Exhibit 10.1

 

Execution Version

 

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

 

OF

 

ARES HOLDINGS L.P.

 

Dated as of June 8, 2016

 

THE PARTNERSHIP UNITS OF ARES HOLDINGS L.P. HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY
OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH
UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN
COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND
CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND
(III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE GENERAL
PARTNER AND THE APPLICABLE LIMITED PARTNER. THE UNITS MAY NOT BE TRANSFERRED OF
RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS; THIS AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT; AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING
BY THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THEREFORE, PURCHASERS
AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

 

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Table of Contents

 

 

 

Page

 

 

 

ARTICLE I

DEFINITIONS

2

 

 

 

Section 1.1

Definitions

2

Section 1.2

Interpretation

10

 

 

 

ARTICLE II

FORMATION, TERM, PURPOSE AND POWERS

11

 

 

 

Section 2.1

Conversion; Name; Foreign Jurisdictions

11

Section 2.2

Business Purpose

12

Section 2.3

Term

12

Section 2.4

Registered Office; Registered Agent

12

Section 2.5

Principal Office

12

Section 2.6

Powers of the Partnership

12

Section 2.7

Partners; Admission of New Partners

12

Section 2.8

Withdrawal

13

 

 

 

ARTICLE III

MANAGEMENT

13

 

 

 

Section 3.1

General Partner

13

Section 3.2

Compensation

14

Section 3.3

Expenses

14

Section 3.4

Officers

15

Section 3.5

Authority of Partners

15

Section 3.6

Action by Written Consent or Ratification

16

 

 

 

ARTICLE IV

DISTRIBUTIONS

16

 

 

 

Section 4.1

Distributions

16

Section 4.2

Liquidation Distribution

17

Section 4.3

Limitations on Distribution

17

Section 4.4

Clawbacks

17

 

 

 

ARTICLE V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS

18

 

 

 

Section 5.1

Initial Capital Contributions

18

Section 5.2

No Additional Capital Contributions

18

Section 5.3

Capital Accounts

18

Section 5.4

Allocations of Profits and Losses

18

Section 5.5

Special Allocations

19

Section 5.6

Tax Allocations

20

Section 5.7

Tax Advances

20

Section 5.8

Tax Matters

21

Section 5.9

Other Allocation Provisions

21

 

 

 

ARTICLE VI

BOOKS AND RECORDS; REPORTS

22

 

 

 

Section 6.1

Books and Records

22

 

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Page

 

 

 

ARTICLE VII

PARTNERSHIP UNITS

22

 

 

 

Section 7.1

Units

22

Section 7.2

Register

23

Section 7.3

Registered Partners

23

 

 

 

ARTICLE VIII

VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

23

 

 

 

Section 8.1

Vesting of Unvested Units

23

Section 8.2

Forfeiture of Units

24

Section 8.3

Limited Partner Transfers

25

Section 8.4

Mandatory Exchanges

26

Section 8.5

Encumbrances

26

Section 8.6

Further Restrictions

26

Section 8.7

Rights of Assignees

27

Section 8.8

Admissions, Withdrawals and Removals

28

Section 8.9

Admission of Assignees as Substitute Limited Partners

28

Section 8.10

Withdrawal and Removal of Limited Partners

28

 

 

 

ARTICLE IX

DISSOLUTION, LIQUIDATION AND TERMINATION

29

 

 

 

Section 9.1

No Dissolution

29

Section 9.2

Events Causing Dissolution

29

Section 9.3

Distribution upon Dissolution

30

Section 9.4

Time for Liquidation

30

Section 9.5

Termination

30

Section 9.6

Claims of the Partners

30

Section 9.7

Survival of Certain Provisions

31

 

 

 

ARTICLE X

LIABILITY AND INDEMNIFICATION

31

 

 

 

Section 10.1

Duties; Liabilities; Exculpation

31

Section 10.2

Indemnification

33

 

 

 

ARTICLE XI

MISCELLANEOUS

35

 

 

 

Section 11.1

Dispute Resolution

35

Section 11.2

Severability

36

Section 11.3

Binding Effect

36

Section 11.4

Further Assurances

36

Section 11.5

Expenses

36

Section 11.6

Amendments and Waivers

36

Section 11.7

No Third Party Beneficiaries

38

Section 11.8

Power of Attorney

38

Section 11.9

Letter Agreements; Schedules

39

Section 11.10

Governing Law; Separability

39

Section 11.11

Notices

39

 

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Page

 

 

 

Section 11.12

Counterparts

39

Section 11.13

Cumulative Remedies

39

Section 11.14

Entire Agreement

40

Section 11.15

Partnership Status

40

Section 11.16

Limited Partner Representations

40

 

 

 

ARTICLE XII

TERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR
UNITS

41

 

 

 

Section 12.1

Designation

41

Section 12.2

Definitions

41

Section 12.3

Distributions

43

Section 12.4

Rank

45

Section 12.5

Redemption

45

Section 12.6

Distribution Rate

46

Section 12.7

Voting

46

Section 12.8

Liquidation Rights

46

Section 12.9

Amendments and Waivers

47

Section 12.10

No Conversion

47

Section 12.11

No Third Party Beneficiaries

48

 

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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
ARES HOLDINGS L.P.

 

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Ares
Holdings L.P., dated as of June 8, 2016, among Ares Holdco LLC, a Delaware
limited liability company, as general partner, and the Limited Partners (as
defined herein) of the Partnership.

 

WHEREAS, Ares Holdings LLC (“AH LLC”) was formed as a Delaware limited liability
company on May 24, 2007;

 

WHEREAS, on or prior to the Effective Date, all necessary action was taken to
authorize AH LLC’s conversion to Ares Holdings L.P., a Delaware limited
partnership (the “Partnership”), under the 2013 Amended and Restated Limited
Liability Company Agreement of AH LLC, dated as of July 31, 2013 (the “LLC
Agreement”), and the Delaware Limited Liability Company Act (6 Del. C. § 18-101,
et seq.) (the “LLC Act”), including the approval by AH LLC’s manager of the
conversion of AH LLC from a limited liability company to a limited partnership
pursuant to an action by written consent dated on or about the Effective Date;

 

WHEREAS, on the Effective Date, AH LLC was converted to a limited partnership
(the “Conversion”) pursuant to Section 17-217 of the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. § 17-101, et seq.) (the “Act”) and
Section 18-216 of the LLC Act by causing the filing in the office of the
Secretary of State of the State of Delaware of a Certificate of Conversion to
Limited Partnership of AH LLC and a Certificate of Limited Partnership of the
Partnership (the “Certificate”);

 

WHEREAS, in accordance with Section 17-217(g) of the Act, the Partnership shall
constitute a continuation of the existence of AH LLC in the form of a Delaware
limited partnership and, for all purposes of the laws of the State of Delaware,
shall be deemed to be the same entity as AH LLC;

 

WHEREAS, Ares Holdings Inc., a Delaware corporation (the “Prior General
Partner”), previously entered into the Limited Partnership Agreement, dated as
of May 1, 2014 (the “Original Agreement”), and the Original Agreement was
amended by the Prior General Partner on January 1, 2015 by Amendment No. 1 to
the Limited Partnership Agreement (as amended, the “Amended LP Agreement”);

 

WHEREAS, with the written consent of the Prior General Partner, the Prior
General Partner was replaced by the General Partner on or about August 4, 2015;
and

 

WHEREAS, pursuant to its authority under Section 11.6, the General Partner
desires to amend and restate the Amended LP Agreement.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

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ARTICLE I

 

DEFINITIONS

 

Section 1.1            Definitions.  Unless the context otherwise requires, the
following terms shall have the following meanings for purposes of this
Agreement:

 

“Act” has the meaning set forth in the recitals.

