AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ARDENT CAPITAL PARTNERS III LP
A Delaware Limited Partnership
Effective as of February 28, 2024
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARDENT CAPITAL PARTNERS III LP
This AMENDMENT NO. 1 TO THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARDENT CAPITAL PARTNERS III LP (this "Amendment") is entered into and made effective as of February 28, 2024 (the "Amendment Effective Date"), by Ardent Capital GP III LLC, a Delaware limited liability company (the "General Partner"), acting in its capacity as the sole general partner of, and on behalf of, Ardent Capital Partners III LP, a Delaware limited partnership (the "Partnership" or the "Fund").
This Amendment amends and supplements that certain Amended and Restated Agreement of Limited Partnership of Ardent Capital Partners III LP, dated as of April 15, 2019 (the date of the Fund's final closing) (as in effect immediately prior to this Amendment, the "Partnership Agreement" or the "LPA").
The principal office of the Fund and the General Partner is located at 590 Madison Avenue, 28th Floor, New York, NY 10022. The registered agent of the General Partner in the State of Delaware is Prestige Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, DE 19904. The Partnership was formed and is governed by the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et seq. (the "DRULPA"), and this Amendment shall be governed by and construed in accordance with the laws of the State of Delaware. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Partnership Agreement.
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RECITALS
WHEREAS, Ardent Capital Partners III LP is a Delaware limited partnership duly formed and existing under the DRULPA for the purpose of making control investments in middle-market industrial and business-services companies, with aggregate capital commitments of Two Billion Eight Hundred Million Dollars ($2,800,000,000) from forty-seven (47) limited partners admitted to the Partnership on or prior to the final closing on April 15, 2019;
WHEREAS, Ardent Capital GP III LLC serves as the sole general partner of the Partnership pursuant to the terms of the Partnership Agreement and holds a general partner commitment equal to 1.5% of total commitments, or Forty-Two Million Dollars ($42,000,000) (the "GP Commitment");
WHEREAS, Ardent Capital Management LLC, a Delaware limited liability company and registered investment adviser with the United States Securities and Exchange Commission (the "SEC") (CRD #298417), serves as the investment adviser and manager of the Fund pursuant to the terms of the Partnership Agreement and a separate Investment Management Agreement dated as of April 15, 2019 (the "Management Company");
WHEREAS, the General Partner has undergone a management company restructuring (the "Restructuring"), pursuant to which Ardent Capital Holdings LLC, a newly formed Delaware limited liability company ("HoldCo"), has been established as the parent holding company of both (i) the General Partner, through Ardent GP Intermediate LLC, a newly formed Delaware limited liability company ("GP Intermediate"), which serves as the sole member of the General Partner, and (ii) the Management Company, which is directly owned by HoldCo;
WHEREAS, in connection with the Restructuring, David Kellner, a Senior Partner of the General Partner and the Management Company, is retiring from his positions with the General Partner and the Management Company effective March 31, 2024, and Joanna Trask, a Partner of the General Partner and the Management Company, is departing from her positions with the General Partner and the Management Company effective April 15, 2024, and each of David Kellner and Joanna Trask has withdrawn, or has agreed to withdraw, as a member of the General Partner and the Management Company in connection with the Restructuring;
WHEREAS, in connection with the Restructuring, the ownership structure of the General Partner has been converted from direct ownership by five (5) individual principals — namely, Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao — to indirect ownership through the following chain: the HoldCo Members (as defined below) hold membership interests in HoldCo, which is the sole member of GP Intermediate, which in turn is the sole member of the General Partner;
WHEREAS, the members of HoldCo following the completion of the Restructuring are as follows: Marcus Aldridge (42%), Priya Narayanan (36%), Robert Hsiao (14%), Elena Marchetti (4%), and Samuel Okonkwo (4%) (collectively, the "HoldCo Members");
WHEREAS, Section 9.4 of the Partnership Agreement provides that the consent of the Limited Partner Advisory Committee (the "LPAC") shall be required for certain amendments to the Partnership Agreement and for material changes to the management structure of the Fund, including changes in the ownership or control of the General Partner;
WHEREAS, the LPAC, currently consisting of duly appointed representatives of Ridgeline Public Employees' Retirement System, Crestwood Endowment Partners, Pinnacle Insurance Group, and Graystone Family Office LLC, has been duly notified of the Restructuring and the proposed amendments to the Partnership Agreement contemplated by this Amendment, and has provided its written consent to this Amendment and the Restructuring at a duly convened meeting of the LPAC held on February 14, 2024, in compliance with the requirements of Section 9.4 of the Partnership Agreement;
WHEREAS, the General Partner desires to amend the Partnership Agreement to (a) reflect the Restructuring, including the interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner and the Management Company, (b) update certain defined terms to reflect the new organizational structure and the departure of David Kellner and Joanna Trask, (c) amend the GP Commitment provisions to reflect the assumption of departing principals' unfunded commitments by the remaining and newly admitted principals, and (d) make conforming changes to Section 5.2 (Key Person), Section 8.3 (Transfer of GP Interest), Section 9.4 (LPAC Consent), and related provisions of the Partnership Agreement;
WHEREAS, the General Partner is authorized to execute this Amendment on behalf of the Partnership pursuant to the terms of Section 9.4 of the Partnership Agreement and has obtained all requisite consents and approvals, including the consent of the LPAC and the written consent of all members of the General Partner prior to the Restructuring;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner hereby amends the Partnership Agreement as set forth herein.
