT OF MEMBERSHIP INTEREST (this "Assignment") is made and entered into as of May 1, 2023 (the "Effective Date"), by and between:

ASSIGNOR:

Jonathan Robert Caldwell, an individual residing at 418 East 72nd Street, Apt. 14A, New York, New York 10021 (SSN: xxx-xx-4781), acting in his individual capacity (the "Assignor");

and

ASSIGNEE:

Jonathan Robert Caldwell, not individually but solely in his capacity as Trustee of the Caldwell 2023 Realty GRAT, an irrevocable trust established under a Trust Agreement dated May 1, 2023, governed by the laws of the State of New York (referred to herein as "GRAT B" or the "Trust") (the "Assignee" or "Trustee").

The Assignor and the Assignee are sometimes referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS:

A. Stonecrest Realty Holdings LLC ("Stonecrest" or the "Company") is a limited liability company duly organized and validly existing under the laws of the State of New York, with its principal office located at 330 Madison Avenue, Suite 2401, New York, New York 10017, and Robert M. Sinclair serving as Chief Operating Officer. Stonecrest holds direct and indirect interests in eleven (11) commercial and residential real estate properties located across the States of New York, New Jersey, and Connecticut, as more fully described in Article 4 and Exhibit A hereto. The total fair market value of Stonecrest, as determined by an independent qualified appraisal, is One Hundred Thirty-Four Million Dollars ($134,000,000) as of the Effective Date. As of the date hereof and immediately prior to the consummation of this Assignment, the Assignor holds a one hundred percent (100%) membership interest in Stonecrest, constituting all of the issued and outstanding membership interests of the Company;

B. The Assignor desires to assign, transfer, convey, and deliver to the Trust an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest (the "Assigned Interest"), which has a pre-discount fair market value of Eighty Million Dollars ($80,000,000), calculated as $134,000,000 multiplied by 59.7%. For federal gift tax purposes, a combined twenty-five percent (25%) valuation discount—reflecting lack of marketability and lack of control—is applied to the Assigned Interest, yielding a discounted fair market value of Sixty Million Dollars ($60,000,000). The Assigned Interest is being contributed to the Trust as the initial corpus of the Caldwell 2023 Realty GRAT, a zeroed-out grantor retained annuity trust structured and intended to qualify under Section 2702 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC");

C. This Assignment is made in connection with the funding of GRAT B as part of a comprehensive estate plan for the Assignor. The Caldwell 2023 Realty GRAT is a three (3)-year zeroed-out grantor retained annuity trust providing for annual annuity payments to the Assignor in the amount of Twenty-Nine Million Three Hundred Seventy-Five Thousand Eight Hundred Fifty-Nine Dollars ($29,375,859), calculated using the applicable Section 7520 rate of five percent (5.0%) for April 2023, the month in which the Trust is funded. Upon the expiration of the three-year annuity term, the remainder interest in the Trust, if any, shall pass to the Caldwell Family Dynasty Trust, an irrevocable trust established on April 1, 2023, with situs in the State of Delaware, as remainder beneficiary under the terms of the Trust Agreement; and

D. Stonecrest is governed by an Operating Agreement, as amended from time to time (the "Operating Agreement"), setting forth the rights, obligations, and restrictions applicable to the members of Stonecrest. This Assignment is being made in compliance with the terms and conditions of the Operating Agreement, including any applicable transfer restrictions and consent requirements. As the sole member of Stonecrest, the Assignor has the exclusive authority to approve and consent to this transfer, and such consent is being provided contemporaneously herewith in the form attached as Exhibit B.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1 — DEFINITIONS

As used in this Assignment, the following terms shall have the meanings set forth below:

1.1 "Assigned Interest" means the approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC being transferred hereunder, representing a pro rata share of all economic and governance rights appurtenant thereto, including but not limited to rights to distributions, allocations of income, gain, loss, deduction, and credit, voting rights, management rights, information rights, and all other rights and privileges of a member under the Operating Agreement.

1.2 "Assignor" means Jonathan Robert Caldwell, an individual, acting in his individual capacity.

1.3 "Assignee" or "Trustee" means Jonathan Robert Caldwell, not individually but solely in his capacity as Trustee of the Caldwell 2023 Realty GRAT.

1.4 "Company" means Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York.

1.5 "Effective Date" means May 1, 2023.

1.6 "Operating Agreement" means the Operating Agreement of Stonecrest Realty Holdings LLC, as amended, restated, supplemented, or otherwise modified from time to time.

1.7 "Trust Agreement" means the Caldwell 2023 Realty GRAT Trust Agreement dated May 1, 2023, as the same may be amended from time to time in accordance with its terms.

1.8 "IRC" or "Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

1.9 "Person" means any individual, corporation, partnership, limited liability company, trust, estate, association, governmental authority, or other entity.

ARTICLE 2 — ASSIGNMENT

Section 2.1 — Assignment of Membership Interest

As of the Effective Date, the Assignor hereby irrevocably assigns, transfers, conveys, and delivers to the Assignee, as Trustee of the Caldwell 2023 Realty GRAT, all of the Assignor's right, title, and interest in and to the Assigned Interest, free and clear of all liens, claims, encumbrances, security interests, options, charges, pledges, restrictions, and adverse claims of any kind whatsoever. The Assigned Interest constitutes an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, as more fully described in Exhibit A attached hereto and incorporated herein by reference.

The assignment effected hereby includes, without limitation, all of the following rights appurtenant to the Assigned Interest under the Operating Agreement and applicable law:

(a) all economic interests, including the right to receive distributions of cash and other property, and all allocations of income, gain, loss, deduction, and credit of the Company attributable to the Assigned Interest;

(b) all voting rights and governance rights, including the right to vote on any matter submitted to the members of the Company for approval;

(d) all information rights, including the right to inspect the books and records of the Company;

(e) all rights to participate in the capital of the Company;

(f) all rights to consent to or approve any action by the Company that requires member consent under the Operating Agreement or applicable law; and

(g) all other rights, privileges, and benefits of a member of the Company with respect to the Assigned Interest, whether arising under the Operating Agreement, the New York Limited Liability Company Law, or otherwise.

The foregoing assignment and transfer shall be effective as of the Effective Date and shall constitute a complete and irrevocable transfer of the Assigned Interest from the Assignor to the Assignee.

Section 2.2 — Acceptance by Assignee

The Assignee, as Trustee of the Caldwell 2023 Realty GRAT, hereby accepts the assignment of the Assigned Interest and agrees to hold the Assigned Interest as trust corpus, subject in all respects to the terms and conditions of the Trust Agreement. The Assignee acknowledges that the Assigned Interest shall constitute the initial funding of the Caldwell 2023 Realty GRAT and shall be administered, managed, and distributed in accordance with the provisions of the Trust Agreement.

The Assignee, as Trustee of the Trust, assumes all obligations of a member of Stonecrest Realty Holdings LLC to the extent of the Assigned Interest, effective as of the Effective Date, including without limitation all obligations arising under the Operating Agreement, applicable law, and any agreements to which the Company is a party that impose obligations on the members of the Company. The Assignee agrees to be bound by all of the terms and conditions of the Operating Agreement, as the same may be amended from time to time, with respect to the Assigned Interest.

