CARRY RETENTION AND CLAWBACK SIDE LETTER
Ardent Capital Partners III LP
February 28, 2024
This Carry Retention and Clawback Side Letter (this "Side Letter") is entered into as of February 28, 2024, by and between:
(1) Ardent Capital GP III LLC, a Delaware limited liability company (the "General Partner" or "GP"), with its principal office at 590 Madison Avenue, 28th Floor, New York, NY 10022, and its registered agent at Prestige Registered Agents LLC, 850 New Burton Road, Suite 201, Dover, DE 19904; and
(2) Joanna Trask, an individual residing in the State of New York ("Ms. Trask" or the "Departing Principal").
The General Partner and Ms. Trask are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the General Partner serves as the sole general partner of Ardent Capital Partners III LP, a Delaware limited partnership (the "Fund"), a private equity fund with approximately $2.8 billion in total commitments from 47 limited partners;
WHEREAS, Ms. Trask has served as a Partner of the Ardent Capital platform and currently holds a 12% interest in the General Partner and a 12% share of the carried interest in the Fund;
WHEREAS, Ms. Trask is voluntarily departing from the Ardent Capital platform effective April 15, 2024 (the "Departure Date");
WHEREAS, the General Partner, Ardent Capital Management LLC (the "Management Company"), and Ms. Trask have entered into that certain Separation and Release Agreement, dated as of the date hereof (the "Separation Agreement"), setting forth the terms and conditions of Ms. Trask's departure from the Ardent Capital platform, including the mutual release of claims, restrictive covenant obligations, and other matters;
WHEREAS, in connection with the broader restructuring of the management company and economics realignment among the principals of the Fund (the "Restructuring"), including the formation of Ardent Capital Holdings LLC ("HoldCo") and Ardent GP Intermediate LLC ("GP Intermediate"), the Parties wish to memorialize the specific terms governing Ms. Trask's carried interest retention, forfeiture, clawback obligations, escrow arrangements, distribution mechanics, and reporting rights following her departure;
WHEREAS, the Amended and Restated Carried Interest Allocation Agreement, dated as of the date hereof, governs the post-Restructuring allocation of carried interest among the remaining and next-generation principals of the Fund;
WHEREAS, the Fund's Amended and Restated Agreement of Limited Partnership, as amended by Amendment No. 1 dated as of the date hereof (the "LPA"), provides for a carried interest of 20% of net profits, subject to an 8% preferred return and full catch-up, with a 100% joint and several clawback obligation among GP members, subject to individual escrow of 30% of distributions; and
WHEREAS, the Limited Partner Advisory Committee of the Fund (the "LPAC") provided its consent to the Restructuring on February 14, 2024, as required under Section 9.4 of the LPA.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1: DEFINITIONS
As used in this Side Letter, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LPA or the Separation Agreement, as applicable.
"Accrued Carry" means the aggregate accrued but undistributed carried interest attributable to the Fund as of September 30, 2023, equal to $87,600,000, as determined in accordance with the Fund's most recent quarterly valuation.
"Carry Escrow Account" means the escrow account maintained for the benefit of the Fund's limited partners in respect of Ms. Trask's Clawback Obligation, as more fully described in Section 4 of this Side Letter.
"Clawback Obligation" means the obligation of Ms. Trask to return previously distributed carried interest to the Fund, as described in the LPA and Section 5 of this Side Letter.
"Departure Date" means April 15, 2024.
"Forfeited Carry" means, collectively, the Forfeited Vested Carry and all forfeited unvested carry, as defined in Section 3 of this Side Letter.
"Fund" means Ardent Capital Partners III LP, a Delaware limited partnership.
"GP Intermediate" means Ardent GP Intermediate LLC, a Delaware limited liability company and the sole member of the General Partner following the Restructuring.
"HoldCo" means Ardent Capital Holdings LLC, a Delaware limited liability company and the sole member of GP Intermediate following the Restructuring.
"LPA" means the Amended and Restated Agreement of Limited Partnership of the Fund, as amended by Amendment No. 1 dated as of the date hereof, and as may be further amended from time to time in accordance with its terms.
