THIRD AMENDED AND RESTATED
INVESTMENT ADVISORY MANAGEMENT AGREEMENT
BETWEEN
APOLLO INVESTMENT CORPORATION
AND
APOLLO INVESTMENT MANAGEMENT, L.P.
Third Amended and Restated Agreement made this 8th day of August 2018, by and
between APOLLO INVESTMENT CORPORATION, a Maryland corporation (the
“Corporation”), and APOLLO INVESTMENT MANAGEMENT L.P., a Delaware limited
partnership (the “Adviser”).
WHEREAS, the Corporation is a closed-end management investment company that has
elected to be treated as a business development company under the Investment
Company Act of 1940 (the “Investment Company Act”);
WHEREAS, the Adviser is an investment adviser that has registered under the
Investment Advisers Act of 1940 (the “Advisers Act”); and
WHEREAS, the Corporation desires to retain the Adviser to furnish investment
advisory services to the Corporation on the terms and conditions hereinafter set
forth, and the Adviser wishes to be retained to provide such services.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the parties hereby agree as follows:
1.Duties of the Adviser.
(a)    The Corporation hereby employs the Adviser to act as the investment
adviser to the Corporation and to manage the investment and reinvestment of the
assets of the Corporation, subject to the supervision of the Board of Directors
of the Corporation, for the period and upon the terms herein set forth, (i) in
accordance with the investment objective, policies and restrictions that are set
forth in the Corporation’s Registration Statement on Form N-2, dated February 6,
2004, as the same shall be amended from time to time (as amended, the
“Registration Statement”), (ii) in accordance with the Investment Company Act
and (iii) during the term of this Agreement in accordance with all other
applicable federal and state laws, rules and regulations, and the Corporation’s
charter and by-laws. Without limiting the generality of the foregoing, the
Adviser shall, during the term and subject to the provisions of this Agreement,
(i) determine the composition of the portfolio of the Corporation, the nature
and timing of the changes therein and the manner of implementing such changes;
(ii) identify, evaluate and negotiate the structure of the investments made by
the Corporation; (iii) close and monitor the Corporation’s investments; (iv)
determine the securities and other assets that the Corporation will purchase,
retain, or sell; (v) perform due diligence on prospective portfolio companies;
and (vi) provide the Corporation with such other investment advisory, research
and related services as the Corporation may, from time to time, reasonably
require for the investment of its funds. The Adviser shall have the power and
authority on behalf of the Corporation to effectuate its investment decisions
for the Corporation, including the execution and delivery of all documents
relating to the Corporation’s investments and the placing of orders for other
purchase or sale transactions on behalf of the Corporation. In the event that
the Corporation determines to acquire debt financing, the Adviser will arrange
for such financing on the Corporation’s behalf, subject to the oversight and
approval of the Corporation’s Board of Directors. If it is necessary for the
Adviser to make investments on behalf of the Corporation through a special
purpose vehicle, the Adviser shall have authority to create or arrange for the
creation of such special purpose vehicle and to make such investments through
such special purpose vehicle in accordance with the Investment Company Act.
(b)    The Adviser hereby accepts such employment and agrees during the term
hereof to render the services described herein for the compensation provided
herein.
(c)    Subject to the requirements of the Investment Company Act, the Adviser is
hereby authorized to enter into one or more sub-advisory agreements with other
investment advisers (each, a “Sub-Adviser”) pursuant to which the Adviser may
obtain the services of the Sub-Adviser(s) to assist the Adviser in fulfilling
its responsibilities hereunder. Specifically, the Adviser may retain a
Sub-Adviser to recommend specific securities or other investments based upon the
Corporation’s investment objective and policies, and work, along with the
Adviser, in structuring, negotiating, arranging or effecting the acquisition or
disposition of such investments and monitoring investments on behalf of the
Corporation, subject to the oversight of the Adviser and the Corporation. The
Adviser, and not the Corporation, shall be responsible for any compensation
payable to any Sub-Adviser. Any sub-advisory agreement entered into by the
Adviser shall be in accordance with the requirements of the Investment Company
Act and other applicable federal and state law.
(d)    The Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, except as expressly provided or authorized herein,
shall have no authority to act for or represent the Corporation in any way or
