1001-00002 · Ardent Capital Management LLC · Correspondence

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP One Vanderbilt Avenue, 44th Floor New York, NY 10017

Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com

January 19, 2024

Via Email and Hand Delivery

Richard Beaulieu, Esq. Partner, Private Funds Whitford & Chase LLP 200 Park Avenue, Suite 4200 New York, NY 10166

Re: Separation and Release Agreement — Joanna Trask; Ardent Capital Partners III LP

Dear Richard:

We write on behalf of our clients, Ardent Capital GP III LLC and Ardent Capital Management LLC (collectively, the "Ardent Parties"), in connection with the management company restructuring and economics realignment for Ardent Capital Partners III LP (the "Fund"). I am writing at the direction of Nicholas Stern, who serves as the responsible partner for this matter at Calderwood & Harkness LLP.

Enclosed with this letter please find a revised draft of the Separation and Release Agreement (the "Agreement") for Joanna Trask (the "Revised Draft"), dated as of the date hereof. The Revised Draft responds in detail to the counter-proposals submitted by your firm on behalf of Ms. Trask in your letter dated January 12, 2024. As you will recall, the first draft of the Agreement was circulated by our firm on December 8, 2023. For your convenience, we have also enclosed a redline comparison showing changes from the December 8 draft against the Revised Draft, so that your team can readily identify each modification.

Below we provide a summary of the relevant context and address each of the substantive positions raised in your January 12 letter in turn.

Summary of Context

As you are aware, Ms. Trask is departing Ardent Capital voluntarily, effective April 15, 2024, to pursue a position at another investment firm. Ms. Trask currently holds a twelve percent (12%) membership interest in Ardent Capital GP III LLC and a corresponding twelve percent (12%) share of carried interest in the Fund. She has been with the Ardent platform since 2013 and has served as a Managing Director and, subsequently, a Partner during her tenure.

The Fund has approximately $2.8 billion in total commitments from forty-seven (47) limited partners. As of the date of this letter, approximately $1.96 billion (representing 70% of total commitments) has been called and deployed, and the Fund maintains eleven (11) active portfolio companies in various stages of value creation. Accrued carried interest as of September 30, 2023 stands at $87,600,000 on an aggregate basis. Ms. Trask's share of accrued vested carry is accordingly calculated at $10,512,000 (i.e., 12% × $87,600,000).

As we discussed in our December 8 cover letter, the Ardent Parties are undertaking a broader restructuring that involves the formation of Ardent Capital Holdings LLC as a new parent holding company for the GP entities and the management company, and a corresponding realignment of economics among the remaining and next-generation principals. Ms. Trask's separation is one component of this broader initiative, and timely resolution of her departure terms is important to the overall restructuring timeline.

The Ardent Parties have given careful and thorough consideration to each of the positions set forth in your January 12 letter. We appreciate the constructive tone of your counter-proposals and have endeavored to respond in kind. That said, there are several areas where the Ardent Parties' view differs from the positions advanced on Ms. Trask's behalf, and we address each of those areas below.

Section 1 — Carried Interest Retention Percentage

Your January 12 letter proposed that Ms. Trask retain seventy-five percent (75%) of her vested carried interest in the Fund, arguing that her departure is amicable in nature, that she contributed materially to the Fund's portfolio construction during her more than ten years of service, and that a higher retention percentage is therefore warranted. We appreciate the acknowledgment of Ms. Trask's contributions, which are not in dispute.

Nevertheless, the Revised Draft maintains a sixty percent (60%) retention of Ms. Trask's vested carried interest. This position is grounded in the following considerations:

First, the 60% retention rate is consistent with the Fund's existing internal protocols and precedent for voluntary departures by partners and managing directors. These protocols were established at the inception of the Ardent platform and have been applied uniformly. While we recognize that each departure has unique circumstances, the Ardent Parties believe that adherence to established internal standards is important both for consistency and for the integrity of the platform's governance framework.

Second, Ms. Trask is leaving Ardent Capital to join another investment firm, which materially distinguishes her situation from a retirement. By way of comparison, David Kellner, who is retiring from the platform as part of the same restructuring, will retain one hundred percent (100%) of his vested carry. The distinction between a departure to a competitor and a retirement from the industry is well-recognized in the private equity market and is reflected in the Fund's internal protocols. The Ardent Parties believe the 60% rate is the appropriate benchmark for Ms. Trask's circumstances.

From a financial perspective, the 60% retention rate means that Ms. Trask will retain $6,307,200 (calculated as 60% × $10,512,000). The forfeited portion of her vested carry totals $4,204,800 (40% × $10,512,000). In addition, Ms. Trask will forfeit one hundred percent (100%) of any unvested carried interest. The forfeited carried interest will be reallocated among the remaining and next-generation principals as part of the broader economics realignment that is central to the restructuring.

