MARKED DRAFT — Calderwood & Harkness LLP comments and proposed revisions shown in [brackets] and footnotes. Prepared for Briarwood Family Office LLC internal review only. This document has not been submitted to the General Partner or its counsel.
March 10, 2024 Prepared by: Owen Fischer, Calderwood & Harkness LLP Matter No.: 1026-00001 Status: DRAFT — C&H Markup for Client Review — NOT FOR EXECUTION
SUBSCRIPTION AGREEMENT
MERIDIAN PEAK CAPITAL PARTNERS FUND IV, L.P.
a Delaware limited partnership
General Partner: Meridian Peak Capital Partners GP IV LLC a Delaware limited liability company
Subscriber: Briarwood Family Office LLC a Delaware limited liability company
Reference is made to that certain Amended and Restated Agreement of Limited Partnership of Meridian Peak Capital Partners Fund IV, L.P. dated December 20, 2023 (the "Limited Partnership Agreement" or "LPA"), and to that certain Confidential Private Placement Memorandum of Meridian Peak Capital Partners Fund IV, L.P. dated December 15, 2023 (the "Memorandum" or "PPM").
This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
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SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is entered into as of the date set forth on the signature page hereto by and between Meridian Peak Capital Partners Fund IV, L.P., a Delaware limited partnership (the "Fund"), Meridian Peak Capital Partners GP IV LLC, a Delaware limited liability company, 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 (the "Subscriber").
RECITALS
WHEREAS, the Fund has been organized as a Delaware limited partnership for the purpose of making investments in accordance with the investment strategy described in the Confidential Private Placement Memorandum dated December 15, 2023 (the "PPM");
WHEREAS, the General Partner is offering limited partnership interests in the Fund to qualified investors pursuant to the terms and conditions set forth in the PPM, the Amended and Restated Agreement of Limited Partnership of the Fund dated December 20, 2023 (the "LPA"), and this Agreement;
WHEREAS, the Subscriber desires to subscribe for a limited partnership interest in the Fund and to commit to contribute capital to the Fund in the amount and on the terms set forth herein; and
WHEREAS, the General Partner desires to accept the Subscriber's subscription for a limited partnership interest, subject to the terms and conditions set forth herein.
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 parties 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:
"Agreement" means this Subscription Agreement, including all schedules and appendices attached hereto, as it may be amended, modified, or supplemented from time to time in accordance with its terms.
"Capital Commitment" means the aggregate amount of capital that the Subscriber has committed to contribute to the Fund, as set forth in Section 2.1 of this Agreement. The Capital Commitment shall include all amounts drawn down by the General Partner through capital call notices as well as any amounts subject to recall in accordance with the LPA.
"Closing" means the closing at which the Subscriber is admitted as a Limited Partner of the Fund in accordance with the terms of this Agreement and the LPA.
"Closing Date" means the date of the applicable Closing at which the Subscriber is admitted as a Limited Partner.
"Final Close Deadline" means October 31, 2024, or such later date as may be determined by the General Partner in its sole discretion, which in no event shall be later than the date permitted under the LPA.
"First Close" means the initial closing of the Fund, which is anticipated to occur on or about April 30, 2024, at which the General Partner expects to accept initial subscriptions from investors.
"Fund" means Meridian Peak Capital Partners Fund IV, L.P., a Delaware limited partnership, formed pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware (LP Certificate Number LP-2023-08841), Employer Identification Number 92-1684537.
"Fund Administrator" means Granite Ledger Fund Services LLC, with offices at 100 Summer Street, Suite 2700, Boston, MA 02110, or such other fund administrator as may be appointed by the General Partner from time to time.
"Fund Term" means a period of ten (10) years commencing on the Final Close, subject to two (2) one-year extensions at the discretion of the General Partner, as further described in the LPA.
"General Partner" or "GP" means Meridian Peak Capital Partners GP IV LLC, a Delaware limited liability company, Employer Identification Number 92-1672483, in its capacity as the general partner of the Fund.
"Investment Manager" means Meridian Peak Capital Advisors LLC, a Delaware limited liability company, Employer Identification Number 45-3297104, the sole member of the General Partner, which serves as the investment manager to the Fund and is responsible for the day-to-day investment and operational activities of the Fund.
"Investment Period" means the period of four (4) years commencing on the Final Close, during which the General Partner may make drawdowns from the Subscriber's Capital Commitment for the purpose of making new portfolio investments, subject to the terms and conditions set forth in the LPA.
"Limited Partnership Agreement" or "LPA" means the Amended and Restated Agreement of Limited Partnership of the Fund dated December 20, 2023, as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Memorandum" or "PPM" means the Confidential Private Placement Memorandum of the Fund dated December 15, 2023, including all supplements, appendices, and amendments thereto.
"Placement Agent" means Pinnacle Capital Markets LLC, a Delaware limited liability company and registered broker-dealer, with offices at 399 Park Avenue, 18th Floor, New York, NY 10022, which has been engaged by the Fund to serve as placement agent in connection with the offering and sale of limited partnership interests.
