CONFIDENTIAL — FOR DISCUSSION PURPOSES ONLY
FORM OF SIDE LETTER
HARROWGATE PRIVATE EQUITY FUND V LP
Prepared by:
Calderwood & Harkness LLP 400 South Ashbury Asset Advisors, Suite 3000 Wilmington, DE 19801
620 Eighth Avenue, 42nd Floor New York, NY 10018
Matter No. 1003-00002
Drafting Note: This document constitutes the base form template from which investor-specific side letters will be derived. Bracketed placeholders are to be customized for each negotiated side letter, including letters for Northmoor, Kingsbridge, Edgecombe, Tidewater, and other investors as applicable. All bracketed terms require review and completion prior to execution. This form should be read in conjunction with the Agreement of Limited Partnership and Subscription Agreement for Harrowgate Private Equity Fund V LP.
SIDE LETTER
This Side Letter (this "Side Letter") is entered into as of [●], 2025, by and between:
(1) Harrowgate Fund V GP LLC, a Delaware limited liability company (the "General Partner"), whose sole member is Harrowgate Capital Partners LLC, a Delaware limited liability company (the "Sponsor"), with its principal office at c/o Harrowgate Capital Partners LLC, 1200 Concord Pike, Suite 600, Wilmington, DE 19803; and
(2) [Name of Limited Partner], a [entity type] organized under the laws of [jurisdiction] (the "Limited Partner" or the "Investor"), with its principal office at [●].
The General Partner and the Limited Partner are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Harrowgate Private Equity Fund V LP, a Delaware limited partnership (the "Fund" or "HPE Fund V"), has been formed pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware and is governed by that certain Agreement of Limited Partnership dated as of [●], 2025, by and among the General Partner and the limited partners from time to time party thereto (as the same may be amended, supplemented, modified, or restated from time to time, the "Partnership Agreement" or "LPA");
WHEREAS, Harrowgate Fund V GP LLC serves as the sole general partner of the Fund and is vested with authority to manage and control the business and affairs of the Fund in accordance with the terms and provisions of the Partnership Agreement;
WHEREAS, the Limited Partner has committed to make a capital contribution in the aggregate amount of $[●] (the "Commitment") to the Fund pursuant to a Subscription Agreement dated as of [●], 2025, between the Limited Partner and the General Partner (the "Subscription Agreement"), subject to the terms and conditions set forth therein and in the Partnership Agreement;
WHEREAS, the Fund has a target fund size of $2,000,000,000 (the "Hard Cap") and a minimum limited partner commitment of $10,000,000, subject to the General Partner's discretion to waive or reduce such minimum commitment in its sole discretion;
WHEREAS, the General Partner desires to grant the Limited Partner certain rights, benefits, and accommodations supplemental to, and in certain cases modifying, the terms of the Partnership Agreement as applied to the Limited Partner, subject to the terms and conditions set forth herein; and
WHEREAS, the General Partner is authorized pursuant to Section [●] of the Partnership Agreement to enter into side letters and other written agreements with one or more Limited Partners that have the effect of modifying, supplementing, or waiving certain provisions of the Partnership Agreement as applied to such Limited Partner, without the consent of any other Limited Partner, provided that such modifications, supplements, or waivers do not adversely affect the rights of any other Limited Partner in any material respect.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
SECTION 1: DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used but not otherwise defined in this Side Letter shall have the respective meanings ascribed to such terms in the Partnership Agreement. As used in this Side Letter, the following terms shall have the meanings set forth below:
(a) "Commitment" means the capital commitment of the Limited Partner to the Fund as specified in the recitals hereto, in the aggregate amount of $[●].
(b) "Final Close" means the final closing of the Fund at which limited partner commitments are accepted by the General Partner, which is expected to occur no later than February 15, 2027 (being the date that is eighteen (18) months after the First Close), or such later date as the General Partner may determine in accordance with the Partnership Agreement.
(c) "First Close" means the initial closing of the Fund at which limited partner commitments are first accepted by the General Partner, which is targeted to occur on or about August 15, 2025, or such other date as the General Partner may determine.
(d) "Investment Period" means the period commencing on the date of the Final Close and ending on the fifth (5th) anniversary thereof, subject to any extension or early termination thereof in accordance with the Partnership Agreement.
(e) "LPAC" means the Limited Partner Advisory Committee established pursuant to the Partnership Agreement, as constituted from time to time.
(f) "MFN Election Period" means the thirty (30)-day period commencing on the date that is one (1) business day following the Final Close, during which eligible Limited Partners may elect to receive the benefit of certain side letter provisions granted to other Limited Partners in accordance with Section 3 hereof.
(g) "Partnership Agreement" has the meaning set forth in the recitals hereto.
1.2 Interpretation. In the event of any conflict or inconsistency between the terms of this Side Letter and the terms of the Partnership Agreement, the terms of this Side Letter shall govern and control with respect to the Limited Partner, but only to the extent of such conflict or inconsistency. Except as expressly modified or supplemented by this Side Letter, all other provisions of the Partnership Agreement shall remain in full force and effect and shall continue to apply to the Limited Partner in accordance with their terms. Nothing in this Side Letter shall be construed to modify, amend, or waive any provision of the Partnership Agreement as applied to any other limited partner of the Fund.
1.3 Construction. For purposes of this Side Letter, (a) references to "Sections" and "Exhibits" are to sections of, and exhibits to, this Side Letter unless otherwise indicated; (b) the words "hereof," "herein," "hereunder," and words of similar import shall refer to this Side Letter as a whole and not to any particular provision of this Side Letter; (c) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation"; and (d) references to any statute, rule, or regulation include any amendments, modifications, or replacements thereof.
