ARES MANAGEMENT LLC MEMORANDUM

¹

For reference, an “Ares Management Entity” means any of Ares Management LLC (“Ares”) or its affiliates, including its affiliated employment or employee ownership entities, affiliated investment management entities, general partner entities, carry vehicles or investment vehicles of the foregoing, but excluding portfolio companies of such affiliated investment vehicles.  The term “Retired Partner” or “Retired Member” shall have the meaning given such term (or similar term) in the constituent agreement with respect to the applicable Ares Management Entity and generally means such time as one is no longer actively providing services or involved in the affairs of an Ares Management Entity.

1.

In connection with the investment management services provided by the General Partner and its affiliates to the Fund, the General Partner receives (i) annual base management and/or advisory fees, including any fees structured as a priority profit share (the “Base Fees”) and (ii) a Performance Fee based on the investment performance of the Fund.  The Participation Interest is not subject to vesting, and will be determined solely in relation to the Performance Fee as and when actually paid to and received by the General Partner and exclusive of and without reference to the Base Fees (which are not a part of this award) and/or any Performance Fee paid to and received by the General Partner from the Fund attributable to any Affiliate Investment.

2.

The Participation Interest as referenced herein will be represented by a number of “points” out of an aggregate of [●] “points” (individually and collectively, “Points”) initially representing [●]% of the Performance Fee actually paid to and received from time to time by the General Partner.  Ares may, in its discretion, increase or decrease the aggregate number of Points at any time (which could dilute or accrete your Participation Interest).  Distributions paid to and received by the General Partner with respect to the Performance Fee will be paid by the General Partner pro rata to holders of Points (subject to Paragraphs 4 and 7 below) based on the number of Points then held by each holder at the time of distribution.

3.

The Participation Interest will not entitle you to any corporate governance rights, voting rights, inspection rights or other rights in the General Partner, the Fund, Ares or any other Ares Management Entity.

4.

The Participation Interest is dependent on the Performance Fee being paid to and received by the General Partner with respect to which there is no assurance, notwithstanding the performance of the Fund.  Moreover, notwithstanding that the General Partner may receive a Performance Fee related to the Fund’s aggregate investment capital/portfolio, it is understood that the determination of the Participation Interest will be made exclusive of any Performance Fee (or portion thereof) attributable to any Affiliate Investment.  Ares may, in its discretion, elect to defer any Performance Fee that is allocated to the General Partner.  Further, the General Partner and certain other Ares Management Entities are subject to certain contractual limitations that may restrict any payments to you with respect to the Participation Interest.

5.

The award of the Participation Interest to you, as represented by Points, will be determined on an annual or more frequent basis as referenced in your award notice.  The award as set forth on Schedule I hereto, shall be effective only for the Performance Fee attributable to the Fund during the Award Period to the extent such Performance Fee is actually paid to and received by the General Partner.

6.

To the extent, if any, that it is determined that the General Partner is required to make a clawback payment with respect to the Fund pursuant to the terms of the Amended and Restated Limited Partnership Agreement (the “Partnership Agreement”), you, as a holder of a Participation Interest, shall be required to return amounts of Performance Fee previously received in respect of your Participation Interest to the General Partner for ultimate distribution to the partners of the Fund in an amount equal to your Share of such Clawback Payment.  For purposes of this Memorandum, “Share” shall mean, with respect to any Clawback Payment, your pro rata portion of such payment calculated based on the

7.

The Participation Interest is not subject to any vesting, is not transferable and constitutes an unsecured obligation of Ares.  You understand that your Participation Interest may change from one Award Period to another Award Period or at any time as determined by Ares.  Ares’ obligation to make payments related to your Participation Interest is contingent upon (i) your continued employment, good standing and active association with and/or, to the extent applicable, you not otherwise becoming a Retired Partner or Retired Member (whether for or without cause, including by disability or death) of an Ares Management Entity as of the payment date and (ii) you not having notified Ares of your intent to resign as an employee of and/or, to the extent applicable, become a Retired Partner or Retired Member of an Ares Management Entity as of the payment date.  Payment with respect to your Participation Interest will be completed on or before March 15th of the calendar year following the calendar year in which the Payment Determination Date occurs.

8.

You recognize and understand that the award of Points as referenced herein is not a guarantee of employment or any other assurance that your employment or the terms of your employment will continue; the award of Points is an independent determination and your Participation Interest will be subject to your continued active association with an Ares Management Entity as discussed herein.  Nothing in this Memorandum shall change the nature of your employment with the relevant Ares Management Entity.

9.

You recognize and understand that any payments with respect to Points held by you will be treated as ordinary compensation income for applicable tax purposes and, accordingly, will be subject to all applicable withholding taxes on compensation.

10.

By accepting this Memorandum and the Participation Interest granted herein you agree to the terms and conditions set forth in this Memorandum.

11.

This notice of award shall be governed by and construed in accordance with [JURISDICTION] law irrespective of conflicts of laws principles that would require the application of the laws of another jurisdiction.

·

Recipient:           [EMPLOYEE NAME]

·

Total Points awarded for the Award Period January 1, 20[●] through December 31, 20[●]: