PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
SIDE LETTER
February 28, 2024
This SIDE LETTER (this "Side Letter") is entered into as of February 28, 2024, by and among:
MERIDIAN PEAK CAPITAL PARTNERS FUND IV, L.P., a Delaware limited partnership (EIN 92-1684537; Delaware Limited Partnership Certificate Number LP-2023-08841), with its registered agent at Beacon Statutory Services LLC, 1013 Centre Road, Wilmington, Delaware 19805 (the "Fund" or "Fund IV");
MERIDIAN PEAK CAPITAL PARTNERS GP IV LLC, a Delaware limited liability company (EIN 92-1672483; sole member: Meridian Peak Capital Advisors LLC), with its registered agent at Beacon Statutory Services LLC, 1013 Centre Road, Wilmington, Delaware 19805, in its capacity as the general partner of the Fund (the "General Partner" or "GP"); and
BRIARWOOD FAMILY OFFICE LLC, a Delaware limited liability company (EIN 27-4831956), with its registered agent at Capitol Registered Agents Inc., 1209 Orange Street, Wilmington, Delaware 19801 (the "Investor" or "BFO").
Each of the Fund, the General Partner, and the Investor is referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Fund was formed as a Delaware limited partnership and is governed by that certain Amended and Restated Agreement of Limited Partnership of Meridian Peak Capital Partners Fund IV, L.P., dated as of December 20, 2023, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms (the "Partnership Agreement" or "LPA"), which is governed by the laws of the State of Delaware;
WHEREAS, the Fund has been offered to prospective investors pursuant to a Private Placement Memorandum dated December 15, 2023 (the "PPM"), and a Form D was filed with the Securities and Exchange Commission on January 2, 2024;
WHEREAS, the Fund is managed by Meridian Peak Capital Advisors LLC ("MPCA"), a Delaware limited liability company with its principal office at 200 Clarendon Street, 42nd Floor, Boston, Massachusetts 02116;
WHEREAS, Pinnacle Capital Markets LLC ("Placement Agent"), a Delaware limited liability company and a broker-dealer registered with the Financial Industry Regulatory Authority, with its principal office at 399 Park Avenue, 18th Floor, New York, New York 10022, serves as placement agent for the Fund pursuant to a placement agent engagement letter dated November 1, 2023;
WHEREAS, the Fund has a target size of One Billion Five Hundred Million Dollars ($1,500,000,000) and a hard cap of One Billion Seven Hundred Fifty Million Dollars ($1,750,000,000);
WHEREAS, the Investor has agreed to make a capital commitment to the Fund in the amount of Seventy-Five Million Dollars ($75,000,000) (the "Commitment"), representing approximately 5.0% of the Fund's target size and approximately 4.29% of the Fund's hard cap, pursuant to a subscription agreement executed by the Investor (the "Subscription Agreement");
WHEREAS, the General Partner and the Fund desire to set forth certain supplemental terms and conditions applicable to the Investor's participation in the Fund as an inducement to the Investor's capital commitment and in recognition of the size and strategic importance of the Investor's Commitment; and
WHEREAS, this Side Letter is entered into in connection with and as a supplement to the Partnership Agreement and the Subscription Agreement, and capitalized terms used but not defined herein shall have the meanings ascribed to them in the Partnership Agreement.
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:
SECTION 1: DEFINITIONS AND CONSTRUCTION
1.1 Definitions. In addition to the terms defined elsewhere in this Side Letter, the following terms shall have the meanings set forth below:
(a) "Anchor Investor" means any Limited Partner that has made a capital commitment to the Fund equal to or in excess of Two Hundred Million Dollars ($200,000,000), representing approximately 13.33% of the Fund's target size.
(b) "Commitment" means the capital commitment of the Investor to the Fund in the aggregate amount of Seventy-Five Million Dollars ($75,000,000).
(c) "Covered Categories" has the meaning set forth in Section 3.1 of this Side Letter.
(d) "MFN Election Period" has the meaning set forth in Section 2.3 of this Side Letter.
(e) "MFN Threshold" has the meaning set forth in Section 2.1 of this Side Letter.
(f) "Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership of Meridian Peak Capital Partners Fund IV, L.P., dated as of December 20, 2023, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
(g) "Permitted Transferee" has the meaning set forth in Section 8.1 of this Side Letter.
(h) "Side Letter Summary" has the meaning set forth in Section 2.2 of this Side Letter.
1.2 Construction. In the event of any conflict or inconsistency between the terms of this Side Letter and the terms of the Partnership Agreement, the terms of this Side Letter shall control with respect to the Investor; provided, however, that no amendment, modification, restatement, or supplement to the Partnership Agreement shall modify, limit, or otherwise affect the rights of the Investor under this Side Letter without the Investor's prior written consent. For the avoidance of doubt, except as expressly modified or supplemented by this Side Letter, the Partnership Agreement shall continue in full force and effect with respect to the Investor.
1.3 References. Unless otherwise expressly stated, all references in this Side Letter to "Sections" are to sections of this Side Letter, and all references to "Exhibits" are to exhibits attached to this Side Letter.
