Subject: RSTP
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Date: Wed, 10 Dec 2014 15:18:21 -0500

Not directly related to John’s email but to be clear, the following is the language in the RSTP II fund docs related to how much time “managing members” of the GP are supposed to spend on RSTP.  There may be other references elsewhere but I haven’t found them yet.

(c) Except to the extent otherwise permitted under this Agreement,
until at least the Substantial Investment Date, the managing members of the General Partner (for
so long as they remain such) shall devote substantially all of their business time business time to
the conduct of the affairs of the Prior Funds, the General Partner in its capacity as general partner
of the Partnership, the Partnership, all Parallel Funds, all Alternative Funds and any entities
permitted to be formed pursuant to this Agreement, or other activities reasonably related to, or in
furtherance of, the Partnership’s affairs, brand or its business or operational relationships.
Thereafter, the managing members of the General Partner (for so long as they remain such) shall
devote so much of their time to Partnership affairs as shall be necessary to manage the
Partnership’s affairs effectively. Except with the consent of a Majority in Interest of Limited
Partners, neither the General Partner nor the managing members of the General Partner (so long
as they remain such) shall call down capital of any other entity with operations and objectives
similar to those of the Partnership prior to the earlier of (i) such time as funds equal to at least
seventy-five percent (75%) of the Partners’ Capital Commitments have been invested, expensed,
committed or reserved for follow-on investment in portfolio companies or future expenses, (ii)
the fifth anniversary of the Initial Contribution Date or (iii) the permanent expiration of the
Investment Period (including the permanent expiration of the Investment Period following a
Suspension Period pursuant to Section 2.3(a)(iii) of this Agreement) (the earlier of (i), (ii) or (iii),
the “Substantial Investment Date”).

1) It does not say 100% of the GP's time should be devoted to the fund as some have constantly claimed nor does it say “full time".  It say “substantially all”.  And there is a typo in that sentence where it repeats “business time” twice.

2) Even when it refers to devoting our time to RSTP it also refers the ability to spend time on “other activities reasonably related to, or in furtherance of, the Partnership’s affairs, brand, or it business or operational relationships."   My read of that is that it clearly allows for time spent with any other Rosemont Seneca entity particularly the Advisory business.  There is no language in there related to Board memberships and I see no language anywhere that says that the partnership needs to approve any outside business activities.  Maybe it is in our GP agreement but I don’t believe we have one.

3) Also, I do not believe all members of the GP have to be “managing members” of the GP.   I believe, Rosemont Seneca Partners can hold a percentage of the GP and be a member of the GP but not a “managing” member.  John, Will, Neil and Rob could all be managing members.  I would assume that is how other asset managers like Blackstone, KKR, etc. work.  Clearly David Rubenstein isn’t required to work on devote 100% of his time to ALL Carlyle funds.   I don’t know enough to know but I bet the structure of Carlyle Funds is that there are certain managing members of the individual funds and then other Carlyle partners who wade into those funds from time to time.  As far as brand, John may think that RSTP is the brand we are building but that doesn’t make it so.  It is Rosemont Seneca.   Rosemont Seneca isn’t the “back-up” plan for RSTP - it is the plan.  RSTP is a subset of that.  

I am done - for now.

Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
[email-masked]
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