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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Pamela Cross, Responsible Partner, Funds & Asset Management, Calderwood & Harkness LLP

FROM: Theresa Kim, Lead Associate, Funds & Asset Management; Owen Fischer, Working Associate, Funds & Asset Management

DATE: April 30, 2026

RE: Side Letter Framework — Cobalt Life Sciences Opportunities Fund I, LP

MATTER NO.: 1004-00002

BILLING CODE: 88103-CVC

This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of the formation and offering of Cobalt Life Sciences Opportunities Fund I, LP. It is intended solely for the use of the addressee and should not be distributed, copied, or disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

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I. EXECUTIVE SUMMARY

The purpose of this memorandum is to set forth the recommended side letter framework for Cobalt Life Sciences Opportunities Fund I, LP ("CLSO Fund I" or the "Fund"), a Delaware limited partnership to be formed, with a target fund size of $750,000,000 (the "Target Size") and a hard cap of $1,000,000,000 (the "Hard Cap"). The Fund will pursue an opportunistic life-sciences investment strategy, as described in further detail in Section II below.

The Fund's general partner will be Cobalt Life Sciences GP I, LLC ("CLSO GP"), a Delaware limited liability company managed by Dr. Marcus Yeung and Priya Dasgupta (collectively, the "Principals"). The management company responsible for day-to-day operations, personnel, and overhead will be Cobalt Life Sciences Management I, LLC ("CLSO Management"), also a Delaware limited liability company controlled by the Principals.

Three anchor and seed investors have been identified by the Principals and the placement agent, with aggregate anticipated commitments of $225,000,000, representing 30% of the Target Size:

• Ironwood Public Employees' Retirement System ("Ironwood PERS"), an Oregon state pension fund, with an anticipated commitment of $100,000,000;

• Northgate Endowment Management LLC ("Northgate"), a Delaware LLC serving as the investment arm of a major university endowment, with an anticipated commitment of $50,000,000; and

• Pinnacle Insurance Group, Inc. ("Pinnacle"), a Connecticut corporation and life and annuity insurer, with an anticipated commitment of $75,000,000.

In addition to the anchor commitments, the GP commitment will be a minimum of 2% of aggregate commitments, which at Target Size equates to $15,000,000. Based on these figures, the remaining capital to be raised from third-party limited partners, after accounting for the anchor commitments and the GP commitment, is approximately $510,000,000 at Target Size.

This memorandum analyzes the following components of the side letter framework:

(a) standard side letter concessions that may be made available to all qualifying investors;

(b) investor-specific terms anticipated for each of the three anchor investors, based on preliminary conversations with their respective representatives and counsel, as well as customary market expectations for their investor types;

(c) most-favored-nation ("MFN") cascade mechanics, including eligibility thresholds, carve-out categories, timing, and process;

(d) a recommended tiered approach to side letter concessions based on commitment size thresholds, designed to provide CLSO GP with a structured and defensible framework for negotiations during the fundraising process; and

(e) coordination with parallel workstreams, including drafting of the Limited Partnership Agreement (the "LPA"), the Private Placement Memorandum (the "PPM"), tax structuring, regulatory analysis, and fund administration.

The side letter framework set forth herein should be finalized and presented to the Principals in conjunction with the first draft of the LPA (target circulation date: May 31, 2026) and the PPM (target delivery date: June 30, 2026). Marketing is expected to commence on or about August 1, 2026, with the target first close on November 15, 2026 (subject to a minimum first close of $250,000,000 in aggregate commitments) and the target final close on May 15, 2027. The framework described in this memorandum will serve as the basis for investor negotiations throughout that timeline.

We note that certain aspects of this memorandum—particularly those relating to tax structuring, regulatory compliance, and fund administration—remain subject to input from our co-counsel and advisors, as identified throughout this memorandum. We have flagged these items for follow-up and have included them in the action items set forth in Section X.

II. BACKGROUND AND CONTEXT

A. Fund Overview

CLSO Fund I is an opportunistic life-sciences fund pursuing control and significant-minority investments across three primary sectors:

(i) Clinical-Stage Therapeutics: Investments in companies with drug candidates in Phase II clinical trials or later stages of development, where the Fund can underwrite de-risked clinical pathways with identifiable regulatory milestones and potential for accelerated FDA review designations (Breakthrough Therapy, Fast Track, Priority Review, or Accelerated Approval).

(ii) Medical Devices: Investments in medical device companies pursuing FDA clearance or approval through the 510(k) premarket notification pathway or the Premarket Approval ("PMA") pathway, with a focus on Class II and Class III devices in high-growth therapeutic areas such as minimally invasive surgery, remote patient monitoring, and neural interface technologies.

(iii) Platform Biotechnology: Investments in platform technology companies operating in gene editing (including CRISPR-based and base-editing modalities), synthetic biology, and AI-enabled drug discovery and development, where the platform nature of the technology provides optionality across multiple therapeutic applications and potential partnering or licensing arrangements with larger pharmaceutical companies.

The Fund's sponsor is Cobalt Ventures LP, a Delaware limited partnership headquartered at 3400 Sand Hill Road, Suite 220, Menlo Park, California 94025. Cobalt Ventures was founded in 2018 by Dr. Marcus Yeung, a former partner at a leading life-sciences venture capital firm and a trained physician-scientist with an M.D./Ph.D. from Stanford University, and Priya Dasgupta, a former healthcare investment banker with over 15 years of experience in life-sciences capital markets. Cobalt Ventures currently manages approximately $420,000,000 in assets under management ("AUM") across two prior vintage vehicles: Cobalt Ventures Fund A, LP (2019 vintage, $125,000,000 in committed capital) and Cobalt Ventures Fund B, LP (2021 vintage, $295,000,000 in committed capital). Both prior vehicles pursued venture-stage investments in life-sciences companies, typically in the $5,000,000–$25,000,000 per investment range.

CLSO Fund I represents a deliberate strategy shift to larger, more concentrated positions, with anticipated initial investment sizes of $30,000,000–$100,000,000 per portfolio company, supplemented by follow-on reserves. This transition reflects both the maturation of the Cobalt Ventures platform and the Principals' assessment that the current market environment presents attractive opportunities for control and significant-minority investments in clinical-stage and platform-stage life-sciences companies at valuations that offer compelling risk-adjusted returns. The Fund's concentrated approach—targeting 10 to 15 portfolio companies—necessitates robust governance rights and active portfolio management, both of which have implications for the side letter framework discussed herein.

The Fund's geographic focus will be primarily North America, with up to 25% of aggregate commitments available for deployment in Western Europe and Israel, where the Principals have established networks in the life-sciences ecosystem. The Fund targets board seats or contractual governance rights in 100% of portfolio companies, a feature that is critical not only to the Fund's investment strategy but also to its intended qualification as a venture capital operating company ("VCOC") under the Department of Labor's ERISA regulations, as discussed further below.

B. Key Fund Economics Relevant to Side Letter Negotiations

The following economic terms of the Fund are directly relevant to the side letter framework, as they establish the baseline against which side letter concessions will be measured and the parameters within which modifications can be offered:

Management Fee. The management fee will be 2.00% per annum on aggregate commitments during the five-year investment period, producing annual management fee revenue of $15,000,000 at the Target Size. Following the expiration of the investment period, the management fee will step down to 2.00% per annum calculated on invested capital, defined as the cost basis of portfolio investments net of write-offs, write-downs, and the return of realized proceeds. This step-down is designed to align the management fee with the actual capital at work in the portfolio and is a standard feature in institutional-quality funds. Management fee reductions granted via side letter—whether through a reduced rate, a cap, or an offset—will be analyzed in the context of their aggregate impact on CLSO Management's operating budget and the Principals' economics.

Carried Interest. The carried interest will be 20% of net profits, calculated over a preferred return hurdle of 8% per annum, compounded annually. The distribution waterfall provides for a 100% GP catch-up following the return of contributed capital and accrued preferred return, after which distributions will be split 80% to limited partners and 20% to CLSO GP (or its designees). These are standard market terms for funds of this type and size.

Carry Escrow. 30% of carried interest distributions received by CLSO GP will be held in an escrow account until the later of (a) the wind-down of the Fund and (b) the resolution of all outstanding clawback obligations. This escrow percentage is at the upper end of market practice and provides a meaningful source of protection for limited partners in the event of a GP clawback obligation.

GP Clawback. The GP clawback obligation will be joint and several among the Principals, meaning that each of Dr. Yeung and Ms. Dasgupta will be individually liable for the full amount of any clawback, rather than solely for their respective shares. This is a significant LP-protective feature and may reduce pressure for additional clawback protections in side letters.

Recycling Allowance. CLSO GP will be permitted to recycle up to 15% of aggregate commitments ($112,500,000 at Target Size) during the investment period only. Recycled amounts represent realized proceeds from portfolio investments that may be re-called and re-invested, effectively increasing the Fund's deployable capital without requiring additional LP commitments. The recycling allowance is subject to the limitation that it may only be exercised during the investment period, and recycled capital counts toward the management fee base during the period in which it is deployed.

Concentration Limit. No single investment may exceed 15% of aggregate commitments ($112,500,000 at Target Size). This concentration limit is a key parameter for co-investment rights, as co-investment opportunities typically arise when CLSO GP identifies an investment opportunity that exceeds the Fund's desired allocation (considering the concentration limit) or that the Principals determine should be offered alongside the Fund for portfolio construction reasons.

Organizational Expense Cap. Organizational expenses—including legal fees for fund formation, regulatory filings, printing, and other formation costs—are capped at $1,500,000. Amounts in excess of this cap will be borne by CLSO Management and not charged to the Fund. This is a standard market provision.

Broken-Deal Expense Cap. Expenses relating to potential investments that are not consummated (including due diligence costs, legal fees, travel, and third-party consultant fees) are capped at $500,000 per deal. Broken-deal expenses in excess of this cap will be borne by CLSO Management.

Placement Fee. The placement fee payable to sagebrush Capital Partners LLC ("Sagebrush"), the Fund's exclusive global placement agent, is 1.50% of third-party commitments sourced by sagebrush. The placement fee is subject to a 100% offset against the management fee, meaning that the economic cost of the placement fee is borne entirely by CLSO Management and not by the limited partners. This offset structure is an important feature for institutional investors, particularly governmental plans, and will be disclosed in all side letters.

Transaction and Monitoring Fee Offset. Transaction fees, monitoring fees, directors' fees, and similar fees received by CLSO GP or its affiliates from portfolio companies will be offset at a rate of 80% against the management fee payable by the Fund. The 20% retained by CLSO Management is intended to compensate for the incremental cost of providing transaction and monitoring services to portfolio companies.

Fund Term. The Fund's term will be 10 years from the final close, with two optional one-year extensions. The first extension may be effected at the sole discretion of CLSO GP. The second extension requires the affirmative consent of the LP Advisory Committee ("LPAC"). Based on a target final close of May 15, 2027, the initial term would expire on May 15, 2037, with possible extensions to May 15, 2038 (first extension) and May 15, 2039 (second extension, subject to LPAC consent).

LP Advisory Committee. The LPAC will consist of a minimum of three and a maximum of seven members, appointed by CLSO GP. If aggregate non-U.S. commitments reach or exceed $50,000,000, at least one LPAC member must be a representative of a non-U.S. limited partner. The LPAC's functions include consent to conflicts of interest, review of valuation methodology, consent to the second one-year fund extension, and such other matters as may be specified in the LPA.

Key Person. Both Dr. Marcus Yeung and Priya Dasgupta are designated as key persons. A key person event will be triggered if either Principal ceases to devote substantially all of his or her business time and attention to the affairs of the Fund, resulting in a suspension of the investment period pending reinstatement or termination by the limited partners.

C. Investor Base Considerations

The composition of the Fund's anticipated investor base has significant implications for the side letter framework. Each category of institutional investor brings distinct regulatory, governance, and reporting requirements that must be addressed through investor-specific side letter provisions.

