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Chapwood Investments, LLC

Chapwood Investments offers seamless integration and delivery of a comprehensive asset management service to Individual Investors. We understand the client's balance sheet, implement an investment strategy, and continuously monitor and adjust performance. Our services include determining investment parameters, defining investment strategies, maximizing risk/reward trade-off, and minimizing taxation.

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Chapwood Investments, LLC

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  1. ChapwoodInvestments, LLC

  2. Wealth Management Process Chapwood Investments will provide seamless integration and delivery of a comprehensive asset management service. Understand Individual’s Balance Sheet Implement Investment Strategy Performance Measurement Continuous Monitoring & Adjustment Determine Investment Parameters Define Investment Strategy • Real Assets • Financial Assets • Liquid Assets • Liabilities • Unrealized Gains • Concentrated/ Restricted Positions • Client’s Experience • Cash Flow Needs • Risk Tolerance • Performance Objectives • Time Horizon • Tax & Estate Planning Needs • Active/Passive Management • Formal Policy Statement • Maximize Risk/Reward Trade-off • Minimize Taxation • Tailor Asset Allocation • Determine Performance Benchmarks • Manager Selection • Allocation of Funds • Fee Negotiation • Custody • Portfolio Rebalancing • Performance Attribution • Tracking and Reporting • Ongoing Review of Objectives and Strategies • Altered Client Circumstances • Altered Financial Market Conditions • Strategic and Tactical Adjustments

  3. Integrated Advice Firm-wide Access for Individual Investors Client Personal Banking* Investments Commercial Real Estate Banking* Trusts & Wealth Transfer Credit & Treasury Measurement* • Checking & savings • Debit Cards • Loans • CDs • Short-Term Credit • Online Services • Core Portfolio • Separate Account Management • Outside Money Managers (CSG) • Hedge Funds • Private Equity • Derivative • Term & Bridge Financing • Construction & Development Financing • Mortgage Warehouse Service • Personal Trust • Estate Planning & Settlement • Charitable Giving/Private Foundation • Financial & Tax Planning • Non-Financial Asset Management • Administrative Services • Reporting • Disbursement Services • Receivables Solutions • Liquidity Management • Fraud Protection • Interest Rate Derivatives • Specialty Financing • Liquidity & Investment Financing • Real Estate & Wealth Transfer Financing * Provided through Dallas Capital Bank

  4. Wealth Management Process – Firm Capabilities • Investment Parameter Determination • Performance objectives • Time horizon • Risk/reward trade-off • Overall Asset Allocation Plan • Maximize tax efficiency • Recommend asset classes and implementation vehicles • Analysis of Restricted Stock and Option Positions • Risk/return profile • Early exercise considerations • Exchange fund analysis • Diversification Alternatives for Concentrated Equity Positions • Tax and Estate Planning Alternatives Equity Portfolio • Investment Group and Separate Account Management • Buy and hold companies with sustainable global competitive advantage • Build positions over time where advantage is not fully reflected in current stock price Municipal Bond Portfolio • Laddered Municipal Bond Portfolio • Preserves capital and provides necessary cash flow • Provides flexibility for future interest rate moves • Structure portfolio to meet long-term objectives • Position new portfolios to complement existing XYZ stock and options as well as equity and fixed income positions • Maximize after-tax return Opportunistic Strategies • Non-Discretionary Brokerage Account • Take advantage of short-term trading calls • Special equity and fixed income products Alternative Investments • Direct Investment Alternatives • Private Equity • Venture Capital • REITs Diversification Strategies • Diversification alternatives for concentrated equity and restricted stock • Exchange fund • Hedging Strategies

  5. Firm’s Capabilities * Services provided through Dallas Capital Bank

  6. The 8 Metrics: How to Objectively Evaluate Your Portfolio This is the rate you need to make on your portfolio in orderto not lose purchasing power after subtracting your expenses, taxes, and cost of living increase. If your return is not greater than your cost of living increase, you lose purchasingpower. Rate Of Return This statistic measures how much risk you are takingversus your return. The lower the number, the better. Too oftenthis metric is not understood. The higher the number, the more your compoundedreturns. Standard Deviation This statistic explains the importance between your standard deviation and historical returns. VDPT is a crucialstatisticwhere the goal is a 0.8 or lower. Anything greater than 1.5is disasterous. Variance Drag Phantom Tax You want this to be 1 or higher on your entireportfolio. Anything at 0.5 or less isunacceptable. Sharpe Ratio This is the probability that your portfolio will experienceanyloss during the next 12 months. It should be 15% orless. Probability of Any Loss in the Next 12 Months Based on historical data, this identifies how much money isat risk. Amount of Money at Risk in the Next 12 Months These two values show the historical range of returns of your portfolio. The goal is to have this range as narrow aspossible, thus giving you a higher compoundedreturn. Upper and Lower Return Correlation To S&P 500 Index This metric quantifies how your portfolio performed relativeto the S&P 500 Index'sperformance.

  7. Investment Policy Statement

  8. PHILOSOPHY AND PURPOSE • To respond to investors’ expressed needs, and to assure a competitively robust service offering, an Investment Policy Statement must be prepared and will require adherence to the appropriate processes and approvals as describe below, prior to any asset allocation, manager selection,and portfolioactivity. • The purposes of the Investment Policy Statement are: • To elicit two-way dialogue about, and recorded in writing, the investor’s investment goals, objectives, and specific circumstances • To establish a sound strategic investment policy framework • To identify all the assets of the Client • To facilitate the ongoing assessment of investment performance versus agreed-uponbenchmarks REQUIRED FEATURES • At a minimum, every Investment Policy Statement must cover the following topics: • The scope ofthe assets • The overall investment objectives, time horizon, and risk profile of the assets covered under the IPS including any appropriate investment restrictions and income/distribution/liquidity requirements • The investor’s strategic asset allocation and allocation ranges • Any relevant tax, trust, and estate planning contact information (as provided by the investor) • Acknowledgement and agreement with the terms of the IPS by theinvestor • The IPS is designed to elicit information in form and in substance that will facilitate accurate completion of the IPS addressing the following topics: • Identification of any appropriate advisory assets • Descriptions of other relevant assets, such as securities and investment funds,concentrated positions, and/or personal non-securities holdings • The investor’s investment objectives and total return goals • The investor’s risk categorization • Any short- or long-term liquidity and contribution/withdrawal requirements • Sections relating to alternative assets, investment restrictions, and other pertinentinformation GENERAL INFORMATION This Investment Policy Statement was developed for Client. The purpose of this statement is tooutline an investment management philosophy that will set forth the objectives, guidelines, and constraints of the advisory portfolio and for any asset managers managing identified segments of the portfolio. It is intended to be sufficiently specific to be meaningful, yet flexible enough to be practical. The purpose of this Investment Policy Statement is to establish and communicate the long-term goals and investment guidelines of the Client. The Investment Policy statement provides the trusteeswith the direction and a framework within which they are expected to work and be evaluated. The intentof this Investment Policy Statement is to be specific enough to be meaningful, yet flexible enough to be practical, given changing economic, business, and financial marketconditions.

