AGREEMENT OF LIMITED PARTNERSHIP
OF
HARROWGATE PRIVATE EQUITY FUND V LP
A Delaware Limited Partnership
** **
Prepared by Calderwood & Harkness LLP
CONFIDENTIAL — For Discussion Purposes Only — Subject to Revision
This document is a preliminary draft prepared for discussion purposes and is subject to further revision and negotiation. This draft does not constitute a binding offer or agreement by any party. Distribution of this document is restricted to intended recipients and their legal and financial advisors. All rights reserved.
AGREEMENT OF LIMITED PARTNERSHIP
OF
HARROWGATE PRIVATE EQUITY FUND V LP
This Agreement of Limited Partnership (this "Agreement") of Harrowgate Private Equity Fund V LP, a Delaware limited partnership (the "Partnership" or the "Fund"), is entered into as of the date of the First Close (as defined below) by and among Harrowgate Fund V GP LLC, a Delaware limited liability company, as the general partner (the "General Partner" or "GP"), and each Person who is admitted as a limited partner of the Partnership (each, a "Limited Partner" or "LP" and, collectively, the "Limited Partners"), in each case in accordance with the terms and conditions set forth herein. The General Partner and the Limited Partners are sometimes referred to herein individually as a "Partner" and collectively as the "Partners."
RECITALS
WHEREAS, the General Partner has caused a Certificate of Limited Partnership to be filed (or to be filed on or prior to the date hereof) with the Secretary of State of the State of Delaware, forming the Partnership as a limited partnership under and pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et seq., as amended from time to time (the "Act");
WHEREAS, the General Partner desires to establish the Fund as a private equity investment vehicle for the purpose of making equity and equity-related investments, directly or indirectly, primarily in North American mid-market and upper-mid-market companies in the industrials, business services, healthcare services, and technology-enabled services sectors;
WHEREAS, the General Partner is the sole general partner of the Partnership and is a Delaware limited liability company, the sole member of which is Harrowgate Capital Partners LLC, a Delaware limited liability company (the "Sponsor");
WHEREAS, the Sponsor has sponsored and managed four predecessor private equity funds (Harrowgate Private Equity Fund I LP through Harrowgate Private Equity Fund IV LP) and manages approximately $5.8 billion in aggregate assets under management as of the date hereof;
WHEREAS, each Limited Partner desires to make a capital commitment to the Partnership on the terms and subject to the conditions set forth in this Agreement and in the Subscription Agreement executed by such Limited Partner; and
WHEREAS, the Partners desire to set forth their respective rights, obligations, and duties with respect to the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partners hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et seq., as it may be amended from time to time, and any successor statute thereto.
"Adjusted Capital Account" means, with respect to each Partner, such Partner's Capital Account as of the end of the relevant Fiscal Year or other applicable period, as adjusted in accordance with Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6), after giving effect to the following adjustments: (a) credit to such Capital Account any amounts that such Partner is obligated to restore or is treated as obligated to restore pursuant to Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1), and 1.704-2(i)(5); and (b) debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6). The foregoing definition is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the correlative terms "controlling," "controlled by," and "under common control with") 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 ownership of voting securities, by contract, or otherwise, and shall be deemed to exist when a Person owns, directly or indirectly, fifty percent (50%) or more of the outstanding voting securities or equity interests of the applicable entity. Notwithstanding the foregoing, no Limited Partner shall be deemed to be an Affiliate of the General Partner, the Sponsor, or any other Limited Partner solely by reason of such Limited Partner's investment in the Fund.
"Aggregate Commitments" means the aggregate Capital Commitments of all Partners (including the GP Commitment), as set forth in the Schedule of Partners, as the same may be updated from time to time. At the hard cap, Aggregate Commitments shall not exceed Two Billion Dollars ($2,000,000,000).
"Associate" means any member, partner, managing director, principal, officer, director, employee, or agent of the General Partner, the Sponsor, or any of their respective Affiliates.
"Benefit Plan Investor" means a "benefit plan investor" as defined in 29 C.F.R. § 2510.3-101(f)(2), as modified by Section 3(42) of ERISA, including (a) any "employee benefit plan" as defined in Section 3(3) of ERISA that is subject to Part 4 of Subtitle B of Title I of ERISA, (b) any "plan" as defined in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code, and (c) any entity whose underlying assets include "plan assets" by reason of a plan's investment in such entity.
"Blocker Entity" means HGF V blocker Corp., a Delaware C corporation formed for the benefit of certain tax-exempt or non-U.S. Limited Partners to mitigate UBTI or effectively connected income concerns, as the General Partner may determine to be appropriate in connection with the Fund's investment program.
"Bridge Financing" means any short-term Fund-level borrowing (whether under the Subscription Credit Facility or otherwise) used to fund Portfolio Investments or other Partnership obligations in advance of or in lieu of issuing Capital Calls, which borrowing shall not remain outstanding for
"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 or executive order to remain closed.
"Capital Account" means, with respect to each Partner, the capital account established and maintained for such Partner in accordance with Section 704(b) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv), as further described in Section 6.1 of this Agreement.
"Capital Call" or "Drawdown Notice" means a written notice issued by the General Partner to the Partners requiring such Partners to fund all or a portion of their unfunded Capital Commitments, specifying the aggregate amount of such capital contribution, the purpose thereof, and the date on which such funds are due, in accordance with Section 4.2 of this Agreement.
"Capital Commitment" means, with respect to each Partner, the aggregate amount that such Partner has committed to contribute to the Partnership as capital contributions, as set forth in such Partner's Subscription Agreement and reflected in the Schedule of Partners, as the same may be updated from time to time.