Section 2.3 — Valuation for Gift Tax Purposes

The Parties acknowledge and agree that the Assigned Interest has a pre-discount fair market value of Eighty Million Dollars ($80,000,000), determined as of the Effective Date. Such pre-discount fair market value is based upon the total fair market value of Stonecrest Realty Holdings LLC of One Hundred Thirty-Four Million Dollars ($134,000,000), multiplied by the percentage membership interest being transferred (59.7%).

For federal gift tax purposes, a combined twenty-five percent (25%) valuation discount is applied to the Assigned Interest. This discount reflects the lack of marketability of the Assigned Interest (i.e., the absence of a readily available public market for interests in a closely held limited liability company) and the lack of control attributable to a less-than-one-hundred-percent membership interest. After application of this combined discount, the discounted fair market value of the Assigned Interest is Sixty Million Dollars ($60,000,000).

The fair market value of the Assigned Interest and of Stonecrest Realty Holdings LLC has been independently appraised by Ashford Valuation Group LLC, an independent qualified appraiser, under the direction of Dr. Leonard K. Whitfield, ASA, Managing Partner, with offices located at 1120 Avenue of the Americas, Suite 3500, New York, New York 10036. The qualified appraisal report prepared by Ashford Valuation Group LLC (the "Appraisal Report") sets forth the methodologies employed, the assumptions made, and the conclusions reached in determining the fair market value of the Company and the Assigned Interest. The Appraisal Report shall be attached to and filed with the Assignor's federal gift tax return for the 2023 taxable year.

The transfer of the Assigned Interest to the Trust is structured as a zeroed-out grantor retained annuity trust under IRC § 2702, with the result that the taxable gift value of the transfer is zero dollars ($0). The annuity payments to the Assignor during the three-year annuity term have been calculated to equal the full value of the Assigned Interest (as discounted), plus the assumed rate of return at the applicable Section 7520 rate, such that the present value of the remainder interest passing to the remainder beneficiary upon the expiration of the annuity term is as close to zero as possible.

ARTICLE 3 — REPRESENTATIONS AND WARRANTIES OF ASSIGNOR

The Assignor hereby makes the following representations and warranties to the Assignee as of the Effective Date, each of which is material and relied upon by the Assignee:

Section 3.1 — Title

The Assignor represents and warrants that the Assignor is the sole legal and beneficial owner of the Assigned Interest, free and clear of all liens, pledges, security interests, encumbrances, claims, options, charges, restrictions, conditional sale or other title retention agreements, and adverse claims of any kind whatsoever (collectively, "Encumbrances"). No other Person has any right, title, interest, or claim in or to the Assigned Interest, whether legal or equitable, direct or indirect, vested or contingent. The Assignor has good and marketable title to the Assigned Interest, and the delivery of the Assigned Interest pursuant to this Assignment will vest in the Assignee good and marketable title to the Assigned Interest, free and clear of all Encumbrances.

Section 3.2 — Authority

The Assignor represents and warrants that the Assignor has full legal right, power, capacity, and authority to execute, deliver, and perform this Assignment and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Assignment by the Assignor do not and will not: (i) violate, conflict with, or result in a breach or default under any agreement, contract, instrument, mortgage, lien, license, permit, order, judgment, decree, law, statute, rule, or regulation to which the Assignor is a party or by which the Assignor or any of the Assignor's assets (including the Assigned Interest) is bound or affected; (ii) result in the creation or imposition of any Encumbrance on the Assigned Interest; or (iii) require any consent, approval, authorization, order, filing, registration, or qualification of or with any court, governmental authority, or other Person, except as has been obtained or provided herein.

As the holder of one hundred percent (100%) of the membership interests in Stonecrest prior to this Assignment, the Assignor has the sole authority to approve and consent to this transfer under the Operating Agreement. The Assignor hereby grants such consent and approval, as further evidenced by the Consent of Sole Member attached hereto as Exhibit B.

Section 3.3 — Absence of Encumbrances

The Assigned Interest is not subject to any mortgage, deed of trust, pledge, hypothecation, security interest, lien, charge, encumbrance, or adverse claim of any nature. There are no outstanding options, warrants, rights of first refusal, preemptive rights, purchase agreements, or other rights or agreements of any kind to purchase, acquire, or otherwise obtain any portion of the Assigned Interest or any interest therein. There are no agreements, arrangements, or understandings, whether written or oral, that would restrict the transfer of the Assigned Interest or that would give any Person any right with respect to the Assigned Interest other than as set forth in the Operating Agreement.

Notwithstanding the foregoing, the Parties acknowledge that certain properties held at the Stonecrest entity level are subject to mortgages, deeds of trust, and other debt obligations. Such entity-level indebtedness is non-recourse to the Assignor individually and is not personally guaranteed by the Assignor. The existence of such entity-level indebtedness does not constitute an Encumbrance on the Assigned Interest itself and does not impair or restrict the Assignor's ability to transfer the Assigned Interest to the Assignee as contemplated herein.

Section 3.4 — Compliance with Operating Agreement

The Assignor represents and warrants that the transfer of the Assigned Interest complies with all applicable provisions of the Operating Agreement, including without limitation any restrictions on transfer, requirements for member consent, rights of first refusal, and conditions to the admission of substitute or additional members. All consents required under the Operating Agreement for the transfer of the Assigned Interest have been obtained or are hereby provided by the Assignor in his capacity as the sole member of Stonecrest. The Assignee will, upon the effectiveness of this Assignment, be admitted as a member of Stonecrest with all of the rights and obligations of a member under the Operating Agreement with respect to the Assigned Interest.

Section 3.5 — No Litigation

The Assignor represents and warrants that there is no pending or, to the Assignor's knowledge after due inquiry, threatened litigation, arbitration, administrative proceeding, investigation, or other legal proceeding of any kind that would: (i) affect or impair the Assigned Interest or the Assignor's title thereto; (ii) restrict or prohibit the transfer of the Assigned Interest as contemplated by this Assignment; (iii) challenge or seek to set aside this Assignment or any of the transactions contemplated hereby; or (iv) otherwise materially and adversely affect the Assignor's ability to consummate this Assignment and perform the Assignor's obligations hereunder.

Section 3.6 — Tax Matters

The Assignor represents and warrants that the Assigned Interest constitutes a membership interest in a limited liability company that is classified as a partnership for federal income tax purposes (or, in the event that the Company has only one member at any relevant time, as a disregarded entity for federal income tax purposes). The Assignor acknowledges and confirms that GRAT B is a grantor trust under IRC §§ 671 through 679, inclusive, and that the Assignor will continue to be treated as the owner of the Assigned Interest for federal income tax purposes for the duration of the annuity term of the Trust. During the annuity term, all items of income, gain, loss, deduction, and credit attributable to the Assigned Interest shall be reported on the Assignor's individual federal and state income tax returns, and the Trust shall not be a separate taxpayer for federal income tax purposes.