"Auditor" means Brockton Marsh & Associates LLP, with offices at 500 Boylston Street, 30th Floor, Boston, MA 02116, or such other independent registered public accounting firm as may be appointed by the General Partner from time to time.
"Side Letter" means that certain side letter agreement among the Fund, the General Partner, and the Subscriber, dated as of the Closing Date, pursuant to which the Subscriber is granted certain additional rights and protections as further described therein.
[C&H Note: Cross-reference to the Side Letter is to be finalized upon execution. The draft Side Letter is currently under active negotiation with Ashford Crane & Hewitt LLP, counsel to the General Partner. As of the date of this markup, the Side Letter is in its third draft stage with three bracketed points remaining. This Subscription Agreement should not be executed until the Side Letter has been finalized and is in a form acceptable to BFO and C&H.]
"Subscriber" means Briarwood Family Office LLC, a Delaware limited liability company.
Section 1.2 — Interpretation
For purposes of this Agreement, the following rules of interpretation shall apply:
(a) References herein to the LPA, the PPM, and the Side Letter shall be deemed to refer to such documents as they may be amended, supplemented, restated, or otherwise modified from time to time in accordance with their respective terms.
(b) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the LPA.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(d) References to "Sections," "Articles," "Schedules," and "Appendices" are to sections, articles, schedules, and appendices of this Agreement unless otherwise specified.
(e) The headings and captions contained herein are for convenience of reference only and shall not affect the interpretation of this Agreement.
(f) Words importing the singular shall include the plural and vice versa, and words importing one gender shall include all genders, as the context may require.
ARTICLE II — SUBSCRIPTION AND CAPITAL COMMITMENT
Section 2.1 — Subscription
The Subscriber hereby irrevocably subscribes for a limited partnership interest in the Fund and commits to contribute capital to the Fund in the aggregate amount of Seventy-Five Million Dollars ($75,000,000) (the "Capital Commitment"), subject to the terms and conditions of this Agreement, the LPA, and, to the extent applicable, the Side Letter. The subscription set forth herein is irrevocable by the Subscriber and may not be withdrawn, canceled, or terminated by the Subscriber without the prior written consent of the General Partner.
The Capital Commitment of $75,000,000 represents approximately 5.0% of the Fund's target size of $1,500,000,000 and approximately 4.29% of the Fund's hard cap of $1,750,000,000, as described in the PPM.
The Subscriber acknowledges that the General Partner may accept additional subscriptions from other investors up to the hard cap, and that the Subscriber's percentage interest in the Fund may be diluted as additional Limited Partners are admitted at subsequent Closings, subject to equalization adjustments as provided in the LPA.
[C&H Note: The irrevocability provision is standard for private equity fund subscription agreements. BFO should confirm its comfort level with an irrevocable subscription prior to execution. Once executed, BFO will be legally bound to fund capital calls up to the full $75,000,000 Capital Commitment, subject only to the excuse/exclusion rights negotiated in the Side Letter. The legal and financial consequences of failing to honor a capital call are significant (including forfeiture of a portion of BFO's interest, as set forth in Article IX of the LPA). BFO should ensure that it has adequate liquidity and capital planning arrangements in place to meet capital calls over the anticipated four-year Investment Period.]
Section 2.2 — Capital Contributions
Capital contributions shall be made by the Subscriber in accordance with the terms and conditions of the LPA upon receipt of capital call notices (sometimes referred to as "drawdown notices") from the General Partner. Each capital call notice shall specify the amount of the drawdown, the purpose of the drawdown, and the date by which payment must be received.
The Subscriber shall fund each drawdown within the time period specified in the LPA, which is typically ten (10) to fifteen (15) business days from the date of the capital call notice. Capital contributions shall be made in United States dollars by wire transfer of immediately available funds to the account designated by the General Partner or the Fund Administrator.
The Subscriber acknowledges that the General Partner may draw down the Capital Commitment in whole or in part, at any time and from time to time during the Investment Period, and may recall distributions for the purpose of funding follow-on investments, paying fund expenses, and for other purposes as described in the LPA.
[C&H Note: The Side Letter (Section 3) provides for certain excuse and exclusion rights that would modify BFO's capital call obligations. Specifically, BFO may be excused from investments in (a) cannabis-related businesses, (b) gaming and casino operations, (c) sanctioned jurisdiction investments, and (d) investments that would cause BFO to be treated as holding "plan assets" under ERISA. The excuse cap is currently bracketed in the Side Letter at [15%/25%] of the Capital Commitment and remains subject to negotiation with Ashford Crane & Hewitt LLP. A cross-reference to the relevant Side Letter provisions will be inserted upon finalization of the Side Letter.]
