CALDERWOOD & HARKNESS LLP 620 Eighth Avenue, 42nd Floor New York, New York 10018
— INTERNAL COVER PAGE —
PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT ATTORNEY-CLIENT PRIVILEGE
MEMORANDUM
TO: File — Harrowgate Capital Partners LLC
FROM: Theresa Kim, Working Associate Calderwood & Harkness LLP 620 Eighth Avenue, 42nd Floor New York, NY 10018
SUPERVISED BY: Graham Sutherland, Responsible Partner Stephen Adler, Lead Associate
MATTER NUMBER: 1003-00002
CLIENT: Harrowgate Capital Partners LLC
RE: Markup / Review Draft — Fund Administration Agreement between Pinnacle Fund Services LLC and Harrowgate Private Equity Fund V LP
DATE: May 19, 2025
MARKUP LEGEND AND INSTRUCTIONS
This document represents Calderwood & Harkness LLP's ("C&H") markup of the draft Fund Administration Agreement submitted by Pinnacle Fund Services LLC ("Pinnacle") on May 5, 2025. All C&H comments appear in redline with marginal annotations as described below. Bracketed text (designated with "[OPEN ITEM]") indicates items that remain open for client discussion with Catherine E. Loomis, General Counsel & Chief Compliance Officer, Harrowgate Capital Partners LLC, and Jonathan P. Birch, Partner, Head of Operations & Chief Financial Officer, Harrowgate Capital Partners LLC.
C&H revisions are tracked as follows:
• Deletions from Pinnacle's original draft are shown as:
• Insertions by C&H are shown as:
• Replacement text is shown as:
A compiled summary of all C&H comments, open issues, and recommended discussion points is set forth as the Appendix hereto (the "C&H Markup Summary / Comment Log").
This draft is consistent with the formation timeline for Harrowgate Private Equity Fund V LP (target First Close: August 15, 2025) and should be read in conjunction with the Agreement of Limited Partnership (the "LPA"), the Placement Agent Agreement with Osprey Capital Markets LLC, the Subscription Credit Facility term sheet with Ashford National Bank, N.A., and the Custody Agreement with Ridgeway Trust Company.
FUND ADMINISTRATION AGREEMENT
by and between
HARROWGATE PRIVATE EQUITY FUND V LP
(by its General Partner, Harrowgate Fund V GP LLC)
and
PINNACLE FUND SERVICES LLC
Dated as of [____], 2025
CONFIDENTIAL — NOT FOR DISTRIBUTION
Right-click to update Table of Contents
FUND ADMINISTRATION AGREEMENT
This FUND ADMINISTRATION AGREEMENT (this "Agreement") is entered into as of the Effective Date (as defined below) by and between:
(1) HARROWGATE PRIVATE EQUITY FUND V LP, a Delaware limited partnership (the "Fund"), acting by and through its general partner, HARROWGATE FUND V GP LLC, a Delaware limited liability company (the "General Partner"); and
(2) PINNACLE FUND SERVICES LLC, a Delaware limited liability company (the "Administrator").
The Fund and the Administrator are each referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Fund is a closed-end private equity fund formed as a Delaware limited partnership, organized for the purpose of making equity and equity-related investments in middle-market and upper-middle-market companies, as more fully described in the Agreement of Limited Partnership of the Fund (the "LPA");
WHEREAS, the General Partner is the sole general partner of the Fund and has full authority to manage the business and affairs of the Fund, including the authority to engage service providers on behalf of the Fund;
WHEREAS, Harrowgate Capital Partners LLC (the "Sponsor" or "Manager"), a Delaware limited liability company and an investment adviser registered with the U.S. Securities and Exchange Commission (the "SEC"), serves as the investment manager and sponsor of the Fund and is the sole member of the General Partner;
WHEREAS, the General Partner desires to appoint the Administrator to provide certain fund administration services to the Fund, including, without limitation, net asset value calculation, investor reporting, capital call and distribution processing, anti-money laundering verification, and related administrative services, all as more particularly described in this Agreement and in Schedule A hereto;
WHEREAS, the Administrator has the experience, expertise, personnel, and infrastructure necessary to provide such fund administration services and desires to accept such appointment on the terms and conditions set forth herein;
WHEREAS, the Fund, together with Harrowgate Fund V Parallel LP (the "Parallel Fund"), Harrowgate Fund V Offshore SLP (the "Offshore Feeder"), and HGF V blocker Corp. (the "blocker"), collectively constitute the fund complex through which the Fund's investment program is implemented (collectively, the "Fund Vehicles" and each, a "Fund Vehicle"); and
WHEREAS, the Parties desire to set forth their respective rights and obligations with respect to the Administrator's provision of fund administration services.