ARTICLE 4 — UNDERLYING PROPERTY DESCRIPTION

Section 4.1 — Stonecrest Property Portfolio

The Assigned Interest represents an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, which holds direct and indirect interests in the following eleven (11) real estate properties. The properties, their respective classifications, locations, and estimated fair market values as of the Effective Date (as determined by the Appraisal Report) are set forth in the table below:

The Assigned Interest represents 59.7% of the total entity value of Stonecrest, or approximately Eighty Million Dollars ($80,000,000) on a pre-discount basis. The foregoing estimated fair market values are derived from the Appraisal Report prepared by Ashford Valuation Group LLC and reflect the fair market value of each property as of the Effective Date, taking into account current market conditions, comparable transactions, income capitalization analyses, and other methodologies customarily employed in the valuation of real estate assets. The individual property values set forth above are provided for informational and reference purposes; the Assigned Interest represents an undivided fractional membership interest in the Company as a whole and not a direct ownership interest in any individual property.

ARTICLE 5 — COVENANTS

Section 5.1 — Further Assurances

The Assignor agrees to execute and deliver, at any time and from time to time after the Effective Date, any and all additional documents, instruments, certificates, and assurances as may be reasonably necessary or desirable to effectuate the purposes of this Assignment, to vest in the Assignee good and valid title to the Assigned Interest, and to confirm the Assignee's rights hereunder. Without limiting the generality of the foregoing, the Assignor agrees to execute and deliver such amendments to the Operating Agreement, membership certificates, updated membership registers, and other organizational documents of the Company as may be required to reflect the transfer of the Assigned Interest and the admission of the Assignee as a member of Stonecrest. The Assignor shall cooperate fully with the Assignee in updating the membership register of Stonecrest to reflect the Assignee's status as a member holding an approximate 59.7% membership interest in the Company.

Section 5.2 — Operating Agreement Amendment

The Parties shall cause the Operating Agreement to be amended promptly following the Effective Date to reflect the transfer of the Assigned Interest and the admission of the Assignee as a member of Stonecrest holding an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in the Company. Such amendment shall set forth the revised ownership percentages of the members, update the membership register and schedule of members, and make such other conforming changes as are necessary or appropriate to give effect to the transactions contemplated by this Assignment.

Following the consummation of this Assignment, the Assignor shall retain an approximate forty and three-tenths percent (40.3%) membership interest in Stonecrest in his individual capacity. The Assignee, as Trustee of the Caldwell 2023 Realty GRAT, shall hold an approximate 59.7% membership interest in Stonecrest, subject to the terms and conditions of the Trust Agreement.

Section 5.3 — Notification

The Assignor shall provide written notice of this Assignment to Robert M. Sinclair, Chief Operating Officer of Stonecrest Realty Holdings LLC, promptly following the execution hereof. Such notice shall include a copy of this Assignment or a summary thereof reasonably satisfactory to the Assignee, and shall inform Mr. Sinclair of the change in the membership register, the identity and capacity of the Assignee, and any operational or administrative matters arising from the transfer.

ARTICLE 6 — TAX MATTERS

Section 6.1 — Gift Tax Reporting

The transfer of the Assigned Interest to the Trust shall be reported on the Assignor's 2023 federal gift tax return (IRS Form 709), filed for the calendar year ending December 31, 2023, as a transfer to a zeroed-out grantor retained annuity trust under IRC § 2702. The taxable gift value of this transfer is zero dollars ($0), reflecting the structure of GRAT B as a zeroed-out GRAT in which the present value of the retained annuity interest equals the full value of the property transferred.

The transfer shall be reported as an adequate disclosure on Form 709, and the Appraisal Report prepared by Ashford Valuation Group LLC shall be attached to the return as a qualified appraisal supporting the reported fair market value of the Assigned Interest. The Assignor shall ensure that the Form 709 filing provides sufficient detail regarding the valuation methodology, the applicable valuation discounts, the terms of the Trust, and the identity of the appraiser to satisfy the adequate disclosure requirements under Treasury Regulation § 301.6501(c)-1(f), thereby commencing the statute of limitations period for purposes of any subsequent adjustment by the Internal Revenue Service.

Section 6.2 — Grantor Trust Status

The Parties acknowledge and agree that GRAT B is a grantor trust for federal and state income tax purposes, and that the Assignor shall be treated as the owner of the trust corpus (including the Assigned Interest) for federal and state income tax purposes for the duration of the GRAT annuity term, pursuant to IRC §§ 671 through 679. During the annuity term, all items of income, gain, loss, deduction, and credit attributable to the Assigned Interest shall be reported on the Assignor's personal federal and state income tax returns, and the Trust shall not file a separate income tax return as a taxpayer (though the Trust may be required to file an informational return as a grantor trust). The Assignor's payment of income taxes attributable to the Trust's income during the annuity term shall not constitute an additional gift to the Trust or to the remainder beneficiary.

Section 6.3 — Section 7520 Rate

The applicable Section 7520 rate for the month of funding (April 2023) is five percent (5.0%), as published by the Internal Revenue Service. This rate has been applied in the zeroed-out annuity calculation under the Trust Agreement to determine the annual annuity amount payable to the Assignor during the three-year annuity term. The Parties acknowledge that the selection of the April 2023 Section 7520 rate is consistent with the provisions of IRC § 7520(a) and the applicable Treasury Regulations, which permit the use of the rate for the month of the transfer or either of the two months preceding the month of the transfer.

ARTICLE 7 — MISCELLANEOUS PROVISIONS

Section 7.1 — Governing Law

This Assignment shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to any choice or conflict-of-laws provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute arising out of or relating to this Assignment shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York.

Section 7.2 — Binding Effect

This Assignment shall be binding upon and inure to the benefit of the Assignor and the Assignee and their respective heirs, executors, administrators, personal representatives, successors, and assigns. The obligations and rights of the Assignee hereunder shall be obligations and rights of the Assignee in the Assignee's capacity as Trustee of the Caldwell 2023 Realty GRAT and not in the Assignee's individual capacity. Any successor trustee of the Trust appointed in accordance with the Trust Agreement shall succeed to the rights and obligations of the Assignee hereunder.

Section 7.3 — Entire Agreement

This Assignment, together with the Trust Agreement dated May 1, 2023, the Operating Agreement of Stonecrest Realty Holdings LLC, the Consent of Sole Member attached hereto as Exhibit B, and the exhibits and schedules hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, discussions, representations, and warranties, whether written or oral, relating to such subject matter.

Section 7.4 — Amendments

This Assignment may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Assignor and the Assignee. No course of dealing between the Parties, no delay or omission in exercising any right or remedy hereunder, and no failure to exercise any such right or remedy shall operate as a waiver of any such right or remedy or any other right or remedy hereunder.

Section 7.5 — Severability

If any provision of this Assignment, or the application of any such provision to any Person or circumstance, shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions of this Assignment shall continue in full force and effect, and the application of such provision to other Persons or circumstances shall not be affected thereby. In the event that any provision is so held to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

Section 7.6 — Counterparts

This Assignment may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Assignment by facsimile, electronic mail (including .pdf format), or other electronic transmission shall be as effective as delivery of a manually executed counterpart.

