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Summary of Terms and Description

THE DESCENDANT’S FUND

The Descendant’s Fund (the “Fund”) is an investment fund that is designed to make equity in small to mid-sized private companies founded and/or controlled by African-Americans.  It is called the “Descendant’s Fund” due to the involvement of a number of relatives of various civil-rights icons, including, but not limited to, descendants of Frederick Douglas, Martin Luther King Jr., Rosa Parks, Harriet Tubman, Rodney King, John Lewis and others.  The Descendants will serve as a committee for the Fund focused on raising awareness for investing in companies that meet the funds mandate.  The committee may also be available to assist the portfolio companies in which the Fund invests in capacities where expertise and strategic relationships overlap with portfolio companies.

The Fund will be managed by Blackview Capital Advisors, led by its sole principal, Jay Freeman. Mr. Freeman is a private equity professional that has 10+ years’ experience advising large and mid-sized public and private companies on mergers & acquisitions, leveraged buyouts, turnaround & restructuring as well as corporate strategy. 

Prior to BlackView, Mr. Freeman served on Ankura Consulting Group’s Turnaround & Restructuring team where he advised on both debtor and creditor engagements. Most notably, Jay served as a key member in designing and executing the restructuring $470 million of debt and the turnaround strategy for Payless ShoeSource’s Chapter 11 bankruptcy.  Jay also served as an advisor to a multi-billion dollar asset management firm’s private capital lending group as a lender to a top-5 Yum Brands! distressed franchisee. 

Before joining Ankura, Mr. Freeman ran BlackView Consulting Group as a company focusing on strategy, corporate finance, raising capital and deal origination for middle-market private companies. Mr. Freeman served as an advisor to Vianova Health in negotiating its strategic partnership, providing its advanced biometric devices and AI-powered software to Lenovo.  He served as a consultant for Barney’s New York leading up to the company’s bankruptcy filing. 

Prior to BlackView Consulting, Mr. Freeman worked at UBS where he was tasked assisting in the wind-down and restructuring of UBS’ “good bank” and “bad bank” assets, focusing on mortgage and derivatives units. Prior to UBS, Mr. Freeman served on RBS’ Credit Portfolio Management team where he evaluated opportunities for credit portfolio with $2.0 billion of committed bank capital in the industrial and manufacturing sectors and assisted in executing debt M&A transactions.

Before RBS Mr. Freeman worked at Black Opal Equity, a lower middle-market private equity firm. 

Mr. Freeman is active with several non-profit organizations, including but not limited to: The Ascend program at Northwestern Kellogg School of business where he advises small and medium size diverse owned businesses on financial management and growth strategies; Project Reset, a restorative justice program in the Bronx, NY, where he volunteers.  Mr. Freeman also volunteers time at the Children’s Aid Society in Harlem, NY via the P.R.E.P. and College Access programs 

Mr. Freeman is a graduate of NYU Stern School of Business where he earned his Masters in Business Administration (MBA) with a focus on Corporate Finance and Artificial Intelligence, Machine Learning and Data Analytics and also graduated from SUNY Empire State College with a B.S. in Economics.

This presentation provides an overview of the proposed Summary of Terms of the Fund.  Exhibit A is an executive summary and Exhibit B is a more fulsome description of the proposed terms.  It is not an offering to purchase securities, which only may be made pursuant to definitive offering documentation.  

EXHIBIT A

EXECUTIVE SUMMARY

The Fund

[NAME OF FUND], a Delaware limited partnership.

Investment Objective

The investment objective of the Fund is to make equity investments in small to mid-sized companies with annual revenues of at least $5 million and to implement managerial and operational improvements geared toward sustained growth and profitability.  

Investment Manager

Blackview Capital Advisors

Key Person 

Jay Freeman

Capital Commitments

Seeking approximately $200 million

Minimum Investment

$1 million

Term

Ten years, subject to extension by the Advisory Committee

Commitment Period

Five years

Management Fees

2% on Commitments during Commitment Period and 2% on Invested Capital following Commitment Period

Carried Interest

20%, subject to standard 8% Preferred Return and Catch-Up

Transaction Fees

80% of Transaction Fees will be offset against Management Fees

Advisory Board

To be appointed and will be comprised of between 3-7 LP representatives

EXHIBIT B

SUMMARY OF TERMS

The following Summary of Principal Terms is subject to the detailed provisions of the Agreement of Limited Partnership of [NAME OF FUND] (as amended, restated, waived or otherwise modified from time to time, the “Partnership Agreement”) and is qualified in its entirety by reference to the Partnership Agreement. In the event that the description of terms in this Summary of Principal Terms is inconsistent with or contrary to the description in, or terms of, the Partnership Agreement or any related document (including the subscription agreement), the terms of the Partnership Agreement or such related document, as applicable, will control.