Cobalt Ventures currently operates under exempt reporting adviser ("ERA") status with the SEC (File No. 802-11934) pursuant to Section 203(m) of the Investment Advisers Act of 1940, as amended. Depending on the aggregate AUM of Cobalt Ventures following the closing of CLSO Fund I—which, when combined with the existing approximately $420,000,000 in AUM, could bring total regulatory AUM well above the $150,000,000 threshold—Cobalt Ventures may be required to transition from ERA status to full SEC registration as an investment adviser. This transition would impose additional compliance obligations (including Form ADV Part 2 delivery, enhanced recordkeeping, and custody rule compliance) that could affect side letter provisions and ongoing reporting to investors. We have flagged this issue for coordination with Fielding & O'Hara PLLC (Brian Liddell), which is advising on the regulatory aspects of the Fund formation.

The anticipated investor mix for CLSO Fund I is expected to include:

• State pension funds (such as Ironwood PERS), which are subject to state public records laws, fiduciary standards applicable to public pension fiduciaries, and investment policies adopted by their respective boards of trustees;

• University endowments (such as Northgate), which may have underlying pools subject to ERISA and which are governed by internal investment policies and, in many cases, endowment spending policies that affect liquidity needs;

• Insurance companies (such as Pinnacle), which are subject to state insurance regulatory frameworks, including investment limitations, statutory accounting requirements, and risk-based capital calculations;

• Sovereign wealth funds, which may require specific sovereign immunity protections, exemptions from U.S. tax withholding, and compliance with the Foreign Sovereign Immunities Act;

• Family offices, which may be less regulated but may have idiosyncratic investment guidelines, co-investment appetites, and reporting preferences; and

• Other institutional investors, including foundations, fund-of-funds, and healthcare-focused institutional allocators.

Each of these investor categories brings different negotiation dynamics and side letter expectations, and the tiered framework recommended in this memorandum is designed to accommodate this diversity while maintaining a manageable level of administrative complexity.

With respect to ERISA considerations, the Fund intends to elect VCOC status under Department of Labor Regulation §2510.3-101(d) if ERISA "plan assets" reach or exceed 25% of any class of equity interests in the Fund. VCOC status is available to funds that, through the exercise of management rights in portfolio companies (including board seats, contractual veto rights, and consultation rights), actively participate in the management of the companies in which they invest. The Fund's stated strategy of obtaining board seats or contractual governance rights in 100% of portfolio companies is directly aligned with the VCOC operating criteria. However, VCOC qualification must be monitored on an ongoing basis, and certain investors (particularly Northgate, as discussed in Section IV.B) will require side letter provisions addressing VCOC compliance. We are coordinating with Fielding & O'Hara PLLC (Brian Liddell) on ERISA/VCOC analysis and with Greystone Tax Advisors LLC (Kenneth Liu) on the tax structuring implications of certain side letter concessions, including blocker entity access and UBTI minimization.

D. Role of Placement Agent

Sagebrush Capital Partners LLC ("Sagebrush"), CRD No. 298714, has been engaged as the Fund's exclusive global placement agent. Jonathan Mercer, Managing Director at sagebrush, is the primary relationship manager for the engagement. Sagebrush is represented by Ashworth & Lyle LLP (Sara Phan, partner).

The Placement Agent Agreement between CLSO GP and sagebrush has a target execution date of July 15, 2026, and will set forth the terms of the engagement, including: (a) the 1.50% placement fee on all third-party commitments sourced by sagebrush; (b) the 100% offset of the placement fee against the management fee; (c) a $150,000 non-refundable retainer payable upon execution; (d) a 24-month tail period during which sagebrush will be entitled to the placement fee on commitments from investors introduced during the engagement term; and (e) sagebrush's exclusivity as the Fund's global placement agent.

In the context of the side letter framework, sagebrush's role is significant for several reasons. First, sagebrush will be the primary interface with many prospective investors during the marketing period, and its representatives must be fully briefed on the tiered framework and the menu of available concessions so that investor discussions and marketing materials are consistent with the framework. Second, certain investors—particularly governmental plan investors such as Ironwood PERS—will require detailed placement agent disclosures in their side letters, including confirmation of the absence of any "pay-to-play" relationships. Third, sagebrush's counsel at Ashworth & Lyle LLP may review the side letter framework to assess any placement agent compliance implications, particularly under SEC and FINRA regulations governing placement agent conduct.

III. STANDARD SIDE LETTER CONCESSIONS

This Section III describes the categories of side letter concessions that we recommend making available on a standardized basis to qualifying investors, subject to the tiered framework discussed in Section VII. These provisions represent the core menu of terms that CLSO GP should be prepared to offer during negotiations, and they are designed to address the most common institutional investor requirements while preserving the Fund's economic structure and operational flexibility.

A. Most-Favored-Nation (MFN) Rights

Description. Most-favored-nation rights entitle an LP to elect to receive any term or provision that has been granted to another LP in a side letter, subject to specified carve-outs. The MFN clause is the cornerstone of the side letter framework, as it serves as a leveling mechanism that ensures investors of comparable size are treated equitably while preserving the ability of CLSO GP to offer differentiated terms to anchor investors and investors with unique regulatory requirements.

Recommendation. We recommend including a standard MFN clause in all side letters for investors meeting the commitment threshold discussed in Section VII below. The MFN clause should be drafted as a covenant of CLSO GP, rather than as a self-executing provision, to ensure that the process is administered in an orderly manner following the final close.

Mechanics. Upon the final close of the Fund (target: May 15, 2027), CLSO GP will prepare—with the assistance of Calderwood & Harkness LLP—a redacted compendium of all side letter terms granted to all LPs. The compendium will be redacted to remove investor-identifying information (including the name, commitment size, and contact details of each LP) while preserving the substance of each concession in sufficient detail to permit an informed election. Each MFN-eligible LP will receive a copy of the redacted compendium, together with a notice setting forth the election procedures and the deadline for elections. Each MFN-eligible LP will have 30 calendar days from the date of distribution to elect, in writing, to receive any or all of the disclosed concessions. Elected terms will be incorporated into the electing LP's side letter by means of a written amendment executed by the LP and CLSO GP.

Carve-Outs from MFN. Certain categories of side letter terms should be excluded from the MFN election process, as they are by their nature investor-specific or relate to the particular legal, regulatory, or tax status of the benefited LP. The recommended carve-out categories are discussed in detail in Section V.C below and summarized in Appendix B. By way of overview, the recommended carve-outs include: (a) ERISA-specific provisions (e.g., the Northgate VCOC carve-out); (b) insurance regulatory provisions (e.g., the Pinnacle compliance suite); (c) FOIA and public records protections (e.g., the Ironwood PERS provisions); (d) blocker entity access (investor-specific tax structuring); (e) LPAC seats (allocated based on commitment size and investor profile); (f) co-investment rights at no fee/no carry, to the extent offered only to investors above a specified commitment threshold (recommended: $75,000,000); and (g) terms that are personal to the investor, such as notice addresses and contact information.

Co-Investment and MFN. A threshold question for the framework is whether co-investment rights at no additional management fee and no carried interest should be MFN-eligible or carved out as an anchor-specific concession. Our recommendation is that co-investment rights at no fee/no carry should be carved out of MFN for investors with commitments below $75,000,000. This preserves the economic incentive for anchor commitments and is consistent with market practice for life-sciences funds of this size. Co-investment opportunities offered on a "best-efforts" basis at reduced (but not eliminated) fee and carry terms may remain MFN-eligible, as these represent a lower-value concession and are less likely to create economic imbalance.

B. Enhanced Reporting Rights

Standard Offering. Under the LPA, all LPs will receive: (a) annual audited financial statements of the Fund, prepared by Whitfield & Pratt LLP, the Fund's independent auditor, in accordance with U.S. generally accepted accounting principles ("GAAP"), delivered within 120 days following the end of each fiscal year; (b) quarterly unaudited portfolio summaries, providing high-level information regarding the Fund's portfolio composition, recent investment activity, and liquidity position; and (c) capital account statements, processed and distributed by Halcyon Fund Services, Inc. ("Halcyon"), the Fund's third-party fund administrator, on a quarterly basis.

Enhanced Reporting Side Letter Provisions. In addition to the standard reporting package, qualifying investors may negotiate for enhanced reporting, which may include one or more of the following:

(i) Portfolio-Level Analytics: Investment-level internal rate of return ("IRR") and multiple of invested capital ("MOIC"), sector breakdown, geographic allocation, and vintage year attribution, presented in a format consistent with the Institutional Limited Partners Association ("ILPA") reporting guidelines.

(ii) ESG Reporting: Reporting on environmental, social, and governance factors relevant to the Fund's portfolio, including clinical trial diversity metrics, environmental impact assessments for manufacturing-stage portfolio companies, and governance diversity data. ESG reporting is increasingly demanded by institutional investors, particularly endowments and pension funds.

(iii) Bespoke Reporting Formats: Certain investors may require reporting in specific formats to satisfy internal reporting systems, board presentation requirements, or regulatory filing obligations (e.g., insurance statutory accounting formats, as discussed in Section IV.C for Pinnacle).

Frequency. Enhanced reporting may be provided quarterly or annually, depending on the investor's commitment level and regulatory requirements. We recommend offering quarterly enhanced reporting to Tier 1 investors and annual enhanced reporting to Tier 2 investors, as described in Section VII.

C. Excuse / Exclusion Rights

Standard LPA Provision. The LPA will include a standard provision permitting CLSO GP to excuse or exclude an LP from participation in a specific investment if such participation would cause the LP to violate applicable law, regulation, or the LP's governing instrument (including, for example, fiduciary mandate restrictions, sanctioned-jurisdiction prohibitions, or investment policy limitations).

Side Letter Enhancement. Beyond the standard LPA provision, certain investors may negotiate for an expanded excuse right, which would permit the LP to request an excuse from any investment in a particular therapeutic area, sub-sector, or geography upon written notice to CLSO GP, subject to CLSO GP's reasonable discretion. This type of expanded excuse right is particularly relevant for governmental pension plans that may be subject to legislatively imposed investment restrictions (such as prohibitions on investments in certain industries or countries) and for insurance companies that may face regulatory limitations on the types or concentrations of investments their general accounts may hold.

Fee Treatment of Excused Capital. When an LP is excused from a particular investment, the excused capital should not be counted toward the LP's unfunded commitments for management fee calculation purposes. This ensures that the LP does not bear a management fee on capital that it has not been permitted to deploy, which is both equitable and standard market practice.

D. Transfer / Assignment Rights

LPA Baseline. Under the LPA, transfers of LP interests will be subject to the following conditions: (a) CLSO GP consent, which may not be unreasonably withheld; (b) minimum transfer amounts (to be specified in the LPA, typically $5,000,000 or the LP's entire remaining interest, whichever is less); (c) compliance with applicable federal and state securities laws, including the absence of a general solicitation and satisfaction of applicable exemptions from registration; and (d) ERISA considerations, including confirmation that the transfer will not cause the Fund to hold "plan assets" under ERISA or, if the Fund already holds plan assets, that the transfer will not adversely affect VCOC status.

Side Letter Enhancement. Qualifying investors may negotiate for the following transfer facilitation provisions: (a) pre-approved transfers to affiliates, wholly owned subsidiaries, and controlled entities of the transferring LP without the requirement of GP consent; (b) the right to transfer to a successor entity upon a merger, reorganization, or similar corporate transaction affecting the LP, provided that the successor entity satisfies the same eligibility requirements as the original LP; and (c) streamlined notice procedures, including reduced notice periods and simplified documentation requirements for permitted transfers. These enhancements are particularly relevant for institutional investors that may undergo organizational restructurings, changes in investment vehicle structures, or transitions in investment management arrangements.

E. FOIA / Public Records Protections

FOIA and public records protections are critical for governmental plan investors. Ironwood PERS, as an Oregon state pension fund, is subject to the Oregon Public Records Law (ORS 192.311 et seq.), and any information provided to Ironwood PERS in connection with its investment in the Fund may be subject to public records requests by third parties, including journalists, activists, and competitors of the Fund's portfolio companies.