 

“Additional Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

 

“Adjusted Capital Account Balance” means, with respect to each Partner, the
balance in such Partner’s Capital Account adjusted (i) by taking into account
the adjustments, allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6); and (ii) by adding to such
balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse
Debt Minimum Gain, determined pursuant to Treasury Regulations Sections
1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore
pursuant to any provision of this Agreement or by applicable Law. The foregoing
definition of Adjusted Capital Account Balance is intended to comply with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agreement” has the meaning set forth in the preamble of this Agreement.

 

“AH LLC” has the meaning set forth in the recitals.

 

“Alleghany” means Alleghany Insurance Holdings LLC, a Delaware limited liability
company.

 

“Alleghany Permitted Transferee” means any Affiliate of Alleghany (other than
any Person that is a competitor of any Ares Company or whose ownership of equity
interests in any entity that is a member of the Ares Operating Group or the
Issuer would restrict the operations of any Ares Company, in each case, as
determined in good faith by the Issuer).

 

“Amended LP Agreement” has the meaning set forth in the recitals.

 

“Amended Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

 

“Ares Company” means any of (i) the Issuer, (ii) Ares GP, (iii) Ares Voting LLC,
a Delaware limited liability company, (iv) any entity that is or becomes part of
the Ares Operating Group and (v) any entity in which any the foregoing directly
or indirectly owns a majority

 

2

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interest or which any of the foregoing controls, or through which any of the
foregoing directly or indirectly manages, directs or invests in a Fund, but
excluding any Fund.

 

“Ares Operating Group” means, collectively, (i) Ares Domestic Holdings L.P., a
Delaware limited partnership, (ii) the Partnership, (iii) Ares Investments L.P.,
a Delaware limited partnership, (iv) Ares Offshore Holdings L.P., a Cayman
Islands exempted limited partnership, (v) Ares Real Estate Holdings L.P., a
Delaware limited partnership, and (vi) any future entity designated by Ares GP
in its discretion as an Ares Operating Group entity for purposes of this
Agreement.

 

“Ares Owners Class IND Units” has the meaning given to “Class IND Units” in the
Ares Owners LP Agreement.

 

“Ares Owners Class OG Units” has the meaning given to “Class OG Units” in the
Ares Owners LP Agreement.

 

“Ares Owners LP” means Ares Owners Holdings L.P., a Delaware limited
partnership.

 

“Ares Owners LP Agreement” means the limited partnership agreement of Ares
Owners LP.

 

“Ares Owners Mirror Units” means Class Mirror Units (as defined in the Ares
Owners LP Agreement).

 

“Assignee” has the meaning set forth in Section 8.7.

 

“Assumed Tax Rate” means the highest effective marginal combined U.S. federal,
state and local income tax rate for a Fiscal Year prescribed for an individual
or corporate resident in Los Angeles, California or New York, New York,
whichever is higher (taking into account (a) the nondeductiblity of expenses
subject to the limitation described in Section 67(a) of the Code and (b) the
character (e.g., long-term or short-term capital gain or ordinary or exempt
income) of the applicable income, but not taking into account the deductibility
of state and local income taxes for U.S. federal income tax purposes). For the
avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.

 

“Available Cash” means, with respect to any fiscal period, the amount of cash on
hand which the General Partner, in its sole discretion, deems available for
distribution to the Partners, taking into account all debts, liabilities and
obligations of the Partnership then due and amounts which the General Partner,
in its sole discretion, deems necessary to expend or retain for working capital
or otherwise or to place into reserves.

 

“Capital Account” means the separate capital account maintained for each Partner
in accordance with Section 5.3 hereof.

 

“Capital Contribution” means, with respect to any Partner, the aggregate amount
of money contributed to the Partnership and the Carrying Value of any property
(other than money), net of any liabilities assumed by the Partnership upon
contribution or to which such property is subject, contributed to the
Partnership pursuant to Article V.

 

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“Carrying Value” means, with respect to any Partnership asset, the asset’s
adjusted basis for U.S. federal income tax purposes, except that the initial
carrying value of assets contributed to the Partnership shall be their
respective gross fair market values on the date of contribution as determined by
the General Partner, and the Carrying Values of all Partnership assets shall be
adjusted to equal their respective fair market values, in accordance with the
rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as
otherwise provided herein, as of: (a) the date of the acquisition of any
additional Partnership interest by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (b) the date of the distribution of
more than a de minimis amount of Partnership assets to a Partner; (c) the date a
Partnership interest is relinquished to the Partnership; or (d) any other date
specified in the Treasury Regulations; provided that adjustments pursuant to
clauses (a), (b) (c) and (d) above shall be made only if such adjustments are
deemed necessary or appropriate by the General Partner to reflect the relative
economic interests of the Partners. The Carrying Value of any Partnership asset
distributed to any Partner shall be adjusted immediately before such
distribution to equal its fair market value. In the case of any asset that has a
Carrying Value that differs from its adjusted tax basis, Carrying Value shall be
adjusted by the amount of depreciation calculated for purposes of the definition
of “Profits (Losses)” rather than the amount of depreciation determined for U.S.
federal income tax purposes, and depreciation shall be calculated by reference
to Carrying Value rather than tax basis once Carrying Value differs from tax
basis.

 

“Certificate” has the meaning set forth in the recitals.

 

“Class” means the classes of Units into which the interests in the Partnership
may be classified or divided from time to time by the General Partner in its
sole discretion pursuant to the provisions of this Agreement. As of the date
hereof, the only Classes of Units are Class A Units and Series A Preferred
Mirror Units. Subclasses within a Class shall not be separate Classes for
purposes of this Agreement. For all purposes hereunder and under the Act, only
such Classes expressly established under this Agreement, including by the
General Partner in accordance with this Agreement, shall be deemed to be a class
of interests in the Partnership. For the avoidance of doubt, to the extent that
the General Partner holds interests of any Class, the General Partner shall not
be deemed to hold a separate Class of such interests from any other Partner
because it is the General Partner.

 

“Class A Units” means the Units of partnership interest in the Partnership
designated as the “Class A Units” herein and having the rights pertaining
thereto as are set forth in this Agreement.