The Fund

[NAME OF FUND], a Delaware limited partnership.

Investment Objective

The investment objective of the Fund is to make equity investments in small to mid-sized companies with annual revenues of at least 5 million and to implement managerial and operational improvements geared toward sustained growth and profitability.  

The General Partner

[NAME OF GP ENTITY], a Delaware limited partnership (the “General Partner”). The principal of the General Partner primarily responsible for the Fund’s investment activities will be Jay Freeman (the “Principal”).

The Management Company

Blackview Capital Advisors, a Delaware limited liability company (the “Management Company”). The Management Company will be responsible for evaluating and monitoring the Fund’s investments and providing day-to-day managerial and administrative services to the Fund.

Committed Capital

The Fund is seeking aggregate capital commitments (the “Commitments”) from Limited Partners (each a “Limited Partner”, collectively, the “Limited Partners,” and together with the General Partner, the “Partners”) of $[___] million

Minimum Commitment

The minimum Commitment of each Limited Partner will be $[__] million from institutional investors and $[______] from a select number of individual investors.  Commitments of lesser amounts may be accepted at the discretion of the General Partner.

Commitment of General Partner

The General Partner will make a capital commitment of [___]% of the aggregate Commitments of the Limited Partners.

Closings

The General Partner may choose to hold an initial closing for the Fund at any time (the “Initial Closing Date”). From time to time after the Initial Closing Date, but not more than 12 months thereafter, one or more additional closings may be held as necessary to accommodate the admission of additional Limited Partners or permit any existing Limited Partner to increase its Commitment (the final additional closing, the “Final Closing Date”).

Term

The term of the Fund will be [ten] years from the Initial Closing Date (subject to earlier termination as provided in the Partnership Agreement), but may be extended for up to two consecutive one-year periods at the discretion of the General Partner with the consent of the Advisory Board (as defined below). The term also may be terminated by the vote of Limited Partners holding at least 75% of the Limited Partner interests.

Commitment Period

Investments may be made by the Fund through the [fifth] anniversary of the Final Closing Date (the “Commitment Period”). Upon the termination of the Commitment Period, all Partners will be released from any further obligation with respect to their unfunded Commitments, except to the extent necessary to: (i) cover expenses, liabilities and obligations of the Fund, including Management Fees; (ii) complete investments by the Fund in transactions which were committed to or the subject of a definitive agreement, letter of intent or memorandum of understanding as of the end of the Commitment Period; and (iii) effect follow-on investments in existing portfolio companies of the Fund (collectively, “Portfolio Companies” and each, a “Portfolio Company”). The Commitment Period also may be terminated by the vote of the Limited Partners holding at least 75% of the Limited Partners interests.

Drawdowns

Commitments will be drawn down pro rata as needed during the Commitment Period to fund investments and to pay Fund expenses, with not less than ten business days prior written notice to the Limited Partners.

Distributions

Distributions of net cash proceeds from the sale of securities and distributions of securities in kind, together with any dividends and interest income received with respect to investments in Portfolio Companies that are not re-invested in Portfolio Companies, will be preliminarily apportioned among the Partners participating in the applicable investment in proportion to their respective participation in funding such investment. The amount so apportioned to the General Partner will be distributed to it. The amount so apportioned to a Limited Partner  will be distributed as follows:

  1. first, 100% to such Limited Partner until the cumulative amount distributed to such Limited Partner in respect of investments under this paragraph (a) equals the following:

(i) such Limited Partner’s funded Commitment attributable to realized investments (including investments with respect to which the Partnership has received any cash dividend) and unrealized investments to the extent they are permanently written down as of that time; and

(ii) such Limited Partner’s funded Commitment attributable to the portion of organizational expenses, management fees and other expenses paid to date and allocated to realized investments and unrealized investments to the extent they are permanently written down as of that time; and

 

(b) second, 100% to such Limited Partner until such Limited Partner has received aggregate distributions that would provide such Limited Partner with a rate of return on amounts included in paragraphs (a)(i) and (a) (ii) above equal to [8.0%] per annum; and

(c) third, 100% to the General Partner until the General Partner has received under this paragraph (c) 20% of the sum of the distributed preferred return described in paragraph (b) above and the amounts distributed under this paragraph (c); and 

(d) thereafter, 80% to the Limited Partner and 20% to the General Partner.