The Ardent Parties view this outcome as fair and balanced. It recognizes Ms. Trask's meaningful contributions to the Fund while simultaneously ensuring that the team responsible for carrying the Fund through its remaining investment and harvesting period — the Fund's stated term does not expire until December 31, 2029, with two one-year extension options available — is appropriately incentivized to maximize value for the Fund's limited partners.

We want to be direct on this point: the 60% carried interest retention rate is not subject to further negotiation. The Ardent Parties regard this as a firm position, and we respectfully ask that Ms. Trask's team accept this term so that the parties can focus their remaining discussions on the other open items addressed below.

Section 2 — Clawback Obligation on Retained Carry

Your January 12 letter took the position that Ms. Trask's clawback obligation with respect to her retained carried interest should terminate upon her departure — that is, effective as of April 15, 2024. We understand the rationale underlying this request: Ms. Trask will no longer be an active participant in the Fund's investment decisions following her departure and therefore should not, in your view, bear ongoing clawback exposure for investment outcomes she cannot influence.

The Revised Draft does not accept this position. Instead, the Revised Draft provides that Ms. Trask's clawback obligation will continue for a period of two (2) years following the departure effective date — i.e., through April 15, 2026.

The Fund's Limited Partnership Agreement (the "LPA") provides for a one hundred percent (100%) joint and several clawback obligation among GP members, with individual escrow of thirty percent (30%) of all carried interest distributions held back to secure that obligation. A complete release of Ms. Trask's clawback obligation at the time of her departure would be inconsistent with the Fund's obligations to its forty-seven (47) limited partners and, more specifically, with the terms of Section 9.4 of the LPA, which governs the mechanics and duration of clawback obligations.

The Ardent Parties recognize that a perpetual clawback tail for a departed partner would be unreasonable, and the two-year post-departure period represents a meaningful compromise. We note that this tail is shorter than the three-year clawback period applicable to Mr. Kellner's retirement arrangement, reflecting the smaller quantum of retained carry in Ms. Trask's case.

Importantly, the Fund's investment period does not end until June 30, 2025, and unrealized portfolio value stands at approximately $2.33 billion as of September 30, 2023 (based on the Fund's most recent quarterly valuation). Significant realizations are expected during the two-year post-departure period, and the clawback tail ensures that Ms. Trask remains accountable during the period when carried interest calculations are most likely to be adjusted. The Ardent Parties believe this is both commercially reasonable and consistent with their fiduciary obligations to the Fund's limited partners.

Section 3 — Carry Escrow Mechanics

Your January 12 letter requested a full release of Ms. Trask's existing escrow balance of $3,150,000 upon her departure. This request is related to the clawback discussion above, and the Revised Draft addresses it as follows:

The Revised Draft provides for a partial release of the escrow balance. Specifically, Ms. Trask's escrow will be adjusted downward to $1,892,160, which represents thirty percent (30%) of her retained carried interest of $6,307,200. This is the same escrow ratio that applies to all carry recipients under the LPA, and the Ardent Parties believe it must be maintained uniformly. The difference between Ms. Trask's current escrow balance and the adjusted amount — i.e., $1,257,840 ($3,150,000 minus $1,892,160) — will be released to Ms. Trask within thirty (30) days of the departure effective date.

We note that this represents a meaningful concession from the December 8 draft, which did not contemplate any accelerated escrow release whatsoever. The original draft would have required Ms. Trask to maintain the full $3,150,000 escrow balance for the duration of the clawback tail. The Revised Draft's approach — adjusting the escrow to reflect only the retained carry amount and releasing the surplus promptly — is, in our view, a fair and practical resolution.

The Revised Draft includes specific mechanics governing the partial release, including provisions for wire transfer instructions to be provided by Ms. Trask (or her designee) within ten (10) business days of the departure effective date, and coordination with Heathrow Whitman & Co., the Fund's auditor and tax advisor (engagement partner: Paul Devereux), regarding tax reporting obligations associated with the escrow release. The adjusted escrow balance of $1,892,160 will be maintained for the duration of the two-year clawback period discussed in Section 2 above, after which it will be released in full to Ms. Trask, subject to any then-pending clawback claims.

Section 4 — Non-Compete Duration

Your January 12 letter proposed a non-compete period of six (6) months, arguing that a longer period would unreasonably restrain Ms. Trask's ability to pursue her career at her new firm and that any restriction beyond six months would be disproportionate to the legitimate interests the Ardent Parties seek to protect.

The Revised Draft maintains a non-compete period of twelve (12) months from the departure effective date of April 15, 2024 — i.e., through April 15, 2025. The non-compete is applicable to investment funds or vehicles with a substantially similar investment strategy to the Fund, which the Revised Draft defines as control investments in middle-market industrial and business-services companies. The restriction is not a blanket prohibition on Ms. Trask's professional activities; it is narrowly tailored to protect the Fund's competitive position in its specific market segment.