"LPAC" means the Limited Partner Advisory Committee of the Fund, as established pursuant to Section 9 of the LPA.
"Management Company" means Ardent Capital Management LLC, a Delaware limited liability company.
"Restructuring" has the meaning set forth in the Recitals.
"Retained Carry" has the meaning set forth in Section 2.2 of this Side Letter.
"Separation Agreement" means the Separation and Release Agreement among the General Partner, the Management Company, and Ms. Trask, dated as of the date hereof.
"Trask Carry Percentage" means 12% of the carried interest pool, being Ms. Trask's pre-Restructuring allocation of the carried interest in the Fund.
"Vested Carry" has the meaning set forth in Section 2.1 of this Side Letter.
All references to dollar amounts in this Side Letter are to United States dollars unless otherwise specified. All references to "days" mean calendar days unless "business days" is expressly stated. All references to sections, exhibits, or schedules are to sections of, and exhibits or schedules to, this Side Letter unless otherwise indicated.
SECTION 2: VESTED CARRIED INTEREST; RETAINED CARRY
2.1 Determination of Vested Carry
As of September 30, 2023, which is the most recent quarterly valuation date prior to the execution of this Side Letter, the Accrued Carry attributable to the Fund was $87,600,000. Such valuation was prepared by Broadleaf Consulting Group, the Fund's independent valuation advisor, in accordance with the valuation policies set forth in the LPA and in compliance with ASC 820 (Fair Value Measurement) and the International Private Equity and Venture Capital Valuation Guidelines.
Ms. Trask's Trask Carry Percentage is 12% of the carried interest pool. Accordingly, Ms. Trask's vested carried interest (the "Vested Carry") is calculated as follows:
Vested Carry = Trask Carry Percentage × Accrued Carry
Vested Carry = 12% × $87,600,000 = $10,512,000
The Vested Carry is determined as of September 30, 2023, and remains subject to subsequent adjustments based on portfolio company performance, future valuations, and realized proceeds. The Parties acknowledge that the Accrued Carry and the Vested Carry are unrealized values that may increase or decrease based on subsequent events, and that no assurance can be given as to the amount, if any, that will ultimately be distributed to Ms. Trask in respect of the Vested Carry.
2.2 Retained Carry
Ms. Trask shall retain 60% of her Vested Carry (the "Retained Carry"). The Retained Carry is calculated as follows:
Retained Carry = 60% × Vested Carry
Retained Carry = 60% × $10,512,000 = $6,307,200
The Retained Carry represents Ms. Trask's continuing economic interest in the carried interest of the Fund, attributable to portfolio investments made prior to the Departure Date. The Retained Carry is subject to future appreciation and depreciation based on the performance of the Fund's eleven (11) active portfolio companies and realized proceeds therefrom. For reference, as of September 30, 2023, the Fund's aggregate portfolio metrics were as follows:
The Retained Carry shall be subject to the forfeiture, escrow, clawback, distribution, and other provisions set forth in this Side Letter and the LPA.
SECTION 3: FORFEITURE OF CARRY
3.1 Forfeiture of Vested Carry
Ms. Trask shall forfeit 40% of her Vested Carry (the "Forfeited Vested Carry"). The Forfeited Vested Carry is calculated as follows:
Forfeited Vested Carry = 40% × Vested Carry
Forfeited Vested Carry = 40% × $10,512,000 = $4,204,800
The Forfeited Vested Carry shall be irrevocably relinquished by Ms. Trask as of the Departure Date. Ms. Trask acknowledges and agrees that she shall have no further right, title, interest, or claim with respect to the Forfeited Vested Carry, and that the Forfeited Vested Carry shall revert to the General Partner for reallocation to the remaining and next-generation principals in accordance with the Amended and Restated Carried Interest Allocation Agreement. The forfeiture contemplated by this Section 3.1 is a material inducement for the General Partner's agreement to allow Ms. Trask to retain the Retained Carry, and Ms. Trask expressly waives any right to contest or challenge such forfeiture.