Section 7.7 — No Third-Party Beneficiaries

This Assignment is not intended to, and shall not, confer any rights, benefits, or remedies upon any Person other than the Parties hereto and their respective successors and permitted assigns; provided, however, that to the extent the Caldwell Family Dynasty Trust (as remainder beneficiary under the Trust Agreement) has a vested or contingent interest in the Assigned Interest by virtue of the terms of the Trust Agreement, nothing in this Section 7.7 shall be deemed to diminish or impair such interest.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Assignment of Membership Interest as of the date first written above.

ASSIGNOR:

JONATHAN R. CALDWELL, Individually

By: ________

Name: Jonathan R. Caldwell

Date: ________

Address: 418 East 72nd Street, Apt. 14A

New York, New York 10021

ASSIGNEE:

JONATHAN R. CALDWELL, as Trustee of the Caldwell 2023 Realty GRAT

By: ________

Name: Jonathan R. Caldwell

Capacity: Trustee, Caldwell 2023 Realty GRAT

Date: ________

Address: 418 East 72nd Street, Apt. 14A

New York, New York 10021

EXHIBIT A

DESCRIPTION OF ASSIGNED INTEREST

The Assigned Interest transferred pursuant to the Assignment of Membership Interest dated May 1, 2023 (the "Assignment"), by and between Jonathan Robert Caldwell, individually, as Assignor, and Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, as Assignee, is described as follows:

Membership Interest: An approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York (EIN: to be specified upon issuance by the Internal Revenue Service following amendment of the Operating Agreement).

Nature of Interest: The Assigned Interest constitutes a pro rata share of all economic rights, governance rights, voting rights, management rights, information rights, and all other rights, privileges, and obligations of a member of Stonecrest Realty Holdings LLC under the Operating Agreement and applicable law.

Pre-discount Fair Market Value: Eighty Million Dollars ($80,000,000), representing 59.7% of the total enterprise value of Stonecrest Realty Holdings LLC of One Hundred Thirty-Four Million Dollars ($134,000,000).

Post-discount Fair Market Value (for Federal Gift Tax Purposes): Sixty Million Dollars ($60,000,000), reflecting a combined twenty-five percent (25%) valuation discount for lack of marketability and lack of control.

Valuation Date: May 1, 2023.

Independent Appraiser: Ashford Valuation Group LLC, 1120 Avenue of the Americas, Suite 3500, New York, New York 10036. The appraisal was conducted under the direction of Dr. Leonard K. Whitfield, ASA, Managing Partner. Dr. Whitfield holds the Accredited Senior Appraiser (ASA) designation from the American Society of Appraisers and is qualified to render valuation opinions with respect to closely held business interests and real estate holdings.

Cross-Reference: This Exhibit A corresponds to and should be read in conjunction with Schedule A of the Caldwell 2023 Realty GRAT Trust Agreement dated May 1, 2023, which identifies the initial trust corpus of the Caldwell 2023 Realty GRAT.

EXHIBIT B

CONSENT OF SOLE MEMBER OF STONECREST REALTY HOLDINGS LLC

WRITTEN CONSENT OF THE SOLE MEMBER OF STONECREST REALTY HOLDINGS LLC A New York Limited Liability Company

Dated: May 1, 2023

The undersigned, Jonathan Robert Caldwell, being the sole member of Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York (the "Company"), and holding one hundred percent (100%) of the issued and outstanding membership interests in the Company, hereby acts by written consent in lieu of a meeting, pursuant to the Operating Agreement of the Company and the applicable provisions of the New York Limited Liability Company Law, and adopts the following resolutions:

RESOLVED, that the transfer by Jonathan Robert Caldwell, individually, of an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in the Company (the "Assigned Interest") to Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, an irrevocable trust established under a Trust Agreement dated May 1, 2023, is hereby approved and consented to in all respects;

FURTHER RESOLVED, that the Operating Agreement of the Company shall be, and hereby is, authorized to be amended to reflect the transfer of the Assigned Interest, the admission of Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, as a member of the Company holding an approximate 59.7% membership interest, and the corresponding reduction of Jonathan Robert Caldwell's individual membership interest to an approximate 40.3% membership interest, and that such amendment shall be in form and substance satisfactory to the undersigned;

FURTHER RESOLVED, that any and all rights of first refusal, transfer restrictions, conditions to transfer, or other limitations set forth in the Operating Agreement that might otherwise restrict or impede the transfer of the Assigned Interest are hereby waived in their entirety with respect to the transfer described herein;

FURTHER RESOLVED, that Robert M. Sinclair, Chief Operating Officer of the Company, and any other officer, agent, or representative of the Company, is hereby authorized and directed to take all actions and execute all documents, instruments, certificates, and filings as may be necessary or appropriate to effectuate the foregoing resolutions, including without limitation updating the membership register of the Company, executing and filing any required amendments to the Company's certificate of formation or other organizational documents, and providing notice of the foregoing to any applicable governmental authority, lender, tenant, or other third party as may be required; and

FURTHER RESOLVED, that all acts and actions heretofore taken by any officer, agent, or representative of the Company in furtherance of and consistent with the foregoing resolutions are hereby ratified, confirmed, and approved in all respects.

This Written Consent may be executed in counterparts and shall be effective as of the date first set forth above.

SOLE MEMBER:

JONATHAN R. CALDWELL, Sole Member of Stonecrest Realty Holdings LLC

By: ________

Name: Jonathan R. Caldwell

Capacity: Sole Member

Date: May 1, 2023

Address: 418 East 72nd Street, Apt. 14A

New York, New York 10021

Property	Type	Location	Estimated FMV
440 West Broadway	Mixed-use retail/residential	New York, NY 10012	$28,000,000
15–21 Harrison Street	Luxury residential condo (6 units)	New York, NY 10013	$19,500,000
Stonecrest Office Park I	Class A office	Paramus, NJ 07652	$22,000,000
Stonecrest Office Park II	Class A office	Paramus, NJ 07652	$18,500,000
The Ridgeline at Stamford	Multi-family (120 units)	Stamford, CT 06901	$16,000,000
88 Mercer Street	Retail	New York, NY 10012	$11,500,000
200 West 14th Street	Office/loft conversion	New York, NY 10011	$8,500,000
765 Morris Avenue	Industrial warehouse	Elizabeth, NJ 07208	$4,200,000
12 Elm Court	Single-family (personal investment)	Rye, NY 10580	$2,800,000
44 Prospect Lane	Single-family (personal investment)	Westport, CT 06880	$1,800,000
9 Birch Hill Road	Vacant land (3.2 acres)	Bedford, NY 10506	$1,200,000
Total	$134,000,000