SECTION 2: MANAGEMENT FEE MODIFICATIONS
2.1 Early Close discount.
[If applicable — If the Limited Partner subscribes at or prior to the First Close:]
In consideration of the Limited Partner's early commitment to the Fund, the Parties agree that, notwithstanding the management fee provisions set forth in Section [●] of the Partnership Agreement, during the Investment Period the management fee applicable to the Limited Partner shall be reduced by ten (10) basis points from one and seventy-five hundredths of one percent (1.75%) to one and sixty-five hundredths of one percent (1.65%) per annum, calculated on the Limited Partner's Commitment (including any portion thereof that has been called and contributed to the Fund and any unfunded portion thereof). Such reduced management fee shall apply in lieu of the standard management fee rate set forth in the Partnership Agreement during the Investment Period.
For the avoidance of doubt, the management fee applicable to the Limited Partner during the period following the expiration or earlier termination of the Investment Period (the "Post-Investment Period") shall be calculated at the rate of one and fifty hundredths of one percent (1.50%) per annum on invested capital (net of the cost basis of realized dispositions and permanent write-downs), which rate is consistent with the Post-Investment Period management fee set forth in the Partnership Agreement and is not modified by this Section 2.1.
Drafting Note: This Section 2.1 shall apply only to Limited Partners that subscribe for an interest in the Fund at or prior to the First Close (currently targeted for August 15, 2025). If the Limited Partner subscribes after the First Close, this Section 2.1 shall be deleted in its entirety.
2.2 Large LP discount.
[If applicable — If the Commitment is equal to or greater than $150,000,000:]
In further consideration of the size of the Limited Partner's Commitment, the Parties agree that, during the Investment Period, the management fee applicable to the Limited Partner shall be reduced by an additional five (5) basis points from the rate otherwise applicable under Section 2.1 above (or, if Section 2.1 is not applicable, from the standard management fee rate set forth in the Partnership Agreement). For the avoidance of doubt, if both Section 2.1 and this Section 2.2 are applicable to the Limited Partner, the combined effect shall be a management fee during the Investment Period of one and sixty hundredths of one percent (1.60%) per annum on the Limited Partner's Commitment, representing a cumulative reduction of fifteen (15) basis points from the standard management fee rate of one and seventy-five hundredths of one percent (1.75%) per annum.
The Post-Investment Period management fee of one and fifty hundredths of one percent (1.50%) per annum on invested capital (net of realized dispositions) shall remain unchanged and is not modified by this Section 2.2.
Drafting Note: This Section 2.2 shall apply only to Limited Partners with a Commitment equal to or greater than $150,000,000. If the Limited Partner's Commitment is less than $150,000,000, this Section 2.2 shall be deleted in its entirety.
2.3 Transaction Fee Offset.
The General Partner confirms, and the Parties acknowledge, that one hundred percent (100%) of net transaction fees, monitoring fees, directors' fees, advisory fees, break-up fees, and similar fees received by the General Partner, the Sponsor, or any of their respective affiliates from portfolio companies of the Fund (in each case, net of any unreimbursed out-of-pocket expenses incurred in connection therewith) shall be applied as an offset against management fees otherwise payable by the Fund, in a manner consistent with Section [●] of the Partnership Agreement. This Section 2.3 is intended as a confirmation of the existing provisions of the Partnership Agreement and does not create any additional rights or obligations beyond those set forth therein.
SECTION 3: MOST FAVORED NATION RIGHTS
3.1 MFN Eligibility.
The rights set forth in this Section 3 shall be available to the Limited Partner only if the Limited Partner's Commitment to the Fund equals or exceeds fifty million dollars ($50,000,000). If the Limited Partner's Commitment is less than $50,000,000, this Section 3 shall not apply and the Limited Partner shall not be entitled to the most favored nation rights set forth herein.
[If the Limited Partner's Commitment is less than $50,000,000, this Section 3 shall not apply.]
3.2 MFN Disclosure and Election Process.
(a) Disclosure. Within thirty (30) days following the Final Close, the General Partner shall provide the Limited Partner with a written summary (the "MFN Summary") setting forth the material terms and provisions of all side letters, supplemental agreements, or other written arrangements entered into by the General Partner with any other limited partner of the Fund that grant such limited partner rights, terms, or conditions that differ from or are in addition to those set forth in the Partnership Agreement. The MFN Summary shall describe the substance of each material provision in sufficient detail to permit the Limited Partner to evaluate whether to elect to receive the benefit of such provision. The MFN Summary may redact the identity of the limited partner to whom such provision was granted, to the extent such redaction is required by applicable confidentiality obligations, provided that in no event shall such redaction prevent the Limited Partner from understanding the substantive content and applicability of the provision.
(b) Election. The Limited Partner shall have the right, exercisable by delivering a written notice of election (an "MFN Election Notice") to the General Partner during the MFN Election Period, to elect to receive the benefit of any one or more of the provisions set forth in the MFN Summary, subject to the exclusions set forth in Section 3.2(c) below. The MFN Election Notice shall be substantially in the form attached hereto as Exhibit A and shall specify each provision as to which the Limited Partner elects to receive the benefit thereof.
(c) Exclusions. Notwithstanding the foregoing, the following categories of provisions shall be excluded from MFN election and the Limited Partner shall not be entitled to elect to receive the benefit thereof:
(i) Provisions that are specifically tied to, or necessitated by, an investor's particular legal, tax, or regulatory status, including, without limitation, ERISA-specific covenants and operating restrictions, governmental plan or public pension fund accommodations, freedom of information act or public records act carve-outs, sovereign immunity provisions, insurance regulatory accommodations (including NAIC reporting and risk-based capital compliance provisions), Sharia compliance screening and investment restriction provisions, and similar provisions that are applicable solely by reason of the legal, tax, or regulatory characteristics of the investor to which they were granted;
(ii) Provisions that relate to, or are conditioned upon, capital commitments in excess of the Limited Partner's Commitment (including, without limitation, management fee discounts or co-investment preferences that are available only to limited partners with commitments above a specified threshold that exceeds the Limited Partner's Commitment);
(iii) Designations of seats on, or observer rights with respect to, the LPAC; and
(iv) Provisions that are granted in connection with, or relate specifically to, investments made through the Fund's parallel fund vehicles (including Harrowgate Fund V Parallel LP) or offshore feeder structures (including Harrowgate Fund V Offshore SLP).