"Carried Interest" means the General Partner's right to receive twenty percent (20%) of Net Profits distributed in excess of the Preferred Return, as more fully described in Section 8.2 of this Agreement (Tiers 3 and 4 of the distribution waterfall).
"Carry Distribution" means any Distribution of Carried Interest to the General Partner pursuant to Tier 3 or Tier 4 of the distribution waterfall set forth in Section 8.2.
"Catch-Up" or "GP Catch-Up" means the distribution priority described in Tier 3 of Section 8.2, pursuant to which eighty percent (80%) of distributable amounts are allocated to the General Partner and twenty percent (20%) to the Limited Partners until the
"Cause" means (a) the commission of fraud or willful misconduct by the General Partner, any Key Person, or any Associate acting on behalf of the General Partner in connection with the affairs of the Partnership; (b) a material breach by the General Partner of this Agreement that is not cured within the applicable cure period set forth in Section 12.6; or (c) the voluntary or involuntary bankruptcy, insolvency, receivership, or dissolution of the General Partner.
"Clawback Amount" means the amount of excess Carried Interest subject to return by the General Partner to the Partnership pursuant to Article IX of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto. References to specific sections of the Code shall be deemed to include corresponding provisions of any successor statute.
"Commitment Period" has the meaning ascribed to the term "Investment Period."
"Concentration Limit" means, with respect to any single Portfolio Investment, twenty percent (20%) of Aggregate Commitments, measured at the time of the initial commitment to such Portfolio Investment (i.e., a maximum of Four Hundred Million Dollars ($400,000,000) at the hard cap of Two Billion Dollars ($2,000,000,000)), as more fully described in Section 5.3(a).
"Defaulting Partner" means any Partner that fails to fund its share of a Capital Call by the applicable funding date, as set forth in Section 4.9 of this Agreement, and that has not cured such failure within five (5) Business Days of the funding date.
"Distribution" means any distribution of cash, securities, or other property by the Partnership to one or more Partners, whether as a return of capital, a share of income or gain, or otherwise, as determined by the General Partner in accordance with this Agreement.
"Early Close discount" means the ten (10) basis point reduction in the Management Fee rate applicable to Limited Partners admitted to the Partnership at the First Close, as described in Section 7.1(c) of this Agreement (resulting in a Management Fee rate of 1.65% per annum on Capital Commitments during the Investment Period, in lieu of 1.75%).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute thereto, together with all rules and regulations promulgated thereunder.
"Excess Organizational Expenses" means Organizational Expenses incurred by the Partnership in excess of Three Million Five Hundred Thousand Dollars ($3,500,000), which Excess Organizational Expenses shall be borne solely by the Sponsor and shall not be charged to the Partnership or any Partner.
"Excluded Co-Investment" means a co-investment opportunity offered alongside the Fund to one or more Limited Partners or third parties in accordance with Section 5.4, which co-investment is made through a separate co-investment vehicle or on a direct basis and is not treated as a Portfolio Investment of the Fund for purposes of this Agreement.
"Final Close" means the last date on which Limited Partners may be admitted to the Partnership and Capital Commitments accepted, which date shall be no later than the Final Close Deadline.
"Final Close Deadline" means February 15, 2027, being eighteen (18) months after the target date of the First Close.
"First Close" means the initial closing of Capital Commitments to the Partnership, targeted for August 15, 2025, at which the General Partner shall have accepted Capital Commitments aggregating at least Seven Hundred Fifty Million Dollars ($750,000,000) (or such lesser amount as the General Partner may determine in its sole discretion).
"Fiscal Year" means the calendar year commencing on January 1 and ending on December 31 of each year; provided, that the first Fiscal Year of the Partnership shall commence on the date of the First Close and shall end on December 31 of such calendar year, and the final Fiscal Year of the Partnership shall end on the date of the final distribution of all Partnership assets and cancellation of the Certificate of Limited Partnership.
"For-Cause Removal" means the removal of the General Partner for Cause by a vote of a majority in interest of the Limited Partners (excluding GP-affiliated Capital Commitments) in accordance with Section 12.6(b).
"Fund" means Harrowgate Private Equity Fund V LP, a Delaware limited partnership formed pursuant to this Agreement.
"Fund Expenses" means the ordinary and recurring expenses of the Partnership borne by the Partnership, as more fully described in Section 7.4 of this Agreement.
"General Partner" or "GP" means Harrowgate Fund V GP LLC, a Delaware limited liability company, the sole member of which is Harrowgate Capital Partners LLC, a Delaware limited liability company, in its capacity as the sole general partner of the Partnership, and any successor general partner admitted to the Partnership in accordance with this Agreement.
"GP Catch-Up" has the meaning set forth in the definition of "Catch-Up" above.
"GP Commitment" means the Capital Commitment of the General Partner (or its Affiliates) to the Partnership, which shall be equal to two and one-half percent (2.5%) of Aggregate Commitments (equal to Fifty Million Dollars ($50,000,000) at the hard cap of Two Billion Dollars ($2,000,000,000)). The GP Commitment shall be funded pari passu with Capital Calls to the Limited Partners and on the same terms and conditions as the Capital Commitments of the Limited Partners, except that no Management Fee shall be charged with respect to the GP Commitment.
"Included Investors" means those Limited Partners that are (a) investment-grade institutional investors (as determined by the lender under the Subscription Credit Facility), (b) government plan investors, or (c) such other investors as may be included in the borrowing base under the Subscription Credit Facility, in each case whose unfunded Capital Commitments are pledged to secure such facility.
