SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
ARDENT CAPITAL MANAGEMENT LLC
A Delaware Limited Liability Company
Effective as of February 28, 2024
This Agreement amends and restates in its entirety the prior Limited Liability Company Agreement of Ardent Capital Management LLC, as previously amended.
Right-click to update Table of Contents
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ARDENT CAPITAL MANAGEMENT LLC
This Second Amended and Restated Limited Liability Company Agreement (this "Agreement") of Ardent Capital Management LLC, a Delaware limited liability company (the "Company"), is entered into and effective as of February 28, 2024 (the "Effective Date"), by Ardent Capital Holdings LLC, a Delaware limited liability company ("HoldCo"), as the sole member of the Company (the "Member").
RECITALS
WHEREAS, the Company was originally formed as a Delaware limited liability company under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq. (the "Act"), by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware;
WHEREAS, the Company is a registered investment adviser with the United States Securities and Exchange Commission (the "SEC") under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), bearing Central Registration Depository Number 298417 (CRD #298417);
WHEREAS, the Company serves as the investment adviser and manager of Ardent Capital Partners III LP, a Delaware limited partnership (the "Fund"), and may from time to time serve as investment adviser and manager to other investment vehicles sponsored by or affiliated with the Ardent platform;
WHEREAS, the Company was previously governed by a limited liability company agreement, as amended (the "Prior Agreement"), entered into among its prior members: Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao (collectively, the "Prior Members");
WHEREAS, in connection with a comprehensive restructuring of the management platform of the Fund (the "Restructuring"), the Prior Members have contributed and transferred all of their respective membership interests in the Company to HoldCo, and HoldCo has been admitted as the sole member of the Company, effective as of the date hereof;
WHEREAS, David Kellner is retiring from the Ardent platform effective March 31, 2024, and Joanna Trask is departing from the Ardent platform effective April 15, 2024, and each has withdrawn as a member of the Company and transferred all of his or her membership interests to HoldCo in connection with the Restructuring;
WHEREAS, the parties desire to amend and restate the Prior Agreement in its entirety to reflect the new ownership structure of the Company, the revised management fee profit distribution provisions, updated key-personnel provisions, and updated regulatory compliance provisions, all as more fully set forth herein; and
WHEREAS, HoldCo, as the sole member of the Company, is authorized to amend and restate the Prior Agreement in its entirety pursuant to the terms thereof and the Act.
NOW, THEREFORE, the Member hereby agrees as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.
"Act" means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq., as amended from time to time.
"Advisers Act" means the Investment Advisers Act of 1940, as amended from time to time, and the rules and regulations promulgated thereunder.
"Agreement" means this Second Amended and Restated Limited Liability Company Agreement of Ardent Capital Management LLC, as the same may be further amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Ardent Capital GP III LLC" or "General Partner" means Ardent Capital GP III LLC, a Delaware limited liability company (EIN 84-3291063), serving as the sole general partner of the Fund.
"Ardent Capital Holdings LLC" or "HoldCo" means Ardent Capital Holdings LLC, a Delaware limited liability company formed on March 1, 2024 (Delaware File No. 7948231, EIN 93-1847225), serving as the sole member of the Company.
"Ardent GP Intermediate LLC" or "GP Intermediate" means Ardent GP Intermediate LLC, a Delaware limited liability company formed on March 1, 2024 (Delaware File No. 7948237, EIN 93-1847231), serving as the sole member of the General Partner.
"Board" or "Board of Managers" means the governing body of the Company established pursuant to, and having the powers and authority set forth in, Article V of this Agreement.
"Certificate" means the Certificate of Formation of the Company as filed with the Secretary of State of the State of Delaware on the date of the Company's original formation, as amended, supplemented, or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations, and guidance promulgated thereunder. Any reference to a specific section of the Code shall include any successor provision thereto.
"Company" means Ardent Capital Management LLC, a Delaware limited liability company (EIN 84-3291070).
"Fiscal Year" means the calendar year, or such shorter period as may commence on the date of formation of the Company or end on the date of dissolution of the Company.
"Fund" means Ardent Capital Partners III LP, a Delaware limited partnership (EIN 84-3291057), with total capital commitments of Two Billion Eight Hundred Million Dollars ($2,800,000,000).
"Indemnified Person" has the meaning set forth in Section 12.1.
"Key Personnel" has the meaning set forth in Article VIII.
"LPA" means the Amended and Restated Agreement of Limited Partnership of Ardent Capital Partners III LP, as amended by Amendment No. 1, dated February 28, 2024, as the same may be further amended, restated, or supplemented from time to time.
"Management Fee" means the management fee payable to the Company as investment adviser and manager of the Fund pursuant to the LPA and the management agreement between the Company and the Fund, currently equal to one and seventy-five hundredths percent (1.75%) per annum on committed capital during the investment period of the Fund and one and fifty hundredths percent (1.50%) per annum on invested capital following the expiration of the investment period.
"ManCo Profit Share" means the portion of the Company's annual distributable profits (after payment of or reservation for Operating Expenses) allocated and distributed to the Member, currently approximately Seventeen Million One Hundred Fifty Thousand Dollars ($17,150,000) per year, representing approximately thirty-five percent (35%) of annual Management Fee revenue of approximately Forty-Nine Million Dollars ($49,000,000).
"Member" means Ardent Capital Holdings LLC, as the sole member of the Company, and any successor or permitted assignee admitted as a member of the Company in accordance with the terms of this Agreement.
"Officers" means the officers of the Company appointed by the Board of Managers from time to time, as described in Article VI.
"Operating Expenses" means the expenses of the Company incurred in connection with its operations, including without limitation (i) compensation and benefits of non-principal employees, (ii) office rent and related occupancy costs, (iii) technology and infrastructure costs, (iv) compliance and regulatory expenses, (v) professional liability and other insurance premiums, (vi) legal, accounting, and consulting fees, and (vii) other general and administrative overhead, currently approximately Thirty-One Million Eight Hundred Fifty Thousand Dollars ($31,850,000) per year, representing approximately sixty-five percent (65%) of annual Management Fee revenue.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, estate, unincorporated association, governmental authority, or other entity of any kind.
