Subject: Fwd: RSP/RSTP Acknowledge Agreement 2/19/15
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Date: Thu, 21 May 2015 21:04:11 -0400

Here's what went out.....

Eric D. Schwerin
[email-masked]

Sent from my iPhone

Begin forwarded message:

*From:* Hunter Biden <[email-masked]>
*Date:* May 21, 2015 at 3:07:10 PM EDT
*To:* William Lee <[email-masked]>
*Cc:* Eric Schwerin <[email-masked]>, Neil Callahan <
[email-masked]>,  Devon Archer <[email-masked]>, John DeLoche <
[email-masked]>
*Subject:* *Re: RSP/RSTP Acknowledge Agreement 2/19/15*

Will-

I understand that Devon has reached out to you to clairfy that he has not
recused himself and that RSP is still voting on this matter as a single
entity.  I think that gets to the crux of the fundamental misunderstanding
here.  Until the negotiations over my exit from the funds have concluded
and the document we are discussing has been signed, RSP still has 45%
equity in all the RSTP funds.  While I agreed in principle to remove myself
from RSTP II, we had not settled on the terms and no agreement has been
signed.  Therefore no new RSTP II GP agreement should have been executed.
According to the original agreement we negotiated, the Rosemont Seneca
Technology Partners, LLC operating agreement, it takes an 80% vote of the
partners to make any changes or make any significant financial decisions.
This was always very important to Devon and me so that we could operate the
fund by consensus.  This is not something we would ever give up.  In fact,
we only agreed to go down from holding a majority of the equity knowing
that the 80% provision would ensure that a majority could not unilaterally
make decisions for the whole partnership.

I see from the revised agreement you sent me on Monday that there are two
key differences in that agreement from the one you sent on Friday.  One,
the counter-party to the agreement is an entity called RSTP Management,
LLC, an entity that was recently registered in Delaware on April 2, 2015
and then registered with the SEC as an investment adviser on May 11, 2015,
the day before Goldman’s IC approved its investment in RSTP II.   Can you
clarify what this entity is and why it would be the counter party to this
agreement?  As far as I know RSP has not voted to allow the GP in any of
the RSTP entities to change and the GP, and hence the signatory, should
still be Rosemont Seneca Technology Partners, LLC.  Two, I see that the
agreement is now back dated to February 19, 2015.  As we are still
negotiating the terms that will govern how we move forward the date of the
agreement should be the date that it is signed.

Perhaps the major issue Devon and I have with the proposed agreement you
sent is that the new agreement allows a majority in interest of the
partners to remove another partner under what seem to be very broad
reasons.  This is unacceptable to us and goes against the spirit of the 80%
rule we negotiated and particularly if under your proposal I am giving up
voting rights.   This is why I am opposed to your request for vesting.
Thank you for your clarification on the RSTP I vesting, but I also don’t
see the vesting requirements in the RSTP II Alpha and Bravo LP agreements
or in the Rosemont Seneca Technology Partners, LLC agreement (which should
govern Alpha and Bravo as that is the GP of those funds).

These funds are closed.  We are all incentivized to bring as much value to
Counsyl as possible so it is unclear to me why we would need to include
vesting provisions.  You will recall that in the midst of our negotiations
about my exit I still picked up the phone and called Walmart.

Because these funds are closed and the sole remaining purpose of the GP
partners is to manage the Counsyl investment and develop business for
Counsyl - all of those partners should receive management fees for taking
the time to do so.  These funds were created for the sole purpose of
investing in Counsyl.  Management fees from those funds should not be used
to grow RSTP II or any other funds.  The management fees should go to
compensate the partners of the fund for the time they are expending on
behalf of that specific fund.

As it relates to the additional attestations you sent - code of ethics,
political contributions, etc. - I also can not sign the political
contribution document and see no reason why I should when the fund is no
longer raising money and not subject to pay to play issues anymore.  I also
am concerned about some of the requirements of the code of ethics and some
them would need to be clarified.