  9. PREPARATION This Investment Policy Statement has been prepared based on the instructions of the Clientand Chapwood Capital Investment Management, LLC concerning, among other things, investment objectives and goals, risk tolerance, and taxstatus. INVESTMENT OBJECTIVES The Client seeks a portfolio balanced between stock, bonds and cash, which emphasizeappreciation and some income at a level of price fluctuation relative to the investmentstrategy. The primary investment objective of the Client is to seek growth of capital over a full marketcycle. INVESTMENT GUIDELINES It shall be the function of the trustees to allocate the portfolios assets among U.S. common stocks, International equities, U.S. convertible securities, U.S. fixed income securities, Managed Futuresand U.S. cashequivalents. The assets of the portfolio shall be generally well diversified to avoid undue exposure to anysingle economic or industry sector, or individualsecurity. All assets should have a readily ascertainable market value and be readily marketable. Realization of capital gains and losses should be viewed solely in terms of investmentmerits. Equity investments should be listed on the New York, American or principal regional exchanges or traded on the over-the-counter market with the requirement that such have adequate marketliquidity. Quality liquid convertibles may also bepurchased. Fixed Income investments shall emphasize quality bonds including U.S. Governmentsecurities, Treasury obligations, and Corporate bonds with an investment graderating. Cash equivalents or short-term investments shall consist on investment grade, liquid securities suchas certificates of deposits, commercial paper, U.S. Treasury bills and other Treasury obligations, government agency paper, and high quality, short-term corporate securities that do not exceed a two- yearmaturity.

  10. INVESTMENT GOALS AND PERFORMANCE MEASUREMENT The trustees shall make reasonable efforts to preserve the principal of the Portfolio with theguidelines and the objectives set forth in this Investment PolicyStatement. The Client acknowledges that the economy and financial markets entail risks, and thus, they are volatile and go through cycles which can affect the performance of their portfolio either positivelyor negatively during any givenperiod. The Client’s gross investment results for the Portfolio will be compared, on a relative basis, to the general market index for the investment style selected by the Client, as represented by a balanced index consisting of 60% of the Standard & Poor’s 500 Equity Index, 30% of the Lehman Brothers Intermediate Government/Corporate Bond Index and 10% of the T-Bill rate (S&P 500/LBIGC/T-Bill Balanced Index) over a five to ten yearperiod. In addition, the Portfolio’s gross results will be reviewed relative to another broad market index,as well as an index that is representative of the investment style of the Investment Manager chosen to manage thePortfolio. The Portfolio’s gross returns will be reviewed relative to the appropriate management style index and the broad market index over a full market cycle (3 to 5 years). The Client’s results will also be shown on a net of feebasis. COMMUNICATIONS • The Client willreceive: • Written confirmation of everytransaction. • Monthly asset valuation statements, each month that hasactivity. • Quarterly statements summarizing all securityholdings. • Quarterly investment strategy statements written by the trustee, which will reviewrecent activity and provide an outlook for the upcomingperiod. • Quarterly performance reports which summarize the Portfolio’sresults. • Quarterly update letter requesting notification of change in financial statusand/orinvestment objective. REVIEWS AND NOTIFICATION OF CHANGE On a timely basis, the Client must provide the trustees with any change in the Portfolio’s circumstances or requirements which might affect the investment of the assets managed underthis program. This Statement of Investment Objectives should be reviewed periodically by the Client,and any modifications should be discussed andevaluated.

  11. STRATEGIC AND TACTICAL ASSET ALLOCATION RANGES • Strategic Asset Allocation uses historical data in an attempt to understand how the asset hasperformed and is likely to perform over long periods of time. The goal is not to “beat” the market, but toestablish a long-term investment strategy using a core mix of assets. The Strategic Asset Allocation represents an individual, subjective, customized target percentage for the time horizon selected by the Client for each major asset class, based on: historical market conditions; risk, reward, and correlations data; and other inputs as may beappropriate. • Asset Class Weightings: The Client’s assets shall be diversified among various classes ofinvestments. While the allocation of assets at any given time is dependent upon the overall economic and financial outlook and the relative risk/return parameters and valuation levels for each asset class, the Clients assets will be generally allocated among the major asset classes within the following ranges according to the Client’sdirections. • 80% Strategic AssetAllocation • 20% Tactical AssetAllocation • Assets Allocation Tactical Asset Allocation uses periodic assumptions regarding the performance and characteristicsof the assets and/or the economy. This approach attempts to improve portfolio performance by making “mid-Course” changes in the long-term strategy based on near-term strategy based onnear-term expectation. If, over time, the asset allocation falls outside of the Tactical Asset Allocation Ranges, Chapwood Capital Investment Management, LLC will inform the Client and recommend changesto reallocate the portfolio appropriately. The Client understands that Chapwood Capital Investment Management, LLC will not reallocate its assets without Client’s writtenconsent.