The recommended side letter provision for governmental plan investors includes the following elements:

(a) CLSO GP will use commercially reasonable efforts to designate all confidential information provided to the LP as "trade secrets" or "proprietary business information" that is exempt from disclosure under applicable public records statutes, including ORS 192.345(2) (trade secrets) and ORS 192.355(4) (information submitted in confidence).

(b) The LP will provide CLSO GP with advance written notice (not less than 10 business days, to the extent permitted by applicable law) before disclosing any information received from CLSO GP or the Fund in response to a FOIA request, public records request, or court order.

(c) CLSO GP will cooperate with the LP in seeking protective orders, confidentiality designations, or other measures to prevent or limit the disclosure of confidential information.

(d) The LP acknowledges that CLSO GP cannot guarantee that any particular information will be exempt from disclosure under applicable public records laws, and that the ultimate determination of whether information must be disclosed rests with the applicable governmental authority or court.

(e) The LP will bear the costs of any legal challenge or proceeding relating to the disclosure of confidential information received from CLSO GP or the Fund, including attorneys' fees and court costs.

These provisions should be carved out of the MFN framework, as they are relevant only to LPs that are subject to public records laws and are not applicable to private institutional investors.

F. Regulatory Compliance Carve-Outs

A general regulatory compliance carve-out should be available to all LPs, providing that if compliance with any provision of the LPA would cause the LP to violate any applicable law, rule, regulation, or order of any governmental authority, the LP will be excused from such compliance to the extent of the conflict, upon written notice to CLSO GP accompanied by a supporting legal opinion from counsel to the LP. This is a broad protective provision that serves as a catch-all for regulatory situations not specifically addressed by other side letter provisions.

Specific regulatory contexts that may give rise to investor-specific carve-out provisions include:

(a) Insurance Company Investment Regulations: State insurance codes impose detailed limitations on the types, concentrations, and risk profiles of investments that may be held in an insurer's general account. Pinnacle, as a Connecticut life and annuity insurer, is subject to the Connecticut Insurance Code (Conn. Gen. Stat. §38a-102 et seq.) and the regulations of the Connecticut Insurance Department.

(b) ERISA Fiduciary Standards: ERISA plan fiduciaries are subject to the prudent man rule and the exclusive benefit rule under ERISA §§404 and 406, which may limit their ability to consent to certain fund-level transactions or waive certain rights.

(c) Bank Regulatory Capital Requirements: If any LP is a banking institution subject to bank regulatory capital requirements (e.g., Basel III/IV risk-weighted asset calculations), the LP may require side letter provisions addressing the treatment of its fund investment for regulatory capital purposes.

(d) Sovereign Immunity Considerations: Sovereign wealth fund investors may require side letter provisions preserving their sovereign immunity under the Foreign Sovereign Immunities Act and ensuring that their investment in the Fund does not constitute a waiver of immunity.

G. Key Person Event Notification

LPA Baseline. The LPA will provide that a key person event occurs upon either Dr. Marcus Yeung or Priya Dasgupta ceasing to devote substantially all of his or her business time and attention to the affairs of the Fund. Upon the occurrence of a key person event, the investment period will be automatically suspended. The suspension will continue until the earlier of (a) the appointment of a replacement key person acceptable to a majority-in-interest of the limited partners or (b) 180 days, after which the investment period will terminate unless reinstated by a vote of a majority-in-interest of the limited partners.

Side Letter Enhancement. Major investors may negotiate for the following enhanced key person notification provisions: (a) prompt written notice (within five business days) of the occurrence of any key person event, including a description of the circumstances giving rise to the event; (b) the right to participate in discussions regarding the reinstatement of the investment period or the appointment of a replacement key person; and (c) enhanced information rights during the suspension period, including the right to receive weekly updates on the status of discussions regarding reinstatement or termination and the right to receive portfolio-level information regarding the impact of the suspension on pending or contemplated investments.

H. Co-Investment Rights

Standard Provision. Under the LPA, CLSO GP may, but is not obligated to, offer co-investment opportunities to limited partners. The LPA will provide that CLSO GP has sole discretion over the allocation of co-investment opportunities and the terms on which such opportunities are offered.

Side Letter Concession Levels. Co-investment rights are among the most sought-after side letter concessions in the current fundraising environment, particularly for life-sciences funds where individual deal sizes may create natural co-investment opportunities. We recommend the following two-tier approach:

Tier 1 (Anchor Investors, $75,000,000 and above): Right of first offer on co-investment opportunities alongside the Fund, at no additional management fee and no carried interest charged on co-invested capital. This concession is a material economic benefit to the LP, as it allows the LP to increase its exposure to the Fund's most attractive investments without bearing the full cost structure of the Fund. The right of first offer means that CLSO GP will present co-investment opportunities to Tier 1 LPs before offering them to other LPs or external parties, but CLSO GP retains the right to determine the availability, size, and timing of each co-investment opportunity.

Tier 2 (Other Qualifying LPs, $25,000,000–$74,999,999): Co-investment opportunities offered on a best-efforts basis, meaning that CLSO GP will use reasonable efforts to make co-investment opportunities available to Tier 2 LPs but is not obligated to do so. Co-investment terms for Tier 2 LPs will include reduced management fee and carried interest, as determined by CLSO GP on a deal-by-deal basis.

Allocation Policy. Co-investment allocations will be made on a pro rata basis relative to each LP's commitment to the Fund, subject to CLSO GP's discretion to consider factors including investor suitability for the particular investment, speed of execution and ability to commit capital within the required timeframe, the LP's historical participation in co-investment opportunities, and potential conflicts of interest. The allocation policy should be set forth in the LPA and referenced in each side letter that includes co-investment rights.

I. Advisory Committee (LPAC) Representation

LPAC Composition. As noted in Section II.B, the LPAC will consist of a minimum of three and a maximum of seven members, appointed by CLSO GP. At least one member must be a representative of a non-U.S. LP if aggregate non-U.S. commitments reach $50,000,000.

Side Letter Allocation of Seats. LPAC seats are a governance concession that is typically offered to the largest LPs and to investors whose participation in the LPAC adds value to the Fund's governance (e.g., investors with deep sector expertise, investors who represent a particular constituency within the LP base, or investors whose regulatory status makes their input on compliance matters particularly relevant). LPAC seats should be allocated in the side letters of anchor investors. For CLSO Fund I, we recommend guaranteeing one LPAC seat to Ironwood PERS (as the largest anchor investor) in its side letter, and reserving the remaining seats for allocation during the fundraising process based on the composition of the LP base at each closing. Northgate and Pinnacle may request LPAC representation, and CLSO GP should retain flexibility to accommodate such requests if the committee composition allows.

LPAC Functions. The LPAC's primary functions, as set forth in the LPA, will include: (a) consent to conflicts of interest involving CLSO GP, the Principals, or their affiliates; (b) review of the Fund's valuation methodology, including fair value determinations for portfolio investments; (c) consent to the second one-year fund extension (from May 15, 2038 to May 15, 2039, assuming the first extension has been exercised); and (d) such other advisory functions as may be specified in the LPA. The LPAC will operate in an advisory capacity and will not have the power to bind the Fund or CLSO GP, except where specific consent rights are granted.

J. Indemnification and Exculpation

LPA Baseline. The LPA will contain standard exculpation and indemnification provisions, pursuant to which CLSO GP, its members, officers, employees, and agents (collectively, the "Indemnified Persons") will be exculpated from liability and indemnified by the Fund for losses, claims, damages, expenses, and liabilities arising out of or in connection with the Fund's activities, except to the extent that such losses, claims, damages, expenses, or liabilities result from the Indemnified Person's fraud, gross negligence, willful misconduct, or material breach of the LPA. This standard is consistent with Delaware limited partnership law and market practice.

Side Letter Considerations. Certain sophisticated institutional investors may seek to modify the indemnification framework in their side letters, for example by: (a) narrowing the definition of "losses" to exclude consequential or punitive damages; (b) adding a requirement that the Indemnified Person acted in good faith and in a manner reasonably believed to be in the best interests of the Fund; or (c) limiting the LP's indemnification obligation to a specified dollar amount or to the LP's unfunded commitment.

Recommendation. We recommend resisting substantive modifications to the LPA indemnification framework in side letters, as such modifications create inconsistencies among LPs and may give rise to contribution issues in the event of a claim. Clarifying language—such as confirmation that the exculpation standard applies to investment decisions as well as administrative actions—may be appropriate. Any indemnification modifications should be reviewed on a case-by-case basis and discussed with the Principals before being offered.

IV. INVESTOR-SPECIFIC TERMS — ANCHOR INVESTORS

This Section sets forth the detailed analysis of investor-specific side letter terms anticipated for each of the three anchor investors. The analysis for each investor includes: (a) a profile of the investor; (b) a description of the key terms expected to be sought, based on preliminary discussions and market practice; and (c) our recommendations regarding each requested term.

A. Ironwood Public Employees' Retirement System

1. Investor Profile.

Full Legal Name: Ironwood Public Employees' Retirement System

Type: State pension fund, organized and existing under the laws of the State of Oregon

AUM: Approximately $62 billion

Primary Contact: Helen Tsao, Director of Private Markets, 900 Capitol Way NE, Suite 400, Salem, Oregon 97301

Anticipated Commitment: $100,000,000, subject to approval by the Ironwood PERS Investment Committee, which is tentatively scheduled to consider the CLSO Fund I allocation at its regularly scheduled meeting in June 2026

Background: Ironwood PERS is the largest public employees' pension system in Oregon, providing retirement, disability, and death benefits to eligible state and local government employees and their beneficiaries. The Ironwood PERS Investment Committee oversees an investment program that includes public equity, fixed income, real estate, infrastructure, and private equity/venture capital. Helen Tsao's Private Markets team manages a diversified alternatives portfolio with existing allocations to life-sciences venture capital, growth equity, and buyout strategies. Ironwood PERS has a well-established track record of investing in first-time institutional funds with emerging managers and has previously invested with Cobalt Ventures through a participation in Cobalt Ventures Fund B, LP.

Ironwood PERS is the largest anticipated anchor investor and represents the single largest LP commitment expected at first close. Its participation is a cornerstone of the fundraising strategy, and its side letter will serve as the baseline from which other side letters are derived.

2. Key Terms Sought. Based on preliminary discussions with Helen Tsao's team and Ironwood PERS's outside counsel, the following terms are expected to be sought:

MFN Side Letter. Ironwood PERS will expect full MFN rights, with the broadest possible scope of election. As the largest LP, Ironwood PERS will expect to be the MFN "benchmark" investor, meaning that its side letter effectively sets the ceiling of concessions that other investors can elect into (subject to carve-outs for investor-specific regulatory provisions). This is a standard expectation for the largest LP in a fund and is consistent with market practice. We recommend granting full MFN rights to Ironwood PERS, while ensuring that the carve-out categories are clearly delineated to prevent unintended cascade of investor-specific provisions. Specifically, insurance regulatory provisions (applicable to Pinnacle), ERISA/VCOC provisions (applicable to Northgate), and blocker entity access provisions should be carved out of MFN as relating to the specific legal, regulatory, or tax status of the benefited LP.

Advisory Committee Seat. Ironwood PERS will expect a guaranteed seat on the LPAC for Helen Tsao or her designee. This is a standard request for the largest LP and is consistent with LPAC governance best practices. Ironwood PERS expects to participate actively in conflict-of-interest reviews, valuation methodology reviews, and extension votes. We recommend granting this concession without qualification, as LPAC participation by the largest LP is both customary and valuable for Fund governance.

Co-Investment Rights at No Fee / No Carry. Ironwood PERS will seek the right of first offer on all co-investment opportunities alongside the Fund, with no additional management fee and no carried interest charged on co-invested capital. This is a material concession, as it allows Ironwood PERS to increase its exposure to the Fund's best investments at zero incremental cost. We recommend granting this concession, subject to the following limitations: (a) the right of first offer applies only to co-investment opportunities where the Fund's desired allocation exceeds the concentration limit ($112,500,000 / 15% of aggregate commitments) or where CLSO GP otherwise determines in its sole discretion that a co-investment allocation is available; (b) the minimum allocation for Ironwood PERS co-investments will be calculated pro rata based on Ironwood PERS's commitment relative to total Fund commitments; and (c) CLSO GP retains discretion over the timing, structure, and terms of each co-investment opportunity, including the right to offer co-investment opportunities through a co-investment vehicle organized and managed by CLSO GP.

