Estate of Leon Israel, Jr., Deceased, Barry W. Gray, Executor, and Audrey H. Israel - Page 9

                  In the context of the straddle transactions of the type                             
            involved in these cases, commodity forward contracts (as with                             
            futures commodity contracts) are not consummated by actual sale                           
            or purchase and delivery of the underlying securities or                                  
            commodity.  Actual delivery of the underlying securities is not                           
            contemplated.  Rather, forward contracts are generally closed by                          
            offset, that is by entering into opposite forward contracts in                            
            the same commodity with the same or similar settlement dates.                             
            When such opposite forward contracts in the same commodity are                            
            entered into, the rights and obligations of the investor in the                           
            initial contracts are simply regarded as terminated.                                      
                  The parties agree that in the above situation the                                   
            termination by offset of the investor's respective positions                              
            constitutes a capital transaction.  We emphasize that all that                            
            has happened in closing the transaction by way of offset is that                          
            the investor (at whatever time during the length of the contract                          
            the investor chooses to terminate or lock in the gain or loss                             
            that has occurred with respect thereto as a result of changes in                          
            the price differential and in interest and discount rates                                 
            relating to the relevant Government securities from the day the                           
            forward contracts were first entered into until the day the                               
            contracts are closed) simply notifies the other party of the                              
            investor’s desire to close the transaction by offset and, in                              
            effect, the contracts or positions are terminated as of that                              
            point in time.                                                                            

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Last modified: May 25, 2011