ARTICLE I — DEFINITIONS; AMENDMENTS TO DEFINED TERMS
Section 1.1 — Amendment to the Definition of "General Partner"
The definition of "General Partner" set forth in Section 1.1 of the Partnership Agreement is hereby deleted in its entirety and replaced with the following:
"General Partner" means Ardent Capital GP III LLC, a Delaware limited liability company, whose sole member is Ardent GP Intermediate LLC, a Delaware limited liability company ("GP Intermediate"), which in turn is wholly owned by Ardent Capital Holdings LLC, a Delaware limited liability company ("HoldCo"). The General Partner serves as the sole general partner of the Partnership and is responsible for the management, operation, and investment activities of the Partnership in accordance with the terms of this Agreement.
For the avoidance of doubt, the General Partner continues to be Ardent Capital GP III LLC, and the interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner in connection with the Restructuring does not constitute a change in the identity of the General Partner for any purpose under the Partnership Agreement or the DRULPA. Ardent Capital GP III LLC remains the same legal entity that was designated as the General Partner in the original Partnership Agreement, and the Partnership's Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware continues to reflect Ardent Capital GP III LLC as the sole general partner of the Partnership.
Section 1.2 — Amendment to the Definition of "Management Company"
The definition of "Management Company" set forth in Section 1.1 of the Partnership Agreement is hereby deleted in its entirety and replaced with the following:
"Management Company" means Ardent Capital Management LLC, a Delaware limited liability company registered as an investment adviser with the SEC (CRD #298417), whose sole member is Ardent Capital Holdings LLC, a Delaware limited liability company. The Management Company serves as the investment adviser and manager of the Fund and is entitled to receive the Management Fee in accordance with the terms of this Agreement.
The parties hereby confirm that the Management Company continues to receive the Management Fee as provided in Section 6.1 of the Partnership Agreement. The Management Fee rates are (a) 1.75% per annum on committed capital (i.e., aggregate capital commitments of all partners) during the Investment Period (as defined in the Partnership Agreement), and (b) 1.50% per annum on invested capital (i.e., aggregate funded capital contributions less the cost basis of investments that have been realized or written off) following the expiration or termination of the Investment Period. No change to the Management Fee rates, the basis on which the Management Fee is calculated, or the timing or manner of payment of the Management Fee results from the Restructuring or this Amendment.
Section 1.3 — Amendment to the Definition of "Key Persons"
The definition of "Key Persons" set forth in Section 1.1 of the Partnership Agreement is hereby amended and restated in its entirety as follows:
"Key Persons" means Marcus Aldridge and Priya Narayanan, each of whom shall devote substantially all of his or her business time and attention to the affairs of the Fund during the Investment Period and, thereafter, to the management and monitoring of the Fund's portfolio investments through the end of the Fund term, subject to the terms of Section 5.2 of this Agreement.
For the avoidance of doubt, the definition of Key Persons remains substantively unchanged from the definition set forth in the Partnership Agreement as in effect immediately prior to this Amendment. Marcus Aldridge and Priya Narayanan were the only individuals designated as Key Persons under the original Partnership Agreement, and this Amendment continues such designation without modification.
The General Partner hereby confirms that the departures of David Kellner and Joanna Trask from their respective positions with the General Partner and the Management Company do not constitute a "Key Person Event" as defined in Section 5.2 of the Partnership Agreement, because neither David Kellner nor Joanna Trask is, or has ever been, a designated Key Person under the Partnership Agreement. The Restructuring, including the interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner, similarly does not constitute or trigger a Key Person Event under the Partnership Agreement.
Section 1.4 — New Defined Term: "HoldCo"
The following new defined term is hereby added to Section 1.1 of the Partnership Agreement:
"HoldCo" means Ardent Capital Holdings LLC, a Delaware limited liability company formed on March 1, 2024, with a Certificate of Formation filed with the Secretary of State of the State of Delaware (File No. 7948231) and bearing Employer Identification Number 93-1847225. The registered agent of HoldCo is Prestige Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, DE 19904. HoldCo serves as the parent holding company of both (i) the Management Company (as the direct and sole member thereof) and (ii) the General Partner (indirectly, through GP Intermediate, which is the sole member of the General Partner and which is itself wholly owned by HoldCo).
Section 1.5 — New Defined Term: "GP Intermediate"
The following new defined term is hereby added to Section 1.1 of the Partnership Agreement:
"GP Intermediate" means Ardent GP Intermediate LLC, a Delaware limited liability company formed on March 1, 2024, with a Certificate of Formation filed with the Secretary of State of the State of Delaware (File No. 7948237) and bearing Employer Identification Number 93-1847231. The registered agent of GP Intermediate is Prestige Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, DE 19904. GP Intermediate is the sole member of the General Partner and is itself wholly owned by HoldCo.