Section 2.3 — Admission
The Subscriber shall be admitted as a Limited Partner of the Fund upon (a) acceptance of this Subscription Agreement by the General Partner, (b) satisfaction of all conditions to admission set forth in the LPA, including completion and submission of the Investor Questionnaire and any applicable anti-money laundering and know-your-customer documentation, and (c) payment of any amounts required in connection with the applicable Closing.
The General Partner reserves the right, in its sole and absolute discretion, to accept or reject this subscription in whole or in part, for any reason or no reason, and without any obligation to disclose the reason for any such rejection. In the event the General Partner rejects this subscription in whole, the General Partner shall promptly notify the Subscriber, and the Subscriber shall have no further rights or obligations under this Agreement. In the event the General Partner accepts this subscription in part, the Capital Commitment shall be reduced to the amount accepted, and the Subscriber shall be admitted as a Limited Partner with respect to such reduced Capital Commitment.
[C&H Note: C&H recommends that BFO confirm whether partial acceptance of the subscription is acceptable. If the Capital Commitment is reduced below $50,000,000, BFO would fall below the MFN eligibility threshold under the Side Letter (which is conditioned on a commitment of $50,000,000 or more). Accordingly, C&H recommends adding language to this Section 2.3 requiring that any partial acceptance that would reduce BFO's Capital Commitment below $50,000,000 shall require the Subscriber's prior written consent. Proposed language:
"Notwithstanding the foregoing, the General Partner shall not accept this subscription in part if such partial acceptance would reduce the Subscriber's Capital Commitment to an amount less than Fifty Million Dollars ($50,000,000) without the prior written consent of the Subscriber."
This proposed addition will preserve BFO's MFN eligibility and should be discussed with BFO before insertion into the final form.]
Section 2.4 — Side Letter
The Subscriber and the General Partner acknowledge and agree that the terms and conditions of the Side Letter, if executed, shall supplement and, to the extent of any conflict or inconsistency with the LPA or this Agreement as they apply to the Subscriber, supersede the terms of the LPA and this Agreement with respect to the Subscriber. In the event of any conflict between the terms of the Side Letter, on the one hand, and the terms of the LPA or this Agreement, on the other hand, the terms of the Side Letter shall control and govern as between the Subscriber and the General Partner with respect to the Subscriber's limited partnership interest.
The parties acknowledge that the Side Letter is being negotiated contemporaneously with this Agreement and is intended to be executed simultaneously with this Agreement and the Subscriber's admission as a Limited Partner.
[C&H Note: This is a critical provision. The Side Letter is currently in its third draft stage, with three bracketed points remaining as of March 10, 2024. Specifically, the following items are still under negotiation between C&H and Ashford Crane & Hewitt LLP (on behalf of the General Partner):
1. Excuse cap — GP has proposed 15% of the Capital Commitment ($11,250,000); BFO has proposed 25% ($18,750,000). The difference is $7,500,000.
2. MFN summary delivery timing — The draft Side Letter provides for delivery of an MFN summary, but the timing of delivery remains bracketed.
3. K-1 delivery timing — BFO has requested 75 days post fiscal year-end; standard LPA provides for 120 days.
This Subscription Agreement should not be executed until the Side Letter is finalized and executed simultaneously. C&H recommends inserting explicit language in this Section 2.4 conditioning the effectiveness of this Agreement on the simultaneous execution and delivery of the Side Letter. Proposed language:
"This Agreement shall not become effective, and the Subscriber shall not be admitted as a Limited Partner, unless and until the Side Letter is executed and delivered by all parties thereto simultaneously with or prior to the execution of this Agreement."
This condition precedent will protect BFO from being bound by the subscription without the benefit of the negotiated Side Letter protections.]
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER
The Subscriber hereby represents and warrants to the Fund, the General Partner, and the Investment Manager, as of the date hereof and as of the Closing Date (and, to the extent required by the LPA, as of the date of each capital contribution), as follows:
Section 3.1 — Organization and Authority
Briarwood Family Office LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Subscriber was organized in 2007 and has been continuously in good standing since the date of its formation.
The Subscriber's registered agent in the State of Delaware is Capitol Registered Agents Inc., located at 1209 Orange Street, Wilmington, DE 19801. The Subscriber's principal office is located at 780 Park Avenue, Suite 3200, New York, NY 10021.
The Subscriber has full power, authority, and legal capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by the Subscriber have been duly authorized by all necessary limited liability company action on the part of the Subscriber, and no further approval, consent, or authorization is required for the Subscriber to enter into and perform this Agreement.
This Agreement constitutes, or upon execution and delivery will constitute, the legal, valid, and binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
The execution, delivery, and performance of this Agreement by the Subscriber will not (a) conflict with or violate the Subscriber's limited liability company agreement or certificate of formation, (b) conflict with or violate any applicable law, rule, regulation, order, judgment, or decree binding on the Subscriber, or (c) result in a breach of, or default under, any material agreement to which the Subscriber is a party or by which the Subscriber's assets are bound.