(d) MFN Election Form. The General Partner shall provide the Limited Partner with an MFN Election Notice form substantially in the form attached hereto as Exhibit A, together with the MFN Summary, at the commencement of the MFN Election Period.
3.3 Effect of MFN Election.
(a) Upon the General Partner's receipt of a valid and timely MFN Election Notice from the Limited Partner, the provisions elected by the Limited Partner therein shall be deemed incorporated into this Side Letter by reference and shall apply to the Limited Partner as if such provisions had been originally included herein, effective as of the date of the General Partner's receipt of the MFN Election Notice (or, if later, the date on which the elected provision was first effective with respect to the limited partner to whom it was originally granted).
(b) The General Partner shall provide written confirmation to the Limited Partner of the provisions elected pursuant to the MFN Election Notice within fifteen (15) business days following the General Partner's receipt of such notice. Such confirmation shall set forth the full text of each elected provision, as modified to the extent necessary to reflect the Limited Partner's name, Commitment, and other relevant terms.
(c) For the avoidance of doubt, the election of any provision pursuant to this Section 3 shall not entitle the Limited Partner to receive the benefit of any other provision that was not expressly elected, nor shall such election be construed to modify any term of this Side Letter other than to incorporate the elected provision.
SECTION 4: CO-INVESTMENT RIGHTS
4.1 Co-Investment Allocation.
[Standard / Enhanced — select applicable provision:]
Standard Provision:
The General Partner shall use commercially reasonable efforts to offer the Limited Partner the opportunity to co-invest alongside the Fund in one or more portfolio investments of the Fund, on a no-fee, no-carry basis. The allocation, sizing, timing, and structuring of any such co-investment opportunity shall be determined by the General Partner in its sole and absolute discretion, taking into account such factors as the General Partner deems relevant, including, without limitation, the availability of co-investment capacity, the nature and size of the investment, the preferences of the selling party or counterparty, and the interests of the Fund and its limited partners as a whole. Nothing in this Section 4.1 shall be construed to obligate the General Partner to offer any particular co-investment opportunity to the Limited Partner or to allocate any minimum amount of co-investment capacity to the Limited Partner.
Enhanced Provision:
[For LPs committing $[●] or more:] The General Partner shall offer the Limited Partner a pro rata co-investment allocation on all portfolio investments of the Fund in which the aggregate equity investment by the Fund and any co-investment vehicles exceeds one hundred fifty million dollars ($150,000,000), subject to reasonable allocation among all co-investing limited partners of the Fund that have been granted similar enhanced co-investment rights. The General Partner shall determine the allocation methodology for such co-investment opportunities in its reasonable discretion, taking into account the Commitments and co-investment preferences of all eligible limited partners, and shall use commercially reasonable efforts to allocate co-investment opportunities on a fair and equitable basis.
Applicable to both Standard and Enhanced Provisions:
(a) All co-investments offered pursuant to this Section 4.1 shall be made on economic terms substantially similar to those of the Fund's investment in the relevant portfolio company, including the same price per share or unit, the same class of securities, and the same material commercial terms. No management fee or carried interest shall be charged by the General Partner, the Sponsor, or any of their affiliates on capital invested by the Limited Partner in any co-investment made pursuant to this Section 4.1.
(b) Co-investment opportunities shall be offered on a deal-by-deal basis. The General Partner shall provide the Limited Partner with a written co-investment notice (a "Co-Investment Notice") setting forth a summary of the investment opportunity, the proposed co-investment amount, the material terms thereof, and such other information as the General Partner deems appropriate or as the Limited Partner may reasonably request. The Limited Partner shall have ten (10) business days from the date of receipt of the Co-Investment Notice to accept or decline the co-investment opportunity by delivering a written election notice to the General Partner substantially in the form attached hereto as Exhibit B (a "Co-Investment Election Notice"). If the Limited Partner fails to deliver a Co-Investment Election Notice within such ten (10) business day period, the Limited Partner shall be deemed to have declined the co-investment opportunity.
(c) The General Partner reserves the right to rescind, modify, or reduce any co-investment opportunity prior to the closing of the applicable investment if, in the General Partner's reasonable judgment, such rescission, modification, or reduction is necessary or advisable in light of changes in the terms of the investment, regulatory considerations, or other relevant circumstances.
4.2 Co-Investment Vehicle.
(a) Co-investments made by the Limited Partner pursuant to this Section 4 may be effected through a co-investment vehicle organized by the General Partner (which may take the form of a limited partnership, limited liability company, or other entity) or directly by the Limited Partner, in each case as determined by the General Partner in its sole discretion. The General Partner shall notify the Limited Partner of the applicable co-investment structure in the Co-Investment Notice.
(b) The Limited Partner shall bear its pro rata share of all reasonable transaction costs and expenses incurred in connection with the co-investment, including, without limitation, legal fees, accounting fees, due diligence expenses, and any applicable transfer taxes or filing fees. Such costs and expenses shall be allocated among all co-investing parties (including the Fund) in proportion to their respective co-investment amounts, unless otherwise determined by the General Partner.
(c) Any co-investment vehicle organized by the General Partner in connection with co-investments offered pursuant to this Section 4 shall be governed by a separate co-investment agreement or limited partnership agreement (as applicable), which shall contain terms and conditions customary for co-investment vehicles established by private equity sponsors, including provisions governing capital contributions, distributions, reporting, and dissolution.
SECTION 5: REPORTING AND INFORMATION RIGHTS
5.1 Standard Enhanced Reporting.
In addition to the reports and financial information required to be provided to limited partners under the Partnership Agreement, the General Partner shall furnish, or cause to be furnished, to the Limited Partner the following:
(a) Quarterly Financial Statements. Unaudited financial statements of the Fund for each fiscal quarter (based on a calendar year fiscal year ending December 31), prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), delivered to the Limited Partner within sixty (60) days after the end of each fiscal quarter. Such quarterly financial statements shall include a balance sheet as of the end of such quarter and a statement of operations and changes in partners' capital for the quarter and the year-to-date period then ended.
(b) Annual Financial Statements. Audited financial statements of the Fund for each fiscal year, prepared in accordance with GAAP and audited by Caldwell, Fitch & Hartley LLP (the Fund's independent auditor, or such successor firm as may be appointed by the General Partner), delivered to the Limited Partner within one hundred twenty (120) days after the end of each fiscal year. Such annual financial statements shall include a balance sheet, a statement of operations, a statement of changes in partners' capital, a statement of cash flows, and notes thereto, together with the report of the independent auditor thereon.
(c) Quarterly Portfolio Summary. A quarterly portfolio summary, delivered concurrently with the quarterly financial statements, providing investment-level detail for each portfolio company held by the Fund, including the original cost basis, current fair market value (as determined in accordance with the Fund's valuation policy), industry sector classification, geographic location, date of acquisition, and a brief narrative description of each investment and material developments during the quarter.
(d) Annual Meeting. An annual meeting or investor day, to be held in person at a location to be determined by the General Partner or by virtual conference, at which members of the investment team of Harrowgate Capital Partners LLC shall present an overview of Fund performance, portfolio company updates, market conditions, and such other matters as the General Partner deems appropriate. The General Partner shall provide the Limited Partner with not less than thirty (30) days' advance notice of any such annual meeting or investor day.
(e) Schedule K-1s. IRS Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) for each fiscal year, delivered to the Limited Partner no later than [75/90] days after the end of each fiscal year, which delivery timeline is consistent with the filing deadlines applicable to IRS Form 1065 (U.S. Return of Partnership Income).
(f) Capital Account Statements. A statement of the Limited Partner's capital account, setting forth the beginning capital account balance, capital contributions made during the period, distributions received during the period, allocations of net income and net loss, and the ending capital account balance, delivered to the Limited Partner following each capital call and each distribution event within a reasonable time after such event.
5.2 ESG Reporting.
[If applicable:] The General Partner shall provide the Limited Partner with an annual report on the Fund's environmental, social, and governance ("ESG") and responsible investment activities and practices as applied to the Fund's portfolio investments. Such ESG report shall be prepared in a format reasonably consistent with [the Institutional Limited Partners Association ("ILPA") guidelines / the United Nations Principles for Responsible Investment ("UN PRI") reporting framework / the investor-specified standard set forth in Schedule 1 hereto], and shall cover such topics as the General Partner deems appropriate, including, without limitation, the Fund's ESG policy, material ESG risks and opportunities identified at the portfolio company level, climate-related disclosures, diversity and inclusion metrics, and any material ESG incidents or controversies during the reporting period. The ESG report shall be delivered to the Limited Partner no later than one hundred eighty (180) days after the end of each fiscal year.
5.3 Regulatory Reporting Accommodations.
[If applicable — for insurance company, bank, or other regulated investors:]
(a) The General Partner acknowledges that the Limited Partner is subject to the regulatory oversight of [name of regulator], and that the Limited Partner may require certain information regarding the Fund and its investments in order to comply with applicable regulatory reporting, capital adequacy, solvency, and risk management requirements.
(b) The General Partner shall provide, or cause Pinnacle Fund Services LLC (the "Fund Administrator") to provide, such information as is reasonably requested by the Limited Partner to comply with the reporting requirements of its primary regulator, including, without limitation:
(i) Look-through reporting for regulatory capital and solvency purposes, including the identification and classification of each portfolio investment held by the Fund, in a format that enables the Limited Partner to "look through" the Fund to the underlying assets for purposes of applying applicable regulatory capital charges and risk weightings;
(ii) A Schedule of Investments in a format consistent with the requirements of the [National Association of Insurance Commissioners ("NAIC") / applicable regulatory body], including such detail regarding issuer, CUSIP or other identifier, asset class, credit rating, fair value, and other data fields as may be required;
(iii) Quarterly valuation data, including investment-level fair values and any changes in valuation methodology, and asset classification information sufficient to permit the Limited Partner to complete regulatory filings on a timely basis; and
(iv) Such other information regarding the Fund's investments, leverage, liquidity, and risk exposures as the Limited Partner may reasonably request in order to comply with applicable regulatory requirements.
(c) The General Partner shall use commercially reasonable efforts to furnish any information requested pursuant to this Section 5.3 within thirty (30) days of the Limited Partner's written request, or within such shorter period as may be required to permit the Limited Partner to meet applicable regulatory filing deadlines. The Limited Partner shall provide the General Partner with reasonable advance notice of any recurring or periodic regulatory reporting requirements.
5.4 Access to Information.
Subject to the confidentiality obligations set forth in Section 15 of this Side Letter and applicable law, the General Partner shall provide the Limited Partner with reasonable access to information regarding the Fund's investments, financial condition, and operations upon reasonable written request by the Limited Partner. The General Partner shall use commercially reasonable efforts to respond to such requests in a timely manner, provided that the General Partner shall not be required to disclose information that the General Partner reasonably determines to be competitively sensitive, subject to legal privilege, or otherwise confidential to a third party (including a portfolio company of the Fund) without such third party's consent.
SECTION 6: TRANSFER RIGHTS
6.1 Consent to Transfer.
The General Partner's consent to any proposed transfer of all or any portion of the Limited Partner's interest in the Fund (including any transfer by sale, assignment, gift, pledge, encumbrance, or otherwise) shall not be unreasonably withheld, conditioned, or delayed, provided that all of the following conditions are satisfied with respect to such proposed transfer:
(a) The proposed transferee is a "qualified purchaser" as defined under Section 2(a)(51) of the Investment Company Act of 1940 (the "1940 Act") and qualifies under Section 3(c)(7) of the 1940 Act, and is an "accredited investor" as defined under Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended;
(b) The proposed transfer would not cause the Fund to be treated as a "publicly traded partnership" within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor provision thereto, or otherwise cause the Fund to be taxable as a corporation for U.S. federal income tax purposes;
(c) The proposed transfer would not cause the assets of the Fund to be treated as "plan assets" for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), by causing the aggregate participation of "benefit plan investors" (as defined under 29 C.F.R. § 2510.3-101(f)) to equal or exceed twenty-five percent (25%) of any class of equity interests in the Fund;
(d) The proposed transferee has completed all "know your customer" and anti-money laundering verification requirements (including verification against applicable sanctions lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the European Union, the United Nations, and other relevant regulatory authorities) as administered by Pinnacle Fund Services LLC, and has provided such certifications and documentation as the General Partner may reasonably require; and
(e) The proposed transfer otherwise complies in all respects with applicable federal, state, and foreign securities laws, including, without limitation, the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
6.2 Permitted Transfers.
Notwithstanding Section 6.1, transfers by the Limited Partner of all or any portion of its interest in the Fund to an affiliate of the Limited Partner (as determined by the General Partner in its reasonable judgment) shall not require the prior written consent of the General Partner, provided that (a) the proposed transferee is an affiliate of the Limited Partner, (b) the proposed transferee assumes in writing all of the obligations and liabilities of the Limited Partner under the Partnership Agreement, this Side Letter, and the Subscription Agreement, (c) the proposed transferee makes all representations and warranties required by the Partnership Agreement, the Subscription Agreement, and the Investor Questionnaire, and (d) the conditions set forth in Sections 6.1(a), (b), (c), (d), and (e) are satisfied. The Limited Partner shall provide the General Partner with not less than fifteen (15) business days' prior written notice of any proposed transfer to an affiliate pursuant to this Section 6.2.
6.3 Transfer Documentation.
All transfers of interests in the Fund, whether requiring General Partner consent or not, shall be documented using the Form of Transfer (Assignment) Agreement provided by the General Partner, which shall contain representations, warranties, and covenants customary for transfers of limited partnership interests in private equity funds, including, without limitation, representations regarding the transferee's status as a qualified purchaser and accredited investor, compliance with applicable securities laws, and assumption of all obligations under the Partnership Agreement. The transferring Limited Partner and the proposed transferee shall bear all costs and expenses (including legal fees of the General Partner) incurred in connection with any proposed transfer.
SECTION 7: EXCUSE AND EXCLUSION RIGHTS
7.1 Excuse from Investments.
[If applicable:] The Limited Partner shall have the right to be excused from participation in a particular Fund investment (an "Excused Investment") if:
(a) Participation in such investment would cause the Limited Partner to violate any applicable law, statute, rule, regulation, order, judgment, or decree of any governmental authority, or would cause the Limited Partner to violate or breach its own governing documents, charters, bylaws, investment policies, or similar organizational instruments;
(b) [Investments in [specified jurisdictions / industries / investment types]]: The investment involves a portfolio company that is organized in, or derives a substantial majority of its revenues from, [specified jurisdictions], or that operates in [specified industries or investment categories], as set forth in Schedule 1 hereto;
(c) [Investments that do not comply with Sharia investment principles as determined by the Limited Partner in its reasonable discretion]: The investment does not comply with Sharia investment principles, including, without limitation, investments involving interest-bearing instruments, gambling, alcohol, tobacco, pork-related products, or conventional financial services, as reasonably determined by the Limited Partner in consultation with its Sharia advisor, with the specific Sharia compliance criteria set forth in Schedule 1 hereto;
(d) [Investments reasonably expected to generate unrelated business taxable income ("UBTI") for the Limited Partner]: The investment is reasonably expected to generate unrelated business taxable income within the meaning of Sections 511 through 514 of the Code, taking into account the Limited Partner's tax-exempt status under Section [501(c)(3) / 501(a) / other applicable section] of the Code; and
(e) Such other categories as may be set forth in Schedule 1 hereto.
The Limited Partner shall notify the General Partner in writing of the basis for any excuse request within ten (10) business days of receiving the applicable capital call notice or investment notification. Such notice shall specify in reasonable detail the provision of this Section 7.1 upon which the Limited Partner relies and the facts and circumstances giving rise to the exercise of such excuse right. The General Partner shall have the right, acting reasonably and in good faith, to request additional information from the Limited Partner to verify the basis for any excuse request.
Excused amounts shall not reduce the Limited Partner's unfunded Commitment for purposes of future capital calls (but shall reduce the Limited Partner's participation in, and allocable share of income, gain, loss, and deduction with respect to, the particular Excused Investment).
7.2 Regulatory Concentration Limits.
[If applicable — for insurance or other regulated investors:] The Limited Partner shall have the right to be excused from participation in any Fund investment that would cause the Limited Partner to exceed applicable regulatory concentration limits, single-issuer exposure limits, asset class allocation limits, or risk-based capital requirements imposed by the Limited Partner's primary regulator (including, without limitation, the [state insurance department / other applicable regulatory authority]). The Limited Partner shall provide the General Partner with written notice of the applicable regulatory limitation and the basis for the excuse request within the time period specified in Section 7.1 above.
SECTION 8: LPAC MEMBERSHIP
8.1 LPAC Seat Designation.
[If applicable:] The General Partner shall designate [Name of individual] as a member of the Limited Partner Advisory Committee of the Fund (the "LPAC"). The LPAC shall consist of five (5) members, of which three (3) shall be designated at or about the time of the First Close and the remaining members shall be designated at or following subsequent closings of the Fund. LPAC members shall serve in accordance with the terms and conditions set forth in the LPAC Charter and Terms of Reference adopted by the General Partner (the "LPAC Charter"), which governs the scope of the LPAC's authority, quorum requirements, meeting procedures, confidentiality obligations, and liability protections. The General Partner shall provide the Limited Partner with a copy of the LPAC Charter promptly following the designation of the Limited Partner's representative as an LPAC member.
The LPAC shall be authorized to review and approve or disapprove conflict-of-interest transactions, to consent to related-party transactions and valuations, and to perform such other functions as may be delegated to the LPAC by the General Partner or as set forth in the Partnership Agreement. LPAC members shall be required to execute a confidentiality agreement in form and substance satisfactory to the General Partner. LPAC members shall not be liable to the Fund, the General Partner, or any limited partner for any action taken or omitted to be taken in good faith in the performance of their duties as LPAC members, except in the case of fraud, willful misconduct, or bad faith.