 

“Clawback Obligation” has the meaning set forth in Section 4.4.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral Agreement” means any security agreement, pledge agreement or similar
agreement relating to any Credit Agreement.

 

“Common Units” means common units representing partner interests of the Issuer.

 

“Consenting Party” has the meaning set forth in Section 11.1(a).

 

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“Contingencies” has the meaning set forth in Section 9.3(a).

 

“Conversion” has the meaning set forth in the recitals.

 

“Corresponding Rate” means the number of Class A Units that would be forfeited
or cancelled upon the forfeiture or cancellation of Ares Owners Mirror Units or
Common Units pursuant to any agreements governing such Ares Owners Mirror Units
or Common Units, as applicable. As of the Effective Date, the Corresponding Rate
shall be 1 for 1. The Corresponding Rate shall be adjusted accordingly by the
General Partner in its sole discretion upon: (a) any subdivision (by any unit
split, unit distribution, reclassification, reorganization, recapitalization or
otherwise) or combination (by reverse unit split, reclassification,
reorganization, recapitalization or otherwise) of the Class A Units that is not
accompanied by an identical subdivision or combination of the Ares Owners Mirror
Units, as applicable, or Common Units, as applicable; or (b) any subdivision (by
any unit split, unit distribution, reclassification, reorganization,
recapitalization or otherwise) or combination (by reverse unit split,
reclassification, reorganization, recapitalization or otherwise) of the Ares
Owners Mirror Units, as applicable, or Common Units, as applicable, that is not
accompanied by an identical subdivision or combination of the Class A Units.

 

“Credit Agreement” means any facility for borrowed money of Ares Management LLC
or an affiliate of Ares Management LLC.

 

“Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

 

“Creditable Non-U.S. Tax” means a non-U.S. tax paid or accrued for U.S. federal
income tax purposes by the Partnership, in either case to the extent that such
tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a
Creditable Non-U.S. Tax for these purposes without regard to whether a partner
receiving an allocation of such non-U.S. tax elects to claim a credit for such
amount. This definition is intended to be consistent with the term “creditable
foreign tax” in Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be
interpreted consistently therewith.

 

“Disabling Event” means the General Partner ceasing to be the general partner of
the Partnership pursuant to Section 17-402 of the Act.

 

“Dissolution Event” has the meaning set forth in Section 9.2.

 

“Effective Date” means May 1, 2014.

 

“Encumbrance” means any mortgage, hypothecation, claim, lien, encumbrance,
conditional sales or other title retention agreement, right of first refusal,
preemptive right, pledge, option, charge, security interest or other similar
interest, easement, judgment or imperfection of title of any nature whatsoever.

 

“ERISA” means The Employee Retirement Income Security Act of 1974.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

 

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“Exchange Agreement” means the exchange agreement, dated as of or about the
Effective Date, among the Issuer, the Ares Operating Group entities, the limited
partners of the Ares Operating Group entities (or their designees or Affiliates)
from time to time party thereto, and the other parties thereto.

 

“Exchange Transaction” means an exchange of Class A Units for Common Units
pursuant to, and in accordance with, the Exchange Agreement or, if the Issuer
and the exchanging Limited Partner shall mutually agree, a Transfer of Class A
Units to the Issuer, the Partnership or any of their subsidiaries for other
consideration.

 

“Family Member” means, with respect to any Limited Partner who is a natural
person, such Limited Partner’s spouse, parents, siblings and children and any
other natural person who occupies the same principal residence as such Limited
Partner, and the spouses, descendants and ancestors of each of the foregoing.

 

“Final Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

 

“Fiscal Year” means the period commencing on January 1 and ending on December 31
of each year, except (a) for the short taxable years in the years of the
Partnership’s formation (i.e., the year in which AH LLC was formed) and
termination and (b) as otherwise elected by the General Partner in its sole
discretion or required by the Code.

 

“Fund” means any fund, investment vehicle or account whose investments are
managed or advised by an Ares Company.

 

“GAAP” means accounting principles generally accepted in the United States of
America as in effect from time to time.

 

“General Partner” means Ares Holdco LLC, a Delaware limited liability company,
or any successor general partner admitted to the Partnership in accordance with
the terms of this Agreement.

 

“Gross Ordinary Income” has the meaning assigned to such term in Section 5.5(d).

 

“Incapacity” means, with respect to any Person, the bankruptcy, dissolution,
termination, entry of an order of incompetence, or the insanity, permanent
disability or death of such Person.

 

“Indemnitee” means (a) the General Partner, (b) any Person who is or was a “tax
matters partner” (as defined in the Code prior to amendment by P.L 114-74) or
“partnership representative” (as defined in Section 6223 of the Code after
amendment by P.L. 114-74), officer or director of the General Partner, (c) any
officer or director of the General Partner who is or was serving at the request
of the General Partner as a director, officer, employee, trustee, fiduciary,
partner, tax matters partner, partnership representative, member,
representative, agent or advisor of another Person; provided that a Person shall
not be an Indemnitee by reason of providing, on a fee-for-services basis or
similar arm’s-length compensatory basis, agency, advisory, consulting, trustee,
fiduciary or custodial services, (d) any Person the General Partner in its sole
discretion designates as an “Indemnitee” for purposes of this Agreement and
(e) any heir, executor or administrator with respect to Persons named in clauses
(a) through (d).

 

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“Issuer” means Ares Management, L.P., a Delaware limited partnership.

 

“Issuer General Partner” means Ares Management GP LLC, a Delaware limited
liability company and the general partner of the Issuer, or any successor
general partner of the Issuer.

 

“Issuer Limited Partnership Agreement” means the Second Amended and Restated
Agreement of Limited Partnership of the Issuer, dated on or about the date
hereof.

 

“Law” means any statute, law, ordinance, regulation, rule, code, executive
order, injunction, judgment, decree or other order issued or promulgated by any
national, supranational, state, federal, provincial, local or municipal
government or any administrative or regulatory body with authority therefrom
with jurisdiction over the Partnership or any Partner, as the case may be.

 

“Limited Partner” means each of the Persons from time to time listed as a
limited partner in the books and records of the Partnership, and, for purposes
of Sections 8.1, 8.2, 8.3, 8.4, 8.5 and 8.6, any Permitted Transferee of such
Limited Partner.

 

“Liquidation Agent” has the meaning set forth in Section 9.3.

 

“LLC Act” has the meaning set forth in the recitals.

 

“LLC Agreement” has the meaning set forth in the recitals.

 

“Net Taxable Income” has the meaning set forth in Section 4.1(b)(i).

 

“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations
Section 1.704-2(b).  The amount of Nonrecourse Deductions of the Partnership for
a fiscal year equals the net increase, if any, in the amount of Partnership
Minimum Gain of the Partnership during that fiscal year, determined according to
the provisions of Treasury Regulations Section 1.704-2(c).

 

“Officer” means each Person designated as an officer of the Partnership by the
General Partner pursuant to and in accordance with the provisions of
Section 3.4, subject to any resolutions of the General Partner appointing such
Person as an officer of the Partnership or relating to such appointment.