[C&H Note: BFO's investment committee approval is required before this Agreement can be authorized and executed. Per BFO's operating agreement, investment committee approval requires the affirmative vote of three (3) of four (4) members. Julian R. Hargrove holds veto rights over all investment commitments. As of March 10, 2024, investment committee approval has not been obtained. This Agreement should not be executed until the investment committee has formally approved the $75,000,000 commitment to Fund IV. C&H has been advised by Sandra Whitfield that an investment committee meeting is expected to be scheduled for late March 2024.]
Section 3.2 — Authorized Signatory
The person executing this Agreement on behalf of the Subscriber, Julian R. Hargrove, in his capacity as Managing Director and Chief Investment Officer, is duly authorized to execute this Agreement on behalf of the Subscriber and to bind the Subscriber to the obligations set forth herein. The Subscriber represents that no other signature, authorization, or approval is required to make this Agreement fully effective and binding on the Subscriber, other than the investment committee approval referenced in Section 3.1 above.
[C&H Note: C&H recommends confirming with Sandra M. Whitfield, General Counsel of BFO, whether any additional signatory is required under BFO's operating agreement or internal governance documents. Certain BFO governance documents may require dual-signature authorization for commitments in excess of a specified threshold. This should be confirmed prior to execution.]
Section 3.3 — Accredited Investor Status
The Subscriber hereby represents and warrants that it is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"). The Subscriber qualifies as an accredited investor on the following basis: the Subscriber is an entity in which all of the equity owners are accredited investors within the meaning of Rule 501(a) of Regulation D.
The Subscriber acknowledges that this representation is being relied upon by the Fund and the General Partner in determining whether the offering and sale of limited partnership interests may be made in compliance with Regulation D and other exemptions from registration under the Securities Act.
Section 3.4 — Qualified Purchaser Status
The Subscriber hereby represents and warrants that it is a "qualified purchaser" as that term is defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the "Investment Company Act"). Specifically, the Subscriber owns not less than Five Million Dollars ($5,000,000) in "investments" as that term is defined in Rule 2a51-1 promulgated under the Investment Company Act.
The Subscriber understands that the Fund is relying on the exemption from registration provided by Section 3(c)(7) of the Investment Company Act, which requires that all beneficial owners of the Fund's securities be "qualified purchasers" or "knowledgeable employees" (as defined in Rule 3c-5 under the Investment Company Act).
[C&H Note: BFO, with approximately $1.8 billion in assets under management as of December 31, 2023, comfortably satisfies the $5,000,000 "investments" threshold for qualified purchaser status. C&H recommends that BFO confirm the factual accuracy of this representation with Derek T. Calloway, Director of External Investments, before execution, including verification that the composition of BFO's investment portfolio satisfies the definition of "investments" under Rule 2a51-1 (which excludes, among other things, real estate held for personal use and interests in certain operating businesses).]
Section 3.5 — ERISA Representations
The Subscriber hereby represents and warrants that:
(a) The Subscriber is NOT an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA");
(b) The Subscriber is NOT a "plan" as described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code");
(c) The Subscriber is NOT an entity whose underlying assets include "plan assets" by reason of a plan's investment in the entity within the meaning of 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA; and
(d) The Subscriber's Capital Commitment to the Fund, and each capital contribution made pursuant thereto, will not constitute or involve the direct or indirect use of the assets of any employee benefit plan, plan, or arrangement described in clauses (a) through (c) above.
The Subscriber acknowledges that the General Partner is relying on this representation in determining whether the assets of the Fund constitute "plan assets" for purposes of ERISA, and that the General Partner may deny admission to, or require the withdrawal of, any investor whose investment would cause the Fund to hold "plan assets" under ERISA.
[C&H Note: This ERISA representation is critical and must remain accurate at all times. The representation is consistent with BFO's excuse right negotiated in the Side Letter (Section 3(d)), which permits BFO to be excused from any investment that would cause BFO to be treated as holding "plan assets" under ERISA. BFO should confirm with Sandra Whitfield and Derek Calloway that this representation remains accurate and that no portion of BFO's capital is derived from or attributable to any employee benefit plan or similar arrangement. C&H notes that if any Hargrove family members contribute assets from individual retirement accounts or similar tax-qualified accounts to BFO, this representation could be jeopardized.]
Section 3.6 — Non-Benefit Plan Investor
The Subscriber hereby represents and warrants that it is not a "benefit plan investor" as defined in 29 C.F.R. § 2510.3-101(f)(2). No portion of the Subscriber's assets constitutes or will constitute assets of any benefit plan investor, including (a) any employee benefit plan subject to Part 4, Subtitle B of Title I of ERISA, (b) any plan to which Section 4975 of the Code applies, or (c) any entity whose underlying assets include assets of any such plan by reason of a plan's investment in such entity.