Annual In-Person Reporting. Ironwood PERS will require that CLSO GP's Principals (Dr. Yeung and/or Ms. Dasgupta) attend an annual in-person meeting with the Ironwood PERS investment staff in Salem, Oregon, to present portfolio updates, performance attribution, market outlook, and pipeline information. This requirement reflects Ironwood PERS's governance culture and the Investment Committee's expectation that portfolio managers provide in-person updates. The operational burden of this commitment is modest—a single annual trip to Salem by one or both Principals—and we recommend agreeing without qualification. The side letter should specify that the meeting will be held at a mutually convenient time during the first quarter following the end of each fiscal year.

FOIA / Public Records. As described in Section III.E, Ironwood PERS will require robust FOIA protections reflecting its status as a governmental entity subject to the Oregon Public Records Law. These provisions are non-negotiable from Ironwood PERS's perspective and are standard for governmental plan investors. We recommend including the full suite of FOIA protections as described in Section III.E, including advance notice, cooperation in seeking protective orders, and trade secret designations. The FOIA provisions should be carved out of MFN, as they are relevant only to governmental plan investors.

Key Person Notification. Ironwood PERS will seek enhanced key person notification provisions as described in Section III.G, including five-business-day notice and the right to participate in discussions regarding reinstatement or termination of the investment period. We recommend granting this concession.

Placement Agent Disclosure. Ironwood PERS will require full disclosure of the sagebrush engagement in its side letter, including: (a) the identity of sagebrush as the exclusive global placement agent; (b) the placement fee of 1.50% on third-party commitments sourced by sagebrush; (c) the 100% offset of the placement fee against the management fee; (d) the $150,000 retainer; (e) any other compensation or consideration paid or payable to sagebrush or its personnel in connection with the Fund; and (f) a representation by CLSO GP that, to the best of its knowledge after reasonable inquiry, no placement agent compensation has been paid or promised to any person who has a relationship (whether as a board member, employee, consultant, or advisor) with Ironwood PERS or its board of trustees. This "pay-to-play" representation is standard for governmental plan investors and reflects the heightened scrutiny that pension fund investments receive in the public records context.

3. Analysis and Recommendations. The $100,000,000 commitment from Ironwood PERS represents approximately 13.3% of the Fund's target size. This is a marquee anchor relationship that provides the Fund with substantial first-close capital, a credible institutional anchor investor for marketing purposes, and a relationship that, if successful, could yield follow-on commitments in future Cobalt Life Sciences vintage vehicles.

From a concessions perspective, the terms sought by Ironwood PERS are well within market norms for anchor investors of this size in life-sciences funds. Co-investment at no fee/no carry is increasingly standard for commitments of $75,000,000 or more in the life-sciences sector, where deal sizes and concentration limits naturally create co-investment opportunities. The LPAC seat, FOIA protections, and placement agent disclosures are standard governmental plan requirements that impose minimal economic cost on the Fund or other LPs. The annual in-person reporting requirement is a modest operational commitment that builds relationship equity with a key investor.

We recommend granting the full suite of concessions described above to Ironwood PERS. The Ironwood PERS side letter will serve as the Tier 1 template from which other anchor investor side letters are derived, with investor-specific modifications for each anchor.

B. Northgate Endowment Management LLC

1. Investor Profile.

Full Legal Name: Northgate Endowment Management LLC

Type: Delaware limited liability company; investment arm of a major university endowment

AUM: Approximately $8.5 billion

Primary Contact: David Park, Senior Portfolio Manager – Life Sciences Allocation, 77 Brattle Street, 4th Floor, Cambridge, Massachusetts 02138

Anticipated Commitment: $50,000,000

Background: Northgate is the external investment management entity that manages the endowment assets of a leading research university. David Park leads Northgate's life-sciences allocation program, which invests across the full spectrum of life-sciences strategies, including venture capital, growth equity, buyouts, and royalty-based structures. Northgate's investment in CLSO Fund I would be a natural extension of its life-sciences allocation strategy and would position Northgate to participate in the emerging manager opportunity represented by the Cobalt platform's transition to larger, more concentrated investments.

2. Key Terms Sought. ERISA-Compliant Carve-Out Structure. Although Northgate is itself an endowment investment arm—and therefore not itself an employee benefit plan subject to ERISA—certain of its underlying investment pools may constitute "plan assets" within the meaning of ERISA Section 3(42) and Department of Labor Regulation §2510.3-101. This arises because certain retirement and benefit plans for university employees may invest indirectly in the endowment's investment program, and if such plan assets constitute 25% or more of any class of equity interests in CLSO Fund I, the Fund's assets would be deemed to be plan assets for purposes of ERISA's fiduciary responsibility and prohibited transaction provisions.

To address this concern, Northgate will require the following side letter provisions:

(a) Confirmation that the Fund intends to qualify as a VCOC under DOL Regulation §2510.3-101(d) if ERISA plan assets reach or exceed 25% of any class of equity interests in the Fund. VCOC status, if maintained, provides a safe harbor from the plan asset regulations, meaning that the Fund's assets will not be deemed to be plan assets regardless of the level of ERISA plan asset participation.

(b) Specific representations regarding the Fund's satisfaction of the VCOC operating criteria, including: (i) the Fund's stated strategy of obtaining management rights (board seats, contractual veto rights, or similar governance rights) in 100% of portfolio companies; (ii) the Fund's intent to exercise such management rights on an ongoing basis; and (iii) the Fund's intention to invest at least 50% of its assets (other than short-term investments pending long-term deployment) in "operating companies" as defined in DOL Regulation §2510.3-101(c).

(c) A side letter provision permitting Northgate to withdraw or reduce its commitment in the event that the Fund fails to maintain VCOC status, subject to appropriate notice and cure provisions.

(d) Reporting on ERISA plan asset status at each closing and annually thereafter, including a schedule of ERISA plan asset participation as a percentage of each class of equity interests in the Fund.

(e) Coordination with Greystone Tax Advisors LLC (Kenneth Liu) and Fielding & O'Hara PLLC (Brian Liddell) on the interaction between VCOC status and the Fund's investment strategy, including any circumstances in which a specific investment might jeopardize VCOC qualification (e.g., an investment in a non-operating entity, or a failure to obtain management rights in a portfolio company due to co-investor dynamics or regulatory restrictions).

Co-Investment Rights. Northgate will seek the right to participate in co-investment opportunities alongside the Fund, on terms similar to those offered to Ironwood PERS (i.e., no additional management fee and no carried interest), but subject to a slightly lower priority in the allocation waterfall given Northgate's smaller commitment size ($50,000,000 versus $100,000,000 for Ironwood PERS). The treatment of Northgate's co-investment rights relative to the Tier 2 standard is discussed further in Section VII.C below.

Annual Detailed Portfolio Analytics. Northgate will seek enhanced reporting beyond the standard quarterly unaudited summaries provided under the LPA. Specifically, Northgate will request access to the following on at least an annual basis:

(i) Investment-level IRR and MOIC, calculated on both a gross and net basis;

(ii) Clinical trial milestone tracking for therapeutics investments, including current trial phase, enrollment status, data readout timelines, and regulatory interactions;

(iii) FDA regulatory pathway status for medical device investments, including 510(k) or PMA filing status, review timelines, and any FDA correspondence of note;

(iv) Mark-to-market methodology disclosure, including the valuation approach applied to each portfolio company (comparable company analysis, discounted cash flow, recent transaction prices, etc.) and any changes in methodology from prior periods;

(v) Sector and geography attribution analysis, breaking down the portfolio by therapeutic area, technology platform, and geographic market.

These analytics are to be prepared by Halcyon Fund Services, Inc. in coordination with CLSO Management and are consistent with the reporting that life-sciences allocators increasingly expect from their fund managers.

3. Analysis and Recommendations. The $50,000,000 commitment from Northgate represents approximately 6.7% of the Fund's target size. While smaller in absolute terms than the Ironwood PERS and Pinnacle commitments, Northgate's participation carries significant signaling value in the life-sciences investor community. University endowments with dedicated life-sciences allocation programs are among the most knowledgeable and discerning allocators in the sector, and their participation in a fund provides a meaningful endorsement of the manager's strategy and capabilities. David Park's reputation as a leading life-sciences allocator further enhances the value of Northgate's commitment for marketing purposes.

With respect to the ERISA carve-out provisions, these are standard and protective in nature and should be granted. The VCOC compliance framework is integral to the Fund's investment strategy—100% board/governance rights in portfolio companies—and the VCOC representations are consistent with the Fund's stated operating model. However, we recommend that the withdrawal right triggered by VCOC failure be narrowly drafted. Specifically, the withdrawal right should be triggered only if CLSO GP affirmatively determines that it will not maintain VCOC status on an ongoing basis, and not upon a temporary or technical shortfall in the VCOC operating criteria (e.g., a brief period during which the Fund's portfolio composition falls below the 50% operating company threshold due to timing of investments and realizations). The side letter should include a reasonable cure period (e.g., 90 days) during which CLSO GP may take corrective action before the withdrawal right becomes exercisable.

With respect to enhanced portfolio analytics, we recommend granting this concession but suggest discussing the specific scope and format of deliverables with Halcyon Fund Services (Thomas Varga, relationship manager) before committing to detailed specifications in the side letter. The clinical trial milestone tracking and FDA regulatory pathway status reporting, in particular, will require input from CLSO Management's investment professionals and may impose incremental costs on the fund administration budget.

With respect to co-investment at no fee/no carry, we recommend granting this concession to Northgate as an upgraded term, notwithstanding Northgate's classification as a Tier 2 investor under the proposed commitment thresholds. The rationale for this upgrade is discussed in Section VII.C below.

The ERISA-specific provisions granted to Northgate should be carved out of the MFN framework, as they relate to Northgate's specific regulatory status and are not applicable to investors that are not subject to ERISA.

C. Pinnacle Insurance Group, Inc.

1. Investor Profile.

Full Legal Name: Pinnacle Insurance Group, Inc.

Type: Connecticut corporation; life and annuity insurer

General Account AUM: Approximately $28 billion

Primary Contact: Rachel Stein, Senior Vice President – Alternative Investments, 500 Asylum Avenue, Hartford, Connecticut 06103

Anticipated Commitment: $75,000,000

Background: Pinnacle is a leading life and annuity insurance company domiciled in Connecticut and licensed in all 50 states and the District of Columbia. Pinnacle's general account investment portfolio is managed by an internal investment team that allocates across fixed income, public equities, real estate, and alternative investments, including private equity, venture capital, and hedge funds. Alternative investments are managed through a dedicated private markets sleeve within the general account. Rachel Stein oversees the alternative investments program and has been building Pinnacle's exposure to life-sciences private markets as part of a broader diversification initiative. Pinnacle's investment in CLSO Fund I would represent its first allocation to a dedicated life-sciences fund and would be subject to approval by Pinnacle's Investment Committee and compliance review by its regulatory affairs department.

Pinnacle's participation provides important diversification of the LP base beyond pension and endowment capital. Insurance company investors bring patient capital, long-duration investment horizons, and a stable commitment profile that is well-suited to the Fund's 10-year (plus extensions) term structure.

