MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
FROM: Pamela Cross, Billing Partner, Funds & Asset Management Calderwood & Harkness LLP — New York Office 620 Eighth Avenue, 42nd Floor New York, NY 10018
TO: Graham Sutherland, Responsible Partner, Funds & Asset Management Calderwood & Harkness LLP — Wilmington Office 400 South Ashbury Asset Advisors, Suite 3000 Wilmington, DE 19801
DATE: April 3, 2025
RE: Staffing Plan & Budget Projections — Formation of Harrowgate Private Equity Fund V LP and Related Vehicles
MATTER NO.: 1003-00002
CLIENT: Harrowgate Capital Partners LLC
1. Purpose and Executive Summary
This memorandum sets forth the recommended staffing assignments, projected hours by workstream, and estimated budget for the fund formation engagement opened on April 2, 2025, under Matter No. 1003-00002. The memorandum is intended to facilitate your review and approval of the proposed team composition, workstream allocation, and fee projections before we communicate assignments to the broader engagement team and confirm billing arrangements with the client.
The Client. Our client is Harrowgate Capital Partners LLC ("HCP"), a Delaware limited liability company with its principal office at 1200 Concord Pike, Suite 600, Wilmington, Delaware 19803. HCP is an established private equity sponsor with approximately $5.8 billion in assets under management across four predecessor funds (Harrowgate Private Equity Fund I LP through Harrowgate Private Equity Fund IV LP, collectively, "HPE Funds I–IV"). HCP is registered as an investment adviser with the U.S. Securities and Exchange Commission (File No. 801-79223; CRD No. 298417). The firm's senior leadership includes Marcus J. Harrowgate (Founder and Managing Partner), Diana R. Castellano (Senior Managing Director and Co-Head of Investments), Catherine E. Loomis (General Counsel and Chief Compliance Officer), and Jonathan P. Birch (Chief Financial Officer).
Scope of Engagement. Calderwood & Harkness LLP ("C&H") has been retained to provide full-service fund formation counsel for the launch of Harrowgate Private Equity Fund V LP ("Fund V" or the "Main Fund"), with a target hard cap of $2,000,000,000. The scope of the engagement encompasses the following principal deliverables:
• Drafting and negotiating the Amended and Restated Agreement of Limited Partnership of the Main Fund (the "LPA");
• Drafting the Confidential Private Placement Memorandum (the "PPM");
• Preparation of subscription agreements and related investor documentation for the Main Fund, the parallel fund, and the offshore feeder vehicle;
• Drafting all ancillary formation documents, including the general partner LLC agreement, LPAC charter, capital call and distribution notice forms, transfer agreement form, and investor questionnaires;
• Tax structuring advice for the entire fund complex, including the Main Fund, a Delaware parallel fund (the "Parallel Fund"), a Cayman Islands offshore feeder vehicle (the "Offshore Feeder"), and a Delaware C corporation blocker entity (the "Blocker");
• Preparation of tax structuring memoranda addressing UBTI, ECI, FIRPTA, ERISA compliance, and Section 1061 carried interest compliance;
• Negotiation of side letters with limited partner counsel;
• Regulatory filings, including Form D, blue sky filings, and coordination on Cayman Islands registration under the Mutual Funds Act;
• Delivery of legal opinions at First Close; and
• Review of the subscription credit facility term sheet, fund administration agreement, and placement agent disclosure obligations.
Fee Arrangement. Core fund formation work is subject to a negotiated fee cap of $2,200,000, as set forth in the engagement letter dated April 2, 2025. Side letter negotiation beyond the initial form template will be billed at standard hourly rates and is expressly excluded from the fee cap. Disbursements, including filing fees, Cayman counsel coordination costs, travel expenses, and document production charges, are also excluded from the cap and will be billed at cost.
Budget Estimate. Based on the staffing plan and workstream analysis set forth below, I estimate total core formation fees in the range of $1,800,000 to $2,200,000, with the high end representing the fee cap. Side letter negotiation fees outside the cap are estimated at an additional $204,500 to $315,000, depending on the number and complexity of individually negotiated side letters. These estimates are subject to the assumptions and caveats described in Section 7 of this memorandum.
Target Timeline. The engagement is organized around the following critical milestones:
Meeting these milestones will require prompt mobilization of the engagement team and timely receipt of client inputs, including track record data verification, updated professional biographies, and risk factor review materials. I address the phasing of work in greater detail in Section 6 below.