"Principal Office" means the principal office of the Company, currently located at 590 Madison Avenue, 28th Floor, New York, New York 10022, or such other location as the Board of Managers may designate from time to time in accordance with Section 2.3.
"Prior Agreement" means the limited liability company agreement of the Company originally entered into among the Prior Members, as amended from time to time prior to the Effective Date, which is superseded and replaced in its entirety by this Agreement.
"Prior Members" means, collectively, Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao, each of whom was a member of the Company under the Prior Agreement and each of whom has transferred his or her membership interests in the Company to HoldCo in connection with the Restructuring.
"Restructuring" means the comprehensive management company restructuring and economics realignment effected as of or about the Effective Date, involving (a) the formation of HoldCo and GP Intermediate, (b) the contribution and transfer of the Prior Members' membership interests in the Company to HoldCo, (c) the reallocation of management fee economics and carried interest economics among the individuals participating in the Ardent platform, and (d) the departures of David Kellner and Joanna Trask from the Company.
"SEC" means the United States Securities and Exchange Commission, or any successor agency.
"Transfer" means, with respect to any membership interest, any sale, assignment, transfer, pledge, hypothecation, encumbrance, gift, donation, or other direct or indirect disposition of such membership interest (or any legal or beneficial interest therein), whether voluntary or involuntary, by operation of law or otherwise, including any transfer by way of merger, consolidation, or liquidation of the transferor entity.
"Treasury Regulations" means the Income Tax Regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time. Any reference to a specific section of the Treasury Regulations shall include any successor provision thereto.
ARTICLE II — ORGANIZATION
Section 2.1 — Formation
The Company was formed as a Delaware limited liability company by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware in accordance with the Act. The rights, obligations, powers, and liabilities of the Member shall be as provided in the Act, except as otherwise expressly provided in this Agreement. To the extent that the rights, obligations, powers, or liabilities of the Member are different by reason of any provision of this Agreement than they would be under the Act in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.
Section 2.2 — Name
The name of the Company is "Ardent Capital Management LLC." The Company may conduct its business under such name or under any other name or names approved by the Board of Managers from time to time. The Board of Managers shall have the authority to change the name of the Company and to file or cause to be filed any amendments to the Certificate and any assumed name certificates or similar filings as may be required in connection therewith.
Section 2.3 — Principal Office
The principal office of the Company is located at 590 Madison Avenue, 28th Floor, New York, New York 10022. The Board of Managers may change the principal office of the Company at any time and from time to time upon notice to the Member. The Company may maintain such additional offices at such other locations as the Board of Managers may from time to time determine to be necessary or appropriate for the conduct of the Company's business.
Section 2.4 — Registered Agent and Registered Office
The registered agent of the Company for service of process in the State of Delaware is Prestige Registered Agents LLC, and the registered office of the Company in the State of Delaware is 850 New Burton Road, Suite 201, Dover, Delaware 19904. The Board of Managers may change the registered agent or registered office of the Company from time to time in accordance with the Act by filing the appropriate amendment or statement with the Secretary of State of the State of Delaware.
Section 2.5 — Term
The Company shall have perpetual existence and shall continue in full force and effect until dissolved in accordance with Article XI of this Agreement and the applicable provisions of the Act. Neither the admission or withdrawal of any member, nor the Restructuring, nor the departure of any employee, officer, or personnel of the Company (including the departures of David Kellner and Joanna Trask) shall, in and of itself, cause the dissolution of the Company.
Section 2.6 — Purpose
The Company is organized for the following purposes:
(a) serving as the investment adviser and manager of the Fund and any successor fund, parallel fund, alternative investment vehicle, co-investment vehicle, or other affiliated investment vehicle sponsored by or affiliated with the Ardent platform;
(b) registering and maintaining registration as an investment adviser under the Advisers Act with the SEC (CRD #298417), and complying with all applicable requirements of the Advisers Act, SEC rules and regulations, and applicable state securities laws;
(c) employing investment professionals, compliance personnel, operations personnel, and other employees, consultants, and service providers as the Board of Managers deems necessary or appropriate for the conduct of the Company's business (the Company currently employs sixty-two (62) professionals);
(d) receiving management fees, advisory fees, and other compensation for investment advisory and management services provided to the Fund and any other clients of the Company;
(e) distributing available cash, including Management Fee revenue net of Operating Expenses, to the Member in accordance with Article IV of this Agreement; and
(f) engaging in any and all lawful activities that are incidental or ancillary to, or in furtherance of, any of the foregoing purposes, and any other lawful business activity permitted under the Act and applicable law.
Section 2.7 — Regulatory Status
The Company is registered as an investment adviser with the SEC under the Advisers Act (CRD #298417). The Company shall at all times maintain such registration in good standing and shall comply with all applicable requirements of the Advisers Act, the rules and regulations promulgated thereunder, and applicable state securities laws. The Company shall file all required reports, returns, amendments, and other filings with the SEC and any applicable state securities regulators in a timely manner. Any amendment to this Agreement that would reasonably be expected to affect the Company's regulatory status, registration, or compliance obligations shall require the prior approval of the Board of Managers. The Board of Managers shall ensure that the Company's Form ADV is updated promptly to reflect any material changes in the Company's business, ownership, control persons, or operations.
ARTICLE III — MEMBER; MEMBERSHIP INTERESTS
Section 3.1 — Sole Member
Ardent Capital Holdings LLC is the sole member of the Company as of the Effective Date. HoldCo holds one hundred percent (100%) of the membership interests in the Company. The Prior Members — Marcus Aldridge, Priya Narayanan, David Kellner, Joanna Trask, and Robert Hsiao — have each contributed and transferred all of their respective membership interests in the Company to HoldCo in connection with the Restructuring, effective as of the Effective Date, and none of the Prior Members retains any membership interest in the Company. Each Prior Member's withdrawal as a member of the Company, and HoldCo's admission as the sole member, were effected in accordance with the Prior Agreement and the Act.