1.4 Fund Service Providers. The Parties acknowledge the following service providers engaged by the Fund as of the date hereof:
(a) Fund Administrator: Granite Ledger Fund Services LLC, 100 Summer Street, Suite 2700, Boston, Massachusetts 02110.
(b) Fund Auditor: Brockton Marsh & Associates LLP, 500 Boylston Street, 30th Floor, Boston, Massachusetts 02116.
SECTION 2: MOST FAVORED NATION RIGHTS
2.1 Grant of MFN Right. The General Partner agrees that the Investor shall be entitled to receive the benefit of any economic, governance, reporting, or other material term or right (collectively, "MFN-Eligible Terms") granted by the General Partner, the Fund, or any of their affiliates to any other Limited Partner of the Fund whose capital commitment to the Fund equals or exceeds Fifty Million Dollars ($50,000,000) (the "MFN Threshold"), whether such MFN-Eligible Term is set forth in a side letter, supplemental agreement, amendment to the Partnership Agreement applicable solely to such other Limited Partner, or any other written arrangement of any kind. The General Partner shall make such MFN-Eligible Terms available to the Investor in accordance with the procedures set forth in this Section 2.
2.2 Side Letter Summary Delivery. Within [15/20] business days following the applicable closing at which the Investor is admitted to the Fund as a Limited Partner (and, with respect to each subsequent closing at which additional Limited Partners are admitted to the Fund, within [15/20] business days following each such subsequent closing), the General Partner shall deliver to the Investor a written summary of all material side letter terms and rights granted to other Limited Partners meeting the MFN Threshold (the "Side Letter Summary"). The Side Letter Summary shall set forth a description of each MFN-Eligible Term in sufficient detail to enable the Investor to make an informed election, including, without limitation, the category of term (e.g., management fee reduction, co-investment right, reporting enhancement, excuse right, governance right), the applicable rate, threshold, or other material parameter, and the commitment level of the Limited Partner receiving such term (expressed as a range or bracket, if the General Partner so elects). The Side Letter Summary may be redacted to remove the name and other identifying information of the Limited Partner(s) receiving such terms, but shall not be redacted in a manner that obscures the substantive terms or renders them unintelligible.1
2.3 MFN Election Period. The Investor shall have a period of twenty (20) business days following receipt of the Side Letter Summary (the "MFN Election Period") to elect in writing to adopt any one or more of the MFN-Eligible Terms described therein. Such election shall be made by delivering to the General Partner a written notice substantially in the form of Exhibit A hereto (the "MFN Election Notice"). The Investor's election shall be effective as of the date of the General Partner's receipt of the MFN Election Notice, and shall be deemed to amend and supplement this Side Letter and the Partnership Agreement with respect to the Investor to the extent necessary to give effect to the elected MFN-Eligible Term(s).
2.4 MFN Exclusions. The most favored nation right set forth in this Section 2 shall not apply to:
(i) Any terms or rights granted to Anchor Investors (i.e., Limited Partners that have made capital commitments to the Fund of Two Hundred Million Dollars ($200,000,000) or more);
(ii) Regulatory accommodations granted to Limited Partners that are (a) subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (b) tax-exempt entities described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), or (c) governmental plan investors as defined in Section 3(32) of ERISA, in each case to the extent such accommodations are required by or reasonably related to the regulatory, tax-exempt, or governmental plan status of such Limited Partner and are not otherwise generally available to Limited Partners without regard to such status; and
(iii) Any terms or rights made available to affiliates of the General Partner or MPCA, including any employee, officer, member, or partner of the General Partner, MPCA, or any of their respective affiliates.
2.5 Subsequent Closings. If additional Limited Partners are admitted to the Fund after the initial closing at which the Investor is admitted, the General Partner shall deliver an updated Side Letter Summary to the Investor within [15/20] business days of each such subsequent closing, to the extent any new or additional MFN-Eligible Terms have been granted to Limited Partners meeting the MFN Threshold. The Investor shall have a new MFN Election Period of twenty (20) business days with respect to any such new or additional MFN-Eligible Terms. For the avoidance of doubt, the Investor's MFN right under this Section 2 shall apply with respect to each closing occurring during the Fund's fundraising period, including the final closing of the Fund.
SECTION 3: EXCUSE/EXCLUSION RIGHTS
3.1 Covered Categories. The Investor shall have the right to elect to be excused from participation in any Fund investment that involves or primarily relates to any of the following categories (each, a "Covered Category" and, collectively, the "Covered Categories"):
(a) Cannabis-Related Assets. Any investment involving or relating to the cultivation, processing, manufacturing, distribution, sale, or marketing of cannabis, marijuana, hemp-derived cannabinoids, or cannabis-derived products, or any investment in a portfolio company that derives a material portion of its revenues from any of the foregoing activities.
(b) Gaming or Casino Properties. Any investment involving or relating to gaming or casino properties, including (without limitation) any investment in which more than [25]% of the revenues of the applicable portfolio company, property, or enterprise are derived from gaming operations, wagering activities, sports betting, or the operation of casino facilities.
(c) Sanctioned Jurisdictions. Any investment in jurisdictions that are subject to comprehensive sanctions imposed by the United States, including sanctions programs administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, or any investment that would require a specific license from OFAC or any other U.S. governmental authority.