 

“Original Agreement” has the meaning set forth in the recitals.

 

“Partially Unvested Partner” means any Partner with Unvested Units.

 

“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each
partner nonrecourse debt (as defined in Treasury Regulations
Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result
if such partner nonrecourse debt were treated as a nonrecourse liability (as
defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance
with Treasury Regulations Section 1.704-2(i)(3).

 

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“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner
nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).

 

“Partners” means, at any time, each Person listed as a Partner (including the
General Partner) on the books and records of the Partnership, in each case for
so long as he, she or it remains a partner of the Partnership as provided
hereunder.

 

“Partnership” has the meaning set forth in the recitals.

 

“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).

 

“Permitted Transferee” means, with respect to a Limited Partner, (a) its
Principal, if any, (b) any trust for the primary benefit of the Family Members
of such Limited Partner or the Family Members of such Limited Partner’s
Principal; provided that, in each case, either (i) such Limited Partner or its
Principal, if any or (ii) a bona fide third party trustee continues to hold,
directly or indirectly, 100% of the voting interests of such trust until the
death or legal incapacity of such Limited Partner or its Principal, if any; or
(c) any entity of which such Limited Partner and any Permitted Transferees or
Family Members of such Limited Partner collectively are beneficial owners of
100% of the equity interests; provided that either such (i) Limited Partner or
its Principal, if any, or (ii) a bona fide third party trustee continues to
hold, directly or indirectly, 100% of the voting interests of such entity until
the death or legal incapacity of such Limited Partner or its Principal, if any.

 

“Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association
(including any group, organization, co-tenancy, plan, board, council or
committee), government (including a country, state, county, or any other
governmental or political subdivision, agency or instrumentality thereof) or
other entity (or series thereof).

 

“Preferred Units” means a Class of Units, in one or more series, designated as
“Preferred Units,” which entitles the holder thereof to a preference with
respect to the payment of distributions over the Class A Units and any other
Junior Units then outstanding as set forth herein.

 

“Primary Indemnification” has the meaning set forth in Section 10.2(a).

 

“Principal,” with respect to any Limited Partner, has the meaning set forth in a
Supplemental Agreement applicable to such Limited Partner.

 

“Prior General Partner” has the meaning set forth in the recitals.

 

“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable
income or loss of the Partnership, or particular items thereof, determined in
accordance with the accounting method used by the Partnership for U.S. federal
income tax purposes with the following adjustments: (a) all items of income,
gain, loss or deduction allocated pursuant to Section 5.5 shall not be taken
into account in computing such taxable income or loss; (b) any income of the
Partnership that is exempt from U.S. federal income taxation and not otherwise
taken into

 

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account in computing Profits and Losses shall be added to such taxable income or
loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis
for U.S. federal income tax purposes, any gain or loss resulting from a
disposition of such asset shall be calculated with reference to such Carrying
Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in
respect of depreciation) of any asset, pursuant to the definition of Carrying
Value, the amount of the adjustment shall be included as gain or loss in
computing such taxable income or loss; (e) if the Carrying Value of any asset
differs from its adjusted tax basis for U.S. federal income tax purposes, the
amount of depreciation, amortization or cost recovery deductions with respect to
such asset for purposes of determining Profits and Losses, if any, shall be an
amount which bears the same ratio to such Carrying Value as the U.S. federal
income tax depreciation, amortization or other cost recovery deductions bears to
such adjusted tax basis (provided that if the U.S. federal income tax
depreciation, amortization or other cost recovery deduction is zero, the General
Partner may use any reasonable method for purposes of determining depreciation,
amortization or other cost recovery deductions in calculating Profits and
Losses); and (f) except for items in (a) above, any expenditures of the
Partnership not deductible in computing taxable income or loss, not properly
capitalizable and not otherwise taken into account in computing Profits and
Losses pursuant to this definition shall be treated as deductible items.

 

“Relevant Entity” means any Ares Company and any entity in which any Ares
Company, directly or indirectly, owns any interest, and any Fund to which any
Ares Company provides services.

 

“Securities Act” means the U.S. Securities Act of 1933.

 

“Series A Preferred Mirror Units” means the Class of Preferred Units designated
as “7.00% Series A Preferred Mirror Units” pursuant to Section 12.1.

 

“Service Provider” means any Limited Partner (in his, her or its individual
capacity) or other Person, who at the time in question, is employed by or
providing services to any Ares Company. For the avoidance of doubt, Alleghany is
not a Service Provider.

 

“Similar Law” means any law or regulation that could cause the underlying assets
of the Partnership to be treated as assets of a Partner by virtue of its partner
interest in the Partnership and thereby subject the Partnership and the General
Partner (or other persons responsible for the investment and operation of the
Partnership’s assets) to laws or regulations that are similar to the fiduciary
responsibility or prohibited transaction provisions contained in Title I of
ERISA or Section 4975 of the Code.

 

“Supplemental Agreement” means, with respect to any Limited Partner, any
unitization letter, fair competition agreement or other supplemental agreement
with such Limited Partner or its Principal containing terms modifying,
supplementing or otherwise affecting the rights or obligations of such Limited
Partner hereunder.

 

“Tax Advances” has the meaning set forth in Section 5.7.

 

“Tax Amount” has the meaning set forth in Section 4.1(b)(i).

 

“Tax Distributions” has the meaning set forth in Section 4.1(b)(i).

 

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“Total Percentage Interest” means, with respect to any Partner, the quotient
obtained by dividing the number of Class A Units (vested and unvested) then
owned by such Partner by the number of Class A Units (vested and unvested) then
owned by all Partners.

 

“Transfer” means, in respect of any Unit, property or other asset, any sale,
assignment, transfer, distribution, exchange, mortgage, pledge, hypothecation or
other disposition thereof, whether voluntarily or by operation of Law, directly
or indirectly, in whole or in part, including the exchange of any Unit for any
other security.  “Transferee”, “Transferor”, “Transferring”, “Transferred” and
similar terms have meanings correlative to the foregoing.

 

“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code.

 

“Units” means the Class A Units, the Preferred Units and any other Class of
Units that is established in accordance with this Agreement, which shall
constitute interests in the Partnership as provided in this Agreement and under
the Act, entitling the holders thereof to the relative rights, title and
interests in the profits, losses, deductions and credits of the Partnership at
any particular time as set forth in this Agreement, and any and all other
benefits to which a holder thereof may be entitled as a Partner as provided in
this Agreement, together with the obligations of such Partner to comply with all
terms and provisions of this Agreement.

 

“Unvested Units” means those Units from time to time listed as unvested Units in
the books and records of the Partnership.

 

“Vested Units” means those Units listed as vested Units in the books and records
of the Partnership, as the same may be amended from time to time in accordance
with this Agreement.

 

Section 1.2            Interpretation.