3.2 Forfeiture of Unvested Carry
Ms. Trask shall forfeit 100% of any unvested carried interest as of the Departure Date. Any carry attributable to investments made on or after the Departure Date, or not yet vested under the applicable vesting schedule as set forth in the LPA and the prior Carried Interest Allocation Agreement, shall not be allocated or distributable to Ms. Trask. For the avoidance of doubt, Ms. Trask shall have no right to any carried interest that would have vested after the Departure Date, whether by virtue of continued service, passage of time, or otherwise.
3.3 Reallocation of Forfeited Carry
The Forfeited Vested Carry and all forfeited unvested carry shall be redistributed as part of the Restructuring economics realignment among the remaining and next-generation principals of the Fund. The post-Restructuring carried interest allocation percentages are as follows:
The redistribution described in this Section 3.3 applies to go-forward carried interest on future appreciation and to the reallocation of the Forfeited Vested Carry and forfeited unvested carry. Ms. Trask's Retained Carry on accrued amounts as of the determination date set forth in Section 2.1 is carved out from such redistribution and shall continue to be governed by this Side Letter. The specific mechanics of the reallocation are set forth in the Amended and Restated Carried Interest Allocation Agreement, to which Ms. Trask is not a party.
SECTION 4: CARRY ESCROW ARRANGEMENTS
4.1 Pre-Existing Escrow Balance
Prior to the Restructuring, Ms. Trask maintained a carry escrow balance of $3,150,000, representing 30% of prior carried interest distributions attributable to her Trask Carry Percentage, as required under Section 7.6 of the LPA. The Carry Escrow Account has been maintained at Greaves Bancorp in a segregated interest-bearing deposit account.
4.2 Adjusted Escrow Amount
Following the adjustment of Ms. Trask's retained interest to the Retained Carry amount of $6,307,200, the required escrow amount shall be recalculated as 30% of the Retained Carry, consistent with the escrow requirements applicable to all GP members under the LPA. The adjusted escrow requirement is calculated as follows:
Adjusted Escrow Requirement = 30% × Retained Carry
Adjusted Escrow Requirement = 30% × $6,307,200 = $1,892,160
4.3 Partial Escrow Release
Because the pre-existing escrow balance exceeds the adjusted escrow requirement, the excess escrow amount shall be released to Ms. Trask within sixty (60) days of the Departure Date. The escrow release amount is calculated as follows:
Escrow Release Amount = Pre-Existing Escrow Balance − Adjusted Escrow Requirement
Escrow Release Amount = $3,150,000 − $1,892,160 = $1,257,840
Payment of the escrow release shall be made by wire transfer to a bank account designated by Ms. Trask in writing to the General Partner no later than thirty (30) days prior to the anticipated release date. The General Partner shall provide Ms. Trask with at least ten (10) business days' prior written notice of the anticipated date of the escrow release payment.
4.4 Continued Escrow Maintenance
The remaining escrow balance of $1,892,160 shall be maintained in the Carry Escrow Account for the duration of Ms. Trask's Clawback Obligation period, which is two (2) years following the Departure Date (i.e., through April 15, 2026). The escrow funds shall continue to be held in a segregated interest-bearing account at Greaves Bancorp (or such other nationally recognized financial institution as the General Partner may designate from time to time with prior written notice to Ms. Trask). Interest accrued on the escrowed funds shall be for the benefit of Ms. Trask, net of any applicable bank fees, account maintenance charges, or similar expenses.
Upon expiration of the Clawback Obligation period on April 15, 2026, without any clawback event having been triggered or any clawback claim then pending, the remaining escrow balance (together with all accrued and unpaid interest thereon) shall be released to Ms. Trask within thirty (30) business days of such expiration. If, as of April 15, 2026, a clawback event has been triggered or a clawback claim is then pending, the escrow balance shall continue to be maintained until such clawback event or claim has been finally resolved, at which time any remaining balance shall be released to Ms. Trask in accordance with the foregoing procedures.