(d) ERISA Plan Asset Investments. Any investment that would reasonably be expected to cause the Investor, any portion of the Fund's assets attributable to the Investor, or any portion of the Fund's assets generally to be treated as holding "plan assets" within the meaning of Section 3(42) of ERISA and the regulations promulgated thereunder (including 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA).
3.2 Exercise of Excuse Right. The excuse right granted under this Section 3 shall be exercised by the Investor as an affirmative, investment-by-investment election. Upon receipt of a capital call notice (or any other notice issued by the General Partner in connection with a drawdown of capital) identifying a proposed investment falling within any Covered Category, the Investor shall deliver written notice to the General Partner, substantially in the form of Exhibit B hereto (the "Excuse Election Notice"), within fifteen (15) business days of the Investor's receipt of such capital call notice, electing to be excused from participation in such investment. If the Investor fails to deliver an Excuse Election Notice within such fifteen (15) business day period, the Investor shall be deemed to have elected to participate in such investment and shall be obligated to fund its proportionate share of the capital call in accordance with the Partnership Agreement.
3.3 Effect of Excuse. Upon the effective exercise of an excuse right under this Section 3:
(a) The Investor's unfunded Commitment shall be reduced dollar-for-dollar by the amount of capital that would have been called from the Investor in respect of the excused investment absent the exercise of the excuse right.
(b) The Investor shall not participate in, and shall not be allocated any share of, the economics (including gains, losses, income, deductions, credits, or distributions) attributable to the excused investment.
(c) The General Partner shall use commercially reasonable efforts to reallocate the Investor's proportionate share of the excused investment among the remaining participating Limited Partners or to otherwise fund the investment without reducing the overall size of such investment, but the General Partner shall have no obligation to do so.
3.4 Aggregate Excuse Cap. The aggregate amount of investments from which the Investor may be excused under this Section 3, measured by the capital that would have been called from the Investor in respect of each excused investment, shall not exceed [15%/25%] of the Investor's aggregate Commitment (i.e., [Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000) / Eighteen Million Seven Hundred Fifty Thousand Dollars ($18,750,000)]).2 Once the applicable aggregate excuse cap has been reached, the Investor shall have no further excuse rights under this Section 3 with respect to subsequent investments, and the Investor shall be obligated to fund capital calls for all subsequent investments in accordance with the Partnership Agreement.
3.5 Good Faith Obligation. The General Partner shall use commercially reasonable efforts to identify in each capital call notice whether a proposed investment falls within any Covered Category and, to the extent reasonably practicable, shall provide the Investor with sufficient information regarding the nature, sector, geography, and other relevant characteristics of each proposed investment to enable the Investor to make an informed determination regarding the exercise of its excuse right. Nothing in this Section 3.5 shall require the General Partner to disclose confidential or material non-public information, or to delay the closing of any investment pending the Investor's exercise of its excuse right.
SECTION 4: MANAGEMENT FEE REDUCTION
4.1 Fee Reduction During Investment Period. Notwithstanding any contrary provision set forth in the Partnership Agreement (including the management fee provisions thereof), during the Investment Period (as defined in the Partnership Agreement, being a period of four (4) years commencing on the date of the final closing of the Fund (the "Final Close")), the management fee payable by the Investor to the General Partner or MPCA (or any of their affiliates) shall be at the rate of 1.50% per annum, calculated on the Investor's Commitment, in lieu of the standard rate of 1.75% per annum on committed capital as set forth in the Partnership Agreement. This reduction represents a decrease of twenty-five (25) basis points. For illustrative purposes, the annual management fee savings to the Investor during the Investment Period shall be approximately $187,500 per year (calculated as $75,000,000 × 0.25%), resulting in cumulative savings of approximately $750,000 over the four-year Investment Period.
4.2 Fee Reduction Post-Investment Period. Following the expiration or earlier termination of the Investment Period, the management fee payable by the Investor to the General Partner or MPCA (or any of their affiliates) shall be at the rate of 1.25% per annum, calculated on invested capital (as determined in accordance with the Partnership Agreement), in lieu of the standard rate of 1.50% per annum on invested capital as set forth in the Partnership Agreement. This reduction represents a decrease of twenty-five (25) basis points relative to the standard post-Investment Period rate.
4.3 Calculation. Management fees payable by the Investor shall be calculated and payable in accordance with the procedures, timing, and mechanics set forth in the Partnership Agreement, except as modified by this Section 4. For the avoidance of doubt, (a) the Investor's management fee during the Investment Period shall be calculated on the Investor's Commitment (consistent with the basis of calculation set forth in the Partnership Agreement for the Investment Period), with the reduced rate of 1.50% per annum applied, and (b) the Investor's management fee following the Investment Period shall be calculated on invested capital (consistent with the basis of calculation set forth in the Partnership Agreement for the post-Investment Period), with the reduced rate of 1.25% per annum applied. All other terms and conditions relating to the calculation, payment, and administration of management fees (including any management fee offset provisions) shall be as set forth in the Partnership Agreement.