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 agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Administrator" means Pinnacle Fund Services LLC, a Delaware limited liability company, with its principal offices located at 100 Summer Street, Suite 2400, Boston, Massachusetts 02110, and any permitted successors or assigns.
"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person, where "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" has the meaning set forth in the preamble hereto.
"AML Laws" means all applicable anti-money laundering laws, rules, and regulations, including, without limitation, the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), the USA PATRIOT Act of 2001 (Pub. L. 107-56), the regulations promulgated thereunder by the Financial Crimes Enforcement Network ("FinCEN"), and, to the extent applicable to the Offshore Feeder, the Anti-Money Laundering Regulations of the Cayman Islands as administered by the Cayman Islands Monetary Authority ("CIMA").
"Auditor" means Caldwell, Fitch & Hartley LLP, with offices at 30 Rockefeller Plaza, Suite 4500, New York, New York 10112, or any successor auditor appointed by the General Partner. The current Audit Partner is Robert A. Fonseca.
"blocker" means HGF V blocker Corp., a Delaware C corporation formed as a corporate blocker entity for the benefit of certain tax-exempt and non-U.S. investors investing in the Fund.
"Business Day" means any day other than a Saturday, Sunday, or a day on which commercial banks in New York, New York or Wilmington, Delaware are authorized or required by law to close.
"CRS" means the Common Reporting Standard as developed by the Organisation for Economic Co-operation and Development.
"Custodian" means Ridgeway Trust Company, a Delaware-chartered trust company, with offices at 1100 North Market Street, Wilmington, Delaware 19801, or any successor custodian appointed by the General Partner. The key contact at the Custodian is Thomas B. Chandler, Vice President, Institutional Custody.
"Effective Date" means the date of the First Close of the Fund, which is currently targeted for August 15, 2025, or such other date as the Parties may agree in writing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder by the U.S. Department of Labor.
"FATCA" means the Foreign Account Tax Compliance Act (Sections 1471–1474 of the Internal Revenue Code of 1986, as amended) and the regulations and guidance promulgated thereunder, together with any applicable intergovernmental agreements.
"Final Close" means the final closing of the Fund for the acceptance of capital commitments from Limited Partners, as determined by the General Partner in accordance with the LPA.
"First Close" means the initial closing of the Fund for the acceptance of capital commitments from Limited Partners, as determined by the General Partner in accordance with the LPA.
"Fiscal Year" means the calendar year, commencing on January 1 and ending on December 31.
"Fund" means Harrowgate Private Equity Fund V LP, a Delaware limited partnership formed (or to be formed) pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware.
"Fund Data" means all non-public information, records, data, reports, and documents provided by or on behalf of the Fund, the General Partner, the Sponsor, or the Limited Partners to the Administrator in connection with this Agreement, or generated or created by the Administrator in the course of performing the Services.
"Fund Vehicles"
> C&H Comment No. 1: The definition of "Fund Vehicles" has been added to encompass the Main Fund, Parallel Fund, Offshore Feeder, and blocker. We request clarification from Pinnacle as to whether its services under this Agreement extend to all Fund Vehicles or only to the Main Fund. If Pinnacle's services are intended to cover all Fund Vehicles, the appointment in Section 2.1 should be expanded accordingly, and the fee set forth in Article IV should be confirmed as applying to the collective administration of all Fund Vehicles. If separate agreements or letter agreements are required for each Fund Vehicle, this should be addressed. [OPEN ITEM — for discussion with Catherine E. Loomis and Jonathan P. Birch.]**
"General Partner" means Harrowgate Fund V GP LLC, a Delaware limited liability company, the sole general partner of the Fund, the sole member of which is Harrowgate Capital Partners LLC.
"Investment Period" means the period commencing on the date of the First Close and ending on the earlier of (a) the fifth anniversary of the Final Close, (b) the date on which the General Partner determines that substantially all of the Fund's committed capital has been invested, reserved, or committed, or (c) the date on which the Investment Period is terminated by vote of the Limited Partners in accordance with the LPA.
"Key Contact" means David L. Prentiss, Client Relationship Director, Pinnacle Fund Services LLC, or such other person as the Administrator may designate by written notice to the General Partner.
"Limited Partners" or "Investors" means all Persons admitted to the Fund as limited partners from time to time in accordance with the LPA, together with their permitted successors and assigns.
"LPA" means the Agreement of Limited Partnership of Harrowgate Private Equity Fund V LP, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"NAV" means the net asset value of the Fund, determined in accordance with the valuation methodology set forth in the LPA and in compliance with ASC 820 (Fair Value Measurement).
"Offshore Feeder" means Harrowgate Fund V Offshore SLP, a Cayman Islands exempted limited partnership registered with CIMA.