otherwise be deemed an agent of the Corporation.
(e)    The Adviser shall keep and preserve for the period required by the
Investment Company Act any books and records relevant to the provision of its
investment advisory services to the Corporation and shall specifically maintain
all books and records with respect to the Corporation’s portfolio transactions
and shall render to the Corporation’s Board of Directors such periodic and
special reports as the Board may reasonably request. The Adviser agrees that all
records that it maintains for the Corporation are the property of the
Corporation and will surrender promptly to the Corporation any such records upon
the Corporation’s request, provided that the Adviser may retain a copy of such
records.
2.    Corporation’s Responsibilities and Expenses Payable by the Corporation.
All investment professionals of the Adviser and their respective staffs, when
and to the extent engaged in providing investment advisory and management
services hereunder, and the compensation and routine overhead expenses of such
personnel allocable to such services, will be provided and paid for by the
Adviser and not by the Corporation. The Corporation will bear all other costs
and expenses of its operations and transactions, including (without limitation)
those relating to: organization and offering; calculating the Corporation’s net
asset value (including the cost and expenses of any independent valuation firm);
expenses incurred by the Adviser payable to third parties, including agents,
consultants or other advisors, in monitoring financial and legal affairs for the
Corporation and in monitoring the Corporation’s investments and performing due
diligence on its prospective portfolio companies; interest payable on debt, if
any, incurred to finance the Corporation’s investments; offerings of the
Corporation’s common stock and other securities; investment advisory and
management fees; administration fees, if any, payable under the Administration
Agreement between the Corporation and Apollo Investment Administration, LLC (the
“Administrator”), the Corporation’s administrator; fees payable to third
parties, including agents, consultants or other advisors, relating to, or
associated with, evaluating and making investments; transfer agent and custodial
fees; federal and state registration fees; all costs of registration and listing
the Corporation’s shares on any securities exchange; federal, state and local
taxes; independent Directors’ fees and expenses; costs of preparing and filing
reports or other documents required by the Securities and Exchange Commission;
costs of any reports, proxy statements or other notices to stockholders,
including printing costs; the Corporation’s allocable portion of the fidelity
bond, directors and officers/errors and omissions liability insurance, and any
other insurance premiums; direct costs and expenses of administration, including
printing, mailing, long distance telephone, copying, secretarial and other
staff, independent auditors and outside legal costs; and all other expenses
incurred by the Corporation or the Administrator in connection with
administering the Corporation’s business, including payments under the
Administration Agreement between the Corporation and the Administrator based
upon the Corporation’s allocable portion of the Administrator’s overhead in
performing its obligations under the Administration Agreement, including rent
and the allocable portion of the cost of the Corporation’s chief compliance
officer and chief financial officer and their respective staffs.
3.    Compensation of the Adviser. The Corporation agrees to pay, and the
Adviser agrees to accept, as compensation for the services provided by the
Adviser hereunder, a base management fee (“Base Management Fee”) and an
incentive fee (“Incentive Fee”) as hereinafter set forth. The Corporation shall
make any payments due hereunder to the Adviser or to the Adviser’s designee as
the Adviser may otherwise direct. To the extent permitted by applicable law, the
Adviser may elect, or the Corporation may adopt a deferred compensation plan
pursuant to which the Adviser may elect, to defer all or a portion of its fees
hereunder for a specified period of time.
(a)    Effective April 1, 2018, the Base Management Fee shall be calculated
initially at an annual rate of 1.50% (0.375% per quarter) of the lesser of (i)
the average of the value of the Corporation’s gross assets (excluding cash or
cash equivalents but including other assets purchased with borrowed amounts) at
the end of each of the two most recently completed calendar quarters and (ii)
the average monthly value (measured as of the last day of each month) of the
Corporation’s gross assets (excluding cash or cash equivalents but including
other assets purchased with borrowed amounts) during the most recently completed