4.4 No Modification to Carried Interest. For the avoidance of doubt, the carried interest provisions of the Partnership Agreement, including (without limitation) the General Partner's entitlement to a carried interest of twenty percent (20%) of net profits in excess of an eight percent (8%) per annum preferred return to the Limited Partners (calculated on a whole-fund European waterfall basis), shall apply to the Investor without modification. Nothing in this Section 4 shall be deemed to modify, limit, or otherwise affect the carried interest payable by or allocable to the Investor.
SECTION 5: CO-INVESTMENT RIGHTS
5.1 Pro Rata Co-Investment Right. The General Partner shall offer the Investor a pro rata co-investment opportunity in connection with any Fund investment where the aggregate equity investment by the Fund and any co-investors (including any affiliated vehicle, parallel fund, or alternative investment vehicle managed by the General Partner, MPCA, or any of their affiliates) exceeds One Hundred Million Dollars ($100,000,000) in the aggregate (the "Co-Investment Threshold"). The General Partner shall offer such co-investment opportunity to the Investor prior to or concurrently with offering such opportunity to any third-party co-investor that is not a Limited Partner, provided, however, that the General Partner shall not be required to offer such opportunity to the Investor prior to offering the same to any Anchor Investor that has a separate contractual right to co-investment priority.
5.2 Terms of Co-Investment. Co-investments made by the Investor pursuant to this Section 5 shall be made on the following terms:
(a) No management fee shall be charged or payable with respect to capital invested by the Investor as a co-investor.
(b) No carried interest shall be charged or payable with respect to gains, profits, or distributions attributable to the Investor's co-investment.
(c) All other terms of each co-investment (including structure, documentation, governance, and allocation of expenses) shall be as determined by the General Partner in good faith and communicated to the Investor prior to the Investor's election to participate.
5.3 Pro Rata Calculation. The Investor's pro rata share of a co-investment opportunity shall be determined based on the ratio of the Investor's Commitment to the aggregate capital commitments of all Limited Partners of the Fund as of the date of such co-investment opportunity. By way of illustration, if the aggregate capital commitments of all Limited Partners at the time of a co-investment opportunity total $1,500,000,000, the Investor's pro rata share would be 5.0% ($75,000,000 ÷ $1,500,000,000) of the aggregate co-investment allocation available to Limited Partners.
5.4 Notice and Election. The General Partner shall provide the Investor with written notice of any co-investment opportunity arising under this Section 5 at least [10] business days prior to the anticipated closing of such co-investment.3 Such notice shall include a summary of the investment (including the identity or a description of the target company or asset, the investment thesis, the anticipated aggregate size of the co-investment, and the Investor's pro rata allocation). The Investor shall notify the General Partner of its election to participate or decline within [5] business days of receipt of such notice.3 Failure to respond within such [5] business day period shall be deemed a declination.
5.5 No Obligation. The Investor shall have no obligation to participate in any co-investment opportunity offered pursuant to this Section 5. Declining to participate in any co-investment opportunity shall not affect the Investor's rights under this Side Letter or the Partnership Agreement, nor shall it reduce or modify the Investor's Commitment or any other obligation of the Investor under the Partnership Agreement.
SECTION 6: ENHANCED REPORTING
6.1 Quarterly Reports. The General Partner shall deliver to the Investor quarterly portfolio-level reports within forty-five (45) days of the end of each fiscal quarter of the Fund. Each such quarterly report shall include, at a minimum:
(a) A summary of all investments made and disposed of during the applicable quarter, including the name or description of each portfolio company or asset, the aggregate amount invested, and a brief investment rationale or status update for each investment;
(b) A statement of the estimated fair market value of each portfolio investment as of the end of the applicable quarter, together with a summary of the valuation methodology employed;
(c) A summary of fund-level cash flows for the applicable quarter, including capital calls, distributions, management fees, other expenses, and net cash flow; and
(d) A narrative discussion of material developments affecting the portfolio, including any material changes in the financial condition, operations, or prospects of portfolio companies, and any material events or market conditions relevant to the Fund's investment strategy or performance.
6.2 Annual Audited Financials. The General Partner shall deliver to the Investor audited annual financial statements of the Fund within ninety (90) days of the end of each fiscal year of the Fund. Such financial statements shall be prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and shall be audited by the Fund's independent auditor (currently Brockton Marsh & Associates LLP, or any successor auditor appointed by the General Partner). The audited financial statements shall include, at a minimum, a balance sheet, a statement of operations, a statement of changes in partners' capital, a statement of cash flows, and notes to the financial statements.
6.3 ESG Reporting. The General Partner shall deliver to the Investor an annual environmental, social, and governance ("ESG") report covering the Fund's portfolio within [120] days of the end of each fiscal year. Such ESG report shall include, at a minimum, a summary of the Fund's ESG policies and procedures, a description of ESG factors considered in the Fund's investment process, a summary of ESG-related metrics and key performance indicators for portfolio companies (to the extent reasonably available), and a discussion of any material ESG risks or incidents affecting the Fund's portfolio.
