Subject: Re: CAF
From: "Eric Schwerin" <[email-masked]>
To: <[email-masked]>
Cc: "Hunter Biden" <[email-masked]>, <[email-masked]>
Date: Tue, 27 Jul 2010 23:24:31 -0400

I think there is a mis-apprehension that we have already been screwed.  We
may very well be because we don't have anything in writing, but my point has
been that we be firm, have Hunter call the CEO and congratulate him, say we
are looking forward to working with CAF as they implement the Amtrak
contract and then follow it up with a letter to memorialize the success fee
arrangement.  IF and only if they push back let's not let CAF make us think
we didn't do enough work to deserve the fee, as it is a minor percentage
compared to what we would normally get for working on a project like this.
 Right now, we are only going on a guess that we are going to get screwed.

If there is an issue, we have a signed contract for a year's retainer at
$250,000.  We'll take our $250,000 (split 60/40) and not do anything else
for them.

We'll talk more tomorrow before the TA call and strategize. The key is
convincing Lorenzo and Abel not to buy into any BS CAF might offer that we
didn't provide value.  Remember Lorenzo wanted to do business with CAF
instead of Talgo because he said CAF was "honorable".  Let's let him prove
it.  And that means that they we come up with an arrangement to pay our
success fee without us going to Spain to have to beg them for it.

On Tue, Jul 27, 2010 at 11:08 PM, Neil Callahan <
[email-masked]> wrote:

>  Hey guys,
>
>
>
> I am not trying to Monday morning QB this or make anyone feel bad.  What’s
> done is done, live and learn, it’s all good.
>
>
>
> We just need to embrace the reality of where we are and who we are dealing
> with and take an approach that we believe will make us whole.  An
> aggressive, hardnosed approach is likely our best option towards making us
> whole.
>
>
>
> And Hunter has a potty mouth and is known to be cranky, so we are about
> half way there.
>
>
>
> The good news is we tested out the weapon, and it’s very lethal when
> pointed at the right target.  Let’s find some more targets – ready, aim,
> fire.
>
>
>
>
> ------------------------------------------------------------------------------------------
>
> Neil Callahan
>
> Rosemont Seneca
>
> 401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
> 212-796-4037
>
> 1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880
>
> 917-945-9516 (mobile)
>
> 866-749-8879  (fax)
>
>
>
> *From:* Hunter Biden [mailto:[email-masked]]
> *Sent:* Tuesday, July 27, 2010 10:46 PM
> *To:* <[email-masked]>
> *Cc:* Eric Schwerin; <[email-masked]>
> *Subject:* Re: CAF
>
>
>
> All of these points are great and exactly why we are idiots for agreeing to
> a success fee based on a handshake deal with between Lorenzo and someone
> we've never met.
>
> Sent from my iPhone
>
>
> On Jul 27, 2010, at 9:59 PM, "Neil Callahan" <[email-masked]>
> wrote:
>
>  Got it.  So getting a 0.2% fee was something we agreed to up front.  And
> is that a 50|50 split with TA?  So really a 0.1% fee or do we get the whole
> thing?
>
>
>
> I’d still argue for the whole fee up front – CAF could do something next
> year (i.e. CFO goes to jail, over charging, endless reasons) and Amtrak
> pulls the contract – not our fault, our job was done.  Or we need an
> agreement they will pay put the payment in escrow and it will release it to
> us in full if CAF violates and stipulations (a standard practice).
>
>
>
> Although my point number 6 is something we should consider.  Asking them to
> purchase a tangential service – something they are going to do anyway, why
> not through us (i.e. RSP Event Management)
>
>
>
> If you are assuming push back from CAF, you can’t you go in asking for what
> you want – you have to go in higher/more and then be happy to settle at what
> you want.  So going in with “my understanding was the fee is for the 1styear” or something like it is a good way to start the conversation and
> anchoring to a number that they feel like they got a win once we get to
> where we want to be anyway.
>
>
>
> Our checkered history with TransAtlantic (IB, Ormazabal) tells me that we
> must assume CAF is trying to fuck us and we go in very hard right away,
> almost unreasonably hard to make a point.
>
>
>
> All of the Spanish clients we have dealt with so far are just not nice guys
> – they are dicks when it comes to business - so we have assume CAF is the
> same and treat them accordingly.
>
>
>
>
> ------------------------------------------------------------------------------------------
>
> Neil Callahan
>
> Rosemont Seneca
>
> 401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
> 212-796-4037
>
> 1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880
>
> 917-945-9516 (mobile)
>
> 866-749-8879  (fax)
>
>
>
> *From:* Eric Schwerin [mailto:[email-masked]]
> *Sent:* Tuesday, July 27, 2010 9:30 PM
> *To:* <[email-masked]>
> *Cc:* Hunter Biden; <[email-masked]>
> *Subject:* Re: CAF
>
>
>
> The success fee was definitely on the entire $258m not the first year. The
> point I want to make to CAF (assuming there is push back) is that we agreed
> to a much smaller fee than the norm so it should be no skin off of their
> nose and also it was in recognition that we were hired at the last hour.
>  BUT our value is obvious.  Hunter's relationship with CAF gave Amtrak that
> extra bit of confidence to award the contract to CAF.   I don't want to
> renegotiate - I just want what was agreed to and is more than reasonable.
>
>
>
> Also, Lorenzo negotiated the fee directly with the CEO of CAF. It is coming
> out of the budget in Spain.  Jesus is not Pedro.
>
>
>
> I am not saying they won't pay, just want to figure out how memorialize it.
>  And if they push back we have our coordinated message.
>
> Eric D. Schwerin
>
> [email-masked]
>
>
>
> Sent from my iPhone
>
>
> On Jul 27, 2010, at 8:43 PM, "Neil Callahan" <[email-masked]>
> wrote:
>
>  Hi guys,
>
>
>
> A couple of questions / comments:
>
>
>
> 1.       Agreed with all the additional Advisory type services we can tack
> on
>
>
>
> 2.       Did we know the size of the deal going in - $258m?  Or was the
> Success Fee $800k pertaining to winning the bid?  To me the winning bid is
> for $25.8m, and our $800k is on that.
>
>
>
> 3.       Our position could/should be that our success fee is $800k on the
> first 10% - $25.8m or 3% which is fair and reasonable, and we expect
> equivalent (3%) on all additional awards under the bid
>
>
>
> 4.       10% sales commission is customary across the board to their
> internal folks, deal teams, etc.   RSP claiming 3% or about a 1/3 rd of the
> commission is not outrageous
>
>
>
> 5.       Or we give them a choice – 3% on this deal and 3% on all deals
> going forward – or 0.2% on this deal and 5% on all deals going forward.
>
>
>
> 6.       Offer them a tangential service / Line of Business such as RSP
> Promotions, or RSP Business Meetings, RSP Research, RSP International, etc.
> – we’d offer an additional line of business with an expectation of $1m-$1.2m
> annually of revenue and sign a 3 year contact.  They will say “oh, I did not
> know you guys did that” and we’ll just build a mini-delivery team around the
> 3 year $3.6m contract.  (This is a fairly common and effective tactic, the
> thesis is they will hire someone to that service, why not us, and we will
> deliver it to an acceptable level of service.)  But is clearly not our Core
> Business, which is also being expanded as noted in point #1.
>
>
>
> 7.       Going to Spain for a negotiation session where it will be RSP vs
> CAF/TA is lose lose proposition, I’d rather hit the spas of Pyongyang – the
> trip to Spain should just be a big fat party and discussion of the next
> contract, collecting a check and nothing more.
>
>
>
> 8.       The Governor could give some grandfatherly advice to CAF – “make
> sure you treat your partners right, especially RSP” – basically do the right
> thing.
>
>
>
> 9.       I suspect the main indigestion is that Jesus does not have the
> budget approved to cover it, or he is/was not authorized to make such a deal
> and the people in DC will be basically be like, thanks, but I never hired
> you and it’s not coming out of my budget, a nice pat on the back from the DC
> team is anticipated.
>
>
>
> Best,
>
>
>
> Neil
>
>
>
>
>
>
> ------------------------------------------------------------------------------------------
>
> Neil Callahan
>
> Rosemont Seneca
>
> 401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
> 212-796-4037
>
> 1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880
>
> 917-945-9516 (mobile)
>
> 866-749-8879  (fax)
>
>
>
> *From:* Eric Schwerin [mailto:[email-masked]]
> *Sent:* Tuesday, July 27, 2010 5:42 PM
> *To:* Hunter Biden; [email-masked] Archer
> *Cc:* Neil Callahan
> *Subject:* CAF
>
>
>
> For discussion tomorrow at 10:30am.
>
>
>
> Here's what we should propose to CAF.   The deal was for approx an $800K
> success fee as I recall.  This always (as standard operating procedure) was
> contingent on the actual award and when the money is obligated by Amtrak.
>
>
>
> Amtrak has so far only allocated $25.8m of the $258m contract.  (It is a
> five year contract at $258m, with the first year only being valued at 10% of
> the total, $25.8m).   So, we would only be receiving 10% of the $800,000
> anyway had we had a signed agreement on the success fee.  And by the way,
> $800,000 is .2% of $298m.   Way, way below the going rate for these types of
> things.
>
>
>
> I think we should send CAF a letter saying that per our agreement we want
> to memorialize our understanding on payment of success/sales percentage
> fees.   We should ask for our $80,000 now (the 10%) and agree that the rest
> is paid out as the money in obligated.   We could also look at increasing
> our annual retainer by $80,000.
>
>
>
> We should also agree to help them with the following things:
>
>
>
> 1) Advice and strategy related to Amtrak
>
> 2) Advice and strategy as related to work CAF can do to help Amtrak secure
> financing for the remaining 90%
>
> 3) NY State relations - including work with the Governor (to include a
> press event ASAP in Elmira)
>
> 4) Federal Government Strategy (no lobbying, but this could include a
> recommendation to hire a lobbyist)
>
> 5) Labor Relations
>
>
>
> We may even want to look at expanding the relationship to focus on Light
> Rail.
>
>
>
> FYI, Lorenzo wants to schedule a trip to Spain in September to talk to
> Jesus about this.  I don't think we should go until this is finalized.
>
>
>
>
>
> Eric D. Schwerin
>
> Rosemont Seneca Partners, LLC
>
> 1010 Wisconsin Ave., NW
>
> Suite 705
>
> Washington, DC 20007
>
> (202) 333-1880
>
> [email-masked]
>
> *P** **Consider the environment before printing this email.*
>
>
>
>

-- 
Eric D. Schwerin
Rosemont Seneca Partners
(202) 333-1880
[email-masked]