2. Engagement Team — Roles and Billing Rates
The proposed engagement team consists of three partners and two associates, drawn from our Funds & Asset Management and Tax practices in the New York and Wilmington offices. The team has been selected to provide comprehensive coverage across all fund formation workstreams while maintaining continuity of the client relationship established during the formation of HPE Fund IV in 2021. Set forth below is a detailed description of each team member's role, relevant experience, and applicable billing rate.
2.1 Partners
Graham Sutherland — Responsible Partner, Funds & Asset Management (Wilmington)
Graham brings twenty-four years of practice experience in private equity fund formation, having led the formation of over sixty private investment vehicles during his career at Calderwood & Harkness. Graham served as lead outside counsel on the formation of HPE Funds III and IV and has an established working relationship with the senior leadership team at HCP. In his capacity as Responsible Partner, Graham will provide overall engagement oversight and serve as the lead client relationship partner, interfacing directly with Catherine E. Loomis (General Counsel & CCO) and Jonathan P. Birch (CFO) on all material matters. Graham will take the lead on key LPA negotiations with LP counsel, with particular responsibility for managing negotiations with the following firms:
• Aldworth & McBride LLP (Margaret S. Quinlan), counsel to the Northmoor State Pension System;
• Pelham Chambers LLP (Andrew K. Leverett), counsel to The Kingsbridge Endowment Fund; and
• Ramsden Clarke International LLP (Tariq N. Haddad), counsel to the Tidewater Sovereign Investment Authority.
Graham will also lead the preparation and delivery of legal opinions at First Close and provide oversight of the subscription credit facility term sheet review. His billing rate for this engagement is $1,650 per hour.
Pamela Cross — Billing Partner, Funds & Asset Management (New York)
I will serve as Billing Partner for this engagement, with primary responsibility for budget management, billing oversight, and fee cap monitoring throughout the life of the engagement. In addition to my administrative role, I will take substantive responsibility for the review and finalization of the PPM, with particular attention to disclosure adequacy, risk factor completeness, and consistency between the PPM and the LPA. I will also serve as the primary point of coordination with Osprey Capital Markets LLC, the placement agent retained by HCP, on all disclosure matters arising in connection with the offering. I bring twenty years of practice experience in fund formation, having advised sponsors on the formation of funds with aggregate commitments exceeding $30 billion. My billing rate for this engagement is $1,600 per hour.
Sylvia Hartwell — Specialist Partner, Tax (New York)
Sylvia will serve as tax specialist for the engagement, providing all tax structuring advice in connection with the fund complex. Sylvia has eighteen years of practice experience focused on the taxation of private investment funds and their investors, with particular expertise in partnership tax, ERISA, and cross-border structuring for sovereign and tax-exempt investors. Her responsibilities will encompass the following:
• Fund-level tax structuring for the Main Fund, Parallel Fund, Offshore Feeder, and blocker entity;
• ERISA analysis and benefit plan investor threshold monitoring, including governmental plan treatment for Northmoor State Pension System;
• Preparation of a Section 1061 carried interest compliance memorandum, addressing the three-year holding period requirement and its interaction with the Fund's European-style whole-fund waterfall;
• UBTI analysis (principally for The Kingsbridge Endowment Fund and the Northmoor State Pension System);
• ECI and FIRPTA analysis (principally for the Tidewater Sovereign Investment Authority and Edgecombe Insurance Group Ltd.);
• State and local tax considerations; and
• Review of tax-related disclosure sections of the PPM and tax-related provisions of the LPA and side letters.
Sylvia's billing rate for this engagement is $1,550 per hour.
2.2 Associates
Stephen Adler — Lead Associate, Funds & Asset Management (Wilmington)
Stephen is a seventh-year associate in the Wilmington office and will serve as the lead associate on this engagement. Stephen has worked on the formation of twelve private equity funds during his tenure at Calderwood & Harkness, including HPE Fund IV in 2021, and is thoroughly familiar with HCP's fund documentation and institutional preferences. Stephen will serve as the primary drafter and day-to-day lead on the following deliverables:
• LPA for the Main Fund, Parallel Fund, and Offshore Feeder;
• GP LLC Agreement for Harrowgate Fund V GP LLC;
• Subscription agreements for all three fund vehicles;
• Form side letter and negotiated side letters;
• Formation filings (review function);
• LPAC charter;
• Capital call and distribution notice forms;
• Form of transfer (assignment) agreement;
• Subscription credit facility term sheet review memorandum;
• Placement agent disclosure and compliance memorandum; and
• Legal opinions (drafting and research).