"Independent Auditor" means Caldwell, Fitch & Hartley LLP, or such other independent certified public accounting firm of national or regional standing as the General Partner may select from time to time, subject to LPAC approval for any change in the Independent Auditor.
"Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, and any successor statute thereto, together with all rules and regulations promulgated thereunder.
"Investment Period" means the period commencing on the date of the Final Close and expiring on the fifth (5th) anniversary of the Final Close, unless earlier terminated or suspended in accordance with the provisions of this Agreement (including Section 5.7 and Article X).
"Key Person" means each of Marcus J. Harrowgate and Diana R. Castellano, as identified in Schedule B.
"Key Person Event" means the occurrence of either Key Person ceasing to devote substantially all of his or her to the investment activities of the Fund , whether due to death, permanent disability, voluntary departure, termination, or otherwise, as more fully described in Article X.
"Large LP discount" means the additional five (5) basis point reduction in the Management Fee rate applicable to Limited Partners committing One Hundred Fifty Million Dollars ($150,000,000) or more to the Partnership, as described in Section 7.1(c) of this Agreement (resulting in a cumulative Management Fee rate of 1.60% per annum during the Investment Period for a First Close Limited Partner committing $150,000,000 or more).
"Limited Partner" or "LP" means each Person admitted to the Partnership as a limited partner in accordance with Article III of this Agreement and the Act, and "Limited Partners" means all such Persons collectively. For the avoidance of doubt, the term "Limited Partner" does not include the General Partner, except to the extent the General Partner holds an interest in the Partnership in its capacity as a limited partner (if applicable).
"Limited Partner Advisory Committee" or "LPAC" means the advisory committee of Limited Partner representatives established and maintained by the General Partner in accordance with Article XI of this Agreement.
"Management Fee" means the fee payable by the Partnership to the General Partner or its designee in consideration for the management and advisory services provided by the General Partner and its Associates to the Partnership, as set forth in Section 7.1 of this Agreement.
"MFN Election" means the Most Favored Nation election process described in Section 15.14 of this Agreement, pursuant to which qualifying Limited Partners may elect to receive the benefit of certain Side Letter provisions offered to other Limited Partners
"Minimum LP Commitment" means Ten Million Dollars ($10,000,000), being the minimum Capital Commitment required to be made by each Limited Partner in order to be admitted to the Partnership, subject to waiver or reduction by the General Partner in its sole discretion.
"Net Asset Value" or "NAV" means, as of any date of determination, the fair market value of all assets of the Partnership (determined in accordance with the valuation policies adopted by the General Partner), less all liabilities of the Partnership (including accrued but unpaid Management Fees, Fund Expenses, and amounts owing under the Subscription Credit Facility), determined in a manner consistent with generally accepted accounting principles in the United States of America as applied by the General Partner on a consistent basis.
"Net Losses" means, for any Fiscal Year or other applicable period, the excess, if any, of the items of loss and deduction allocated to the Partnership over the items of income and gain allocated to the Partnership, in each case as computed for purposes of the Carried Interest allocation and the distribution waterfall set forth in Section 8.2.
"Net Profits" means, for any Fiscal Year or other applicable period, the excess, if any, of the items of income and gain allocated to the Partnership over the items of loss and deduction allocated to the Partnership, in each case as computed for purposes of the Carried Interest allocation and the distribution waterfall set forth in Section 8.2. For the avoidance of doubt, Net Profits shall be determined on a cumulative, whole-fund basis.
"No-Fault Removal" means the removal of the General Partner without Cause by a vote of seventy-five percent (75%) in interest of the Limited Partners (excluding GP-affiliated Capital Commitments) in accordance with Section 12.6(a).
"Offshore Feeder" means Harrowgate Fund V Offshore SLP, a Cayman Islands exempted limited partnership formed to invest alongside the Fund for the benefit of certain non-U.S. investors and tax-exempt investors, as described in Section 2.7.
"Organizational Expenses" means the expenses incurred in connection with the organization and formation of the Partnership, the General Partner, the Parallel Fund, the Offshore Feeder, the blocker Entity, and any other parallel or related vehicles, including legal fees, accounting fees, filing fees, printing costs, travel expenses, and other expenses directly related to the formation and organization of the foregoing entities and the offering and sale of Partnership Interests, subject to the cap set forth in Section 7.3.
"Parallel Fund" means Harrowgate Fund V Parallel LP, a Delaware limited partnership, and any other parallel investment vehicle established by the General Partner to invest alongside the Fund on substantially similar economic terms, as described in Section 2.7.
"Partner" means the General Partner or any Limited Partner, and "Partners" means the General Partner and all Limited Partners collectively.
"Partnership" means Harrowgate Private Equity Fund V LP, a Delaware limited partnership, as constituted from time to time.
"Partnership Interest" means a Partner's entire interest in the Partnership, including such Partner's right to receive allocations and Distributions, the right to vote on matters submitted to the Partners, and all other rights and obligations of such Partner under this Agreement and the Act.
"Percentage Interest" means, with respect to each Partner, the ratio (expressed as a percentage) of such Partner's Capital Commitment to Aggregate Commitments, as set forth in the Schedule of Partners. Percentage Interests shall be adjusted upon the admission of additional Partners at Subsequent Closes.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, estate, unincorporated organization, governmental authority or body, or any other entity of any kind.
"Placement Agent" means Osprey Capital Markets LLC, a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA), engaged by the Sponsor as exclusive placement agent for certain distribution activities in connection with the offering of Partnership Interests, as more fully described in Section 15.15.