ASSIGNMENT OF MEMBERSHIP INTEREST IN STONECREST REALTY HOLDINGS LLC
From Jonathan R. Caldwell, individually, to Jonathan R. Caldwell, as Trustee of the Caldwell 2023 Realty GRAT
Dated as of May 1, 2023
This ASSIGNMENT OF MEMBERSHIP INTEREST (this "Assignment") is made and entered into as of May 1, 2023 (the "Effective Date"), by and between:
ASSIGNOR:
Jonathan Robert Caldwell, an individual residing at 418 East 72nd Street, Apt. 14A, New York, New York 10021 (SSN: xxx-xx-4781), acting in his individual capacity (the "Assignor");
and
ASSIGNEE:
Jonathan Robert Caldwell, not individually but solely in his capacity as Trustee of the Caldwell 2023 Realty GRAT, an irrevocable trust established under a Trust Agreement dated May 1, 2023, governed by the laws of the State of New York (referred to herein as "GRAT B" or the "Trust") (the "Assignee" or "Trustee").
The Assignor and the Assignee are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. Stonecrest Realty Holdings LLC ("Stonecrest" or the "Company") is a limited liability company duly organized and validly existing under the laws of the State of New York, with its principal office located at 330 Madison Avenue, Suite 2401, New York, New York 10017, and Robert M. Sinclair serving as Chief Operating Officer. Stonecrest holds direct and indirect interests in eleven (11) commercial and residential real estate properties located across the States of New York, New Jersey, and Connecticut, as more fully described in Article 4 and Exhibit A hereto. The total fair market value of Stonecrest, as determined by an independent qualified appraisal, is One Hundred Thirty-Four Million Dollars ($134,000,000) as of the Effective Date. As of the date hereof and immediately prior to the consummation of this Assignment, the Assignor holds a one hundred percent (100%) membership interest in Stonecrest, constituting all of the issued and outstanding membership interests of the Company;
B. The Assignor desires to assign, transfer, convey, and deliver to the Trust an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest (the "Assigned Interest"), which has a pre-discount fair market value of Eighty Million Dollars ($80,000,000), calculated as $134,000,000 multiplied by 59.7%. For federal gift tax purposes, a combined twenty-five percent (25%) valuation discount—reflecting lack of marketability and lack of control—is applied to the Assigned Interest, yielding a discounted fair market value of Sixty Million Dollars ($60,000,000). The Assigned Interest is being contributed to the Trust as the initial corpus of the Caldwell 2023 Realty GRAT, a zeroed-out grantor retained annuity trust structured and intended to qualify under Section 2702 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC");
C. This Assignment is made in connection with the funding of GRAT B as part of a comprehensive estate plan for the Assignor. The Caldwell 2023 Realty GRAT is a three (3)-year zeroed-out grantor retained annuity trust providing for annual annuity payments to the Assignor in the amount of Twenty-Nine Million Three Hundred Seventy-Five Thousand Eight Hundred Fifty-Nine Dollars ($29,375,859), calculated using the applicable Section 7520 rate of five percent (5.0%) for April 2023, the month in which the Trust is funded. Upon the expiration of the three-year annuity term, the remainder interest in the Trust, if any, shall pass to the Caldwell Family Dynasty Trust, an irrevocable trust established on April 1, 2023, with situs in the State of Delaware, as remainder beneficiary under the terms of the Trust Agreement; and
D. Stonecrest is governed by an Operating Agreement, as amended from time to time (the "Operating Agreement"), setting forth the rights, obligations, and restrictions applicable to the members of Stonecrest. This Assignment is being made in compliance with the terms and conditions of the Operating Agreement, including any applicable transfer restrictions and consent requirements. As the sole member of Stonecrest, the Assignor has the exclusive authority to approve and consent to this transfer, and such consent is being provided contemporaneously herewith in the form attached as Exhibit B.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE 1 — DEFINITIONS
As used in this Assignment, the following terms shall have the meanings set forth below:
1.1 "Assigned Interest" means the approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC being transferred hereunder, representing a pro rata share of all economic and governance rights appurtenant thereto, including but not limited to rights to distributions, allocations of income, gain, loss, deduction, and credit, voting rights, management rights, information rights, and all other rights and privileges of a member under the Operating Agreement.
1.2 "Assignor" means Jonathan Robert Caldwell, an individual, acting in his individual capacity.
1.3 "Assignee" or "Trustee" means Jonathan Robert Caldwell, not individually but solely in his capacity as Trustee of the Caldwell 2023 Realty GRAT.
1.4 "Company" means Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York.
1.5 "Effective Date" means May 1, 2023.
1.6 "Operating Agreement" means the Operating Agreement of Stonecrest Realty Holdings LLC, as amended, restated, supplemented, or otherwise modified from time to time.
1.7 "Trust Agreement" means the Caldwell 2023 Realty GRAT Trust Agreement dated May 1, 2023, as the same may be amended from time to time in accordance with its terms.
1.8 "IRC" or "Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
1.9 "Person" means any individual, corporation, partnership, limited liability company, trust, estate, association, governmental authority, or other entity.
ARTICLE 2 — ASSIGNMENT
Section 2.1 — Assignment of Membership Interest
As of the Effective Date, the Assignor hereby irrevocably assigns, transfers, conveys, and delivers to the Assignee, as Trustee of the Caldwell 2023 Realty GRAT, all of the Assignor's right, title, and interest in and to the Assigned Interest, free and clear of all liens, claims, encumbrances, security interests, options, charges, pledges, restrictions, and adverse claims of any kind whatsoever. The Assigned Interest constitutes an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, as more fully described in Exhibit A attached hereto and incorporated herein by reference.
The assignment effected hereby includes, without limitation, all of the following rights appurtenant to the Assigned Interest under the Operating Agreement and applicable law:
(a) all economic interests, including the right to receive distributions of cash and other property, and all allocations of income, gain, loss, deduction, and credit of the Company attributable to the Assigned Interest;
(b) all voting rights and governance rights, including the right to vote on any matter submitted to the members of the Company for approval;
(c) all management rights, to the extent applicable under the Operating Agreement;
(d) all information rights, including the right to inspect the books and records of the Company;
(e) all rights to participate in the capital of the Company;
(f) all rights to consent to or approve any action by the Company that requires member consent under the Operating Agreement or applicable law; and
(g) all other rights, privileges, and benefits of a member of the Company with respect to the Assigned Interest, whether arising under the Operating Agreement, the New York Limited Liability Company Law, or otherwise.
The foregoing assignment and transfer shall be effective as of the Effective Date and shall constitute a complete and irrevocable transfer of the Assigned Interest from the Assignor to the Assignee.
Section 2.2 — Acceptance by Assignee
The Assignee, as Trustee of the Caldwell 2023 Realty GRAT, hereby accepts the assignment of the Assigned Interest and agrees to hold the Assigned Interest as trust corpus, subject in all respects to the terms and conditions of the Trust Agreement. The Assignee acknowledges that the Assigned Interest shall constitute the initial funding of the Caldwell 2023 Realty GRAT and shall be administered, managed, and distributed in accordance with the provisions of the Trust Agreement.
The Assignee, as Trustee of the Trust, assumes all obligations of a member of Stonecrest Realty Holdings LLC to the extent of the Assigned Interest, effective as of the Effective Date, including without limitation all obligations arising under the Operating Agreement, applicable law, and any agreements to which the Company is a party that impose obligations on the members of the Company. The Assignee agrees to be bound by all of the terms and conditions of the Operating Agreement, as the same may be amended from time to time, with respect to the Assigned Interest.
Section 2.3 — Valuation for Gift Tax Purposes
The Parties acknowledge and agree that the Assigned Interest has a pre-discount fair market value of Eighty Million Dollars ($80,000,000), determined as of the Effective Date. Such pre-discount fair market value is based upon the total fair market value of Stonecrest Realty Holdings LLC of One Hundred Thirty-Four Million Dollars ($134,000,000), multiplied by the percentage membership interest being transferred (59.7%).
For federal gift tax purposes, a combined twenty-five percent (25%) valuation discount is applied to the Assigned Interest. This discount reflects the lack of marketability of the Assigned Interest (i.e., the absence of a readily available public market for interests in a closely held limited liability company) and the lack of control attributable to a less-than-one-hundred-percent membership interest. After application of this combined discount, the discounted fair market value of the Assigned Interest is Sixty Million Dollars ($60,000,000).
The fair market value of the Assigned Interest and of Stonecrest Realty Holdings LLC has been independently appraised by Ashford Valuation Group LLC, an independent qualified appraiser, under the direction of Dr. Leonard K. Whitfield, ASA, Managing Partner, with offices located at 1120 Avenue of the Americas, Suite 3500, New York, New York 10036. The qualified appraisal report prepared by Ashford Valuation Group LLC (the "Appraisal Report") sets forth the methodologies employed, the assumptions made, and the conclusions reached in determining the fair market value of the Company and the Assigned Interest. The Appraisal Report shall be attached to and filed with the Assignor's federal gift tax return for the 2023 taxable year.
The transfer of the Assigned Interest to the Trust is structured as a zeroed-out grantor retained annuity trust under IRC § 2702, with the result that the taxable gift value of the transfer is zero dollars ($0). The annuity payments to the Assignor during the three-year annuity term have been calculated to equal the full value of the Assigned Interest (as discounted), plus the assumed rate of return at the applicable Section 7520 rate, such that the present value of the remainder interest passing to the remainder beneficiary upon the expiration of the annuity term is as close to zero as possible.
ARTICLE 3 — REPRESENTATIONS AND WARRANTIES OF ASSIGNOR
The Assignor hereby makes the following representations and warranties to the Assignee as of the Effective Date, each of which is material and relied upon by the Assignee:
Section 3.1 — Title
The Assignor represents and warrants that the Assignor is the sole legal and beneficial owner of the Assigned Interest, free and clear of all liens, pledges, security interests, encumbrances, claims, options, charges, restrictions, conditional sale or other title retention agreements, and adverse claims of any kind whatsoever (collectively, "Encumbrances"). No other Person has any right, title, interest, or claim in or to the Assigned Interest, whether legal or equitable, direct or indirect, vested or contingent. The Assignor has good and marketable title to the Assigned Interest, and the delivery of the Assigned Interest pursuant to this Assignment will vest in the Assignee good and marketable title to the Assigned Interest, free and clear of all Encumbrances.
Section 3.2 — Authority
The Assignor represents and warrants that the Assignor has full legal right, power, capacity, and authority to execute, deliver, and perform this Assignment and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Assignment by the Assignor do not and will not: (i) violate, conflict with, or result in a breach or default under any agreement, contract, instrument, mortgage, lien, license, permit, order, judgment, decree, law, statute, rule, or regulation to which the Assignor is a party or by which the Assignor or any of the Assignor's assets (including the Assigned Interest) is bound or affected; (ii) result in the creation or imposition of any Encumbrance on the Assigned Interest; or (iii) require any consent, approval, authorization, order, filing, registration, or qualification of or with any court, governmental authority, or other Person, except as has been obtained or provided herein.
As the holder of one hundred percent (100%) of the membership interests in Stonecrest prior to this Assignment, the Assignor has the sole authority to approve and consent to this transfer under the Operating Agreement. The Assignor hereby grants such consent and approval, as further evidenced by the Consent of Sole Member attached hereto as Exhibit B.
Section 3.3 — Absence of Encumbrances
The Assigned Interest is not subject to any mortgage, deed of trust, pledge, hypothecation, security interest, lien, charge, encumbrance, or adverse claim of any nature. There are no outstanding options, warrants, rights of first refusal, preemptive rights, purchase agreements, or other rights or agreements of any kind to purchase, acquire, or otherwise obtain any portion of the Assigned Interest or any interest therein. There are no agreements, arrangements, or understandings, whether written or oral, that would restrict the transfer of the Assigned Interest or that would give any Person any right with respect to the Assigned Interest other than as set forth in the Operating Agreement.
Notwithstanding the foregoing, the Parties acknowledge that certain properties held at the Stonecrest entity level are subject to mortgages, deeds of trust, and other debt obligations. Such entity-level indebtedness is non-recourse to the Assignor individually and is not personally guaranteed by the Assignor. The existence of such entity-level indebtedness does not constitute an Encumbrance on the Assigned Interest itself and does not impair or restrict the Assignor's ability to transfer the Assigned Interest to the Assignee as contemplated herein.
Section 3.4 — Compliance with Operating Agreement
The Assignor represents and warrants that the transfer of the Assigned Interest complies with all applicable provisions of the Operating Agreement, including without limitation any restrictions on transfer, requirements for member consent, rights of first refusal, and conditions to the admission of substitute or additional members. All consents required under the Operating Agreement for the transfer of the Assigned Interest have been obtained or are hereby provided by the Assignor in his capacity as the sole member of Stonecrest. The Assignee will, upon the effectiveness of this Assignment, be admitted as a member of Stonecrest with all of the rights and obligations of a member under the Operating Agreement with respect to the Assigned Interest.
Section 3.5 — No Litigation
The Assignor represents and warrants that there is no pending or, to the Assignor's knowledge after due inquiry, threatened litigation, arbitration, administrative proceeding, investigation, or other legal proceeding of any kind that would: (i) affect or impair the Assigned Interest or the Assignor's title thereto; (ii) restrict or prohibit the transfer of the Assigned Interest as contemplated by this Assignment; (iii) challenge or seek to set aside this Assignment or any of the transactions contemplated hereby; or (iv) otherwise materially and adversely affect the Assignor's ability to consummate this Assignment and perform the Assignor's obligations hereunder.
Section 3.6 — Tax Matters
The Assignor represents and warrants that the Assigned Interest constitutes a membership interest in a limited liability company that is classified as a partnership for federal income tax purposes (or, in the event that the Company has only one member at any relevant time, as a disregarded entity for federal income tax purposes). The Assignor acknowledges and confirms that GRAT B is a grantor trust under IRC §§ 671 through 679, inclusive, and that the Assignor will continue to be treated as the owner of the Assigned Interest for federal income tax purposes for the duration of the annuity term of the Trust. During the annuity term, all items of income, gain, loss, deduction, and credit attributable to the Assigned Interest shall be reported on the Assignor's individual federal and state income tax returns, and the Trust shall not be a separate taxpayer for federal income tax purposes.
ARTICLE 4 — UNDERLYING PROPERTY DESCRIPTION
Section 4.1 — Stonecrest Property Portfolio
The Assigned Interest represents an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, which holds direct and indirect interests in the following eleven (11) real estate properties. The properties, their respective classifications, locations, and estimated fair market values as of the Effective Date (as determined by the Appraisal Report) are set forth in the table below:
The Assigned Interest represents 59.7% of the total entity value of Stonecrest, or approximately Eighty Million Dollars ($80,000,000) on a pre-discount basis. The foregoing estimated fair market values are derived from the Appraisal Report prepared by Ashford Valuation Group LLC and reflect the fair market value of each property as of the Effective Date, taking into account current market conditions, comparable transactions, income capitalization analyses, and other methodologies customarily employed in the valuation of real estate assets. The individual property values set forth above are provided for informational and reference purposes; the Assigned Interest represents an undivided fractional membership interest in the Company as a whole and not a direct ownership interest in any individual property.
ARTICLE 5 — COVENANTS
Section 5.1 — Further Assurances
The Assignor agrees to execute and deliver, at any time and from time to time after the Effective Date, any and all additional documents, instruments, certificates, and assurances as may be reasonably necessary or desirable to effectuate the purposes of this Assignment, to vest in the Assignee good and valid title to the Assigned Interest, and to confirm the Assignee's rights hereunder. Without limiting the generality of the foregoing, the Assignor agrees to execute and deliver such amendments to the Operating Agreement, membership certificates, updated membership registers, and other organizational documents of the Company as may be required to reflect the transfer of the Assigned Interest and the admission of the Assignee as a member of Stonecrest. The Assignor shall cooperate fully with the Assignee in updating the membership register of Stonecrest to reflect the Assignee's status as a member holding an approximate 59.7% membership interest in the Company.
Section 5.2 — Operating Agreement Amendment
The Parties shall cause the Operating Agreement to be amended promptly following the Effective Date to reflect the transfer of the Assigned Interest and the admission of the Assignee as a member of Stonecrest holding an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in the Company. Such amendment shall set forth the revised ownership percentages of the members, update the membership register and schedule of members, and make such other conforming changes as are necessary or appropriate to give effect to the transactions contemplated by this Assignment.
Following the consummation of this Assignment, the Assignor shall retain an approximate forty and three-tenths percent (40.3%) membership interest in Stonecrest in his individual capacity. The Assignee, as Trustee of the Caldwell 2023 Realty GRAT, shall hold an approximate 59.7% membership interest in Stonecrest, subject to the terms and conditions of the Trust Agreement.
Section 5.3 — Notification
The Assignor shall provide written notice of this Assignment to Robert M. Sinclair, Chief Operating Officer of Stonecrest Realty Holdings LLC, promptly following the execution hereof. Such notice shall include a copy of this Assignment or a summary thereof reasonably satisfactory to the Assignee, and shall inform Mr. Sinclair of the change in the membership register, the identity and capacity of the Assignee, and any operational or administrative matters arising from the transfer.
ARTICLE 6 — TAX MATTERS
Section 6.1 — Gift Tax Reporting
The transfer of the Assigned Interest to the Trust shall be reported on the Assignor's 2023 federal gift tax return (IRS Form 709), filed for the calendar year ending December 31, 2023, as a transfer to a zeroed-out grantor retained annuity trust under IRC § 2702. The taxable gift value of this transfer is zero dollars ($0), reflecting the structure of GRAT B as a zeroed-out GRAT in which the present value of the retained annuity interest equals the full value of the property transferred.
The transfer shall be reported as an adequate disclosure on Form 709, and the Appraisal Report prepared by Ashford Valuation Group LLC shall be attached to the return as a qualified appraisal supporting the reported fair market value of the Assigned Interest. The Assignor shall ensure that the Form 709 filing provides sufficient detail regarding the valuation methodology, the applicable valuation discounts, the terms of the Trust, and the identity of the appraiser to satisfy the adequate disclosure requirements under Treasury Regulation § 301.6501(c)-1(f), thereby commencing the statute of limitations period for purposes of any subsequent adjustment by the Internal Revenue Service.
Section 6.2 — Grantor Trust Status
The Parties acknowledge and agree that GRAT B is a grantor trust for federal and state income tax purposes, and that the Assignor shall be treated as the owner of the trust corpus (including the Assigned Interest) for federal and state income tax purposes for the duration of the GRAT annuity term, pursuant to IRC §§ 671 through 679. During the annuity term, all items of income, gain, loss, deduction, and credit attributable to the Assigned Interest shall be reported on the Assignor's personal federal and state income tax returns, and the Trust shall not file a separate income tax return as a taxpayer (though the Trust may be required to file an informational return as a grantor trust). The Assignor's payment of income taxes attributable to the Trust's income during the annuity term shall not constitute an additional gift to the Trust or to the remainder beneficiary.
Section 6.3 — Section 7520 Rate
The applicable Section 7520 rate for the month of funding (April 2023) is five percent (5.0%), as published by the Internal Revenue Service. This rate has been applied in the zeroed-out annuity calculation under the Trust Agreement to determine the annual annuity amount payable to the Assignor during the three-year annuity term. The Parties acknowledge that the selection of the April 2023 Section 7520 rate is consistent with the provisions of IRC § 7520(a) and the applicable Treasury Regulations, which permit the use of the rate for the month of the transfer or either of the two months preceding the month of the transfer.
ARTICLE 7 — MISCELLANEOUS PROVISIONS
Section 7.1 — Governing Law
This Assignment shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to any choice or conflict-of-laws provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute arising out of or relating to this Assignment shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York.
Section 7.2 — Binding Effect
This Assignment shall be binding upon and inure to the benefit of the Assignor and the Assignee and their respective heirs, executors, administrators, personal representatives, successors, and assigns. The obligations and rights of the Assignee hereunder shall be obligations and rights of the Assignee in the Assignee's capacity as Trustee of the Caldwell 2023 Realty GRAT and not in the Assignee's individual capacity. Any successor trustee of the Trust appointed in accordance with the Trust Agreement shall succeed to the rights and obligations of the Assignee hereunder.
Section 7.3 — Entire Agreement
This Assignment, together with the Trust Agreement dated May 1, 2023, the Operating Agreement of Stonecrest Realty Holdings LLC, the Consent of Sole Member attached hereto as Exhibit B, and the exhibits and schedules hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, discussions, representations, and warranties, whether written or oral, relating to such subject matter.
Section 7.4 — Amendments
This Assignment may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Assignor and the Assignee. No course of dealing between the Parties, no delay or omission in exercising any right or remedy hereunder, and no failure to exercise any such right or remedy shall operate as a waiver of any such right or remedy or any other right or remedy hereunder.