2. Key Terms Sought. Insurance Regulatory Compliance Provisions. As a life and annuity insurer regulated by the Connecticut Insurance Department (and potentially other state insurance regulators in states where Pinnacle is licensed), Pinnacle's investment in the Fund is subject to a comprehensive regulatory framework governing the types, amounts, and concentrations of investments that may be held in an insurer's general account. Pinnacle will require the following side letter provisions to ensure ongoing regulatory compliance:

(a) Regulatory Acknowledgment. A provision acknowledging that Pinnacle's investment in the Fund is subject to regulation by the Connecticut Insurance Department and potentially other state insurance regulators, and that CLSO GP will prov

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Pamela Cross, Responsible Partner, Funds & Asset Management, Calderwood & Harkness LLP
FROM: Theresa Kim, Lead Associate, Funds & Asset Management; Owen Fischer, Working Associate, Funds & Asset Management
DATE: April 30, 2026
RE: Side Letter Framework — Cobalt Life Sciences Opportunities Fund I, LP
MATTER NO.: 1004-00002
BILLING CODE: 88103-CVC
This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of the formation and offering of Cobalt Life Sciences Opportunities Fund I, LP. It is intended solely for the use of the addressee and should not be distributed, copied, or disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
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I. EXECUTIVE SUMMARY
The purpose of this memorandum is to set forth the recommended side letter framework for Cobalt Life Sciences Opportunities Fund I, LP ("CLSO Fund I" or the "Fund"), a Delaware limited partnership to be formed, with a target fund size of $750,000,000 (the "Target Size") and a hard cap of $1,000,000,000 (the "Hard Cap"). The Fund will pursue an opportunistic life-sciences investment strategy, as described in further detail in Section II below.
The Fund's general partner will be Cobalt Life Sciences GP I, LLC ("CLSO GP"), a Delaware limited liability company managed by Dr. Marcus Yeung and Priya Dasgupta (collectively, the "Principals"). The management company responsible for day-to-day operations, personnel, and overhead will be Cobalt Life Sciences Management I, LLC ("CLSO Management"), also a Delaware limited liability company controlled by the Principals.
Three anchor and seed investors have been identified by the Principals and the placement agent, with aggregate anticipated commitments of $225,000,000, representing 30% of the Target Size:
• Ironwood Public Employees' Retirement System ("Ironwood PERS"), an Oregon state pension fund, with an anticipated commitment of $100,000,000;
• Northgate Endowment Management LLC ("Northgate"), a Delaware LLC serving as the investment arm of a major university endowment, with an anticipated commitment of $50,000,000; and
• Pinnacle Insurance Group, Inc. ("Pinnacle"), a Connecticut corporation and life and annuity insurer, with an anticipated commitment of $75,000,000.
In addition to the anchor commitments, the GP commitment will be a minimum of 2% of aggregate commitments, which at Target Size equates to $15,000,000. Based on these figures, the remaining capital to be raised from third-party limited partners, after accounting for the anchor commitments and the GP commitment, is approximately $510,000,000 at Target Size.
This memorandum analyzes the following components of the side letter framework:
(a) standard side letter concessions that may be made available to all qualifying investors;
(b) investor-specific terms anticipated for each of the three anchor investors, based on preliminary conversations with their respective representatives and counsel, as well as customary market expectations for their investor types;
(c) most-favored-nation ("MFN") cascade mechanics, including eligibility thresholds, carve-out categories, timing, and process;
(d) a recommended tiered approach to side letter concessions based on commitment size thresholds, designed to provide CLSO GP with a structured and defensible framework for negotiations during the fundraising process; and
(e) coordination with parallel workstreams, including drafting of the Limited Partnership Agreement (the "LPA"), the Private Placement Memorandum (the "PPM"), tax structuring, regulatory analysis, and fund administration.
The side letter framework set forth herein should be finalized and presented to the Principals in conjunction with the first draft of the LPA (target circulation date: May 31, 2026) and the PPM (target delivery date: June 30, 2026). Marketing is expected to commence on or about August 1, 2026, with the target first close on November 15, 2026 (subject to a minimum first close of $250,000,000 in aggregate commitments) and the target final close on May 15, 2027. The framework described in this memorandum will serve as the basis for investor negotiations throughout that timeline.
We note that certain aspects of this memorandum—particularly those relating to tax structuring, regulatory compliance, and fund administration—remain subject to input from our co-counsel and advisors, as identified throughout this memorandum. We have flagged these items for follow-up and have included them in the action items set forth in Section X.
II. BACKGROUND AND CONTEXT
A. Fund Overview
CLSO Fund I is an opportunistic life-sciences fund pursuing control and significant-minority investments across three primary sectors:
(i) Clinical-Stage Therapeutics: Investments in companies with drug candidates in Phase II clinical trials or later stages of development, where the Fund can underwrite de-risked clinical pathways with identifiable regulatory milestones and potential for accelerated FDA review designations (Breakthrough Therapy, Fast Track, Priority Review, or Accelerated Approval).
(ii) Medical Devices: Investments in medical device companies pursuing FDA clearance or approval through the 510(k) premarket notification pathway or the Premarket Approval ("PMA") pathway, with a focus on Class II and Class III devices in high-growth therapeutic areas such as minimally invasive surgery, remote patient monitoring, and neural interface technologies.
(iii) Platform Biotechnology: Investments in platform technology companies operating in gene editing (including CRISPR-based and base-editing modalities), synthetic biology, and AI-enabled drug discovery and development, where the platform nature of the technology provides optionality across multiple therapeutic applications and potential partnering or licensing arrangements with larger pharmaceutical companies.
The Fund's sponsor is Cobalt Ventures LP, a Delaware limited partnership headquartered at 3400 Sand Hill Road, Suite 220, Menlo Park, California 94025. Cobalt Ventures was founded in 2018 by Dr. Marcus Yeung, a former partner at a leading life-sciences venture capital firm and a trained physician-scientist with an M.D./Ph.D. from Stanford University, and Priya Dasgupta, a former healthcare investment banker with over 15 years of experience in life-sciences capital markets. Cobalt Ventures currently manages approximately $420,000,000 in assets under management ("AUM") across two prior vintage vehicles: Cobalt Ventures Fund A, LP (2019 vintage, $125,000,000 in committed capital) and Cobalt Ventures Fund B, LP (2021 vintage, $295,000,000 in committed capital). Both prior vehicles pursued venture-stage investments in life-sciences companies, typically in the $5,000,000–$25,000,000 per investment range.
CLSO Fund I represents a deliberate strategy shift to larger, more concentrated positions, with anticipated initial investment sizes of $30,000,000–$100,000,000 per portfolio company, supplemented by follow-on reserves. This transition reflects both the maturation of the Cobalt Ventures platform and the Principals' assessment that the current market environment presents attractive opportunities for control and significant-minority investments in clinical-stage and platform-stage life-sciences companies at valuations that offer compelling risk-adjusted returns. The Fund's concentrated approach—targeting 10 to 15 portfolio companies—necessitates robust governance rights and active portfolio management, both of which have implications for the side letter framework discussed herein.
The Fund's geographic focus will be primarily North America, with up to 25% of aggregate commitments available for deployment in Western Europe and Israel, where the Principals have established networks in the life-sciences ecosystem. The Fund targets board seats or contractual governance rights in 100% of portfolio companies, a feature that is critical not only to the Fund's investment strategy but also to its intended qualification as a venture capital operating company ("VCOC") under the Department of Labor's ERISA regulations, as discussed further below.
B. Key Fund Economics Relevant to Side Letter Negotiations
The following economic terms of the Fund are directly relevant to the side letter framework, as they establish the baseline against which side letter concessions will be measured and the parameters within which modifications can be offered:
Management Fee. The management fee will be 2.00% per annum on aggregate commitments during the five-year investment period, producing annual management fee revenue of $15,000,000 at the Target Size. Following the expiration of the investment period, the management fee will step down to 2.00% per annum calculated on invested capital, defined as the cost basis of portfolio investments net of write-offs, write-downs, and the return of realized proceeds. This step-down is designed to align the management fee with the actual capital at work in the portfolio and is a standard feature in institutional-quality funds. Management fee reductions granted via side letter—whether through a reduced rate, a cap, or an offset—will be analyzed in the context of their aggregate impact on CLSO Management's operating budget and the Principals' economics.
Carried Interest. The carried interest will be 20% of net profits, calculated over a preferred return hurdle of 8% per annum, compounded annually. The distribution waterfall provides for a 100% GP catch-up following the return of contributed capital and accrued preferred return, after which distributions will be split 80% to limited partners and 20% to CLSO GP (or its designees). These are standard market terms for funds of this type and size.
Carry Escrow. 30% of carried interest distributions received by CLSO GP will be held in an escrow account until the later of (a) the wind-down of the Fund and (b) the resolution of all outstanding clawback obligations. This escrow percentage is at the upper end of market practice and provides a meaningful source of protection for limited partners in the event of a GP clawback obligation.
GP Clawback. The GP clawback obligation will be joint and several among the Principals, meaning that each of Dr. Yeung and Ms. Dasgupta will be individually liable for the full amount of any clawback, rather than solely for their respective shares. This is a significant LP-protective feature and may reduce pressure for additional clawback protections in side letters.
Recycling Allowance. CLSO GP will be permitted to recycle up to 15% of aggregate commitments ($112,500,000 at Target Size) during the investment period only. Recycled amounts represent realized proceeds from portfolio investments that may be re-called and re-invested, effectively increasing the Fund's deployable capital without requiring additional LP commitments. The recycling allowance is subject to the limitation that it may only be exercised during the investment period, and recycled capital counts toward the management fee base during the period in which it is deployed.
Concentration Limit. No single investment may exceed 15% of aggregate commitments ($112,500,000 at Target Size). This concentration limit is a key parameter for co-investment rights, as co-investment opportunities typically arise when CLSO GP identifies an investment opportunity that exceeds the Fund's desired allocation (considering the concentration limit) or that the Principals determine should be offered alongside the Fund for portfolio construction reasons.
Organizational Expense Cap. Organizational expenses—including legal fees for fund formation, regulatory filings, printing, and other formation costs—are capped at $1,500,000. Amounts in excess of this cap will be borne by CLSO Management and not charged to the Fund. This is a standard market provision.
Broken-Deal Expense Cap. Expenses relating to potential investments that are not consummated (including due diligence costs, legal fees, travel, and third-party consultant fees) are capped at $500,000 per deal. Broken-deal expenses in excess of this cap will be borne by CLSO Management.
Placement Fee. The placement fee payable to sagebrush Capital Partners LLC ("Sagebrush"), the Fund's exclusive global placement agent, is 1.50% of third-party commitments sourced by sagebrush. The placement fee is subject to a 100% offset against the management fee, meaning that the economic cost of the placement fee is borne entirely by CLSO Management and not by the limited partners. This offset structure is an important feature for institutional investors, particularly governmental plans, and will be disclosed in all side letters.
Transaction and Monitoring Fee Offset. Transaction fees, monitoring fees, directors' fees, and similar fees received by CLSO GP or its affiliates from portfolio companies will be offset at a rate of 80% against the management fee payable by the Fund. The 20% retained by CLSO Management is intended to compensate for the incremental cost of providing transaction and monitoring services to portfolio companies.
Fund Term. The Fund's term will be 10 years from the final close, with two optional one-year extensions. The first extension may be effected at the sole discretion of CLSO GP. The second extension requires the affirmative consent of the LP Advisory Committee ("LPAC"). Based on a target final close of May 15, 2027, the initial term would expire on May 15, 2037, with possible extensions to May 15, 2038 (first extension) and May 15, 2039 (second extension, subject to LPAC consent).
LP Advisory Committee. The LPAC will consist of a minimum of three and a maximum of seven members, appointed by CLSO GP. If aggregate non-U.S. commitments reach or exceed $50,000,000, at least one LPAC member must be a representative of a non-U.S. limited partner. The LPAC's functions include consent to conflicts of interest, review of valuation methodology, consent to the second one-year fund extension, and such other matters as may be specified in the LPA.
Key Person. Both Dr. Marcus Yeung and Priya Dasgupta are designated as key persons. A key person event will be triggered if either Principal ceases to devote substantially all of his or her business time and attention to the affairs of the Fund, resulting in a suspension of the investment period pending reinstatement or termination by the limited partners.
C. Investor Base Considerations