calendar quarter; provided, however, in each case, the Base Management Fee shall
be calculated at an annual rate of 1.00% (0.250% per quarter) of the average of
the value of the Corporation’s gross assets (excluding cash or cash equivalents
but including other assets purchased with borrowed amounts) that exceeds the
product of (A) 200% and (B) the value of the Corporation’s net asset value at
the end of the prior calendar quarter. The Base Management Fee will be payable
quarterly in arrears. The Base Management Fee for any partial quarter will be
appropriately pro-rated. The value of the Corporation’s gross assets shall be
calculated in accordance with the Corporation's valuation policies.
(b)    From the date of this Agreement until December 31, 2018, the Incentive
Fee shall consist of two parts, as follows:
(i)    One part will be calculated and payable quarterly in arrears based on the
pre-Incentive Fee net investment income for the immediately preceding calendar
quarter. For this purpose, pre-Incentive Fee net investment income means
interest income, dividend income and any other income (including any other fees,
such as commitment, origination, structuring, diligence and consulting fees but
excluding fees for providing significant managerial assistance or other fees
that the Corporation receives from portfolio companies) accrued by the
Corporation during the calendar quarter, minus the Corporation’s operating
expenses for the quarter (including the Base Management Fee, any expenses
payable under the Administration Agreement, and any interest expense and
dividends paid on any issued and outstanding preferred stock, but excluding the
Incentive Fee). Pre-Incentive Fee net investment income does not include any
realized capital gains, realized capital losses or unrealized capital
depreciation. Pre-Incentive Fee net investment income, expressed as a rate of
return on the value of the Corporation’s net assets at the end of the
immediately preceding calendar quarter, will be compared to a “performance
threshold” of 1.75% per quarter (7% annualized). The Corporation will pay the
Adviser an Incentive Fee with respect to the Corporation’s pre-Incentive Fee net
investment income in each calendar quarter as follows; (1) no Incentive Fee in
any calendar quarter in which the Corporation’s pre-Incentive Fee net investment
income does not exceed the performance threshold; (2) 100% of the Corporation’s
pre-Incentive Fee net investment income with respect to that portion of such
pre-Incentive Fee net investment income, if any, that exceeds the performance
threshold but does not exceed 2.1875% in any calendar quarter (8.75%
annualized); and (3) 20% of the amount of the Corporation’s pre-Incentive Fee
net investment income, if any, that exceeds 2.1875% in any calendar quarter
(8.75% annualized). These calculations will be appropriately pro-rated for any
period of less than three months.
(ii)    The second part of the Incentive Fee (the “Capital Gains Fee”) will be
determined and payable in arrears as of the end of each calendar year (or upon
termination of this Agreement as set forth below), and will equal 20.0% of the
sum of the Corporation’s cumulative realized capital gains, cumulative realized
capital losses and unrealized capital depreciation (unrealized capital
depreciation on a gross investment-by-investment basis), less all Capital Gains
Fee payments previously made to the Adviser. In the event that this Agreement
shall terminate as of a date that is not a calendar year end, the termination
date shall be treated as though it were a calendar year end for purposes of
calculating and paying a Capital Gains Fee. The Supplement attached hereto as
Exhibit I illustrates the calculation of the Capital Gains Fee.
(c)    Following December 31, 2018, the Incentive Fee shall consist of two
components that are independent of each other, with the result that one
component may be payable even if the other is not. A portion of the Incentive
Fee is based on the Corporation’s income (such fee referred to herein as the
“Incentive Fee on Income”) and a portion is based on the Corporation’s capital
gains (such fee referred to herein as the “Incentive Fee on Capital Gains”),
each as described below.
(i)    The Incentive Fee on Income will be determined and paid quarterly in
arrears by calculating the amount by which (x) the aggregate amount of the
“Pre-Incentive Fee Net Investment Income” (as defined below) in respect of the
current calendar quarter and each of the eleven preceding calendar quarters
beginning with the calendar quarter that commences on or after April 1, 2018, as
the case may be (or the appropriate portion thereof in the case of any of the
Corporation’s calendar quarters that commence January 1, 2019 and are one of the
first eleven calendar quarters commencing on or after April 1, 2018) (in either
case, the “Trailing Twelve Quarters”) exceeds (y) the Preferred Return Amount