SECTION 5: CLAWBACK OBLIGATION
5.1 Duration. Ms. Trask's Clawback Obligation with respect to the Retained Carry shall continue for a period of two (2) years following the Departure Date (i.e., from April 15, 2024 through April 15, 2026). During such period, Ms. Trask shall remain subject to the clawback provisions of the LPA to the extent set forth in this Section 5, as modified hereby.
5.2 Scope of Clawback
Under the LPA, the carried interest clawback is 100% joint and several among GP members. Notwithstanding the foregoing, the Parties acknowledge and agree that, following the Departure Date, Ms. Trask's Clawback Obligation shall be limited to the following:
(a) the Retained Carry (as such amount may be adjusted from time to time based on portfolio company performance and realized proceeds); and
(b) any carried interest distributions actually received by Ms. Trask with respect to the Fund, whether received prior to, on, or after the Departure Date.
Ms. Trask shall not be responsible for clawback obligations attributable to carried interest allocated to or distributed to other GP members, HoldCo members, or any other person or entity. The General Partner shall indemnify and hold Ms. Trask harmless from and against any clawback claim asserted against her that exceeds the scope of her Clawback Obligation as limited by this Section 5.2, and the remaining GP members (or their successors through HoldCo) shall bear the responsibility for any such excess clawback amounts. This limitation on Ms. Trask's Clawback Obligation has been approved by the LPAC as part of the consent to the Restructuring obtained on February 14, 2024.
5.3 Clawback Calculation
In the event a clawback obligation is triggered under the LPA upon final liquidation of the Fund (or as otherwise provided therein), Ms. Trask's share of any clawback shall be calculated based on her Retained Carry as a proportion of total carried interest distributions received by all GP members (including former members retaining carried interest). Specifically, Ms. Trask's allocable share of any Fund-level clawback shall be determined as follows:
Trask Clawback Share = (Total Carried Interest Distributions Received by Ms. Trask / Total Carried Interest Distributions Received by All GP Members) × Aggregate Clawback Amount
For purposes of this calculation, "Total Carried Interest Distributions Received by Ms. Trask" shall include all carry distributions received by Ms. Trask at any time during the life of the Fund, including distributions received prior to the Departure Date and any distributions of Retained Carry received thereafter. The General Partner shall provide Ms. Trask with a detailed calculation of any clawback amount within thirty (30) days of the determination that a clawback has been triggered, together with reasonable supporting documentation.
5.4 Payment Mechanics
Any clawback amounts owed by Ms. Trask shall first be satisfied from the Carry Escrow Account. The General Partner shall have the right to withdraw funds from the Carry Escrow Account to satisfy Ms. Trask's Clawback Obligation without further consent or authorization from Ms. Trask, provided that the General Partner has delivered written notice to Ms. Trask at least fifteen (15) business days prior to such withdrawal, specifying the amount to be withdrawn and the basis for the clawback. To the extent the escrow balance is insufficient to satisfy Ms. Trask's Clawback Obligation in full, Ms. Trask shall be obligated to remit additional amounts within sixty (60) days of written demand by the General Partner. Any amounts not paid within such sixty (60) day period shall bear interest at the rate of the prime rate as published by The Wall Street Journal on the date of the demand, plus 2% per annum, until paid in full.
5.5 Release of Clawback Obligation
Upon expiration of the two (2) year Clawback Obligation period on April 15, 2026, Ms. Trask's Clawback Obligation shall terminate and be of no further force or effect, and Ms. Trask shall be released and discharged from any and all clawback liability to the Fund, the General Partner, the limited partners, and any other person or entity; provided, however, that such release shall not apply if a clawback event has been triggered and is then pending as of April 15, 2026. In the event of a pending clawback as of such date, Ms. Trask's Clawback Obligation shall continue solely with respect to such pending clawback event until it has been finally resolved, and Ms. Trask shall thereafter be released from all further clawback liability.
SECTION 6: MECHANICS OF CARRY DISTRIBUTIONS
6.1 Entitlement to Distributions
Following the Departure Date, Ms. Trask shall remain entitled to receive distributions of the Retained Carry as and when carried interest is distributed by the Fund to the General Partner, subject to the terms and conditions of the LPA (including the 8% preferred return, full catch-up waterfall, and all other distribution provisions contained therein). Ms. Trask's entitlement to distributions of the Retained Carry shall not be contingent upon her continued employment with, or membership in, the General Partner, the Management Company, HoldCo, GP Intermediate, or any affiliate thereof.
