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Eric and Hunter:

As we undertake the documentation of the transfer of 10% of the interest in BHR from RSB --> Skaneateles, we would like to confirm our understanding of the transaction so that we can ideally achieve a tax-neutral transaction. To recap:

RSB currently holds 20% interest in BHR, which we believe was acquired in 2014 for approximately USD $928,000. Thus, ½ of that interest (10% of the interest in BHR) was valued at USD $464,000. We view RSB as acting as Hunter's agent in holding funds that RSB accumulated on Hunter's behalf from various third party payments to Hunter (e.g., Burisma). We further understand that RSB has agreed that Hunter has accumulated US $464,000, which is the sum necessary for Hunter to earn 10% of the interests in BHR (ie., ½ of RSB's interest). Thus, no money will change hands now. To effectuate the equity transfer, Hunter is directing that RSB transfer its 10% interest in BHR to Skaneateles, which is owned indirectly by Hunter (75%) and indirectly by Eric (25%).

Will Eric be receiving a 25% interest in the 10% BHR equity transferred by RSB to Skaneateles in accordance with the current ownership structure of Skaneateles? Will the basis for the equity grant be on account of exchange for services Eric provided to Hunter or on some other basis? Paul can talk through the potential US tax implications and other issues related to any ownership in BHR that accrues to Eric, so please feel free to follow up directly with Paul.

Thank you.

George


George R. Mesires
Partner
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