 

(a)           Unless a clear contrary intention appears: (i) the defined terms
herein shall apply equally to both the singular and plural forms of such terms;
(ii) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; (iii) any pronoun shall include
the corresponding masculine, feminine and neuter forms; (iv) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (v) reference to any law, rule or regulation means such law,
rule or regulation as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any law, rule or regulation means that provision of such law,
rule or regulation from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision; (vi) “hereunder,” “hereof,” “hereto,”  and words of
similar import shall be deemed references to this Agreement as a whole and not
to any particular article, section or other provision hereof; (vii) numbered or
lettered articles, sections and subsections herein contained refer to articles,
sections and subsections of this Agreement; (viii) “including” (and with
correlative meaning “include”) means including without limiting the generality
of any

 

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description preceding such term; (ix) “or” is used in the inclusive sense of
“and/or”; (x) references to documents, instruments or agreements shall be deemed
to refer as well to all addenda, exhibits, schedules or amendments thereto; and
(xi) reference to dollars or $ shall be deemed to refer to U.S. dollars.

 

(b)           All headings herein are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.

 

ARTICLE II

 

FORMATION, TERM, PURPOSE AND POWERS

 

Section 2.1            Conversion; Name; Foreign Jurisdictions.

 

(a)           Effective as of the time of the Conversion, (i) the LLC Agreement
and certificate of formation were replaced and superseded in their entirety by
the Original Agreement and the Certificate, (ii) all of the limited liability
company interests in AH LLC issued and outstanding immediately prior to the
Conversion were converted into Class A Units, (iii) each of those Persons who
executed a counterpart to this Agreement as a Limited Partner on the Effective
Date was admitted to the Partnership as a Limited Partner, and (iv) the Prior
General Partner was admitted to the Partnership as the general partner.  On or
about August 4, 2015, the Prior General Partner withdrew as the general partner
of the Partnership and the General Partner was admitted and substituted as the
general partner of the Partnership.

 

(b)           The name of the Partnership is “Ares Holdings L.P.” or such other
name as the General Partner may from time to time hereafter designate.  If
requested by the General Partner, the Limited Partners shall promptly execute
all certificates and other documents consistent with the terms of this Agreement
necessary for the General Partner to accomplish all filing, recording,
publishing and other acts as may be appropriate to comply with all requirements
for (i) the formation and operation of a limited partnership under the laws of
the State of Delaware, (ii) if the General Partner deems it advisable, the
operation of the Partnership as a limited partnership, or partnership in which
the Limited Partners have limited liability, in all jurisdictions where the
Partnership proposes to operate and (iii) all other filings required to be made
by the Partnership. The rights, powers, duties, obligations and liabilities of
the Partners shall be determined pursuant to the Act and this Agreement. To the
extent that the rights, powers, duties, obligations and liabilities of any
Partner are different by reason of any provision of this Agreement than they
would be in the absence of such provision, this Agreement shall, to the extent
permitted by the Act, control. The execution and filing of the Certificate and
each amendment thereto and the Conversion is hereby ratified, approved and
confirmed by the Partners.

 

(c)           The General Partner may take all action which may be necessary or
appropriate (i) for the continuation of the Partnership’s valid existence as a
limited partnership under the laws of the State of Delaware (and of each other
jurisdiction in which such existence is necessary to enable the Partnership to
conduct the business in which it is engaged) and (ii) for the maintenance,
preservation and operation of the business of the Partnership in accordance

 

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with the provisions of this Agreement and applicable laws and regulations. The
General Partner may file or cause to be filed for recordation in the proper
office or offices in each other jurisdiction in which the Partnership is formed
or qualified, such certificates (including certificates of limited partnership
and fictitious name certificates) and other documents as are required by the
applicable statutes, rules or regulations of any such jurisdiction or as are
required to reflect the identity of the Partners. The General Partner may cause
the Partnership to comply, to the extent procedures are available and those
matters are reasonably within the control of the Officers, with all requirements
necessary to qualify the Partnership to do business in any jurisdiction other
than the State of Delaware.

 

Section 2.2            Business Purpose.  The Partnership was formed for the
object and purpose of, and the nature and character of the business to be
conducted by the Partnership is, engaging in any lawful act or activity for
which limited partnerships may be formed under the Act.

 

Section 2.3            Term.  The term of the Partnership shall continue until
the Partnership is dissolved and its affairs are wound up in accordance with
this Agreement.

 

Section 2.4            Registered Office; Registered Agent.  The address of the
registered office of the Partnership in the State of Delaware is c/o Corporation
Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. 
The name and address of the registered agent of the Partnership for service of
process on the Partnership in the State of Delaware is Corporation Service
Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.  The
General Partner may from time to time change the registered agent or registered
office of the Partnership in the State of Delaware by an amendment to the
Certificate, and upon the filing of such an amendment, this Agreement shall be
deemed amended accordingly.

 

Section 2.5            Principal Office.  The principal office address of the
Partnership shall be at such place or places as the General Partner may
determine from time to time.

 

Section 2.6            Powers of the Partnership.  Subject to the limitations
set forth in this Agreement, the Partnership (i) will possess and may exercise
all of the powers and privileges granted to it by the Act including the
ownership and operation of the assets and other property contributed to the
Partnership by the Partners, by any other Law or this Agreement, together with
all powers incidental thereto, and (ii) may execute, deliver and perform all
contracts, agreements and other undertakings and engage in all activities and
transactions, in each case, so far as such powers, activities or transactions
are necessary, desirable, convenient or incidental to, or in furtherance of, the
conduct, promotion or attainment of the purpose of the Partnership set forth in
Section 2.2.

 

Section 2.7            Partners; Admission of New Partners.  Each of the Persons
listed in the books and records of the Partnership, as the same may be amended
from time to time in accordance with this Agreement, by virtue of the execution
of this Agreement (or the Original Agreement), are admitted as Partners of the
Partnership. The rights, duties and liabilities of the Partners shall be as
provided in the Act, except as is otherwise expressly provided herein, and the
Partners consent to the variation of such rights, duties and liabilities as
provided herein. Subject

 

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to Section 8.9 with respect to substitute Limited Partners, a Person may be
admitted from time to time as a new Limited Partner with the written consent of
the General Partner in its sole discretion. Each new Limited Partner shall
execute and deliver to the General Partner an appropriate supplement to this
Agreement pursuant to which the new Limited Partner agrees to be bound by the
terms and conditions of the Agreement, as it may be amended from time to time. A
new General Partner or substitute General Partner may be admitted to the
Partnership solely in accordance with Section 8.8 or Section 9.2(e) hereof.

 

Section 2.8            Withdrawal.  No Partner may withdraw from the
Partnership, provided that (a) a Limited Partner may withdraw from the
Partnership following the Transfer of all Units owned by such Limited Partner in
accordance with Article VIII and (b) subject to Section 8.8, the General Partner
may withdraw without the consent of any other Partner.

 

ARTICLE III

 

MANAGEMENT

 

Section 3.1            General Partner.

