“DIAMOND BOXESTM*”

A New Investment Era

for Alpha Bank

by David Birnbaum / Rare 1

DIAMOND BOXESTM*

TABLE OF CONTENTS Overview

Why Buy a Diamond Box

Transformation

Potential Clients for Boxes

Potential Box Sizes

Comparison: Loose Diamonds v. Diamond Box

Comparison: Gold Shares v. Gold Bars v. Diamond Boxes

David Birnbaum Expertise and Credentials – related

Building Blocks

Liquidity Characteristics Diamond Boxes

Lo/Hi

Carrying Costs; Insurance Costs; Shipping Costs

Profit To Sponsors

Built-In Advantages

DIAMOND BOXESTM*

TABLE OF CONTENTS

Precedent

Potential Evolvement

The Right Moment

Burgeoning China and India

Biggest Risk / Upside

Diamond Specs X

Diamond Specs Y

Diamond Specs Z

Protecting the Integrity of the Boxes

Sample Box Manifest

2 Salient Issues

Senior Executive

Succession

DIAMOND BOXESTM*

Overview “Diamond Boxes” are treasure chests of unique and fabulous jewels assembled into a certified and intriguing new investment vehicle. Diamond Boxes were conceived by the “David Birnbaum/Rare1” group, a veteran original-source international diamond-gem and rare jewels dealer, to truly bring out the potential of diamonds as a liquid and stellar addition to “precious metal assets”. Diamond Boxes are lab-verified to be priced at inter-dealer cost. Volume purchasing and nimble global sourcing are key components to this excellent investment strategy. Each gem diamond in the “Box” is triple-Lab certified. Each Box set is carefully assembled for consistent value. Individually, each gem represents a significant and liquid investment, as a certified Diamond Box set - liquidity and value are further enhanced. Diamond Boxes are available in various units starting at $500,000. Diamond Boxes capitalize on premium certified gem diamond historical and potential exceptional appreciation – as well as to provide a compact, portable, near-invisible, rarefied investment/Treasure Chest of Wealth. Only a firm like DB/R1 has the critical mass of expertise, global sourcing-power, and blue-chip credentials and reputation – to insure the success – from the global procurement level to the VIP investor level. The DB/R1 Client roster includes Presidents, Heads of State, Fortune 1000 owners, as well as banking and investment leaders.

Diamond Boxes

An Inside View Premium gems are sourced directly from international diamond traders, hand selected by highly trained Gemologists for maximum upside potential and liquidity. Each diamond then goes through a rigorous GIA inspection, certification, and sealing process. Sealed diamonds are then sorted by “Inter-Dealer” pricing into sets matching the various Diamond Box unit price levels. Each set is then sealed into a specially constructed Diamond Box. The contents of each Diamond Box are transparent and can always be inspected. The Boxes are lab-sealed and numbered after they are lab-certified, packed and contents photographed – for maximum international liquidity. The content detail will be provided both in both physical and electronic form containing:

- all certificate data - pricing - GIA certificate copies - photos and videos of each individual gem and the box

As verification – any jeweler in the world inspecting these documents – should be able to readily verify that the Diamond Box contains premium gems – priced at the inter-dealer level. The Boxes have several levels of liquidity: both individually as plastic-sealed GIA lab-certified gems – and as a composite sealed numbered

Box in our global network. Valuation-quotes will be provided quarterly. Boxes will be available for immediate delivery to investors wanting possession. A ‘Major Bank’ will act as Custodian of the Boxes for all those not taking delivery. Global delivery assurances by the ‘Major Bank’ (or DB/R1) are included and can be readily arranged – at any point going forward. Lloyds of London guarantees are available on Box manifest. The – Diamond Box – as an investment is simultaneously simple, yet highly-sophisticated.

Lo-risk / High upside. A unique asset class. Tangible, yet globally liquid. A sophisticated add-on to a diverse portfolio.