Section 1.6 — New Defined Term: "HoldCo Members"
The following new defined term is hereby added to Section 1.1 of the Partnership Agreement:
"HoldCo Members" means the members of HoldCo from time to time. As of the Amendment Effective Date, the HoldCo Members and their respective membership interests in HoldCo are as follows:
(a) Marcus Aldridge — 42%;
(b) Priya Narayanan — 36%;
(c) Robert Hsiao — 14%;
(d) Elena Marchetti — 4%; and
(e) Samuel Okonkwo — 4%.
Section 1.7 — Amendment to the Definition of "GP Commitment"
The definition of "GP Commitment" set forth in Section 1.1 of the Partnership Agreement is hereby amended and restated in its entirety as follows:
"GP Commitment" means the aggregate capital commitment of the General Partner to the Fund, which is Forty-Two Million Dollars ($42,000,000), equal to 1.5% of the total capital commitments of the Partnership of Two Billion Eight Hundred Million Dollars ($2,800,000,000). The GP Commitment is funded through capital contributions made by the HoldCo Members to HoldCo, which in turn contributes such amounts through GP Intermediate to the General Partner, which in turn contributes such amounts to the Partnership in accordance with the terms of this Agreement.
For the avoidance of doubt, the total amount of the GP Commitment has not been changed by this Amendment. The aggregate GP Commitment remains Forty-Two Million Dollars ($42,000,000). In connection with the Restructuring and the departures of David Kellner and Joanna Trask, the portions of the GP Commitment previously attributable to such departing principals have been reallocated as follows:
(a) David Kellner's total GP Commitment allocation was Six Million Three Hundred Thousand Dollars ($6,300,000), representing 15% of the total GP Commitment. Of such amount, Four Million Four Hundred Ten Thousand Dollars ($4,410,000) has been funded (representing 70% of his allocation, consistent with the overall funding rate of the Partnership) and One Million Eight Hundred Ninety Thousand Dollars ($1,890,000) remains unfunded.
(b) Joanna Trask's total GP Commitment allocation was Five Million Forty Thousand Dollars ($5,040,000), representing 12% of the total GP Commitment. Of such amount, Three Million Five Hundred Twenty-Eight Thousand Dollars ($3,528,000) has been funded (representing 70% of her allocation, consistent with the overall funding rate of the Partnership) and One Million Five Hundred Twelve Thousand Dollars ($1,512,000) remains unfunded.
(c) The combined unfunded GP Commitment of the departing principals is Three Million Four Hundred Two Thousand Dollars ($3,402,000) ($1,890,000 + $1,512,000).
(d) The combined unfunded GP Commitment of $3,402,000 has been assumed by the HoldCo Members pro rata in accordance with their respective HoldCo membership percentages, as follows:
(i) Marcus Aldridge: 42% × $3,402,000 = $1,428,840;
(ii) Priya Narayanan: 36% × $3,402,000 = $1,224,720;
(iii) Robert Hsiao: 14% × $3,402,000 = $476,280;
(iv) Elena Marchetti: 4% × $3,402,000 = $136,080; and
(v) Samuel Okonkwo: 4% × $3,402,000 = $136,080.
(e) The GP Commitment continues to be funded through the General Partner from capital contributions made by the HoldCo Members through the GP Intermediate structure as described above.
Section 1.8 — Amendment to the Definition of "Principals"
The definition of "Principals" set forth in Section 1.1 of the Partnership Agreement is hereby deleted in its entirety and replaced with the following:
"Principals" means the HoldCo Members, being Marcus Aldridge, Priya Narayanan, Robert Hsiao, Elena Marchetti, and Samuel Okonkwo.
For the avoidance of doubt, David Kellner and Joanna Trask are hereby removed from the definition of "Principals" effective as of the Amendment Effective Date, reflecting their respective departures from the General Partner and the Management Company in connection with the Restructuring.
Section 1.9 — Other Conforming Definitional Changes
Any other defined terms in the Partnership Agreement that reference the individual principals (including, without limitation, Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao) as direct owners, equity holders, or members of the General Partner or the Management Company shall be deemed amended to refer to the applicable ownership structure through HoldCo and GP Intermediate, as applicable, consistent with the Restructuring and the amendments set forth in this Article I.
All cross-references throughout the Partnership Agreement to the individual membership interests of the principals in the General Partner shall be deemed to be references to the indirect interests of the HoldCo Members held through the HoldCo/GP Intermediate structure, as described herein. No such conforming change shall be interpreted to alter any substantive right, obligation, or economic term set forth in the Partnership Agreement except as expressly set forth in this Amendment.
ARTICLE II — AMENDMENTS TO SECTION 5.2 (KEY PERSON)
Section 2.1 — Key Person Event Definition
Section 5.2 of the Partnership Agreement is hereby amended to clarify the following:
(a) The designated Key Persons under the Partnership Agreement remain Marcus Aldridge and Priya Narayanan. No change has been made to the identity of the Key Persons as a result of the Restructuring or this Amendment.
