Subject: Thoughts on BHR Conference Call
From: "Michael Leonard" <[email-masked]>
To: "Eric" <[email-masked]>, "Hunter Biden" <[email-masked]>, "James Bulger" <[email-masked]>
Date: Thu, 25 Aug 2016 10:01:07 -0400

Gentlemen:

Following the BHR conference call the other night I had the following
thoughts that I wanted to put out there for the group's consumption. Here
they are:

1.* Registered Capital:* Jonathan clarified that they are only going to
raise the registered capital by the amount that BHR hopes to raise by
offering shares to the employees. The goal is that original shareholders
like us won't have to contribute more capital than we already currently
owe. However, *what if the employees don't fully subscribe or there is
somehow a shortfall?* *Will original shareholders like us be on the hook
for the difference?*

2. *Cash Back:* We all want to get cash back from BHR. That was the
ultimate goal when undertaking this endeavor. That being said we recognize
it takes time to grow a business, close deals and make successful exits.
However, the other night Jonathan made it clear that we won't be seeing any
sort of dividends for at least the next two years. Realizing we might want
cash in the nearer term Jonathan said that his plan is that we will be able
to sell our interest in BHR to the employees in later purchasing rounds and
as well as some point in the future when Jonathan plans a Chinese IPO of
BHR.

*Is that how we thought we were going to get our money back? By selling our
interest in BHR bit by bit over time?*

I thought the concept of PE funds was that they had relatively low overhead
and that when they closed deals there was enough cash that the partners
could do very well off the dividends. It seems to me to be very unorthodox
that the partners make their money back by selling their interest instead;
especially via an IPO.

There needs to be more discussion on how partners get their cash back and
the method Jonathan proposed is not the only way and might not be the most
advisable way.

3. *What are the business prospects?:* Jonathan said that 2016 so far has
been a lousy year. Why will 2017 be different? Same with 2018? It would be
nice to know what the future prospects of BHR are before we put anymore
money into it. Otherwise we are just giving them the resources to just keep
trying and hoping something will be different.

4. *What are the projected carries on deals we already have?:* We never
seem to discuss this topic. BHR has Didi, Henniges and CATL (a Chinese
battery manufacturer) which are all companies that are doing well and ready
for BHR to exit from. How much do we think these exits will generate in
carry? What will we do with that cash?

BHR has never described this in detail. I think part of the reason is that
they don't want to be beholden to projections they make in case they don't
meet them. However, we don't even have a range. *For instance, will
Henniges potentially generate a carry of $10 million to be split among the
partners or will it generate $100 million?* *Just even knowing the range
could make a huge difference in how we think of BHR!* What about Didi and
CATL? What sort of carry can we expect there?

Discussion about future carries also begs the question of how a carry will
be parceled out. We could learn a lot about how Jonathan thinks about BHR
just by having him walk through these scenarios and showing where the money
will go and how much each partner will get. This sort of discussion can
fundamentally change how we appraise BHR.

Those are just some thought I had. Please let me know if you have any
questions.

Best,
Mike

-- 
Michael R. Leonard
Vice President, Operations Department
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office: 617-248-9440
Mobile: 781-454-922