Section 3.7 — Bad Actor Representations
The Subscriber hereby represents and warrants that neither the Subscriber, nor any of the Subscriber's directors, executive officers, managing members, or other persons who would be considered "covered persons" under Rule 506(d) of Regulation D promulgated under the Securities Act, has been subject to any of the disqualifying events described in Rule 506(d)(1) of Regulation D. Such disqualifying events include, without limitation, convictions of certain felonies and misdemeanors, certain court injunctions and restraining orders, certain final orders of specified state and federal regulators, certain SEC disciplinary orders, suspension or expulsion from membership in a self-regulatory organization, and stop orders or similar orders relating to the filing of a registration statement.
The Subscriber agrees to notify the General Partner promptly in writing if any disqualifying event described in Rule 506(d)(1) occurs with respect to the Subscriber or any of its covered persons after the date of this Agreement.
[C&H Note: This is a standard bad actor representation required for offerings conducted in reliance on Rule 506(b) or Rule 506(c) of Regulation D. C&H recommends that BFO confirm with Sandra Whitfield that no covered persons of BFO (including all directors, executive officers, managing members, and persons participating in the offering) are subject to any disqualifying events under Rule 506(d)(1). A bad actor questionnaire should be completed by each covered person of BFO as part of the diligence process.]
Section 3.8 — Investment Intent and Suitability
The Subscriber is acquiring the limited partnership interest for its own account, for investment purposes only, and not with a view to any distribution, resale, subdivision, or fractionalization thereof, in whole or in part, in violation of the Securities Act or any applicable state securities laws. The Subscriber has no present plans, intentions, or arrangements to sell, transfer, pledge, hypothecate, or otherwise dispose of all or any portion of the limited partnership interest.
The Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Fund. The Subscriber has had the opportunity to consult with its own legal, tax, accounting, and financial advisors regarding the desirability and suitability of an investment in the Fund, and the Subscriber has independently evaluated the merits and risks of such investment.
The Subscriber can bear the economic risk of the investment in the Fund for an indefinite period of time, including a total loss of the Capital Commitment. The Subscriber has adequate means of providing for its current financial needs and contingencies and has no need for liquidity in its investment in the Fund. The Subscriber's overall commitment to investments that are illiquid or not readily marketable is not disproportionate to the Subscriber's net worth and total assets, and the investment in the Fund will not cause such overall commitment to become excessive.
Section 3.9 — Receipt of Documents
The Subscriber hereby acknowledges that it has received and carefully reviewed complete copies of the following documents in connection with its subscription:
(a) The Confidential Private Placement Memorandum of the Fund dated December 15, 2023;
(b) The Amended and Restated Agreement of Limited Partnership of the Fund dated December 20, 2023; and
(c) This Subscription Agreement and related subscription documents.
The Subscriber has had the opportunity to ask questions of, and receive answers from, the General Partner, the Investment Manager, and their respective representatives concerning the terms and conditions of the offering, the operations and financial condition of the Fund, and any other matters relating to the Fund and the investment contemplated hereby. The Subscriber is satisfied that it has received adequate information to make an informed investment decision.
The Subscriber acknowledges that in making its investment decision, it has relied solely on the information contained in the PPM, the LPA, this Agreement, and the representations of the General Partner and the Investment Manager, and not on any other information, projection, or representation made by or on behalf of any other person or entity.
[C&H Note: BFO received the PPM and LPA from Gavin R. Lockhart (Meridian Peak Capital Advisors LLC, Head of Investor Relations) on January 8, 2024, via secure electronic transmission. C&H received copies of the PPM and LPA from Ashford Crane & Hewitt LLP (Harrison K. Drummond) on January 26, 2024. C&H has conducted a review of both documents and has provided BFO with a summary memorandum of key terms and risk factors dated February 5, 2024.]
Section 3.10 — Placement Agent Disclosure Acknowledgment
The Subscriber hereby acknowledges and agrees that Pinnacle Capital Markets LLC ("Pinnacle"), a Delaware limited liability company and registered broker-dealer, is acting as the placement agent for the Fund in connection with the offering and sale of limited partnership interests. The Subscriber acknowledges that Pinnacle will receive a placement fee equal to 1.0% of the Subscriber's Capital Commitment, calculated as follows: $75,000,000 × 1.0% = $750,000 (the "Placement Fee").
The Subscriber acknowledges that the Placement Fee will be borne by the Fund and will reduce returns to all Limited Partners. The Subscriber further acknowledges that Pinnacle may have financial interests that differ from those of the Subscriber, and that Pinnacle is acting as agent for the Fund and not as agent for or advisor to the Subscriber.
The Subscriber confirms that it has not relied on any advice, recommendation, or representation of Pinnacle in making its decision to invest in the Fund, and that any information provided by Pinnacle has been supplementary to, and not a substitute for, the information contained in the PPM and the LPA.