Section 3.2 — Admission of Additional Members
No additional members shall be admitted to the Company except with the prior written consent of HoldCo, in its capacity as the sole member. Any admission of additional members shall be conditioned upon (a) the execution by the proposed member of a joinder agreement or amendment to this Agreement, in form and substance satisfactory to HoldCo and the Board of Managers, (b) compliance with all applicable regulatory requirements, including any required amendments to Form ADV filed with the SEC, and (c) compliance with any applicable provisions of the LPA and any side letters entered into with limited partners of the Fund, including any consent, notice, or approval requirements set forth therein.
Section 3.3 — Limited Liability
The Member shall not be personally liable for any debts, obligations, or liabilities of the Company, whether arising in contract, tort, or otherwise, solely by reason of being a member of the Company. The Member's liability for the debts, obligations, and liabilities of the Company shall be limited to the fullest extent permitted by the Act, and the Member shall not be required to make any contributions to the Company or to lend any funds to the Company, except as expressly provided in this Agreement.
Section 3.4 — No Withdrawal
The Member may not voluntarily withdraw from the Company except in connection with the dissolution and winding up of the Company in accordance with Article XI. Any purported withdrawal by the Member in contravention of this Section 3.4 shall be null and void and of no force or effect.
ARTICLE IV — CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS
Section 4.1 — Capital Contributions
The Member's capital contribution to the Company consists of the membership interests in the Company previously held by the Prior Members and contributed and transferred by the Prior Members to HoldCo in connection with the Restructuring. The aggregate value of the membership interests so contributed shall be determined in accordance with the books and records of the Company as of the Effective Date. The Board of Managers may from time to time call for additional capital contributions from the Member as reasonably necessary for the operations of the Company, subject to the prior consent of the Member. The Member shall not be required to make any additional capital contributions except to the extent it consents in writing to do so.
Section 4.2 — Capital Account
A single capital account shall be maintained for the Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) and the Code. The capital account shall be credited with the Member's capital contributions and the Member's allocable share of the Company's income and gains, and shall be debited with distributions made to the Member and the Member's allocable share of the Company's losses and deductions. Because the Company has a single member and is treated as a disregarded entity for U.S. federal income tax purposes, the maintenance of the capital account is for informational and record-keeping purposes and to ensure compliance with applicable tax regulations.
Section 4.3 — Distributions — Generally
The Board of Managers shall cause the Company to distribute available cash to the Member at such times and in such amounts as the Board of Managers determines in its sole discretion, subject to the Company's obligation to maintain adequate reserves for (a) Operating Expenses, (b) regulatory capital requirements, if any, (c) contingent liabilities, and (d) any other obligations or commitments of the Company. Without limiting the foregoing, the Board of Managers shall cause the Company to make distributions to the Member at least quarterly. "Available cash" for purposes of this Section 4.3 means the cash on hand of the Company in excess of amounts reasonably required to fund Operating Expenses, reserves, and working capital needs, as determined by the Board of Managers.
Section 4.4 — Management Fee Revenue and ManCo Profit Share
(a) Management Fee Revenue. The Company receives Management Fee revenue from the Fund pursuant to the terms of the LPA and the management agreement between the Company and the Fund. As of the Effective Date, the Management Fee is calculated and payable as follows:
(i) During the investment period of the Fund (which commenced on June 30, 2019 and is scheduled to expire on June 30, 2025): one and seventy-five hundredths percent (1.75%) per annum of the total committed capital of the Fund (Two Billion Eight Hundred Million Dollars ($2,800,000,000)), equaling approximately Forty-Nine Million Dollars ($49,000,000) per year, payable quarterly in advance; and
(ii) Following the expiration of the investment period: one and fifty hundredths percent (1.50%) per annum of invested capital (currently approximately One Billion Eight Hundred Eighty Million Dollars ($1,880,000,000)), payable quarterly in advance in accordance with the LPA.
(b) Operating Expenses. From gross Management Fee revenue, the Company shall first pay or reserve for all Operating Expenses incurred in connection with the conduct of the Company's business. As of the Effective Date, Operating Expenses are approximately Thirty-One Million Eight Hundred Fifty Thousand Dollars ($31,850,000) per year, representing approximately sixty-five percent (65%) of annual Management Fee revenue. Operating Expenses include, without limitation, compensation and benefits of the Company's non-principal employees, office rent and related occupancy costs at the Principal Office, technology and infrastructure, compliance and regulatory costs, insurance, and other overhead and general administrative expenses.
(c) ManCo Profit Share. The remaining amount, after payment of or reservation for Operating Expenses, constitutes the ManCo Profit Share. As of the Effective Date, the ManCo Profit Share is approximately Seventeen Million One Hundred Fifty Thousand Dollars ($17,150,000) per year, representing approximately thirty-five percent (35%) of annual Management Fee revenue. The ManCo Profit Share shall be distributed to the Member (HoldCo) in accordance with Section 4.3.
(d) Allocation Among HoldCo Members. HoldCo shall allocate ManCo Profit Share distributions received from the Company among its own members in accordance with the Amended and Restated LLC Agreement of Ardent Capital Holdings LLC and the Management Fee Sharing and Profit Allocation Agreement, each dated as of the Effective Date. As of the Effective Date, such allocations are anticipated to be as follows:
For the avoidance of doubt, the allocation of ManCo Profit Share among HoldCo's members is governed exclusively by the Amended and Restated LLC Agreement of Ardent Capital Holdings LLC and the Management Fee Sharing and Profit Allocation Agreement dated February 28, 2024, and not by this Agreement. The Company shall have no obligation to, and shall not, make any distributions directly to any individual who is a member of HoldCo.