"Parallel Fund" means Harrowgate Fund V Parallel LP, a Delaware limited partnership.
"Party" or "Parties" has the meaning set forth in the preamble hereto.
"Person" means any natural person, corporation, limited liability company, partnership, joint venture, trust, estate, governmental authority, or other entity.
"Placement Agent" means Osprey Capital Markets LLC, or any successor placement agent retained by the Sponsor in connection with the Fund's offering.
"Services" means the fund administration services to be provided by the Administrator pursuant to this Agreement, as more particularly described in Article II and Schedule A hereto.
"Sponsor" or "Manager" means Harrowgate Capital Partners LLC, a Delaware limited liability company, with its principal offices located at 1200 Concord Pike, Suite 600, Wilmington, Delaware 19803. The Sponsor is an investment adviser registered with the SEC under the Investment Advisers Act of 1940, as amended; SEC File No. 801-79223; CRD No. 298417.
"Subscription Credit Facility" means the revolving credit facility provided by Ashford National Bank, N.A. (the "Subscription Facility Lender") to the Fund, in an aggregate principal amount of up to Five Hundred Million Dollars ($500,000,000), as the same may be amended, restated, or refinanced from time to time.
Section 1.2 — Interpretation
In this Agreement, unless the context otherwise requires:
(a) references to any statute, law, rule, or regulation include any amendments, modifications, re-enactments, or successor legislation thereto, and all rules and regulations promulgated thereunder;
(b) headings and captions are included for convenience of reference only and shall not affect the interpretation of this Agreement;
(c) words in the singular shall include the plural and vice versa, and words of one gender shall include all genders;
(d) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation";
(e) the words "hereof," "herein," and "hereunder" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(f) references to "Articles," "Sections," and "Schedules" are to Articles, Sections, and Schedules of this Agreement unless otherwise specified;
(g) references to "days" shall mean calendar days unless "Business Days" are expressly specified;
(h) all references to dollar amounts shall mean lawful currency of the United States of America; and
(i) any reference to a "writing" or "written" includes electronic mail (email) and any other form of electronic communication that creates a record capable of retrieval.
ARTICLE II — APPOINTMENT AND SCOPE OF SERVICES
Section 2.1 — Appointment
The Fund hereby appoints the Administrator as the fund administrator of the Fund, and the Administrator hereby accepts such appointment, effective as of the Effective Date, on the terms and conditions set forth in this Agreement. The Administrator shall provide the Services described in this Article II and in Schedule A to the Fund with effect from and after the Effective Date.
> C&H Comment No. 2: We have added language expanding Pinnacle's appointment to the Parallel Fund and Offshore Feeder on the same terms, and have proposed that blocker administration be addressed by a separate letter agreement. This is subject to confirmation by Pinnacle and by the client as to the intended scope of engagement. See also C&H Comment No. 1 regarding the definition of "Fund Vehicles" and the related fee discussion in Article IV.
Section 2.2 — NAV Calculation Services
(a) Quarterly NAV Computation. The Administrator shall compute the NAV of the Fund on a quarterly basis as of the last calendar day of each fiscal quarter (March 31, June 30, September 30, and December 31) or on such more frequent basis as the General Partner may reasonably request from time to time. Each quarterly NAV computation shall be delivered to the General Partner within forty-five (45) days following the applicable quarter-end date.
(b) Valuation Methodology. NAV shall be determined in accordance with the fair value measurement principles set forth in Accounting Standards Codification Topic 820 (Fair Value Measurement) ("ASC 820") and the valuation policy set forth in the LPA. The Administrator shall classify all Fund assets within the fair value hierarchy established by ASC 820 (Level 1, Level 2, and Level 3).
(c) Reliance on General Partner Valuations. The Parties acknowledge and agree that portfolio company investments held by the Fund are predominantly illiquid investments classified as Level 3 assets under ASC 820. The Administrator shall rely upon valuations of portfolio company investments as provided by the General Partner, and the Administrator shall not be independently responsible for determining the fair value of such illiquid investments. The Administrator's responsibility with respect to Level 3 assets shall be limited to accurately recording, processing, and reporting the valuations provided by the General Partner.
(d) Cash and Liquid Assets. Cash, cash equivalents, and other liquid assets shall be valued at market value or, if market quotations are not available, at fair value as determined by the General Partner. The Administrator shall reconcile cash balances with the records maintained by the Custodian (Ridgeway Trust Company) on at least a monthly basis and shall promptly report any discrepancies to the General Partner.
> C&H Comment No. 3: New paragraph (e) has been inserted to require Pinnacle to identify material valuation swings (>10%) period-over-period for Level 3 assets. This is an important control mechanism that provides an additional check on GP-provided valuations and facilitates coordination with the Auditor. The threshold of 10% is proposed — Pinnacle and the client may wish to discuss whether a different threshold is appropriate.