Finally, on how the GP shares for RSTP I, Alpha and Bravo should be split,
I in fact believe that the equity in those three entities should be split
evenly by you, me, John, Devon, Neil and Rob so that we each get 15%, with
Eric and Chris splitting the remaining 10% so that they each get 5% each.
That seems more than fair to me.  I also want to make clear that there is
absolutely no objection from me on Rob being given a clear percentage.
Since you were insisting that Rob, Eric and I split our shares out of the
22.5% I was merely indicating that since none of you are volunteering to
give up anything to cut Rob in, this would have to be something Rob, Eric
and I will have to discuss and determine on our own.  I would strongly urge
us to all consider cutting Rob in equally, which is more aligned with the
terms of our operating agreement anyway.

I look forward to your response to the above points.

Best,

Hunter

On Mon, May 18, 2015 at 7:38 PM, William Lee <[email-masked]> wrote:

> Hi Hunter,
>
> Thanks for clarifying your intention. I am not sure what you mean by going
> back to GS and NB--they were informed that you left RSTP II last year when
> you voluntarily stepped down and the executed RSTP II GP agreement was
> shared with both of them. The important thing here is to resolve the
> outstanding questions constructively and in the spirit of partnership.
>
> Regarding our call last week, I apologize for not mentioning that Devon
> had recused himself from the process of drafting this agreement given his
> close personal relationship with you.  He gives his support of the
> agreement that the partnership would reach with you.  Therefore, we cannot
> accept the agreement that Devon and you signed.
>
> You are correct the RSTP I agreement does not require vesting. However,
> Alpha, Bravo and all of our other agreements do require vesting consistent
> with best practices at the direction of Goldman Sachs. Every member of the
> partnerships must also sign our annual attestation which includes a code of
> ethics, insider trading policy and political contribution policy, which I
> attached. We now also have a compliance consultant that verifies this
> happens.
>
> It sounds from your message that some version of the 2/19/15 agreement may
> be the solution here. Here are the key points of the original agreement on
> 2/19/15.
>
> a) Eric, Rob and you as individuals would remain as full members of RSTP
> I, Alpha & Bravo subject to an annual attestation and vesting schedule (for
> Alpha and Bravo) in accordance to our partnership’s 5-year vesting
> schedule. This is a requirement for any member to be a member of any of the
> funds now that we have institutional money from GS and others. It is how
> these partnerships work.
>
> b) The $32,000 payment to RSP remains the same. Management fees are for
> fund expenses and salaries paid to individuals who are working full time
> for the benefit of partnership. The partnership is stretched for fee income
> to cover our costs and cannot afford anything more than that offered. As an
> LP as well as a GP of the fund, it is critical to me (and the partnership)
> that fees support activities that are driving the fund forward. If you have
> specific expenses relating to direct business development work on the fund,
> we can reimburse them.
>
> c) Because only individual can vest and sign the attestation annually, the
> original agreement would have to list the % of carried interest shares for
> each individual. This seems to be the point that is the sticking point. It
> is important to the partnership that Rob be given a clear percentage that
> vests and it seems only fair to do so given his involvement in the
> origination of the deal and ongoing business development support.
>
> If you want to be a full member of Alpha and Bravo, you will have to vest
> like the rest of us. If you don't want to vest, then we will have to cut
> back your ownership to what is vested as of now. We would welcome you
> working to advance Counsyl's growth opportunities which is how you would
> continue to vest.
>
> Attached is a revised version of the original agreement from 2/19/15 that
> reflects the removal of vesting in RSTP, LLC.
>
> Thanks for trying to work this out. I hope we are almost there.
>
> -Will
>
>
>
>
>
>
> On May 17, 2015, at 5:40 PM, Hunter Biden <[email-masked]>
> wrote:
>
> Will-
>
> Thanks for your email.
>
> There is nothing in the fund docs (either the Rosemont Seneca Technology
> Partners, LLC agreement or the RSTP II, LLC agreement we signed with
> Goldman) that mentions anything about a five year vesting period.
> Furthermore, if Goldman was so insistent on my being removed from the RSTP
> II Alpha and Bravo as far back as February 2014 why did the agreement you
> originally sent me in February 2015 allow me to remain in the fund and