"Portfolio Company" or "Portfolio Investment" means any Person in which the Partnership, directly or indirectly (including through one or more holding companies, special purpose vehicles, or other intermediary entities), acquires or holds an investment, whether in the form of equity securities, debt securities, convertible instruments, or other financial interests.
"Preferred Return" means a cumulative, compounded annual rate of return equal to eight percent (8%) per annum on each Partner's net funded Capital Contributions (adjusted for the timing of contributions and prior Distributions), computed from the date of each Capital Contribution through the date of Distribution, as more fully described in Tier 2 of the distribution waterfall set forth in Section 8.2.
"Qualified Purchaser" means a "qualified purchaser" as defined in Section 2(a)(51)(A) of the Investment Company Act and the rules and regulations promulgated thereunder.
"Regulatory Allocations" means the mandatory tax allocations required to be made pursuant to Code Sections 704(b) and 704(c) and the Treasury Regulations thereunder, including the qualified income offset, minimum gain chargeback, partner nonrecourse deduction allocations, and other allocations described in Section 6.3 of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time to time, and any successor statute thereto, together with all rules and regulations promulgated thereunder.
"Side Letter" means any letter agreement, supplemental agreement, or similar arrangement entered into between the General Partner (or its Affiliate) and a Limited Partner that supplements, modifies, or waives any provision of this Agreement with respect to such Limited Partner, in each case as permitted by Section 15.14 and the other provisions of this Agreement.
"Sponsor" means Harrowgate Capital Partners LLC, a Delaware limited liability company, the sole member of the General Partner and the management company responsible for the investment advisory and management services provided to the Fund and its parallel vehicles.
"Subscription Agreement" means the subscription agreement and related documents executed by each Limited Partner in connection with such Limited Partner's commitment to the Partnership, in the form attached hereto as Exhibit D (or as otherwise prescribed by the General Partner), together with all exhibits, schedules, questionnaires, and certifications attached thereto.
"Subscription Credit Facility" means any revolving credit facility, letter of credit facility, or similar borrowing arrangement established by the Partnership (or a parallel vehicle) that is secured, in whole or in part, by the unfunded Capital Commitments of the Partners, as more fully described in Section 4.8 of this Agreement.
"Subscription Facility Limit" means an amount equal to twenty-five percent (25%) of the aggregate unfunded Capital Commitments of all Partners at
"Subsequent Close" means any closing of Capital Commitments to the Partnership occurring after the First Close and on or prior to the Final Close Deadline, at which additional Limited Partners may be admitted to the Partnership and/or existing Limited Partners may increase their Capital Commitments, in accordance with Section 3.4 of this Agreement.
"Transaction Fees" means all transaction fees, monitoring fees, directors' fees, advisory fees, consulting fees, break-up fees, topping fees, and similar fees and compensation received by the General Partner, the Sponsor, or any of their respective Affiliates from or in connection with Portfolio Companies or prospective Portfolio Companies (net of any unreimbursed out-of-pocket expenses incurred in connection therewith).
"Transfer" means any direct or indirect sale, assignment, transfer, exchange, pledge, hypothecation, encumbrance, gift, bequest, or other disposition (whether voluntary, involuntary, or by operation of law) of all or any portion of a Partnership Interest or any economic or other right therein.
"Treasury Regulations" means the regulations promulgated under the Code by the United States Department of the Treasury, as such regulations may be amended from time to time (including corresponding provisions of successor regulations).
"UBTI" means "unrelated business taxable income" within the meaning of Code Sections 511 through 514, as amended.
"Waterfall" means the European-style (whole-fund) distribution waterfall set forth in Section 8.2 of this Agreement, pursuant to which all distributable amounts are distributed among the Partners in the priority order described therein.
"Withdrawal Event" means any event permitting or requiring the withdrawal or resignation of the General Partner from the Partnership as described in Section 12.7 of this Agreement or as otherwise provided by the Act.
Section 1.2 — Interpretation and Construction
(a) The headings and captions contained in this Agreement are included for convenience of reference only and shall not be deemed to constitute a part hereof or to affect the meaning or interpretation of any provision of this Agreement.
(b) Unless the context otherwise requires: (i) words importing the singular shall include the plural, and vice versa; (ii) words importing a gender shall include all genders; (iii) references to a Person include such Person's successors and permitted assigns; (iv) the word "including" (and correlative words such as "include," "includes," and "included") shall mean "including, without limitation" and shall not be construed to limit any general statement to the specific or similar items or matters immediately following it; and (v) the words "hereof," "herein," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) References to any statute, rule, or regulation shall be deemed to include all amendments thereto, all rules and regulations promulgated thereunder, and all successor statutes, rules, and regulations, unless the context otherwise requires.
(d) All references to "dollars" or "$" shall mean United States dollars.
(e) This Agreement shall be interpreted and construed in accordance with the laws of the State of Delaware, applying Delaware interpretive canons, without regard to conflicts of law principles that would result in the application of the laws of another jurisdiction.
(f) References to "Articles," "Sections," "Schedules," and "Exhibits" are to the Articles, Sections, Schedules, and Exhibits of this Agreement, unless otherwise specified.
(g) Each accounting term used herein that is not otherwise defined shall have the meaning ascribed to it under generally accepted accounting principles in the United States of America, as in effect from time to time.