(b) A "Key Person Event" under Section 5.2 of the Partnership Agreement shall be triggered if either (i) both Key Persons cease to devote substantially all of their business time and attention to the affairs of the Fund during the Investment Period, or (ii) one Key Person ceases to devote substantially all of his or her business time and attention to the affairs of the Fund during the Investment Period and such Key Person is not replaced by a substitute individual approved by the LPAC within one hundred twenty (120) days following such cessation.
(c) The departures of David Kellner and Joanna Trask from their respective positions with the General Partner and the Management Company do not trigger or constitute a Key Person Event under Section 5.2 of the Partnership Agreement, as neither David Kellner nor Joanna Trask is a designated Key Person.
(d) The Restructuring, including the interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner, does not trigger or constitute a Key Person Event under Section 5.2 of the Partnership Agreement. Marcus Aldridge and Priya Narayanan continue to serve in their respective capacities with the General Partner and the Management Company and continue to devote substantially all of their business time and attention to the affairs of the Fund.
Section 2.2 — Contributing Persons
The General Partner acknowledges that certain side letters entered into in connection with the Fund's closings contain "expanded key person" or "additional key person" provisions that designate David Kellner as a "Contributing Person" (or similar designation) in addition to the designated Key Persons under the Partnership Agreement. As of the date hereof, the General Partner has identified six (6) side letters containing such expanded key person provisions naming David Kellner as a Contributing Person.
The parties hereby clarify that the rights and obligations arising under such side letters with respect to the designation of David Kellner as a Contributing Person, including any notification requirements, consent rights, suspension rights, or other remedies triggered by the departure of a Contributing Person, are governed exclusively by the terms of such side letters and are not modified, superseded, or otherwise affected by this Amendment. Nothing in this Amendment shall be construed to limit, expand, or alter the rights of any limited partner under any such side letter.
The General Partner confirms that it has provided, or will provide within fifteen (15) business days following the effective date of David Kellner's departure (March 31, 2024), all notifications required to be delivered to the applicable limited partners under such side letters, in accordance with the terms and conditions set forth in the applicable side letter provisions. The General Partner further confirms that it will provide similar notifications to any limited partners holding side letters containing analogous provisions with respect to the departure of Joanna Trask, within fifteen (15) business days following the effective date of her departure (April 15, 2024).
Section 2.3 — Suspension Rights
The General Partner acknowledges that three (3) side letters entered into in connection with the Fund's closings grant the applicable limited partners a right to request a suspension of the Investment Period for a period of up to ninety (90) days pending LPAC review and consultation upon the departure of a Contributing Person, as defined in such side letters. The General Partner hereby confirms the following facts with respect to such suspension rights:
(a) The General Partner notified the LPAC of the Restructuring and the planned departures of David Kellner and Joanna Trask by formal letter dated February 5, 2024, delivered by email and by overnight courier to each LPAC member.
(b) The LPAC convened a duly noticed meeting on February 14, 2024, at which all four (4) LPAC representatives were present (either in person or by telephone), and the LPAC discussed the Restructuring, the departures of David Kellner and Joanna Trask, and the proposed amendments to the Partnership Agreement.
(c) At the February 14, 2024 meeting, the LPAC granted its consent to the Restructuring and the amendments contemplated by this Amendment, and no LPAC member raised an objection or requested a suspension of the Investment Period.
(d) As a result, the Investment Period (which commenced on June 30, 2019, and is scheduled to expire on June 30, 2025, unless earlier terminated in accordance with the terms of the Partnership Agreement) continues in effect and has not been suspended or otherwise interrupted.
The General Partner will cooperate with the holders of the applicable side letters in good faith to address any questions regarding the impact of the Restructuring on the expanded key person provisions set forth therein.
ARTICLE III — AMENDMENTS TO SECTION 8.3 (TRANSFER OF GP INTEREST)
Section 3.1 — Permitted Transfers and Restructuring
Section 8.3 of the Partnership Agreement is hereby amended to provide as follows:
(a) The transfer of the membership interests in the General Partner from the five (5) individual principals (Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao) to Ardent GP Intermediate LLC, as the sole member of the General Partner, in connection with the Restructuring constitutes a "Permitted Transfer" under Section 8.3 of the Partnership Agreement and does not require the consent of the limited partners of the Partnership, other than the consent of the LPAC, which has been duly obtained as set forth in Article IV of this Amendment.
(b) The interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner in connection with the Restructuring does not constitute a "Transfer" (as defined in Section 8.3 of the Partnership Agreement) of the General Partner's interest in the Partnership. Ardent Capital GP III LLC's general partner interest in the Partnership has not been transferred, assigned, pledged, encumbered, or otherwise disposed of in any manner. Ardent Capital GP III LLC continues to hold the same general partner interest in the Partnership that it held immediately prior to the Restructuring, and no assignment or conveyance of such interest has occurred.
(c) The Restructuring does not trigger any transfer restrictions, rights of first refusal, tag-along rights, drag-along rights, or other similar provisions set forth in Section 8.3 or elsewhere in the Partnership Agreement with respect to the general partner interest.
(d) Ardent Capital GP III LLC continues as the sole general partner of the Partnership, and no other person or entity has been admitted as a general partner of the Partnership.