8.2 LPAC Observer Rights.
[If applicable — as alternative to full LPAC membership:] In lieu of a full LPAC seat, the Limited Partner shall have the right to designate one (1) representative to attend meetings of the LPAC as a non-voting observer (the "LPAC Observer"). The LPAC Observer shall be entitled to receive all written materials distributed to LPAC members in advance of LPAC meetings and to attend and participate in discussions at LPAC meetings, but shall not have any voting or approval rights. The LPAC Observer shall be subject to the same confidentiality obligations applicable to LPAC members and shall execute a confidentiality agreement in form and substance satisfactory to the General Partner prior to attending any LPAC meeting or receiving any LPAC materials.
SECTION 9: KEY PERSON AND GP REMOVAL PROVISIONS
9.1 Key Person Event Notification.
The General Partner shall promptly notify the Limited Partner (and in any event within [5/10] business days) upon the occurrence of a "Key Person Event" as defined in the Partnership Agreement. As of the date hereof, a Key Person Event is triggered if either Marcus J. Harrowgate, Managing Partner of Harrowgate Capital Partners LLC, or Diana R. Castellano, Partner and Co-Head of Investments of Harrowgate Capital Partners LLC (each, a "Key Person"), ceases to devote substantially all of his or her professional time and attention to the business and affairs of the Fund and the Sponsor, whether by reason of death, disability, resignation, termination, retirement, or any other reason. The General Partner's notification to the Limited Partner shall describe the nature of the Key Person Event, the date on which it occurred, and any actions taken or proposed to be taken by the General Partner in response thereto.
Upon the occurrence of a Key Person Event, the Investment Period shall be automatically suspended in accordance with the terms of the Partnership Agreement and shall remain suspended until such Key Person Event has been cured (by the appointment of a replacement key person reasonably satisfactory to a majority-in-interest of the limited partners) or waived by a majority-in-interest of the limited partners (excluding any limited partner interests held by the General Partner or its affiliates). During any suspension period, the General Partner shall not make any new investments on behalf of the Fund, but may continue to fund previously committed investments and follow-on investments in existing portfolio companies to the extent permitted by the Partnership Agreement.
9.2 GP Removal Voting Rights.
The General Partner confirms that the Limited Partner shall have the voting rights set forth in the Partnership Agreement with respect to the removal of the General Partner, including the following:
(a) No-Fault Removal. The General Partner may be removed without cause by the affirmative vote of limited partners holding not less than seventy-five percent (75%) in interest of the aggregate capital commitments of all limited partners of the Fund (excluding any capital commitments held by the General Partner or its affiliates). Upon a no-fault removal, the provisions of the Partnership Agreement governing the consequences of such removal (including any termination of the Investment Period, wind-down procedures, and carried interest vesting provisions) shall apply.
(b) For-Cause Removal. The General Partner may be removed for cause by the affirmative vote of a majority in interest of the limited partners of the Fund (excluding any capital commitments held by the General Partner or its affiliates). For purposes of the Partnership Agreement, "cause" includes the General Partner's (or any Key Person's) commission of fraud, willful misconduct, or gross negligence in the management of the Fund, a material breach of the Partnership Agreement that remains uncured for thirty (30) days following written notice thereof, or the General Partner's or Sponsor's bankruptcy, insolvency, or dissolution.
[Additional notice or consultation rights, if negotiated, to be set forth in Schedule 1 hereto.]
SECTION 10: ERISA AND BENEFIT PLAN INVESTOR PROVISIONS
10.1 ERISA Operating Covenant.
[If the Limited Partner is a "benefit plan investor" as defined under 29 C.F.R. § 2510.3-101(f):]
The General Partner covenants and agrees that it shall operate the Fund in a manner such that the assets of the Fund are not treated as "plan assets" for purposes of Title I of ERISA and the regulations promulgated thereunder, including 29 C.F.R. § 2510.3-101 (as modified by Section 3(42) of ERISA). Without limiting the generality of the foregoing, the General Partner shall monitor the level of benefit plan investor participation in the Fund on an ongoing basis and shall maintain the aggregate participation of "benefit plan investors" (as defined under 29 C.F.R. § 2510.3-101(f), which includes employee benefit plans subject to ERISA, plans described in Section 4975 of the Code, and entities whose underlying assets include plan assets by reason of a plan's investment in such entity) below twenty-five percent (25%) of each class of equity interests in the Fund. For purposes of this calculation, equity interests held by the General Partner and its affiliates shall be excluded in accordance with 29 C.F.R. § 2510.3-101(a)(2).
If, at any time, the General Partner determines that benefit plan investor participation would equal or exceed the twenty-five percent (25%) threshold as a result of a proposed admission of a new limited partner, a proposed transfer of a limited partner interest, or otherwise, the General Partner shall take such reasonable steps as may be necessary or appropriate to prevent such exceedance, including, without limitation, declining to admit the proposed limited partner or transferee, requiring the redemption or withdrawal of one or more benefit plan investors, or restructuring the relevant class of equity interests.
The General Partner shall promptly notify the Limited Partner if the General Partner becomes aware that benefit plan investor participation has exceeded, or is reasonably expected to exceed, the twenty-five percent (25%) threshold.
10.2 Governmental Plan Acknowledgment.
[If the Limited Partner is a governmental plan exempt from ERISA (e.g., a state pension system):]
The Parties acknowledge that the Limited Partner is a "governmental plan" within the meaning of Section 3(32) of ERISA and, as such, is not subject to the fiduciary responsibility provisions of Title I of ERISA or the prohibited transaction rules of Section 4975 of the Code. Notwithstanding the foregoing, the Limited Partner may be subject to similar fiduciary, investment, or governance requirements imposed by applicable state or local law (including, without limitation, the [applicable state public pension code or investment statute]). The General Partner shall cooperate with the Limited Partner in providing such information regarding the Fund, its investments, fees, expenses, and operations as the Limited Partner may reasonably request in order to comply with the fiduciary, reporting, and governance requirements imposed on the Limited Partner by applicable state or local law.