ARTICLE II — FORMATION, NAME, AND PURPOSE
Section 2.1 — Formation
The Partnership has been formed as a limited partnership under and pursuant to the Act by the filing (or the contemplated filing on or prior to the date of the First Close) of a Certificate of Limited Partnership with the Secretary of State of the State of Delaware. The Certificate of Limited Partnership identifies Harrowgate Fund V GP LLC as the sole general partner of the Partnership. The registered office of the Partnership in the State of Delaware is located at 400 South Ashbury Asset Advisors, Suite 3000, Wilmington, Delaware 19801, in care of Calderwood & Harkness LLP, which serves as the registered agent of the Partnership for service of process in the State of Delaware. The General Partner shall cause such amendments to the Certificate of Limited Partnership and such other filings and recordings as may be required or appropriate under the Act and the laws of any other jurisdiction in which the Partnership conducts business.
Section 2.2 — Name
The Partnership shall operate under the name "Harrowgate Private Equity Fund V LP" and may conduct business under such other names as the General Partner may determine from time to time. The General Partner shall have the right to change the name of the Partnership at any time and from time to time; provided, that the General Partner shall give prior written notice to the Limited Partners of any such change.
Section 2.3 — Purpose
The purpose of the Partnership is:
(a) To make equity and equity-related investments, directly or indirectly (including through holding companies, special purpose vehicles, or other intermediary entities), primarily in North American mid-market and upper-mid-market companies operating in the industrials, business services, healthcare services, and technology-enabled services sectors, with target equity checks ranging from Seventy-Five Million Dollars ($75,000,000) to Two Hundred Fifty Million Dollars ($250,000,000) per platform investment;
(b) To hold, monitor, manage, and ultimately dispose of such investments with the objective of generating attractive risk-adjusted returns for the Partners;
(c) To engage in ancillary activities reasonably incidental to or in furtherance of the foregoing investment program, including (i) entering into hedging arrangements to manage currency, interest rate, or other financial risks in connection with Portfolio Investments; (ii) making temporary investments pending investment in Portfolio Companies or Distribution to the Partners; (iii) obtaining borrowings (including under the Subscription Credit Facility and Bridge Financing arrangements); (iv) forming and maintaining subsidiaries, holding companies, special purpose vehicles, and other entities as the General Partner may deem necessary or appropriate in connection with the structuring, acquisition, holding, or disposition of Portfolio Investments; and (v) taking all actions and doing all things necessary, advisable, or incidental to the foregoing purposes.
The Partnership shall not engage in any business or activity that is inconsistent with the foregoing purposes without the consent of a majority in interest of the Limited Partners.
Section 2.4 — Principal Office
The principal office of the Partnership shall be located at 1200 Concord Pike, Suite 600, Wilmington, Delaware 19803, which is the headquarters of Harrowgate Capital Partners LLC, or at such other location as the General Partner may determine from time to time. The General Partner shall give written notice to the Limited Partners of any change in the principal office of the Partnership.
Section 2.5 — Term
(a) The Partnership shall continue in full force and effect until the tenth (10th) anniversary of the Final Close (the "Fund Term"), unless earlier dissolved in accordance with Article XIII of this Agreement.
(b) The General Partner may, in its sole discretion, extend the Fund Term for up to two (2) consecutive periods of one (1) year each by providing written notice to the Limited Partners at least ninety (90) days prior to the expiration of the then-current Fund Term (each, a "GP Extension").
(c) Following the expiration of any GP Extension, the Fund Term may be further extended for one (1) additional period of one (1) year with the prior approval of the LPAC (the "LPAC Extension"). The General Partner shall request such LPAC approval in writing at least ninety (90) days prior to the expiration of the last GP Extension.
(d) During any extension period, the General Partner shall focus primarily on the orderly realization and disposition of remaining Portfolio Investments and the distribution of proceeds to the Partners. No new Portfolio Investments shall be made during any extension period (other than follow-on investments in existing Portfolio Companies that are necessary to protect or enhance the value of such investments).
Section 2.6 — Registered Agent
The registered agent for service of process on the Partnership in the State of Delaware shall be Calderwood & Harkness LLP, at 400 South Ashbury Asset Advisors, Suite 3000, Wilmington, Delaware 19801, or such other registered agent as the General Partner may designate from time to time in accordance with the Act.
Section 2.7 — Parallel Vehicles
(a) The General Partner may, in its sole discretion, establish, organize, and maintain one or more parallel investment vehicles to invest alongside the Fund, including (i) Harrowgate Fund V Parallel LP, a Delaware limited partnership (the "Parallel Fund"), (ii) Harrowgate Fund V Offshore SLP, a Cayman Islands exempted limited partnership (the "Offshore Feeder"), and (iii) HGF V blocker Corp., a Delaware C corporation (the "Blocker Entity"), each structured to accommodate the legal, regulatory, tax, or other requirements of certain categories of investors (including non-U.S. investors, tax-exempt investors, and investors subject to ERISA or state pension regulations).
(b) Unless the context otherwise requires, all references in this Agreement to the "Fund" or the "Partnership" shall be deemed to include the Parallel Fund, the Offshore Feeder, the blocker Entity, and any other parallel vehicle established by the General Partner, and such parallel vehicles shall be treated as a single economic unit for purposes of computing Aggregate Commitments, the distribution waterfall, the Concentration Limit, the Management Fee, the Preferred Return, and Carried Interest allocations. All investments shall be made on a pro rata basis across the Fund and such parallel vehicles (adjusted for excuse rights, regulatory restrictions, and tax considerations), and the General Partner shall use reasonable efforts to ensure that the economic terms applicable to investors in each parallel vehicle are substantially equivalent to those applicable to investors in the Fund.