Why Buy

a Diamond Box great legacy/heirloom item price trends supply demand characteristics inflation hedge dollar devaluation hedge against financial system

global meltdown or

natural/man made disaster shutdown general volatility and uncertainty

unique asset class diversifies portfolio 2 levels of liquidity potential windfall profits - if big buyer wants to scoop-up invisible, if so-desired desire for sundry financial anchors in context of rapid global pace of change usable as (emergency) collateral with banks, etc.

Transformation

Transforms a quasi-liquid single diamond (liquid only at what an individual jeweler will pay for it) into an internationally liquid medium in large $-unit form by

1) Birnbaum selecting items for maximum potential appreciation in that Box category

Then,

2) GIA + IGI lab–certifying it

3) having the GIA laser-engrave the GIA cert number onto its girdle

4) (Birnbaum) 360 degree video-taping of each diamond

> CD of entire series in the Box (including all certificate copies)

5) IGI lab-certificate valuing the item at Inter-Dealer Fair Market

Value

6) IGI lab-sealing the item

Then

7) IGI + Birnbaum sealing (& dating) (& noting total IGI valuation) of the (multiple of $500,000) ENTIRE Box

8) Then, an International Financial Firm wrap-around Sealing the Box

9) Then Birnbaum + IGI

POSTING IGI inter-dealer value online at Sealing point

+ then Quarterly (eventually, monthly)

10) International Financial Firm Custody + guarantees Integrity

of individual Box

We have a viable, portable, invisible, international, liquid trading medium in super-selected certificated gem diamonds

in multiples of $500,000 unique store of wealth & value

Unleashes Potential The Birnbaum plan for Diamond Boxes unleashes the underlying potential of diamonds – the rarest Precious item on earth - as a medium of liquid store of wealth. The combined integrated package to a very great extent ‘solves the problems’ which have hitherto impeded diamond potential on several key fronts.

Potential Clients for Boxes

Any Individual with a Portfolio Any Buyer of Gold Intelligence Agencies Governments Foreign Corporations Russian Oligarchs Autocrats

Potential Box Sizes

$500,000

$1,000,000

$5,000,000

$25,000,000

Comparison $10,000,000

Loose Diamonds v. Diamond Box Series of

10 carat Diamonds

Diamond Box

Bought within 10% of Inter-dealer?

unlikely

likely

Liquid at cost + after 2 years

unlikely

likely

Liquid by sending an email?

no

yes

Liquid without moving it?

no

yes

Liquid via Wire Transfer?

not so quick

yes

Comparison $10,000,000

Loose Diamonds v. Diamond Box

Series of 10 carat Diamonds

Diamond Box

Liquid during crisis?

not so quick

yes

Offered item Triple-sealed? Lab + Birnbaum + Financial Sponsor Bank

no

yes

Offered item possibly Counterfeit?

possible; Will 99% need re-certification by GIA Lab

no

Offered item possibly damaged, nicked?

yes; may need re-polishing; then, re-certification

no

Comparison $10,000,000

Loose Diamonds v. Diamond Box Series of

10 carat Diamonds

Diamond Box

Levels of Liquidity

1 the diamond

2 the underlying diamonds + Box network

Liquid away from a major Diamond center?

not really

yes

Comparison $10,000,000

Gold Shares v. Gold Bars v. Diamond Boxes

Gold Shares

Gold Bars

Diamond Boxes

Liquidity ++ ++ +

Historic Appreciation

++

++

++

24 month Appreciation

too hi ?

too hi ?

++

Overpriced? possibly possibly +

Volatility too volatile? too volatile? ++

In Strong hands?

not necessarily

not necessarily

Yes

Portable? Yes No Yes

Invisible? No No Yes

Upside Potential

+ + +++

Windfall profit possible?