6.2 Distribution Flow
Following the Restructuring, distributions attributable to Ms. Trask's Retained Carry shall flow through the following entities in the order indicated:
(i) Ardent Capital Partners III LP (the Fund) distributes carried interest to the General Partner;
(ii) Ardent Capital GP III LLC (the General Partner) distributes such amounts to its sole member, GP Intermediate;
(iii) Ardent GP Intermediate LLC (GP Intermediate) distributes such amounts to its sole member, HoldCo;
(iv) Ardent Capital Holdings LLC (HoldCo) distributes the Retained Carry allocation to Ms. Trask as a former member holding a residual economic interest.
Notwithstanding the interposition of the HoldCo and GP Intermediate structures as part of the Restructuring, Ms. Trask's right to receive the Retained Carry shall not be impaired, diminished, or delayed by virtue of such structures. The General Partner and HoldCo shall cause each intermediate entity to promptly distribute amounts attributable to Ms. Trask's Retained Carry in accordance with this Section 6 and the governing documents of each such entity.
6.3 Timing of Distributions
Distributions to Ms. Trask of amounts attributable to the Retained Carry shall be made within fifteen (15) business days of the General Partner's receipt of carry distributions from the Fund, subject to any applicable withholding or escrow requirements under this Side Letter, the LPA, or applicable law. The General Partner shall provide Ms. Trask with a written distribution notice at least five (5) business days prior to each distribution, specifying the amount to be distributed and the basis for the calculation thereof.
6.4 Withholding. The General Partner (or HoldCo, as applicable) shall be entitled to withhold from any distribution to Ms. Trask any amounts required to be withheld by applicable federal, state, or local tax law or regulation, including any backup withholding or withholding on amounts treated as effectively connected income. Withheld amounts shall be treated as having been distributed to Ms. Trask for all purposes of this Side Letter and the LPA, and the General Partner shall remit such withheld amounts to the applicable taxing authority on a timely basis and shall provide Ms. Trask with documentation of such remittance.
6.5 No Go-Forward Carry Participation
For the avoidance of doubt, Ms. Trask shall have no right to any carried interest attributable to:
(a) new investments made by the Fund on or after the Departure Date; or
(b) any increase in the value of portfolio investments occurring after the Departure Date to the extent such increase is attributable to the reallocated carry percentages of the remaining and next-generation principals as set forth in Section 3.3 of this Side Letter and the Amended and Restated Carried Interest Allocation Agreement.
Ms. Trask's Retained Carry is limited to her 60% share of the Vested Carry as determined in Section 2, and will participate pro rata in any distributions attributable to investments made prior to the Departure Date, based on the Retained Carry as a percentage of the total accrued carried interest of the Fund as of the valuation date set forth in Section 2.1. Ms. Trask shall have no voting rights, consent rights, management rights, or governance rights with respect to the Fund, the General Partner, GP Intermediate, or HoldCo following the Departure Date.
SECTION 7: GP COMMITMENT
Certain provisions governing Ms. Trask's GP commitment are set forth in the Separation Agreement and are incorporated herein by reference. For the avoidance of doubt and to ensure clarity with respect to the economic terms, the Parties acknowledge and agree as follows:
Ms. Trask's total GP commitment to the Fund was $5,040,000, representing 12% of the aggregate GP commitment of $42,000,000. As of the date hereof, Ms. Trask has funded $3,528,000 of her GP commitment, representing 70% of her total commitment. The remaining unfunded commitment is $1,512,000.
The unfunded commitment of $1,512,000 shall be assumed by the remaining HoldCo members pro rata in accordance with their respective post-Restructuring carry allocation percentages (as set forth in Section 3.3), as further provided in the Separation Agreement and the Second Amended and Restated LLC Agreement of the General Partner. Ms. Trask shall have no further obligation to fund any portion of the GP commitment following the Departure Date, and the General Partner shall not make any capital call to Ms. Trask after such date.