  12. Commercial Banking Business Loans, Treasury Management, Checking & Savings Accounts Industries • Manufacturing • Distribution • Transportation • Service Interest Rates • Competitive Pricing Structure • Revolving Lines of Credit for working capital • Terms Loans for growth capital, capex, and owner occupied real estate • Merger & Acquisition Financing (cash-flow based) • Tailored to client needs • Up to 3 years for Revolving Lines of Credit • Up to 5 years based on Cash Flow • Up to 7 years for Equipment • Up to 25 years for Owner Occupied Real Estate Terms

  13. Team Approach Client Family Team Delivery Chapwood Investments Investment Team Management Financial Structuring Investment Strategy Comprehensive Asset Management Management Client Strategy Group Investment Group Chapwood Managed Accounts

  14. Money Management Business Overview Buying Power & Tax-Sensitive Customized & Tax-Sensitive Quantitative Analysis Dedicated Client Team Wealth Preservation

  15. Sample Monthly Portfolio Report

  16. Preliminary Transaction Timetable Issues Addressed at Meetings Phase I Phase II Phase III Phase IV • Overview of Chapwood Investments • Private Wealth Management Services Overview • Information Gathering • Analyze Balance Sheet and Current Portfolio • Set Investment Goals • Determine Income and Liquidity Needs • Analyze Restricted Stock • Asset Allocation • Diversification Strategy • Portfolio Strategy • Create and Execute New Account Documentation • Implement Client’s Investment Program • Ongoing Monitoring and Adjustments

  17. Firmwide Investment Opportunities Client Family Team delivery of every investment opportunity within Chapwood Investments PWM and MSDW Senior Management Asset Allocation and Strategy Group Access to senior management Suitability/risk management Analysis Implementation Hedging & monetization Risk management strategy M&A Corporate Finance Equity Derivative Products Group Investment Banking Brokerage Advisory Investment manager selection Consolidated reporting Financial Analysis Customized solutions Venture Capital Leverage Buyouts Tax efficient separate account management Graystone Wealth Management Services Real Estate Merchant Banking Client Strategy Group Investment Group

  18. Professor Dr. Richard Marston James R.F. Guy Professor of Finance; Professor of Economics Director, Weiss Center for International Financial Research PhD, Massachusetts Institute of Technology, 1972; BPhil, University of Oxford, 1968; AB, Yale University, 1966 Research Areas: International investments; international asset pricing; foreign exchange risk management Current Projects International asset pricing, exchange rate exposure of firms Academic Positions Held Wharton: 1977-present (Director, Weiss Center for International Financial Research, 1992-present; Acting Director, U.S.-Japan Management Studies Center, 1989-91; named James R.F. Guy Professor of Finance and Economics, 1986). University of Pennsylvania: 1972-present. Visiting appointments: Kiel Institute; Institute for Monetary and Economic Studies, Bank of Japan; Chulalongkorn University, Thailand; Institute for Advanced Studies, Vienna; EcoleSuperieure des Sciences Economiques et Commerciales, Paris; London Business School Career and Recent Professional Awards; Teaching Awards German Marshall Fund Fellow, 1981; Sanwa Bank Award, 1992 Professional Leadership 2001-2005Associate Editor, Journal of International Money and Finance, 1981-present; Board of Editors, Empirical Economics, 1983-present; Board of Editors, Japan and the World Economy, 1987-present Representative Publications International Financial Integration. Cambridge University Press, 1995. "The effects of industry structure on economic exposure," Journal of International Money and Finance 20.2 (April 2001) (with G.M. Bodnar and B.Dumas)."Pass-through and Exposure," Journal of Finance (February 2002). Wharton faculty scheduled to instruct at the Private Wealth Management Program are highlighted below. These faculty members are actively involved in the Securities Industry Institute and Investment Management Consultants Association (IMCA) Programs at Wharton. In addition, you will be able to call on the expertise of those invited as guest lecturers by the Institute. Richard C. MarstonRichard C. Marston is the James R.F. Guy Professor of Finance and Economics and is also Director of the George Weiss Center for International Financial Research. He holds an A.B. degree from Yale University, a B. Phil. from Oxford University, and a Ph.D. from the Massachusetts Institute of Technology. He was awarded a Fulbright and Rhodes Scholarship, and most recently, the Sanwa Bank Prize in International Finance. Dr. Marston will serve as Academic Director for the Institute for Private Investors' Private Wealth Management Program. .Dr. Marston's research focus is on international financial markets and exchange rates. He is the author or editor of five books on international finance including his most recent work, International Financial Integration among the Major Industrial Countries. He holds senior editorial positions in several journals, including Journal of International Economics, Journal of International Money and Finance, and the Journal of Economic Literature. He has conducted programs in investment management for the Investment Management Consultants Association, the Securities Industry Association, and Pension Fund Program at Wharton, for Nomura Securities in Singapore, for the Asian Securities Industry Association in the Philippines, Taiwan and Malaysia, for Daiwa Securities in Japan, for Seminarian in Argentina, Chile, and Mexico, as well as for a number of American securities firms and money managers.

  19. Professor Dr. Richard Marston’s Class Notes

  20. Why Invest with Chapwood Investments? Chapwood Investments’ mission is to deliver institutional quality portfolio management to high-net-worth individuals by utilizing the tools and statistics commonly used by the largest endowments and foundations in the country. By focusing on both quantitative and qualitative aspects on portfolio construction, Chapwood Capital Investment Management is able to deliver wealth management solutions not found any where else in the industry. As an independent investment advisor, we are able to provide investment advice without any conflict of interest and of third party influence. We blend traditional and alternative investments to build overall investment management solutions. Together as a team, we assist our clients in assessing their goals and build portfolios to achieve these. Our main objective is to achieve your desired are of return with the least amount of risk. It is crucial to map out your investment plan. Chapwood will assist in the development and implementation of an Investment Policy to state the purpose and the guidelines of your investment goals. The Investment Policy is structured around each client’s personal goals, risk tolerance, time horizon and cash flow needs. Chapwood will continually monitor and evaluate the performance of client portfolios to ensure that they remain consistent with your objectives. Our clients include entrepreneurs, professionals, executives, business owners, family foundations, entertainment and sports professionals.