The composition of the Fund's anticipated investor base has significant implications for the side letter framework. Each category of institutional investor brings distinct regulatory, governance, and reporting requirements that must be addressed through investor-specific side letter provisions.
Cobalt Ventures currently operates under exempt reporting adviser ("ERA") status with the SEC (File No. 802-11934) pursuant to Section 203(m) of the Investment Advisers Act of 1940, as amended. Depending on the aggregate AUM of Cobalt Ventures following the closing of CLSO Fund I—which, when combined with the existing approximately $420,000,000 in AUM, could bring total regulatory AUM well above the $150,000,000 threshold—Cobalt Ventures may be required to transition from ERA status to full SEC registration as an investment adviser. This transition would impose additional compliance obligations (including Form ADV Part 2 delivery, enhanced recordkeeping, and custody rule compliance) that could affect side letter provisions and ongoing reporting to investors. We have flagged this issue for coordination with Fielding & O'Hara PLLC (Brian Liddell), which is advising on the regulatory aspects of the Fund formation.
The anticipated investor mix for CLSO Fund I is expected to include:
• State pension funds (such as Ironwood PERS), which are subject to state public records laws, fiduciary standards applicable to public pension fiduciaries, and investment policies adopted by their respective boards of trustees;
• University endowments (such as Northgate), which may have underlying pools subject to ERISA and which are governed by internal investment policies and, in many cases, endowment spending policies that affect liquidity needs;
• Insurance companies (such as Pinnacle), which are subject to state insurance regulatory frameworks, including investment limitations, statutory accounting requirements, and risk-based capital calculations;
• Sovereign wealth funds, which may require specific sovereign immunity protections, exemptions from U.S. tax withholding, and compliance with the Foreign Sovereign Immunities Act;
• Family offices, which may be less regulated but may have idiosyncratic investment guidelines, co-investment appetites, and reporting preferences; and
• Other institutional investors, including foundations, fund-of-funds, and healthcare-focused institutional allocators.
Each of these investor categories brings different negotiation dynamics and side letter expectations, and the tiered framework recommended in this memorandum is designed to accommodate this diversity while maintaining a manageable level of administrative complexity.
With respect to ERISA considerations, the Fund intends to elect VCOC status under Department of Labor Regulation §2510.3-101(d) if ERISA "plan assets" reach or exceed 25% of any class of equity interests in the Fund. VCOC status is available to funds that, through the exercise of management rights in portfolio companies (including board seats, contractual veto rights, and consultation rights), actively participate in the management of the companies in which they invest. The Fund's stated strategy of obtaining board seats or contractual governance rights in 100% of portfolio companies is directly aligned with the VCOC operating criteria. However, VCOC qualification must be monitored on an ongoing basis, and certain investors (particularly Northgate, as discussed in Section IV.B) will require side letter provisions addressing VCOC compliance. We are coordinating with Fielding & O'Hara PLLC (Brian Liddell) on ERISA/VCOC analysis and with Greystone Tax Advisors LLC (Kenneth Liu) on the tax structuring implications of certain side letter concessions, including blocker entity access and UBTI minimization.
D. Role of Placement Agent
Sagebrush Capital Partners LLC ("Sagebrush"), CRD No. 298714, has been engaged as the Fund's exclusive global placement agent. Jonathan Mercer, Managing Director at sagebrush, is the primary relationship manager for the engagement. Sagebrush is represented by Ashworth & Lyle LLP (Sara Phan, partner).
The Placement Agent Agreement between CLSO GP and sagebrush has a target execution date of July 15, 2026, and will set forth the terms of the engagement, including: (a) the 1.50% placement fee on all third-party commitments sourced by sagebrush; (b) the 100% offset of the placement fee against the management fee; (c) a $150,000 non-refundable retainer payable upon execution; (d) a 24-month tail period during which sagebrush will be entitled to the placement fee on commitments from investors introduced during the engagement term; and (e) sagebrush's exclusivity as the Fund's global placement agent.
In the context of the side letter framework, sagebrush's role is significant for several reasons. First, sagebrush will be the primary interface with many prospective investors during the marketing period, and its representatives must be fully briefed on the tiered framework and the menu of available concessions so that investor discussions and marketing materials are consistent with the framework. Second, certain investors—particularly governmental plan investors such as Ironwood PERS—will require detailed placement agent disclosures in their side letters, including confirmation of the absence of any "pay-to-play" relationships. Third, sagebrush's counsel at Ashworth & Lyle LLP may review the side letter framework to assess any placement agent compliance implications, particularly under SEC and FINRA regulations governing placement agent conduct.
III. STANDARD SIDE LETTER CONCESSIONS
This Section III describes the categories of side letter concessions that we recommend making available on a standardized basis to qualifying investors, subject to the tiered framework discussed in Section VII. These provisions represent the core menu of terms that CLSO GP should be prepared to offer during negotiations, and they are designed to address the most common institutional investor requirements while preserving the Fund's economic structure and operational flexibility.
A. Most-Favored-Nation (MFN) Rights
Description. Most-favored-nation rights entitle an LP to elect to receive any term or provision that has been granted to another LP in a side letter, subject to specified carve-outs. The MFN clause is the cornerstone of the side letter framework, as it serves as a leveling mechanism that ensures investors of comparable size are treated equitably while preserving the ability of CLSO GP to offer differentiated terms to anchor investors and investors with unique regulatory requirements.
Recommendation. We recommend including a standard MFN clause in all side letters for investors meeting the commitment threshold discussed in Section VII below. The MFN clause should be drafted as a covenant of CLSO GP, rather than as a self-executing provision, to ensure that the process is administered in an orderly manner following the final close.
Mechanics. Upon the final close of the Fund (target: May 15, 2027), CLSO GP will prepare—with the assistance of Calderwood & Harkness LLP—a redacted compendium of all side letter terms granted to all LPs. The compendium will be redacted to remove investor-identifying information (including the name, commitment size, and contact details of each LP) while preserving the substance of each concession in sufficient detail to permit an informed election. Each MFN-eligible LP will receive a copy of the redacted compendium, together with a notice setting forth the election procedures and the deadline for elections. Each MFN-eligible LP will have 30 calendar days from the date of distribution to elect, in writing, to receive any or all of the disclosed concessions. Elected terms will be incorporated into the electing LP's side letter by means of a written amendment executed by the LP and CLSO GP.
Carve-Outs from MFN. Certain categories of side letter terms should be excluded from the MFN election process, as they are by their nature investor-specific or relate to the particular legal, regulatory, or tax status of the benefited LP. The recommended carve-out categories are discussed in detail in Section V.C below and summarized in Appendix B. By way of overview, the recommended carve-outs include: (a) ERISA-specific provisions (e.g., the Northgate VCOC carve-out); (b) insurance regulatory provisions (e.g., the Pinnacle compliance suite); (c) FOIA and public records protections (e.g., the Ironwood PERS provisions); (d) blocker entity access (investor-specific tax structuring); (e) LPAC seats (allocated based on commitment size and investor profile); (f) co-investment rights at no fee/no carry, to the extent offered only to investors above a specified commitment threshold (recommended: $75,000,000); and (g) terms that are personal to the investor, such as notice addresses and contact information.
Co-Investment and MFN. A threshold question for the framework is whether co-investment rights at no additional management fee and no carried interest should be MFN-eligible or carved out as an anchor-specific concession. Our recommendation is that co-investment rights at no fee/no carry should be carved out of MFN for investors with commitments below $75,000,000. This preserves the economic incentive for anchor commitments and is consistent with market practice for life-sciences funds of this size. Co-investment opportunities offered on a "best-efforts" basis at reduced (but not eliminated) fee and carry terms may remain MFN-eligible, as these represent a lower-value concession and are less likely to create economic imbalance.
B. Enhanced Reporting Rights
Standard Offering. Under the LPA, all LPs will receive: (a) annual audited financial statements of the Fund, prepared by Whitfield & Pratt LLP, the Fund's independent auditor, in accordance with U.S. generally accepted accounting principles ("GAAP"), delivered within 120 days following the end of each fiscal year; (b) quarterly unaudited portfolio summaries, providing high-level information regarding the Fund's portfolio composition, recent investment activity, and liquidity position; and (c) capital account statements, processed and distributed by Halcyon Fund Services, Inc. ("Halcyon"), the Fund's third-party fund administrator, on a quarterly basis.
Enhanced Reporting Side Letter Provisions. In addition to the standard reporting package, qualifying investors may negotiate for enhanced reporting, which may include one or more of the following:
(i) Portfolio-Level Analytics: Investment-level internal rate of return ("IRR") and multiple of invested capital ("MOIC"), sector breakdown, geographic allocation, and vintage year attribution, presented in a format consistent with the Institutional Limited Partners Association ("ILPA") reporting guidelines.
(ii) ESG Reporting: Reporting on environmental, social, and governance factors relevant to the Fund's portfolio, including clinical trial diversity metrics, environmental impact assessments for manufacturing-stage portfolio companies, and governance diversity data. ESG reporting is increasingly demanded by institutional investors, particularly endowments and pension funds.
(iii) Bespoke Reporting Formats: Certain investors may require reporting in specific formats to satisfy internal reporting systems, board presentation requirements, or regulatory filing obligations (e.g., insurance statutory accounting formats, as discussed in Section IV.C for Pinnacle).
Frequency. Enhanced reporting may be provided quarterly or annually, depending on the investor's commitment level and regulatory requirements. We recommend offering quarterly enhanced reporting to Tier 1 investors and annual enhanced reporting to Tier 2 investors, as described in Section VII.
C. Excuse / Exclusion Rights
Standard LPA Provision. The LPA will include a standard provision permitting CLSO GP to excuse or exclude an LP from participation in a specific investment if such participation would cause the LP to violate applicable law, regulation, or the LP's governing instrument (including, for example, fiduciary mandate restrictions, sanctioned-jurisdiction prohibitions, or investment policy limitations).
Side Letter Enhancement. Beyond the standard LPA provision, certain investors may negotiate for an expanded excuse right, which would permit the LP to request an excuse from any investment in a particular therapeutic area, sub-sector, or geography upon written notice to CLSO GP, subject to CLSO GP's reasonable discretion. This type of expanded excuse right is particularly relevant for governmental pension plans that may be subject to legislatively imposed investment restrictions (such as prohibitions on investments in certain industries or countries) and for insurance companies that may face regulatory limitations on the types or concentrations of investments their general accounts may hold.
Fee Treatment of Excused Capital. When an LP is excused from a particular investment, the excused capital should not be counted toward the LP's unfunded commitments for management fee calculation purposes. This ensures that the LP does not bear a management fee on capital that it has not been permitted to deploy, which is both equitable and standard market practice.
D. Transfer / Assignment Rights
LPA Baseline. Under the LPA, transfers of LP interests will be subject to the following conditions: (a) CLSO GP consent, which may not be unreasonably withheld; (b) minimum transfer amounts (to be specified in the LPA, typically $5,000,000 or the LP's entire remaining interest, whichever is less); (c) compliance with applicable federal and state securities laws, including the absence of a general solicitation and satisfaction of applicable exemptions from registration; and (d) ERISA considerations, including confirmation that the transfer will not cause the Fund to hold "plan assets" under ERISA or, if the Fund already holds plan assets, that the transfer will not adversely affect VCOC status.
Side Letter Enhancement. Qualifying investors may negotiate for the following transfer facilitation provisions: (a) pre-approved transfers to affiliates, wholly owned subsidiaries, and controlled entities of the transferring LP without the requirement of GP consent; (b) the right to transfer to a successor entity upon a merger, reorganization, or similar corporate transaction affecting the LP, provided that the successor entity satisfies the same eligibility requirements as the original LP; and (c) streamlined notice procedures, including reduced notice periods and simplified documentation requirements for permitted transfers. These enhancements are particularly relevant for institutional investors that may undergo organizational restructurings, changes in investment vehicle structures, or transitions in investment management arrangements.
E. FOIA / Public Records Protections
FOIA and public records protections are critical for governmental plan investors. Ironwood PERS, as an Oregon state pension fund, is subject to the Oregon Public Records Law (ORS 192.311 et seq.), and any information provided to Ironwood PERS in connection with its investment in the Fund may be subject to public records requests by third parties, including journalists, activists, and competitors of the Fund's portfolio companies.