 

(a)           The business, property and affairs of the Partnership shall be
managed under the sole, absolute and exclusive direction of the General Partner,
which may from time to time delegate authority to Officers or to others to act
on behalf of the Partnership.

 

(b)           Without limiting the foregoing provisions of this Section 3.1, the
General Partner shall have the general power to manage or cause the management
of the Partnership (which may be delegated to Officers of the Partnership),
including the following powers:

 

(i)            to develop and prepare a business plan each year;

 

(ii)           to execute and deliver or to authorize the execution and delivery
of contracts, deeds, leases, licenses, instruments of transfer and other
documents on behalf of the Partnership;

 

(iii)          the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations;

 

(iv)          the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having jurisdiction
over the business or assets of the Partnership;

 

(v)           to select and dismiss employees (including employees having such
titles as the General Partner may determine in its sole discretion) and agents,
representatives, outside attorneys, accountants, consultants and contractors and
to determine their compensation and other terms of employment or hiring;

 

(vi)          to establish and enforce limits of authority and internal controls
with respect to all personnel and functions;

 

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(vii)         to develop or cause to be developed accounting procedures for the
maintenance of the Partnership’s books of account;

 

(viii)        the control of any matters affecting the rights and obligations of
the Partnership, including the bringing and defending of actions at law or in
equity and otherwise engaging in the conduct of litigation, arbitration or
mediation and the incurring of legal expense and the settlement of claims and
litigation;

 

(ix)          the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;

 

(x)           the purchase, sale or other acquisition or disposition of Units;
and

 

(xi)          to do all such other acts as shall be authorized in this Agreement
or by the Partners in writing from time to time.

 

(c)           In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation or duty to, take into account the
tax consequences to any Partner (including the General Partner) of any action
taken (or not taken) by it.  The General Partner and the Partnership shall not
have any liability to a Limited Partner for monetary damages, equitable relief
or otherwise for losses sustained, liabilities incurred or benefits not derived
by such Limited Partner in connection with such decisions.

 

Section 3.2            Compensation.  The General Partner shall not be entitled
to any compensation for services rendered to the Partnership in its capacity as
General Partner.

 

Section 3.3            Expenses.  The Partnership shall pay, or cause to be
paid, all costs, fees, operating expenses and other expenses of the Partnership
(including the costs, fees and expenses of attorneys, accountants or other
professionals) incurred in pursuing and conducting, or otherwise related to, the
activities of the Partnership. The Partnership shall also, in the sole
discretion of the General Partner, bear or reimburse the General Partner for
(i) any costs, fees or expenses incurred by the General Partner (or any direct
or indirect equityholders of the General Partner) in connection with serving as
the General Partner, (ii) all other expenses allocable to the Partnership or
otherwise incurred by the General Partner (or any direct or indirect
equityholders of the General Partner) in connection with operating the
Partnership’s business (including expenses allocated to the General Partner (or
any direct or indirect equityholders of the General Partner) by its Affiliates)
and (iii) all costs, fees or expenses owed directly or indirectly by the
Partnership or the General Partner to the Issuer General Partner (or any direct
or indirect equityholders of the Issuer General Partner) pursuant to their
reimbursement obligations under, or which are otherwise allocated to the General
Partner (or any direct or indirect equityholders of the General Partner)
pursuant to, the Issuer Limited Partnership Agreement. If the General Partner
determines in its sole discretion that such expenses are related to the business
and affairs of the General Partner that are conducted through the Partnership or
its subsidiaries (including expenses that relate to the business and affairs of
the Partnership or its subsidiaries and that also relate to other activities of
the General Partner), the General Partner may cause the Partnership to pay or
bear all expenses of the General Partner (or any direct or indirect
equityholders of the General Partner), including compensation and meeting costs
of any board of directors or similar

 

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body of the General Partner, any salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the General Partner to
perform services for the Partnership, litigation costs and damages arising from
litigation, accounting and legal costs and franchise taxes. Reimbursements
pursuant to this Section 3.3 shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to Section 10.2.

 

Section 3.4            Officers.  Subject to the direction and oversight of the
General Partner, the day-to-day administration of the business of the
Partnership may be carried out by persons who may be designated as officers by
the General Partner, with titles including but not limited to “assistant
secretary,” assistant treasurer,” “chief executive officer,” “chief financial
officer,” “chief legal officer,” “chief operating officer,” “chief compliance
officer,” “general counsel,” “managing director,” “president,” “executive vice
president,” “senior vice president,” “vice president,” “principal accounting
officer,” “secretary,” or “treasurer,” and as and to the extent authorized by
the General Partner. The officers of the Partnership shall have such titles and
powers and perform such duties as shall be determined from time to time by the
General Partner and otherwise as shall customarily pertain to such offices. Any
number of offices may be held by the same person. In its sole discretion, the
General Partner may choose not to fill any office for any period as it may deem
advisable. All officers and other persons providing services to or for the
benefit of the Partnership shall be subject to the supervision and direction of
the General Partner and may be removed, with or without cause, from such office
by the General Partner and the authority, duties or responsibilities of any
employee, agent or officer of the Partnership may be suspended by the General
Partner from time to time, in each case in the sole discretion of the General
Partner. The General Partner shall not cease to be a general partner of the
Partnership as a result of the delegation of any duties hereunder. No officer of
the Partnership, in its capacity as such, shall be considered a general partner
of the Partnership by agreement, as a result of the performance of its duties
hereunder or otherwise.

 

Section 3.5            Authority of Partners.  No Limited Partner, in its
capacity as such, shall participate in or have any control over the business of
the Partnership. Except as expressly provided herein, the Units do not confer
any rights upon the Limited Partners to participate in the affairs of the
Partnership described in this Agreement. Except as expressly provided herein, no
Limited Partner shall have any right to vote on any matter involving the
Partnership, including with respect to any merger, consolidation, combination or
conversion of the Partnership, or any other matter that a limited partner might
otherwise have the ability to vote on or consent with respect to under the Act,
at law, in equity or otherwise. The conduct, control and management of the
Partnership shall be vested exclusively in the General Partner. In all matters
relating to or arising out of the conduct of the operation of the Partnership,
the decision of the General Partner shall be the decision of the Partnership.
Except as required or permitted by Law, or expressly provided in the ultimate
sentence of this Section 3.5 or by separate agreement with the Partnership, no
Partner who is not also a General Partner (and acting in such capacity) shall
take any part in the management or control of the operation or business of the
Partnership in its capacity as a Partner, nor shall any Partner who is not also
a General Partner (and acting in such capacity) have any right, authority or
power to act for or on behalf of or bind the Partnership in his or its capacity
as a Partner in any respect or assume any obligation or responsibility of the
Partnership or of any other Partner. Notwithstanding the foregoing, the
Partnership may from time to time appoint one or more Partners as officers or
employ one or more Partners as employees, and such Partners, in their capacity
as officers or employees of the Partnership (and

 

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not, for clarity, in their capacity as Limited Partners of the Partnership), may
take part in the control and management of the business of the Partnership to
the extent such authority and power to act for or on behalf of the Partnership
has been delegated to them by the General Partner.