(as defined below) in respect of the Trailing Twelve Quarters. The Preferred
Return Amount will be determined on a quarterly basis, and will be calculated by
summing the amounts obtained by multiplying 1.75% by the Corporation’s net asset
value at the beginning of each applicable calendar quarter comprising the
relevant Trailing Twelve Quarters. The Preferred Return Amount will be
calculated after making appropriate adjustments to the Corporation’s net asset
value at the beginning of each applicable calendar quarter for Corporation
capital issuances and distributions during the applicable calendar quarter.
Subject to Section 3(c)(ii) below, the amount of the Incentive Fee on Income
that will be paid to the Adviser for a particular quarter will equal the excess
of the Incentive Fee on Income so calculated less the aggregate Incentive Fees
on Income that were paid to the Adviser (excluding waivers, if any) in the
preceding eleven calendar quarters (or portion thereof) comprising the relevant
Trailing Twelve Quarters.
For this purpose, “Pre-Incentive Fee Net Investment Income” means interest
income, dividend income and any other income (including, without limitation, any
accrued income that the Corporation has not yet received in cash and any other
fees such as commitment, origination, structuring, diligence and consulting fees
or other fees that the Corporation receives from portfolio companies) (the
“Ordinary Income”) accrued during the calendar quarter, minus the Corporation’s
operating expenses accrued during the calendar quarter (including, without
limitation, the Base Management Fee, administration expenses and any interest
expense and dividends paid on any issued and outstanding preferred stock, but
excluding the Incentive Fee on Income and the Incentive Fee on Capital Gains).
For the avoidance of doubt, Pre-Incentive Fee Net Investment Income does not
include any realized capital gains, realized capital losses or unrealized
capital appreciation or depreciation.
“Net Capital Loss” in respect of a particular period means the difference, if
positive, between (i) aggregate capital losses, whether realized or unrealized,
in such period and (ii) aggregate capital gains, whether realized or unrealized,
in such period.
The calculation of the Incentive Fee on Income for each quarter is as follows:
(1)    No Incentive Fee on Income shall be payable to the Adviser in any
calendar quarter in which the Corporation’s Pre-Incentive Fee Net Investment
Income for the Trailing Twelve Quarters does not exceed the Preferred Return
Amount;
(2)    100% of the Corporation’s Pre-Incentive Fee Net Investment Income for the
Trailing Twelve Quarters, if any, that exceeds the Preferred Return Amount but
is less than or equal to an amount (the “Catch-Up Amount”) determined by
multiplying 2.1875% by the Corporation’s net asset value at the beginning of
each applicable calendar quarter comprising the relevant Trailing Twelve
Quarters. The Catch-Up Amount is intended to provide the Adviser with an
incentive fee of 20% on all of the Corporation’s Pre-Incentive Fee Net
Investment Income when the Corporation’s Pre-Incentive Fee Net Investment Income
reaches 2.1875% per quarter (8.75% annualized) during the Trailing Twelve
Quarters; and
(3)    For any quarter in which the Corporation’s Pre-Incentive Fee Net
Investment Income for the Trailing Twelve Quarters exceeds the Catch-Up Amount,
the Incentive Fee on Income shall equal 20% of the amount of the Corporation’s
Pre-Incentive Fee Net Investment Income for such Trailing Twelve Quarters, as
the Preferred Return Amount and Catch-Up Amount will have been achieved.
(ii)    The Incentive Fee on Income as calculated is subject to a cap (the
“Incentive Fee Cap”). The Incentive Fee Cap in any quarter is an amount equal to
(a) 20% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during
the relevant Trailing Twelve Quarters less (b) the aggregate Incentive Fees on
Income that were paid to the Adviser (excluding waivers, if any) in the
preceding eleven calendar quarters (or portion thereof) comprising the relevant
Trailing Twelve Quarters. For this purpose, “Cumulative Pre-Incentive Fee Net
Return” during the relevant Trailing Twelve Quarters means (x) Pre-Incentive Fee
Net Investment Income in respect of the Trailing Twelve Quarters less (y) any
Net Capital Loss, since April 1, 2018, in respect of the Trailing Twelve
Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value,
the Corporation shall pay no Incentive Fee on Income to the Adviser in that
quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is
less than the Incentive Fee on Income calculated in accordance with Section
3(c)(i) above, the Corporation shall pay the Adviser the Incentive Fee Cap for
such quarter. If, in any quarter, the Incentive Fee Cap is equal to or greater
than the Incentive Fee on Income calculated in accordance with Section 3(c)(i)