(c) The General Partner may, in its discretion, form additional subsidiary entities, alternative investment vehicles, or blocker corporations as may be necessary or advisable to facilitate the Fund's investment program, to accommodate the tax, regulatory, or legal requirements of certain investors, or to facilitate the structuring of particular Portfolio Investments.
Section 2.8 — Fiscal Year
The Fiscal Year of the Partnership shall be the calendar year, commencing on January 1 and ending on December 31 of each year; provided, that the first Fiscal Year shall commence on the date of the First Close and end on December 31 of such calendar year, and the last Fiscal Year shall end on the date upon which all assets of the Partnership have been distributed and the Certificate of Limited Partnership has been cancelled.
ARTICLE III — PARTNERS; ADMISSIONS
Section 3.1 — General Partner
(a) Harrowgate Fund V GP LLC, a Delaware limited liability company, the sole member of which is Harrowgate Capital Partners LLC, a Delaware limited liability company, is hereby admitted as the sole general partner of the Partnership upon its execution of this Agreement. The General Partner shall serve as the sole general partner of the Partnership for the duration of the Fund Term, subject to the provisions of Sections 12.6 and 12.7.
(b) The GP Commitment shall be equal to two and one-half percent (2.5%) of Aggregate Commitments, which at the hard cap of Two Billion Dollars ($2,000,000,000) equals Fifty Million Dollars ($50,000,000). The GP Commitment shall be funded by the General Partner (or by one or more Affiliates of the General Partner on its behalf, including by Associates through co-investment or other arrangements) pari passu with Capital Calls issued to the Limited Partners. The GP Commitment shall be subject to the same terms and conditions as the Capital Commitments of the Limited Partners, except that (i) no Management Fee shall be charged with respect to the GP Commitment and (ii) the General Partner's distributive share of income and loss shall be determined in accordance with the Carried Interest provisions set forth herein.
(c) The General Partner shall have the powers and duties set forth in Article XII and elsewhere in this Agreement.
Section 3.2 — Limited Partners
(a) Each Limited Partner shall be admitted to the Partnership upon (i) the execution and delivery by such Limited Partner of a Subscription Agreement and the joinder or counterpart signature page to this Agreement, (ii) the acceptance of such Limited Partner's Capital Commitment by the General Partner, and (iii) the occurrence of the applicable Closing (as defined below) at which such Limited Partner is admitted.
(b) Each Limited Partner represents and warrants, as of the date of its admission and as of the date of each Capital Call, that it is (i) a "qualified purchaser" as defined in Section 2(a)(51)(A) of the Investment Company Act and (ii) an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(c) The Partnership is organized and operated in reliance upon the exemption from registration under the Investment Company Act provided by Section 3(c)(7) thereof, and the General Partner shall take all actions necessary to maintain such exemption, including limiting the admission of Limited Partners to those who qualify as Qualified Purchasers and monitoring the composition of the Partnership's investor base on an ongoing basis.
(d) Each Limited Partner acknowledges and agrees that its Partnership Interest has not been registered under the Securities Act or the securities laws of any state and may not be transferred except in compliance with this Agreement and applicable securities laws.
Section 3.3 — First Close
(a) The First Close of Capital Commitments to the Partnership is targeted to occur on August 15, 2025 (the "First Close"), at which time the General Partner shall accept Capital Commitments from one or more Limited Partners.
(b) The First Close shall not occur unless the aggregate Capital Commitments accepted at the First Close (including the GP Commitment) equal or exceed Seven Hundred Fifty Million Dollars ($750,000,000); provided, that the General Partner may, in its sole discretion, waive or reduce such minimum and proceed with the First Close at a lower aggregate commitment level if the General Partner determines that doing so is in the best interests of the Partnership.
(c) Upon the occurrence of the First Close, the Partnership shall commence its operations and the General Partner shall be authorized to make Capital Calls and to begin the investment program described in Article V.
Section 3.4 — Subsequent Closes
(a) Following the First Close, the General Partner may hold one or more Subsequent Closes at such times as the General Partner may determine, at which additional Limited Partners may be admitted to the Partnership and/or existing Limited Partners may increase their Capital Commitments. Subsequent Closes may occur on a rolling basis through the Final Close Deadline of February 15, 2027 (being eighteen (18) months after the target date of the First Close).
(b) Each Limited Partner admitted at a Subsequent Close shall be required to make a catch-up capital contribution equal to such Limited Partner's pro rata share of all Capital Calls that were funded by the existing Partners prior to such Subsequent Close, together with interest thereon at the rate of eight percent (8%) per annum, compounded annually, from the date of the First Close (or, in the case of Capital Calls funded after the First Close, from the respective funding dates thereof) through the date of such Subsequent Close. The catch-up capital contribution shall be funded on the date of such Subsequent Close (or on such other date as the General Partner may specify in the Capital Call notice).
(c) The interest component of the catch-up contribution shall be distributed to the Partners who funded Capital Calls prior to such Subsequent Close, pro rata in proportion to their respective funded Capital Contributions, and shall not constitute a return of capital for purposes of the distribution waterfall.
(d) Upon admission at a Subsequent Close, each Limited Partner shall be treated, for purposes of the distribution waterfall, allocations, and all other economic provisions of this Agreement, as if such Limited Partner had been admitted at the First Close.
Section 3.5 — Minimum LP Commitment
Each Limited Partner shall be required to make a Capital Commitment of at least Ten Million Dollars ($10,000,000) (the "Minimum LP Commitment"); provided, that the General Partner may, in its sole discretion, waive or reduce the Minimum LP Commitment for any particular Limited Partner or class of Limited Partners.
