1034-00004 · Group Strathmore Corp · Gift Tax & Valuation

letter-ashford-appraisal-engagement.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law 375 Park Avenue, 42nd Floor New York, NY 10152

Telephone: (212) 448-7000 Facsimile: (212) 448-7001 www.calderwoodharkness.com

April 20, 2023

VIA HAND DELIVERY AND EMAIL

Dr. Leonard K. Whitfield, ASA Managing Partner Ashford Valuation Group LLC 1120 Avenue of the Americas, Suite 3500 New York, NY 10036

Re: Appraisal Engagement — Estate of Jonathan R. Caldwell; Valuation of Certain Interests in Stonecrest Realty Holdings LLC, Caldwell Ridgeline Capital Fund IV LP, Caldwell Ridgeline Capital Fund V LP, Caldwell Ridgeline Capital Fund VI LP (Carried Interest), and Art & Collectibles

C&H Matter No. 1034-00004

Dear Dr. Whitfield:

1. Introduction and Purpose of Engagement

This firm, Calderwood & Harkness LLP, represents Jonathan R. Caldwell ("Mr. Caldwell" or the "Client") in connection with a comprehensive generational estate plan currently being developed and implemented on his behalf. The purpose of this letter is to set forth the scope, terms, and instructions for the engagement of Ashford Valuation Group LLC ("Ashford") as an independent qualified appraiser in connection with that estate plan.

Mr. Caldwell's estimated gross estate is approximately Three Hundred Million Dollars ($300,000,000), consisting generally of the following principal asset categories:

• Liquid securities and publicly traded investments: approximately $112,000,000;

• Real estate held through Stonecrest Realty Holdings LLC ("Stonecrest"): approximately $134,000,000;

• Carried interest and fund stakes in investment funds managed by Caldwell Ridgeline Capital LLC ("Caldwell Ridgeline"), including Caldwell Ridgeline Capital Fund IV LP, Caldwell Ridgeline Capital Fund V LP, and Caldwell Ridgeline Capital Fund VI LP: approximately $38,000,000 in the aggregate;

• Art and collectibles held personally by Mr. Caldwell: approximately $9,000,000; and

• Other assets, including cash, personal property, and miscellaneous holdings: approximately $7,000,000.

The estate plan being developed for Mr. Caldwell contemplates the creation and funding of three Grantor Retained Annuity Trusts ("GRATs"), each structured as a "zeroed-out" or near-zeroed-out GRAT under Section 2702 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"). In addition, the estate plan includes the establishment of a dynasty trust for the benefit of Mr. Caldwell's descendants, a private foundation to be known as the Caldwell Family Foundation, and related structures designed to accomplish Mr. Caldwell's philanthropic and wealth-transfer objectives while minimizing gift and estate tax exposure.

Ashford Valuation Group LLC is being retained as an independent qualified appraiser to perform fair market value appraisals of specific assets that are being contributed to the GRAT structures, and to provide appraisal reports that will support gift tax reporting on IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) for the 2023 tax year. The accuracy and defensibility of these appraisals are of paramount importance to the success of the estate plan, as the fair market value determinations will directly affect the calculation of the taxable gift (if any) resulting from each GRAT funding, the annuity payment obligations of each GRAT, and the potential for IRS challenge to the reported values.

This engagement is supervised by the undersigned, Sylvia Hartwell, Specialist Partner (Tax), at Calderwood & Harkness LLP. The engagement is being carried out in coordination with the broader estate planning team, which includes the following attorneys at this firm:

• Victoria Chambers, Responsible Partner, Trust & Estates Practice Group;

• Monica Reyes, Lead Associate, Trust & Estates Practice Group; and

• Elliot Nguyen, Working Associate, Trust & Estates Practice Group.

Ms. Chambers serves as the relationship partner for Mr. Caldwell and has overall supervisory responsibility for the estate plan. Day-to-day coordination of this appraisal engagement, including the exchange of valuation data and documentation, will be managed primarily through Mr. Nguyen, with substantive legal and tax questions directed to me.

2. Valuation Standard

All appraisals performed under this engagement must determine the fair market value of each asset as of the applicable valuation date specified below. The applicable standard of value is fair market value as defined under IRC § 2512 and the regulations promulgated thereunder. Specifically, Treasury Regulation § 25.2512-1 defines fair market value as follows:

"The value of the property is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts."

This definition is well-established and has been consistently applied by the Internal Revenue Service and the United States Tax Court in the context of gift, estate, and income tax matters. Ashford's appraisals must adhere to this standard without deviation. The hypothetical willing buyer and willing seller must be assumed to be hypothetical persons, not specific individuals or entities, and no special or strategic value attributable to a particular buyer or seller should be reflected in the conclusions.

In addition, each appraisal report prepared under this engagement must comply with the requirements for a "qualified appraisal" under IRC § 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c). While these provisions were enacted primarily in the context of charitable contribution deductions, they establish the applicable standard for what constitutes a qualified appraisal and a qualified appraiser for purposes of federal tax reporting, and adherence to these standards is required as a matter of best practice for gift tax appraisals as well. Among other things, each appraisal must be performed by an individual who qualifies as a "qualified appraiser" within the meaning of IRC § 170(f)(11)(E)(ii) — that is, an individual who has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements, and who regularly performs appraisals for which the individual receives compensation.

The appraisal reports are being prepared for the specific purpose of attachment to, and submission with, IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) for the 2023 tax year. Each report must therefore be prepared with the understanding that it will be examined by the Internal Revenue Service in the ordinary course of return processing and that it may be subject to detailed scrutiny in the event of an audit or examination of the gift tax return. The reports must be suitable in form and substance for such submission and potential examination.

The appraisals are being prepared in coordination with the Client's accountants, Strathmore Corporation & Greaves LLP, who will be responsible for the preparation and filing of the Form 709. The principal contact at Strathmore Corporation & Greaves is:

Martin J. Prescott, CPA Senior Partner, Private Client Group Strathmore Corporation & Greaves LLP 600 Third Avenue, 28th Floor New York, NY 10016

Mr. Prescott and his team at Strathmore Corporation & Greaves will require copies of the final appraisal reports for inclusion with the Form 709 filing. Any direct communication between Ashford and Strathmore Corporation & Greaves regarding valuation matters should be coordinated through this office to ensure consistency of legal positions and to preserve applicable privileges.

3. Assets to Be Appraised and Relevant Valuation Dates

The following sections describe each asset or category of assets to be appraised under this engagement, together with the applicable valuation date, the relevant entity and contact information, and specific appraisal instructions and considerations for each asset.

(a) Stonecrest Realty Holdings LLC — Membership Interests

Entity: Stonecrest Realty Holdings LLC, a New York limited liability company organized under the laws of the State of New York.

Entity Address: 330 Madison Avenue, Suite 2401, New York, NY 10017.

Key Contact for Valuation Data: Robert M. Sinclair, Chief Operating Officer, Stonecrest Realty Holdings LLC.

Ownership: Jonathan R. Caldwell currently holds one hundred percent (100%) of the membership interests in Stonecrest. Stonecrest is a single-member LLC that has historically been disregarded for federal income tax purposes. However, in connection with the estate plan, a portion of the membership interests will be contributed to a trust, resulting in a multi-member LLC structure.

Interest to Be Appraised: An approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, which is the interest being contributed to the Caldwell 2023 Realty GRAT (referred to internally as "GRAT B"). This interest will represent a majority economic interest in Stonecrest following the contribution, although the governing provisions of the operating agreement may limit the management rights and other prerogatives associated with such interest. Ashford should carefully review the operating agreement to ascertain the precise rights and restrictions applicable to the 59.7% membership interest.

Entity Value and Property Portfolio: The total entity value of Stonecrest is estimated at approximately $134,000,000 on a gross-asset basis. Stonecrest owns and operates a portfolio of eleven (11) commercial and residential properties located across New York, New Jersey, and Connecticut. The following is a summary of the property portfolio, with individual property details subject to verification through entity records and due diligence to be conducted by Ashford:

Please note that the estimated values set forth above are preliminary internal estimates based on the most recent available information and are provided solely for reference purposes. Ashford is expected to conduct its own independent analysis of property values, whether through direct property-level appraisals, reliance on recent third-party appraisals obtained by Stonecrest, or a combination thereof.

It should also be noted that mortgages on the Stonecrest properties are held at the entity level and are non-recourse to Mr. Caldwell personally. Ashford should obtain and review mortgage documentation as part of its entity-level valuation analysis.

Valuation Date: May 1, 2023. This is the anticipated date of GRAT B funding, and all conclusions of value for the Stonecrest membership interest must be rendered as of this date.

discount Considerations: The appraisal should address and quantify, as appropriate, combined discounts for lack of marketability ("DLOM") and lack of control ("DLOC") applicable to a 59.7% membership interest in a closely held real estate LLC. Although the 59.7% interest represents a majority economic interest, the applicable operating agreement provisions, transfer restrictions, and the illiquid nature of the underlying real estate assets may support meaningful valuation discounts. Our estate planning team's preliminary analysis, based on a review of comparable transactions and relevant Tax Court precedent, suggests that a combined discount in the range of twenty-five percent (25%) may be supportable for this interest. However, Ashford must reach its own independent conclusion regarding the applicability and magnitude of any discounts, based on the specific facts and circumstances of the interest, the operating agreement, and available empirical market data. We do not intend to constrain Ashford's analysis or conclusions in any manner.

(b) Caldwell Ridgeline Capital Fund IV LP — LP Interest

Entity: Caldwell Ridgeline Fund IV LP, a Delaware limited partnership formed under the laws of the State of Delaware.

General Partner/Manager: Caldwell Ridgeline Capital LLC, a Delaware limited liability company, serving as the general partner of the Fund. Caldwell Ridgeline Capital LLC maintains its principal office at 280 Park Avenue, 35th Floor, New York, NY 10017.

Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.

Fund Vintage: 2015. Fund IV is a mature fund that has substantially completed its investment period and is currently in the harvesting and distribution phase.

Interest to Be Appraised: Mr. Caldwell's limited partnership interest in Caldwell Ridgeline Fund IV LP, which has an estimated fair market value of approximately $12,000,000 as of the most recent quarterly valuation. This LP interest is being contributed to the Caldwell 2023 Carried Interest GRAT (referred to internally as "GRAT C").

Valuation Date: June 1, 2023. This is the anticipated date of GRAT C funding.

discount Considerations: The appraisal should address and quantify combined discounts for lack of marketability and minority interest applicable to a limited partnership interest in a private equity fund. LP interests in private equity funds are inherently illiquid and are subject to significant transfer restrictions under the governing limited partnership agreement. Our preliminary analysis, based on a review of secondary market transaction data and relevant empirical studies, suggests that a combined discount of approximately thirty-five percent (35%) may be supportable for this interest. As with all discount analyses under this engagement, Ashford should reach its own independent conclusion.

Entity: Caldwell Ridgeline Fund V LP, a Delaware limited partnership formed under the laws of the State of Delaware.

General Partner/Manager: Caldwell Ridgeline Capital LLC, the same general partner and manager as described in Section 3(b) above. The same principal office address and contact information apply.

Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.

Fund Vintage: 2018. Fund V is in the mid-life stage of its investment cycle, with a mix of realized and unrealized portfolio company investments.

Interest to Be Appraised: Mr. Caldwell's limited partnership interest in Caldwell Ridgeline Fund V LP, which has an estimated fair market value of approximately $14,000,000 as of the most recent quarterly valuation. This LP interest is also being contributed to GRAT C.

Valuation Date: June 1, 2023, concurrent with the GRAT C funding date.

discount Considerations: The same discount considerations applicable to the Fund IV LP interest apply to the Fund V LP interest. Our preliminary analysis suggests that a combined discount of approximately thirty-five percent (35%) for lack of marketability and minority interest may be supportable for this interest as well. Ashford should evaluate whether the different stage of Fund V's investment cycle relative to Fund IV warrants any differentiation in the applicable discount, and should reach its own independent conclusion based on the relevant facts and data.

(d) Caldwell Ridgeline Capital Fund VI LP — Carried Interest

Entity: Caldwell Ridgeline Fund VI LP, a Delaware limited partnership formed under the laws of the State of Delaware.

General Partner/Manager: Caldwell Ridgeline Capital LLC, the same general partner and manager as described in Sections 3(b) and 3(c) above. The same principal office address and contact information apply.

Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.

Fund Vintage: 2021. Fund VI is a relatively early-stage fund that is still in its active investment period.

Interest to Be Appraised: Mr. Caldwell's carried-interest (profits interest) position in Caldwell Ridgeline Fund VI LP, which has an estimated fair market value of approximately $12,000,000. This carried-interest position is also being contributed to GRAT C.

Valuation Date: June 1, 2023, concurrent with the GRAT C funding date.

Nature of the Interest: It is important to note that this interest is a carried-interest (profits interest) position rather than a limited partnership capital interest. A carried interest represents a contractual right to receive a specified percentage of the profits of the fund (typically after the return of invested capital and a preferred return to the limited partners), and its value is inherently contingent upon the future performance of the fund's portfolio investments. Carried interest is subordinated to the capital interests of the limited partners in the distribution waterfall, and its ultimate value depends on a number of uncertain future variables, including the performance of unrealized portfolio companies, the timing and magnitude of future exits, prevailing market conditions, and the fund's ability to meet its preferred return hurdle.

The appraisal methodology employed for the carried-interest position should account for the contingent and subordinated nature of this interest. We would expect the appraisal to employ methodologies appropriate for valuing contingent cash flow streams, which may include, among others, discounted cash flow analysis with probability-weighted scenarios, option-pricing models, or Monte Carlo simulation to model the range of possible outcomes for the fund's remaining unrealized investments.

discount Considerations: Our preliminary discount analysis suggests that a discount of approximately thirty percent (30%) for lack of marketability and the unique nature of the carried-interest position may be supportable. However, the appropriate discount for a carried-interest position may differ from the discount applicable to a standard LP capital interest, given the additional layers of contingency and subordination inherent in carried interest. Ashford should reach its own independent determination of the appropriate discount, taking into account the specific terms of the carried-interest arrangement, the stage of the fund, and the available empirical data on transactions involving carried-interest positions.

(e) Art and Collectibles

Ownership: The art and collectibles to be appraised are owned personally by Jonathan R. Caldwell and are not held through any entity structure.

Estimated Aggregate Value: Approximately $9,000,000.

Inventory: A detailed inventory of the specific pieces to be appraised under this engagement will be provided to Ashford under separate cover. We are currently in the process of compiling the final list of items that will be contributed to GRAT A and other structures. In the interim, Mr. Caldwell's financial advisor can provide access to the existing collection inventory and insurance schedules:

Diana R. Linden, CFP® Managing Director, Family Office Services Havensbrook Wealth Advisors LLC 900 Third Avenue, 18th Floor New York, NY 10022

Ms. Linden maintains comprehensive records of Mr. Caldwell's art collection, including provenance documentation, acquisition costs, and current insurance valuations. These records will serve as a useful starting point for Ashford's appraisal work, although Ashford's independent conclusions of fair market value may differ from the insurance valuations.

Valuation Date: April 15, 2023. This date corresponds to the anticipated funding date of the Caldwell 2023 Art GRAT (referred to internally as "GRAT A"). We note, however, that certain art pieces may ultimately be addressed in connection with the overall estate inventory or other planning structures rather than the specific GRAT A funding. The precise valuation date for each piece will be confirmed upon receipt and review of the detailed inventory and finalization of the estate plan. We will notify Ashford promptly if any modification to the valuation date is required.

Appraisal Requirements: Appraisals of art and collectibles should reflect fair market value under the applicable IRS regulations and should be performed by an appraiser or appraisers with recognized expertise in the relevant categories of art and collectibles (e.g., contemporary art, impressionist works, decorative arts, antiquities, or other categories as applicable to Mr. Caldwell's collection). For any individual item with a claimed value exceeding $5,000, the appraisal must satisfy the heightened requirements of IRC § 170(f)(11)(C) and (D) and Treasury Regulation § 1.170A-13(c), including the requirement that the appraisal be performed by a qualified appraiser with relevant expertise and that the appraisal report contain all of the information specified in the regulations. We understand that Ashford may engage or subcontract with specialized art appraisers for this component of the engagement; if so, please identify any such individuals or firms in advance so that we may confirm their qualifications and independence.

4. Summary of Valuation Dates

The following table summarizes the three distinct valuation dates applicable to the assets to be appraised under this engagement, together with the corresponding GRAT to which each asset will be contributed:

It is of critical importance that the appraisals reflect the precise valuation dates set forth above, as these dates correspond to the actual funding dates of the respective GRATs. The IRC § 7520 rate applicable to each GRAT is determined by the month in which the trust is funded (or, at the taxpayer's election, the rate for either of the two months immediately preceding the month of the valuation date). For planning purposes, the § 7520 rates currently anticipated for the respective funding months are as follows:

• March 2023 (applicable to GRAT A): 5.0%

• April 2023 (applicable to GRAT B): 5.0%

• May 2023 (applicable to GRAT C): 5.0%

The determination of the correct § 7520 rate for each GRAT is dependent upon the date of funding, which in turn must be supported by the appraisal valuation date. Any discrepancy between the valuation date in the appraisal report and the actual funding date of the GRAT could create complications in the gift tax reporting and could potentially undermine the effectiveness of the GRAT structure. Please take care to ensure that all conclusions of value are rendered as of the correct valuation date.

5. Appraisal Report Requirements

Each appraisal report prepared under this engagement must constitute a "qualified appraisal" within the meaning of IRC § 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c)(3). To that end, each report must contain, at a minimum, the following elements:

(i) A description of the property appraised in sufficient detail for a person who is not generally familiar with the type of property to ascertain that the property appraised is not the same as some other property;

(ii) In the case of any tangible property, the physical condition of the property;

(iii) The valuation date or dates for which the appraisal was performed;

(iv) The date on which the appraisal was actually performed and the date on which the appraisal report was prepared;

(v) The terms of the engagement between Ashford and Calderwood & Harkness LLP on behalf of the Client;

(vi) The appraised fair market value of each property or interest as of the applicable valuation date;

(vii) The valuation methodology or methodologies employed by the appraiser, including, where applicable, the income approach, market approach, asset-based approach, comparable sales analysis, discounted cash flow analysis, or other recognized valuation techniques;

(viii) The specific basis for the valuation, including any comparable transactions, market data, financial projections, discount rates, capitalization rates, or other data or assumptions relied upon by the appraiser in reaching the conclusion of value;

(ix) A statement of the qualifications of the appraiser or appraisers performing the engagement, including any relevant professional designations such as ASA (Accredited Senior Appraiser), CFA (Chartered Financial Analyst), MAI (Member, Appraisal Institute), or other applicable credentials, together with a description of the appraiser's education, experience, and areas of specialization;

(x) A statement that the appraisal was prepared for federal gift tax purposes in connection with the filing of IRS Form 709 for the 2023 tax year;

(xi) The appraiser's taxpayer identification number (or, if the appraisal is performed by an entity, the entity's employer identification number and the individual appraiser's taxpayer identification number);

(xii) A declaration that the appraiser understands that a substantial or gross valuation misstatement resulting from the appraisal may subject the appraiser to civil penalties under IRC § 6695A, and that the appraiser has undertaken the appraisal with the requisite degree of diligence to avoid such penalties; and

(xiii) A statement that the appraised value was not based on a percentage of the appraised value of the property (i.e., that the appraiser's fee is not contingent upon the outcome of the valuation).

In addition to the foregoing general requirements, the following specific requirements apply to particular asset categories:

LP Interests and Carried Interest (Funds IV, V, and VI). Appraisal reports for the limited partnership interests and carried-interest position should address the specific methodologies applicable to the valuation of interests in private investment funds. Such methodologies should include, but need not be limited to, the following:

• discounted cash flow analysis, incorporating probability-weighted scenarios for the realization of unrealized portfolio company investments;

• Comparable public company analysis, where applicable, to support portfolio company valuations;

• Analysis of secondary market transaction data for comparable private fund interests, including data from established secondary market intermediaries;

• For the carried-interest position in Fund VI, Monte Carlo simulation or similar probabilistic modeling to capture the contingent and subordinated nature of the carried-interest cash flows; and

• Analysis of the fund's distribution waterfall and the mechanics of the preferred return hurdle as they affect the timing and magnitude of carried-interest distributions.

Stonecrest Membership Interest. The appraisal report for the Stonecrest membership interest should include property-level appraisals or reference to recent property-level appraisals for each property in the Stonecrest portfolio, together with capitalization rate analysis, comparable sales data, and income and expense analysis at the property level. At the entity level, the appraisal should address the net asset value of Stonecrest (taking into account entity-level liabilities, including mortgage indebtedness), and should then apply appropriate discounts for lack of marketability and, to the extent applicable, lack of control to arrive at the fair market value of the 59.7% membership interest. Where recent third-party property appraisals are available (e.g., appraisals obtained in connection with mortgage financing), Ashford may rely on such appraisals provided that they are current, credible, and consistent with market conditions as of the valuation date, and that any reliance is disclosed and discussed in the report.

discount Analysis (All Reports). The discount analysis in each report must be clearly articulated and supported by empirical data, including but not limited to restricted stock studies (e.g., Silber, FMV Opinions, Stout), pre-IPO studies (e.g., Beaumont Strategy Partners), and comparable transaction data from secondary markets or other sources. The discount analysis should include citations to relevant United States Tax Court authority (including, where applicable, cases such as Mandelbaum v. Commissioner, T.C. Memo. 1995-255; Lappo v. Commissioner, T.C. Memo. 2003-258; Peracchio v. Commissioner, T.C. Memo. 2003-280; Holman v. Commissioner, 130 T.C. 170 (2008); and Estate of Giustina v. Commissioner, T.C. Memo. 2011-141) and relevant IRS guidance (including Rev. Rul. 59-60, 1959-1 C.B. 237). The analysis should address each factor relevant to the determination of an appropriate discount, including the size and nature of the interest, the restrictions on transferability, the availability of information to potential purchasers, the holding period, the underlying asset characteristics, and any other relevant factors.

Format. Separate reports may be prepared for each asset class (i.e., one report for the Stonecrest membership interest, one report for the Fund IV, V, and VI interests, and one report for the art and collectibles), or a consolidated report with clearly delineated sections is acceptable, provided that each section independently satisfies all applicable qualified appraisal requirements. We leave the format to Ashford's discretion, but request that the report structure be discussed in advance so that we may coordinate with Strathmore Corporation & Greaves regarding the Form 709 attachment format.

6. Access to Information and Coordination

Calderwood & Harkness LLP will facilitate Ashford's access to the following sources of information and documentation in connection with the appraisal engagement:

Stonecrest Realty Holdings LLC. Ashford will be given access to the following documents and information pertaining to Stonecrest, to be obtained through Robert M. Sinclair, Chief Operating Officer:

• The operating agreement of Stonecrest Realty Holdings LLC, including all amendments and restatements;

• Financial statements of Stonecrest for the three most recent fiscal years and the most recent interim period;

• Rent rolls for each property in the Stonecrest portfolio;

• Existing property-level appraisals, if any, obtained in connection with mortgage financing, insurance, or other purposes;

• Mortgage documentation, including loan agreements, amortization schedules, and outstanding balances for all entity-level indebtedness;

• Capital expenditure schedules and budgets for each property;

• Lease abstracts and tenant information;

• Property tax assessments; and

• Any other financial, operational, or legal documents that Ashford reasonably determines to be necessary or useful for the appraisal.

Caldwell Ridgeline Capital LLC (Funds IV, V, and VI). Ashford will be given access to the following documents and information pertaining to the Caldwell Ridgeline funds, to be obtained through Gregory S. Fenton, Chief Financial Officer:

• The limited partnership agreements for Caldwell Ridgeline Fund IV LP, Fund V LP, and Fund VI LP, including all amendments, side letters, and supplemental agreements;

• Audited financial statements for each fund for the three most recent fiscal years;

• Capital account statements for Mr. Caldwell's LP interests in Funds IV and V;

• Distribution history for each fund;

• Unrealized portfolio company valuations as of the most recent quarter-end;

• Carried interest allocation waterfalls and the terms of Mr. Caldwell's carried-interest arrangement in Fund VI;

• Fund-level performance data, including IRR, MOIC, DPI, and RVPI metrics;

• Portfolio company summaries and investment memoranda, to the extent available and permitted to be shared; and

• Any other fund-level documentation that Ashford reasonably determines to be necessary or useful for the appraisal.

Art and Collectibles. The collection inventory, provenance documentation, authentication records, and insurance schedules for Mr. Caldwell's art and collectibles will be provided through Havensbrook Wealth Advisors LLC (Diana R. Linden, contact information as set forth in Section 3(e) above) and/or directly by Mr. Caldwell or his personal staff. We will arrange for Ashford or its designated art appraisers to have access to the physical artworks for inspection purposes, and will coordinate the logistics of any site visits as needed.

Coordination of Data Requests. All valuation data requests from Ashford should be channeled through the following individual at Calderwood & Harkness LLP, who will serve as the primary point of contact for this engagement:

Elliot Nguyen Working Associate Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152 Telephone: (212) 448-7234

Email: e.nguyen@calderwoodharkness.com

Mr. Nguyen will coordinate with the relevant entity contacts to assemble and deliver the requested documentation and will track outstanding data requests to ensure timely responses. Any questions regarding the legal structure of the GRATs, the gift tax reporting context, applicable provisions of the Internal Revenue Code, or other legal or tax matters should be directed to the undersigned, Sylvia Hartwell, at the address and firm set forth below.

7. Deliverables and Timing

The following deliverable schedule is requested for the appraisal engagement:

Draft Appraisal Reports: Draft appraisal reports for all assets described in Section 3 above are requested to be delivered no later than May 31, 2023. Draft reports should be provided in electronic format (PDF) and should be substantially complete, including all conclusions of value, discount analyses, and supporting data. The draft reports will be reviewed by Calderwood & Harkness and, as appropriate, by Strathmore Corporation & Greaves, for the purpose of identifying any questions, comments, or requests for clarification or additional analysis. Any comments on the draft reports will be provided to Ashford promptly following receipt.

Final Appraisal Reports: Final appraisal reports for all assets are requested to be delivered no later than June 15, 2023. This date is critical, as it is coordinated with the overall estate plan timeline and with the gift tax return preparation process, which is scheduled to commence on August 1, 2023. Any delay in the delivery of final appraisal reports could jeopardize the ability of Strathmore Corporation & Greaves to prepare and file the Form 709 on a timely basis, and could have adverse consequences for the estate plan as a whole.

Final appraisal reports should be delivered to the following individuals:

Sylvia Hartwell Specialist Partner (Tax) Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152

With copies to:

Monica Reyes, Lead Associate, at the same address Elliot Nguyen, Working Associate, at the same address

Electronic copies in PDF format are acceptable for draft reports. However, final executed originals are required for the gift tax return filing and for inclusion in the closing binder for the estate plan. We request that Ashford prepare and deliver at least three (3) originally executed copies of each final appraisal report (i.e., copies bearing the original signature of the qualified appraiser).

8. Independence and Conflicts

The independence and objectivity of the appraiser are essential to the validity and defensibility of the appraisals. Accordingly, Ashford Valuation Group LLC must confirm, in writing, each of the following:

(a) That Ashford Valuation Group LLC and each individual appraiser assigned to this engagement are independent of Jonathan R. Caldwell, the Caldwell family (including all lineal descendants, spouses, and related family members), Caldwell Ridgeline Capital LLC, Stonecrest Realty Holdings LLC, and all entities, trusts, and structures related to or affiliated with any of the foregoing;

(b) That no appraiser assigned to this engagement has any direct or indirect financial interest in, or business or personal relationship with, any of the parties identified in clause (a) above that could compromise, or could reasonably be perceived to compromise, the independence and objectivity of the appraisal;

(c) That no appraiser assigned to this engagement is: (i) the donor or donee of the property being appraised; (ii) a member of the family of the donor or donee (within the meaning of IRC § 267(c)(4)); (iii) a party to the transaction in which the donor acquired the property being appraised; or (iv) any person employed by, related to, or regularly used by any of the foregoing individuals or entities, within the meaning of Treasury Regulation § 1.170A-13(c)(5)(iv); and

(d) That Ashford's compensation for this engagement is not contingent upon the results or conclusions of the appraisals, and that no portion of the fee is calculated as a percentage of the appraised value of any property.

If Ashford or any individual appraiser has any relationship or circumstance that could give rise to a question regarding independence, Ashford should disclose such relationship or circumstance to this office immediately so that the matter may be evaluated and addressed before work commences.

9. Fees and Expenses

We request that Ashford provide a detailed fee estimate for the complete scope of work described in this letter, including a breakdown of estimated fees by asset category (Stonecrest membership interest, Fund IV LP interest, Fund V LP interest, Fund VI carried interest, and art and collectibles) and an estimate of any out-of-pocket expenses (such as travel, property inspections, subconsultant fees for specialized art appraisers, data acquisition costs, or similar expenses) that Ashford anticipates incurring.

Fee invoices should be directed to:

Howard Quinn Billing Partner Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152

All invoices should reference C&H Matter No. 1034-00004 and billing code 78412-JRC. Fees and expenses incurred by Ashford in connection with this engagement will be billed to the Client, Jonathan R. Caldwell, and will be paid in accordance with Ashford's standard billing terms. Please include a copy of Ashford's standard billing terms with the fee estimate, or identify any non-standard billing arrangements that Ashford wishes to propose.

10. Confidentiality

All information provided to Ashford in connection with this engagement — including, without limitation, information regarding Mr. Caldwell, his assets, his financial condition, the estate plan, the identity and terms of the GRATs and other structures, and the existence and terms of this engagement — is strictly confidential. Certain of this information is protected by the attorney-client privilege and/or the work product doctrine, and Ashford's access to such information is provided on the express understanding that Ashford will maintain the confidentiality of all such information and will take all reasonable measures to prevent unauthorized disclosure.

Ashford shall not disclose any information regarding Mr. Caldwell, his assets, the estate plan, the appraisal engagement, or the existence of this engagement to any third party without the prior written consent of Calderwood & Harkness LLP. This obligation extends to all employees, agents, and subconsultants of Ashford who have access to the information in connection with this engagement.

Notwithstanding the foregoing, it is understood that the final appraisal reports will be disclosed to the Internal Revenue Service in connection with the filing of the Form 709 gift tax return, and that Ashford and its appraisers should be prepared for the possibility that the IRS may contact Ashford directly to make inquiries regarding the appraisals. In the event of any such inquiry or contact from the IRS or any other governmental authority, Ashford should promptly notify Calderwood & Harkness LLP before providing any substantive response, so that we may coordinate the response and protect all applicable privileges.

11. Engagement Confirmation

To confirm Ashford's acceptance of this engagement and agreement to the terms set forth in this letter, we request that Dr. Whitfield countersign this letter in the space provided below and return a signed copy to the undersigned at the address set forth above. Alternatively, if Ashford prefers to issue its own engagement letter reflecting the scope and terms described herein, Ashford may do so, provided that such engagement letter is consistent with the instructions and requirements set forth in this letter and is submitted for our review and approval before work commences.

Upon execution of this letter or issuance of a mutually acceptable engagement letter, Ashford should promptly contact Elliot Nguyen at Calderwood & Harkness to arrange for an initial data request and to schedule a kickoff call with the estate planning team.

Closing

We appreciate your willingness to undertake this engagement and look forward to working with you and the Ashford team on this important matter. As noted above, the engagement is time-sensitive given the GRAT funding schedule and the overall matter timeline, with a target completion date for the estate plan of September 29, 2023. The timely delivery of final appraisal reports by June 15, 2023, is critical to maintaining this schedule, and we are confident that Ashford will bring the professionalism and rigor required for appraisals of this nature and significance.

Please do not hesitate to contact me directly at (212) 448-7118 or by email at s.hartwell@calderwoodharkness.com with any questions regarding this engagement or the matters discussed in this letter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Sylvia Hartwell Specialist Partner (Tax) Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152 Telephone: (212) 448-7118

Email: s.hartwell@calderwoodharkness.com

cc:

Victoria Chambers, Partner, Calderwood & Harkness LLP Monica Reyes, Lead Associate, Calderwood & Harkness LLP Elliot Nguyen, Working Associate, Calderwood & Harkness LLP Jonathan R. Caldwell (via separate cover, privileged)

Enclosures: (to be assembled and sent under separate cover)

1. Stonecrest Realty Holdings LLC — Operating Agreement (summary)

2. Caldwell Ridgeline Capital Fund IV LP — Limited Partnership Agreement (summary)

3. Caldwell Ridgeline Capital Fund V LP — Limited Partnership Agreement (summary)

4. Caldwell Ridgeline Capital Fund VI LP — Limited Partnership Agreement (summary)

5. Art and Collectibles — Preliminary Inventory List (to follow)

ACKNOWLEDGMENT AND ACCEPTANCE OF ENGAGEMENT

The undersigned, on behalf of Ashford Valuation Group LLC, hereby acknowledges receipt of this letter, confirms acceptance of the appraisal engagement described herein, and agrees to perform the engagement in accordance with the terms, scope, and instructions set forth in this letter.

ASHFORD VALUATION LLC

By: ________

Dr. Leonard K. Whitfield, ASA Managing Partner

Date: ________

Property	Location	Type	Estimated Value
440 West Broadway	New York, NY 10012	Mixed-use retail/residential	$28,000,000
15–21 Harrison Street	New York, NY 10013	Luxury residential condo (6 units)	$19,500,000
Stonecrest Office Park I	Paramus, NJ 07652	Class A office	$22,000,000
Stonecrest Office Park II	Paramus, NJ 07652	Class A office	$18,500,000
The Ridgeline at Stamford	Stamford, CT 06901	Multi-family residential (120 units)	$16,000,000
88 Mercer Street	New York, NY 10012	Retail	$11,500,000
200 West 14th Street	New York, NY 10011	Office/loft conversion	$8,500,000
765 Morris Avenue	Elizabeth, NJ 07208	Industrial warehouse	$4,200,000
12 Elm Court	Rye, NY 10580	Single-family (personal investment)	$2,800,000
44 Prospect Lane	Westport, CT 06880	Single-family (personal investment)	$1,800,000
9 Birch Hill Road	Bedford, NY 10506	Vacant land (3.2 acres)	$1,200,000
Valuation Date	Asset(s)	GRAT
April 15, 2023	Art and collectibles (subject to confirmation)	GRAT A (Caldwell 2023 Art GRAT)
May 1, 2023	Stonecrest Realty Holdings LLC — 59.7% membership interest	GRAT B (Caldwell 2023 Realty GRAT)
June 1, 2023	Caldwell Ridgeline Fund IV LP interest; Caldwell Ridgeline Fund V LP interest; Caldwell Ridgeline Fund VI LP carried interest	GRAT C (Caldwell 2023 Carried Interest GRAT)

CALDERWOOD & HARKNESS LLP Attorneys at Law 375 Park Avenue, 42nd Floor New York, NY 10152
Telephone: (212) 448-7000 Facsimile: (212) 448-7001 www.calderwoodharkness.com
April 20, 2023
VIA HAND DELIVERY AND EMAIL
Dr. Leonard K. Whitfield, ASA Managing Partner Ashford Valuation Group LLC 1120 Avenue of the Americas, Suite 3500 New York, NY 10036
Re: Appraisal Engagement — Estate of Jonathan R. Caldwell; Valuation of Certain Interests in Stonecrest Realty Holdings LLC, Caldwell Ridgeline Capital Fund IV LP, Caldwell Ridgeline Capital Fund V LP, Caldwell Ridgeline Capital Fund VI LP (Carried Interest), and Art & Collectibles
C&H Matter No. 1034-00004
Dear Dr. Whitfield:
1. Introduction and Purpose of Engagement
This firm, Calderwood & Harkness LLP, represents Jonathan R. Caldwell ("Mr. Caldwell" or the "Client") in connection with a comprehensive generational estate plan currently being developed and implemented on his behalf. The purpose of this letter is to set forth the scope, terms, and instructions for the engagement of Ashford Valuation Group LLC ("Ashford") as an independent qualified appraiser in connection with that estate plan.
Mr. Caldwell's estimated gross estate is approximately Three Hundred Million Dollars ($300,000,000), consisting generally of the following principal asset categories:
•  Liquid securities and publicly traded investments: approximately $112,000,000;
•  Real estate held through Stonecrest Realty Holdings LLC ("Stonecrest"): approximately $134,000,000;
•  Carried interest and fund stakes in investment funds managed by Caldwell Ridgeline Capital LLC ("Caldwell Ridgeline"), including Caldwell Ridgeline Capital Fund IV LP, Caldwell Ridgeline Capital Fund V LP, and Caldwell Ridgeline Capital Fund VI LP: approximately $38,000,000 in the aggregate;
•  Art and collectibles held personally by Mr. Caldwell: approximately $9,000,000; and
•  Other assets, including cash, personal property, and miscellaneous holdings: approximately $7,000,000.
The estate plan being developed for Mr. Caldwell contemplates the creation and funding of three Grantor Retained Annuity Trusts ("GRATs"), each structured as a "zeroed-out" or near-zeroed-out GRAT under Section 2702 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"). In addition, the estate plan includes the establishment of a dynasty trust for the benefit of Mr. Caldwell's descendants, a private foundation to be known as the Caldwell Family Foundation, and related structures designed to accomplish Mr. Caldwell's philanthropic and wealth-transfer objectives while minimizing gift and estate tax exposure.
Ashford Valuation Group LLC is being retained as an independent qualified appraiser to perform fair market value appraisals of specific assets that are being contributed to the GRAT structures, and to provide appraisal reports that will support gift tax reporting on IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) for the 2023 tax year. The accuracy and defensibility of these appraisals are of paramount importance to the success of the estate plan, as the fair market value determinations will directly affect the calculation of the taxable gift (if any) resulting from each GRAT funding, the annuity payment obligations of each GRAT, and the potential for IRS challenge to the reported values.
This engagement is supervised by the undersigned, Sylvia Hartwell, Specialist Partner (Tax), at Calderwood & Harkness LLP. The engagement is being carried out in coordination with the broader estate planning team, which includes the following attorneys at this firm:
•  Victoria Chambers, Responsible Partner, Trust & Estates Practice Group;
•  Monica Reyes, Lead Associate, Trust & Estates Practice Group; and
•  Elliot Nguyen, Working Associate, Trust & Estates Practice Group.
Ms. Chambers serves as the relationship partner for Mr. Caldwell and has overall supervisory responsibility for the estate plan. Day-to-day coordination of this appraisal engagement, including the exchange of valuation data and documentation, will be managed primarily through Mr. Nguyen, with substantive legal and tax questions directed to me.
2. Valuation Standard
All appraisals performed under this engagement must determine the fair market value of each asset as of the applicable valuation date specified below. The applicable standard of value is fair market value as defined under IRC § 2512 and the regulations promulgated thereunder. Specifically, Treasury Regulation § 25.2512-1 defines fair market value as follows:
"The value of the property is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts."
This definition is well-established and has been consistently applied by the Internal Revenue Service and the United States Tax Court in the context of gift, estate, and income tax matters. Ashford's appraisals must adhere to this standard without deviation. The hypothetical willing buyer and willing seller must be assumed to be hypothetical persons, not specific individuals or entities, and no special or strategic value attributable to a particular buyer or seller should be reflected in the conclusions.
In addition, each appraisal report prepared under this engagement must comply with the requirements for a "qualified appraisal" under IRC § 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c). While these provisions were enacted primarily in the context of charitable contribution deductions, they establish the applicable standard for what constitutes a qualified appraisal and a qualified appraiser for purposes of federal tax reporting, and adherence to these standards is required as a matter of best practice for gift tax appraisals as well. Among other things, each appraisal must be performed by an individual who qualifies as a "qualified appraiser" within the meaning of IRC § 170(f)(11)(E)(ii) — that is, an individual who has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements, and who regularly performs appraisals for which the individual receives compensation.
The appraisal reports are being prepared for the specific purpose of attachment to, and submission with, IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) for the 2023 tax year. Each report must therefore be prepared with the understanding that it will be examined by the Internal Revenue Service in the ordinary course of return processing and that it may be subject to detailed scrutiny in the event of an audit or examination of the gift tax return. The reports must be suitable in form and substance for such submission and potential examination.
The appraisals are being prepared in coordination with the Client's accountants, Strathmore Corporation & Greaves LLP, who will be responsible for the preparation and filing of the Form 709. The principal contact at Strathmore Corporation & Greaves is:
Martin J. Prescott, CPA Senior Partner, Private Client Group Strathmore Corporation & Greaves LLP 600 Third Avenue, 28th Floor New York, NY 10016
Mr. Prescott and his team at Strathmore Corporation & Greaves will require copies of the final appraisal reports for inclusion with the Form 709 filing. Any direct communication between Ashford and Strathmore Corporation & Greaves regarding valuation matters should be coordinated through this office to ensure consistency of legal positions and to preserve applicable privileges.
3. Assets to Be Appraised and Relevant Valuation Dates
The following sections describe each asset or category of assets to be appraised under this engagement, together with the applicable valuation date, the relevant entity and contact information, and specific appraisal instructions and considerations for each asset.
(a) Stonecrest Realty Holdings LLC — Membership Interests
Entity: Stonecrest Realty Holdings LLC, a New York limited liability company organized under the laws of the State of New York.
Entity Address: 330 Madison Avenue, Suite 2401, New York, NY 10017.
Key Contact for Valuation Data: Robert M. Sinclair, Chief Operating Officer, Stonecrest Realty Holdings LLC.
Ownership: Jonathan R. Caldwell currently holds one hundred percent (100%) of the membership interests in Stonecrest. Stonecrest is a single-member LLC that has historically been disregarded for federal income tax purposes. However, in connection with the estate plan, a portion of the membership interests will be contributed to a trust, resulting in a multi-member LLC structure.
Interest to Be Appraised: An approximate fifty-nine and seven-tenths percent (59.7%) membership interest in Stonecrest Realty Holdings LLC, which is the interest being contributed to the Caldwell 2023 Realty GRAT (referred to internally as "GRAT B"). This interest will represent a majority economic interest in Stonecrest following the contribution, although the governing provisions of the operating agreement may limit the management rights and other prerogatives associated with such interest. Ashford should carefully review the operating agreement to ascertain the precise rights and restrictions applicable to the 59.7% membership interest.
Entity Value and Property Portfolio: The total entity value of Stonecrest is estimated at approximately $134,000,000 on a gross-asset basis. Stonecrest owns and operates a portfolio of eleven (11) commercial and residential properties located across New York, New Jersey, and Connecticut. The following is a summary of the property portfolio, with individual property details subject to verification through entity records and due diligence to be conducted by Ashford:
Please note that the estimated values set forth above are preliminary internal estimates based on the most recent available information and are provided solely for reference purposes. Ashford is expected to conduct its own independent analysis of property values, whether through direct property-level appraisals, reliance on recent third-party appraisals obtained by Stonecrest, or a combination thereof.
It should also be noted that mortgages on the Stonecrest properties are held at the entity level and are non-recourse to Mr. Caldwell personally. Ashford should obtain and review mortgage documentation as part of its entity-level valuation analysis.
Valuation Date: May 1, 2023. This is the anticipated date of GRAT B funding, and all conclusions of value for the Stonecrest membership interest must be rendered as of this date.
discount Considerations: The appraisal should address and quantify, as appropriate, combined discounts for lack of marketability ("DLOM") and lack of control ("DLOC") applicable to a 59.7% membership interest in a closely held real estate LLC. Although the 59.7% interest represents a majority economic interest, the applicable operating agreement provisions, transfer restrictions, and the illiquid nature of the underlying real estate assets may support meaningful valuation discounts. Our estate planning team's preliminary analysis, based on a review of comparable transactions and relevant Tax Court precedent, suggests that a combined discount in the range of twenty-five percent (25%) may be supportable for this interest. However, Ashford must reach its own independent conclusion regarding the applicability and magnitude of any discounts, based on the specific facts and circumstances of the interest, the operating agreement, and available empirical market data. We do not intend to constrain Ashford's analysis or conclusions in any manner.
(b) Caldwell Ridgeline Capital Fund IV LP — LP Interest
Entity: Caldwell Ridgeline Fund IV LP, a Delaware limited partnership formed under the laws of the State of Delaware.
General Partner/Manager: Caldwell Ridgeline Capital LLC, a Delaware limited liability company, serving as the general partner of the Fund. Caldwell Ridgeline Capital LLC maintains its principal office at 280 Park Avenue, 35th Floor, New York, NY 10017.
Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.
Fund Vintage: 2015. Fund IV is a mature fund that has substantially completed its investment period and is currently in the harvesting and distribution phase.
Interest to Be Appraised: Mr. Caldwell's limited partnership interest in Caldwell Ridgeline Fund IV LP, which has an estimated fair market value of approximately $12,000,000 as of the most recent quarterly valuation. This LP interest is being contributed to the Caldwell 2023 Carried Interest GRAT (referred to internally as "GRAT C").
Valuation Date: June 1, 2023. This is the anticipated date of GRAT C funding.
discount Considerations: The appraisal should address and quantify combined discounts for lack of marketability and minority interest applicable to a limited partnership interest in a private equity fund. LP interests in private equity funds are inherently illiquid and are subject to significant transfer restrictions under the governing limited partnership agreement. Our preliminary analysis, based on a review of secondary market transaction data and relevant empirical studies, suggests that a combined discount of approximately thirty-five percent (35%) may be supportable for this interest. As with all discount analyses under this engagement, Ashford should reach its own independent conclusion.
(c) Caldwell Ridgeline Capital Fund V LP — LP Interest
Entity: Caldwell Ridgeline Fund V LP, a Delaware limited partnership formed under the laws of the State of Delaware.
General Partner/Manager: Caldwell Ridgeline Capital LLC, the same general partner and manager as described in Section 3(b) above. The same principal office address and contact information apply.
Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.
Fund Vintage: 2018. Fund V is in the mid-life stage of its investment cycle, with a mix of realized and unrealized portfolio company investments.
Interest to Be Appraised: Mr. Caldwell's limited partnership interest in Caldwell Ridgeline Fund V LP, which has an estimated fair market value of approximately $14,000,000 as of the most recent quarterly valuation. This LP interest is also being contributed to GRAT C.
Valuation Date: June 1, 2023, concurrent with the GRAT C funding date.
discount Considerations: The same discount considerations applicable to the Fund IV LP interest apply to the Fund V LP interest. Our preliminary analysis suggests that a combined discount of approximately thirty-five percent (35%) for lack of marketability and minority interest may be supportable for this interest as well. Ashford should evaluate whether the different stage of Fund V's investment cycle relative to Fund IV warrants any differentiation in the applicable discount, and should reach its own independent conclusion based on the relevant facts and data.
(d) Caldwell Ridgeline Capital Fund VI LP — Carried Interest
Entity: Caldwell Ridgeline Fund VI LP, a Delaware limited partnership formed under the laws of the State of Delaware.
General Partner/Manager: Caldwell Ridgeline Capital LLC, the same general partner and manager as described in Sections 3(b) and 3(c) above. The same principal office address and contact information apply.
Key Contact for Valuation Data: Gregory S. Fenton, Chief Financial Officer, Caldwell Ridgeline Capital LLC.
Fund Vintage: 2021. Fund VI is a relatively early-stage fund that is still in its active investment period.
Interest to Be Appraised: Mr. Caldwell's carried-interest (profits interest) position in Caldwell Ridgeline Fund VI LP, which has an estimated fair market value of approximately $12,000,000. This carried-interest position is also being contributed to GRAT C.
Valuation Date: June 1, 2023, concurrent with the GRAT C funding date.
Nature of the Interest: It is important to note that this interest is a carried-interest (profits interest) position rather than a limited partnership capital interest. A carried interest represents a contractual right to receive a specified percentage of the profits of the fund (typically after the return of invested capital and a preferred return to the limited partners), and its value is inherently contingent upon the future performance of the fund's portfolio investments. Carried interest is subordinated to the capital interests of the limited partners in the distribution waterfall, and its ultimate value depends on a number of uncertain future variables, including the performance of unrealized portfolio companies, the timing and magnitude of future exits, prevailing market conditions, and the fund's ability to meet its preferred return hurdle.
The appraisal methodology employed for the carried-interest position should account for the contingent and subordinated nature of this interest. We would expect the appraisal to employ methodologies appropriate for valuing contingent cash flow streams, which may include, among others, discounted cash flow analysis with probability-weighted scenarios, option-pricing models, or Monte Carlo simulation to model the range of possible outcomes for the fund's remaining unrealized investments.
discount Considerations: Our preliminary discount analysis suggests that a discount of approximately thirty percent (30%) for lack of marketability and the unique nature of the carried-interest position may be supportable. However, the appropriate discount for a carried-interest position may differ from the discount applicable to a standard LP capital interest, given the additional layers of contingency and subordination inherent in carried interest. Ashford should reach its own independent determination of the appropriate discount, taking into account the specific terms of the carried-interest arrangement, the stage of the fund, and the available empirical data on transactions involving carried-interest positions.
(e) Art and Collectibles
Ownership: The art and collectibles to be appraised are owned personally by Jonathan R. Caldwell and are not held through any entity structure.
Estimated Aggregate Value: Approximately $9,000,000.
Inventory: A detailed inventory of the specific pieces to be appraised under this engagement will be provided to Ashford under separate cover. We are currently in the process of compiling the final list of items that will be contributed to GRAT A and other structures. In the interim, Mr. Caldwell's financial advisor can provide access to the existing collection inventory and insurance schedules:
Diana R. Linden, CFP® Managing Director, Family Office Services Havensbrook Wealth Advisors LLC 900 Third Avenue, 18th Floor New York, NY 10022
Ms. Linden maintains comprehensive records of Mr. Caldwell's art collection, including provenance documentation, acquisition costs, and current insurance valuations. These records will serve as a useful starting point for Ashford's appraisal work, although Ashford's independent conclusions of fair market value may differ from the insurance valuations.
Valuation Date: April 15, 2023. This date corresponds to the anticipated funding date of the Caldwell 2023 Art GRAT (referred to internally as "GRAT A"). We note, however, that certain art pieces may ultimately be addressed in connection with the overall estate inventory or other planning structures rather than the specific GRAT A funding. The precise valuation date for each piece will be confirmed upon receipt and review of the detailed inventory and finalization of the estate plan. We will notify Ashford promptly if any modification to the valuation date is required.
Appraisal Requirements: Appraisals of art and collectibles should reflect fair market value under the applicable IRS regulations and should be performed by an appraiser or appraisers with recognized expertise in the relevant categories of art and collectibles (e.g., contemporary art, impressionist works, decorative arts, antiquities, or other categories as applicable to Mr. Caldwell's collection). For any individual item with a claimed value exceeding $5,000, the appraisal must satisfy the heightened requirements of IRC § 170(f)(11)(C) and (D) and Treasury Regulation § 1.170A-13(c), including the requirement that the appraisal be performed by a qualified appraiser with relevant expertise and that the appraisal report contain all of the information specified in the regulations. We understand that Ashford may engage or subcontract with specialized art appraisers for this component of the engagement; if so, please identify any such individuals or firms in advance so that we may confirm their qualifications and independence.
4. Summary of Valuation Dates
The following table summarizes the three distinct valuation dates applicable to the assets to be appraised under this engagement, together with the corresponding GRAT to which each asset will be contributed:
It is of critical importance that the appraisals reflect the precise valuation dates set forth above, as these dates correspond to the actual funding dates of the respective GRATs. The IRC § 7520 rate applicable to each GRAT is determined by the month in which the trust is funded (or, at the taxpayer's election, the rate for either of the two months immediately preceding the month of the valuation date). For planning purposes, the § 7520 rates currently anticipated for the respective funding months are as follows:
•  March 2023 (applicable to GRAT A): 5.0%
•  April 2023 (applicable to GRAT B): 5.0%
•  May 2023 (applicable to GRAT C): 5.0%
The determination of the correct § 7520 rate for each GRAT is dependent upon the date of funding, which in turn must be supported by the appraisal valuation date. Any discrepancy between the valuation date in the appraisal report and the actual funding date of the GRAT could create complications in the gift tax reporting and could potentially undermine the effectiveness of the GRAT structure. Please take care to ensure that all conclusions of value are rendered as of the correct valuation date.
5. Appraisal Report Requirements
Each appraisal report prepared under this engagement must constitute a "qualified appraisal" within the meaning of IRC § 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c)(3). To that end, each report must contain, at a minimum, the following elements:
(i) A description of the property appraised in sufficient detail for a person who is not generally familiar with the type of property to ascertain that the property appraised is not the same as some other property;
(ii) In the case of any tangible property, the physical condition of the property;
(iii) The valuation date or dates for which the appraisal was performed;
(iv) The date on which the appraisal was actually performed and the date on which the appraisal report was prepared;
(v) The terms of the engagement between Ashford and Calderwood & Harkness LLP on behalf of the Client;
(vi) The appraised fair market value of each property or interest as of the applicable valuation date;
(vii) The valuation methodology or methodologies employed by the appraiser, including, where applicable, the income approach, market approach, asset-based approach, comparable sales analysis, discounted cash flow analysis, or other recognized valuation techniques;
(viii) The specific basis for the valuation, including any comparable transactions, market data, financial projections, discount rates, capitalization rates, or other data or assumptions relied upon by the appraiser in reaching the conclusion of value;
(ix) A statement of the qualifications of the appraiser or appraisers performing the engagement, including any relevant professional designations such as ASA (Accredited Senior Appraiser), CFA (Chartered Financial Analyst), MAI (Member, Appraisal Institute), or other applicable credentials, together with a description of the appraiser's education, experience, and areas of specialization;
(x) A statement that the appraisal was prepared for federal gift tax purposes in connection with the filing of IRS Form 709 for the 2023 tax year;
(xi) The appraiser's taxpayer identification number (or, if the appraisal is performed by an entity, the entity's employer identification number and the individual appraiser's taxpayer identification number);
(xii) A declaration that the appraiser understands that a substantial or gross valuation misstatement resulting from the appraisal may subject the appraiser to civil penalties under IRC § 6695A, and that the appraiser has undertaken the appraisal with the requisite degree of diligence to avoid such penalties; and
(xiii) A statement that the appraised value was not based on a percentage of the appraised value of the property (i.e., that the appraiser's fee is not contingent upon the outcome of the valuation).
In addition to the foregoing general requirements, the following specific requirements apply to particular asset categories:
LP Interests and Carried Interest (Funds IV, V, and VI). Appraisal reports for the limited partnership interests and carried-interest position should address the specific methodologies applicable to the valuation of interests in private investment funds. Such methodologies should include, but need not be limited to, the following:
•  discounted cash flow analysis, incorporating probability-weighted scenarios for the realization of unrealized portfolio company investments;
•  Comparable public company analysis, where applicable, to support portfolio company valuations;
•  Analysis of secondary market transaction data for comparable private fund interests, including data from established secondary market intermediaries;
•  For the carried-interest position in Fund VI, Monte Carlo simulation or similar probabilistic modeling to capture the contingent and subordinated nature of the carried-interest cash flows; and
•  Analysis of the fund's distribution waterfall and the mechanics of the preferred return hurdle as they affect the timing and magnitude of carried-interest distributions.
Stonecrest Membership Interest. The appraisal report for the Stonecrest membership interest should include property-level appraisals or reference to recent property-level appraisals for each property in the Stonecrest portfolio, together with capitalization rate analysis, comparable sales data, and income and expense analysis at the property level. At the entity level, the appraisal should address the net asset value of Stonecrest (taking into account entity-level liabilities, including mortgage indebtedness), and should then apply appropriate discounts for lack of marketability and, to the extent applicable, lack of control to arrive at the fair market value of the 59.7% membership interest. Where recent third-party property appraisals are available (e.g., appraisals obtained in connection with mortgage financing), Ashford may rely on such appraisals provided that they are current, credible, and consistent with market conditions as of the valuation date, and that any reliance is disclosed and discussed in the report.
discount Analysis (All Reports). The discount analysis in each report must be clearly articulated and supported by empirical data, including but not limited to restricted stock studies (e.g., Silber, FMV Opinions, Stout), pre-IPO studies (e.g., Beaumont Strategy Partners), and comparable transaction data from secondary markets or other sources. The discount analysis should include citations to relevant United States Tax Court authority (including, where applicable, cases such as Mandelbaum v. Commissioner, T.C. Memo. 1995-255; Lappo v. Commissioner, T.C. Memo. 2003-258; Peracchio v. Commissioner, T.C. Memo. 2003-280; Holman v. Commissioner, 130 T.C. 170 (2008); and Estate of Giustina v. Commissioner, T.C. Memo. 2011-141) and relevant IRS guidance (including Rev. Rul. 59-60, 1959-1 C.B. 237). The analysis should address each factor relevant to the determination of an appropriate discount, including the size and nature of the interest, the restrictions on transferability, the availability of information to potential purchasers, the holding period, the underlying asset characteristics, and any other relevant factors.
Format. Separate reports may be prepared for each asset class (i.e., one report for the Stonecrest membership interest, one report for the Fund IV, V, and VI interests, and one report for the art and collectibles), or a consolidated report with clearly delineated sections is acceptable, provided that each section independently satisfies all applicable qualified appraisal requirements. We leave the format to Ashford's discretion, but request that the report structure be discussed in advance so that we may coordinate with Strathmore Corporation & Greaves regarding the Form 709 attachment format.
6. Access to Information and Coordination
Calderwood & Harkness LLP will facilitate Ashford's access to the following sources of information and documentation in connection with the appraisal engagement:
Stonecrest Realty Holdings LLC. Ashford will be given access to the following documents and information pertaining to Stonecrest, to be obtained through Robert M. Sinclair, Chief Operating Officer:
•  The operating agreement of Stonecrest Realty Holdings LLC, including all amendments and restatements;
•  Financial statements of Stonecrest for the three most recent fiscal years and the most recent interim period;
•  Rent rolls for each property in the Stonecrest portfolio;
•  Existing property-level appraisals, if any, obtained in connection with mortgage financing, insurance, or other purposes;
•  Mortgage documentation, including loan agreements, amortization schedules, and outstanding balances for all entity-level indebtedness;
•  Capital expenditure schedules and budgets for each property;
•  Lease abstracts and tenant information;
•  Property tax assessments; and
•  Any other financial, operational, or legal documents that Ashford reasonably determines to be necessary or useful for the appraisal.
Caldwell Ridgeline Capital LLC (Funds IV, V, and VI). Ashford will be given access to the following documents and information pertaining to the Caldwell Ridgeline funds, to be obtained through Gregory S. Fenton, Chief Financial Officer:
•  The limited partnership agreements for Caldwell Ridgeline Fund IV LP, Fund V LP, and Fund VI LP, including all amendments, side letters, and supplemental agreements;
•  Audited financial statements for each fund for the three most recent fiscal years;
•  Capital account statements for Mr. Caldwell's LP interests in Funds IV and V;
•  Distribution history for each fund;
•  Unrealized portfolio company valuations as of the most recent quarter-end;
•  Carried interest allocation waterfalls and the terms of Mr. Caldwell's carried-interest arrangement in Fund VI;
•  Fund-level performance data, including IRR, MOIC, DPI, and RVPI metrics;
•  Portfolio company summaries and investment memoranda, to the extent available and permitted to be shared; and
•  Any other fund-level documentation that Ashford reasonably determines to be necessary or useful for the appraisal.
Art and Collectibles. The collection inventory, provenance documentation, authentication records, and insurance schedules for Mr. Caldwell's art and collectibles will be provided through Havensbrook Wealth Advisors LLC (Diana R. Linden, contact information as set forth in Section 3(e) above) and/or directly by Mr. Caldwell or his personal staff. We will arrange for Ashford or its designated art appraisers to have access to the physical artworks for inspection purposes, and will coordinate the logistics of any site visits as needed.
Coordination of Data Requests. All valuation data requests from Ashford should be channeled through the following individual at Calderwood & Harkness LLP, who will serve as the primary point of contact for this engagement:
Elliot Nguyen Working Associate Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152 Telephone: (212) 448-7234
Email: e.nguyen@calderwoodharkness.com
Mr. Nguyen will coordinate with the relevant entity contacts to assemble and deliver the requested documentation and will track outstanding data requests to ensure timely responses. Any questions regarding the legal structure of the GRATs, the gift tax reporting context, applicable provisions of the Internal Revenue Code, or other legal or tax matters should be directed to the undersigned, Sylvia Hartwell, at the address and firm set forth below.
7. Deliverables and Timing
The following deliverable schedule is requested for the appraisal engagement:
Draft Appraisal Reports: Draft appraisal reports for all assets described in Section 3 above are requested to be delivered no later than May 31, 2023. Draft reports should be provided in electronic format (PDF) and should be substantially complete, including all conclusions of value, discount analyses, and supporting data. The draft reports will be reviewed by Calderwood & Harkness and, as appropriate, by Strathmore Corporation & Greaves, for the purpose of identifying any questions, comments, or requests for clarification or additional analysis. Any comments on the draft reports will be provided to Ashford promptly following receipt.
Final Appraisal Reports: Final appraisal reports for all assets are requested to be delivered no later than June 15, 2023. This date is critical, as it is coordinated with the overall estate plan timeline and with the gift tax return preparation process, which is scheduled to commence on August 1, 2023. Any delay in the delivery of final appraisal reports could jeopardize the ability of Strathmore Corporation & Greaves to prepare and file the Form 709 on a timely basis, and could have adverse consequences for the estate plan as a whole.
Final appraisal reports should be delivered to the following individuals:
Sylvia Hartwell Specialist Partner (Tax) Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152
With copies to:
Monica Reyes, Lead Associate, at the same address Elliot Nguyen, Working Associate, at the same address
Electronic copies in PDF format are acceptable for draft reports. However, final executed originals are required for the gift tax return filing and for inclusion in the closing binder for the estate plan. We request that Ashford prepare and deliver at least three (3) originally executed copies of each final appraisal report (i.e., copies bearing the original signature of the qualified appraiser).
8. Independence and Conflicts
The independence and objectivity of the appraiser are essential to the validity and defensibility of the appraisals. Accordingly, Ashford Valuation Group LLC must confirm, in writing, each of the following:
(a) That Ashford Valuation Group LLC and each individual appraiser assigned to this engagement are independent of Jonathan R. Caldwell, the Caldwell family (including all lineal descendants, spouses, and related family members), Caldwell Ridgeline Capital LLC, Stonecrest Realty Holdings LLC, and all entities, trusts, and structures related to or affiliated with any of the foregoing;
(b) That no appraiser assigned to this engagement has any direct or indirect financial interest in, or business or personal relationship with, any of the parties identified in clause (a) above that could compromise, or could reasonably be perceived to compromise, the independence and objectivity of the appraisal;
(c) That no appraiser assigned to this engagement is: (i) the donor or donee of the property being appraised; (ii) a member of the family of the donor or donee (within the meaning of IRC § 267(c)(4)); (iii) a party to the transaction in which the donor acquired the property being appraised; or (iv) any person employed by, related to, or regularly used by any of the foregoing individuals or entities, within the meaning of Treasury Regulation § 1.170A-13(c)(5)(iv); and
(d) That Ashford's compensation for this engagement is not contingent upon the results or conclusions of the appraisals, and that no portion of the fee is calculated as a percentage of the appraised value of any property.
If Ashford or any individual appraiser has any relationship or circumstance that could give rise to a question regarding independence, Ashford should disclose such relationship or circumstance to this office immediately so that the matter may be evaluated and addressed before work commences.
9. Fees and Expenses
We request that Ashford provide a detailed fee estimate for the complete scope of work described in this letter, including a breakdown of estimated fees by asset category (Stonecrest membership interest, Fund IV LP interest, Fund V LP interest, Fund VI carried interest, and art and collectibles) and an estimate of any out-of-pocket expenses (such as travel, property inspections, subconsultant fees for specialized art appraisers, data acquisition costs, or similar expenses) that Ashford anticipates incurring.
Fee invoices should be directed to:
Howard Quinn Billing Partner Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152
All invoices should reference C&H Matter No. 1034-00004 and billing code 78412-JRC. Fees and expenses incurred by Ashford in connection with this engagement will be billed to the Client, Jonathan R. Caldwell, and will be paid in accordance with Ashford's standard billing terms. Please include a copy of Ashford's standard billing terms with the fee estimate, or identify any non-standard billing arrangements that Ashford wishes to propose.
10. Confidentiality
All information provided to Ashford in connection with this engagement — including, without limitation, information regarding Mr. Caldwell, his assets, his financial condition, the estate plan, the identity and terms of the GRATs and other structures, and the existence and terms of this engagement — is strictly confidential. Certain of this information is protected by the attorney-client privilege and/or the work product doctrine, and Ashford's access to such information is provided on the express understanding that Ashford will maintain the confidentiality of all such information and will take all reasonable measures to prevent unauthorized disclosure.
Ashford shall not disclose any information regarding Mr. Caldwell, his assets, the estate plan, the appraisal engagement, or the existence of this engagement to any third party without the prior written consent of Calderwood & Harkness LLP. This obligation extends to all employees, agents, and subconsultants of Ashford who have access to the information in connection with this engagement.
Notwithstanding the foregoing, it is understood that the final appraisal reports will be disclosed to the Internal Revenue Service in connection with the filing of the Form 709 gift tax return, and that Ashford and its appraisers should be prepared for the possibility that the IRS may contact Ashford directly to make inquiries regarding the appraisals. In the event of any such inquiry or contact from the IRS or any other governmental authority, Ashford should promptly notify Calderwood & Harkness LLP before providing any substantive response, so that we may coordinate the response and protect all applicable privileges.
11. Engagement Confirmation
To confirm Ashford's acceptance of this engagement and agreement to the terms set forth in this letter, we request that Dr. Whitfield countersign this letter in the space provided below and return a signed copy to the undersigned at the address set forth above. Alternatively, if Ashford prefers to issue its own engagement letter reflecting the scope and terms described herein, Ashford may do so, provided that such engagement letter is consistent with the instructions and requirements set forth in this letter and is submitted for our review and approval before work commences.
Upon execution of this letter or issuance of a mutually acceptable engagement letter, Ashford should promptly contact Elliot Nguyen at Calderwood & Harkness to arrange for an initial data request and to schedule a kickoff call with the estate planning team.
Closing
We appreciate your willingness to undertake this engagement and look forward to working with you and the Ashford team on this important matter. As noted above, the engagement is time-sensitive given the GRAT funding schedule and the overall matter timeline, with a target completion date for the estate plan of September 29, 2023. The timely delivery of final appraisal reports by June 15, 2023, is critical to maintaining this schedule, and we are confident that Ashford will bring the professionalism and rigor required for appraisals of this nature and significance.
Please do not hesitate to contact me directly at (212) 448-7118 or by email at s.hartwell@calderwoodharkness.com with any questions regarding this engagement or the matters discussed in this letter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Sylvia Hartwell Specialist Partner (Tax) Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, NY 10152 Telephone: (212) 448-7118
Email: s.hartwell@calderwoodharkness.com
cc:
Victoria Chambers, Partner, Calderwood & Harkness LLP Monica Reyes, Lead Associate, Calderwood & Harkness LLP Elliot Nguyen, Working Associate, Calderwood & Harkness LLP Jonathan R. Caldwell (via separate cover, privileged)
Enclosures: (to be assembled and sent under separate cover)
1.  Stonecrest Realty Holdings LLC — Operating Agreement (summary)
2.  Caldwell Ridgeline Capital Fund IV LP — Limited Partnership Agreement (summary)
3.  Caldwell Ridgeline Capital Fund V LP — Limited Partnership Agreement (summary)
4.  Caldwell Ridgeline Capital Fund VI LP — Limited Partnership Agreement (summary)
5.  Art and Collectibles — Preliminary Inventory List (to follow)
ACKNOWLEDGMENT AND ACCEPTANCE OF ENGAGEMENT
The undersigned, on behalf of Ashford Valuation Group LLC, hereby acknowledges receipt of this letter, confirms acceptance of the appraisal engagement described herein, and agrees to perform the engagement in accordance with the terms, scope, and instructions set forth in this letter.
ASHFORD VALUATION LLC
By: ________
Dr. Leonard K. Whitfield, ASA Managing Partner
Date: ________
Property | Location | Type | Estimated Value
440 West Broadway | New York, NY 10012 | Mixed-use retail/residential | $28,000,000
15–21 Harrison Street | New York, NY 10013 | Luxury residential condo (6 units) | $19,500,000
Stonecrest Office Park I | Paramus, NJ 07652 | Class A office | $22,000,000
Stonecrest Office Park II | Paramus, NJ 07652 | Class A office | $18,500,000
The Ridgeline at Stamford | Stamford, CT 06901 | Multi-family residential (120 units) | $16,000,000
88 Mercer Street | New York, NY 10012 | Retail | $11,500,000
200 West 14th Street | New York, NY 10011 | Office/loft conversion | $8,500,000
765 Morris Avenue | Elizabeth, NJ 07208 | Industrial warehouse | $4,200,000
12 Elm Court | Rye, NY 10580 | Single-family (personal investment) | $2,800,000
44 Prospect Lane | Westport, CT 06880 | Single-family (personal investment) | $1,800,000
9 Birch Hill Road | Bedford, NY 10506 | Vacant land (3.2 acres) | $1,200,000
Valuation Date | Asset(s) | GRAT
April 15, 2023 | Art and collectibles (subject to confirmation) | GRAT A (Caldwell 2023 Art GRAT)
May 1, 2023 | Stonecrest Realty Holdings LLC — 59.7% membership interest | GRAT B (Caldwell 2023 Realty GRAT)
June 1, 2023 | Caldwell Ridgeline Fund IV LP interest; Caldwell Ridgeline Fund V LP interest; Caldwell Ridgeline Fund VI LP carried interest | GRAT C (Caldwell 2023 Carried Interest GRAT)

CALDERWOOD & HARKNESS LLP Attorneys at Law 375 Park Avenue, 42nd Floor New York, NY 10152

VIA HAND DELIVERY AND EMAIL

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGMENT AND ACCEPTANCE OF ENGAGEMENT

ASHFORD VALUATION LLC

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