above, the Corporation shall pay the Adviser the Incentive Fee on Income for
such quarter.
(iii)    The Incentive Fee on Capital Gains shall be determined and payable in
arrears as of the end of each calendar year (or upon termination of this
Agreement). This fee shall equal 20.0% of the sum of the Corporation’s realized
capital gains on a cumulative basis, calculated as of the end of each calendar
year (or upon termination of this Agreement), computed net of all realized
capital losses and unrealized capital depreciation on a cumulative basis, less
the aggregate amount of any Incentive Fees on Capital Gains previously paid to
the Adviser. The aggregate unrealized capital depreciation of the Corporation
shall be calculated as the sum of the differences, if negative, between (a) the
valuation of each investment in the Corporation’s portfolio as of the applicable
calculation date and (b) the accreted or amortized cost basis of such
investment.
4.    Covenants of the Adviser. The Adviser covenants that it is registered as
an investment adviser under the Advisers Act. The Adviser agrees that its
activities will at all times be in compliance in all material respects with all
applicable federal and state laws governing its operations and investments.
5.    Excess Brokerage Commissions. The Adviser is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Corporation to
pay a member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of such exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith, taking
into account such factors as price (including the applicable brokerage
commission or dealer spread), size of order, difficulty of execution, and
operational facilities of the firm and the firm’s risk and skill in positioning
blocks of securities, that such amount of commission is reasonable in relation
to the value of the brokerage and/or research services provided by such member,
broker or dealer, viewed in terms of either that particular transaction or its
overall responsibilities with respect to the Corporation’s portfolio, and
constitutes the best net results for the Corporation.
6.    Limitations on the Employment of the Adviser. The services of the Adviser
to the Corporation are not exclusive, and the Adviser may engage in any other
business or render similar or different services to others including, without
limitation, the direct or indirect sponsorship or management of other investment
based accounts or commingled pools of capital, however structured, having
investment objectives similar to those of the Corporation, so long as its
services to the Corporation hereunder are not impaired thereby, and nothing in
this Agreement shall limit or restrict the right of any manager, partner,
officer or employee of the Adviser to engage in any other business or to devote
his or her time and attention in part to any other business, whether of a
similar or dissimilar nature, or to receive any fees or compensation in
connection therewith (including fees for serving as a director of, or providing
consulting services to, one or more of the Corporation’s portfolio companies,
subject to applicable law). So long as this Agreement or any extension, renewal
or amendment remains in effect, the Adviser shall be the only investment adviser
for the Corporation, subject to the Adviser’s right to enter into sub-advisory
agreements. The Adviser assumes no responsibility under this Agreement other
than to render the services called for hereunder. It is understood that
directors, officers, employees and stockholders of the Corporation are or may
become interested in the Adviser and its affiliates, as directors, officers,
employees, partners, stockholders, members, managers or otherwise, and that the
Adviser and directors, officers, employees, partners, stockholders, members and
managers of the Adviser and its affiliates are or may become similarly
interested in the Corporation as stockholders or otherwise.
7.    Responsibility of Dual Directors, Officers and/or Employees. If any person
who is a manager, partner, officer or employee of the Adviser or the
Administrator is or becomes a director, officer and/or employee of the
Corporation and acts as such in any business of the Corporation, then such
manager, partner, officer and/or employee of the Adviser or the Administrator
shall be deemed to be acting in such capacity solely for the Corporation, and
not as a manager, partner, officer or employee of the Adviser or the
Administrator or under the control or direction of the Adviser or the
Administrator, even if paid by the Adviser or the Administrator.
8.    Limitation of Liability of the Adviser; Indemnification. The Adviser (and
its officers, managers, partners, agents, employees, controlling persons,
members and any other person or entity affiliated with the Adviser, including
without limitation its general partner and the Administrator) shall not be
liable to the Corporation for any action taken or omitted to be taken by the