Stephen will also serve as the first-line coordination point with the client's in-house legal team, principally Catherine E. Loomis and Rachel M. Overton (Associate General Counsel). He will be responsible for reviewing the fund administration agreement with Pinnacle Fund Services LLC and for coordinating LPA provision consistency with the tax memoranda prepared by Sylvia Hartwell. Stephen's billing rate for this engagement is $1,050 per hour.
Theresa Kim — Working Associate, Funds & Asset Management (New York)
Theresa is a fourth-year associate in the New York office and will serve as the working associate supporting Stephen Adler across all workstreams. Theresa has been involved in seven fund formation engagements and brings strong drafting and research capabilities. Her primary responsibilities will include:
• Primary drafter of the PPM;
• Support on subscription documents and the investor questionnaire/KYC form;
• Drafting of blocker entity documents (Certificate of Incorporation and Bylaws for HGF V blocker Corp.);
• Primary responsibility for all formation filing preparation, including Certificates of Limited Partnership, LLC Formation, and Incorporation filed with the Delaware Secretary of State;
• Blue sky filing coordination across all U.S. states where limited partners are domiciled;
• Review and markup of the fund administration agreement with Pinnacle Fund Services LLC;
• Research on regulatory disclosure requirements;
• Assistance with the preparation of legal opinions;
• Closing checklist management; and
• General research support across all workstreams.
Theresa's billing rate for this engagement is $850 per hour.
2.3 Billing Rate Summary
The following table summarizes the engagement team, roles, offices, and applicable billing rates:
All billing rates fall within Calderwood & Harkness's 2025 standard rate ranges for the Funds & Asset Management and Tax practices: Partners, $1,450–$1,650 per hour; Associates, $850–$1,050 per hour. No rate premium or discount has been applied for this engagement.
No outside regulatory counsel is anticipated at this time. Delaware blue sky matters, Investment Advisers Act considerations, and all securities law compliance matters will be handled internally by the engagement team, with Sylvia Hartwell providing coverage on tax and ERISA regulatory questions. If Cayman Islands local counsel is required for the Offshore Feeder CIMA registration (as discussed further in Section 7), such counsel would be retained directly by HCP, with C&H providing coordination assistance.
3. Workstream Breakdown and Estimated Hours
This section provides a detailed breakdown of each workstream comprising the engagement, including a description of the scope of work, key substantive issues, and estimated hours by timekeeper. The workstreams are organized to correspond to the principal deliverables under the engagement letter. Hours estimates are based on our experience with comparable fund formation engagements, adjusted for the anticipated complexity of this transaction, the number of prospective LP counsel relationships to manage, and the multi-vehicle fund structure.
3.1 Limited Partnership Agreement — Main Fund (HPE Fund V LP)
Description. This workstream encompasses the drafting of the initial LPA for Harrowgate Private Equity Fund V LP, internal review and quality control, incorporation of client revisions following review by Catherine E. Loomis, Jonathan P. Birch, and Rachel M. Overton, and negotiation of the LPA with LP counsel. Based on the current pipeline of prospective investors and their known legal representation, we anticipate multiple rounds of LPA negotiation with at least three sophisticated LP counsel firms: Aldworth & McBride LLP (representing the Northmoor State Pension System), Pelham Chambers LLP (representing The Kingsbridge Endowment Fund), and Ramsden Clarke International LLP (representing the Tidewater Sovereign Investment Authority). Each of these firms has historically taken an active and detailed approach to LPA negotiation, and we should anticipate two to four rounds of markup and negotiation per firm, with the possibility of joint negotiation sessions to address cross-cutting issues. The final deliverable will include a clean execution-ready draft and a comprehensive redline against the initial distribution draft.
Key Provisions. The LPA will address the following principal economic and governance terms, as discussed with HCP during the pre-engagement planning process:
• Capital Commitments and Calls. Minimum LP commitment of $10,000,000 (subject to GP waiver); capital calls on not less than 10 business days' notice; default provisions including forfeiture and forced sale.
• Management Fee. 1.75% per annum of committed capital during the Investment Period; 1.50% per annum of invested capital (net of write-downs) following the expiration of the Investment Period. Fee offsets and discounts to be addressed in side letters for certain anchor LPs.
• Carried Interest. 20% carried interest above an 8% preferred return, calculated on a European-style whole-fund waterfall basis. Distribution waterfall: (i) return of all contributed capital and Fund Expenses; (ii) 8% preferred return (compounded annually); (iii) 80/20 GP catch-up until the General Partner has received 20% of cumulative profits; and (iv) 80/20 split thereafter.
• GP Commitment. 2.5% of aggregate commitments, equal to $50,000,000 at hard cap. The GP commitment will be funded by Harrowgate Fund V GP LLC from capital contributions made by HCP.