> ultimately collect 100% of the carried interest due to me? Clearly that
> agreement would have gone against the request you say Goldman made.  If
> this was so important to Goldman why wouldn’t they have demanded that this
> agreement be signed and executed before they agreed to invest money
> directly into RSTP II?
>
> I want to make it clear that the solution we all agreed to on the phone
> back in October was that a) I would remove myself from RSTP II and b) I
> would remain a full member of RSTP I, RSTP II Alpha and RSTP II Bravo.
> That’s it.
>
> However, after after some thought and clearly some pressure I made it
> clear that I am willing to go ever further and give up my management fees
> to RSTP I, Alpha and Bravo and allow the partnership percentages of RSTP II
> to be reduced so that Rob is cut into RSTP II solely out of the RSP side.
> I thought this was more than fair and equitable, despite the fact that many
> of us didn’t think that was necessary.
>
> In exchange I keep 100% of the carried interest in the funds that are now
> closed - RSTP I, RSTP Alpha and RSTP Bravo - and I receive a settlement
> payment of $250,000 (the equivalent of approx. 60% of fees DC office would
> have generated in 2016 under a status quo scenario) payable to me over the
> course of 18 months. I will distribute the carried interest fees between
> myself, Eric and Rob when the time comes.  I’m also willing to discuss
> stretching the $250K payment out as far as necessary for the fund to
> function properly.  I still intend to continue cultivating relationships
> for the advancement of Counsyl’s business interests, like Walmart, as I
> have all along.
>
> I want to be clear that under the fund documents, there is nothing that
> could lead anyone to say I violated the agreement in any way.   If anyone
> has acted contrary to the fund docs it is members who have authorized or
> held back distributions from the fund contrary to the wishes of 80% of the
> partners.
>
> I feel that I have gone above and beyond and agreed to remove myself from
> RSTP II so that the fund can survive and not suffer having GS or NB pull
> out.  And I am doing so in a way that that allows those who are dedicating
> a majority of their time on the fund to receive a far greater share of the
> management fees.
>
> If the agreement Devon and I signed isn’t acceptable, I am happy to keep
> the status quo and reach out to NB and Goldman directly and explain that I
> am still a member of the funds.   Let me know which solution you prefer.
>
> Best,
>
> Hunter
>
> On Fri, May 15, 2015 at 2:46 PM, William Lee <[email-masked]> wrote:
>
>> Hi Hunter,
>>
>> Thanks for the call this morning.  Hope your brother’s condition is
>> improving.  My thoughts and prayers are with you.
>>
>> Here are the key points of the attached agreement.
>>
>> a) We removed the individual names from the original proposed agreement.
>> The revised agreement is between RSP and RSTP.
>>
>> b) RSP gets paid $32,000.
>>
>> c) RSP gets 22.5% of the carried interest of RSTP I, Alpha and Bravo in
>> accordance to all of our partnership’s 5-year vesting schedule.
>>
>> d) The partnership agrees to grant 100% vested carried interest for RSP
>> in RSTP I.  This is an accelerated increase from 70% to 100% from our call
>> this morning.  This is based on good faith of our relationship.
>>
>> e) As for Alpha & Bravo, Goldman’s entities are the sole LPs of Alpha and
>> Bravo.  They requested the removal of you from Alpha, Bravo and all the
>> RSTP entities that Goldman is a part of starting October 2014, and asked us
>> to consider doing so back to February 2014.  Once again, under good faith,
>> the partnership is granting you extra 8 months of vesting from October 2014
>> to May 2015.
>>
>> I am in complete agreement with you that we should get this resolved
>> within 72 hours.  Please feel free to reach out to me any time today or
>> over the weekend to discuss.
>>
>> All the best,
>> Will
>>
>>
>>
>>
>> William Lee, Managing Director
>> RSTP
>> 333 Bush Street, 21st Floor
>> San Francisco, California 94104
>> Office: 415.767.1289
>> Mobile: 617.407.5958
>> www.rstp.com
>>
>> This email communication is privileged and confidential and is intended
>> only for the individuals or entities named above. Any unauthorized
>> dissemination of any of the contents of this email is strictly prohibited.
>> If you are not the intended recipient, please do not read, copy, use or
>> disclose to others the contents of this communication. Please notify the
>> sender that you have received this e-mail in error and then delete the
>> e-mail.
>>
>>
>>
>>
>
>
> --
> R. Hunter Biden
> Rosemont Seneca Partners, LLC
> 1010 Wisconsin Ave., NW
> Suite 705
> Washington, DC 20007
> (202) 333-1880
>
>
>
>

-- 
R. Hunter Biden
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-188