Adviser in connection with the performance of any of its duties or obligations
under this Agreement or otherwise as an investment adviser of the Corporation,
except to the extent specified in Section 36(b) of the Investment Company Act
concerning loss resulting from a breach of fiduciary duty (as the same is
finally determined by judicial proceedings) with respect to the receipt of
compensation for services, and the Corporation shall indemnify, defend and
protect the Adviser (and its officers, managers, partners, agents, employees,
controlling persons, members and any other person or entity affiliated with the
Adviser, including without limitation its general partner and the Administrator,
each of whom shall be deemed a third party beneficiary hereof) (collectively,
the “Indemnified Parties”) and hold them harmless from and against all damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and
amounts reasonably paid in settlement) incurred by the Indemnified Parties in or
by reason of any pending, threatened or completed action, suit, investigation or
other proceeding (including an action or suit by or in the right of the
Corporation or its security holders) arising out of or otherwise based upon the
performance of any of the Adviser’s duties or obligations under this Agreement
or otherwise as an investment adviser of the Corporation. Notwithstanding the
preceding sentence of this Paragraph 8 to the contrary, nothing contained herein
shall protect or be deemed to protect the Indemnified Parties against or entitle
or be deemed to entitle the Indemnified Parties to indemnification in respect
of, any liability to the Corporation or its security holders to which the
Indemnified Parties would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser’s duties or by
reason of the reckless disregard of the Adviser’s duties and obligations under
this Agreement (as the same shall be determined in accordance with the
Investment Company Act and any interpretations or guidance by the Securities and
Exchange Commission or its staff thereunder).
9.    Effectiveness, Duration and Termination of Agreement. This Agreement
became effective as of March 25, 2004, was amended and restated on March 18,
2010 and was also amended and restated on May 17, 2018. This Agreement shall
remain in effect for two years from the date of effectiveness, and thereafter
shall continue automatically for successive annual periods, provided that such
continuance is specifically approved at least annually by (a) the vote of the
Corporation’s Board of Directors, or by the vote of a majority of the
outstanding voting securities of the Corporation and (b) the vote of a majority
of the Corporation’s Directors who are not parties to this Agreement or
“interested persons” (as such term is defined in Section 2(a)(19) of the
Investment Company Act) of any such party, in accordance with the requirements
of the Investment Company Act. This Agreement may be terminated at any time,
without the payment of any penalty, upon 60 days’ written notice, by the vote of
a majority of the outstanding voting securities of the Corporation, or by the
vote of the Corporation’s Directors or by the Adviser. This Agreement will
automatically terminate in the event of its “assignment” (as such term is
defined for purposes of Section 15(a)(4) of the Investment Company Act). The
provisions of Paragraph 8 of this Agreement shall remain in full force and
effect, and the Adviser shall remain entitled to the benefits thereof,
notwithstanding any termination of this Agreement. Further, notwithstanding the
termination or expiration of this Agreement as aforesaid, the Adviser shall be
entitled to any amounts owed under Section 3 through the date of termination or
expiration and Section 8 shall continue in force and effect and apply to the
Adviser and its representatives as and to the extent applicable.
10.    Notices. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its
principal office.
11.    Amendments. This Agreement may be amended by mutual consent, but the
consent of the Corporation must be obtained in conformity with the requirements
of the Investment Company Act.
12.    Entire Agreement; Governing Law. This Agreement contains the entire
agreement of the parties and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof. This Agreement shall be
construed in accordance with the laws of the State of New York and the
applicable provisions of the Investment Company Act. To the extent the
applicable laws of the State of New York, or any of the provisions herein,
conflict with the provisions of the Investment Company Act, the latter shall
control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date above written.
APOLLO INVESTMENT CORPORATION
By:    /s/ Joseph D. Glatt    
Name: Joseph D. Glatt
Title: Chief Legal Officer
APOLLO INVESTMENT MANAGEMENT, L.P.
By:
ACC Management, LLC, its general partner.