Section 3.6 — Schedule of Partners
(a) The General Partner shall establish and maintain a Schedule of Partners (attached hereto as Schedule A), setting forth each Partner's name, Capital Commitment, date of admission, and Percentage Interest. The Schedule of Partners shall be updated by the General Partner following each Closing and upon the occurrence of any Transfer, withdrawal, default, or other event affecting the identity or Capital Commitment of any Partner.
(b) The Schedule of Partners shall constitute a part of this Agreement, and any updates thereto by the General Partner shall be deemed to be an amendment to this Agreement, without requiring the consent of the Limited Partners.
ARTICLE IV — CAPITAL COMMITMENTS AND CAPITAL CONTRIBUTIONS
Section 4.1 — Capital Commitments
(a) Each Partner's Capital Commitment shall be as set forth in such Partner's Subscription Agreement and reflected in the Schedule of Partners. Capital Commitments shall be irrevocable once accepted by the General Partner, except as otherwise expressly provided in this Agreement.
(b) The aggregate of all Capital Commitments shall not exceed Two Billion Dollars ($2,000,000,000) (the "hard cap"), except as may be increased by the General Partner with the consent of a majority in interest of the Limited Partners.
(c) No Partner shall be required to contribute capital to the Partnership in excess of such Partner's Capital Commitment, except as may be required (i) pursuant to Section 4.5 (Subsequent Close Equalization), (ii) to fund the return of distributions required by law or by the terms of this Agreement, or (iii) as otherwise agreed in writing by such Partner.
Section 4.2 — Capital Calls / Drawdown Notices
(a) During the Investment Period and thereafter (solely for the purposes permitted by Section 5.2), the General Partner may require each Partner to contribute all or any portion of such Partner's unfunded Capital Commitment by issuing a Capital Call (also referred to as a "Drawdown Notice") to each Partner in writing. Each Capital Call shall specify: (i) the aggregate amount of the capital contribution requested from all Partners; (ii) each Partner's pro rata share of such capital contribution (based on each Partner's unfunded Capital Commitment as a proportion of the aggregate unfunded Capital Commitments of all Partners, unless otherwise agreed); (iii) the purpose of such capital contribution (including whether for a Portfolio Investment, Management Fees, Organizational Expenses, Fund Expenses, Subscription Credit Facility repayment, or other Partnership purposes); and (iv) the funding date on which such capital contribution is due.
(b) Each Capital Call shall be issued not less than ten (10) Business Days prior to the applicable funding date, unless a shorter notice period is agreed to by the Partners or is necessitated by the timing requirements of a Portfolio Investment (in which case the General Partner shall provide as much notice as is practicable under the circumstances, and in no event less than five (5) Business Days).
(c) Capital Calls shall be made pro rata based on each Partner's unfunded Capital Commitment relative to the aggregate unfunded Capital Commitments of all Partners, unless the General Partner and the affected Partners otherwise agree (for example, in connection with the exercise of excuse rights under Section 15.19 or the reallocation of a Defaulting Partner's share).
(d) The General Partner may issue Capital Calls for any purpose related to the business of the Partnership, including (i) funding Portfolio Investments; (ii) paying Management Fees; (iii) paying Organizational Expenses and Fund Expenses; (iv) repaying amounts borrowed under the Subscription Credit Facility; (v) funding reserves, escrows, or holdbacks; and (vi) satisfying any other obligations of the Partnership.
Section 4.3 — Funding Mechanics
(a) All capital contributions shall be made by each Partner by wire transfer of immediately available funds to such account or accounts at Ridgeway Trust Company (the Partnership's custodian), or such other account as the General Partner may designate in the applicable Capital Call, on or before the funding date specified in such Capital Call.
(b) In lieu of or in advance of issuing a Capital Call, the General Partner may draw upon the Subscription Credit Facility to fund Portfolio Investments, pay expenses, or satisfy other Partnership obligations, as set forth in Section 4.8. Amounts drawn under the Subscription Credit Facility shall be repaid from the proceeds of Capital Calls subsequently issued to the Partners.
(c) The General Partner shall maintain records of all capital contributions received from each Partner and shall provide each Partner with a confirmation of the amount contributed promptly following each funding date.
Section 4.4 — Overcalls
In the event that a Partner fails to fund all or any portion of a Capital Call when due (and thereby becomes a Defaulting Partner under Section 4.9), the General Partner may, at its discretion, offer the non-defaulting Partners the right to fund the unfunded amount of the Defaulting Partner on a pro rata basis (based on the relative Capital Commitments of the non-defaulting Partners who elect to participate), or on such other basis as the General Partner may determine. No non-defaulting Partner shall be obligated to fund any portion of a Defaulting Partner's share, and any overcall shall be entirely at the election of each non-defaulting Partner. Amounts contributed by non-defaulting Partners in respect of a defaulted amount shall be treated as additional capital contributions by such non-defaulting Partners for all purposes of this Agreement, including for purposes of the distribution waterfall and the allocation of Net Profits and Net Losses.
Section 4.5 — Subsequent Close Equalization
(a) Each Limited Partner admitted at a Subsequent Close shall pay to the Partnership, on the date of such Subsequent Close, an equalization contribution equal to such Limited Partner's pro rata share (based on its Capital Commitment as a proportion of Aggregate Commitments after giving effect to its admission) of all Capital Calls previously funded by the existing Partners, together with interest thereon at the rate of eight percent (8%) per annum, compounded annually, from the date each prior Capital Call was funded through the date of such Subsequent Close.