The twelve-month duration is supported by several considerations. Ms. Trask has had access to proprietary deal flow, detailed portfolio company financial and operational information, and direct relationships with the Fund's limited partners throughout her more than ten-year tenure at Ardent Capital. She has participated in investment committee deliberations, sourcing activities, and LP fundraising and reporting processes. The information and relationships to which she has been privy are competitively sensitive, and a twelve-month cooling-off period is both standard in the private equity industry and reasonable in scope under applicable New York law.

We also note that the Ardent Parties have agreed not to extend the non-compete to eighteen (18) months, which is the duration applicable to Mr. Kellner's retirement arrangement. The decision to apply a shorter restriction to Ms. Trask reflects the Ardent Parties' recognition that she is departing to continue her career, rather than retiring, and that a shorter period is appropriate in that context. This represents a compromise from the Ardent Parties' initial position, and we believe the twelve-month period appropriately balances the parties' respective interests.

Section 5 — Non-Solicitation Provisions

Your January 12 letter proposed that the non-solicitation of employees and the non-solicitation of limited partners each be limited to twelve (12) months. The Revised Draft sets both periods at eighteen (18) months from the departure effective date.

With respect to the non-solicitation of employees, the Fund and the management company currently employ sixty-two (62) professionals across investment, operations, investor relations, and administrative functions. The stability of the team is critical to the Fund's ability to execute its remaining investment and value-creation plans across the eleven active portfolio companies. The eighteen-month non-solicitation period provides an appropriate runway during which the Ardent Parties can stabilize the team in the wake of the restructuring and Ms. Trask's departure.

With respect to the non-solicitation of limited partners, the Fund's relationships with its forty-seven (47) limited partners are among its most valuable assets. These relationships are the foundation of the Ardent platform's ability to raise successor funds and maintain its reputation in the institutional investor community. The eighteen-month period is designed to ensure that Ms. Trask does not leverage relationships developed during her tenure at Ardent to solicit LPs for competing investment vehicles during the critical period surrounding the restructuring and any potential successor fund marketing. Importantly, the scope of the LP non-solicitation is limited to solicitation for competing investment vehicles — it does not prohibit Ms. Trask from maintaining general business contact with individuals at LP institutions in other professional contexts.

We note that both the employee and LP non-solicitation periods in the Revised Draft are shorter than the twenty-four (24) month restrictions applicable to Mr. Kellner's retirement arrangement, again reflecting the Ardent Parties' view that a departure to a new firm warrants a different treatment than a retirement.

Section 6 — Separation Payment

The Revised Draft maintains the separation payment at a lump sum of $1,250,000, payable within thirty (30) days of the departure effective date of April 15, 2024. This amount was proposed by the Ardent Parties in the December 8 draft and was accepted in your January 12 counter-proposal. No changes to this provision have been made in the Revised Draft, and we understand this term to be agreed.

The separation payment will be made by Ardent Capital Management LLC, the management company entity, and will be subject to all standard withholding and tax reporting obligations. The payment will be characterized as a separation payment constituting ordinary income to Ms. Trask for federal and applicable state and local income tax purposes. The Revised Draft includes standard language regarding the issuance of a Form W-2 (or, if applicable, a Form 1099) reflecting the separation payment.

Section 7 — GP Commitment Assumption

As reflected in the Fund's records, Ms. Trask's total GP commitment is $5,040,000, representing her twelve percent (12%) share of the $42,000,000 aggregate GP commitment to the Fund. Of this amount, $3,528,000 has been funded to date (consistent with the 70% overall capital call rate), leaving an unfunded commitment of $1,512,000.

The Revised Draft confirms that Ms. Trask's remaining unfunded GP commitment of $1,512,000 will be assumed by the remaining members of Ardent Capital Holdings LLC — the newly formed parent holding company — on a pro rata basis in accordance with their post-restructuring ownership percentages. This assumption will be documented in the amended and restated GP LLC agreement that is being prepared as part of the broader restructuring and will be effective as of the departure effective date.

Ms. Trask's funded GP commitment of $3,528,000 will remain invested in the Fund and will participate in distributions in accordance with the terms of the LPA, subject to adjustments reflecting her retained carried interest allocation as set forth in the Agreement. The Revised Draft includes conforming provisions to ensure that Ms. Trask's capital account and distribution entitlements are properly reflected in the Fund's books and records following her departure.

Section 8 — Mutual General Release

Your January 12 letter accepted the mutual general release in principle, subject to three requested carve-outs: (a) claims arising under the Agreement itself, (b) indemnification rights under the GP LLC Agreement (including, without limitation, rights arising under Article VII thereof), and (c) rights to retained carry distributions as provided in the Agreement.