Section 4.5 — Tax Distributions
The Company shall make tax distributions to the Member in advance of quarterly estimated tax payment dates (generally April 15, June 15, September 15, and January 15 of the following year) in amounts reasonably estimated by the Board of Managers (in consultation with the Company's tax advisors) to be sufficient to cover the Member's estimated federal, state, and local tax liability arising from the Company's allocable income for the relevant period. Tax distributions shall be treated as advances against, and shall reduce, distributions otherwise payable to the Member under Section 4.3 and Section 4.4.
Section 4.6 — No Interest on Capital
No interest shall accrue or be payable on the Member's capital contribution or capital account balance. No Member shall have the right to demand or receive any return of its capital contribution except as expressly provided in this Agreement.
ARTICLE V — MANAGEMENT AND GOVERNANCE
Section 5.1 — Board of Managers
The business and affairs of the Company shall be managed by or under the direction of a Board of Managers. The Board of Managers shall be appointed by the Member (HoldCo) and shall consist of such number of Managers as the Member shall determine from time to time. As of the Effective Date, the initial Board of Managers shall consist of the following three (3) individuals:
(a) Marcus Aldridge (Co-Founder & Managing Partner) — Chairperson of the Board;
(b) Priya Narayanan (Co-Founder & Managing Partner) — Vice Chairperson of the Board; and
(c) Robert Hsiao (Partner) — Manager.
The Member may change the composition of the Board of Managers at any time and from time to time, by written notice delivered to the Company, and may add, remove, or replace any Manager with or without cause. Each Manager shall serve until his or her successor is appointed or until his or her earlier death, disability, resignation, or removal.
Section 5.2 — Powers of the Board
The Board of Managers shall have full power and authority to manage the business and affairs of the Company and to take all actions that the Board deems necessary, appropriate, or advisable in furtherance of the Company's purposes, including without limitation the power and authority to:
(a) direct and oversee the investment advisory activities of the Company on behalf of the Fund and any other clients of the Company, including the evaluation, negotiation, structuring, execution, monitoring, and disposition of investments;
(b) hire, compensate, promote, supervise, and terminate employees, consultants, and other personnel of the Company (the Company currently employs sixty-two (62) professionals across investment, operations, compliance, finance, legal, and investor relations functions);
(c) enter into, execute, deliver, perform, modify, and terminate contracts, agreements, instruments, and other undertakings on behalf of the Company, including but not limited to the management agreement with the Fund, office leases, service provider agreements, subscription agreements, non-disclosure agreements, and engagement letters;
(d) establish, adopt, implement, and maintain compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and applicable securities laws, in accordance with Rule 206(4)-7 under the Advisers Act;
(e) determine the amount, timing, and form of distributions to the Member in accordance with Article IV;
(f) establish, maintain, and release reserves for Operating Expenses, regulatory requirements, contingent liabilities, and other obligations of the Company;
(g) file, maintain, amend, and update the Company's SEC registration and all regulatory filings, including Form ADV (CRD #298417), Form PF, and any other reports or filings required by the SEC, state securities regulators, or any other applicable governmental authority;
(h) open, maintain, and close bank accounts and investment accounts in the name of the Company and designate authorized signatories therefor;
(i) borrow money and incur indebtedness on behalf of the Company, and pledge, mortgage, or otherwise encumber the assets of the Company, to the extent consistent with the Company's purposes;
(j) commence, prosecute, defend, and settle legal proceedings on behalf of the Company;
(k) cause the Company to obtain and maintain insurance, including professional liability insurance, directors and officers liability insurance, and errors and omissions insurance; and
(l) exercise such other powers and perform such other acts as are necessary, appropriate, or incidental to the management of the Company and the furtherance of its purposes.
Section 5.3 — Action by the Board
The Board of Managers shall act by the affirmative vote of a majority of the Managers then in office; provided, that any action requiring the consent of the Member under this Agreement or the Act shall also require such consent. The Board of Managers may act by unanimous written consent in lieu of a meeting, and any action so taken shall be as effective as if taken at a duly convened meeting. Meetings of the Board may be held at such times and places as the Chairperson shall determine, and may be held by telephone or video conference or other communications technology permitting all participants to communicate with each other simultaneously. Written notice of each meeting shall be given to each Manager not less than two (2) business days prior to such meeting, unless waived by all Managers.
Section 5.4 — Delegation
The Board of Managers may delegate any of its powers and authority to one or more Officers, committees, employees, or agents of the Company, in each case subject to such limitations and conditions as the Board may determine and subject to appropriate oversight consistent with the Board's fiduciary obligations and the requirements of the Advisers Act. No delegation of authority shall relieve the Board of its ultimate responsibility for the management and oversight of the Company's business and affairs.
Section 5.5 — Compensation of Managers
The Managers shall not receive separate compensation from the Company in their capacity as Managers of the Company. The compensation of Marcus Aldridge, Priya Narayanan, and Robert Hsiao for their services to the Company and the Ardent platform is governed by the Amended and Restated LLC Agreement of Ardent Capital Holdings LLC and the Management Fee Sharing and Profit Allocation Agreement, each dated as of the Effective Date, and is reflected in the ManCo Profit Share allocations set forth in Section 4.4(d). Nothing in this Section 5.5 shall preclude a Manager from being compensated for services provided to the Company in a capacity other than as a Manager (e.g., as an Officer or employee), to the extent approved by the Board of Managers.
ARTICLE VI — OFFICERS
Section 6.1 — Designation of Officers
The Board of Managers may from time to time appoint one or more Officers of the Company, including without limitation a Chief Executive Officer, President, Chief Operating Officer, Chief Compliance Officer, Chief Financial Officer, General Counsel, Secretary, Treasurer, and such other officers with such titles, duties, and authority as the Board of Managers deems appropriate. Any individual may hold more than one office simultaneously. The appointment of an Officer shall not, by itself, create any contractual or employment rights in favor of such Officer.