(b) The equalization contribution shall be treated as a Capital Contribution of such Limited Partner for all purposes of this Agreement, and such Limited Partner's Capital Account shall be credited accordingly. The interest component of the equalization contribution shall be distributed to the existing Partners (other than the admitted Limited Partner) pro rata in proportion to their respective funded Capital Contributions, and shall not constitute a Capital Contribution or a return of capital for purposes of the distribution waterfall.
(c) Following the admission of Limited Partners at a Subsequent Close, the Schedule of Partners and each Partner's Percentage Interest shall be adjusted to reflect the admission of the new Limited Partners and the corresponding increase in Aggregate Commitments.
Section 4.6 — Return of Unused Capital Commitments
If capital is called from the Partners for a particular purpose (including a prospective Portfolio Investment) and such capital is not ultimately invested or used for such purpose within eighteen (18) months of the date on which it was funded, the General Partner may (but shall not be required to) return such unused capital to the contributing Partners pro rata. Any capital so returned shall restore the respective Partners' unfunded Capital Commitments and shall be available for re-call during the Investment Period in connection with future Capital Calls. Capital returned after the expiration of the Investment Period shall restore the Partners' unfunded Capital Commitments only for the limited purposes for which Capital Calls are permitted during the post-Investment Period, as set forth in Section 5.2.
Section 4.7 — Recycling
(a) During the Investment Period, the General Partner may reinvest (i.e., "recycle") the net proceeds from dispositions of Portfolio Investments that were held by the Partnership for less than twenty-four (24) months, and the net proceeds from repayments of Bridge Financing, in new Portfolio Investments; provided, that the aggregate pursuant to this Section 4.7 shall not exceed of Aggregate Commitments.
(b) For purposes of this Section 4.7, the "net proceeds" from a disposition shall mean the gross proceeds received by the Partnership from such disposition, less (i) any expenses incurred by the Partnership in connection with such disposition and (ii) any amounts distributed to the Partners from such proceeds.
(c) Capital that is recycled pursuant to this Section 4.7 shall not increase any Partner's Capital Commitment beyond the amount set forth in such Partner's Subscription Agreement. The effect of recycling is to permit the General Partner to invest proceeds that are treated as a return of contributed capital for purposes of computing unfunded Capital Commitments, without requiring an increase in Aggregate Commitments.
Section 4.8 — Subscription Credit Facility
(a) The General Partner is hereby authorized, on behalf of the Partnership, to establish and maintain one or more Subscription Credit Facilities with one or more financial institutions, including a revolving credit facility with Ashford National Bank, N.A., on terms and conditions determined by the General Partner to be commercially reasonable and in the best interests of the Partnership. The anticipated terms of the initial Subscription Credit Facility include: (i) aggregate commitments of up to Five Hundred Million Dollars ($500,000,000); (ii) an interest rate equal to SOFR plus 175 basis points on drawn amounts and 25 basis points on undrawn amounts; and (iii) a borrowing base equal to ninety percent (90%) of the unfunded Capital Commitments of Included Investors.
(b) The aggregate outstanding principal amount of borrowings under the Subscription Credit Facility shall not exceed twenty-five percent (25%) of the aggregate unfunded Capital Commitments of all Partners at any time (the "Subscription Facility Limit").
(c) Bridge Financing (i.e., borrowings used to fund Portfolio Investments in advance of or in lieu of issuing Capital Calls) shall not remain outstanding for
(d) Each Partner hereby consents to the pledge of its unfunded Capital Commitment as collateral security for the obligations of the Partnership under the Subscription Credit Facility, and agrees to take all actions reasonably requested by the General Partner or the lender(s) in connection therewith, including executing intercreditor agreements, acknowledgment letters, or other documents as may be required by the lender(s) under the Subscription Credit Facility.
(e) Interest and fees payable by the Partnership in connection with the Subscription Credit Facility shall constitute Fund Expenses and shall be borne by the Partnership.
(f) The General Partner shall
Section 4.9 — Default
(a) Default and Cure Period. If any Partner fails to fund all or any portion of its share of a Capital Call on or before the applicable funding date (or within five (5) Business Days thereafter), such Partner shall be deemed a "Defaulting Partner" and shall be in default under this Agreement.
(b) Remedies. Upon a Partner becoming a Defaulting Partner, the General Partner shall have the right, in its sole discretion, to exercise one or more of the following remedies (which remedies shall be cumulative and not exclusive):
(i) Forfeiture. The Defaulting Partner shall forfeit up to fifty percent (50%) of the value of its Capital Account as of the date of default, which forfeited amount shall be reallocated to the non-defaulting Partners pro rata (or on such other basis as the General Partner may determine).
(ii) Suspension of Rights. The Defaulting Partner's voting rights, consent rights, and rights to receive Distributions shall be suspended in whole or in part, in the General Partner's discretion, until such time as the default is cured.
(iii) Forced Sale. The General Partner may cause the Defaulting Partner's Partnership Interest to be sold to one or more non-defaulting Partners, third parties, or the Partnership at a price equal to the lesser of (A) the fair market value of such Partnership Interest (as determined by the General Partner in good faith) and (B) eighty percent (80%) of the Net Asset Value attributable to such Partnership Interest (i.e., at a discount of up to twenty percent (20%) from NAV).
(iv) Legal Remedies. The General Partner may pursue any and all legal and equitable remedies available to the Partnership or the non-defaulting Partners against the Defaulting Partner, including an action for specific performance or damages.
(v) Reallocation. The defaulted amount may be reallocated to non-defaulting Partners who elect to fund such amount, in accordance with Section 4.4 (Overcalls).