Section 3.2 — Future Transfers
Notwithstanding the provisions of Section 3.1 above, any future transfer, assignment, pledge, encumbrance, hypothecation, or other disposition (whether voluntary or involuntary, by operation of law or otherwise) of the general partner interest in the Partnership held by Ardent Capital GP III LLC, or any change in control of the General Partner, HoldCo, or GP Intermediate, shall continue to be subject to the transfer restrictions set forth in Section 8.3 of the Partnership Agreement, as amended by this Amendment, and shall require the prior written consent of the LPAC under Section 9.4 of the Partnership Agreement, as amended by this Amendment.
For purposes of this Section 3.2 and Section 9.4 of the Partnership Agreement (as amended hereby), a "change in control" shall mean and include any transaction or series of related transactions pursuant to which any person or "group" (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended) acquires, directly or indirectly, (a) a majority of the membership interests (whether by equity percentage or economic interest) in HoldCo, (b) a majority of the voting control of HoldCo, or (c) the power, whether by contract, equity ownership, or otherwise, to direct or cause the direction of the management and policies of HoldCo, the General Partner, or GP Intermediate.
Section 3.3 — Representations Regarding the Restructuring
In connection with the amendments set forth in this Article III, the General Partner hereby represents and warrants to the Partnership and the limited partners as follows:
(a) Ardent GP Intermediate LLC is a duly organized and validly existing Delaware limited liability company and is a wholly owned subsidiary of HoldCo. GP Intermediate has no members other than HoldCo.
(b) HoldCo is a duly organized and validly existing Delaware limited liability company and is owned by the HoldCo Members in the percentages set forth in Section 1.6 of this Amendment. HoldCo has no members other than the HoldCo Members.
(c) No third party, whether an individual, corporation, limited liability company, partnership, trust, or other entity, has acquired any membership interest, equity interest, economic interest, or other ownership right in HoldCo, GP Intermediate, or the General Partner in connection with the Restructuring, other than the HoldCo Members as described in Section 1.6 of this Amendment.
(d) The Restructuring has been effected in compliance with all applicable provisions of the Partnership Agreement, including Sections 8.3 and 9.4, and in compliance with the DRULPA and all other applicable laws, rules, and regulations.
(e) All instruments, agreements, and filings necessary to effect the Restructuring have been duly executed, delivered, and, where applicable, filed with the appropriate governmental authorities.
ARTICLE IV — AMENDMENTS TO SECTION 9.4 (LPAC CONSENT)
Section 4.1 — LPAC Consent for Restructuring
Section 9.4 of the Partnership Agreement is hereby amended and restated to confirm that the consent of the LPAC shall be required for any of the following actions:
(a) Any material change in the management structure of the Fund, including, without limitation, any change in the ownership structure, equity composition, or control of the General Partner, HoldCo, GP Intermediate, or the Management Company, whether effected directly or indirectly through one or more transactions or series of related transactions;
(b) Any change in the identity of the designated Key Persons under Section 5.2 of the Partnership Agreement, including any replacement of a Key Person;
(c) Any amendment, modification, or waiver of any provision of the Partnership Agreement, other than ministerial, administrative, or conforming amendments that do not materially and adversely affect the rights, preferences, or obligations of any limited partner; and
(d) Any other action or matter for which LPAC consent is required under the Partnership Agreement or any side letter.
The General Partner hereby confirms that the LPAC has been duly consulted with respect to all of the amendments set forth in this Amendment and with respect to the Restructuring, and that the LPAC has granted its consent to all such amendments and to the Restructuring, at a duly convened meeting of the LPAC held on February 14, 2024, in compliance with all applicable requirements of Section 9.4 of the Partnership Agreement.
Section 4.2 — LPAC Composition
The LPAC as of the Amendment Effective Date consists of duly appointed representatives of the following limited partners:
(a) Ridgeline Public Employees' Retirement System (contact: Thomas Engström, Chief Investment Officer), holding a capital commitment to the Fund of Two Hundred Twenty-Five Million Dollars ($225,000,000);
(b) Crestwood Endowment Partners (contact: Annika Johansson, Director of Private Equity), holding a capital commitment to the Fund of One Hundred Fifty Million Dollars ($150,000,000);
(c) Pinnacle Insurance Group (contact: Derek Mallinson, Head of Alternatives), holding a capital commitment to the Fund of One Hundred Seventy-Five Million Dollars ($175,000,000); and
(d) Graystone Family Office LLC (contact: Catherine Whitfield, Managing Director), holding a capital commitment to the Fund of Fifty Million Dollars ($50,000,000).
The LPAC members collectively represent aggregate capital commitments of Six Hundred Million Dollars ($600,000,000), representing approximately 21.4% of the total capital commitments of the Fund. The composition, appointment, and removal of LPAC members continues to be governed by Section 9.4 of the Partnership Agreement, as amended hereby.
Section 4.3 — Future LPAC Consent Provisions
Section 9.4 of the Partnership Agreement is hereby further amended to add the following additional provisions:
(a) Any future change in the identity or composition of the HoldCo Members that would result in a "change in control" of HoldCo (as defined in Section 3.2 of this Amendment) shall require the prior written consent of the LPAC, which consent may be granted or withheld in the LPAC's sole discretion.