Ms. Trask's funded GP commitment of $3,528,000 shall be returned to her in accordance with the LPA's provisions governing return of GP capital contributions, pari passu with returns of LP capital contributions. The General Partner shall not take any action to subordinate or defer the return of Ms. Trask's funded GP commitment relative to the return of LP capital, except as otherwise required by the express terms of the LPA.
SECTION 8: REPORTING OBLIGATIONS
8.1 Quarterly Reports
The General Partner shall provide Ms. Trask with quarterly reports within sixty (60) days of each fiscal quarter-end (i.e., within sixty days of March 31, June 30, September 30, and December 31 of each year during the term of this Side Letter), containing the following information:
(a) the current fair value of Ms. Trask's Retained Carry, based on the most recent quarterly valuation;
(b) the aggregate Fund-level accrued carried interest;
(c) any distributions of carried interest made during the applicable quarter, including any amounts distributed or distributable to Ms. Trask; and
(d) the balance of the Carry Escrow Account, including any accrued interest thereon.
Such quarterly reports shall be provided in a format substantially consistent with the reporting provided to the limited partners of the Fund and shall be delivered to Ms. Trask by email to an email address designated by her in writing.
8.2 Annual Tax Information
The General Partner (or HoldCo, as applicable) shall provide Ms. Trask with all tax information necessary for the preparation of her personal tax returns, including Schedule K-1s for each of the following entities, to the extent applicable:
(a) Ardent Capital Partners III LP (EIN: 84-3291057);
(b) Ardent Capital GP III LLC (EIN: 84-3291063);
(c) Ardent GP Intermediate LLC (EIN: 93-1847231); and
(d) Ardent Capital Holdings LLC (EIN: 93-1847225).
Such tax information shall be provided within the time periods required by applicable law or, if earlier, within ninety (90) days of the end of each fiscal year of the applicable entity. The General Partner shall use commercially reasonable efforts to deliver estimated K-1 information to Ms. Trask by March 15 of each year to facilitate timely tax filings.
8.3 Valuation Information
Upon reasonable request by Ms. Trask (not more than once per fiscal quarter), the General Partner shall provide Ms. Trask with summary portfolio valuation information with respect to the Fund's portfolio companies, consistent with the valuations prepared by Broadleaf Consulting Group (the Fund's independent valuation advisor). Such valuation information shall be provided in summary form and shall not include proprietary deal-level information or confidential business information regarding portfolio companies that is not otherwise available to limited partners of the Fund.
8.4 Notice of Material Events
The General Partner shall promptly notify Ms. Trask in writing of any event that would materially affect the value of the Retained Carry, including but not limited to:
(a) a realization event with respect to any portfolio company (including any sale, IPO, recapitalization, or other disposition generating realized proceeds);
(b) a material write-down of portfolio company value (defined for these purposes as a write-down of 25% or more of the carrying value of any single portfolio company or 10% or more of the aggregate portfolio value);
(c) a triggering of any clawback obligation under the LPA; or
(d) any amendment to the LPA that would affect Ms. Trask's economic rights, including her right to receive the Retained Carry or the return of her funded GP commitment.
Such notice shall be provided within ten (10) business days of the occurrence of the applicable material event and shall include a reasonably detailed description of the event and its anticipated effect on the Retained Carry.
SECTION 9: REPRESENTATIONS AND WARRANTIES
9.1 By the General Partner
The General Partner hereby represents and warrants to Ms. Trask as follows:
(a) Organization and Existence. The General Partner is duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite power and authority to carry on its business as presently conducted.
(b) Authority. The General Partner has full power and authority to enter into this Side Letter and to perform its obligations hereunder. The execution, delivery, and performance of this Side Letter by the General Partner have been duly authorized by all necessary action on the part of the General Partner and its members, including through the Member Consent Resolutions dated February 28, 2024.