No

No

Yes

Legacy item? + + +++

Bragging rights?

not really

not really

+++

David Birnbaum Expertise and Credentials – related

Strong brand and cachet at VVIP level Diamond Wholesaling Diamond Retailing

Sales Management Marketing Advertising Merchandising Media Deluxe Catalogue development Art Direction Branding

Selling to Corporate World Selling across Asia Selling to super-rich Talented and savvy team Well-known across top-tier financial community Well-known to global billionaire community Plugged-in at highest levels politically Strong personal brand

Global Brand Known for super-Quality & optimal-Value – market niche Has been through the diamond cycles 1974 -2001 Steeped in global diamond industry currents – entire life Respected industry commentator A pre-eminent World Class dealer –

at the top-tier rare jewel industry level

Top track record in rare gem market-timing

Building Blocks Crucial Confidence: Significant effort has been spent on every detail to buttress the “bullet-proof” aspect of the asset. All the components are top-laboratory-certified and/or top-Laboratory-sealed. To our knowledge, there has not been an offering of this modality and of this level Lab-certification – of diamond technicals plus inter-dealer pricing – ever offered. Self-fulfilling prophecy: The more Buyers, the stronger the Network; the stronger the network, the more liquid the Boxes become; The more liquid the Boxes become, the more Buyers.

And, ongoing in a positive ‘loop’ – feeding upon itself. “First-in” Buyers have the greatest Upside.

Growing Pains The premium diamond market is ultimately thin. Focusing Box demand on a thin band of diamond sizes would cause distortions; meaning the market price would rise. The remedy is to have a wide-enough selection of diamond sizes and Box $-magnitudes, for example $500,000, $1MM, $5MM, $25MM so that the “Diamond Box Group” can buy across a large range of sizes, to maintain the upper-hand in various segments.

Liquidity Characteristics Diamond Boxes

2 Levels At Break-Up Level

Break-open the box and sell the individual still-double-sealed and still-double-certified gems

individually In Box Level

Via Sponsor

Bypassing Sponsor a myriad of “street” options will evolve

Inasmuch as Box holder will receive ongoing IGI Lab inter-trade Lab valuations quarterly, on both Individual stones and on the box as a whole, the Box Holder will have significant power.

Lo / Hi

Low Downside / Hi Upside

Low Overhead / Hi Sales

Low Risk / Hi Possible Reward

Low Tech / Hi Barrier to Entry

Carrying Costs

– miniscule if client stores in safe deposit box

Insurance Costs

(assuming Client wants visibility) – miniscule if client stores in safe deposit box

Shipping Costs

– miniscule assuming Client uses Brinks or Malca-Amit

Profit To Sponsors

Initial sales:

Spread between Cost > IGI Lab-certified Inter-dealer pricing

Secondary sales:

Market-maker [But owners can potentially market, as well, bypassing Sponsor – as presumably internet exchange will appear]

Built-In Advantages

First To Market is big advantage Birnbaum is big advantage Leading Investment Bank is big advantage Trademarks and Patent-pending are advantages

In combination, quite formidable

Precedent

Predecessor (rough diamonds)

BOX concept

DeBeers actually originated the concept of a Diamond BOX many decades ago. However, in their case it refers to a BOX of Rough Diamonds offered to SightHolders, typically 10x / year. Typical value: $500,000 - $5,000,000 each BOX. These are the ‘real’ BOXES. Rough diamond BOXES. But, we will peg-off their well-deserved cachet for our polished diamond BOXES. David Birnbaum was a name principal in Andor & David Birnbaum, Inc., International Diamond Cutters and De Beers Sightholders. Consequently, he has intimate familiarity with De Beers BOXES. DeBeers expects its SightHolders to polish/cut/manufacture the rough inside the BOX. However, there is an ongoing ‘gray market’ in these BOXES. Technically, according to DeBeers guidelines, a SightHolder can lose his ‘Sight’ if he even once re-sells a box; but DeBeers seems to ‘wink’ at the practice, as they could easily put an end to it.

As noted, there is an ongoing ‘gray market’: So, for instance, a March 2011 Category “3A” BOX will have a discount or premium to the original price (Note: Most are currently trading at premiums to SightHolder cost). Once in a while, old BOXES (say, 5 – 15 years-old) are offered on the (gray) market via intermediary diamond brokers. Naturally, the BOXES must still have their original DeBeers “seals” – to be market-able in sealed-BOX-form. The Birnbaum firm never sold-off one of its own BOXES, but it did buy BOXES on the ‘gray market’. To be clear, this ‘gray market’ is 1000% legal. It is just that DeBeers severely frowns on the SELLER (not upon the BUYER). In any event, this inter-Diamond Manufacture grey-market has nice and ongoing intrigue. And quite real hi-energy cachet. So, the industry itself, will grasp our intent immediately.