[C&H Note: The Side Letter (Section 11) provides for a 100% offset of the Placement Fee ($750,000) against management fees payable by BFO. This offset effectively eliminates the economic impact of the Placement Fee on BFO. C&H recommends confirming that this offset is accurately reflected in both the Side Letter and any relevant provision of the LPA. C&H also recommends confirming with Derek Calloway and Sandra Whitfield that no separate compensation arrangement has been entered into between BFO and Pinnacle.]
Section 3.11 — No Government Plan
The Subscriber hereby represents and warrants that it is not a governmental plan as defined in Section 3(32) of ERISA or Section 414(d) of the Code, and that it is not a governmental entity or instrumentality of any government. The Subscriber is not subject to any state or local "pay-to-play" laws, regulations, or rules that restrict or regulate political contributions by or on behalf of investment managers, placement agents, or their affiliates in connection with the Subscriber's investment in the Fund.
Section 3.12 — Anti-Money Laundering / OFAC Representations
The Subscriber hereby represents and warrants as follows:
(a) The funds used by the Subscriber to make the Capital Commitment and each capital contribution to the Fund are not derived from, and do not and will not constitute, the proceeds of any criminal activity, unlawful activity, or any activity that would constitute a violation of any applicable anti-money laundering law or regulation, including the Bank Secrecy Act, as amended by the USA PATRIOT Act (Title III of Pub. L. No. 107-56), and the regulations promulgated thereunder.
(b) The Subscriber is not, and is not owned or controlled by, any person or entity that is listed on the Specially Designated Nationals and blocked Persons List (the "SDN List") maintained by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), or on any other sanctions list maintained by OFAC or any other governmental authority.
(c) The Subscriber is not located in, organized under the laws of, or a resident of any country or territory that is the subject of comprehensive country-wide or territory-wide sanctions administered by OFAC, currently including Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk People's Republic, and Luhansk People's Republic regions of Ukraine, or any other country or territory that may become subject to such sanctions after the date hereof.
(d) The Subscriber will promptly notify the General Partner if any of the foregoing representations becomes inaccurate at any time during the term of the Subscriber's investment in the Fund.
Section 3.13 — Tax Status
The Subscriber hereby represents and warrants that:
(a) The Subscriber is treated as a domestic entity for United States federal income tax purposes. The Subscriber is not a "foreign person" within the meaning of Section 1445 of the Code, and is not subject to withholding under Section 1446 of the Code.
(b) The Subscriber's Employer Identification Number is 27-4831956.
(c) The Subscriber is classified as a partnership for U.S. federal income tax purposes, and the information set forth in the Investor Questionnaire regarding the Subscriber's tax status is true, correct, and complete.
(d) The Subscriber has consulted with its own tax advisors regarding the U.S. federal, state, local, and foreign tax consequences of its investment in the Fund, and the Subscriber is not relying on the Fund, the General Partner, the Investment Manager, or any of their respective affiliates for any tax advice.
[C&H Note: The Side Letter (Section 10) provides for the delivery of Schedule K-1s to BFO within 75 days of the Fund's fiscal year-end, as compared to the standard 120-day delivery period set forth in the LPA. This enhanced tax reporting obligation is important for BFO's tax planning and compliance. C&H recommends confirming that this 75-day K-1 delivery timing is agreed in the final Side Letter before execution of this Agreement. As noted above, K-1 delivery timing remains one of the three bracketed items in the current Side Letter draft.]
Section 3.14 — No Registration
The Subscriber hereby acknowledges and understands that:
(a) The limited partnership interests being subscribed for herein have not been registered under the Securities Act of 1933, as amended, or under any state securities or "blue sky" laws, and are being offered and sold in reliance on exemptions from registration under the Securities Act, including without limitation the exemptions provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
(b) The Fund has filed a Form D with the United States Securities and Exchange Commission on January 2, 2024, pursuant to Regulation D, in connection with the offering and sale of limited partnership interests.
(c) The limited partnership interests are "restricted securities" within the meaning of Rule 144 promulgated under the Securities Act, and may not be offered, sold, transferred, pledged, or otherwise disposed of except pursuant to an effective registration statement under the Securities Act or in a transaction exempt from, or not subject to, the registration requirements of the Securities Act, and in compliance with applicable state securities laws.
(d) There is no public market for the limited partnership interests, and no such market is expected to develop. The Subscriber may not be able to liquidate its investment in the Fund, and the limited partnership interests may not be readily transferable.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER
The General Partner hereby represents and warrants to the Subscriber, as of the date hereof and as of the Closing Date, as follows:
Section 4.1 — Organization
The General Partner represents and warrants that it is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. The General Partner's registered agent in the State of Delaware is Beacon Statutory Services LLC, located at 1013 Centre Road, Wilmington, DE 19805. The General Partner has all requisite limited liability company power and authority to carry on its business as currently conducted and as proposed to be conducted in its capacity as the general partner of the Fund.