The recommended side letter provision for governmental plan investors includes the following elements:
(a) CLSO GP will use commercially reasonable efforts to designate all confidential information provided to the LP as "trade secrets" or "proprietary business information" that is exempt from disclosure under applicable public records statutes, including ORS 192.345(2) (trade secrets) and ORS 192.355(4) (information submitted in confidence).
(b) The LP will provide CLSO GP with advance written notice (not less than 10 business days, to the extent permitted by applicable law) before disclosing any information received from CLSO GP or the Fund in response to a FOIA request, public records request, or court order.
(c) CLSO GP will cooperate with the LP in seeking protective orders, confidentiality designations, or other measures to prevent or limit the disclosure of confidential information.
(d) The LP acknowledges that CLSO GP cannot guarantee that any particular information will be exempt from disclosure under applicable public records laws, and that the ultimate determination of whether information must be disclosed rests with the applicable governmental authority or court.
(e) The LP will bear the costs of any legal challenge or proceeding relating to the disclosure of confidential information received from CLSO GP or the Fund, including attorneys' fees and court costs.
These provisions should be carved out of the MFN framework, as they are relevant only to LPs that are subject to public records laws and are not applicable to private institutional investors.
F. Regulatory Compliance Carve-Outs
A general regulatory compliance carve-out should be available to all LPs, providing that if compliance with any provision of the LPA would cause the LP to violate any applicable law, rule, regulation, or order of any governmental authority, the LP will be excused from such compliance to the extent of the conflict, upon written notice to CLSO GP accompanied by a supporting legal opinion from counsel to the LP. This is a broad protective provision that serves as a catch-all for regulatory situations not specifically addressed by other side letter provisions.
Specific regulatory contexts that may give rise to investor-specific carve-out provisions include:
(a) Insurance Company Investment Regulations: State insurance codes impose detailed limitations on the types, concentrations, and risk profiles of investments that may be held in an insurer's general account. Pinnacle, as a Connecticut life and annuity insurer, is subject to the Connecticut Insurance Code (Conn. Gen. Stat. §38a-102 et seq.) and the regulations of the Connecticut Insurance Department.
(b) ERISA Fiduciary Standards: ERISA plan fiduciaries are subject to the prudent man rule and the exclusive benefit rule under ERISA §§404 and 406, which may limit their ability to consent to certain fund-level transactions or waive certain rights.
(c) Bank Regulatory Capital Requirements: If any LP is a banking institution subject to bank regulatory capital requirements (e.g., Basel III/IV risk-weighted asset calculations), the LP may require side letter provisions addressing the treatment of its fund investment for regulatory capital purposes.
(d) Sovereign Immunity Considerations: Sovereign wealth fund investors may require side letter provisions preserving their sovereign immunity under the Foreign Sovereign Immunities Act and ensuring that their investment in the Fund does not constitute a waiver of immunity.
G. Key Person Event Notification
LPA Baseline. The LPA will provide that a key person event occurs upon either Dr. Marcus Yeung or Priya Dasgupta ceasing to devote substantially all of his or her business time and attention to the affairs of the Fund. Upon the occurrence of a key person event, the investment period will be automatically suspended. The suspension will continue until the earlier of (a) the appointment of a replacement key person acceptable to a majority-in-interest of the limited partners or (b) 180 days, after which the investment period will terminate unless reinstated by a vote of a majority-in-interest of the limited partners.
Side Letter Enhancement. Major investors may negotiate for the following enhanced key person notification provisions: (a) prompt written notice (within five business days) of the occurrence of any key person event, including a description of the circumstances giving rise to the event; (b) the right to participate in discussions regarding the reinstatement of the investment period or the appointment of a replacement key person; and (c) enhanced information rights during the suspension period, including the right to receive weekly updates on the status of discussions regarding reinstatement or termination and the right to receive portfolio-level information regarding the impact of the suspension on pending or contemplated investments.
H. Co-Investment Rights
Standard Provision. Under the LPA, CLSO GP may, but is not obligated to, offer co-investment opportunities to limited partners. The LPA will provide that CLSO GP has sole discretion over the allocation of co-investment opportunities and the terms on which such opportunities are offered.
Side Letter Concession Levels. Co-investment rights are among the most sought-after side letter concessions in the current fundraising environment, particularly for life-sciences funds where individual deal sizes may create natural co-investment opportunities. We recommend the following two-tier approach:
Tier 1 (Anchor Investors, $75,000,000 and above): Right of first offer on co-investment opportunities alongside the Fund, at no additional management fee and no carried interest charged on co-invested capital. This concession is a material economic benefit to the LP, as it allows the LP to increase its exposure to the Fund's most attractive investments without bearing the full cost structure of the Fund. The right of first offer means that CLSO GP will present co-investment opportunities to Tier 1 LPs before offering them to other LPs or external parties, but CLSO GP retains the right to determine the availability, size, and timing of each co-investment opportunity.
Tier 2 (Other Qualifying LPs, $25,000,000–$74,999,999): Co-investment opportunities offered on a best-efforts basis, meaning that CLSO GP will use reasonable efforts to make co-investment opportunities available to Tier 2 LPs but is not obligated to do so. Co-investment terms for Tier 2 LPs will include reduced management fee and carried interest, as determined by CLSO GP on a deal-by-deal basis.
Allocation Policy. Co-investment allocations will be made on a pro rata basis relative to each LP's commitment to the Fund, subject to CLSO GP's discretion to consider factors including investor suitability for the particular investment, speed of execution and ability to commit capital within the required timeframe, the LP's historical participation in co-investment opportunities, and potential conflicts of interest. The allocation policy should be set forth in the LPA and referenced in each side letter that includes co-investment rights.
I. Advisory Committee (LPAC) Representation
LPAC Composition. As noted in Section II.B, the LPAC will consist of a minimum of three and a maximum of seven members, appointed by CLSO GP. At least one member must be a representative of a non-U.S. LP if aggregate non-U.S. commitments reach $50,000,000.
Side Letter Allocation of Seats. LPAC seats are a governance concession that is typically offered to the largest LPs and to investors whose participation in the LPAC adds value to the Fund's governance (e.g., investors with deep sector expertise, investors who represent a particular constituency within the LP base, or investors whose regulatory status makes their input on compliance matters particularly relevant). LPAC seats should be allocated in the side letters of anchor investors. For CLSO Fund I, we recommend guaranteeing one LPAC seat to Ironwood PERS (as the largest anchor investor) in its side letter, and reserving the remaining seats for allocation during the fundraising process based on the composition of the LP base at each closing. Northgate and Pinnacle may request LPAC representation, and CLSO GP should retain flexibility to accommodate such requests if the committee composition allows.
LPAC Functions. The LPAC's primary functions, as set forth in the LPA, will include: (a) consent to conflicts of interest involving CLSO GP, the Principals, or their affiliates; (b) review of the Fund's valuation methodology, including fair value determinations for portfolio investments; (c) consent to the second one-year fund extension (from May 15, 2038 to May 15, 2039, assuming the first extension has been exercised); and (d) such other advisory functions as may be specified in the LPA. The LPAC will operate in an advisory capacity and will not have the power to bind the Fund or CLSO GP, except where specific consent rights are granted.
J. Indemnification and Exculpation
LPA Baseline. The LPA will contain standard exculpation and indemnification provisions, pursuant to which CLSO GP, its members, officers, employees, and agents (collectively, the "Indemnified Persons") will be exculpated from liability and indemnified by the Fund for losses, claims, damages, expenses, and liabilities arising out of or in connection with the Fund's activities, except to the extent that such losses, claims, damages, expenses, or liabilities result from the Indemnified Person's fraud, gross negligence, willful misconduct, or material breach of the LPA. This standard is consistent with Delaware limited partnership law and market practice.
Side Letter Considerations. Certain sophisticated institutional investors may seek to modify the indemnification framework in their side letters, for example by: (a) narrowing the definition of "losses" to exclude consequential or punitive damages; (b) adding a requirement that the Indemnified Person acted in good faith and in a manner reasonably believed to be in the best interests of the Fund; or (c) limiting the LP's indemnification obligation to a specified dollar amount or to the LP's unfunded commitment.
Recommendation. We recommend resisting substantive modifications to the LPA indemnification framework in side letters, as such modifications create inconsistencies among LPs and may give rise to contribution issues in the event of a claim. Clarifying language—such as confirmation that the exculpation standard applies to investment decisions as well as administrative actions—may be appropriate. Any indemnification modifications should be reviewed on a case-by-case basis and discussed with the Principals before being offered.
IV. INVESTOR-SPECIFIC TERMS — ANCHOR INVESTORS
This Section sets forth the detailed analysis of investor-specific side letter terms anticipated for each of the three anchor investors. The analysis for each investor includes: (a) a profile of the investor; (b) a description of the key terms expected to be sought, based on preliminary discussions and market practice; and (c) our recommendations regarding each requested term.
A. Ironwood Public Employees' Retirement System
1. Investor Profile.
Full Legal Name: Ironwood Public Employees' Retirement System
Type: State pension fund, organized and existing under the laws of the State of Oregon
AUM: Approximately $62 billion
Primary Contact: Helen Tsao, Director of Private Markets, 900 Capitol Way NE, Suite 400, Salem, Oregon 97301
Anticipated Commitment: $100,000,000, subject to approval by the Ironwood PERS Investment Committee, which is tentatively scheduled to consider the CLSO Fund I allocation at its regularly scheduled meeting in June 2026
Background: Ironwood PERS is the largest public employees' pension system in Oregon, providing retirement, disability, and death benefits to eligible state and local government employees and their beneficiaries. The Ironwood PERS Investment Committee oversees an investment program that includes public equity, fixed income, real estate, infrastructure, and private equity/venture capital. Helen Tsao's Private Markets team manages a diversified alternatives portfolio with existing allocations to life-sciences venture capital, growth equity, and buyout strategies. Ironwood PERS has a well-established track record of investing in first-time institutional funds with emerging managers and has previously invested with Cobalt Ventures through a participation in Cobalt Ventures Fund B, LP.
Ironwood PERS is the largest anticipated anchor investor and represents the single largest LP commitment expected at first close. Its participation is a cornerstone of the fundraising strategy, and its side letter will serve as the baseline from which other side letters are derived.
2. Key Terms Sought. Based on preliminary discussions with Helen Tsao's team and Ironwood PERS's outside counsel, the following terms are expected to be sought:
MFN Side Letter. Ironwood PERS will expect full MFN rights, with the broadest possible scope of election. As the largest LP, Ironwood PERS will expect to be the MFN "benchmark" investor, meaning that its side letter effectively sets the ceiling of concessions that other investors can elect into (subject to carve-outs for investor-specific regulatory provisions). This is a standard expectation for the largest LP in a fund and is consistent with market practice. We recommend granting full MFN rights to Ironwood PERS, while ensuring that the carve-out categories are clearly delineated to prevent unintended cascade of investor-specific provisions. Specifically, insurance regulatory provisions (applicable to Pinnacle), ERISA/VCOC provisions (applicable to Northgate), and blocker entity access provisions should be carved out of MFN as relating to the specific legal, regulatory, or tax status of the benefited LP.
Advisory Committee Seat. Ironwood PERS will expect a guaranteed seat on the LPAC for Helen Tsao or her designee. This is a standard request for the largest LP and is consistent with LPAC governance best practices. Ironwood PERS expects to participate actively in conflict-of-interest reviews, valuation methodology reviews, and extension votes. We recommend granting this concession without qualification, as LPAC participation by the largest LP is both customary and valuable for Fund governance.
Co-Investment Rights at No Fee / No Carry. Ironwood PERS will seek the right of first offer on all co-investment opportunities alongside the Fund, with no additional management fee and no carried interest charged on co-invested capital. This is a material concession, as it allows Ironwood PERS to increase its exposure to the Fund's best investments at zero incremental cost. We recommend granting this concession, subject to the following limitations: (a) the right of first offer applies only to co-investment opportunities where the Fund's desired allocation exceeds the concentration limit ($112,500,000 / 15% of aggregate commitments) or where CLSO GP otherwise determines in its sole discretion that a co-investment allocation is available; (b) the minimum allocation for Ironwood PERS co-investments will be calculated pro rata based on Ironwood PERS's commitment relative to total Fund commitments; and (c) CLSO GP retains discretion over the timing, structure, and terms of each co-investment opportunity, including the right to offer co-investment opportunities through a co-investment vehicle organized and managed by CLSO GP.