Section 6.2 — Initial Officers
Effective as of the Effective Date, the initial Officers of the Company shall be as follows:
(a) Chief Executive Officer: Marcus Aldridge;
(b) President: Priya Narayanan;
(c) Chief Financial Officer: As designated by the Board of Managers; and
(d) Chief Compliance Officer: As designated by the Board of Managers, in compliance with Rule 206(4)-7 under the Advisers Act, which requires that each investment adviser registered with the SEC designate a chief compliance officer responsible for administering the adviser's compliance policies and procedures.
Section 6.3 — Duties of Officers
Each Officer shall perform such duties as are customary for his or her respective office and as may be assigned to such Officer from time to time by the Board of Managers. Each Officer shall, in the performance of his or her duties, act in good faith and in a manner he or she reasonably believes to be in the best interests of the Company. All Officers shall conduct themselves in compliance with the Advisers Act, the rules and regulations promulgated thereunder, the Company's written compliance policies and procedures, the Company's code of ethics, and all applicable laws and regulations. The Chief Compliance Officer shall be specifically responsible for the implementation, administration, and oversight of the Company's compliance program as required by Rule 206(4)-7 under the Advisers Act.
Section 6.4 — Removal and Resignation
Any Officer may be removed by the Board of Managers at any time with or without cause, upon such terms as the Board may determine. Any Officer may resign at any time upon written notice delivered to the Board of Managers. Any such resignation shall be effective upon receipt of such notice by the Board, or at such later time as may be specified in the notice. The removal or resignation of an Officer shall not affect any rights or obligations of such Officer arising under any employment agreement, separation agreement, or other contractual arrangement between such Officer and the Company.
ARTICLE VII — INVESTMENT ADVISORY ACTIVITIES
Section 7.1 — Management Agreement with the Fund
The Company serves as the investment adviser and manager of Ardent Capital Partners III LP, a Delaware limited partnership, pursuant to (a) the management agreement between the Company and the Fund and (b) the LPA. As of the Effective Date, the Fund has the following key characteristics:
(i) Total Commitments: Two Billion Eight Hundred Million Dollars ($2,800,000,000), from forty-seven (47) limited partners;
(ii) Capital Called: Approximately One Billion Nine Hundred Sixty Million Dollars ($1,960,000,000), representing approximately seventy percent (70%) of total commitments;
(iii) Invested Capital: Approximately One Billion Eight Hundred Eighty Million Dollars ($1,880,000,000) of aggregate invested capital across eleven (11) active portfolio companies;
(iv) Investment Period: The investment period commenced on June 30, 2019 and is scheduled to expire on June 30, 2025; and
(v) Fund Term: The Fund's term expires on December 31, 2029, subject to two (2) one-year extensions at the discretion of the General Partner.
The Company shall perform its duties as investment adviser and manager of the Fund in accordance with the LPA, the management agreement, applicable law, and the Company's fiduciary obligations to the Fund and its limited partners.
Section 7.2 — Management Fees
The Company is entitled to receive Management Fees from the Fund as compensation for its investment advisory and management services, calculated and payable as follows:
(a) During the Investment Period: One and seventy-five hundredths percent (1.75%) per annum on the total committed capital of the Fund (Two Billion Eight Hundred Million Dollars ($2,800,000,000)), equaling approximately Forty-Nine Million Dollars ($49,000,000) per year; and
(b) Following the Investment Period: One and fifty hundredths percent (1.50%) per annum on invested capital (as defined in the LPA), payable quarterly in advance in accordance with the terms of the LPA.
Management Fees shall be payable quarterly in advance in accordance with the terms of the LPA and the management agreement. To the extent that the Fund's total commitments, invested capital, or the applicable fee rate changes, the Management Fee shall be adjusted accordingly.
Any fee discounts, rebates, fee offsets, or fee waivers granted to one or more limited partners of the Fund pursuant to side letters or other agreements (currently, eight (8) side letters contain fee discount or rebate provisions) shall be borne exclusively by the Company and shall reduce the Management Fee revenue of the Company on a dollar-for-dollar basis. The economic burden of such fee discounts and rebates shall not be shifted to or shared with the Fund or its other limited partners.
Section 7.3 — Other Advisory Activities
In addition to its role as investment adviser and manager of the Fund, the Company may provide investment advisory, management, or consulting services to other investment vehicles sponsored by or affiliated with the Ardent platform, including without limitation any successor fund, parallel fund, alternative investment vehicle, or co-investment vehicle, subject in each case to (a) compliance with the Advisers Act and all applicable regulations, (b) compliance with the Company's allocation policies and conflict-of-interest procedures, and (c) the approval of the Board of Managers. Co-investment opportunities generated by the Fund or the Company shall be allocated in accordance with the Co-Investment Allocation Policy adopted by the Company, as revised effective February 28, 2024, and any applicable side-letter commitments.
Section 7.4 — Compliance with Side Letters
The Company acknowledges that, as of the Effective Date, the Fund has entered into fourteen (14) side letters with various limited partners. Such side letters contain a range of provisions, including the following:
(a) Most-Favored Nation (MFN) Rights: Eleven (11) side letters contain MFN clauses;
(b) Expanded Key-Person Provisions: Six (6) side letters contain expanded key-person provisions that go beyond the key-person provisions set forth in the LPA (as further described in Section 8.2);
(c) Fee discounts or Rebates: Eight (8) side letters contain provisions granting management fee discounts or rebates to the applicable limited partner;
(d) Transfer/Restructuring Consent Requirements: Four (4) side letters — those with Ridgeline Public Employees' Retirement System, Pinnacle Insurance Group, Crestwood Endowment Partners, and Haverford Capital Partners — contain provisions requiring prior written notice and, in certain cases, affirmative consent in connection with any "material change in the management structure" of the Fund, which may be implicated by a Transfer of membership interests in the Company or certain other aspects of the Restructuring; and
(e) Co-Investment Priority Rights: Nine (9) side letters contain provisions granting the applicable limited partner priority or preferential access to co-investment opportunities.
