Contract analysis

I. EXECUTIVE SUMMARY AND PURPOSE The purpose of this memorandum is to provide a comprehensive federal, state, and international tax analysis of the proposed multi-vehicle fund structure for Harrowgate Private Equity Fund V LP (the "Fund" or "Fund V") and to set forth our recommendations regarding tax-optimized structuring for the benefit of the Sponsor and its anticipated investor base. This memorandum has been prepa

II. OVERVIEW OF FUND STRUCTURE A. Description of Each Entity The proposed Fund V structure comprises five distinct legal entities, each serving a specific function within the overall fund architecture. The relationship among these entities is designed to provide maximum flexibility in accommodating diverse investor types while maintaining operational efficiency and investment parity across all vehicles. Each entity i

1. Harrowgate Private Equity Fund V LP (the "Main Fund"). The Main Fund is a Delaware limited partnership organized under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101 et seq.). It will serve as the primary investment vehicle for Fund V and will accept capital commitments from most domestic taxable limited partners. The Main Fund's general partner will be Harrowgate Fund V GP LLC, and the l

2. Harrowgate Fund V GP LLC (the "Fund V GP"). The Fund V GP is a Delaware limited liability company that will serve as the sole general partner of both the Main Fund and the Parallel Fund. The sole member of the Fund V GP is Harrowgate Capital Partners LLC. The Fund V GP will receive allocations of carried interest equal to 20% of the net profits of each fund vehicle (above the 8% preferred return), and will contrib

3. Harrowgate Fund V Parallel LP (the "Parallel Fund"). The Parallel Fund is a Delaware limited partnership that will invest alongside the Main Fund on a pro rata basis in each portfolio investment. The Parallel Fund is designed principally for certain tax-exempt and non-U.S. limited partners that require structural separation from the Main Fund for tax, regulatory, or institutional reasons. The Parallel Fund will ha

4. Harrowgate Fund V Offshore SLP (the "Offshore Feeder"). The Offshore Feeder is a Cayman Islands exempted limited partnership organized under the Exempted Limited Partnership Act (as revised) of the Cayman Islands. It will serve as the offshore feeder vehicle for non-U.S. investors that prefer to invest through a Cayman-domiciled entity for regulatory, tax, or institutional reasons. The Offshore Feeder will be regi

5. HGF V blocker Corp. (the "Blocker"). The blocker is a Delaware C corporation that will serve as a single-purpose entity interposed between the Fund and certain tax-exempt investors to mitigate unrelated business taxable income ("UBTI") exposure. The blocker will hold a limited partnership interest in the Main Fund or the Parallel Fund (as determined by the Sponsor) and will be subject to federal corporate income t

III. PARTNERSHIP TAX CLASSIFICATION UNDER IRC SUBCHAPTER K A. Check-the-box Classification — Main Fund and Parallel Fund Under the Treasury Regulations governing entity classification (commonly referred to as the "check-the-box" regulations), an entity's classification for federal income tax purposes is determined based on the entity's organizational form and, in certain cases, an affirmative election by the entity.

IV. UBTI CONSIDERATIONS FOR TAX-EXEMPT LIMITED PARTNERS A. Overview of UBTI Framework IRC §§ 511–514 impose a tax on the unrelated business taxable income ("UBTI") of tax-exempt organizations described in IRC § 501(c), as well as certain other tax-exempt entities, including state and local governmental plans under IRC § 511(a)(2)(B). The purpose of the UBTI tax is to prevent tax-exempt organizations from using their

1. The Kingsbridge Endowment Fund The Kingsbridge Endowment Fund ("Kingsbridge") is a 501(c)(3) university endowment with approximately $18.5 billion in assets under management. Kingsbridge's anticipated commitment to Fund V is $100,000,000. As a 501(c)(3) organization, Kingsbridge is subject to the tax on UBTI under IRC § 511(a)(1). UBTI Risk Assessment. Kingsbridge's UBTI exposure from Fund V arises principally fro

2. Northmoor State Pension System The Northmoor State Pension System ("Northmoor") is a state governmental pension plan with approximately $42 billion in assets under management. Northmoor's anticipated commitment to Fund V is $200,000,000, making it the anchor LP. As a state governmental plan, Northmoor is subject to UBTI under IRC § 511(a)(2)(B), but the scope of its UBTI exposure is narrower than that of private f

V. ECI AND FIRPTA CONSIDERATIONS FOR NON-U.S. INVESTORS A. Effectively Connected Income (ECI) — IRC § 864(c) A non-U.S. investor that is a partner in a U.S. partnership is treated as engaged in a U.S. trade or business to the extent the partnership is engaged in a U.S. trade or business. Under IRC § 875(1), a non-resident alien individual or foreign corporation is considered to be engaged in a trade or business withi

1. Edgecombe Insurance Group Ltd. Edgecombe Insurance Group Ltd. ("Edgecombe") is a Bermuda-domiciled insurance holding company with approximately $27 billion in general account assets under management. Edgecombe's anticipated commitment to Fund V is $150,000,000, and Edgecombe is currently expected to invest through the Main Fund (a Delaware limited partnership). ECI Analysis. As a non-U.S. corporate investor in a U