 

Section 3.6            Action by Written Consent or Ratification.  Any action
required or permitted to be taken by the Partners pursuant to this Agreement
shall be taken if all Partners whose consent or ratification is required consent
thereto or provide a consent or ratification in writing.

 

ARTICLE IV

 

DISTRIBUTIONS

 

Section 4.1            Distributions.

 

(a)           The General Partner, in its sole discretion, may authorize
distributions by the Partnership to the Partners.  Distributions shall be made
in accordance with Section 12.3 and this Article IV.  Distributions (other than
distributions made with respect to the Series A Preferred Mirror Units pursuant
to Section 12.3) shall be made pro rata in accordance with the Partners’
respective Total Percentage Interests.

 

(b)

 

(i)            In addition to the foregoing, if the General Partner reasonably
determines that the taxable income of the Partnership for a Fiscal Year will
give rise to taxable income for the Partners that hold Class A Units (“Net
Taxable Income”), the General Partner shall cause the Partnership to distribute
Available Cash in respect of income tax liabilities (the “Tax Distributions”) to
the extent that other distributions made by the Partnership for such year were
otherwise insufficient to cover such tax liabilities. The Tax Distributions
payable with respect to any Fiscal Year shall be computed based upon the General
Partner’s estimate of the allocable Net Taxable Income in accordance with
Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes
of computing the Tax Amount, the effect of any benefit under Section 743(b) of
the Code will be ignored.  Any Tax Distributions shall be made to all Partners
that hold Class A Units pro rata in accordance with their Total Percentage
Interests.

 

(ii)           Tax Distributions shall be calculated and paid no later than one
day prior to each quarterly due date for the payment by corporations on a
calendar year of estimated taxes under the Code in the following manner (A) for
the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly
period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal
Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior
Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period,
100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year.
Following each Fiscal Year, and no later than one day prior to the due date for
the payment by corporations of income taxes for such Fiscal Year, the General
Partner shall make an amended calculation of the Tax Amount for such Fiscal Year
(the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax
Distribution, out of Available Cash, to the extent that the Amended Tax Amount
so

 

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calculated exceeds the cumulative Tax Distributions previously made by the
Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less
than the cumulative Tax Distributions previously made by the Partnership in
respect of the relevant Fiscal Year, then the difference (the “Credit Amount”)
shall be applied against, and shall reduce, the amount of Tax Distributions made
for subsequent Fiscal Years. Within 30 days following the date on which the
Partnership files a tax return on Form 1065, the General Partner shall make a
final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”)
and shall cause the Partnership to distribute a Tax Distribution, out of
Available Cash, to the extent that the Final Tax Amount so calculated exceeds
the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax
Amount in respect of the relevant Fiscal Year, then the difference (“Additional
Credit Amount”) shall be applied against, and shall reduce, the amount of Tax
Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional
Credit Amount applied against future Tax Distributions shall be treated as an
amount actually distributed pursuant to this Section 4.1(b) for purposes of the
computations herein.

 

Section 4.2            Liquidation Distribution.  Distributions made upon
dissolution of the Partnership shall be made as provided in Section 9.3.

 

Section 4.3            Limitations on Distribution.  Notwithstanding any
provision to the contrary contained in this Agreement, the General Partner shall
not make a Partnership distribution to any Partner if such distribution would
violate Section 17-607 of the Act or other applicable Law.

 

Section 4.4            Clawbacks.  To the extent that the Partnership is
directly or indirectly required to comply with a clawback or other similar
obligation with respect to any Fund (a “Clawback Obligation”), upon the written
request of the General Partner, Alleghany shall promptly return to the
Partnership any distributions received from the Partnership in an amount equal
to Alleghany’s pro rata share (based on its Total Percentage Interest) of the
excess of (a) such Clawback Obligation less (b) all amounts returned by
Alleghany with respect to such Clawback Obligation.  Any returned amounts shall
be treated as Capital Contributions but shall not affect Alleghany’s Total
Percentage Interest.  The Partnership shall be entitled to withhold from any
distributions otherwise payable to Alleghany a reasonable amount sufficient to
reserve for any potential Clawback Obligation.  To the extent that any such
reserve is not sufficient to satisfy any such Clawback Obligation, the
Partnership shall be entitled to offset such deficiency with any amounts due and
payable to Alleghany or its Affiliates. Notwithstanding the foregoing, at no
time shall any Partner be liable for amounts in excess of amounts distributed to
such Partner in connection with any Fund in respect of which a Clawback
Obligation is or may be owing.  For the avoidance of doubt, Alleghany shall not
(i) be required to return to the Partnership any distributions, (ii) be
subjected to any withholding or (iii) be subjected to any offset against amounts
due and payable to Alleghany, in each case to the extent that a Clawback
Obligation relates to any amounts distributed prior to July 31, 2013.

 

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ARTICLE V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS

 

Section 5.1            Initial Capital Contributions.  The Partners have made,
on or prior to the Effective Date, Capital Contributions, if any, and, in
exchange, the Partnership has issued to the Partners the number of Class A Units
and Series A Preferred Mirror Units as specified in the books and records of the
Partnership.

 

Section 5.2            No Additional Capital Contributions.  Except as otherwise
provided in this Article V, no Partner shall be required to make additional
Capital Contributions to the Partnership without the consent of such Partner or
permitted to make additional capital contributions to the Partnership without
the consent of the General Partner.

 

Section 5.3            Capital Accounts.  A Capital Account shall be established
and maintained for each Partner in accordance with the provisions of Treasury
Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall
be credited with such Partner’s Capital Contributions, if any, all Profits
allocated to such Partner pursuant to Section 5.4 and any items of income or
gain which are specially allocated pursuant to Section 5.5; and shall be debited
with all Losses allocated to such Partner pursuant to Section 5.4, any items of
loss or deduction of the Partnership specially allocated to such Partner
pursuant to Section 5.5, and all cash and the Carrying Value of any property
(net of liabilities assumed by such Partner and the liabilities to which such
property is subject) distributed by the Partnership to such Partner. Any
references in any section of this Agreement to the Capital Account of a Partner
shall be deemed to refer to such Capital Account as the same may be credited or
debited from time to time as set forth above. In the event of any Transfer of
any interest in the Partnership in accordance with the terms of this Agreement,
the Transferee shall succeed to the Capital Account of the Transferor to the
extent it relates to the Transferred interest.  For the avoidance of doubt, the
Capital Account balance for each Series A Preferred Mirror Unit shall initially
equal the Liquidation Preference per Series A Preferred Mirror Unit as of the
date such Series A Preferred Mirror Unit is initially issued and shall be
increased as set forth in Section 5.5(d).