(f) Audit Coordination. The Administrator shall cooperate with the Auditor (Caldwell, Fitch & Hartley LLP, Audit Partner: Robert A. Fonseca) in connection with the annual audit of the Fund's financial statements. Such cooperation shall include, without limitation, providing the Auditor with all working papers, support schedules, reconciliation reports, capital account data, and such other information as the Auditor may reasonably request in connection with the audit. The Administrator shall make its personnel available for conferences and meetings with the Auditor at reasonable times and upon reasonable notice.
Section 2.3 — Investor Reporting Services
(a) Quarterly Reports. The Administrator shall prepare and distribute quarterly investor reports (unaudited) within sixty (60) days following the end of each fiscal quarter. Quarterly reports shall include, at a minimum: (i) capital account balances for each Limited Partner; (ii) a summary of contributions and distributions during the quarter; (iii) management fee calculations applicable to each Limited Partner; (iv) carried interest accrual data; and (v) a portfolio summary, including a list of portfolio company investments, cost basis, and fair value as reported by the General Partner.
(b) Annual Reports. The Administrator shall prepare and distribute annual investor reports (audited) within one hundred twenty (120) days following the end of each Fiscal Year. Annual reports shall be prepared in coordination with the Auditor and shall include audited financial statements of the Fund, together with capital account statements for each Limited Partner, contribution and distribution summaries, management fee and carried interest calculations, and such other information as the General Partner may reasonably require.
(c) Individual Capital Account Statements. The Administrator shall prepare individual capital account statements for each Limited Partner, reflecting such Limited Partner's committed capital, contributed capital, unfunded commitment, distributions received, allocable share of income, gain, loss, and deduction, and share of carried interest accrual. Such statements shall be included in both quarterly and annual reports.
(d) Schedule K-1 Support. The Administrator shall compile and provide to the Fund's tax preparer such capital account and tax allocation data as is necessary for the preparation of Schedule K-1 to IRS Form 1065 (U.S. Return of Partnership Income) for each Limited Partner for each Fiscal Year.
(e) Electronic Delivery. All investor reports, capital account statements, and other communications to Limited Partners shall be delivered electronically via a secure investor portal maintained by the Administrator, unless a particular Limited Partner has requested delivery by other means as approved by the General Partner.
> C&H Comment No. 4: New paragraphs (f) and (g) have been added to address side letter obligations requiring enhanced regulatory reporting for insurance company investors (Edgecombe — NAIC format) and governmental plan investors (Northmoor — public plan reporting). These obligations are driven by the side letter program and should be discussed with the client to confirm the scope of Pinnacle's responsibility versus the Sponsor's in-house investor relations team (Rachel M. Overton, Head of Investor Relations).
Section 2.4 — Capital Call and Distribution Processing
(a) Capital Call Notices. The Administrator shall prepare and process capital call notices on behalf of the General Partner in accordance with the terms and procedures set forth in the LPA. Capital call notices shall be prepared using the form prescribed by the LPA and shall include, at a minimum, the aggregate amount of the capital call, each Limited Partner's pro rata share of the capital call, the purpose of the capital call, the applicable due date, and wire transfer instructions. The Administrator shall calculate each Limited Partner's pro rata share based on such Limited Partner's unfunded commitment and the allocation methodology set forth in the LPA.
(b) Unfunded Commitment Tracking. The Administrator shall maintain a current record of each Limited Partner's unfunded commitment, reflecting all capital contributions made, capital returned (if any), and any adjustments resulting from LP transfers, withdrawals, defaults, or excuse events as reported by the General Partner.
(c) Distribution Notices. The Administrator shall prepare and process distribution notices on behalf of the General Partner in accordance with the LPA. Distribution notices shall specify the aggregate amount of the distribution, each Limited Partner's allocable share, the character of the distribution (return of capital, preferred return, or profit participation), and wire transfer instructions.
(d) Waterfall Calculations. The Administrator shall perform distribution waterfall calculations consistent with the European-style whole-fund waterfall set forth in the LPA, which provides for distributions in the following order of priority:
(i) Return of Contributed Capital. First, to the Limited Partners, pro rata in accordance with their respective contributed capital, until each Limited Partner has received cumulative distributions equal to such Limited Partner's aggregate contributed capital;
(ii) Preferred Return. Second, to the Limited Partners, pro rata in accordance with their respective contributed capital, until each Limited Partner has received an annualized cumulative compounded preferred return of eight percent (8%) on such Limited Partner's contributed capital (net of prior distributions of preferred return);
(iii) General Partner Catch-Up. Third, eighty percent (80%) to the General Partner (or its designee), until the General Partner has received cumulative carried interest distributions equal to twenty percent (20%) of the aggregate amount distributed pursuant to clauses (ii) and (iii) above; and
(iv) Residual Profit Split. Thereafter, eighty percent (80%) to the Limited Partners, pro rata in accordance with their respective contributed capital, and twenty percent (20%) to the General Partner (or its designee).