Annual In-Person Reporting. Ironwood PERS will require that CLSO GP's Principals (Dr. Yeung and/or Ms. Dasgupta) attend an annual in-person meeting with the Ironwood PERS investment staff in Salem, Oregon, to present portfolio updates, performance attribution, market outlook, and pipeline information. This requirement reflects Ironwood PERS's governance culture and the Investment Committee's expectation that portfolio managers provide in-person updates. The operational burden of this commitment is modest—a single annual trip to Salem by one or both Principals—and we recommend agreeing without qualification. The side letter should specify that the meeting will be held at a mutually convenient time during the first quarter following the end of each fiscal year.
FOIA / Public Records. As described in Section III.E, Ironwood PERS will require robust FOIA protections reflecting its status as a governmental entity subject to the Oregon Public Records Law. These provisions are non-negotiable from Ironwood PERS's perspective and are standard for governmental plan investors. We recommend including the full suite of FOIA protections as described in Section III.E, including advance notice, cooperation in seeking protective orders, and trade secret designations. The FOIA provisions should be carved out of MFN, as they are relevant only to governmental plan investors.
Key Person Notification. Ironwood PERS will seek enhanced key person notification provisions as described in Section III.G, including five-business-day notice and the right to participate in discussions regarding reinstatement or termination of the investment period. We recommend granting this concession.
Placement Agent Disclosure. Ironwood PERS will require full disclosure of the sagebrush engagement in its side letter, including: (a) the identity of sagebrush as the exclusive global placement agent; (b) the placement fee of 1.50% on third-party commitments sourced by sagebrush; (c) the 100% offset of the placement fee against the management fee; (d) the $150,000 retainer; (e) any other compensation or consideration paid or payable to sagebrush or its personnel in connection with the Fund; and (f) a representation by CLSO GP that, to the best of its knowledge after reasonable inquiry, no placement agent compensation has been paid or promised to any person who has a relationship (whether as a board member, employee, consultant, or advisor) with Ironwood PERS or its board of trustees. This "pay-to-play" representation is standard for governmental plan investors and reflects the heightened scrutiny that pension fund investments receive in the public records context.
3. Analysis and Recommendations. The $100,000,000 commitment from Ironwood PERS represents approximately 13.3% of the Fund's target size. This is a marquee anchor relationship that provides the Fund with substantial first-close capital, a credible institutional anchor investor for marketing purposes, and a relationship that, if successful, could yield follow-on commitments in future Cobalt Life Sciences vintage vehicles.
From a concessions perspective, the terms sought by Ironwood PERS are well within market norms for anchor investors of this size in life-sciences funds. Co-investment at no fee/no carry is increasingly standard for commitments of $75,000,000 or more in the life-sciences sector, where deal sizes and concentration limits naturally create co-investment opportunities. The LPAC seat, FOIA protections, and placement agent disclosures are standard governmental plan requirements that impose minimal economic cost on the Fund or other LPs. The annual in-person reporting requirement is a modest operational commitment that builds relationship equity with a key investor.
We recommend granting the full suite of concessions described above to Ironwood PERS. The Ironwood PERS side letter will serve as the Tier 1 template from which other anchor investor side letters are derived, with investor-specific modifications for each anchor.
B. Northgate Endowment Management LLC
1. Investor Profile.
Full Legal Name: Northgate Endowment Management LLC
Type: Delaware limited liability company; investment arm of a major university endowment
AUM: Approximately $8.5 billion
Primary Contact: David Park, Senior Portfolio Manager – Life Sciences Allocation, 77 Brattle Street, 4th Floor, Cambridge, Massachusetts 02138
Anticipated Commitment: $50,000,000
Background: Northgate is the external investment management entity that manages the endowment assets of a leading research university. David Park leads Northgate's life-sciences allocation program, which invests across the full spectrum of life-sciences strategies, including venture capital, growth equity, buyouts, and royalty-based structures. Northgate's investment in CLSO Fund I would be a natural extension of its life-sciences allocation strategy and would position Northgate to participate in the emerging manager opportunity represented by the Cobalt platform's transition to larger, more concentrated investments.
2. Key Terms Sought. ERISA-Compliant Carve-Out Structure. Although Northgate is itself an endowment investment arm—and therefore not itself an employee benefit plan subject to ERISA—certain of its underlying investment pools may constitute "plan assets" within the meaning of ERISA Section 3(42) and Department of Labor Regulation §2510.3-101. This arises because certain retirement and benefit plans for university employees may invest indirectly in the endowment's investment program, and if such plan assets constitute 25% or more of any class of equity interests in CLSO Fund I, the Fund's assets would be deemed to be plan assets for purposes of ERISA's fiduciary responsibility and prohibited transaction provisions.
To address this concern, Northgate will require the following side letter provisions:
(a) Confirmation that the Fund intends to qualify as a VCOC under DOL Regulation §2510.3-101(d) if ERISA plan assets reach or exceed 25% of any class of equity interests in the Fund. VCOC status, if maintained, provides a safe harbor from the plan asset regulations, meaning that the Fund's assets will not be deemed to be plan assets regardless of the level of ERISA plan asset participation.
(b) Specific representations regarding the Fund's satisfaction of the VCOC operating criteria, including: (i) the Fund's stated strategy of obtaining management rights (board seats, contractual veto rights, or similar governance rights) in 100% of portfolio companies; (ii) the Fund's intent to exercise such management rights on an ongoing basis; and (iii) the Fund's intention to invest at least 50% of its assets (other than short-term investments pending long-term deployment) in "operating companies" as defined in DOL Regulation §2510.3-101(c).
(c) A side letter provision permitting Northgate to withdraw or reduce its commitment in the event that the Fund fails to maintain VCOC status, subject to appropriate notice and cure provisions.
(d) Reporting on ERISA plan asset status at each closing and annually thereafter, including a schedule of ERISA plan asset participation as a percentage of each class of equity interests in the Fund.
(e) Coordination with Greystone Tax Advisors LLC (Kenneth Liu) and Fielding & O'Hara PLLC (Brian Liddell) on the interaction between VCOC status and the Fund's investment strategy, including any circumstances in which a specific investment might jeopardize VCOC qualification (e.g., an investment in a non-operating entity, or a failure to obtain management rights in a portfolio company due to co-investor dynamics or regulatory restrictions).
Co-Investment Rights. Northgate will seek the right to participate in co-investment opportunities alongside the Fund, on terms similar to those offered to Ironwood PERS (i.e., no additional management fee and no carried interest), but subject to a slightly lower priority in the allocation waterfall given Northgate's smaller commitment size ($50,000,000 versus $100,000,000 for Ironwood PERS). The treatment of Northgate's co-investment rights relative to the Tier 2 standard is discussed further in Section VII.C below.
Annual Detailed Portfolio Analytics. Northgate will seek enhanced reporting beyond the standard quarterly unaudited summaries provided under the LPA. Specifically, Northgate will request access to the following on at least an annual basis:
(i) Investment-level IRR and MOIC, calculated on both a gross and net basis;
(ii) Clinical trial milestone tracking for therapeutics investments, including current trial phase, enrollment status, data readout timelines, and regulatory interactions;
(iii) FDA regulatory pathway status for medical device investments, including 510(k) or PMA filing status, review timelines, and any FDA correspondence of note;
(iv) Mark-to-market methodology disclosure, including the valuation approach applied to each portfolio company (comparable company analysis, discounted cash flow, recent transaction prices, etc.) and any changes in methodology from prior periods;
(v) Sector and geography attribution analysis, breaking down the portfolio by therapeutic area, technology platform, and geographic market.
These analytics are to be prepared by Halcyon Fund Services, Inc. in coordination with CLSO Management and are consistent with the reporting that life-sciences allocators increasingly expect from their fund managers.
3. Analysis and Recommendations. The $50,000,000 commitment from Northgate represents approximately 6.7% of the Fund's target size. While smaller in absolute terms than the Ironwood PERS and Pinnacle commitments, Northgate's participation carries significant signaling value in the life-sciences investor community. University endowments with dedicated life-sciences allocation programs are among the most knowledgeable and discerning allocators in the sector, and their participation in a fund provides a meaningful endorsement of the manager's strategy and capabilities. David Park's reputation as a leading life-sciences allocator further enhances the value of Northgate's commitment for marketing purposes.
With respect to the ERISA carve-out provisions, these are standard and protective in nature and should be granted. The VCOC compliance framework is integral to the Fund's investment strategy—100% board/governance rights in portfolio companies—and the VCOC representations are consistent with the Fund's stated operating model. However, we recommend that the withdrawal right triggered by VCOC failure be narrowly drafted. Specifically, the withdrawal right should be triggered only if CLSO GP affirmatively determines that it will not maintain VCOC status on an ongoing basis, and not upon a temporary or technical shortfall in the VCOC operating criteria (e.g., a brief period during which the Fund's portfolio composition falls below the 50% operating company threshold due to timing of investments and realizations). The side letter should include a reasonable cure period (e.g., 90 days) during which CLSO GP may take corrective action before the withdrawal right becomes exercisable.
With respect to enhanced portfolio analytics, we recommend granting this concession but suggest discussing the specific scope and format of deliverables with Halcyon Fund Services (Thomas Varga, relationship manager) before committing to detailed specifications in the side letter. The clinical trial milestone tracking and FDA regulatory pathway status reporting, in particular, will require input from CLSO Management's investment professionals and may impose incremental costs on the fund administration budget.
With respect to co-investment at no fee/no carry, we recommend granting this concession to Northgate as an upgraded term, notwithstanding Northgate's classification as a Tier 2 investor under the proposed commitment thresholds. The rationale for this upgrade is discussed in Section VII.C below.
The ERISA-specific provisions granted to Northgate should be carved out of the MFN framework, as they relate to Northgate's specific regulatory status and are not applicable to investors that are not subject to ERISA.
C. Pinnacle Insurance Group, Inc.
1. Investor Profile.
Full Legal Name: Pinnacle Insurance Group, Inc.
Type: Connecticut corporation; life and annuity insurer
General Account AUM: Approximately $28 billion
Primary Contact: Rachel Stein, Senior Vice President – Alternative Investments, 500 Asylum Avenue, Hartford, Connecticut 06103
Anticipated Commitment: $75,000,000
Background: Pinnacle is a leading life and annuity insurance company domiciled in Connecticut and licensed in all 50 states and the District of Columbia. Pinnacle's general account investment portfolio is managed by an internal investment team that allocates across fixed income, public equities, real estate, and alternative investments, including private equity, venture capital, and hedge funds. Alternative investments are managed through a dedicated private markets sleeve within the general account. Rachel Stein oversees the alternative investments program and has been building Pinnacle's exposure to life-sciences private markets as part of a broader diversification initiative. Pinnacle's investment in CLSO Fund I would represent its first allocation to a dedicated life-sciences fund and would be subject to approval by Pinnacle's Investment Committee and compliance review by its regulatory affairs department.
Pinnacle's participation provides important diversification of the LP base beyond pension and endowment capital. Insurance company investors bring patient capital, long-duration investment horizons, and a stable commitment profile that is well-suited to the Fund's 10-year (plus extensions) term structure.
2. Key Terms Sought. Insurance Regulatory Compliance Provisions. As a life and annuity insurer regulated by the Connecticut Insurance Department (and potentially other state insurance regulators in states where Pinnacle is licensed), Pinnacle's investment in the Fund is subject to a comprehensive regulatory framework governing the types, amounts, and concentrations of investments that may be held in an insurer's general account. Pinnacle will require the following side letter provisions to ensure ongoing regulatory compliance:
(a) Regulatory Acknowledgment. A provision acknowledging that Pinnacle's investment in the Fund is subject to regulation by the Connecticut Insurance Department and potentially other state insurance regulators, and that CLSO GP will prov

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1004-00002

BILLING CODE: 88103-CVC

I. EXECUTIVE SUMMARY

II. BACKGROUND AND CONTEXT

III. STANDARD SIDE LETTER CONCESSIONS

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