Distributions to the General Partner under paragraphs (c) and (d) above are referred to as the “Carried Interest. The General Partner will, prior to making a distribution, consider whether to write-down or write-off the cost basis of any investment of the Fund in connection with the application of the foregoing distribution provisions. The Fund anticipates that it will distribute net cash proceeds from disposition of Portfolio Company investments within 90 days of realization and will distribute dividends, interest and other income received with respect to Portfolio Company investments at least annually, in each case other than (i) amounts retained for reinvestment in the manner described in “Reinvestment” below, (ii) reasonable amounts held in reserve to meet Fund expenses, obligations and liabilities, and (iii) any required tax withholdings. Distributions prior to the termination of the Fund may only take the form of cash or marketable securities. Upon termination of the Fund, distributions may also include restricted securities or other assets of the Fund. Notwithstanding the foregoing, the General Partner may receive annual tax distributions to satisfy tax liabilities arising from allocations attributable to its Carried Interest at the highest assumed tax rate for individuals resident in New York City. Such amounts will be treated as an advance against further distributions.

Reinvestment

In general, the General Partner may reinvest investment proceeds, provided that the Fund’s cumulative capital invested (other than bridge financings and temporary investments) shall not exceed one hundred ten percent (110%) of the aggregate Commitments of all Partners. In addition, if the Fund receives all or part of the cost basis of its investment in Portfolio Company within 13 months after the investment, the amount of the cost basis received by the Fund also will be added to the unfunded Commitments and will be available for future Fund investments and expenses.

Management Fee

Commencing on the activation date of the Fund and until the end of the Commitment Period, the Fund will pay to the Management Company an annual management fee (the “Management Fee”), payable quarterly in advance, equal to 2.0% of the aggregate Commitments of Limited Partners.              

Following the Commitment Period, the annual Management Fee will be decreased to 2.0% of the aggregate funded Commitments of Limited Partners, reduced by the aggregate amount of distributions to the Limited Partners constituting a return of invested capital and the amount of any permanent write down (to the extent of the write down).

The Management Fee may be paid out of current income and the disposition proceeds of the Fund and, to the extent necessary, from drawdowns, which will reduce the remaining Commitments of the Limited Partners. 

Transaction Fees

The Management Fee will be reduced by an amount equal to 80% of all transaction, monitoring, directors’ or other fees received by the General Partner, the Management Company or the Principals in respect of the Fund’s portfolio companies (“Transaction Fees”).  Any fees paid to Operating Advisors (as defined below) are not deemed to be Transaction Fees and will not reduce the Management Fee.

To the extent that any other fund or any other entity or individual co-invests alongside the Fund in any portfolio company investment, any Transaction Fees will be allocated among the Fund and the co-investors in proportion to the cost of the investment or potential investment in the portfolio company held (or committed to be held) by each.

Offering and Organizational Expenses

The Fund will be responsible for all legal, accounting, filing and other organizational expenses including the out-of-pocket expenses of the General Partner and the Management Company, incurred in the formation of the Fund (“Organizational Expenses”). 

Operating Expenses

The General Partner and the Management Company will pay all of their ordinary administrative and overhead expenses in managing Fund investments, including salaries, benefits and rent.