• Investment Period. Five years from the Final Close, subject to early termination upon Key Person Event, for-cause removal, or no-fault removal.
• Fund Term. Ten years from the Final Close, with two one-year extension options (first by GP with LPAC consent; second by GP with majority LP consent).
• Concentration Limit. No single portfolio investment to exceed 20% of aggregate commitments at the time of commitment.
• Key Person. Marcus J. Harrowgate and Diana R. Castellano designated as Key Persons. Key Person Event triggered if either ceases to devote substantially all of his or her business time to Fund matters, with a 180-day cure period and option for LPAC to designate a replacement.
• No-Fault Removal. Supermajority (75%) of limited partners by commitment may remove the General Partner without cause, subject to 90 days' notice and a wind-down period not to exceed 24 months.
• For-Cause Removal. Majority in interest of limited partners may remove the General Partner for cause, with "cause" defined to include fraud, willful misconduct, material breach of the LPA, and felony conviction.
• LP Advisory Committee. Five-member LPAC, with three seats designated at First Close (anticipated: Northmoor State Pension System, Edgecombe Insurance Group Ltd., The Kingsbridge Endowment Fund). Scope and procedures governed by a separate LPAC Charter (Section 3.10 below).
• Transaction Fee Offset. 100% offset of transaction, monitoring, and similar fees received by the GP or its affiliates against the management fee.
• Organizational Expenses. Organizational expense cap of $3,500,000, inclusive of C&H legal fees, filing fees, and other formation-related costs.
• Fund-Level Leverage Limits. Subscription credit facility borrowings not to exceed 25% of uncalled commitments at any time; bridge financing for portfolio investments not to exceed 180 calendar days.
• MFN Mechanics. Within 30 days following the Final Close, all limited partners who committed $50,000,000 or more will receive copies of all side letter provisions (subject to confidential redaction of investor identity) and may elect to receive the benefit of any such provision, to the extent applicable, by written notice within 30 days of receipt.
• Governing Law. Delaware.
• Exclusive Jurisdiction. Delaware Court of Chancery (or, if the Court of Chancery declines jurisdiction, the Superior Court of the State of Delaware).
Estimated Hours:
These estimates include time for initial drafting, two rounds of internal review, one round of client revisions, and two to three rounds of LP counsel negotiation. If LP counsel negotiations prove more protracted than anticipated — a realistic possibility given the involvement of three major institutional investor counsel firms — additional hours may be required, as discussed in Section 4 below.
3.2 Parallel Fund LPA & Offshore Feeder LPA
Description. This workstream covers the preparation of the limited partnership agreements for two parallel investment vehicles designed to accommodate the structural requirements of certain categories of investors:
Parallel Fund. The Parallel Fund will be structured as a Delaware limited partnership (Harrowgate Private Equity Fund V Parallel LP) for certain tax-exempt and non-U.S. limited partners requiring structural separation from the Main Fund for tax, regulatory, or reporting reasons. The Parallel Fund LPA will cross-reference and incorporate by reference the economic terms of the Main Fund LPA, with adjustments to address the specific tax and structural considerations applicable to its limited partner base.
Offshore Feeder. The Offshore Feeder will be structured as a Cayman Islands exempted limited partnership (Harrowgate Private Equity Fund V Offshore LP) for non-U.S. investors, including in particular the Tidewater Sovereign Investment Authority, which has indicated an anticipated commitment of $175,000,000 through this vehicle. The Offshore Feeder LPA will be governed by Cayman Islands law and will be registered with the Cayman Islands Monetary Authority ("CIMA") under the Mutual Funds Act (as revised). The Offshore Feeder will invest substantially all of its assets as a limited partner in the Main Fund (or the Parallel Fund, as applicable), thereby ensuring economic parity across the fund complex.
The principal drafting challenge for this workstream lies in maintaining consistency between the economic provisions of the three LPAs while addressing the structural differences inherent in the parallel and feeder architecture, particularly with respect to allocation mechanics, distribution waterfalls, tax withholding provisions, and ERISA compliance.
Estimated Hours:
3.3 GP LLC Agreement
Description. This workstream covers the drafting of the limited liability company operating agreement for Harrowgate Fund V GP LLC, which will serve as the sole general partner of the Main Fund, the Parallel Fund, and the Offshore Feeder. The sole member of the GP LLC will be Harrowgate Capital Partners LLC. The GP LLC Agreement will address the following principal topics:
• Management authority of the GP LLC and its delegation to HCP personnel;
• Capital contributions to the GP LLC to fund the 2.5% GP commitment;
• Carried interest allocation and distribution mechanics, including the timing and calculation of carried interest distributions consistent with the European-style whole-fund waterfall;
• Clawback obligations of the individual carried interest recipients, structured on a several (not joint) basis among Marcus J. Harrowgate, Diana R. Castellano, and Jonathan P. Birch;
• Indemnification and exculpation of the GP LLC and its members, officers, and employees;
• Tax matters partner designation;
• Delaware governing law.