6.4 Additional Information Rights. The General Partner shall, upon reasonable request by the Investor, provide additional information regarding the Fund's investments, operations, and financial condition, subject to (a) the confidentiality obligations set forth in the Partnership Agreement and this Side Letter, (b) applicable law, and (c) the General Partner's reasonable determination that disclosure of such information would not be prejudicial to the Fund or any portfolio company. The Investor agrees that such requests shall not be unreasonably frequent or burdensome and shall be made during normal business hours through the Investor's designated contact (or such other contact as the Investor may designate from time to time in writing to the General Partner).
SECTION 7: KEY PERSON ENHANCEMENT
7.1 Key Person Event. In addition to any key person provisions set forth in the Partnership Agreement, the Parties agree that the departure, death, permanent disability, or cessation of active involvement in the day-to-day management, investment activities, or oversight of the Fund of either Conrad J. Ellsworth or Priya Narayan (each, a "Key Person" and collectively, the "Key Persons") shall constitute a "Key Person Event" for purposes of this Side Letter. For purposes of this Section 7, "cessation of active involvement" means the Key Person's failure to devote a substantial majority of his or her professional time and attention to the affairs of the Fund for a period of sixty (60) consecutive days, other than by reason of temporary illness, vacation, or other temporary absence approved by the General Partner.
7.2 Suspension of Investment Period. Upon the occurrence of a Key Person Event, the Investment Period shall be automatically suspended for a period of ninety (90) days commencing on the date of such Key Person Event (the "Suspension Period"). During the Suspension Period, the General Partner shall not make any new capital calls for new investments (i.e., investments in new portfolio companies or new platforms not previously approved by the General Partner). Notwithstanding the foregoing, during the Suspension Period the General Partner may continue to make capital calls for (a) follow-on investments in existing portfolio companies, (b) investments previously committed or approved by the General Partner prior to the commencement of the Suspension Period, and (c) fund-level expenses (including management fees, organizational expenses, and operating expenses).
7.3 Investor Election. During the Suspension Period, the Investor may elect, by delivering written notice to the General Partner, to cease participation in future capital calls for new investments (i.e., investments not described in clauses (a), (b), and (c) of Section 7.2 above). Such election shall be irrevocable once made and shall result in a permanent reduction of the Investor's unfunded Commitment by the amount of capital that would otherwise be callable from the Investor for new investments during the remaining term of the Investment Period. The Investor shall continue to be obligated to fund capital calls for follow-on investments, previously committed investments, and fund-level expenses as described in Section 7.2 above, and the Investor shall continue to participate in the economics of the Fund to the extent of its funded capital.
7.4 Relationship to LPA Key Person Provisions. The provisions of this Section 7 are in addition to, and not in lieu of, any key person provisions set forth in the Partnership Agreement. To the extent that the Partnership Agreement provides for additional remedies, protections, or procedures in connection with a Key Person Event (or an event described in terms substantially similar thereto), the Investor shall be entitled to the benefit of such provisions in addition to the rights set forth in this Section 7. In the event of any conflict or inconsistency between this Section 7 and the corresponding provisions of the Partnership Agreement with respect to the Investor, this Section 7 shall control.
SECTION 8: TRANSFER RIGHTS
8.1 Permitted Transfers. Notwithstanding any transfer restrictions set forth in the Partnership Agreement (including, without limitation, any requirement to obtain the prior written consent of the General Partner), the Investor shall have the right to transfer all or any portion of its limited partnership interest in the Fund to any entity that is controlled by, or under common control with, any member of the Hargrove family, including (without limitation) any trust, estate, family limited partnership, family limited liability company, or other entity established for the benefit of one or more members of the Hargrove family (each, a "Permitted Transferee"). For purposes of this Section 8, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.
8.2 Conditions to Transfer. Any transfer of the Investor's limited partnership interest (or any portion thereof) to a Permitted Transferee shall be subject to the following conditions:
(a) Compliance with all applicable federal and state securities laws, including (without limitation) the Securities Act of 1933, as amended, and any applicable state blue sky laws;
(b) Delivery to the General Partner of customary transfer documentation, in form and substance reasonably satisfactory to the General Partner, including (without limitation) an assignment and assumption agreement, a transferee questionnaire, and such other documentation as the General Partner may reasonably request;
(c) Representations and warranties from the Permitted Transferee confirming its status as a "qualified purchaser" within the meaning of Section 2(a)(51) of the Investment Company Act of 1940, as amended, and an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended; and
(d) The Permitted Transferee's execution of a joinder or instrument of adherence pursuant to which the Permitted Transferee agrees to be bound by all of the terms and conditions of the Partnership Agreement and this Side Letter as if it were an original party hereto and thereto.
8.3 Tax Considerations. No transfer under this Section 8 shall be effected if, in the reasonable determination of the General Partner (after consultation with the Fund's tax advisors), such transfer would (a) result in the Fund being treated as a "publicly traded partnership" within the meaning of Section 7704 of the Code, (b) cause a termination of the Fund under Section 708 of the Code (to the extent applicable), or (c) otherwise have a material adverse tax consequence to the Fund or any of its partners. The General Partner shall notify the Investor promptly if it determines that any proposed transfer would trigger any of the foregoing consequences and shall provide a reasonable explanation of the basis for such determination.