The Ardent Parties have reviewed these requested carve-outs and find them to be reasonable and appropriate. All three carve-outs are accepted and have been incorporated into the Revised Draft. No further changes have been made to the release provisions.

The release will be mutual in scope and will cover all claims, demands, causes of action, and liabilities of any kind whatsoever, whether known or unknown, arising out of or relating to Ms. Trask's employment by or membership in the GP and the management company through and including the departure effective date. The release will be governed by New York law and will include a specific waiver of any rights under statutes or common law principles that would otherwise limit the scope of a general release to known claims.

Section 9 — Other Terms

For completeness, we address several additional provisions:

Health Insurance. Unlike Mr. Kellner's retirement arrangement, which includes twenty-four (24) months of employer-subsidized COBRA continuation coverage, Ms. Trask's departure terms do not include any COBRA continuation beyond the statutory requirements of the Consolidated Omnibus Budget Reconciliation Act. This benefit was not requested in your January 12 counter-proposal and accordingly is not included in the Revised Draft. Ms. Trask will, of course, be entitled to elect COBRA continuation coverage at her own expense for the applicable statutory period in accordance with the Fund's group health plan.

Confidentiality. The standard mutual confidentiality provisions included in the December 8 draft remain unchanged in the Revised Draft. Both parties will be obligated to maintain the confidentiality of the terms of the Agreement and of proprietary information obtained during Ms. Trask's tenure, subject to customary carve-outs for disclosures required by law, regulation, or legal process, and for disclosures to professional advisors on a need-to-know basis.

Cooperation. The Revised Draft includes a cooperation provision pursuant to which Ms. Trask will reasonably cooperate with the Fund and the Ardent Parties on any matters arising from her tenure, including, without limitation, LP inquiries, regulatory matters, audits, litigation, and portfolio company transitions. The Ardent Parties will reimburse Ms. Trask for reasonable out-of-pocket expenses incurred in connection with such cooperation, and will use commercially reasonable efforts to minimize disruption to Ms. Trask's professional schedule.

Directors' and Officers' Insurance. The Revised Draft confirms that Ms. Trask will be entitled to continued coverage under the Fund's existing directors' and officers' liability insurance policy for a six-year tail period following the departure effective date, with respect to actions taken or omissions occurring during her tenure as a member of the GP and as an officer of portfolio companies. This tail period is consistent with the Fund's existing D&O program and with customary market practice.

Closing — Request for Response and Next Steps

The Ardent Parties believe that the Revised Draft, as described above, represents a fair and comprehensive resolution of the separation terms for Ms. Trask. The positions reflected in the Revised Draft balance Ms. Trask's meaningful contributions to the Fund over the past decade against the Ardent Parties' obligation to incentivize the team carrying the Fund forward and to honor the Fund's commitments to its limited partners.

We respectfully request that Whitford & Chase review the enclosed Revised Draft and accompanying redline and provide any remaining comments by no later than Friday, February 2, 2024. To the extent there are points your team would like to discuss before submitting written comments, we are happy to arrange a call at a mutually convenient time.

We note that the Ardent Parties are working toward execution of all restructuring documents — including the formation documents for Ardent Capital Holdings LLC, the amended and restated GP LLC agreement, and the management company reorganization agreements — in late February 2024. LPAC notification letters are expected to be sent to the members of the Fund's Limited Partner Advisory Committee in early February. As you know, the LPAC of the Fund — consisting of Ridgeline Public Employees' Retirement System, Crestwood Endowment Partners, Pinnacle Insurance Group, and Graystone Family Office LLC — will need to consent to the overall restructuring, including the separation arrangements for Ms. Trask, pursuant to Section 9.4 of the LPA. Timely resolution of the separation terms is therefore important to the broader restructuring timeline and to the Ardent Parties' ability to comply with their LP notification and consent obligations.

I am available to discuss any of the foregoing at your convenience. Nicholas Stern is also available for a principal-level discussion with you or your client, should that be helpful in advancing the remaining open items toward resolution.