(b) The General Partner shall provide the LPAC with not less than thirty (30) days' prior written notice of any proposed change in the composition of the HoldCo Members, including any proposed admission, withdrawal, or substitution of any HoldCo Member and any proposed transfer, assignment, or encumbrance of any HoldCo membership interest. Such notice shall describe in reasonable detail the proposed change, the identity of any new or departing HoldCo Member, the resulting ownership percentages of the HoldCo Members following such change, and any other information reasonably requested by the LPAC to evaluate the proposed change.
(c) For the avoidance of doubt, changes in the relative ownership percentages among existing HoldCo Members that do not result in a change in control of HoldCo shall not require LPAC consent, provided that the General Partner shall provide the LPAC with written notice of any such change within fifteen (15) business days following the effectiveness thereof.
ARTICLE V — AMENDMENTS TO GP COMMITMENT PROVISIONS
Section 5.1 — GP Commitment Amount
The total GP Commitment remains Forty-Two Million Dollars ($42,000,000), equal to 1.5% of total capital commitments of Two Billion Eight Hundred Million Dollars ($2,800,000,000). This Amendment does not increase or decrease the aggregate GP Commitment.
As of the Amendment Effective Date, Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) of the GP Commitment has been funded, representing 70% of the total GP Commitment. This funding percentage is consistent with the overall capital called by the Partnership, which as of the Amendment Effective Date has called One Billion Nine Hundred Sixty Million Dollars ($1,960,000,000) of total commitments, representing 70% of total commitments of $2,800,000,000. The General Partner has funded its GP Commitment pro rata with the limited partners' capital contributions in accordance with the terms of the Partnership Agreement.
The remaining unfunded GP Commitment as of the Amendment Effective Date is Twelve Million Six Hundred Thousand Dollars ($12,600,000), which the General Partner is obligated to fund pro rata with future capital calls to the limited partners in accordance with the terms of the Partnership Agreement.
Section 5.2 — Assumption of Departing Principals' Unfunded Commitments
In connection with the Restructuring and the departures of David Kellner and Joanna Trask, the unfunded portions of the GP Commitment previously attributable to such departing principals have been reallocated to the HoldCo Members as follows:
(a) David Kellner's GP Commitment. David Kellner's total GP Commitment allocation was Six Million Three Hundred Thousand Dollars ($6,300,000), representing 15% of the total GP Commitment of $42,000,000. Of such amount, Four Million Four Hundred Ten Thousand Dollars ($4,410,000) has been funded (70% of his allocation) and One Million Eight Hundred Ninety Thousand Dollars ($1,890,000) remains unfunded.
(b) Joanna Trask's GP Commitment. Joanna Trask's total GP Commitment allocation was Five Million Forty Thousand Dollars ($5,040,000), representing 12% of the total GP Commitment of $42,000,000. Of such amount, Three Million Five Hundred Twenty-Eight Thousand Dollars ($3,528,000) has been funded (70% of her allocation) and One Million Five Hundred Twelve Thousand Dollars ($1,512,000) remains unfunded.
(c) Combined Unfunded Departing GP Commitment. The combined unfunded GP Commitment of the departing principals is Three Million Four Hundred Two Thousand Dollars ($3,402,000) ($1,890,000 + $1,512,000).
(d) Pro Rata Reallocation. The HoldCo Members have assumed the unfunded departing GP Commitment in the aggregate amount of $3,402,000, allocated pro rata in accordance with their respective HoldCo membership percentages, as follows:
(i) Marcus Aldridge: 42% × $3,402,000 = $1,428,840;
(ii) Priya Narayanan: 36% × $3,402,000 = $1,224,720;
(iii) Robert Hsiao: 14% × $3,402,000 = $476,280;
(iv) Elena Marchetti: 4% × $3,402,000 = $136,080; and
(v) Samuel Okonkwo: 4% × $3,402,000 = $136,080.
(e) Funded Portions. The funded portions of David Kellner's GP Commitment ($4,410,000) and Joanna Trask's GP Commitment ($3,528,000) remain invested in the Fund as part of the General Partner's capital account. The treatment of such funded capital, including distributions attributable thereto, shall be governed by the respective separation agreements and carry retention side letters entered into between the General Partner and each of David Kellner and Joanna Trask in connection with the Restructuring. Such separation agreements and carry retention side letters are not provisions of the Partnership Agreement and are not set forth or incorporated herein.
(f) Funding Mechanism. The General Partner shall fund its commitment obligations to the Partnership through capital contributions made by the HoldCo Members to HoldCo, which shall contribute such amounts through GP Intermediate to the General Partner, which shall in turn contribute such amounts to the Partnership. The interposition of HoldCo and GP Intermediate in the contribution chain does not alter the General Partner's obligation to fund the GP Commitment in accordance with the terms of the Partnership Agreement.