The GP LLC Agreement is a relatively straightforward document that will track the framework established in the HPE Fund IV GP LLC Agreement, with updates to reflect the Fund V economic terms and any changes in HCP's internal structure.
Estimated Hours:
3.4 Private Placement Memorandum
Description. This workstream covers the drafting of a comprehensive Confidential Private Placement Memorandum for the offering of limited partnership interests in the Main Fund (with supplemental disclosures as appropriate for the Parallel Fund and Offshore Feeder). The PPM will be the primary marketing and disclosure document for the offering and will require close coordination with HCP (for factual inputs, track record data, and biography review) and with Osprey Capital Markets LLC (for placement agent coordination and disclosure).
The PPM will include the following principal sections:
• Executive Summary and Investment Strategy. Description of HCP's investment strategy, focused on North American mid-market and upper-mid-market buyouts. Target sectors include industrials, business services, healthcare services, and technology-enabled services. Anticipated equity checks of $75,000,000 to $250,000,000 per transaction.
• Fund Terms Summary. Summary of the key economic and governance terms of the Fund, cross-referenced to the LPA. This section will be drafted in close coordination with the LPA to ensure consistency; Stephen Adler will review the terms summary for this purpose.
• Predecessor Fund Track Record. Performance data for HPE Funds I–IV as of December 31, 2024, presented in accordance with industry standards and subject to appropriate disclaimers:
All track record data will require verification by the client prior to inclusion in the PPM. We will coordinate with Jonathan P. Birch and the fund's auditor, Caldwell, Fitch & Hartley LLP (Robert A. Fonseca), to confirm the accuracy of these figures.
• Key Professional Biographies. Biographical information for Marcus J. Harrowgate, Diana R. Castellano, and other senior investment professionals. Updated biographies to be provided by the client.
• Risk Factors. Comprehensive risk factor disclosure covering market risk, leverage risk, illiquidity risk, concentration risk, regulatory risk, cybersecurity risk, pandemic-related risk, ESG/climate risk, geopolitical risk, and other risks customary for a private equity fund of this type and size.
• Tax Considerations. Detailed discussion of the federal income tax consequences of an investment in the Fund, including partnership taxation under Subchapter K, Section 1061 carried interest rules, UBTI considerations for tax-exempt investors, ECI and FIRPTA considerations for non-U.S. investors, and state and local tax considerations. This section will be drafted by Theresa Kim with substantial input from Sylvia Hartwell.
• ERISA Considerations. Discussion of the Fund's status under ERISA, including the benefit plan investor threshold, governmental plan exclusion, and mechanics of the blocker structure for tax-exempt investors subject to UBTI concerns.
• Regulatory Matters. Description of the Fund's reliance on the Section 3(c)(7) exemption from registration under the Investment Company Act of 1940 (requiring all investors to be "qualified purchasers"), the offering exemption under Section 4(a)(2) of the Securities Act of 1933 and Regulation D Rule 506(b), and HCP's registration status under the Investment Advisers Act of 1940.
• Placement Agent Disclosure. Disclosure of HCP's retention of Osprey Capital Markets LLC as exclusive placement agent, including the placement fee of 1.25% on placed capital (payable by the Sponsor, not the Fund), Osprey's registration as a broker-dealer with the SEC and membership in FINRA, and other disclosures required under applicable SEC and FINRA regulations and state pay-to-play rules.
• HCP Registration Information. SEC registration File No. 801-79223; CRD No. 298417.
Client Input Required. Timely receipt of the following materials from HCP will be critical to meeting the May 1, 2025 draft deadline for the PPM: (a) verified track record data through December 31, 2024, with sign-off from Jonathan P. Birch; (b) updated biographies for all key professionals; (c) client review and approval of risk factor disclosure; and (d) confirmation of any changes to the investment strategy or fund terms since the preliminary term sheet circulated in March 2025.