Section 4.2 — Authority
The General Partner has full power and authority to execute, deliver, and perform this Agreement, to admit the Subscriber as a Limited Partner of the Fund, and to take all actions contemplated hereby. The execution, delivery, and performance of this Agreement by the General Partner have been duly authorized by all necessary limited liability company action, and no further approval, consent, or authorization is required. This Agreement constitutes, or upon execution and delivery will constitute, the legal, valid, and binding obligation of the General Partner, enforceable against the General Partner in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 4.3 — Compliance with Law
The execution and delivery of this Agreement by the General Partner, and the admission of the Subscriber as a Limited Partner of the Fund, will not (a) violate any applicable law, regulation, rule, order, judgment, or decree binding on the General Partner or the Fund, (b) conflict with or constitute a breach of or default under the organizational documents of the General Partner or the Fund, or (c) result in the creation of any lien or encumbrance on any assets of the Fund.
Section 4.4 — Fund Information
The General Partner represents and warrants that the information contained in the PPM dated December 15, 2023 is, as of its date, true, correct, and complete in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The General Partner undertakes to promptly notify the Subscriber and provide supplemental disclosure if any material information in the PPM becomes inaccurate, incomplete, or misleading in any material respect prior to the Closing Date.
ARTICLE V — TRANSFER RESTRICTIONS
Section 5.1 — Restrictions on Transfer
The Subscriber agrees that it may not sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of (collectively, "Transfer") all or any portion of its limited partnership interest in the Fund except in strict compliance with the terms and conditions set forth in the LPA. The Subscriber acknowledges that the limited partnership interests have not been registered under the Securities Act or any state securities laws and that any Transfer must be made in compliance with applicable exemptions from registration.
The Subscriber further acknowledges that the LPA imposes significant restrictions on the Transfer of limited partnership interests, including restrictions on transfers that would (a) cause the Fund to be classified as a "publicly traded partnership" for U.S. federal income tax purposes, (b) violate any applicable federal or state securities law, (c) cause the Fund to be required to register as an investment company under the Investment Company Act, or (d) cause the Fund's assets to be treated as "plan assets" under ERISA.
[C&H Note: The Side Letter (Section 8) provides BFO with the right to Transfer its limited partnership interest to any Hargrove family entity (including trusts, family limited partnerships, or other vehicles established for the benefit of members of the Hargrove family) without the prior consent of the General Partner, subject to compliance with applicable securities laws and tax considerations. This is a significant carve-out from the general transfer restrictions set forth in this Section 5.1 and the LPA. This section should be read in conjunction with Side Letter Section 8.]
Section 5.2 — Compliance with Securities Laws
Any proposed Transfer of all or any portion of the Subscriber's limited partnership interest must comply with all applicable federal and state securities laws and regulations. The Subscriber acknowledges that the General Partner may require, as a condition to any proposed Transfer, delivery of an opinion of counsel, in form and substance reasonably satisfactory to the General Partner, to the effect that the proposed Transfer may be effected without registration under the Securities Act and without violation of any applicable state securities laws. The costs and expenses of obtaining such opinion of counsel shall be borne by the Subscriber (or the proposed transferee).
Section 5.3 — GP Consent
Except as otherwise provided in the Side Letter, any Transfer of all or any portion of the Subscriber's limited partnership interest shall require the prior written consent of the General Partner, which consent may be withheld by the General Partner in its sole and absolute discretion, for any reason or no reason. The General Partner shall have no obligation to disclose the reasons for any refusal to consent to a proposed Transfer.
The General Partner may condition its consent to any Transfer on such terms and conditions as it may determine in its sole discretion, including (a) receipt of representations and warranties from the proposed transferee substantially similar to those made by the Subscriber in this Agreement, (b) execution of a subscription agreement or transfer agreement by the proposed transferee, and (c) payment by the Subscriber or the proposed transferee of all costs and expenses incurred by the Fund and the General Partner in connection with such Transfer.
ARTICLE VI — POWER OF ATTORNEY
Section 6.1 — Grant of Power of Attorney
The Subscriber hereby irrevocably constitutes and appoints the General Partner, and any successor general partner of the Fund, as the Subscriber's true and lawful attorney-in-fact, with full power and authority, in the Subscriber's name, place, and stead, to execute, acknowledge, swear to, deliver, record, and file, on behalf of the Subscriber, any and all documents, instruments, certificates, and agreements that the General Partner deems necessary, desirable, or appropriate to effectuate or facilitate:
(a) the Subscriber's admission as a Limited Partner of the Fund;
(b) any amendment, modification, restatement, or supplement to the LPA or the Certificate of Limited Partnership of the Fund filed with the Secretary of State of the State of Delaware, including any amendment necessary to reflect the admission, substitution, or withdrawal of Limited Partners;
(c) any filing or registration required to be made with any governmental authority or regulatory body in connection with the operations of the Fund or the Subscriber's status as a Limited Partner;
(d) the dissolution, liquidation, and winding up of the Fund in accordance with the terms of the LPA; and
(e) any other act or thing that may be required, permitted, or contemplated by the LPA, this Agreement, or applicable law.