We look forward to hearing from you.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Owen Fischer Senior Associate One Vanderbilt Avenue, 44th Floor New York, NY 10017 Telephone: (212) 554-7244

Email: ofischer@calderwoodharkness.com

cc: (via email)

Nicholas Stern, Esq. — Calderwood & Harkness LLP Graham Sutherland, Esq. — Calderwood & Harkness LLP Marcus Aldridge — Ardent Capital Priya Narayanan — Ardent Capital Hannah Polk, Esq. — Whitford & Chase LLP

Enclosures:

1. Revised Separation and Release Agreement — Joanna Trask (dated January 19, 2024)

2. Redline comparison of Revised Draft against December 8, 2023 initial draft

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP One Vanderbilt Avenue, 44th Floor New York, NY 10017
Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com
January 19, 2024
Via Email and Hand Delivery
Richard Beaulieu, Esq. Partner, Private Funds Whitford & Chase LLP 200 Park Avenue, Suite 4200 New York, NY 10166
Re: Separation and Release Agreement — Joanna Trask; Ardent Capital Partners III LP
Dear Richard:
We write on behalf of our clients, Ardent Capital GP III LLC and Ardent Capital Management LLC (collectively, the "Ardent Parties"), in connection with the management company restructuring and economics realignment for Ardent Capital Partners III LP (the "Fund"). I am writing at the direction of Nicholas Stern, who serves as the responsible partner for this matter at Calderwood & Harkness LLP.
Enclosed with this letter please find a revised draft of the Separation and Release Agreement (the "Agreement") for Joanna Trask (the "Revised Draft"), dated as of the date hereof. The Revised Draft responds in detail to the counter-proposals submitted by your firm on behalf of Ms. Trask in your letter dated January 12, 2024. As you will recall, the first draft of the Agreement was circulated by our firm on December 8, 2023. For your convenience, we have also enclosed a redline comparison showing changes from the December 8 draft against the Revised Draft, so that your team can readily identify each modification.
Below we provide a summary of the relevant context and address each of the substantive positions raised in your January 12 letter in turn.
Summary of Context
As you are aware, Ms. Trask is departing Ardent Capital voluntarily, effective April 15, 2024, to pursue a position at another investment firm. Ms. Trask currently holds a twelve percent (12%) membership interest in Ardent Capital GP III LLC and a corresponding twelve percent (12%) share of carried interest in the Fund. She has been with the Ardent platform since 2013 and has served as a Managing Director and, subsequently, a Partner during her tenure.
The Fund has approximately $2.8 billion in total commitments from forty-seven (47) limited partners. As of the date of this letter, approximately $1.96 billion (representing 70% of total commitments) has been called and deployed, and the Fund maintains eleven (11) active portfolio companies in various stages of value creation. Accrued carried interest as of September 30, 2023 stands at $87,600,000 on an aggregate basis. Ms. Trask's share of accrued vested carry is accordingly calculated at $10,512,000 (i.e., 12% × $87,600,000).
As we discussed in our December 8 cover letter, the Ardent Parties are undertaking a broader restructuring that involves the formation of Ardent Capital Holdings LLC as a new parent holding company for the GP entities and the management company, and a corresponding realignment of economics among the remaining and next-generation principals. Ms. Trask's separation is one component of this broader initiative, and timely resolution of her departure terms is important to the overall restructuring timeline.
The Ardent Parties have given careful and thorough consideration to each of the positions set forth in your January 12 letter. We appreciate the constructive tone of your counter-proposals and have endeavored to respond in kind. That said, there are several areas where the Ardent Parties' view differs from the positions advanced on Ms. Trask's behalf, and we address each of those areas below.
Section 1 — Carried Interest Retention Percentage
Your January 12 letter proposed that Ms. Trask retain seventy-five percent (75%) of her vested carried interest in the Fund, arguing that her departure is amicable in nature, that she contributed materially to the Fund's portfolio construction during her more than ten years of service, and that a higher retention percentage is therefore warranted. We appreciate the acknowledgment of Ms. Trask's contributions, which are not in dispute.
Nevertheless, the Revised Draft maintains a sixty percent (60%) retention of Ms. Trask's vested carried interest. This position is grounded in the following considerations:
First, the 60% retention rate is consistent with the Fund's existing internal protocols and precedent for voluntary departures by partners and managing directors. These protocols were established at the inception of the Ardent platform and have been applied uniformly. While we recognize that each departure has unique circumstances, the Ardent Parties believe that adherence to established internal standards is important both for consistency and for the integrity of the platform's governance framework.
Second, Ms. Trask is leaving Ardent Capital to join another investment firm, which materially distinguishes her situation from a retirement. By way of comparison, David Kellner, who is retiring from the platform as part of the same restructuring, will retain one hundred percent (100%) of his vested carry. The distinction between a departure to a competitor and a retirement from the industry is well-recognized in the private equity market and is reflected in the Fund's internal protocols. The Ardent Parties believe the 60% rate is the appropriate benchmark for Ms. Trask's circumstances.