Potential Evolvement Diamond Boxes

International Trading Market Virtual Global Exchange Surrogate sovereign currency

The Right Moment I actually did my Harvard Masters Research thesis Spring 1974 on “Diamonds as an Investment” (I still have the original report), and have had no shortage of opportunities to pitch the concept. But, I never have, heretofore – as “investors” could not truly “pull out profits” within the classic investment paradigms offered by various sponsors. However, under the BOXES umbrella, with a little luck investors should do just fine. The “stars are now aligned”

Burgeoning China and India

Love gems Are buying gems in ever-increasing dollar-volume Are potential major engines for ever-increasing gem appreciation over the next several decades

Biggest Risk / Upside

Biggest Risk: Overheats global diamond market Biggest Upside: control Virtual Global Exchange – diamond market place

Diamond Specs X $500k Boxes

Lab: GIA Sizes: 1.01 – 5.50 carat Shape: Round Brilliant Color: D – I Clarity: Flawless – VS1 Cut: Excellent Fluorescence: None certification dating: last 24 months in general (see exclusions below)

last 6 months if VVS2 prior 6 days if Flawless-VVS1

[ and, No laser or HP/HT or anything unusual ]

Diamond Specs Y $500k Boxes

Lab: GIA Sizes: 4.01 – 7.50 carat Shape: Emerald-cut or Asscher-cut Color: D – G Clarity: Flawless – VS1 (VS2 if Asscher-cut) Fluorescence: None certification dating: last 24 months in general (see exclusions below)

last 6 months if VVS2 prior 6 days if Flawless-VVS1

[ and, No laser or HP/HT or anything unusual ]

Diamond Specs Z $500k Boxes

Lab: GIA Sizes: 0.70 – 1.60 carats Shape: Classic Shapes Color: Fancy Purple Pink Clarity: Flawless – SI1 certification dating: last 24 months in general (see exclusions below)

last 6 months if VVS2 prior 6 days if Flawless-VVS1

[ and, No laser or HP/HT or anything unusual ]

Protecting the Integrity of the Boxes

Birnbaum Diamond Boxes

9 Bullet Points

1) GIA Lab (580 Fifth Ave) will technically certify the diamonds – and laser-inscribe its particular GIA certificate number onto the girdle of the respective diamond 2) Birnbaum buys select goods 3) IGI Lab (589 Fifth Ave) will

- provide "Fair Market Value" (inter-dealer value) Appraisal - plastic-seal each GIA certified diamond into its own

IGI-numbered packets - plastic-seal the ENTIRE Box of good and affix IGI seals to entire Box

4) Birnbaum affixes Birnbaum seals to entire Box 5) ‘Major bank’ to be/can be Custodian of Boxes – (for all Boxes not taken-out by buyers)

6) Lloyds of London can guarantee that Box goods match their manifest 7) ‘Major Bank’ can ship Boxes – any time – globally 8) Quarterly valuation by Lab 9) Sponsoring Group (Sponsoring Financial Institution + Birnbaum) will potentially make-a-market in the Boxes

Birnbaum Boxes: Uncontestable & Bulletproof

Sample Box Manifest

available upon request dated timely, as per your request

2 Salient Issues

Off Shore option Sales Tax issues

Senior Executive

ELLE CHOI Korean-American here since age 15 [Age 5-10 in Japan] Graduate Gemologist from the GIA David’s lieutenant and gemologist With him since 1995 Works hand-in-hand with David on most all matters.

Succession

David B is (young) 61 b. 1950 “The Plan” Eventually, after 2020: ½ day after 2025: 1/4 day etc. Senior Lieutenant Elle Choi, Senior Gemologist is mid-forties (10+ years span with DB/R1) David’s son, Solomon Birnbaum see www.SolomonBirnbaum.com (same password as this site) enters NYU / Stern Fall 2012

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