(c) No Conflict. The execution and delivery of this Side Letter, and the performance by the General Partner of its obligations hereunder, do not and will not (i) conflict with or result in a breach of the LPA, (ii) conflict with or result in a breach of the Second Amended and Restated LLC Agreement of the General Partner, (iii) conflict with or result in a breach of any other governing document of the General Partner, GP Intermediate, HoldCo, or the Fund, or (iv) violate any applicable law, regulation, or order.
(d) LPAC Consent. LPAC consent to the Restructuring, as required by Section 9.4 of the LPA, was duly obtained on February 14, 2024, and such consent has not been revoked or withdrawn.
(e) Accrued Carry. The Accrued Carry as of September 30, 2023, as set forth in Section 2.1, has been calculated in accordance with the valuation methodology set forth in the LPA and is based on the quarterly valuation report prepared by Broadleaf Consulting Group.
9.2 By Ms. Trask
Ms. Trask hereby represents and warrants to the General Partner as follows:
(a) Capacity. Ms. Trask has full legal capacity to enter into this Side Letter and to perform her obligations hereunder.
(b) Legal Counsel. Ms. Trask has reviewed the terms hereof and has had the opportunity to consult with her own legal counsel, Whitford & Chase LLP (Richard Beaulieu, partner, and Hannah Polk, associate), regarding the terms and implications of this Side Letter. Ms. Trask is entering into this Side Letter voluntarily and with full understanding of its terms.
(c) Acknowledgment of Forfeiture. Ms. Trask acknowledges and agrees to the forfeiture of the Forfeited Vested Carry (in the amount of $4,204,800) and 100% of all unvested carry as of the Departure Date, as set forth in Section 3 of this Side Letter. Ms. Trask confirms that such forfeiture is voluntary and is not the result of duress, coercion, or undue influence.
(d) Incorporation by Reference. Ms. Trask's representations and warranties in the Separation Agreement are incorporated herein by reference and shall be deemed to have been made as of the date hereof for purposes of this Side Letter.
(e) No Additional Claims. Ms. Trask represents that she has no claims, demands, or causes of action against the General Partner, the Fund, the Management Company, GP Intermediate, HoldCo, or any of their respective members, managers, officers, employees, or agents, other than her rights under this Side Letter and the Separation Agreement.
SECTION 10: RELATIONSHIP TO OTHER AGREEMENTS
This Side Letter supplements and is to be read in conjunction with the following agreements (collectively, the "Related Agreements"):
(a) the Separation Agreement;
(b) the LPA (as amended by Amendment No. 1, dated as of the date hereof);
(c) the Second Amended and Restated LLC Agreement of the General Partner; and
(d) the Amended and Restated Carried Interest Allocation Agreement.
In the event of any conflict between this Side Letter and the Separation Agreement, the terms of the Separation Agreement shall control; provided, however, that with respect to the specific carry retention, forfeiture, escrow, and clawback mechanics set forth in Sections 2 through 6 of this Side Letter, the terms of this Side Letter shall govern and control to the extent of any such conflict. In the event of any conflict between this Side Letter and the LPA, the terms of the LPA shall control, except to the extent that the LPA expressly permits side letters or other agreements to modify its terms with respect to a particular GP member or former GP member, in which case this Side Letter shall control.
This Side Letter does not modify or supersede Ms. Trask's restrictive covenant obligations under the Separation Agreement, including her non-competition covenant (twelve (12) months from the Departure Date), her non-solicitation of employees covenant (eighteen (18) months from the Departure Date), and her non-solicitation of limited partners covenant (eighteen (18) months from the Departure Date), each of which is governed exclusively by the Separation Agreement. Nothing in this Side Letter shall be construed to expand, limit, or otherwise modify the scope or duration of such restrictive covenants.
SECTION 11: CONFIDENTIALITY
The terms and existence of this Side Letter are confidential and shall not be disclosed by either Party except:
(a) as required by applicable law, regulation, or legal process (including any subpoena or similar compulsory process);
(b) to the Parties' respective legal, tax, and accounting advisors (including Heathrow Whitman & Co. in connection with tax reporting and compliance), who are bound by professional obligations of confidentiality;
(c) to the LPAC members or limited partners of the Fund as required under the LPA, applicable side letters, or fiduciary duties; or
(d) with the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned, or delayed.