  21. The ChapwoodWealth Management Solution • Chapwood's quantitative approach provides… • A disciplined approach with no opinion, emotions, or judgment. • An ability to impartially measure potential risk and reward. • The power to process a significant amount of information efficiently. • A powerful complement to top-down asset allocation and fundamental research. • Chapwood creates portfolios to produce a desired rate of return with the lowest level of risk possible by combining assets that historically have exhibited a low correlation to one another. By doing so, we are building a portfolio that is made-up of assets that will respond different to any given market or economic conditions. In theory an “All Weather Portfolio” that has the potential to perform regardless of market conditions. • Our investment strategy is quantitative and methodical in nature. We follow an academically proven investment strategy, “The Modern Portfolio Theory”, which won a Nobel Prize in 1990. Modern Portfolio Theory states that risk can be reduce through diversification and evaluation of the historical inter-relationship of the various assets in a portfolio. Therefore asset allocation is the most important factor when building a portfolio. • Chapwood Capital Investment Management utilizes exchange traded funds, bonds (both treasury and corporates) and alternative investments such as hedge funds, private equity funds when implementing our portfolios. Exchange traded funds allow us to minimize our risk by focusing on indices and sectors and are a cost-effective and tax-efficient way to invest, while alternatives can complement the overall portfolio with little or no relationship to the overall long only equity markets.

  22. Major Industry Trends… The 3 C’s Competition Consolidation • Wachovia + Prudential • UBS • CSFB + DLJ • Schwab + US Trust • JP Morgan + Chase • Bankers Trust + Deutsche Bank • Wealth Management Firms • Trust and Investment Firms • Banks • Insurance Companies Convergence • Blurring of lines among providers (banks, insurers, brokerages, fund groups)

  23. Core Disciplines of Chapwood Investments Risk Management • Pre/Post Liquidity Events • Education • Process • Analysis • Executive Stock Options (NQSO’s and ISO’s) • Valuation • Sensitivity • Exercise timing • Tax Efficient Diversification • Concentrated Equity • Hold, Sell, Hedge Frameworks and Modeling • Risk-Adjusted Analysis • Correlation Studies • Beta Analysis • Trading and Market Share Research • Disposition Sizing Matrices • Risks of Undiversified Investing Case Studies • Restricted Stock • Regulatory Analysis (144, 145,S-3, Section 16) • IPO Lockup Analysis • Overhang Research • Insider Selling Studies • Blind Trust Strategy • Merger Agreement Analysis • Secondary Offering Analysis Tax, Trust & Estate Planning • Pre/Post Liquidity Events • Education • Process • Analysis • Estate Planning • Outright Gifts • Leveraged Gifts • Control • Income Tax Planning • NQSO/ISO • Philanthropy • Outright Gifts • Split Interest Gifts • Public vs. Private vs. Hybrid Asset Management • Portfolio Analysis • Historical Performance • Risk-Adjusted Performance • Rebalancing Analysis • Comparative Analysis • Cash Flow Modeling • Growth Projections • Asset Allocation • Asset Mix Projections • Risk/Reward Analysis • Optimization • Exchange Fund Analysis • Comparative Structures • Sell/Index Fund Comparison • Structured Notes Other Quantitative Analysis • Executive Compensation Analysis • PTIP • EICP • Cash Flow • Net Worth • Option Valuation • Grandfathered Short Against The Box • Unwind Analysis • Roll Analysis • NQSO: Exercise or Hold? • ISO: AMT Now or Later? • Year End Strategies • Mutual Fund Distribution Analysis • Capital Gain Conversion Analysis

  24. Diversification: A Look At Correlation • A basic definition of diversification can simply be: avoid “putting all your eggs in one basket”. Certainly there is value in averaging one’s risk with a number of different investments, asset categories or portfolios, but diversification should be looked at as something even more important. • The interrelationships among securities, asset classes or multiple managers within a total portfolio is considered as important as the risk/return characteristics of the individual securities, asset classes, managers, or portfolios. Modern portfolio theory redefined the notion of diversification beyond just not “putting all your eggs in one basket.” It suggests the that to reduce risk through diversification major emphasis needs to be placed on finding investments that are distinctly different from one another. This is important because each investment’s unique pattern of returns partially offsets the others’ and has the effect of smoothing overall portfolio volatility. • Investments need to be evaluated based, not only on risk and return, but on diversification and the investments’ covariance to the other holdings in the total portfolio.

  25. Illustration The diagram at right represents two investments, A and B, which move in lockstep with one another. They have similar risk (volatility) and return characteristics, and as A moves up so does B. The relationship between A and B can be statistically described as “perfectly positively correlated”. If money was split 50-50 between investments A and B, a portfolio that follows the dotted line would result. The return of the portfolio would simply be a weighted average of the return of the two investments. The risk of the portfolio would also be a weighted average of the risks of the two investments, because A and B are perfectly positively correlated to each other. In this scenario, where we are merely averaging the risk, there would be no diversification effect. In the diagram at left, investments C and D also have similar return and risk (volatility) characteristics. But unlike investments A and B, C and D move in opposite cycles. When C is going up, D is going down. This example illustrates “perfect negative correlation.” When money is split 50-50 between C and D, the combined portfolio benefits dramatically from the countercyclical pattern of the two investments. We get a weighted average return of the two investments but eliminate the risk through the diversification effect of the countercyclical investments. Unfortunately, such perfect negatively correlated investments generally do not exist in our investment world. The las diagram is more representative of actual investment situations. Investments E and F, with similar risk (volatility) and return characteristics, are neither perfectly positively nor perfectly negatively correlated. There are periods where the investments tend to move in the same direction and the diversification effect is week, and other times where they move in different directions, indicating periods of lower correlation and a strong diversification effect on the portfolio. The portfolio return is the weighted average of returns of E and F, but the diversification effect of an irregular pattern of returns has partially reduced the risk on a portfolio basis.

