EMAIL DETAILS

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 <hbiden@rosemontseneca.com> 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 <will@rstp.com <mailto:will@rstp.com>> 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 <tel:415.767.1289>
> Mobile: 617.407.5958 <tel:617.407.5958>
> www.rstp.com <http://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