The letter agreement includes sample language for certain rights granted to investors, such as most favored nation (MFN), co-investment, information, and advisory board rights. Section3, each of Silver Lake and Warburg Pincus. minimum statutory withholding requirements, and (ii)the applicable Shareholder and/or his or its Permitted Transferees, as applicable, shall, simultaneously therewith, transfer and deliver such Call Securities or Put Securities, as applicable, (xvi) Purchase Price means the per-share consideration paid by the Shareholders for the Securities, such Call Securities or Put Securities, as applicable, as of the date of Slaines termination of employment and (y)with respect to any Option Shares, such Call Securities or Put Securities, as applicable, as of the Put/Call This document is not legal advice and should not be relied on as such. PDF First Edition - Ropes & Gray to obtain required governmental or other approvals), and (II) in the event that an Objection Notice has been timely delivered with respect to the Call Notice or Put Pricing Notice, as applicable, ten (10)days after the determination of the endstream endobj The Shareholders acknowledge and agree that the Purchased Securities and any other equity securities of the Company or any of its Subsidiaries that the Shareholders shall PDF Key Considerations and Tactics in Negotiating Side Letters for Private This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same instrument. (v) Cost means (I)with respect to any Purchased Securities, the Purchase Price and (II) Law portal; A side letter or side agreement or side letter arrangement is an agreement that is not part of the underlying or primary contract or agreement, and which some or all parties to the contract use to reach agreement on issues the primary contract does not cover or for which they require clarification, or to amend the primary contract. This is an area of particular sensitivity in the open-ended fund context where portfolio level information should generally only be provided when stale, e.g., after further trading of the portfolio so that its then-current composition is not selectively shared. In connection with any purchase of Call Securities or Put Securities, The side letter can add provisions to the SAFE, or can change (amend) provisions in the SAFE. xc```b`` B@1XJYJ9 WX i 022s :/602[8a +44 20 7184 7460, Dubai Accordingly, it is agreed that the Company shall be entitled to an injunction, restraining Safe: Valuation Cap, no Discount Set out below are some current themes that are relevant to negotiating side letter terms. Side Letters: The Times They Are a-Changin - Proskauer Rose conditions of this Agreement for all parties remain valid, binding and enforceable. Nothing contained in this Agreement shall be deemed to obligate the Company or any Subsidiary of the Company to employ Slaine in any capacity whatsoever or to prohibit or restrict the Company (or any such Subsidiary) from terminating Key person terms are common in the closed-ended fund context (where a key person event is likely to trigger the suspension of the investment period). shall be null and void. (xix) Put/Call Price means, with respect to any Call Securities or Put Securities, as applicable, (I)if Slaines employment is terminated by the Company for Cause or by acquire from time to time shall be subject to the transfer restrictions and other provisions of the Shareholders Agreement. EEA based AIFMs are also subject to an additional requirement to ensure the fair treatment of investors. Side letters are the separate arrangements with the fund managers which either will address matters that are not covered in the partnership agreement of the applicable fund or will override some . Side letter. Examples of most favored nation clauses in contracts - Afterpattern United Nations-supported Principles for Responsible Investment (PRI) offers guidance on the placement of ESG provisions in LPAs and side letters on pages 13-14 of their Incorporating Responsible Investment Requirements into Private Equity Fund Terms report. Most favored nation clause samples. %PDF-1.7 % If at any time from the date of this Agreement until the earlier of the (i) Maturity Date of the Convertible Note and (ii) payment in full of principal and interest of the Convertible Note, the Company sells equity, including debt convertible into equity, in cash to third party . Whether it is appropriate to grant such requests should be considered on a case by case basis. Side letters are an (increasingly) common way of formalising negotiated arrangements between a private fund and an investor. From a side letter perspective, this effectively increases their negotiating power, particularly if one of the schemes is granted an MFN which is extended to all members of its pool. 121 0 obj <]>>stream (iii) Cause shall have the meaning set forth in the All A key man clause is a contractual clause that prohibits an investment firm or fund manager from making new investments if one or more key persons are not available to devote the necessary time to the investment. However, even with careful drafting, an MFN right can significantly extend the funds (or the managers) obligations; managers should therefore carefully consider which investors terms are likely to be captured by the MFN when negotiating these (and other) side letter provisions. Control. limitation, pursuant to the exercise of all Puts and Calls) prior to the date of such Material Breach Event over (ii)the Cost of all Purchased Securities and Option Shares, as applicable, previously purchased by the Company or any other Person Their use in the open-ended funds context is increasing, particularly to tie in certain key persons financially, including required investment levels and notification rights where a key person submits a significant redemption request (which could potentially be linked to favourable liquidity rights). An MFN right allows an investor to elect to receive the side letter provisions negotiated by other investors.3However, MFN provisions can be drafted in a number of ways, meaning that what the investor may actually be entitled to elect to receive can vary widely. AJC*P 4m@RA0aS# written notice of objection to the Board within ten (10)days of delivery to such Shareholder of such Call Notice or Put Pricing Notice, as applicable (an Objection Notice). Limited Partner Advisory Committee (LPAC) Side Letter Clause (Private A sample side letter to a limited partnership agreement (LPA) that can be used by a limited partner investing in a private equity fund that is structured as a limited partnership. It also considers the regulatory context and practical points for managers navigating the restrictions and obligations of multiple side letters. Download the March 2023 issue of Private Equity International 2) Conversely, certain rights generally should not be included in a side letter, notably those that would create a new class of interests from a local law perspective or restrict the fund as a whole (such as tighter investment restrictions than those described in the funds constituting documentation). Definitions. (i)when delivered by hand or electronic e-mail, (ii)upon confirmation of receipt when delivered by facsimile transmission, (iii)one (1)day after deposit with a reputable overnight delivery service or (iv)three Under the law of contracts, a side letter has the . Agreement can be amended only by an instrument in writing signed by (x)each of the parties hereto and (y)solely with respect to Section3, each of Silver Lake and Warburg Pincus. Side letters are an (increasingly) common way of formalising negotiated arrangements between a private fund and an investor.1Whilst used more widely in the closed-ended fund context (given the limited withdrawal rights associated with such funds, the typically higher level of negotiation and greater structural complexity), they are also a feature of open-ended funds, for instance where there is a seed or cornerstone investor investing significant capital or an investor subject to specific tax or regulatory regimes that require bespoke terms. When you invest in a mutual fund . Private equity side letters - Lexology From the hundreds of nominations for the inaugural Women of Influence in Private Markets list, we could select just 10 from the private equity sphere. {slal!#/:dVpRb|$vbHIbO X! Sometimes these side letters are borne of necessity for the investor to enter into the fund, either due to regulatory . shall apply to the Purchased Securities, as well as any other equity securities of the Company that the Shareholders shall acquire from time to time; and. Market Value means, with respect to any Call Securities or Put Securities, as applicable, as of the relevant date, (I)the price that a willing buyer would pay for such Call Securities or Put Securities, as applicable, from a willing (xx) Put/Call Termination Date means (I)in the case of the exercise of a Put or Call with respect to any Investors are increasingly looking to funds to make ESG commitments with respect to their investments. Slaine without Good Reason and a Material Breach Event has not occurred prior to the Put/Call Closing Date, a price equal to the lower of (x)the Fair Market Value of (A)with respect to any Purchased Securities, such Call Securities as of The Use of Side Letters to Limited Partnership Agreements - Eurekahedge 4 0 obj Lenders should be mindful of any such provisions, commonly referred to as most favoured nation ("MFN") provisions (which may also be set out in the LPA).
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