The Company shall conduct its operations in compliance with all obligations arising under the side letters, and the Board of Managers shall cause the Company to take all actions and provide all notices necessary to satisfy such obligations. The Company shall maintain a current schedule of all side-letter commitments and shall review such schedule at least annually in connection with the annual compliance review.
ARTICLE VIII — KEY PERSONNEL
Section 8.1 — Designation of Key Personnel
The following individuals are hereby designated as Key Personnel of the Company as of the Effective Date:
(a) Marcus Aldridge — Co-Founder & Managing Partner;
(b) Priya Narayanan — Co-Founder & Managing Partner; and
(c) Robert Hsiao — Partner.
Each Key Personnel member is expected to devote substantially all of his or her business time, attention, and efforts to the business and affairs of the Company and the Fund, subject to reasonable exceptions for personal investments, charitable and civic activities, and other activities that do not materially interfere with the performance of his or her duties to the Company and the Fund.
Section 8.2 — Relationship to LPA Key-Person Provisions
Section 5.2 of the LPA designates Marcus Aldridge and Priya Narayanan as "Key Persons" for purposes of the Fund's key-person provisions. A "Key Person Event" under Section 5.2 of the LPA is triggered if:
(a) both Key Persons cease to devote substantially all of their business time and attention to the investment activities of the Fund; or
(b) one Key Person ceases to devote substantially all of his or her business time and attention to the investment activities of the Fund and a replacement acceptable to the Limited Partner Advisory Committee (the "LPAC") of the Fund is not identified and approved within one hundred twenty (120) days of such cessation.
The departures of David Kellner and Joanna Trask from the Company do not constitute a Key Person Event under Section 5.2 of the LPA, as neither David Kellner nor Joanna Trask is a designated Key Person under the LPA.
Notwithstanding the foregoing, the Company acknowledges that six (6) side letters contain expanded key-person provisions that name David Kellner as a "Contributing Person" or similarly designated individual. Pursuant to the terms of such side letters, the Company is required to provide written notification to the applicable limited partners within fifteen (15) business days of David Kellner's departure. Three (3) of such six (6) side letters further grant the relevant limited partner a right to suspend the investment period of the Fund for a period of ninety (90) days pending review by the LPAC. The Company has provided, or shall provide within the required time period, all written notices and other communications required in connection with the departures of David Kellner and Joanna Trask from the Company and the Ardent platform.
Section 8.3 — Next-Generation Professionals
The Board of Managers acknowledges the critical importance of succession planning and the integration of next-generation investment professionals into the leadership structure of the Company and the broader Ardent platform. In furtherance thereof:
(a) Elena Marchetti (Principal, joined the Company in 2017) has been designated as a key contributor to the Company's investment program and has been admitted as a member of HoldCo, holding a four percent (4%) membership interest therein; and
(b) Samuel Okonkwo (Principal, joined the Company in 2018) has been designated as a key contributor to the Company's investment program and has been admitted as a member of HoldCo, holding a four percent (4%) membership interest therein.
The Board of Managers may, from time to time, designate additional next-generation professionals as Key Personnel or key contributors to the Company, and may recommend to HoldCo that such individuals be admitted as members of HoldCo or otherwise be granted economic participation in the Ardent platform.
Section 8.4 — Departing Personnel
(a) David Kellner. David Kellner has retired from the Company and the Ardent platform, effective March 31, 2024. In connection with his retirement, Mr. Kellner has transitioned to a Senior Advisor role pursuant to a Senior Advisor Agreement between Mr. Kellner and the Company, dated February 28, 2024, for a term of two (2) years at an annual advisory fee of Three Hundred Fifty Thousand Dollars ($350,000). Mr. Kellner does not retain any membership interest in the Company. His membership interest was transferred to HoldCo in connection with the Restructuring.
(b) Joanna Trask. Joanna Trask has departed from the Company and the Ardent platform, effective April 15, 2024. Ms. Trask does not retain any membership interest in the Company. Her membership interest was transferred to HoldCo in connection with the Restructuring.
(c) Separation Arrangements. Neither David Kellner nor Joanna Trask retains any membership interest in the Company or in HoldCo. The Company's obligations to David Kellner and Joanna Trask relating to (i) retained carried interest allocations, (ii) clawback obligations, and (iii) escrow arrangements are set forth in the respective Separation and Release Agreements and Carry Retention and Clawback Side Letters entered into between the Company (or HoldCo or the General Partner, as applicable) and each of Mr. Kellner and Ms. Trask, each dated February 28, 2024. The terms of such agreements are incorporated herein by reference to the extent applicable.
ARTICLE IX — TRANSFER RESTRICTIONS
Section 9.1 — Restrictions on Transfer
The Member may not Transfer all or any portion of its membership interest in the Company without the prior written consent of the Board of Managers, except for:
(a) a Transfer to any wholly owned subsidiary of the Member, provided that such subsidiary agrees in writing to be bound by the terms of this Agreement; or
(b) a Transfer in connection with an internal restructuring of the Ardent platform that does not result in a change of control (as determined under the Advisers Act) of the Member or the Company.
Any purported Transfer in violation of this Section 9.1 shall be null and void and of no force or effect, and the Company shall not recognize or give effect to any such purported Transfer on its books and records.
Section 9.2 — Compliance with LPA and Side Letters
Any Transfer of membership interests in the Company, whether or not requiring consent of the Board of Managers under Section 9.1, must comply with the provisions of the LPA, including without limitation Section 8.3 thereof (Transfer of GP Interest), and any applicable side-letter provisions. The Company and the Member acknowledge that four (4) side letters — those entered into with Ridgeline Public Employees' Retirement System, Pinnacle Insurance Group, Crestwood Endowment Partners, and Haverford Capital Partners — require prior written notice and, in certain cases, the affirmative consent of the applicable limited partner in connection with any "material change in the management structure" of the Fund, which may be implicated by a Transfer of membership interests in the Company. Prior to consummating any Transfer, the Member and the Board of Managers shall evaluate whether such Transfer triggers any notice, consent, or approval requirements under the LPA or any side letter, and shall ensure that all such requirements are satisfied prior to or concurrently with the closing of such Transfer.