8.4 Transfer Costs. All costs and expenses incurred in connection with any transfer under this Section 8, including (without limitation) legal fees, tax advisory fees, transfer agent fees, filing fees, and any required regulatory filings or consents, shall be borne solely by the Investor or the applicable Permitted Transferee, and no such costs or expenses shall be borne by the Fund, the General Partner, or any other Limited Partner.
SECTION 9: CONFIDENTIALITY CARVE-OUTS
9.1 General Confidentiality. The Investor acknowledges and agrees to be bound by the confidentiality provisions set forth in the Partnership Agreement, as the same may be amended from time to time. The Investor acknowledges that information regarding the Fund, its investments, its portfolio companies, and its Limited Partners constitutes confidential information and that the unauthorized disclosure of such information could cause material harm to the Fund, the General Partner, and the other Limited Partners. The provisions of this Section 9 are intended to supplement (and not to limit) the confidentiality obligations set forth in the Partnership Agreement, except as expressly provided in Section 9.2 below.
9.2 Permitted Disclosures. Notwithstanding the confidentiality provisions of the Partnership Agreement, the Investor shall be permitted to disclose confidential information regarding the Fund, its investments, its financial condition, and the terms of this Side Letter to the following persons and entities:
(a) The Investor's tax advisors, legal counsel, accounting advisors, and external auditors (including, without limitation, any accounting firm engaged by the Investor for purposes of preparing the Investor's financial statements or tax returns), provided that each such advisor is subject to customary professional confidentiality obligations or has entered into a written confidentiality agreement with the Investor on terms no less restrictive than those set forth in the Partnership Agreement;
(b) Members of the Hargrove family, including any trust, estate, family limited partnership, family limited liability company, or other entity established for the benefit of, or controlled by, one or more members of the Hargrove family, in each case in connection with the Investor's management of its investment in the Fund or the administration of the Hargrove family's financial affairs;
(c) Any regulatory authority, governmental body, self-regulatory organization, or other authority having jurisdiction over the Investor, to the extent required by applicable law, regulation, regulatory request, subpoena, civil investigative demand, or other compulsory legal process; and
(d) Any Permitted Transferee (or prospective Permitted Transferee) in connection with a proposed transfer of the Investor's limited partnership interest under Section 8 of this Side Letter, provided that such Permitted Transferee (or prospective Permitted Transferee) has entered into a written confidentiality agreement with the Investor on terms no less restrictive than those set forth in the Partnership Agreement.
9.3 Notice of Required Disclosure. To the extent practicable and permitted by applicable law, the Investor shall provide the General Partner with prior written notice of any disclosure required by a regulatory authority or governmental body under Section 9.2(c) above, and shall use commercially reasonable efforts to limit the scope and extent of such disclosure to the minimum required by law. The Investor shall cooperate with the General Partner, at the General Partner's expense, in connection with any efforts to obtain a protective order or other appropriate remedy to limit the disclosure of confidential information.
SECTION 10: TAX REPORTING
10.1 Schedule K-1 Delivery. The General Partner shall use commercially reasonable efforts to deliver to the Investor final IRS Schedule K-1 (Form 1065) for each fiscal year of the Fund within seventy-five (75) days of the end of such fiscal year. The Parties acknowledge that the standard delivery period for Schedule K-1s under the Partnership Agreement is one hundred twenty (120) days following the end of each fiscal year, and that the accelerated delivery commitment set forth in this Section 10.1 represents a material accommodation to the Investor.
10.2 Tax Estimates. In the event that final Schedule K-1s are not delivered to the Investor within the seventy-five (75) day period specified in Section 10.1, the General Partner shall, within such seventy-five (75) day period, provide the Investor with reasonable tax estimates, in a form and level of detail sufficient to enable the Investor to fulfill its federal, state, and local tax filing obligations, including (without limitation) estimated allocations of income, gain, loss, deduction, and credit, and estimated amounts of unrelated business taxable income (if any).
10.3 Cooperation. The General Partner shall cooperate in good faith with the Investor and its tax advisors in connection with any reasonable tax-related inquiries, including (without limitation) providing information necessary for the preparation of the Investor's federal, state, and local tax returns, responding to inquiries from tax authorities, and assisting with any tax audits or examinations involving the Fund or the Investor's interest in the Fund. The General Partner shall direct the Fund's accountants and tax advisors to cooperate with the Investor's tax advisors upon reasonable request.
SECTION 11: PLACEMENT FEE OFFSET
11.1 Placement Agent Fee. The Investor acknowledges that Pinnacle Capital Markets LLC serves as placement agent for the Fund pursuant to a placement agent engagement letter dated November 1, 2023. In connection with the Investor's admission to the Fund, a placement fee equal to 1.0% of the Investor's Commitment is payable by the Fund or MPCA to the Placement Agent. Accordingly, the placement fee attributable to the Investor's Commitment of $75,000,000 is Seven Hundred Fifty Thousand Dollars ($750,000).
11.2 Fee Offset. One hundred percent (100%) of the placement fee attributable to the Investor's Commitment (i.e., $750,000) shall be offset against management fees otherwise payable by the Investor pursuant to the Partnership Agreement (as modified by Section 4 of this Side Letter). Such offset shall be applied pro rata over the first [four (4)] years of the Fund's term, resulting in an annual offset of approximately $187,500 per year, or in such other manner as the General Partner and the Investor may mutually agree in writing.4 In no event shall the placement fee offset reduce the management fee payable by the Investor below zero in any given period; to the extent that the offset exceeds the management fee payable in any period, the excess shall be carried forward to subsequent periods.