In addition to the Management Fee, the Fund will bear all fees, costs, expenses, liabilities and obligations relating to the Fund’s and/or its subsidiaries’ activities, investments and business (to the extent not borne or reimbursed by a portfolio company), including (i) all fees, costs, expenses, liabilities and obligations attributable to identifying, investigating, acquiring, holding (including expenses of portfolio tracking and reporting activities and any software, hardware, technology or systems related to such activities), structuring, organizing, financing, refinancing, restructuring, managing, monitoring, operating, taking public or private, valuing, winding up, liquidating, dissolving and disposing of the Fund’s investments (including (a) interest and fees on money borrowed by the Fund or by the Management Company, the General Partner or any affiliate thereof on behalf of the Fund, (b) principal, interest and any related fees and expenses associated with hedging activity permitted under the Partnership Agreement, (c) expenses incurred in connection with credit facilities and (d) registration fees and expenses and commitment, real estate title, survey, brokerage, finders’, custodial and other fees and expenses), (ii) legal, accounting, asset and financial administration, custodian, depositary (including a depositary, representative or paying agent appointed pursuant to the AIFMD or any other similar law, rule or regulation in any relevant jurisdiction), commercial banking, auditing, insurance (including directors and officers, errors and omissions and representation and warranty liability insurance, and all premiums and charges in connection with the maintenance thereof),  travel (including chartered or first-class travel), litigation and indemnification costs and expenses, judgments and settlements, consulting, financial advisory, mergers and acquisitions advisory, investment banking, structuring, brokerage, finders’, financing, expert (including expert networks), appraisal (including the costs of any third-party valuation agents or pricing services), filing, printing, title, transfer, registration, market and reference materials (to the extent incurred for an actual or potential portfolio company) and other fees and expenses (including fees, costs and expenses associated with the preparation or distribution of the Fund’s financial statements, tax returns, tax estimates and Schedule K-1s (including any software, hardware, technology or systems used for such preparation and distribution)), any other administrative, regulatory or other Fund-related reporting or filing (including (A) any filings, forms, notifications, reports or other documents to be filed with the U.S. Securities and Exchange Commission, (B) any filings, forms, notifications, reports or other documents prepared with respect to the Foreign Account Tax Compliance Act and any comparable non-U.S. filings, (C) any filings, forms, notifications, reports or other documents to be filed with the U.S. Commodity Futures Trading Commission, (D) reporting, filing or other compliance requirements (other than the initial registrations, filings and compliance) contemplated by the AIFMD or any other similar law, rule or regulation in any relevant jurisdiction and (E) reporting, filing or other compliance requirements contemplated by any “know your customer” or anti-money laundering laws, rules or regulations or any other similar laws, rules or regulation in any relevant jurisdiction, (iii) fees, costs and expenses incurred by or on behalf of the Advisory Board (as defined below) in connection with the Advisory Board’s activities, (iv) all fees, costs, expenses, liabilities and obligations incurred by the Fund, the General Partner or the General Partner’s members, managers, partners, officers and employees relating to investment and disposition opportunities for the Fund not consummated (including legal, accounting, auditing, insurance, travel (including chartered or first-class travel), consulting, Operating Advisor due diligence and advisory, financial advisory, mergers and acquisitions advisory, investment banking, structuring, brokerage, finders’ (including executive finders and portfolio company finders), financing, appraisal, filing, printing, real estate title, survey, reverse breakup, termination and other fees and expenses), (v) all out-of-pocket fees and expenses incurred by the Fund, the General Partner or the General Partner’s members, managers, partners, officers and employees in connection with the annual and other periodic (if any) meetings of the Limited Partners and any other conference or meeting with any Limited Partner(s), including lodging expenses for the General Partner or any of its members, managers, partners, officers and employees, (vi) any taxes, fees and other governmental charges levied against the Fund (except to the extent that the Fund is reimbursed therefor by a reimbursing partner or such tax, fee or charge is treated as having been distributed to a partner pursuant to the Partnership Agreement), (vii) costs and expenses that are classified as extraordinary expenses under U.S. generally accepted accounting principles, (viii) all fees, costs and expenses incurred in connection with the organization, management, operation and dissolution, liquidation and final winding-up of any alternative investment vehicles, (ix) any regulatory related fees or expenses related to the Fund, (x) any organizational expenses and (xi) any placement fees.

Advisory Board

An advisory board of Limited Partners (the “Advisory Board”) will be established consisting of at least three and not more than seven members selected by the General Partner. The Advisory Board will meet as requested by the General Partner to (i) review any matters involving potential conflict of interest, (ii) review valuations of the Fund’s assets, and (iii) give or withhold consent to certain matters provided for in the Partnership Agreement.

“Key Person” Event

During the Commitment Period, in the event that Jay Freeman ceases to be actively involved in the affairs of the Fund, the Commitment Period shall terminate unless Limited Partners holding at least two-thirds of the Limited Partner interests elect to continue the Commitment Period within 180 days after the notice of such event is given to the Limited Partners.