(e) Capital Account Ledgers. The Administrator shall maintain capital account ledgers for each Limited Partner reflecting, at a minimum: (I) committed capital; (II) contributed capital; (III) unfunded commitment; (IV) cumulative distributions received (by character); (V) allocable share of net income, gain, loss, and deduction; and (VI) share of carried interest accrual. The Administrator shall reconcile capital account ledgers at least quarterly and shall make such ledgers available to the General Partner upon request.
(f) Coordination with Custodian. The Administrator shall coordinate with the Custodian (Ridgeway Trust Company, contact: Thomas B. Chandler) for wire transfer processing and confirmation in connection with capital calls and distributions. The Administrator shall verify with the Custodian the receipt of capital contributions from Limited Partners and the disbursement of distribution payments to Limited Partners, and shall promptly report to the General Partner any discrepancies or failed wire transfers.
> C&H Comment No. 5: New paragraph (g) addresses Pinnacle's coordination obligations with respect to the Fund's $500M Subscription Credit Facility with Ashford National Bank, N.A. This is a critical administrative function, as the borrowing base calculations depend upon accurate and timely unfunded commitment data. The scope has been described as ministerial/administrative in nature to avoid any suggestion that Pinnacle is acting as a financial adviser to the Fund or the Lender.
(h) Management Fee Calculations. The Administrator shall track and calculate management fees payable to the Sponsor in accordance with the LPA and applicable side letters. The management fee shall be calculated as follows:
(i) During the Investment Period: one and seventy-five hundredths percent (1.75%) per annum of each Limited Partner's committed capital;
(ii) After the expiration or termination of the Investment Period: one and fifty hundredths percent (1.50%) per annum of each Limited Partner's invested capital (i.e., the cost basis of unrealized investments plus the funded commitments attributable to follow-on reserves, less the cost basis of realized investments and written-off investments);
in each case, subject to the application of the following fee discounts as set forth in the applicable side letters:
(iii) Early Close discount: A reduction of ten (10) basis points for Limited Partners admitted at the First Close;
(iv) Large LP discount: An additional reduction of five (5) basis points for Limited Partners with aggregate commitments of One Hundred Fifty Million Dollars ($150,000,000) or more.
The Administrator shall maintain a schedule reflecting the applicable management fee rate for each Limited Partner, including any side letter discounts, and shall provide such schedule to the General Partner on at least a quarterly basis.
(i) Transaction Fee Offset Tracking. The Administrator shall track transaction fees, monitoring fees, directors' fees, and break-up fees received by the General Partner, the Sponsor, or their respective Affiliates with respect to portfolio company investments, and shall calculate the offset against management fees in accordance with the LPA. The LPA provides that one hundred percent (100%) of net transaction, monitoring, and break-up fees received shall be applied to offset the management fee payable by the Limited Partners.
Section 2.5 — AML/KYC Verification Services
(a) Initial Verification. The Administrator shall perform anti-money laundering ("AML") and know-your-customer ("KYC") verification procedures for all prospective and admitted Limited Partners in connection with their subscription to the Fund. Such procedures shall include, at a minimum:
(i) identity verification of each prospective Limited Partner and, where applicable, its beneficial owners, in accordance with applicable AML Laws;
(ii) beneficial ownership identification, including identification of all natural persons who, directly or indirectly, own or control twenty-five percent (25%) or more of the equity interests of any entity investor;
(iii) screening against sanctions lists maintained by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), the European Union, and the United Nations;
(iv) screening for politically exposed persons ("PEPs") in accordance with applicable AML Laws and industry best practices;
(v) review of the source of funds of each prospective Limited Partner, to the extent required by applicable AML Laws; and
(vi) processing and review of the Investor Suitability Questionnaire / KYC Forms submitted by each prospective Limited Partner in connection with its subscription to the Fund.
(b) FATCA and CRS Compliance. The Administrator shall collect and validate FATCA self-certification forms (IRS Form W-8BEN, W-8BEN-E, W-8IMY, or W-9, as applicable) and CRS self-certification forms from each Limited Partner, and shall maintain such forms in its records.
(c) Ongoing Monitoring. The Administrator shall perform ongoing monitoring of admitted Limited Partners, including periodic re-verification of AML/KYC information at least annually or upon any material change in a Limited Partner's identity, ownership, or control structure, as reported by the General Partner or the Limited Partner.