Section 7.5 — Severability
If any provision of this Assignment, or the application of any such provision to any Person or circumstance, shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions of this Assignment shall continue in full force and effect, and the application of such provision to other Persons or circumstances shall not be affected thereby. In the event that any provision is so held to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.
Section 7.6 — Counterparts
This Assignment may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Assignment by facsimile, electronic mail (including .pdf format), or other electronic transmission shall be as effective as delivery of a manually executed counterpart.
Section 7.7 — No Third-Party Beneficiaries
This Assignment is not intended to, and shall not, confer any rights, benefits, or remedies upon any Person other than the Parties hereto and their respective successors and permitted assigns; provided, however, that to the extent the Caldwell Family Dynasty Trust (as remainder beneficiary under the Trust Agreement) has a vested or contingent interest in the Assigned Interest by virtue of the terms of the Trust Agreement, nothing in this Section 7.7 shall be deemed to diminish or impair such interest.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Assignment of Membership Interest as of the date first written above.
ASSIGNOR:
JONATHAN R. CALDWELL, Individually
By: ________
Name: Jonathan R. Caldwell
Date: ________
Address: 418 East 72nd Street, Apt. 14A
New York, New York 10021
ASSIGNEE:
JONATHAN R. CALDWELL, as Trustee of the Caldwell 2023 Realty GRAT
By: ________
Name: Jonathan R. Caldwell
Capacity: Trustee, Caldwell 2023 Realty GRAT
Date: ________
Address: 418 East 72nd Street, Apt. 14A
New York, New York 10021
EXHIBIT A
DESCRIPTION OF ASSIGNED INTEREST
The Assigned Interest transferred pursuant to the Assignment of Membership Interest dated May 1, 2023 (the "Assignment"), by and between Jonathan Robert Caldwell, individually, as Assignor, and Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, as Assignee, is described as follows:
Membership Interest: An approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York (EIN: to be specified upon issuance by the Internal Revenue Service following amendment of the Operating Agreement).
Nature of Interest: The Assigned Interest constitutes a pro rata share of all economic rights, governance rights, voting rights, management rights, information rights, and all other rights, privileges, and obligations of a member of Stonecrest Realty Holdings LLC under the Operating Agreement and applicable law.
Pre-discount Fair Market Value: Eighty Million Dollars ($80,000,000), representing 59.7% of the total enterprise value of Stonecrest Realty Holdings LLC of One Hundred Thirty-Four Million Dollars ($134,000,000).
Post-discount Fair Market Value (for Federal Gift Tax Purposes): Sixty Million Dollars ($60,000,000), reflecting a combined twenty-five percent (25%) valuation discount for lack of marketability and lack of control.
Valuation Date: May 1, 2023.
Independent Appraiser: Ashford Valuation Group LLC, 1120 Avenue of the Americas, Suite 3500, New York, New York 10036. The appraisal was conducted under the direction of Dr. Leonard K. Whitfield, ASA, Managing Partner. Dr. Whitfield holds the Accredited Senior Appraiser (ASA) designation from the American Society of Appraisers and is qualified to render valuation opinions with respect to closely held business interests and real estate holdings.
Cross-Reference: This Exhibit A corresponds to and should be read in conjunction with Schedule A of the Caldwell 2023 Realty GRAT Trust Agreement dated May 1, 2023, which identifies the initial trust corpus of the Caldwell 2023 Realty GRAT.
EXHIBIT B
CONSENT OF SOLE MEMBER OF STONECREST REALTY HOLDINGS LLC
WRITTEN CONSENT OF THE SOLE MEMBER OF STONECREST REALTY HOLDINGS LLC A New York Limited Liability Company
Dated: May 1, 2023
The undersigned, Jonathan Robert Caldwell, being the sole member of Stonecrest Realty Holdings LLC, a limited liability company organized and existing under the laws of the State of New York (the "Company"), and holding one hundred percent (100%) of the issued and outstanding membership interests in the Company, hereby acts by written consent in lieu of a meeting, pursuant to the Operating Agreement of the Company and the applicable provisions of the New York Limited Liability Company Law, and adopts the following resolutions:
RESOLVED, that the transfer by Jonathan Robert Caldwell, individually, of an approximate fifty-nine and seven-tenths percent (59.7%) membership interest in the Company (the "Assigned Interest") to Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, an irrevocable trust established under a Trust Agreement dated May 1, 2023, is hereby approved and consented to in all respects;
FURTHER RESOLVED, that the Operating Agreement of the Company shall be, and hereby is, authorized to be amended to reflect the transfer of the Assigned Interest, the admission of Jonathan Robert Caldwell, as Trustee of the Caldwell 2023 Realty GRAT, as a member of the Company holding an approximate 59.7% membership interest, and the corresponding reduction of Jonathan Robert Caldwell's individual membership interest to an approximate 40.3% membership interest, and that such amendment shall be in form and substance satisfactory to the undersigned;
FURTHER RESOLVED, that any and all rights of first refusal, transfer restrictions, conditions to transfer, or other limitations set forth in the Operating Agreement that might otherwise restrict or impede the transfer of the Assigned Interest are hereby waived in their entirety with respect to the transfer described herein;
FURTHER RESOLVED, that Robert M. Sinclair, Chief Operating Officer of the Company, and any other officer, agent, or representative of the Company, is hereby authorized and directed to take all actions and execute all documents, instruments, certificates, and filings as may be necessary or appropriate to effectuate the foregoing resolutions, including without limitation updating the membership register of the Company, executing and filing any required amendments to the Company's certificate of formation or other organizational documents, and providing notice of the foregoing to any applicable governmental authority, lender, tenant, or other third party as may be required; and
FURTHER RESOLVED, that all acts and actions heretofore taken by any officer, agent, or representative of the Company in furtherance of and consistent with the foregoing resolutions are hereby ratified, confirmed, and approved in all respects.
This Written Consent may be executed in counterparts and shall be effective as of the date first set forth above.
SOLE MEMBER:
JONATHAN R. CALDWELL, Sole Member of Stonecrest Realty Holdings LLC
By: ________
Name: Jonathan R. Caldwell
Capacity: Sole Member
Date: May 1, 2023
Address: 418 East 72nd Street, Apt. 14A
New York, New York 10021
Property | Type | Location | Estimated FMV
440 West Broadway | Mixed-use retail/residential | New York, NY 10012 | $28,000,000
15–21 Harrison Street | Luxury residential condo (6 units) | New York, NY 10013 | $19,500,000
Stonecrest Office Park I | Class A office | Paramus, NJ 07652 | $22,000,000
Stonecrest Office Park II | Class A office | Paramus, NJ 07652 | $18,500,000
The Ridgeline at Stamford | Multi-family (120 units) | Stamford, CT 06901 | $16,000,000
88 Mercer Street | Retail | New York, NY 10012 | $11,500,000
200 West 14th Street | Office/loft conversion | New York, NY 10011 | $8,500,000
765 Morris Avenue | Industrial warehouse | Elizabeth, NJ 07208 | $4,200,000
12 Elm Court | Single-family (personal investment) | Rye, NY 10580 | $2,800,000
44 Prospect Lane | Single-family (personal investment) | Westport, CT 06880 | $1,800,000
9 Birch Hill Road | Vacant land (3.2 acres) | Bedford, NY 10506 | $1,200,000
Total | $134,000,000

ASSIGNMENT OF MEMBERSHIP INTEREST IN STONECREST REALTY HOLDINGS LLC

ASSIGNOR:

ASSIGNEE:

RECITALS

WHEREAS:

ASSIGNOR:

ASSIGNEE:

EXHIBIT A

DESCRIPTION OF ASSIGNED INTEREST

EXHIBIT B

CONSENT OF SOLE MEMBER OF STONECREST REALTY HOLDINGS LLC

SOLE MEMBER:

Record

Parties

Dates

Amounts