11.3 Disclosure. The Investor acknowledges receipt of (a) the Placement Agent's Form ADV Part 2A (or equivalent disclosure document) and (b) the disclosure regarding placement fees, compensation, and conflicts of interest contained in the PPM. The Investor represents that it has had the opportunity to review such disclosures and to ask questions of the General Partner regarding the Placement Agent's role and compensation.
SECTION 12: REPRESENTATIONS AND WARRANTIES
12.1 Investor Representations. The Investor represents and warrants to the Fund and the General Partner, as of the date hereof, as follows:
(a) Organization. The Investor is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) Authority. The Investor has full limited liability company power and authority to enter into this Side Letter, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Side Letter by the Investor have been duly authorized by all necessary limited liability company action on the part of the Investor.
(c) No Conflict. The execution, delivery, and performance of this Side Letter by the Investor does not and will not (i) conflict with or violate any provision of the Investor's certificate of formation or operating agreement, (ii) conflict with or violate any applicable law, rule, or regulation, or (iii) conflict with, result in a breach of, or constitute a default under any agreement, instrument, obligation, or arrangement to which the Investor is a party or by which it is bound.
(d) Qualified Purchaser. The Investor is a "qualified purchaser" within the meaning of Section 2(a)(51) of the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
(e) Accredited Investor. The Investor is an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended.
(f) Non-ERISA Status. The Investor is not, and does not hold assets that constitute "plan assets" of, (i) any "employee benefit plan" as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) any "plan" as defined in Section 4975(e)(1) of the Code, or (iii) any entity whose underlying assets include "plan assets" by reason of a plan's investment in such entity.
(g) Principal Office. The Investor's principal office is located at 780 Park Avenue, Suite 3200, New York, New York 10021.
12.2 GP and Fund Representations. Each of the General Partner and the Fund represents and warrants to the Investor, as of the date hereof, as follows:
(a) Organization. Each of the General Partner and the Fund is duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) Authority. Each of the General Partner and the Fund has full power and authority (including, in the case of the General Partner, full limited liability company power and authority) to enter into this Side Letter, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Side Letter by each of the General Partner and the Fund have been duly authorized by all necessary action on the part of each such Party.
(c) No Conflict. The execution, delivery, and performance of this Side Letter by each of the General Partner and the Fund does not and will not (i) conflict with or violate any provision of the Partnership Agreement, the General Partner's certificate of formation or operating agreement, or the Fund's certificate of limited partnership, (ii) conflict with or violate any applicable law, rule, or regulation, or (iii) conflict with, result in a breach of, or constitute a default under any other agreement, instrument, obligation, or arrangement to which the General Partner or the Fund is a party or by which either is bound.
SECTION 13: GENERAL PROVISIONS
13.1 Governing Law. This Side Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles thereof that would result in the application of the laws of any other jurisdiction.
13.2 Integration. This Side Letter, together with the Partnership Agreement and the Subscription Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and agreements of the Parties, whether written or oral, relating to such subject matter. No Party has relied on any promise, representation, or warranty not set forth herein in entering into this Side Letter.
13.3 Amendments. This Side Letter may not be amended, modified, supplemented, restated, or waived except by a written instrument executed by all Parties hereto. No oral agreement, understanding, or representation shall amend or modify this Side Letter.
13.4 Notices. All notices, requests, demands, consents, elections, and other communications required or permitted under this Side Letter shall be in writing and shall be deemed duly given (a) when delivered personally, (b) when sent by electronic mail (with confirmation of receipt), (c) one (1) business day after deposit with a nationally recognized overnight courier service, or (d) three (3) business days after deposit in the United States mail, first class, certified or registered, postage prepaid, return receipt requested, addressed as follows:
If to the Fund or the General Partner:
Meridian Peak Capital Advisors LLC 200 Clarendon Street, 42nd Floor Boston, Massachusetts 02116
Attention: Tamara Fujimoto, General Counsel & Chief Compliance Officer
With a copy (which shall not constitute notice) to:
Ashford Crane & Hewitt LLP 1 Federal Street, Suite 3600 Boston, Massachusetts 02110
Attention: Harrison K. Drummond
If to the Investor:
Briarwood Family Office LLC 780 Park Avenue, Suite 3200 New York, New York 10021
Attention: Sandra M. Whitfield, General Counsel
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 425 Lexington Avenue New York, New York 10017
Attention: Pamela Cross
Any Party may change its address for notice purposes by giving written notice of such change to the other Parties in accordance with this Section 13.4.
13.5 Severability. If any provision of this Side Letter, or the application thereof to any person, entity, or circumstance, is held by a court of competent jurisdiction or other authority to be invalid, illegal, or unenforceable, the remainder of this Side Letter, and the application of such provision to other persons, entities, or circumstances, shall not be affected thereby. In such event, the Parties shall negotiate in good faith a valid, legal, and enforceable substitute provision that most nearly reflects the original intent of the Parties.