  26. Definition: The Correlation Coefficient • To account for the effect of the covariations between two investments (the extent to which two variables move together), we use the correlation coefficient between the two investments. The correlation coefficient helps indicate the extent to which knowledge of one turn provides infomationregarding the behavior of the other. This relative measures is bounded by +1.0 and –1.0. +1 = Perfect Positive Correlation • A positive correlation indicates that two investments tend to move in the same direction at the same time. When one increases, the other tends to increase. A correlation of 0.89 between investments X and Y versus a correlation of 0.67 for two other investments indicates that for X and Y the patterns of their returns will likely be more similar than the two investments with a 0.67 correlation. The closer the correlation coefficient is to +1.0, the more likely the two investments will move in the same direction at the same time. -1 = Perfect Negative Correlation • A negative correlation indicates that returns on two investments tend to move inversely at the same time, as one increase, the other tends to decrease. The larger a negative correlation coefficient, the more likely two investments will tend to move inversely during the same period. For example, a correlation coefficient of -0.33 means two investments are less correlated than those with a correlation of -0.19. 0 = No Correlation • A zero correlation indicates that the patterns of two investments are unrelated to one another. Returns on two investments are independent and have no tendency to move in the same direction or in opposite directions.

  27. Diversification Across Multiple Asset Classes or Managers • An account’s total return will always be the weighted average of the returns of the investments (portfolios) that comprise the total account, regardless of the pattern of returns among the selected investments. In all cases, however, the portfolio risk will be less than the weighted average of the risk level of the individual investments (portfolios) comprising the total account (unless a perfect positive correlation relationship is present). This is because of the diversification effect caused by investments whose return patterns partially offset each other, helping to smooth out the volatility of the total account. The lower the correlation in returns, the more likely a reduction in risk may occur. The concept of risk/reward and correlation should be applied when diversifying portfolios by individual securities, asset classes or portfolio mangers an their investment styles.

  28. Butowsky/SamsTeamMission Statement • We seek to be the “Family Office” for individuals and families with a net worth greater than $10 million. For those unique families we commit to provide a level of service unparalleled in the investment business. • We believe that every family needs one organization that they trust for investment counsel. We also believe that while every family desires the “best” investment allocation, they want it delivered in a simple, summarized and consistent fashion. They want this delivery from people they trust and more importantly, people that they will trust with their family members.

  29. Introduction to Chapwood Investments HISTORY RESOURCES

  30. Exchange Traded Funds (ETFs)

  31. What are ETFs? • ETFs: An Overview • ETFs are exchange listed securities that give investors the ability to buy or sell in the collective performance of an entire index or sector as a single security. The value of an ETF share is derived from a basket of stocks that are held typically in trust for each particular ETF issue. • ETFs are structured to track both broad and narrow indices, industries, sectors and countries. ETFs are not new; their popularity has soared in the recent years. There are over 500 different ETFs currently trading and often used by investors for index tracking or long/short strategies, sector rotation, cash management, hedging, and international exposure. • Similar to traditional equities, ETFs are actively traded by many different types of investors and can be sold short (but are exempt from the up-tick rule), margined, and loaned. iShares, DIAs, Diamonds, HOLDRs, Sector Spyders, StreetTracks and Vipers ETFs

  32. Who Utilizes ETFs and Why? • Hedge Funds Were Early Adopter... • The ability to take sector / market views. • Most ETFs are exempt from up-tick rule for short sales.. • Unlike futures, ETFs do not require CFTC registration, do not need to be rolled, and do not require the infrastructure for daily marked-to-market gains and losses. • ETFs fit into risk model, back office systems, portfolio management systems just like a stocks. • Like being able to buy (or sell) the equivalent of a basket of stocks through one transaction • More Traditional Accounts Gaining Ground… • The ability to take sector / market views. • Most ETFs are exempt from up-tick rule for short sales.. • Unlike futures, ETFs do not require CFTC registration, do not need to be rolled, and do not require the infrastructure for daily marked-to-market gains and losses. • ETFs fit into risk model, back office systems, portfolio management systems just like a stocks. • Like being able to buy (or sell) the equivalent of a basket of stocks through one. • Tax Efficiency… • ETFs, like index funds in general, tend to offer greater tax benefits because they typically generate fewer capital gains than actively managed funds due to low portfolio turnover. • Investors who want to liquidate shares in an ETF simply sell them to other investors, thus not requiring the fund to sell securities and generate capital gains tax liability. In addition, the creation and redemption process involves an “in kind” transfer of securities, a transaction that is not a taxable event for the fund or trust.

  33. Advantages of ETFs • Low Cost... • Lower turnover costs: Because they are index-based, ETFs require few portfolio changes, resulting in much lower transaction costs than actively managed portfolios. • Lower expense ratios: As passive investments, ETFs also have lower operating expenses and lower management fees, resulting in lower annual expense ratios than many other registered investment products. • Lower operational costs: Since ETFs trade on an exchange and use “in kind” creation and redemption; they are insulated from the costs of buying and selling securities to accommodate shareholder purchases and redemptions. • Lower trading costs: Spreads on many ETFs tend to be narrow, making them inexpensive to buy and sell. • Transparency… • Lower turnover costs: Because they are index-based, ETFs require few portfolio changes, resulting in much lower transaction costs than actively managed portfolios. • Lower expense ratios: As passive investments, ETFs also have lower operating expenses and lower management fees, resulting in lower annual expense ratios than many other registered investment products. • Lower operational costs: Since ETFs trade on an exchange and use “in kind” creation and redemption; they are insulated from the costs of buying and selling securities to accommodate shareholder purchases and redemptions. • Lower trading costs: Spreads on many ETFs tend to be narrow, making them inexpensive to buy and sell. • Flexibility… • Investors can gain exposure to a diversified portfolio of stock with a single transactions. • Investors can track ETF prices throughout the trading day. • ETFs can be bought and sold at intra-day market prices. • ETFs can be purchased on margin. • ETFs are transparent, trust holdings are readily available. • Diversification… • Because each ETF represents a basket of stocks, it inherently provides diversification across an entire index. Additionally, the expanding universe of ETFs offer exposure to a diverse variety of markets including broad-based indexes, sector specific indexes and country and regional world markets.