By:    /s/ Joseph D. Glatt    
Name: Joseph D. Glatt
Title: Vice President

EXHIBIT I
Supplement to the Third Amended and Restated Investment Advisory Management
Agreement Dated August 8, 2018
Between Apollo Investment Corporation and Apollo Investment Management, L.P.
This Supplement clarifies the Capital Gains Fee calculation set out in Section
3(b)(ii) of the Investment Advisory Management Agreement between AIC and AIM
(the “Advisory Agreement”). Nothing contained in this Supplement modifies any
term of the Advisory Agreement.
For purposes of determining any amount due under Section 3(b)(ii) of the
Advisory Agreement, the Capital Gains Fee shall incorporate unrealized
depreciation on a gross investment-by-investment basis at the end of such year.
Capital gains with respect to any investment will equal the difference between
the proceeds from the sale of such investment and the accreted or amortized cost
basis of such investment.
Examples of Determination of Capital Gains Fee:
Alternative 1
Assumptions
•
Year 1: $20 million investment made in Company A (“Investment A”), and $30
million investment made in Company B (“Investment B”)

•
Year 2: Investment A is sold for $50 million and fair market value (“FMV”) of
Investment B determined to be $32 million

•
Year 3: FMV of Investment B determined to be $25 million

•
Year 4: Investment B sold for $31 million

The capital gains portion of the incentive fee would be:
•
Year 1: None

•
Year 2: Capital gains incentive fee of $6 million ($30 million realized capital
gains on sale of Investment A multiplied by 20%)

•
Year 3: None

$5 million (20% multiplied by ($30 million cumulative capital gains less $5
million cumulative capital depreciation)) less $6 million (previous capital
gains fee paid in Year 2)
•
Year 4: Capital gains incentive fee of $200,000

•
$6.2 million ($31 million cumulative realized capital gains multiplied by 20%)
less $6 million (capital gains fee taken in Year 2)

Alternative 2
Assumptions
•
Year 1: $20 million investment made in Company A (“Investment A”), $30 million
investment made in Company B (“Investment B”) and $25 million investment made in
Company C (“Investment C”)

•
Year 2: Investment A sold for $50 million, FMV of Investment B determined to be
$25 million and FMV of Investment C determined to be $25 million

•
Year 3: FMV of Investment B determined to be $27 million and Investment C sold
for $30 million

•
Year 4: FMV of Investment B determined to be $35 million

•
Year 5: Investment B sold for $20 million

The capital gains incentive fee, if any, would be:
•
Year 1: None

•
Year 2: $5 million capital gains incentive fee

•
20% multiplied by $25 million ($30 million realized capital gains on Investment
A less unrealized capital depreciation on Investment B)

•
·    Year 3: $1.4 million capital gains incentive fee(1)

$6.4 million (20% multiplied by $32 million ($35 million cumulative realized
capital gains less $3 million unrealized capital depreciation)) less $5 million
capital gains fee received in Year 2.
•
Year 4: None

•
Year 5: None

$5 million (20% multiplied by $25 million (cumulative realized capital gains of
$35 million less realized capital losses of $10 million)) less $6.4 million
cumulative capital gains fee paid in Year 2 and Year 3

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(1)    As illustrated in Year 3 of Alternative 1 above, if the Corporation were
to be wound up on a date other than December 31st of any year, it may have paid
aggregate capital gain incentive fees that are more than the amount of such fees
that would be payable if it had been wound up on December 31st of such year.

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