13.6 Counterparts. This Side Letter may be executed in any number of counterparts (including by electronic signature or portable document format (.pdf) transmission), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.
13.7 Binding Effect. This Side Letter shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, heirs, personal representatives, and permitted assigns. No Party may assign its rights or obligations under this Side Letter without the prior written consent of the other Parties, except as expressly permitted by Section 8 of this Side Letter.
13.8 Waiver. The failure or delay of any Party to enforce any provision of this Side Letter shall not constitute a waiver of such provision or the right to enforce it at a later time. No waiver of any provision of this Side Letter shall be effective unless made in writing and signed by the Party granting such waiver.
13.9 Relationship to Partnership Agreement. Except as expressly modified, supplemented, or superseded by this Side Letter, the Partnership Agreement shall remain in full force and effect with respect to the Investor. The Investor shall continue to be bound by all provisions of the Partnership Agreement that are not inconsistent with the terms and conditions of this Side Letter. In the event of any conflict between the terms of this Side Letter and the terms of the Partnership Agreement, the terms of this Side Letter shall prevail with respect to the Investor, and the Partnership Agreement shall be deemed to have been modified to the extent necessary to give effect to the terms of this Side Letter.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have caused this Side Letter to be executed as of the date first written above.
MERIDIAN PEAK CAPITAL PARTNERS FUND IV, L.P.
By: Meridian Peak Capital Partners GP IV LLC,
its General Partner
By: ________
Name: ________
Title: ________
Date: ________
MERIDIAN PEAK CAPITAL PARTNERS GP IV LLC
By: ________
Name: ________
Title: ________
Date: ________
BRIARWOOD FAMILY OFFICE LLC
By: ________
Name: Julian R. Hargrove
Title: Managing Director & Chief Investment Officer
Date: ________
EXHIBIT A
FORM OF MFN ELECTION NOTICE
[Date]
Meridian Peak Capital Partners GP IV LLC c/o Meridian Peak Capital Advisors LLC 200 Clarendon Street, 42nd Floor Boston, Massachusetts 02116
Attention: Tamara Fujimoto, General Counsel & Chief Compliance Officer
Re: MFN Election Notice — Meridian Peak Capital Partners Fund IV, L.P.
Ladies and Gentlemen:
Reference is hereby made to that certain Side Letter dated as of February 28, 2024 (the "Side Letter"), by and among Meridian Peak Capital Partners Fund IV, L.P. (the "Fund"), Meridian Peak Capital Partners GP IV LLC (the "General Partner"), and Briarwood Family Office LLC (the "Investor"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Side Letter or the Partnership Agreement, as applicable.
Pursuant to Section 2.3 of the Side Letter, the Investor hereby elects to adopt the following MFN-Eligible Term(s) described in the Side Letter Summary dated [__], 20[] delivered to the Investor on [__], 20[]:
1. Description of Elected Term: [Insert detailed description of the MFN-Eligible Term being elected, including the applicable rate, threshold, condition, or other material parameter.]
2. Description of Elected Term: [Insert detailed description of any additional MFN-Eligible Term being elected.]
3. [Add additional items as applicable.]
The Investor requests that the General Partner confirm in writing the effectiveness of the foregoing election(s) and the corresponding modifications to the Investor's rights and obligations under the Side Letter and the Partnership Agreement.
This MFN Election Notice is irrevocable and shall be effective as of the date of the General Partner's receipt hereof.
BRIARWOOD FAMILY OFFICE LLC
By: ________
Name: ________
Title: ________
Date: ________
EXHIBIT B
FORM OF EXCUSE ELECTION NOTICE
[Date]
Meridian Peak Capital Partners GP IV LLC c/o Meridian Peak Capital Advisors LLC 200 Clarendon Street, 42nd Floor Boston, Massachusetts 02116
Attention: Tamara Fujimoto, General Counsel & Chief Compliance Officer
Re: Excuse Election Notice — Meridian Peak Capital Partners Fund IV, L.P.
Ladies and Gentlemen:
Reference is hereby made to that certain Side Letter dated as of February 28, 2024 (the "Side Letter"), by and among Meridian Peak Capital Partners Fund IV, L.P. (the "Fund"), Meridian Peak Capital Partners GP IV LLC (the "General Partner"), and Briarwood Family Office LLC (the "Investor"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Side Letter or the Partnership Agreement, as applicable.
Pursuant to Section 3.2 of the Side Letter, the Investor hereby elects to be excused from participation in the following proposed investment:
Investment Name/Description: [Insert name or description of the proposed investment.]
Capital Call Notice Reference: Capital Call Notice No. [__], dated [__], 20[].
Applicable Covered Category: The Investor has determined that the proposed investment falls within the following Covered Category (check all that apply):
(a) Cannabis-Related Assets (Section 3.1(a))
(b) Gaming or Casino Properties (Section 3.1(b))
(c) Sanctioned Jurisdictions (Section 3.1(c))
(d) ERISA Plan Asset Investments (Section 3.1(d))
Amount of Capital Call from which the Investor Elects to Be Excused: $[__]
Aggregate Excuse Amounts to Date (including this election):