Subject: Re: Fwd: RSP/RSTP Acknowledge Agreement 2/19/15
From: "Rob Walker" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Cc: "Eric Schwerin" <[email-masked]>
Date: Sat, 23 May 2015 05:59:32 -0500

Thank you.  Hard to digest at the moment with a 26 person delegation
On May 22, 2015 6:31 PM, "Hunter Biden" <[email-masked]> wrote:

> Rob, you should have been copied on this exchange from the beginning.
> Look at the end of the most recent email.  I wanted you to see that I am
> proposing that we all be cut in to RSTP I, Alpha and Bravo equally.
>
> Also, not sure if it was the most recent version, but the GP agreement I
> just saw for RSTP II has you being given a non-voting share of RSTP II when
> I think you would want to be treated as a full partner.   Let me know how
> you want to handle.
>
>
> ---------- Forwarded message ----------
> From: Hunter Biden <[email-masked]>
> Date: Thu, May 21, 2015 at 3:07 PM
> Subject: Re: RSP/RSTP Acknowledge Agreement 2/19/15
> To: William Lee <[email-masked]>
> Cc: Eric Schwerin <[email-masked]>, Neil Callahan <
> [email-masked]>, Devon Archer <[email-masked]>, John DeLoche <
> [email-masked]>
>
>
> 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) 333-1880
>
>
>
> --
> R. Hunter Biden
> Rosemont Seneca Partners, LLC
> 1010 Wisconsin Ave., NW
> Suite 705
> Washington, DC 20007
> (202) 333-1880