Section 9.3 — Regulatory Approvals
Any Transfer of membership interests in the Company that would result in a change of control of the Company within the meaning of the Advisers Act (including Section 205(a)(2) thereof) or the Investment Company Act of 1940, as amended, shall require, as a condition precedent to the consummation of such Transfer, (a) prior compliance with Rule 206(4)-7 under the Advisers Act and any other applicable SEC rules and regulations, (b) the filing of any required amendments to Form ADV and any other regulatory filings, and (c) to the extent required by the LPA or applicable side letters, the consent of the limited partners of the Fund or the LPAC. The Board of Managers shall consult with legal counsel prior to any proposed Transfer to determine whether such Transfer constitutes a change of control requiring regulatory approval.
ARTICLE X — REGULATORY COMPLIANCE
Section 10.1 — SEC Registration
The Company is registered as an investment adviser with the SEC under the Advisers Act, bearing CRD #298417. The Company shall maintain its SEC registration in good standing at all times and shall file all required amendments to Form ADV, including (a) annual amendments within ninety (90) days of the end of each Fiscal Year, and (b) interim amendments promptly (and in any event within thirty (30) days) following any material change in the information previously reported on Form ADV, including changes in ownership, control persons, key personnel, disciplinary history, or business operations.
In connection with the Restructuring, an amendment to Form ADV was filed with the SEC on March 10, 2024, reflecting the following material changes: (i) the updated ownership structure of the Company, with HoldCo as the sole member; (ii) the removal of David Kellner and Joanna Trask as control persons of the Company; and (iii) the addition of Elena Marchetti and Samuel Okonkwo as supervised persons. The Board of Managers shall ensure that Form ADV is maintained on a current basis and that all information contained therein is accurate and complete.
Section 10.2 — Compliance Policies and Procedures
The Company shall adopt and maintain written compliance policies and procedures that are reasonably designed to prevent violations of the Advisers Act and the rules and regulations promulgated thereunder, in accordance with Rule 206(4)-7. Such policies and procedures shall address, at a minimum, (a) portfolio management processes, (b) trading practices, (c) proprietary trading of the firm and personal trading by supervised persons, (d) accuracy of disclosures made to clients and investors, (e) safeguarding of client assets, (f) valuation of client holdings, (g) business continuity and disaster recovery, (h) marketing and advertising, (i) insider trading and material non-public information, and (j) conflicts of interest.
The Chief Compliance Officer shall report directly to the Board of Managers and shall be responsible for the administration and oversight of the Company's compliance program. The Chief Compliance Officer shall, at least annually, conduct a review of the adequacy and effectiveness of the Company's compliance policies and procedures and shall present the results of such review, together with any recommendations for improvements, to the Board of Managers.
Section 10.3 — Code of Ethics
The Company shall adopt and maintain a written code of ethics in compliance with Rule 204A-1 under the Advisers Act. The code of ethics shall establish standards of conduct for all supervised persons and shall address, at a minimum, (a) personal securities transactions by supervised persons, including pre-clearance and reporting requirements, (b) gifts and entertainment, (c) outside business activities, (d) political contributions, and (e) the obligation of supervised persons to report violations of the code. All supervised persons shall acknowledge receipt of the code of ethics and any amendments thereto, and shall certify compliance on at least an annual basis.
Section 10.4 — Books and Records
The Company shall maintain books and records as required by Section 204 of the Advisers Act and Rule 204-2 thereunder. Such books and records shall include, without limitation, (a) journals, ledgers, and other accounting records, (b) communications relating to the Company's investment advisory business, (c) written agreements entered into by the Company, (d) partnership agreements and operating agreements of the Fund, (e) records of personal securities transactions by supervised persons, and (f) copies of all advertisements, performance presentations, and marketing materials. The Company's books and records shall be maintained for the periods required by Rule 204-2 and shall be available for inspection and examination by the SEC and its staff, and, to the extent required by the LPA, applicable side letters, or applicable law, by the limited partners of the Fund.
Section 10.5 — Auditors and Tax Advisors
The Company has engaged Heathrow Whitman & Co. as its independent auditor and tax advisor. The lead engagement partner is Paul Devereux, CPA, and the firm's office is located at 1345 Avenue of the Americas, 18th Floor, New York, New York 10105. Heathrow Whitman & Co. shall perform an annual audit of the Fund's financial statements in accordance with generally accepted auditing standards and shall prepare or assist in the preparation of all tax returns and filings required to be made by the Company and the Fund. The Company may change its independent auditor with the approval of the Board of Managers, subject to compliance with any applicable requirements of the LPA.
Section 10.6 — Valuation
The Company has engaged Broadleaf Consulting Group as its independent valuation advisor for the purpose of performing quarterly portfolio valuations of the Fund's investments. The lead contact at Broadleaf Consulting Group is Martin Schreiber, ASA, and the firm's office is located at 125 High Street, Suite 2800, Boston, Massachusetts 02110. Broadleaf Consulting Group shall provide independent fair value estimates for the Fund's portfolio company investments on a quarterly basis, in accordance with the valuation methodology and procedures set forth in the LPA and the Company's valuation policy. The Board of Managers retains ultimate responsibility for determining the fair value of the Fund's investments, and the engagement of Broadleaf Consulting Group does not relieve the Board of such responsibility.
ARTICLE XI — DISSOLUTION AND WINDING UP
Section 11.1 — Events of Dissolution
The Company shall be dissolved upon the occurrence of any of the following events:
(a) the prior written consent of the Member to dissolve the Company;
(b) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act; or
(c) the occurrence of any other event requiring the dissolution of the Company under the Act that cannot be cured or avoided.
For the avoidance of doubt, neither the departure of David Kellner or Joanna Trask from the Company, nor the consummation of the Restructuring, nor the admission of HoldCo as the sole member, nor any change in the composition of the Board of Managers, constitutes an event of dissolution under this Section 11.1 or the Act.