Reports to Limited Partners

Subject to the provisions set forth in “Confidentiality” below, each Limited Partner will receive (a) audited financial statements for the Fund annually and (b) quarterly unaudited financial statements and reports providing summary information relating to significant developments of the Fund’s Portfolio Companies. Notwithstanding the foregoing, any information provided or disclosed to a Limited Partner may be adjusted, in the General Partner’s discretion, so that any financial information, valuation or other confidential information relating to the Fund’s Portfolio Companies is not disclosed to any Limited Partner that is directly or indirectly subject to either (i) Section 552(a) of Title 5, United State Code (commonly known as the Freedom of Information Act) or (ii) similar public disclosure law whether currently in force or enacted in the future. Each Limited Partner will also be provided annually with tax information related to the Fund necessary for the completion of any applicable federal and state income tax returns.

Limited Partner Meetings

The Fund will hold annual meetings offering Limited Partners the opportunity to review and discuss the Fund’s investment activities. The Fund’s potential investments will not be submitted for discussion.

Transfers and Withdrawals

With certain limited exceptions, a Limited Partner may not sell, assign, transfer or otherwise dispose of any interest in the Fund without the prior written consent of the General Partner. Further, a Limited Partner may not withdraw any amount from the Fund with certain limited exceptions, including an exception where the General Partner requires a Limited Partner to withdraw in order to avoid characterizing the assets of the Fund as “plan assets” under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

[Borrowings

The General Partner may cause the Fund to incur indebtedness with a term not greater than 90 days for the purpose of (i) paying Fund expenses and (ii) providing interim financing to the extent necessary to consummate the purchase of Portfolio Company investments.]

Defaults

Limited Partners will be obligated to make Contributions when called by the General Partner. In addition to all legal remedies available to the Fund, failure by a Limited Partner to make Contributions when due may result in, among other things, such Limited Partner being assessed an immediate 75% reduction of its capital account and foregoing any gains arising after its default that relate to any investment in which such Partner made a Contribution prior to such default. A defaulting Limited Partner will also remain liable to pay its pro rata share of the Management Fees and other expenses.

Confidentiality

The Limited Partners will be required to keep confidential all matters relating to the Fund and its affairs, except as otherwise required by applicable law.

Tax Considerations

The Fund expects that, under the existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated thereunder and court decisions related thereto, it will be treated as a partnership, and not as an association taxable as a corporation, for U.S. federal income tax purposes.

ERISA

The Fund will limit investments from “benefit plan investors” (generally employee benefit plans subject to ERISA, individual retirement accounts and other plans subject to Section 4975 of the Code and entities whose underlying assets are deemed to hold “plan assets”) to no more than 25% of each class of equity interests in the Fund unless, based on anticipated Limited Partners’ capital commitments, the General Partner elects to qualify the Fund as a “venture capital operating company” under ERISA. Any benefit plan investor should carefully review the discussion set out in “Section XII – Legal and Tax Matters” and should consult with its own counsel as to the consequences of making an investment in the Fund.

Tax-Exempt Limited Partners

The General Partner will use reasonable efforts not to take any action that would cause any tax-exempt Limited Partner to recognize, “unrelated business taxable income” (including “unrelated debt-financed income”) under the Code (“UBTI”), with certain exceptions for temporary borrowings and management fee offsets. Each prospective tax-exempt investor should carefully review the discussion concerning UBTI set out in “Section XII – Legal and Tax Matters” and should consult with its own tax advisor as to the consequences of making an investment in the Fund. 

Foreign Limited Partners

The General Partner will use reasonable efforts not to take any action that would cause foreign Limited Partner to recognize, “effectively connected income” under the Code (“ECI”) with certain exceptions including for Management Fee offsets. Each prospective foreign investor should carefully review the discussion concerning ECI set out in “Section XII – Legal and Tax Matters” and should consult its own tax and other advisors in determining the possible tax, exchange control or other consequences to such investor under the laws of the jurisdictions of which it is a citizen, resident or domiciliary, in which it conducts business or in which it otherwise may be subject to tax in connection with the purchase and ownership of Limited Partner interests in the Fund.

Side Letters

The Fund may enter into side letters or other writings to or with individual Limited Partners which have the effect of establishing rights for such Limited Partners not afforded to other Limited Partners, or allowing such Limited Partners to invest in the Fund on terms that differ from the terms described herein and the Partnership Agreement.

Counsel for the Fund

Morrison Cohen LLP will act as legal counsel for the General Partner and the Fund and not for any Limited Partner or the Limited Partners as a group. No independent counsel has been engaged to represent the Limited Partners.

Independent Accountants

[_________], will act as independent accountants for the General Partner and the Fund and not for any Limited Partner or the Limited Partners as a group.