From a financial perspective, the 60% retention rate means that Ms. Trask will retain $6,307,200 (calculated as 60% × $10,512,000). The forfeited portion of her vested carry totals $4,204,800 (40% × $10,512,000). In addition, Ms. Trask will forfeit one hundred percent (100%) of any unvested carried interest. The forfeited carried interest will be reallocated among the remaining and next-generation principals as part of the broader economics realignment that is central to the restructuring.
The Ardent Parties view this outcome as fair and balanced. It recognizes Ms. Trask's meaningful contributions to the Fund while simultaneously ensuring that the team responsible for carrying the Fund through its remaining investment and harvesting period — the Fund's stated term does not expire until December 31, 2029, with two one-year extension options available — is appropriately incentivized to maximize value for the Fund's limited partners.
We want to be direct on this point: the 60% carried interest retention rate is not subject to further negotiation. The Ardent Parties regard this as a firm position, and we respectfully ask that Ms. Trask's team accept this term so that the parties can focus their remaining discussions on the other open items addressed below.
Section 2 — Clawback Obligation on Retained Carry
Your January 12 letter took the position that Ms. Trask's clawback obligation with respect to her retained carried interest should terminate upon her departure — that is, effective as of April 15, 2024. We understand the rationale underlying this request: Ms. Trask will no longer be an active participant in the Fund's investment decisions following her departure and therefore should not, in your view, bear ongoing clawback exposure for investment outcomes she cannot influence.
The Revised Draft does not accept this position. Instead, the Revised Draft provides that Ms. Trask's clawback obligation will continue for a period of two (2) years following the departure effective date — i.e., through April 15, 2026.
The Fund's Limited Partnership Agreement (the "LPA") provides for a one hundred percent (100%) joint and several clawback obligation among GP members, with individual escrow of thirty percent (30%) of all carried interest distributions held back to secure that obligation. A complete release of Ms. Trask's clawback obligation at the time of her departure would be inconsistent with the Fund's obligations to its forty-seven (47) limited partners and, more specifically, with the terms of Section 9.4 of the LPA, which governs the mechanics and duration of clawback obligations.
The Ardent Parties recognize that a perpetual clawback tail for a departed partner would be unreasonable, and the two-year post-departure period represents a meaningful compromise. We note that this tail is shorter than the three-year clawback period applicable to Mr. Kellner's retirement arrangement, reflecting the smaller quantum of retained carry in Ms. Trask's case.
Importantly, the Fund's investment period does not end until June 30, 2025, and unrealized portfolio value stands at approximately $2.33 billion as of September 30, 2023 (based on the Fund's most recent quarterly valuation). Significant realizations are expected during the two-year post-departure period, and the clawback tail ensures that Ms. Trask remains accountable during the period when carried interest calculations are most likely to be adjusted. The Ardent Parties believe this is both commercially reasonable and consistent with their fiduciary obligations to the Fund's limited partners.
Section 3 — Carry Escrow Mechanics
Your January 12 letter requested a full release of Ms. Trask's existing escrow balance of $3,150,000 upon her departure. This request is related to the clawback discussion above, and the Revised Draft addresses it as follows:
The Revised Draft provides for a partial release of the escrow balance. Specifically, Ms. Trask's escrow will be adjusted downward to $1,892,160, which represents thirty percent (30%) of her retained carried interest of $6,307,200. This is the same escrow ratio that applies to all carry recipients under the LPA, and the Ardent Parties believe it must be maintained uniformly. The difference between Ms. Trask's current escrow balance and the adjusted amount — i.e., $1,257,840 ($3,150,000 minus $1,892,160) — will be released to Ms. Trask within thirty (30) days of the departure effective date.
We note that this represents a meaningful concession from the December 8 draft, which did not contemplate any accelerated escrow release whatsoever. The original draft would have required Ms. Trask to maintain the full $3,150,000 escrow balance for the duration of the clawback tail. The Revised Draft's approach — adjusting the escrow to reflect only the retained carry amount and releasing the surplus promptly — is, in our view, a fair and practical resolution.
The Revised Draft includes specific mechanics governing the partial release, including provisions for wire transfer instructions to be provided by Ms. Trask (or her designee) within ten (10) business days of the departure effective date, and coordination with Heathrow Whitman & Co., the Fund's auditor and tax advisor (engagement partner: Paul Devereux), regarding tax reporting obligations associated with the escrow release. The adjusted escrow balance of $1,892,160 will be maintained for the duration of the two-year clawback period discussed in Section 2 above, after which it will be released in full to Ms. Trask, subject to any then-pending clawback claims.
Section 4 — Non-Compete Duration
Your January 12 letter proposed a non-compete period of six (6) months, arguing that a longer period would unreasonably restrain Ms. Trask's ability to pursue her career at her new firm and that any restriction beyond six months would be disproportionate to the legitimate interests the Ardent Parties seek to protect.