  34. CHAPWOOD INVESTMENTS RISKMANAGEMENT SERVICES Hedging, Monetization and Diversification Strategies ForHolders of Control & RestrictedEquities Summer 2016 These materials have been preparedsolely forinformational purposes,basedupon information generallyavailable to the public fromsources believedto bereliableand no representationor warrantyis givenwith respect to its accuracy or completeness. Chapwood Investments disclaims any and al/ liability relating to these materials, including, without limitation, any express or implied representations or warranties forstatements or errors contained in, and omissionsfrom, these materials. These materials do not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or participate in anyparticular trading strategy and no representation or warranty is given with respect to anyfuture offer or sale co,iforming to the terms hereof Chapwood Investments and/or its affiliates may have positions in,and may effect transactions in securities and instruments of issuers mentioned herein and may also provide or seek to provide significant advice or investment services, including, without limitation, investment bankingservices, for the issuers of such securities and instruments. Certain assumptions have been made, and/or parameters set, in the preparation of these materials which have resulted in any returns detailed herein, and norepresentation or warranty is made that any returns indicated will be achieved. Changes to assumptions or parameters may have a material impact on any returns detailed. Past performanceis not necessarilyindicative offuture returns. Price and availability are subject to change without notice. Options are not for everyone. Before engaging in the purchase or sale of options, potential investors should understand thenature of and extent of their rights and obligations and be aware of the risks involved, including, without limitation, the risks pertaining to the business andfinancial condition of the issuer of the underlying security orinstrument. Your attention is called to thepublication "Characteristics and Risks of Standardized Options" which is availablefrom your account representative. Before entering any transaction, potential investors areencouraged to consult their legal counsel and tax advisor regarding the consequences of the transactions describedherein. CHAPWOOD INVESTMENTS www.chapwoodinvestments.com 1of31

  35. TABLE OFCONTENTS Introduction Hedging, Monetization andDiversificationStrategies III. Further HedgingDetails Points Common to HedgingTransactions The Chapwood InvestmentsAdvantage Appendices: A:Section16(a) B: Section 16(b)C:Section 16(c) D:Glossary ofTerms www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 2 of31

  36. PRIMARYDISCLAIMER The benefits of the transactions described in this presentationto the investor canbesignificant. Nonetheless,thesetransactionsmaybecomplex. Chapwood Investments urges clients to review the legal, tax, regulatory andaccounting ramifications with their own professional advisorsprior to executing anytransaction. Chapwood Investmentsdoes NOT offer tax,legal,regulatory or accounting advice. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 3 of31

  37. INTRODUCTION www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 4 of31

  38. EXECUTIVESUMMARY Investors with control or restricted equity positions havehistorically had few alternativesfor managing therisks associated with their stock other than complying with themanner of sale and volume restrictionsassociatedwith Rule144. Notwithstanding, Chapwood Investments cancreateand execute privately negotiated transactions for qualifiedshareholders which may allow them to hedge and in somecases monetize and diversify their positions withoutrealizing a sale of theirstock. *Clients are advised to seek the advice of their own tax counsel regarding constructive saleissues. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 5 of31

  39. TAXPAYER RELIEF ACT OF1997 • On August 5, 1997 President Clinton signed into law the Taxpayer Relief Act of1997. Included in its provisions was a change in the taxable status of "constructivesale" transactions.Specifically the transactions affected are: • Short-Against-the-Box • Offsetting Notional Principal Contracts(such as total returnswaps) • Forward contracts to sell fixed amount of property for fixedprice, or futurecontracts • Any transaction with substantially the same effect as thetransactions mentionedabove • Any person executing these transactions after June 8, 1997 outside of the Short TermHedging Exception (I) will be deemed to have a taxable sale on the date the initialhedging transaction isexecuted. Note: (1) Chapwood Investments does not represent this analysis to be accurate orcomplete. Clients are advised to seek the advice of their own tax counsel regarding constructive saleissues. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 6 of31

  40. HEDGING, MONETIZATION ANDDIVERSIFICATIONSTRATEGIES www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 7 of 31

  41. PROTECTIVEPUTOPTION Investor owns XYZ stock and is unable or unwilling to sell the shares. Investor seeks to reducedownsiderisk. The current market value of XYZ stock is $40.00 per share. Investor purchases a one year,European style, cash-settled protective put option from Chapwood Investments. Indicatively, the put couldhave a $36.00 strike level and cost $5.00 pershare. Market ValueOn TradeDateLongStock Stock & ProtectivePut Collar Value@Expiration Indicative ExpirationScenarios ClosingPrice 60 ----------------------------------------------------- $22.00 • •Put Value = $36.00- 22.00 = $14.00(2) • Portfolio Value = $22.00 (Long Stock) +$14.00 • (Gain on Put) - $5.00 (Premium Paid For Put) =$31.00 • •Put Value = $0.00(2) • Portfolio Value = $60.00 (Long Stock) - $5.00(Premium Paid For Put) =$55.00 $60.00 20 ------- -- Stock Price@ 60 Expiration 40 5 Stock Close AbovePutStrikes (e.g.$60) 30 Stock Closes BelowPut Strike (e.g.$22) Notes: (1) Market value is contingent upon the price at which Chapwood Investments is able to executeits hedge. (2) Investor may be subject to Straddle TaxRules. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 8 of31

  42. PROTECTIVE PUT OPTIONCONSIDERATIONS Why? WhyNot? • Investor hedges position below the put strike whileretaining ownership, voting rights anddividends. • Investor maintains exposure to all upside appreciationin stockprice. • Option strike prices, maturities, and settlement featuresmay be customized to meet Investor'sneeds. • On a situation specific basis, Investor may borrow, atChapwood Investments' discretion, against theposition. • Investor may have the ability to unwind Europeanand/or American style put options prior to maturity with Chapwood Investments'consent. Unwind may result in again or loss toclient. • If properly structured, will not be considered aconstructivesale. • Investor realizes an out-of-pocket expense to payoptionpremium. • Client has the ability to unwind early and have Chapwood Investmentsbuy back the European style put options.These options may have values less than their intrinsicvalue prior to maturity. American style put optionswill always have values greater than or equal to theirintrinsic value, but are more expensive than Europeanstyle putoptions. • Straddle tax rules may apply. Clients must consulttheir independent taxadvisors. • Transaction may be involuntarily terminated pursuantto ISDA "terminationevents." www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 9 of31