Section 5.3 — No Change to LP Commitments or Obligations
This Amendment does not alter, modify, reduce, increase, or otherwise affect (a) any limited partner's capital commitment to the Fund, (b) any limited partner's obligation to fund capital calls in response to drawdown notices issued by the General Partner, (c) any limited partner's right to receive distributions (including distributions of current income, return of capital, and carried interest distributions) in accordance with the waterfall provisions set forth in the Partnership Agreement, or (d) any other right, obligation, or economic interest of any limited partner under the Partnership Agreement.
The total Fund commitments remain Two Billion Eight Hundred Million Dollars ($2,800,000,000) from forty-seven (47) limited partners. No limited partner has been admitted to or withdrawn from the Partnership in connection with the Restructuring.
ARTICLE VI — ADDITIONAL CONFORMING AMENDMENTS
Section 6.1 — Section 9.7 (Removal of General Partner)
Section 9.7 of the Partnership Agreement (Removal of General Partner) is hereby amended to clarify the following:
(a) The removal provisions set forth in Section 9.7 apply to Ardent Capital GP III LLC as the general partner entity of the Partnership. The interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner does not alter, diminish, or otherwise affect the limited partners' rights to remove the General Partner in accordance with the terms and conditions set forth in Section 9.7, including the voting thresholds and procedural requirements specified therein.
(b) Any removal of the General Partner pursuant to Section 9.7 shall also result in the automatic cessation of the Management Company's role as investment adviser and manager of the Fund, effective upon the effective date of such removal, unless the successor general partner otherwise determines, in its sole discretion, to retain the Management Company in such capacity pursuant to a new or amended investment management agreement.
(c) For the avoidance of doubt, the removal of the General Partner pursuant to Section 9.7 shall not affect the rights of the departing General Partner or the HoldCo Members (or their successors or assigns) with respect to any accrued but unpaid carried interest, management fees, or other compensation earned prior to the effective date of such removal, subject to the clawback and escrow provisions of the Partnership Agreement.
Section 6.2 — Carried Interest Provisions
The carried interest provisions of the Partnership Agreement, including without limitation the carried interest rate, the preferred return, the catch-up provisions, and the clawback obligations, are not modified by this Amendment. For the avoidance of doubt, the following terms remain in effect:
(a) Carried Interest Rate. The General Partner (or its designee) is entitled to receive a carried interest equal to 20% of net profits of the Fund, after the limited partners have received distributions equal to a return of their capital contributions and a preferred return thereon.
(b) Preferred Return. The preferred return to the limited partners is 8% per annum (compounded annually) on contributed capital.
(c) Catch-Up. Subject to the preferred return threshold, 100% of additional net profits are allocated to the General Partner until the General Partner has received, in aggregate, 20% of the cumulative net profits of the Fund (i.e., a full catch-up).
(d) Clawback. The General Partner and the Principals are subject to a 100% clawback obligation on a joint and several basis among the members of the General Partner (now the HoldCo Members). Each HoldCo Member is required to maintain an individual escrow equal to 30% of carried interest distributions received by such HoldCo Member (through the applicable chain of entities) to secure such clawback obligation.
The internal allocation of carried interest among the HoldCo Members is a matter governed by the Amended and Restated Carried Interest Allocation Agreement, dated as of February 28, 2024, by and among HoldCo, GP Intermediate, the General Partner, and the HoldCo Members. Such agreement is not a provision of the Partnership Agreement and is not incorporated herein by reference.
The General Partner confirms that the following amounts of carried interest have been retained by the departing principals pursuant to their respective carry retention side letters and separation agreements, and that such amounts are governed exclusively by the terms of such agreements:
(a) David Kellner: retained vested carried interest of Thirteen Million One Hundred Forty Thousand Dollars ($13,140,000); and
(b) Joanna Trask: retained vested carried interest of Six Million Three Hundred Seven Thousand Two Hundred Dollars ($6,307,200).
Section 6.3 — Management Fee Provisions
The management fee provisions of the Partnership Agreement remain unchanged by this Amendment. The Management Fee continues to be calculated and payable as follows:
(a) During the Investment Period (through June 30, 2025): The Management Fee is 1.75% per annum of aggregate committed capital of the Partnership ($2,800,000,000), resulting in an annual Management Fee of Forty-Nine Million Dollars ($49,000,000), payable quarterly in advance.
(b) After the Investment Period: The Management Fee will be 1.50% per annum of invested capital (i.e., aggregate funded capital contributions of the Partnership, reduced by the cost basis of investments that have been realized, written off, or permanently written down), payable quarterly in advance.
The Management Fee continues to be payable to Ardent Capital Management LLC in its capacity as the investment adviser and manager of the Fund. The change in ownership of the Management Company from direct individual ownership to ownership by HoldCo does not affect the Management Company's entitlement to the Management Fee or the limited partners' obligation to bear the Management Fee.
The internal allocation of management fee profits among the HoldCo Members is a matter governed by the Management Fee Sharing and Profit Allocation Agreement, dated as of February 28, 2024, by and among HoldCo, the Management Company, and the HoldCo Members. Such agreement is not a provision of the Partnership Agreement and is not incorporated herein by reference.