The Revised Draft maintains a non-compete period of twelve (12) months from the departure effective date of April 15, 2024 — i.e., through April 15, 2025. The non-compete is applicable to investment funds or vehicles with a substantially similar investment strategy to the Fund, which the Revised Draft defines as control investments in middle-market industrial and business-services companies. The restriction is not a blanket prohibition on Ms. Trask's professional activities; it is narrowly tailored to protect the Fund's competitive position in its specific market segment.
The twelve-month duration is supported by several considerations. Ms. Trask has had access to proprietary deal flow, detailed portfolio company financial and operational information, and direct relationships with the Fund's limited partners throughout her more than ten-year tenure at Ardent Capital. She has participated in investment committee deliberations, sourcing activities, and LP fundraising and reporting processes. The information and relationships to which she has been privy are competitively sensitive, and a twelve-month cooling-off period is both standard in the private equity industry and reasonable in scope under applicable New York law.
We also note that the Ardent Parties have agreed not to extend the non-compete to eighteen (18) months, which is the duration applicable to Mr. Kellner's retirement arrangement. The decision to apply a shorter restriction to Ms. Trask reflects the Ardent Parties' recognition that she is departing to continue her career, rather than retiring, and that a shorter period is appropriate in that context. This represents a compromise from the Ardent Parties' initial position, and we believe the twelve-month period appropriately balances the parties' respective interests.
Section 5 — Non-Solicitation Provisions
Your January 12 letter proposed that the non-solicitation of employees and the non-solicitation of limited partners each be limited to twelve (12) months. The Revised Draft sets both periods at eighteen (18) months from the departure effective date.
With respect to the non-solicitation of employees, the Fund and the management company currently employ sixty-two (62) professionals across investment, operations, investor relations, and administrative functions. The stability of the team is critical to the Fund's ability to execute its remaining investment and value-creation plans across the eleven active portfolio companies. The eighteen-month non-solicitation period provides an appropriate runway during which the Ardent Parties can stabilize the team in the wake of the restructuring and Ms. Trask's departure.
With respect to the non-solicitation of limited partners, the Fund's relationships with its forty-seven (47) limited partners are among its most valuable assets. These relationships are the foundation of the Ardent platform's ability to raise successor funds and maintain its reputation in the institutional investor community. The eighteen-month period is designed to ensure that Ms. Trask does not leverage relationships developed during her tenure at Ardent to solicit LPs for competing investment vehicles during the critical period surrounding the restructuring and any potential successor fund marketing. Importantly, the scope of the LP non-solicitation is limited to solicitation for competing investment vehicles — it does not prohibit Ms. Trask from maintaining general business contact with individuals at LP institutions in other professional contexts.
We note that both the employee and LP non-solicitation periods in the Revised Draft are shorter than the twenty-four (24) month restrictions applicable to Mr. Kellner's retirement arrangement, again reflecting the Ardent Parties' view that a departure to a new firm warrants a different treatment than a retirement.
Section 6 — Separation Payment
The Revised Draft maintains the separation payment at a lump sum of $1,250,000, payable within thirty (30) days of the departure effective date of April 15, 2024. This amount was proposed by the Ardent Parties in the December 8 draft and was accepted in your January 12 counter-proposal. No changes to this provision have been made in the Revised Draft, and we understand this term to be agreed.
The separation payment will be made by Ardent Capital Management LLC, the management company entity, and will be subject to all standard withholding and tax reporting obligations. The payment will be characterized as a separation payment constituting ordinary income to Ms. Trask for federal and applicable state and local income tax purposes. The Revised Draft includes standard language regarding the issuance of a Form W-2 (or, if applicable, a Form 1099) reflecting the separation payment.
Section 7 — GP Commitment Assumption
As reflected in the Fund's records, Ms. Trask's total GP commitment is $5,040,000, representing her twelve percent (12%) share of the $42,000,000 aggregate GP commitment to the Fund. Of this amount, $3,528,000 has been funded to date (consistent with the 70% overall capital call rate), leaving an unfunded commitment of $1,512,000.
The Revised Draft confirms that Ms. Trask's remaining unfunded GP commitment of $1,512,000 will be assumed by the remaining members of Ardent Capital Holdings LLC — the newly formed parent holding company — on a pro rata basis in accordance with their post-restructuring ownership percentages. This assumption will be documented in the amended and restated GP LLC agreement that is being prepared as part of the broader restructuring and will be effective as of the departure effective date.
Ms. Trask's funded GP commitment of $3,528,000 will remain invested in the Fund and will participate in distributions in accordance with the terms of the LPA, subject to adjustments reflecting her retained carried interest allocation as set forth in the Agreement. The Revised Draft includes conforming provisions to ensure that Ms. Trask's capital account and distribution entitlements are properly reflected in the Fund's books and records following her departure.
Section 8 — Mutual General Release