Estimated Hours:
3.5 Subscription Documents
Description. This workstream covers the preparation of form subscription agreements for each of the three fund vehicles (Main Fund, Parallel Fund, and Offshore Feeder). Each subscription agreement will incorporate the following elements:
• Investor representations and warranties, including representations as to accredited investor status, qualified purchaser status, ERISA status (benefit plan investor, governmental plan, or other), OFAC/AML compliance, tax status (U.S. person, non-U.S. person, tax-exempt entity, partnership, etc.), and FOIA applicability;
• Irrevocable power of attorney in favor of the General Partner;
• Joinder to the applicable LPA;
• Electronic delivery and communications elections;
• Investor indemnification of the Fund and General Partner for breach of representations; and
• Capital commitment amount and funding mechanics.
An Investor Questionnaire will be attached as an exhibit to each subscription agreement, requesting detailed information regarding beneficial ownership, source of funds, FATCA and CRS self-certification, and politically exposed person ("PEP") status. The Investor Questionnaire will be designed to satisfy AML/KYC requirements and to facilitate processing by Pinnacle Fund Services LLC.
The minimum commitment for each investor is $10,000,000, subject to the General Partner's right to accept smaller commitments in its sole discretion.
Estimated Hours:
3.6 Side Letters
This workstream encompasses the preparation of a form side letter template and the negotiation of individually tailored side letters with limited partner counsel. Because side letter negotiation beyond the form template is billed at standard hourly rates outside the $2,200,000 fee cap, the hours estimated for this workstream are segregated from the core formation budget.
Form Side Letter. The engagement team will prepare a form side letter incorporating the standard concessions typically offered by HCP to limited partners committing $50,000,000 or more. The form template will include provisions addressing the following topics: MFN rights, enhanced reporting (including quarterly portfolio company information and annual audited financials), co-investment rights (pro rata allocation on a best-efforts basis), transfer rights (permitted transferee carve-outs), excuse rights (permitting opt-out from investments that would violate applicable law or investment restrictions), ERISA representations and operating covenants, tax-related provisions (UBTI, ECI, tax withholding, tax reporting), and FOIA accommodations (public records law carve-outs for governmental plan investors).
Negotiated Side Letters — Anticipated First Close. Based on the current pipeline of prospective investors and their identified counsel, we anticipate the following individually negotiated side letters in connection with the First Close:
1. Northmoor State Pension System — Commitment: $200,000,000. Counsel: Aldworth & McBride LLP (Margaret S. Quinlan). Anticipated key terms: LPAC seat (designated representative: Helen T. Barrows); management fee discount (1.60% during Investment Period); FOIA carve-out (requiring notice and opportunity to seek protective order before disclosure of Fund information in response to public records requests); co-investment rights (preferential allocation on transactions exceeding $150M equity); excuse rights for investments prohibited under applicable state pension investment guidelines. Northmoor has historically been among the more active negotiators in HCP's fund formations, and we should anticipate three to four rounds of markup on the side letter.
2. The Kingsbridge Endowment Fund — Commitment: $100,000,000. Counsel: Pelham Chambers LLP (Andrew K. Leverett). Anticipated key terms: UBTI and blocker provisions (confirmation that Kingsbridge will invest through HGF V blocker Corp. for UBTI mitigation); LPAC seat; ESG reporting (annual ESG impact report and carbon footprint disclosure consistent with UNPRI and TCFD frameworks); management fee discount (1.65% during Investment Period). Kingsbridge has become increasingly focused on ESG-related side letter provisions in recent years, and we anticipate meaningful negotiation on the scope and format of the ESG reporting obligations.
3. Tidewater Sovereign Investment Authority — Commitment: $175,000,000 (via the Offshore Feeder). Counsel: Ramsden Clarke International LLP (Tariq N. Haddad). Anticipated key terms: sovereign immunity (broad reservation of sovereign immunity and waiver limitations); Sharia compliance screening (negative screen excluding investments in companies deriving more than a specified percentage of revenue from prohibited activities); management fee discount (1.60% during Investment Period); LPAC observer seat (non-voting); ECI and FIRPTA provisions (confirmation of structuring to minimize U.S. tax exposure; tax indemnity from the Fund for any ECI or FIRPTA liability arising from failure to maintain agreed-upon structuring). Tidewater is one of the most sophisticated sovereign wealth fund investors in the HCP LP base, and its counsel (Ramsden Clarke International) is known for detailed and technically complex side letter negotiations. We anticipate three to five rounds of markup.
4. Edgecombe Insurance Group Ltd. — Commitment: $150,000,000. Counsel: not yet identified (in-house legal may negotiate directly). Anticipated key terms: insurance regulatory reporting (quarterly and annual reports in a format compliant with applicable insurance regulatory requirements, including NAIC-compliant Schedule BA and Schedule D reporting); LPAC seat; management fee discount (1.60% during Investment Period); NAIC-compliant valuation reporting (NAV and fair value reporting consistent with NAIC Statements of Statutory Accounting Principles).