Section 6.4 — Fund Term
The term of the Fund, as set forth in Section 10.1 of the Partnership Agreement, is not modified by this Amendment. The Fund term expires on December 31, 2029, subject to two (2) successive one-year extensions at the sole discretion of the General Partner, which would extend the Fund term to December 31, 2030 and December 31, 2031, respectively. The General Partner confirms that it has not exercised, and does not presently intend to exercise, either extension right as of the Amendment Effective Date.
Section 6.5 — Organizational Chart
An updated organizational chart reflecting the post-Restructuring corporate and ownership structure of the Fund, the General Partner, HoldCo, GP Intermediate, and the Management Company is attached hereto as Exhibit A and incorporated herein by reference. The organizational chart is provided for informational and illustrative purposes only and shall not be deemed to modify, supplement, or supersede any provision of the Partnership Agreement or this Amendment. In the event of any inconsistency between the organizational chart and the text of this Amendment or the Partnership Agreement, the text shall control.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER
The General Partner hereby represents and warrants to the Partnership and the limited partners as follows, as of the Amendment Effective Date:
Section 7.1 — Authorization
The execution and delivery of this Amendment by the General Partner, and the consummation of the transactions contemplated hereby (including the Restructuring), have been duly authorized by all necessary corporate, limited liability company, and partnership action on the part of the General Partner, including the written consent of all of its members as constituted immediately prior to the Restructuring (namely, Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao), which written consent was executed and delivered as of February 28, 2024. The General Partner has full power, authority, and legal capacity to execute and deliver this Amendment and to perform its obligations hereunder and under the Partnership Agreement, as amended hereby. This Amendment constitutes the valid and binding obligation of the General Partner, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 7.2 — LPAC Consent
The General Partner represents and warrants that the LPAC was duly notified of the Restructuring and the proposed amendments to the Partnership Agreement by formal letter dated February 5, 2024, delivered by email and by overnight courier to each LPAC representative at the address set forth in the Partnership records. The LPAC convened a duly noticed meeting on February 14, 2024, at which all four (4) LPAC representatives participated, and the LPAC granted its consent to this Amendment and to the Restructuring at such meeting, in compliance with all applicable requirements of Section 9.4 of the Partnership Agreement. The General Partner has received and retains in its records written confirmation of the LPAC's consent, and a copy of the LPAC Written Consent dated February 14, 2024 has been provided to the Partnership's counsel.
Section 7.3 — No Key Person Event
The General Partner represents and warrants that the Restructuring, including the interposition of HoldCo and GP Intermediate in the ownership chain of the General Partner, and the departures of David Kellner and Joanna Trask from their respective positions with the General Partner and the Management Company, do not constitute, individually or in the aggregate, a "Key Person Event" under Section 5.2 of the Partnership Agreement. Neither David Kellner nor Joanna Trask is a designated Key Person under the Partnership Agreement. Marcus Aldridge and Priya Narayanan, the designated Key Persons, continue to serve in their respective capacities and continue to devote substantially all of their business time and attention to the affairs of the Fund.
Section 7.4 — Compliance with Side Letters
The General Partner represents and warrants that the Restructuring has been, and this Amendment has been prepared and will be implemented, in compliance with the terms and conditions of the fourteen (14) side letters entered into by the General Partner with certain limited partners in connection with the Fund's initial closing and subsequent closings. Without limiting the generality of the foregoing:
(a) Four (4) side letters (entered into with Ridgeline Public Employees' Retirement System, Pinnacle Insurance Group, Crestwood Endowment Partners, and Haverford Capital Partners) contain provisions requiring prior written notice and/or affirmative consent from the applicable limited partner for any material change in the management structure of the Fund. The General Partner has provided the required prior written notice to each such limited partner and has obtained the required consents, or will obtain such consents prior to the effective date of the applicable changes.
(b) Six (6) side letters contain expanded key person provisions that designate David Kellner as a "Contributing Person" (or similar designation). The General Partner has provided, or will provide within fifteen (15) business days of David Kellner's departure on March 31, 2024, all notifications required under such side letters, including notice of the departure of a Contributing Person and a description of the measures taken by the General Partner to address the departure.
Section 7.5 — No Material Adverse Change
The General Partner represents and warrants that, since September 30, 2023 (the date of the most recent quarterly valuation of the Fund's portfolio), there has been no material adverse change in the financial condition, results of operations, business, assets, or prospects of the Fund or any of its eleven (11) active portfolio companies that would reasonably be expected to have a material adverse effect on the ability of the Fund to achieve its investment objectives or on the ability of the General Partner to perform its obligations under the Partnership Agreement.
As of September 30, 2023, the Fund's portfolio performance metrics were as follows:
• Aggregate portfolio gross multiple of invested capital (MOIC): 1.42x
• Net internal rate of return (IRR) to limited partners: 14.7%
• Aggregate unrealized portfolio value: $2,330,000,000
• Aggregate realized proceeds from portfolio exits and partial realizations: $445,000,000
• Accrued carried interest (subject to clawback): $87,600,000
• Number of active portfolio investments: 11
• Number of fully or partially realized investments: 4
The General Partner acknowledges that past performance is not indicative of future results and that the foregoing performance metrics are presented as of a historical date and are subject to change based on subsequent events, market conditions, and portfolio company performance.