From: "jeffrey E." <jeevacation@gmail.com>
To: Melanie Spinella
Subject: Fwd: Schwitters Joint Purchase
Date: Mon, 14 Jul 2014 15:40:06 +0000
Forwarded message
From: Ada Clapp czli
Date: Mon, Jul 14, 2014 at 11:24 AM
Subject: Schwitters Joint Purchase
To: "jeffrey E." <jeevacation@gmail.com>
Cc: Eileen Alexanderson
Good morning Jeffrey,
Before I go back to Herrick, I want to be sure I understand your instructions regarding Leon and Ronald's
ownership of the Schwitters. I have outlined what I believe is the proposal below. Please give me your thoughts
on the details noted.
Step 1: Herrick should create a non-NY (presumably Delaware) LLC. Each of Leon and Ronald will 50/50
Members and each will contribute funds sufficient to cover 1/2 the purchase price of the painting plus 'A the sales
tax. The LLC will then acquire the painting. The LLC will have as its business purpose the management of the
Schwitters to be held as investment property.
• Before Herrick starts drafting--Has Leon spoken to Ronald about this arrangement and
is Ronald in agreement? Please note that we will need the LLC formed and funded
by each of Ronald and Leon in time to pay Christie's.
•
• I assume the LLC will be a member managed entity and that decisions must be
unanimous? Please confirm.
• To bolster the LLC's status as an independent investment entity:
o The terms of use of partnership property should be included in the LLC
operating agreement;
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o The LLC should have a separate insurance policy and require capital calls for
payment of insurance and other expenses relating to the painting
■ Leon's current agreements with the Neue provide that each party insures
under its own blanket policy so Leon and Ronald may prefer to include that
provision in the LLC agreement—though Heather and I think that creates a
weaker argument that the purpose of the LLC is the manage the investment
of the painting;
o The LLC should request an annual appraisal for insurance purposes to establish
that it is keeping a good eye on its investment.
• What shall we call the LLC?
5p 2: Ronald and Leon will enter into a separate Buy Sell Agreement (or we could put this directly in the LLC
agreement) whereby:
• The survivor of them has the right within 6 months of the death of the first to die (the
"FTD") to purchase the FTD's Membership interest from the estate of the FTD at fair
market value as finally determined for estate tax purposes in the estate of the FTD.
• If the survivor does not exercise the right to purchase, the FTD's estate has the right to
put the FTD's Membership interest to the survivor for a stated period of time (same price
as above).
• If the survivor does not wish to purchase the FTD's Membership interests then the
FTD's estate may force a liquidation of the LLC and a sale of the painting.
Please let me know if you want me to discuss any of the above with Leon directly. Thank you.
Ada Clapp
Elysium Management LLC
445 Park Avenue
Suite 1401
EFTA00993348
New York, New York 10022
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