The power of attorney granted herein is coupled with an interest, is irrevocable, and shall survive the death, disability, dissolution, incapacity, or bankruptcy of the Subscriber. The power of attorney shall not be affected by any subsequent disability or incapacity of the Subscriber, and shall extend to the Subscriber's heirs, successors, assigns, and legal representatives.
[C&H Note: This is a standard and customary provision for Delaware limited partnerships. The power of attorney is coupled with an interest (i.e., the General Partner has an interest in the subject matter of the power of attorney by virtue of its role as general partner) and is therefore irrevocable under Delaware law. This provision does not grant the General Partner authority to act on behalf of the Subscriber in matters unrelated to the Fund or the Subscriber's limited partnership interest.]
ARTICLE VII — INDEMNIFICATION
Section 7.1 — Subscriber Indemnification
The Subscriber agrees to indemnify, defend, and hold harmless the Fund, the General Partner, the Investment Manager, and each of their respective directors, officers, members, partners, employees, agents, affiliates, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all losses, damages, liabilities, claims, actions, suits, proceedings, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") incurred by any Indemnified Party arising out of, resulting from, or relating to:
(a) any breach or inaccuracy of any representation, warranty, or covenant of the Subscriber contained in this Agreement, the Investor Questionnaire, or any other document delivered by the Subscriber in connection with its subscription for a limited partnership interest;
(b) any failure by the Subscriber to fulfill, perform, or comply with its obligations under this Agreement, the LPA, or the Side Letter, including any failure to fund capital contributions when due; or
(c) any claim, action, or proceeding brought by or on behalf of the Subscriber or any of its affiliates, members, partners, employees, or agents in connection with the Subscriber's investment in the Fund, to the extent arising from the Subscriber's own acts, omissions, or misrepresentations.
The indemnification obligations of the Subscriber under this Section 7.1 shall be in addition to, and not in limitation of, any other indemnification obligations of the Subscriber set forth in the LPA or any other agreement between the Subscriber and the Fund or the General Partner.
Section 7.2 — Survival
All representations, warranties, covenants, and indemnification obligations of the Subscriber contained in this Agreement shall survive the execution and delivery of this Agreement, the admission of the Subscriber as a Limited Partner, each capital contribution, and the termination, dissolution, or winding up of the Fund or the Subscriber's withdrawal or transfer of its limited partnership interest. The Subscriber acknowledges that the Fund, the General Partner, the Investment Manager, and the other Indemnified Parties are entitled to rely on the Subscriber's representations, warranties, and covenants at all times during the term of the Fund and thereafter, as applicable.
ARTICLE VIII — MISCELLANEOUS
Section 8.1 — Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Any action, suit, or proceeding arising out of, relating to, or in connection with this Agreement or the transactions contemplated hereby shall be brought exclusively in the Court of Chancery of the State of Delaware, or, if such court declines to exercise jurisdiction, in the United States District Court for the District of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of such courts and waives any objection it may have to the laying of venue in such courts or any claim that any such action, suit, or proceeding has been brought in an inconvenient forum.
Section 8.2 — Entire Agreement
This Agreement, together with the LPA, the PPM, the Side Letter (if executed), the Investor Questionnaire, and any other documents expressly referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, understandings, and agreements, whether written or oral, relating to such subject matter. No party has relied upon any statement, representation, or warranty of any other party except as expressly set forth in this Agreement and the other documents enumerated in this Section 8.2.
[C&H Note: C&H has confirmed that the "Side Letter" is included in the enumeration of constituent documents comprising the entire agreement. This is important to ensure that the Side Letter provisions, once finalized and executed, are given full legal effect and are not superseded by or deemed inconsistent with this Agreement or the LPA.]
Section 8.3 — Amendments
This Agreement may not be amended, modified, supplemented, or waived except by a written instrument duly executed by each of the Subscriber and the General Partner. No waiver by any party of any provision of this Agreement shall be deemed a continuing waiver or a waiver of any other provision, and no failure or delay by any party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof.
Section 8.4 — Severability
If any provision of this Agreement, or the application of any such provision to any person or circumstance, shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement or the application of such provision to any other person or circumstance. The remaining provisions of this Agreement shall continue in full force and effect, and the parties shall negotiate in good faith to replace any invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that, to the extent possible, achieves the economic, business, and other purposes of the original provision.
Section 8.5 — Notices
All notices, requests, demands, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given and received (a) upon personal delivery, (b) upon delivery by a nationally recognized overnight courier service (with written confirmation of receipt), (c) upon delivery by electronic mail (with confirmation of receipt by the recipient, excluding any automatic or "out of office" replies), or (d) three (3) business days after deposit in the United States mail, certified, return receipt requested, postage prepaid, in each case addressed as follows:
If to the Subscriber:
Briarwood Family Office LLC 780 Park Avenue, Suite 3200 New York, NY 10021