SECTION 11: TAX PROVISIONS
11.1 Tax Reporting.
(a) The General Partner shall deliver, or cause Pinnacle Fund Services LLC (in its capacity as Fund Administrator) to deliver, IRS Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) to the Limited Partner with respect to each fiscal year of the Fund (calendar year ending December 31) no later than [75/90] days following the end of such fiscal year. The Fund shall file IRS Form 1065 (U.S. Return of Partnership Income) in accordance with applicable Internal Revenue Service filing requirements and deadlines.
(b) The General Partner shall provide, or cause to be provided, estimated tax information to the Limited Partner on a quarterly basis upon the Limited Partner's written request, including estimates of the Limited Partner's allocable share of (i) unrelated business taxable income ("UBTI"), (ii) effectively connected income ("ECI"), and (iii) FIRPTA withholding amounts (as applicable), in each case in sufficient detail to enable the Limited Partner to comply with its tax reporting and estimated tax payment obligations.
(c) The General Partner shall use commercially reasonable efforts to provide any additional tax information reasonably requested by the Limited Partner in connection with the Limited Partner's federal, state, local, or foreign tax filings.
11.2 UBTI / Blocker Provisions.
[If the Limited Partner is a tax-exempt entity:]
(a) The General Partner shall use commercially reasonable efforts to structure the Fund's investments so as to minimize or eliminate the generation of unrelated business taxable income ("UBTI") within the meaning of Sections 511 through 514 of the Code with respect to the Limited Partner and other tax-exempt limited partners, to the extent that such structuring is consistent with the Fund's overall investment strategy, objectives, and the best interests of the Fund as a whole.
(b) The Limited Partner may elect, with the consent of the General Partner (which consent shall not be unreasonably withheld), to invest in the Fund through HGF V blocker Corp., a Delaware C corporation established by the Sponsor for the purpose of "Blocking" UBTI that might otherwise flow through to tax-exempt limited partners, or through Harrowgate Fund V Parallel LP, or through such other vehicle as the General Partner may establish from time to time for the purpose of managing tax-exempt investors' UBTI exposure. The terms and conditions of any such investment shall be set forth in the governing documents of the applicable blocker or parallel vehicle.
(c) The Limited Partner shall have excuse rights with respect to investments reasonably expected to generate UBTI, as set forth in Section 7.1(d) of this Side Letter.
11.3 ECI / FIRPTA Withholding.
[If the Limited Partner is a non-U.S. investor:]
(a) The General Partner shall provide the Limited Partner with advance written notice of any proposed investment by the Fund that is reasonably expected to generate income that is treated as effectively connected income ("ECI") within the meaning of Sections 871(b) and 882 of the Code, or that is reasonably expected to result in gain subject to withholding under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") (Sections 897 and 1445 of the Code). Such notice shall be provided as soon as reasonably practicable and in any event prior to the related capital call.
(b) The General Partner shall use commercially reasonable efforts to minimize ECI and FIRPTA withholding obligations for non-U.S. Limited Partners, to the extent consistent with the Fund's overall investment strategy, objectives, and the best interests of the Fund as a whole. Such efforts may include, without limitation, structuring investments to avoid holding U.S. real property interests (as defined in Section 897(c) of the Code) where practicable and in the General Partner's reasonable judgment.
(c) Non-U.S. Limited Partners may elect, with the consent of the General Partner, to invest through Harrowgate Fund V Offshore SLP, a Cayman Islands exempted limited partnership established by the Sponsor for the purpose of accommodating non-U.S. investors, or through such other applicable vehicle as the General Partner may designate. The terms and conditions of any such investment shall be set forth in the governing documents of the applicable offshore vehicle.
11.4 Withholding Tax Gross-Up.
[If applicable and negotiated:] The General Partner shall [not be obligated to / shall use commercially reasonable efforts to] gross up or otherwise increase any distributions to the Limited Partner to account for any applicable withholding taxes (including, without limitation, U.S. federal, state, or local withholding taxes, and any foreign withholding taxes) imposed on or with respect to such distributions. Any withholding taxes imposed with respect to distributions to the Limited Partner shall be treated as having been distributed to the Limited Partner for purposes of the Partnership Agreement. The General Partner shall provide the Limited Partner with reasonably detailed information regarding the amount, nature, and jurisdictional source of any such withholding taxes.
SECTION 12: FOIA / PUBLIC RECORDS PROTECTIONS
12.1 Confidentiality and Public Records.
[If the Limited Partner is a governmental plan or other public entity subject to freedom of information or public records laws:]
(a) The General Partner acknowledges that the Limited Partner may be subject to the [applicable freedom of information act / state public records act / other applicable open records law] (collectively, "FOIA Laws"), which may require the Limited Partner to disclose certain information regarding its investments, including information regarding the Fund, to members of the public upon request.
(b) The General Partner shall clearly designate as "Confidential," "Trade Secret," or "Proprietary" any information furnished to the Limited Partner that the General Partner considers to be proprietary, confidential, or competitively sensitive, including, without limitation, portfolio company valuations, investment strategies, deal pipeline information, co-investor identities, and any other information that, if disclosed, could reasonably be expected to cause competitive harm to the General Partner, the Fund, or any portfolio company of the Fund. Such designation shall be made on the face of each document or communication containing such information or, in the case of oral communications, confirmed in writing within a reasonable period thereafter.