Section 11.2 — Winding Up
Upon the dissolution of the Company, the Board of Managers (or, if there is no Board of Managers, a liquidating trustee appointed by the Member) shall proceed to wind up the affairs of the Company. In connection with the winding up, the Board of Managers (or such liquidating trustee) shall:
(a) cause the Company's assets to be liquidated in an orderly manner;
(b) apply the proceeds of such liquidation and any remaining assets of the Company in the following order of priority:
(i) first, to the payment and satisfaction of all debts, obligations, and liabilities of the Company, including any regulatory obligations and obligations to the Fund and its limited partners;
(ii) second, to the establishment of such reserves as the Board of Managers (or liquidating trustee) deems reasonably necessary for contingent or unforeseen liabilities or obligations of the Company; and
(iii) third, the balance, if any, to the Member;
(c) cause to be prepared and filed all tax returns and other filings required in connection with the dissolution and winding up of the Company; and
(d) take such other actions as are necessary or appropriate to wind up the affairs of the Company in accordance with the Act.
Section 11.3 — Certificate of Cancellation
Upon the completion of the winding up of the Company's affairs, the Board of Managers (or the liquidating trustee) shall cause a Certificate of Cancellation to be filed with the Secretary of State of the State of Delaware in accordance with Section 18-203 of the Act. Upon the effectiveness of the filing of the Certificate of Cancellation, the existence of the Company shall cease.
ARTICLE XII — INDEMNIFICATION AND EXCULPATION
Section 12.1 — Indemnification
The Company shall indemnify and hold harmless the Member, each Manager, each Officer, and each employee and agent of the Company (each, an "Indemnified Person") from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees and disbursements, court costs, and costs of investigation) (collectively, "Losses") arising out of, in connection with, or related to the business and affairs of the Company, including any act or omission performed or omitted by such Indemnified Person in his, her, or its capacity as a member, manager, officer, employee, or agent of the Company, to the fullest extent permitted by the Act and applicable law.
Notwithstanding the foregoing, indemnification shall not be available to an Indemnified Person to the extent that such Losses are determined by a court of competent jurisdiction (in a final, non-appealable judgment) to have resulted from such Indemnified Person's fraud, willful misconduct, or gross negligence.
Section 12.2 — Exculpation
No Indemnified Person shall be liable to the Company, the Member, or any other Person for any loss, damage, liability, cost, or expense arising from any act or omission performed or omitted by such Indemnified Person in good faith and in a manner reasonably believed by such Indemnified Person to be within the scope of the authority conferred upon such Indemnified Person by this Agreement and to be in, or not opposed to, the best interests of the Company, except in cases of such Indemnified Person's fraud, willful misconduct, or gross negligence, as determined by a court of competent jurisdiction in a final, non-appealable judgment. An Indemnified Person shall be fully protected in relying in good faith upon the records of the Company and upon information, opinions, reports, or statements presented to such Indemnified Person by any other Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence.
Section 12.3 — Advancement of Expenses
The Company shall advance expenses (including reasonable attorneys' fees and disbursements) incurred by any Indemnified Person in connection with any proceeding in advance of the final disposition of such proceeding, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amounts if it is ultimately determined that such Indemnified Person is not entitled to indemnification under this Article XII. The obligation of the Company to advance expenses hereunder shall not be subject to any prior determination regarding the propriety of indemnification.
Section 12.4 — Insurance
The Company may, at the direction of the Board of Managers, purchase and maintain insurance (including professional liability insurance, directors and officers liability insurance, and errors and omissions insurance) on behalf of any Indemnified Person against any liability asserted against, or arising from, such Indemnified Person's role with, or services performed on behalf of, the Company, whether or not the Company would have the power to indemnify such Indemnified Person against such liability under the provisions of this Article XII.
ARTICLE XIII — TAX MATTERS
Section 13.1 — Tax Classification
For United States federal income tax purposes, the Company shall be treated as a disregarded entity. Because the Company has a single owner (HoldCo), the Company shall not file a separate U.S. federal income tax return, and all items of income, gain, loss, deduction, and credit of the Company shall be reported on the tax return of the Member (Ardent Capital Holdings LLC, EIN 93-1847225). The Company's Employer Identification Number is 84-3291070. The Company shall not elect to be classified as a corporation for U.S. federal income tax purposes without the prior written consent of the Member. For state and local tax purposes, the Company shall be treated in a manner consistent with its federal tax classification, except to the extent otherwise required by applicable state or local law.
Section 13.2 — Tax Returns
The Member, through HoldCo, shall cause the Company's tax obligations to be properly and timely reported on the applicable federal, state, and local tax returns. All tax reporting and compliance obligations of the Company shall be coordinated with Heathrow Whitman & Co., the Company's independent auditor and tax advisor, and shall be subject to the oversight of the Board of Managers. The Board of Managers shall cooperate with HoldCo and its tax advisors in furnishing all information necessary for the preparation of tax returns and shall cause the Company to maintain all books and records necessary for accurate tax reporting.
Section 13.3 — Tax Elections
The Board of Managers shall have the authority to make all tax elections on behalf of the Company, including without limitation any elections under Section 754, Section 761, or Section 1001 of the Code, and any analogous elections under applicable state or local tax law, as the Board of Managers determines to be in the best interests of the Company and the Member. All such elections shall be made in consultation with the Company's tax advisors.
ARTICLE XIV — MISCELLANEOUS
Section 14.1 — Amendments
This Agreement may be amended, restated, supplemented, or otherwise modified only by a written instrument executed by the Member. No oral agreements, understandings, or course of dealings shall be effective to amend, modify, or supplement this Agreement. Any amendment to this Agreement that would reasonably be expected to adversely affect the Fund or the limited partners of the Fund shall require compliance with the LPA, including, where required, the consent of the LPAC pursuant to Section 9.4 of the LPA or the consent of limited partners entitled to vote on such matter.
Section 14.2 — Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (including the Act), without regard to any conflict-of-l