5. Velthorn Family Office LLC — Commitment: $50,000,000. Counsel: not yet identified. Anticipated key terms: likely a shorter-form side letter based substantially on the form template, with limited customization for co-investment and reporting provisions. Negotiation anticipated to be relatively streamlined.
6. Stonewall Partners Fund of Funds III LP — Commitment: $75,000,000. Counsel: not yet identified. Anticipated key terms: likely a shorter-form side letter, with fund-of-funds-specific provisions addressing look-through reporting, portfolio transparency, and secondary transfer facilitation. Negotiation anticipated to be moderate in scope.
MFN Election Notice. Following the Final Close, the engagement team will prepare a form MFN Election Notice for circulation to all limited partners eligible to elect side letter concessions under the MFN mechanics of the LPA. The notice will be accompanied by a schedule of all side letter provisions (with investor identity redacted) and instructions for submitting elections within the 30-day election period.
Note on Fee Treatment. All side letter work beyond the preparation of the initial form template is billed at standard hourly rates and is excluded from the $2,200,000 fee cap. The estimates below assume four to six heavily negotiated side letters, consistent with the current pipeline. If the number of heavily negotiated side letters increases materially, or if additional LP counsel beyond those identified above enter the negotiation process, hours and fees will increase proportionally.
Estimated Hours (Billed Outside Fee Cap):
3.7 Tax Structuring Memoranda
Description. Sylvia Hartwell will lead the preparation of three tax structuring memoranda, each designed to provide HCP with comprehensive tax analysis to inform the fund structure and to memorialize the basis for the structuring decisions embedded in the LPA and PPM. The three memoranda are as follows:
1. Tax Structuring Memorandum. Comprehensive analysis of the tax structure of the fund complex, including the Main Fund, Parallel Fund, Offshore Feeder, and blocker entity. The memorandum will address partnership tax classification under Subchapter K of the Internal Revenue Code; check-the-box elections; Cayman Islands tax neutrality (including the absence of Cayman income, capital gains, or withholding taxes); UBTI analysis for tax-exempt U.S. investors (principally The Kingsbridge Endowment Fund and the Northmoor State Pension System), with particular focus on the treatment of debt-financed income from leveraged portfolio investments; ECI analysis for non-U.S. investors investing through the Offshore Feeder (principally the Tidewater Sovereign Investment Authority) and directly (principally Edgecombe Insurance Group Ltd.); FIRPTA analysis addressing the characterization of portfolio company dispositions as USRPI dispositions and available exemptions and structuring alternatives; and state and local tax considerations, including state withholding and filing obligations for the Main Fund and Parallel Fund.
2. ERISA Analysis Memorandum. Analysis of the Fund's compliance with the Department of Labor's plan asset regulations under ERISA. The memorandum will address the benefit plan investor threshold (less than 25% of any class of equity interest held by benefit plan investors), the methodology for monitoring the threshold at each closing and throughout the Fund's term, the treatment of governmental plans (including the Northmoor State Pension System, which is not subject to Title I of ERISA but is subject to certain of the prohibited transaction rules under Section 4975 of the Code), the treatment of Kingsbridge Endowment Fund's investment through the blocker entity, and the adequacy of the subscription agreement representations to establish benefit plan investor status.
3. Section 1061 Carried Interest Compliance Memorandum. Analysis of the application of Section 1061 of the Internal Revenue Code to the carried interest allocations under the LPA, including the three-year holding period requirement for long-term capital gains treatment, the interaction of Section 1061 with the European-style whole-fund waterfall (where carried interest is not distributable until all contributed capital and preferred return have been returned), and recommended LPA provisions to ensure compliance and preserve favorable tax treatment for the GP and carried interest recipients.
Stephen Adler will coordinate with Sylvia Hartwell on all LPA provisions implicated by the tax memoranda, and Theresa Kim will provide research support as needed.
Estimated Hours:
3.8 Formation Filings
Description. This workstream covers the preparation and filing of all entity formation documents and regulatory filings required to establish the fund complex and comply with applicable securities laws. Theresa Kim will have primary responsibility for this workstream, with Stephen Adler providing review. The required filings are as follows:
• Certificate of Limited Partnership — HPE Fund V LP. Filed with the Delaware Secretary of State pursuant to Section 17-201 of the Delaware Revised Uniform Limited Partnership Act.
• Certificate of Formation — Harrowgate Fund V GP LLC. Filed with the Delaware Secretary of State pursuant to Section 18-201 of the Delaware Limited Liability Company Act.