> C&H Comment No. 6: New paragraphs (d) and (e) have been added to address (i) enhanced diligence for sovereign wealth fund investors (Tidewater Sovereign Investment Authority has been identified as a prospective investor) and (ii) Cayman Islands AML requirements applicable to the Offshore Feeder, which is registered with CIMA. These additions are necessary to ensure that Pinnacle's AML/KYC procedures are adequate for the Fund's anticipated investor base.
Section 2.6 — Additional Services
In addition to the Services described in Sections 2.2 through 2.5, the Administrator shall provide the following additional administrative services:
(a) Tax Reporting Support. The Administrator shall coordinate with the Fund's tax preparer in connection with the preparation of the Fund's annual U.S. federal income tax return (IRS Form 1065) and the preparation of Schedule K-1 for each Limited Partner. The Administrator shall provide the Fund's tax preparer with capital account data, contribution and distribution records, and such other information as may be necessary for the accurate preparation of the Form 1065 and related K-1s.
(b) Organizational Expense Tracking. The Administrator shall track organizational expenses of the Fund against the organizational expense cap of Three Million Five Hundred Thousand Dollars ($3,500,000) set forth in the LPA. Any organizational expenses in excess of such cap shall be borne by the Sponsor. The Administrator shall maintain a running ledger of organizational expenses and shall report to the General Partner on at least a quarterly basis the amount of organizational expenses incurred to date and the remaining balance under the cap.
(c) Transaction Fee Offset Tracking. In addition to the tracking described in Section 2.4(i), the Administrator shall maintain a schedule reflecting all transaction, monitoring, directors', and break-up fees received by the General Partner, the Sponsor, or their Affiliates, and shall calculate the cumulative offset against management fees. Such schedule shall be updated quarterly and provided to the General Partner.
(d) ERISA Monitoring. The Administrator shall track the participation of benefit plan investors (as defined in 29 C.F.R. § 2510.3-101(f)(2)) in each class of equity interests of the Fund, and shall report to the General Partner on at least a quarterly basis the percentage of each class of equity interests held by benefit plan investors. The Administrator shall promptly notify the General Partner if the benefit plan investor participation in any class of equity interests approaches or exceeds the twenty-five percent (25%) threshold set forth in 29 C.F.R. § 2510.3-101(f), at which point the assets of the Fund may be deemed to constitute "plan assets" under ERISA.
(e) MFN Administration Support. The Administrator shall provide administrative support for the most-favored-nation ("MFN") process set forth in the LPA and applicable side letters. Such support shall include: (i) compilation of a summary of material side letter provisions for disclosure to eligible Limited Partners (i.e., those with aggregate commitments of Fifty Million Dollars ($50,000,000) or more); (ii) distribution of MFN election materials to eligible Limited Partners; and (iii) tracking of the thirty (30)-day MFN election period following the Final Close, including recording each eligible Limited Partner's election or waiver. The Administrator shall provide a summary report of MFN elections to the General Partner promptly following the expiration of the MFN election period.
> C&H Comment No. 7: New paragraph (f) has been inserted to clarify the ministerial/administrative nature of Pinnacle's services under this Section 2.6. This language protects both Pinnacle and the Fund by ensuring that Pinnacle's administrative support for ERISA monitoring, MFN administration, tax coordination, and related matters is not construed as the provision of legal, tax, or investment advice.
ARTICLE III — OBLIGATIONS OF THE FUND AND GENERAL PARTNER
Section 3.1 — Provision of Information
The General Partner shall provide the Administrator with all information reasonably necessary for the Administrator to perform the Services, including, without limitation:
(a) executed copies of the LPA and all amendments thereto;
(b) executed subscription agreements and investor suitability questionnaires for each Limited Partner;
(c) all side letters entered into between the Fund (or the General Partner, on behalf of the Fund) and any Limited Partner, including any supplements, amendments, or waivers thereto;
(d) capital call instructions and distribution instructions;
(e) valuation reports for portfolio company investments, including supporting documentation and methodologies;
(f) portfolio company financial statements and other portfolio-level information relevant to NAV calculations;
(g) bank statements, wire transfer confirmations, and other records of the Fund's cash accounts at the Custodian;
(h) any LP transfer documents, including notices of assignment, assumption, or substitution of limited partnership interests;
(i) notice of any LP default events, excuse events (including ERISA excuse, legal/regulatory excuse, or co-investment excuse), or withdrawal events as described in the LPA; and
(j) updated investor lists, including each Limited Partner's ERISA status (benefit plan investor or non-benefit plan investor), regulatory reporting requirements, and contact information.