  43. COVERED CALLWRITING Investor owns XYZ stock and is willing to sell the shares if reach a target price. Investor seeks togenerate cash from the stockposition. The current market value of XYZ stock is $40.00 per share. Investor sells to Chapwood Investmentsa oneyear, European style, cash-settled call option struck at the investor's target sale price of $50.00 (CallStrike). Indicatively, Chapwood Investmentsmakes an up-front payment of $2.50 per share in optionpremium. Market Value OnTrade DateLongStock Stock & ShortCall CollarValue@Expiration 80 l< Indicative ExpirationScenarios ClosingPrice $22.00 • Call Value =$0.00(2) • Portfolio Value = $22.00 (Long Stock) + $2.50(Premium Received From Call Sale) =$24.50 70 60 50 • •Call Value = $20.00(2) • Portfolio Value = $70.00 (Long Stock) - $20.00 (Loss on CallSale) + $2.50 (Premium Received From Call Sale)=$52.50 $70.00 30 20--- 20 "'----+-.,---JL----'--+---'--' 80 Stock Price @Expiration 30 40 Stock Closes BelowCall Strike (e.g.$22) 60 70 Stock Close Above CallStrikes (e.g.$70) 50 Notes: ( 1) Market value is contingent upon the price at which Chapwood Investmentsis able to executeits hedge. (2) Investor may be subject to Straddle TaxRules. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 10 of31

  44. COVERED CALL WRITINGCONSIDERATIONS Why? WhyNot? • Investor relinquishes the appreciation of the stockabove the call strike price, and at a minimum willowe Chapwood Investmentsthe difference between the callstrike price and the stock price at unwind orexpiration. • Investor maintains all downside risk ofstock. • Investor must post stock or other margin eligiblesecurities as collateral against short calloption. • Straddle tax rules may apply. Clients must consult theirindependent taxadvisors. • Transaction may be involuntarily terminated pursuant toISDA "terminationevents." • Investor earns an up-front premium for the potentialto sell stock at a future date, at a target strikeprice. • Option strike prices and maturities may becustomized to meet Investor's risk/rewardparameters. • Investor retains ownership of underlying shares,voting rights and dividendincome. • On a situation specific basis, Investor may borrow,at Chapwood Investments'discretion, against theposition. • Investor may have the ability to unwind Europeanand/or American style call options prior toexpiration with Chapwood Investments'consent. Unwindmay result in a gain or loss toclient. • Ifproperly structured, will not be considered aconstructivesale. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 11 of31

  45. ZEROPREMIUMCOLLAR Investor owns XYZ stock and is unable or unwilling to sell the shares. Investor seeks to reducedownside risk without paying any optionpremium. The current market value of XYZ stock is $40.00 per share. Investor enters into a zero premiumcollar with Chapwood Investments. Investor purchases a one year, European style, cash-settled put optionfrom Chapwood Investmentsand finances the put premium by selling a one year, European style, cash­settled call option to Chapwood Investments.Indicatively, the put could have a $36.00 strike and the calla$46.00strike. Market Value On TradeDateLongStock Collar Collar Value@Expiratwn Indicative ExpirationScenarios ClosingPrice 60- --- - -- - - --- - - --- ----- - -- - - - - - - - -- -- - - - - - - - - - - --- -- -- • •Put Value = $36.00- 22.00 = $14.00(2) • Call Value = $0.00(2) • Portfolio Value = $22.00 (Long Stock) + $14.00(Gain on Put) = $36.00 $22.00 • •Put Value = $0.00(2) • Call Value = $0.00(2) • PortfolioValue = $42.00 (Long Stock) $42.00 • •Put Value = $0.00(2) • •Call Value = $58.00 - $46.00 = $12.00(2) • Portfolio Value = $58.00 (Long Stock) - $12.00(Loss on Call) =$46.00 $58.00 +---'-30 '---l-40 20-- 20 -'--4- 50 --' 60Stock Price @Expiratwn Stock Closes BetweenStock ClosesAbove Stock ClosesBelowPut Strike(e.g.$22) Put & CallStrikes (e.g.$42) CallStrike (e.g.$58) Notes: (1) Market value is contingent upon the price at which Chapwood Investments is able to executeits hedge. (2) Investor may be subject to Straddle TaxRules. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 12 of31

  46. ZERO PREMIUM COLLARCONSIDERATIONS Why? WhyNot? • Investor relinquishes the appreciation of the stockabove the call strike price, and at a minimum willowe Chapwood Investmentsthe difference between thecall strike price and the stock price upon unwindorexpiration. • Client has the ability to unwind early and haveChapwood Investmentsbuy back the European style putoptions. These options may have values less thantheir intrinsic value prior to maturity. American styleput options will always have values greater than orequal to their intrinsic value, but are more expensivethan European style putoptions. • Investor must post stock or other margin eligiblesecurities as collateral against short call option andloan, iftaken. • Straddle tax mies may apply. Clients must consulttheir independent taxadvisors. • Transaction may be involuntarily terminated pursuantto ISDA "terminationevents." • Investor hedges position below the put strike whileretaining ownership, voting rights anddividends. • No net up-front out-of-pocket expense to theinvestor. • Option strike prices, maturities, and settlementfeatures may be customized to meet Investor'sneeds. • On a situation specific basis, Investor may borrow, atChapwood Investments'discretion, against theposition. • Investor may have the ability to unwind Europeanand/or American style put or call options withChapwood Investments'consent. Unwind may result in again or loss toclient. • If structured properly, will not be considered aconstructive sale. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 13 of31