(c) In the event the Limited Partner receives a request under any FOIA Law for the disclosure of information relating to the Fund, the General Partner, or any portfolio company of the Fund, the Limited Partner shall, to the extent permitted by applicable law:
(i) Promptly notify the General Partner of such request, and in any event within five (5) business days of receipt thereof, providing the General Partner with a copy of the request and identifying the information responsive to such request;
(ii) Provide the General Partner with a reasonable opportunity, and in any event not less than ten (10) business days following the date of such notice, to seek a protective order, injunction, or other appropriate judicial or administrative remedy to prevent or limit the disclosure of such information;
(iii) Cooperate with the General Partner, at the General Partner's expense, in resisting or limiting the scope of any required disclosure, including by asserting any applicable exemptions under the FOIA Laws (such as trade secret, commercial confidentiality, or competitive harm exemptions); and
(iv) Disclose only such information as is specifically required by the applicable FOIA Law, after giving effect to any applicable exemptions, protective orders, or other limitations on disclosure.
(d) The General Partner acknowledges that, notwithstanding the protections set forth in this Section 12.1, the Limited Partner may ultimately be required by applicable FOIA Laws to disclose certain information regarding its investment in the Fund, and that the Limited Partner shall not be deemed to have breached any confidentiality obligation under this Side Letter or the Partnership Agreement by reason of any such legally compelled disclosure made in good faith compliance with applicable FOIA Laws.
12.2 Sovereign Investor Protections.
[If the Limited Partner is a sovereign wealth fund or governmental investor:]
(a) The General Partner shall provide additional protections regarding the confidentiality of the identity and investment details of the Limited Partner, including by refraining from disclosing the identity or Commitment of the Limited Partner to any third party (including other limited partners of the Fund) without the prior written consent of the Limited Partner, except (i) as required by applicable law, regulation, or legal process, (ii) as necessary for the administration of the Fund (including to the Fund Administrator, the Fund's legal counsel, and the Fund's auditor), or (iii) in connection with the MFN disclosure process described in Section 3.2, in which case the Limited Partner's identity shall be redacted.
(b) The Parties acknowledge that the Limited Partner may enjoy certain sovereign immunity protections under applicable law. Nothing in this Side Letter or the Partnership Agreement shall be construed as a waiver by the Limited Partner of any sovereign immunity to which it may be entitled under the Foreign Sovereign Immunities Act (28 U.S.C. §§ 1602-1611), the State Immunity Act 1978, or any other applicable law, except to the extent the Limited Partner expressly waives such immunity in writing. Any such waiver of sovereign immunity shall be limited in scope to the specific subject matter identified in the waiver and shall not constitute a general waiver of sovereign immunity for any other purpose.
SECTION 13: SUBSCRIPTION CREDIT FACILITY ACKNOWLEDGMENT
The Limited Partner acknowledges that the Fund may, from time to time, enter into one or more subscription credit facilities (each, a "Credit Facility") with Ashford National Bank, N.A., or one or more other nationally recognized lending institutions selected by the General Partner (each, a "Lender"), secured in whole or in part by the uncalled capital commitments of the limited partners of the Fund and the General Partner's right to make capital calls on such commitments. The Credit Facility is expected to have a maximum revolving commitment of up to five hundred million dollars ($500,000,000). Fund-level leverage through the Credit Facility shall be limited to twenty-five percent (25%) of the aggregate uncalled capital commitments of the limited partners of the Fund, and bridge financing drawn under the Credit Facility shall be repaid within one hundred eighty (180) days of the date of each drawdown, in each case in accordance with the terms of the Partnership Agreement and the Credit Facility.
The Limited Partner agrees to execute such documents, instruments, and agreements (including, without limitation, investor letters, acknowledgment agreements, and account control agreements) and to provide such information (including, without limitation, updated financial information, credit ratings, and regulatory status) as may be reasonably required by the Lender in connection with the establishment, maintenance, or renewal of the Credit Facility. The Limited Partner acknowledges that its capital commitment may be included in the borrowing base calculation for the Credit Facility, which borrowing base is expected to include ninety percent (90%) of the uncalled capital commitments of "included investors" (generally limited to limited partners that are investment-grade institutions, government-related investors, or other investors determined by the Lender to have satisfactory creditworthiness), and that the inclusion of the Limited Partner's commitment in the borrowing base may result in earlier or more frequent capital calls than would otherwise occur in the absence of the Credit Facility.
For the avoidance of doubt, the Limited Partner's obligation to fund capital calls shall not be affected or diminished by the existence or utilization of the Credit Facility, and the Limited Partner shall remain obligated to fund capital calls in accordance with the terms of the Partnership Agreement regardless of whether such capital calls are made to repay borrowings under the Credit Facility.
SECTION 14: PLACEMENT AGENT DISCLOSURE
The General Partner hereby confirms and discloses that Osprey Capital Markets LLC, a Delaware limited liability company and registered broker-dealer with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"), has been engaged as the exclusive placement agent (the "Placement Agent") for the Fund pursuant to a Placement Agent Agreement dated as of January 15, 2025, between the Sponsor and the Placement Agent (the "Placement Agent Agreement").
The Placement Agent's fee under the Placement Agent Agreement is one and twenty-five hundredths of one percent (1.25%) of the aggregate capital committed to the Fund by limited partners that are introduced to the Fund by, or whose subscriptions are placed through, the Placement Agent. The Placement Agent fee is payable solely by the Sponsor (Harrowgate Capital Partners LLC) and is not payable by the Fund or from Fund assets. The Placement Agent fee does not increase or affect the management fee, carried interest, or other fees and expenses borne by the Fund or its limited partners.
[The General Partner confirms that [no placement agent fee / a placement agent fee in the amount of $[●]] has been or will be paid in connection with the Limited Partner's Commitment.]
Additional information regarding the engagement of the Placement Agent, including the material terms of the Placement Agent Agreement and any potential conflicts of interest, is set forth in the Confidential Private Placement Memorandum dated [●], 2025, relating to the Fund, a copy of which has been provided to the Limited Partner.
SECTION 15: CONFIDENTIALITY
15.1 Mutual Confidentiality.
Each Party shall maintain the confidentiality of the existence and terms of this Side Letter, and shall not disclose this Side Letter or any of its terms to any third party without the prior written consent of the other Party, except as follows:
(a) Disclosures to the Limited Partner's directors, officers,