The General Partner shall provide such information on a timely basis so as to enable the Administrator to meet the service-level timelines set forth in this Agreement and in Schedule A. The General Partner acknowledges that the Administrator's ability to perform the Services is dependent upon the timely and accurate provision of information by the General Partner, and the Administrator shall not be liable for any delay or error in the performance of the Services to the extent such delay or error is attributable to the General Partner's failure to provide information in accordance with this Section 3.1.
Section 3.2 — Cooperation with Third Parties
The General Partner shall use commercially reasonable efforts to cause the following third-party service providers of the Fund to cooperate with the Administrator as reasonably necessary for the Administrator to perform the Services:
(a) Auditor: Caldwell, Fitch & Hartley LLP (Audit Partner: Robert A. Fonseca), with respect to the annual audit of the Fund's financial statements, the review of NAV computations, and such other matters as may be relevant to the Services;
(b) Custodian: Ridgeway Trust Company (contact: Thomas B. Chandler, VP, Institutional Custody), with respect to cash reconciliation, wire transfer processing, and the maintenance of the Fund's custodial accounts;
(c) Subscription Facility Lender: Ashford National Bank, N.A. (contact: Lisa M. Osterberg), with respect to borrowing base calculations, uncalled commitment data, and the administration of the Subscription Credit Facility; and
(d) Legal Counsel: Calderwood & Harkness LLP (contact: Graham Sutherland), with respect to the provision of copies of formation documents, LPA amendments, side letter summaries, and other legal documents relevant to the administration of the Fund.
The General Partner shall instruct each such third-party service provider to make available to the Administrator such documents, data, and personnel as the Administrator may reasonably request in connection with the performance of the Services.
Section 3.3 — General Partner Representations
The General Partner hereby represents and warrants to the Administrator, as of the Effective Date and on a continuing basis throughout the term of this Agreement, as follows:
(a) Due Formation — Fund. The Fund has been, or will prior to the Effective Date be, duly formed as a limited partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §§ 17-101 et seq.) and is, or will be, validly existing and in good standing under the laws of the State of Delaware.
(b) Due Formation — General Partner. The General Partner is duly formed as a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.) and is validly existing and in good standing under the laws of the State of Delaware.
(c) Authority. The General Partner has full power and authority to enter into this Agreement on behalf of the Fund and to perform its obligations hereunder. The execution and delivery of this Agreement and the performance of the General Partner's obligations hereunder have been duly authorized by all necessary action on the part of the General Partner.
(d) Binding Agreement. The LPA constitutes a valid and binding agreement of the Fund and the General Partner, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, and equitable principles.
(e) Investment Company Act. The Fund is not, and is not required to be, registered as an investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), in reliance on the exclusion from the definition of "investment company" provided by Section 3(c)(7) of the 1940 Act. All investors in the Fund are "qualified purchasers" within the meaning of Section 2(a)(51) of the 1940 Act.
(f) Securities Act. The offering and sale of interests in the Fund is being conducted in reliance on the exemption from registration provided by Regulation D, Rule 506(b), promulgated under the Securities Act of 1933, as amended.
(g) Investment Adviser Registration. Harrowgate Capital Partners LLC, the Sponsor, is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (SEC File No. 801-79223; CRD No. 298417), and such registration is in full force and effect.
ARTICLE IV — FEES AND EXPENSES
Section 4.1 — Administration Fee
(a) Base Fee. In consideration of the Services to be provided by the Administrator hereunder, the Fund shall pay to the Administrator an annual administration fee of Three Hundred Fifty Thousand Dollars ($350,000) (the "Base Fee"), payable in equal quarterly installments of Eighty-Seven Thousand Five Hundred Dollars ($87,500) in arrears within thirty (30) days following the end of each fiscal quarter.
(b) Fee Scaling. Upon the date on which aggregate commitments to the Fund Vehicles (collectively) exceed One Billion Five Hundred Million Dollars ($1,500,000,000), the annual administration fee shall increase to Four Hundred Twenty-Five Thousand Dollars ($425,000) (the "Scaled Fee"), payable in equal quarterly installments of One Hundred Six Thousand Two Hundred Fifty Dollars ($106,250) in arrears. The Scaled Fee shall be effective as of the first day of the fiscal quarter immediately following the date on which such aggregate commitment threshold is exceeded. The hard cap on aggregate commitments to the Fund is Two Billion Dollars ($2,000,000,000).
> C&H Comment No. 8: This is a critical commercial point. Pinnacle's original draft was ambiguous as to whether the administration fee applies to all Fund Vehicles collectively or to the Main Fund only. We have inserted paragraph (c) to clarify that the fee covers all Fund Vehicles. If Pinnacle intends to charge per-vehicle fees, this should be raised promptly. [OPEN ITEM — for discussion with Catherine E. Loomis and Jonathan P. Birch.]**
> C&H Comment No. 9: New paragraph (d) clarifies the classification of the administration fee as a Fund operating expense (not organizational expense). This is consistent with the LPA, under which fund administration fees are treated as ongoing operating expenses borne by the Fund, distinct from the $3,500,000 cap on organizational expenses (which covers legal, accounting, and filing fees incurred in forming and organizing the Fund and preparing offering materials).