• Certificate of Incorporation — HGF V blocker Corp. Filed with the Delaware Secretary of State pursuant to Section 101 of the Delaware General Corporation Law.
• Certificate of Limited Partnership — Harrowgate Private Equity Fund V Parallel LP. Filed with the Delaware Secretary of State.
• Offshore Feeder Exempted LP Registration. Registration of the Offshore Feeder as a registered mutual fund with the Cayman Islands Monetary Authority under the Mutual Funds Act (as revised). This filing will be coordinated with Cayman Islands local counsel, if separately engaged by HCP.
• Form D Filing with the SEC. To be filed electronically via EDGAR within 15 calendar days following the First Close, pursuant to Regulation D, Rule 503. The Form D will identify the offering as a Rule 506(b) offering and will include the names of the issuers, the placement agent, and certain other required information.
• Blue Sky Filings. Notice filings in all U.S. states and territories where limited partners are domiciled, to the extent required under applicable state securities laws. The specific filing requirements will depend on the domicile of each investor admitted at each closing.
Estimated Hours:
3.9 blocker Entity Documents
Description. This workstream covers the preparation of the organizational documents for HGF V blocker Corp., a Delaware C corporation to be established for the benefit of tax-exempt investors — principally The Kingsbridge Endowment Fund — seeking to mitigate unrelated business taxable income exposure that would otherwise arise from the Fund's use of leverage and other debt-financed activities. The deliverables consist of the Certificate of Incorporation (including provisions addressing authorized shares, purpose clause, board composition, and officer designations) and Bylaws (including provisions addressing stockholder meetings, board procedures, officer appointments, indemnification, and amendments). Sylvia Hartwell will review both documents to ensure consistency with the tax structuring memorandum and the ERISA analysis.
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3.10 LPAC Charter / Terms of Reference
Description. This workstream covers the preparation of the Charter (Terms of Reference) for the LP Advisory Committee of the Fund. The LPAC will consist of five members. Three seats will be designated at the First Close, with the anticipated initial members being the Northmoor State Pension System (represented by Helen T. Barrows), Edgecombe Insurance Group Ltd. (representative to be designated), and The Kingsbridge Endowment Fund (representative to be designated). Two additional seats will be designated in connection with subsequent closings. The Tidewater Sovereign Investment Authority is anticipated to receive an LPAC observer seat (non-voting) pursuant to its side letter.
The LPAC Charter will address the following topics:
• Composition, appointment, and removal of LPAC members;
• Quorum requirements (majority of members, in person or by telephone);
• Meeting procedures (minimum two meetings per year, with additional meetings at the request of the GP or any two LPAC members);
• Scope of LPAC authority, including conflict of interest approvals (related-party transactions, co-investments with affiliates, allocation conflicts), valuation review (annual review of portfolio company valuations), fund term extension approvals, and investment restriction waiver approvals;
• Confidentiality obligations of LPAC members;
• Liability protections (no fiduciary duty owed by LPAC members to the Fund or other LPs; exculpation except for fraud or willful misconduct); and
• Relationship between the LPAC Charter and the LPA (LPA controls in the event of any inconsistency).
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3.11 Subscription Credit Facility — Term Sheet Review
Description. HCP has received an indicative term sheet from Ashford National Bank, N.A. for a $500,000,000 revolving subscription credit facility (the "Sub Facility"). Stephen Adler will prepare a review memorandum analyzing the key terms of the indicative term sheet and identifying any provisions that are inconsistent with, or require accommodation in, the LPA. The key terms of the indicative term sheet, as communicated to us by Jonathan P. Birch, are as follows:
• Facility Size. $500,000,000 revolving credit facility.
• Tenor. 364 days, with renewal option.
• Interest Rate. SOFR plus 175 basis points on drawn amounts; 25 basis points commitment fee on undrawn amounts.
• Borrowing Base. 90% of uncalled commitments from "included investors" — defined as limited partners meeting minimum credit criteria (investment-grade rated or governmental plan investors).
• Security Package. First-priority security interest in the Fund's right to call capital from included investors, together with related rights under the LPA, subscription agreements, and side letters.
• LPA Consistency. The term sheet is structured to operate within the Fund's leverage limits as set forth in the LPA (subscription facility borrowings not to exceed 25% of uncalled commitments; bridge financing not to exceed 180 calendar days). The review memo will verify consistency and flag any potential conflicts.
• Lender Accommodation Provisions. The LPA will need to include customary lender accommodation provisions, including a pledge of the right to call capital, borrower representations regarding LP commitments, and notice provisions for capital calls funded through facility draws.