Your January 12 letter accepted the mutual general release in principle, subject to three requested carve-outs: (a) claims arising under the Agreement itself, (b) indemnification rights under the GP LLC Agreement (including, without limitation, rights arising under Article VII thereof), and (c) rights to retained carry distributions as provided in the Agreement.
The Ardent Parties have reviewed these requested carve-outs and find them to be reasonable and appropriate. All three carve-outs are accepted and have been incorporated into the Revised Draft. No further changes have been made to the release provisions.
The release will be mutual in scope and will cover all claims, demands, causes of action, and liabilities of any kind whatsoever, whether known or unknown, arising out of or relating to Ms. Trask's employment by or membership in the GP and the management company through and including the departure effective date. The release will be governed by New York law and will include a specific waiver of any rights under statutes or common law principles that would otherwise limit the scope of a general release to known claims.
Section 9 — Other Terms
For completeness, we address several additional provisions:
Health Insurance. Unlike Mr. Kellner's retirement arrangement, which includes twenty-four (24) months of employer-subsidized COBRA continuation coverage, Ms. Trask's departure terms do not include any COBRA continuation beyond the statutory requirements of the Consolidated Omnibus Budget Reconciliation Act. This benefit was not requested in your January 12 counter-proposal and accordingly is not included in the Revised Draft. Ms. Trask will, of course, be entitled to elect COBRA continuation coverage at her own expense for the applicable statutory period in accordance with the Fund's group health plan.
Confidentiality. The standard mutual confidentiality provisions included in the December 8 draft remain unchanged in the Revised Draft. Both parties will be obligated to maintain the confidentiality of the terms of the Agreement and of proprietary information obtained during Ms. Trask's tenure, subject to customary carve-outs for disclosures required by law, regulation, or legal process, and for disclosures to professional advisors on a need-to-know basis.
Cooperation. The Revised Draft includes a cooperation provision pursuant to which Ms. Trask will reasonably cooperate with the Fund and the Ardent Parties on any matters arising from her tenure, including, without limitation, LP inquiries, regulatory matters, audits, litigation, and portfolio company transitions. The Ardent Parties will reimburse Ms. Trask for reasonable out-of-pocket expenses incurred in connection with such cooperation, and will use commercially reasonable efforts to minimize disruption to Ms. Trask's professional schedule.
Directors' and Officers' Insurance. The Revised Draft confirms that Ms. Trask will be entitled to continued coverage under the Fund's existing directors' and officers' liability insurance policy for a six-year tail period following the departure effective date, with respect to actions taken or omissions occurring during her tenure as a member of the GP and as an officer of portfolio companies. This tail period is consistent with the Fund's existing D&O program and with customary market practice.
Closing — Request for Response and Next Steps
The Ardent Parties believe that the Revised Draft, as described above, represents a fair and comprehensive resolution of the separation terms for Ms. Trask. The positions reflected in the Revised Draft balance Ms. Trask's meaningful contributions to the Fund over the past decade against the Ardent Parties' obligation to incentivize the team carrying the Fund forward and to honor the Fund's commitments to its limited partners.
We respectfully request that Whitford & Chase review the enclosed Revised Draft and accompanying redline and provide any remaining comments by no later than Friday, February 2, 2024. To the extent there are points your team would like to discuss before submitting written comments, we are happy to arrange a call at a mutually convenient time.
We note that the Ardent Parties are working toward execution of all restructuring documents — including the formation documents for Ardent Capital Holdings LLC, the amended and restated GP LLC agreement, and the management company reorganization agreements — in late February 2024. LPAC notification letters are expected to be sent to the members of the Fund's Limited Partner Advisory Committee in early February. As you know, the LPAC of the Fund — consisting of Ridgeline Public Employees' Retirement System, Crestwood Endowment Partners, Pinnacle Insurance Group, and Graystone Family Office LLC — will need to consent to the overall restructuring, including the separation arrangements for Ms. Trask, pursuant to Section 9.4 of the LPA. Timely resolution of the separation terms is therefore important to the broader restructuring timeline and to the Ardent Parties' ability to comply with their LP notification and consent obligations.
I am available to discuss any of the foregoing at your convenience. Nicholas Stern is also available for a principal-level discussion with you or your client, should that be helpful in advancing the remaining open items toward resolution.
We look forward to hearing from you.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Owen Fischer Senior Associate One Vanderbilt Avenue, 44th Floor New York, NY 10017 Telephone: (212) 554-7244
Email: ofischer@calderwoodharkness.com
cc: (via email)
Nicholas Stern, Esq. — Calderwood & Harkness LLP Graham Sutherland, Esq. — Calderwood & Harkness LLP Marcus Aldridge — Ardent Capital Priya Narayanan — Ardent Capital Hannah Polk, Esq. — Whitford & Chase LLP
Enclosures:
1. Revised Separation and Release Agreement — Joanna Trask (dated January 19, 2024)
2. Redline comparison of Revised Draft against December 8, 2023 initial draft

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