Section 4.2 — Out-of-Pocket Expenses
The Fund shall reimburse the Administrator for all reasonable, documented out-of-pocket expenses actually incurred by the Administrator in the performance of the Services, including, without limitation, travel expenses, postage and courier charges, third-party software and system costs directly attributable to the Fund, and regulatory filing fees. The Administrator shall provide the General Partner with itemized invoices for out-of-pocket expenses on a quarterly basis.
> C&H Comment No. 10: We have inserted an annual cap of $25,000 on reimbursable out-of-pocket expenses. This is a standard fund-side protection that prevents open-ended reimbursement obligations. Expenses in excess of the cap would require prior approval from the General Partner.
Section 4.3 — Fee Adjustments
The administration fee set forth in Section 4.1 may be adjusted annually by mutual written agreement of the Parties, effective as of January 1 of each calendar year following the first full calendar year of service under this Agreement.
> C&H Comment No. 11: A CPI escalator cap of 3% per annum has been added. This is a standard provision that limits Pinnacle's ability to unilaterally escalate fees and provides cost certainty for the Fund over its life.
ARTICLE V — STANDARD OF CARE; LIABILITY AND INDEMNIFICATION
Section 5.1 — Standard of Care
(a) The Administrator shall perform the Services with reasonable care, skill, and diligence, consistent with industry standards for fund administrators of comparable closed-end private equity funds. The Administrator shall maintain adequate staffing, systems, and procedures to perform the Services in a timely and accurate manner.
(b) The Parties acknowledge and agree that the Administrator is not a fiduciary of the Fund, the General Partner, or any Limited Partner, and the Administrator does not owe fiduciary duties to any of the foregoing. Nothing in this Agreement shall be construed to create a fiduciary relationship between the Administrator and the Fund, the General Partner, or any Limited Partner.
(c) The Administrator shall be entitled to rely upon, and shall not be required to independently verify, any information, data, instructions, directions, or certifications provided to the Administrator by the General Partner or on its behalf, and the Administrator shall not be liable for any errors, omissions, or losses arising from such reliance; provided, however, that the foregoing shall not limit the Administrator's independent verification obligations in connection with AML/KYC verification services under Section 2.5.
Section 5.2 — Limitation of Liability
(a) The Administrator shall not be liable for any losses, claims, damages, liabilities, costs, or expenses of any nature whatsoever arising out of or relating to the performance of the Services hereunder, except to the extent that such losses, claims, damages, liabilities, costs, or expenses are directly caused by the Administrator's gross negligence, willful misconduct, or fraud.
> C&H Comment No. 12: Pinnacle's original draft contained a blanket exclusion of consequential, indirect, and special damages in all circumstances. C&H has narrowed this exclusion to preserve the Fund's right to recover consequential damages where the loss arises from Pinnacle's gross negligence or willful misconduct. Given the critical nature of NAV calculation, capital call processing, and distribution waterfall calculations for a $2.0B fund, a blanket consequential damages exclusion is inappropriate and inconsistent with market practice for funds of this size.
> C&H Comment No. 13: Pinnacle's original draft included a liability cap equal to fees paid in the preceding 12-month period (i.e., $350,000 to $425,000). C&H recommends increasing the cap to the greater of (x) 2x the annual administration fee and (y) $850,000. A 1x cap of $350,000–$425,000 is insufficient given the Fund's $2.0B target size, the critical nature of Pinnacle's services (NAV calculation, capital call/distribution processing, borrowing base data for the $500M Subscription Credit Facility), and the potential magnitude of losses that could arise from administrative errors. The Liability Cap would not apply in cases of willful misconduct or fraud. [OPEN ITEM — for discussion with Catherine E. Loomis and Jonathan P. Birch.]**
Section 5.3 — Indemnification by the Fund
(a) The Fund shall indemnify, defend, and hold harmless the Administrator and its officers, directors, members, managers, employees, agents, and representatives (collectively, the "Administrator Indemnitees") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) arising out of or relating to the Administrator's performance of the Services hereunder, except to the extent that such losses, claims, damages, liabilities, costs, or expenses arise from the Administrator's gross negligence, willful misconduct, or fraud.
> C&H Comment No. 14: New paragraph (b) adds standard conditions to the Fund's indemnification obligation: prompt notice, cooperation, the Fund's right to control the defense, and a consent requirement for settlements. These are customary protections for indemnifying parties.