  47. ZERO PREMIUMPUT SPREADCOLLAR Investor owns XYZ stock and is unable or unwilling to sell the shares. Investor seeks to reduce downside riskwithout paying any option premium. Investor believes immediate risk is concentrated in first 25% of XYZdepreciation. . The current market valueofXYZstock is $40.00 per share.Investorenterto a put spread collarwithChapwood Investments. Investor purchases a one year, European style, cash-settled put optton from Chapwood Investmentsandfinances the put premium by selling a one year, European style, cash-settled call option and a one year Europeanstyle, cash settled put option to Chapwood Investments. Indicatively, the put <purchased could have a $40.00 strike,the put sold a $30.00 strike and the call sold a $55.00strike. . Collar Value@Expiration Market Value On TradeDate Indicative ExpirationScenarios ClosingPrice LongStock Put SpreadCollar 80 -------- • •Put (1) Value = $40.00- $22.00 = $18.00(2) • •Put (2) Value = $30.00 - $22.00 = $8.00(2) • Call Value = $0.00(2) • Portfolio Value = $22.00 (Long Stock) + $18.00 (Gain on Put (1)) - $8.00(Loss on Put (2)) =$32.00 • •Put (1) Value = $40.00- $32.00 = $8.00(2) • •Put (2) Value = $0.00(2) • Call Value = $0.00(2) • Portfolio Value = $22.00 (Long Stock) + $8.00 (Gain on Put (1))=$40.00 • •Put (1) Value = $0.00(2) • •Put (2) Value = $0.00(2) • Call Value = $0.00(2) • Portfolio Value = $50.00 (LongStock) • •Put (1) Value = $0.00(2) • •Put (2) Value = $0.00(2) • •Call Value = $75.00 - $55.00 = $20.00(2) • Portfolio Value = $80.00 (Long Stock) - $20.00 (Loss on Call) =$55.00 $22.00 70 -------------------- - - - - -- - - ---- -- - - - - - ----- 60 $32.00 50 $50.00 30 30 40 5060 Stock ClosesBetween Put(I)&Call (e.g.$50) 80 $75.00 StockCloses StockClosesBelow Put (2)Between Put (2)& (e.g.$22) Put (I) (e.g.$32) Stock ClosesAboveCallStrike(e.g.$75) Notes: (1) Market value is contingent upon the price at which Chapwood Investmentsis able to executeits hedge. (2) Straddle Tax Rules. www.chapwoodinvestments.com CHAPWOOD INVESTMENTS 14 of31

  48. PUT SPREAD COLLARCONSIDERATIONS Why? Why Not? • Investor relinquishes the appreciation of the stock above the call strike price, and at a minimum will owe Chapwood Investmentsthe difference between the call strike price and the stock price at unwind orexpiration. • Investor at risk below lower put strikeprice. • Client has the ability to unwind early and have Chapwood Investmentsbuy back the European style put options. These options may have values less than their intrinsic value prior to maturity. American style put options will always have values greater than or equal to their intrinsic value, but are more expensive than European style putoptions. • Investor must post stock or other margin eligible securities as collateral against short call option and loan, iftaken. • Straddle tax rules may apply. Clients must consult their independent taxadvisors. • Transaction may be involuntarily terminated pursuant to ISDA "terminationevents." • Investor hedges position between the put strikes while retaining ownership, voting rights anddividends. • No net up-front out-of-pocket expense to the investor. • Option strike prices, maturities, and settlement features may be customized to meet Investor'sneeds. • On a situation specific basis Investor may borrow, at Chapwood Investments'discretion, against theposition. • Investor may have the ability to unwind European and/or American style put or call options with Chapwood Investments’consent. Unwind may result in a gain or loss for theclient. • Investor maintains voting rights and continues to receivedividends. • If properly structured, will not be considered a constructivesale. 0 r:\pwm web\pwm marketing materials\hedging and restricted stock strategiesI risk_management_strategies_for_holders_of_control_and_restricted_stock.pptIju!23 1999I15:19 CHAPWOOD INVESTMENTS 15 of31 Chapwoodinvestments.com

  49. PRE-PAIDFORWARD Investor owns XYZ stock, currently trading at $40.00, and wishes to reduce downside exposure and maintain partial upside participation while monetizing the maximum amount possible without realizing a taxablesale. Investor enters a two year Pre-Paid Forward Contract. Indicatively, Investor could receive a Purchase Price ("PP") of $32.80 (82o/o) at the time the contract is entered into in exchange for an obligation to deliver a number of shares to be determined at maturity based upon the Settlement Price ("SP"). (In some cases the transaction may be cash settled.) Indicatively, the transaction also could have a Downside Protection Threshold Price ("DPTP") of $36.00 (90%) and an Appreciation Threshold Price ("ATP")of$46.00(115%). Pre-Paid Value@ Expiration 70 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Between$36.00 (DPTP) and $46.00 (ATP) Full exposure to stockprice Above $46.00(ATP) No longer participate in stockappreciation 60 - - ---- - - - --- -- - - - - ---- --·----·-·---- ---·-- - - - - - - - - - - Market Value <1> On TradeDate LongStock Pre Paid Forward + Purchase Price +Stock PurchasePrice Belm,v $36.00(DPTP) not at risk forstock pricedepreciation Stock Price@ Expiration Note: (1) Market value is contingent upon where Chapwood Investments is able to execute it's hedge. 10 20 30 40 50 60 70 20 30 40 50 60 70 r:\pwm web\pwm marketing materials\hedging and restricted stock strategies I risk_management_strategies_for_holders_of_control_and_restricted_stock.pptIjul231999I15:19 CHAPWOOD INVESTMENTS 16 of31 Chapwoodinvestments.com

  50. PRE-PAID FORWARD SETTLEMENT Cash Settlement Physical XYZ Below DPTP Client Pays: I 00% Value ofLong Position (Delivery Amount will never be greater than sharevalue) Client Delivers: I 00% Long Position Client Delivers: Portion of Stock Equivalent to DPTPValue XYZ Between DPTP andATP Client Pays: DPTPValue Client Delivers: Portion of Stock Equivalent to DPTP +Appreciation aboveATP XYZ Above ATP Client Pays: DPTP +Appreciation aboveATP r:lpwm weblpwm marketing materialslhedging and restricted stock strategies I risk_management_strategies_for_holders_of_control_and_restricted_stock.pptIjul231999I15:19 CHAPWOOD INVESTMENTS 17 of31 Chapwoodinvestments.com

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