Any disclosure made pursuant to clauses (a) through (c) above shall be limited to the minimum extent necessary to comply with the applicable requirement, and the disclosing Party shall, to the extent practicable and legally permitted, provide the other Party with prior written notice of such disclosure.
SECTION 12: GOVERNING LAW; DISPUTE RESOLUTION
This Side Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles that would result in the application of the laws of any other jurisdiction.
Any dispute, controversy, or claim arising out of or relating to this Side Letter, or the breach, termination, or validity hereof, shall be resolved in accordance with the dispute resolution provisions set forth in Section 14 of the Separation Agreement, which provisions are incorporated herein by reference. The Parties consent to the personal jurisdiction of the courts of the State of Delaware and the federal courts located in the District of Delaware for any proceedings arising out of or relating to this Side Letter, to the extent such proceedings are not subject to the arbitration provisions of the Separation Agreement.
SECTION 13: NOTICES
All notices, requests, demands, consents, and other communications under this Side Letter shall be in writing and shall be deemed duly given (i) when delivered personally, (ii) one (1) business day after being sent by nationally recognized overnight courier service, or (iii) three (3) business days after being sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the General Partner:
Ardent Capital GP III LLC 590 Madison Avenue, 28th Floor New York, NY 10022
Attention: Marcus Aldridge, Co-Founder & Managing Partner
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One Vanderbilt Avenue, 44th Floor New York, NY 10017
Attention: Nicholas Stern
If to Ms. Trask:
At her address on file with the General Partner
with a copy (which shall not constitute notice) to:
Whitford & Chase LLP 200 Park Avenue, Suite 4200 New York, NY 10166
Attention: Richard Beaulieu
Either Party may change its address for notices by giving written notice to the other Party in accordance with this Section 13.
SECTION 14: AMENDMENT; WAIVER
This Side Letter may be amended, modified, or supplemented only by a written instrument duly executed by both Parties. No amendment, modification, or supplement to this Side Letter shall be effective unless in writing and signed by both Parties. No course of dealing between the Parties shall operate as an amendment or modification of this Side Letter.
No waiver of any provision of this Side Letter, or of any right or remedy hereunder, shall be effective unless in writing and signed by the Party making such waiver. No waiver of any breach or default shall be deemed a waiver of any subsequent breach or default of the same or any other provision of this Side Letter. No delay or omission by either Party in exercising any right or remedy under this Side Letter shall operate as a waiver thereof or of any other right or remedy.
SECTION 15: SEVERABILITY
If any provision of this Side Letter is held to be invalid, illegal, or unenforceable by any court of competent jurisdiction or arbitral tribunal, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. In the event that any provision is held to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the economic, business, and other purposes of the invalid, illegal, or unenforceable provision.
SECTION 16: COUNTERPARTS
This Side Letter may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Side Letter by electronic mail (including PDF) or other electronic transmission shall be deemed to be delivery of an original executed counterpart and shall be equally effective as delivery of a manually executed counterpart. Electronic signatures, including signatures transmitted via DocuSign or similar electronic signature platforms, shall be deemed valid and binding for all purposes.
SECTION 17: ENTIRE AGREEMENT
This Side Letter, together with the Separation Agreement, the LPA (as amended), the Second Amended and Restated LLC Agreement of the General Partner, and the Amended and Restated Carried Interest Allocation Agreement, constitutes the entire agreement between the Parties with respect to Ms. Trask's carried interest retention, forfeiture, escrow, clawback, distribution mechanics, and related matters, and supersedes all prior and contemporaneous negotiations, representations, understandings, agreements, and communications, whether written or oral, between the Parties with respect to the subject matter hereof.
[Signature Page Follows]
SIGNATURE PAGE TO CARRY RETENTION AND CLAWBACK SIDE LETTER
IN WITNESS WHEREOF, the Parties have executed this Side Letter as of the date first written above.
ARDENT CAPITAL GP III LLC
By: ________
Name: Marcus Aldridge
Title: Managing Member