 

Section 5.4            Allocations of Profits and Losses.  Subject to
Section 5.5(d), except as otherwise provided in this Agreement, Profits and
Losses (and, to the extent necessary, individual items of income, gain or loss
or deduction of the Partnership) shall be allocated in a manner such that the
Capital Account of each Partner after giving effect to the Special Allocations
set forth in Section 5.5 is, as nearly as possible, equal (proportionately) to
(i) the distributions that would be made pursuant to Article IV if the
Partnership were dissolved, its affairs wound up and its assets sold for cash
equal to their Carrying Value, all Partnership liabilities were satisfied
(limited with respect to each non-recourse liability to the Carrying Value of
the assets securing such liability) and the net assets of the Partnership were
distributed to the Partners pursuant to this Agreement, minus (ii) such
Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain, computed immediately prior to the hypothetical sale of assets. For
purposes of this Article V, each Unvested Unit may be treated as a Vested Unit. 
Notwithstanding the foregoing, the General Partner shall make such adjustments

 

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to Capital Accounts as it determines in its sole discretion to be appropriate to
ensure allocations are made in accordance with a Partner’s interest in the
Partnership.

 

Section 5.5            Special Allocations.  Notwithstanding any other provision
in this Article V:

 

(a)           Minimum Gain Chargeback. If there is a net decrease in Partnership
Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance
with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i))
during any Partnership taxable year, the Partners shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to their respective shares of such net
decrease during such year, determined pursuant to Treasury Regulations
Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be
determined in accordance with Treasury Regulations Section 1.704-2(f). This
Section 5.5(a) is intended to comply with the minimum gain chargeback
requirements in such Treasury Regulations Sections and shall be interpreted
consistently therewith; including that no chargeback shall be required to the
extent of the exceptions provided in Treasury Regulations
Sections 1.704-2(f) and 1.704-2(i)(4).

 

(b)           Qualified Income Offset. If any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the deficit balance in such Partner’s Adjusted Capital
Account Balance created by such adjustments, allocations or distributions as
promptly as possible; provided that an allocation pursuant to this
Section 5.5(b) shall be made only to the extent that a Partner would have a
deficit Adjusted Capital Account Balance in excess of such sum after all other
allocations provided for in this Article V have been tentatively made as if this
Section 5.5(b) were not in this Agreement. This Section 5.5(b) is intended to
comply with the “qualified income offset” requirement of the Code and shall be
interpreted consistently therewith.

 

(c)           Gross Income Allocation. If any Partner has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of (i) the
amount such Partner is obligated to restore, if any, pursuant to any provision
of this Agreement, and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations
Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible; provided that an allocation pursuant to this
Section 5.5(c) shall be made only if and to the extent that a Partner would have
a deficit Capital Account in excess of such sum after all other allocations
provided for in this Article V have been tentatively made as if
Section 5.5(b) and this Section 5.5(c) were not in this Agreement.

 

(d)           Gross Ordinary Income.  Before giving effect to the allocations
set forth in Section 5.4, Gross Ordinary Income for the Fiscal Year shall be
specially allocated pro rata to the holders of Series A Preferred Mirror Units
in an amount equal to the sum of (i) the amount of cash distributed to the
holders of Series A Preferred Mirror Units pursuant to Section 12.3 during such
Fiscal Year and (ii) the excess, if any, of the amount of cash distributed to
the holders of Series A Preferred Mirror Units pursuant to Section 12.3 in all
prior Fiscal Years over the

 

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amount of Gross Ordinary Income allocated to the holders of Series A Preferred
Mirror Units pursuant to this Section 5.5(d) in all prior Fiscal Years.  For
purposes of this Section 5.5(d), “Gross Ordinary Income” means the Partnership’s
gross income excluding any gross income attributable to the sale or exchange of
“capital assets” as defined in Section 1221 of the Code.  Allocations to holders
of Series A Preferred Mirror Units of Gross Ordinary Income shall consist of a
proportionate share of each Partnership item of Gross Ordinary Income for such
Fiscal Year in accordance with each holder’s pro rata percentage of the Series A
Preferred Mirror Units.

 

(e)           Nonrecourse Deductions. Nonrecourse Deductions shall be allocated
to the Partners in accordance with their respective Total Percentage Interests.

 

(f)            Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any taxable period shall be allocated to the Partner who bears the economic
risk of loss with respect to the liability to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(j).

 

(g)           Creditable Non-U.S. Taxes. Creditable Non-U.S. Taxes for any
taxable period attributable to the Partnership, or an entity owned directly or
indirectly by the Partnership, shall be allocated to the Partners in proportion
to the Partners’ distributive shares of income (including income allocated
pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax
relates (under principles of Treasury Regulations Section 1.904-6). The
provisions of this Section 5.5(g) are intended to comply with the provisions of
Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted
consistently therewith.

 

(h)           Ameliorative Allocations. Any special allocations of income or
gain pursuant to Sections 5.5(b) or 5.5(c) hereof shall be taken into account in
computing subsequent allocations pursuant to Section 5.4 and this
Section 5.5(h), so that the net amount of any items so allocated and all other
items allocated to each Partner shall, to the extent possible, be equal to the
net amount that would have been allocated to each Partner if such allocations
pursuant to Sections 5.5(b) or 5.5(c) had not occurred.

 

Section 5.6            Tax Allocations.  For income tax purposes, each item of
income, gain, loss and deduction of the Partnership shall be allocated among the
Partners in the same manner as the corresponding items of Profits and Losses and
specially allocated items are allocated for Capital Account purposes; provided
that in the case of any asset the Carrying Value of which differs from its
adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and
deduction with respect to such asset shall be allocated solely for income tax
purposes in accordance with the principles of Sections 704(b) and (c) of the
Code (in any manner determined by the General Partner and permitted by the Code
and Treasury Regulations) so as to take account of the difference between
Carrying Value and adjusted basis of such asset. Notwithstanding the foregoing,
the General Partner shall make such allocations for tax purposes as it
determines in its sole discretion to be appropriate to ensure allocations are
made in accordance with a partner’s interest in the Partnership.

 

Section 5.7            Tax Advances.  If the General Partner reasonably believes
that the Partnership is required by law to withhold or to make tax payments on
behalf of or with respect to any Partner or the Partnership is subjected to tax
itself by reason of the status of any Partner

 

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(“Tax Advances”), the General Partner may withhold such amounts and make such
tax payments as so required. All Tax Advances made on behalf of a Partner shall
be repaid by reducing the amount of the current or next succeeding distribution
or distributions which would otherwise have been made to such Partner or, if
such distributions are not sufficient for that purpose, by so reducing the
proceeds of liquidation otherwise payable to such Partner. For all purposes of
this Agreement such Partner shall be treated as having received the amount of
the distribution that is equal to the Tax Advance. Each Partner hereby agrees to
indemnify and hold harmless the Partnership and the other Partners from and
against any liability (including any liability for taxes, penalties, additions
to tax or interest  other than any penalties, additions to tax or interest
imposed as a result of the Partnership’s failure to withhold or make a tax
payment on behalf of such Partner which withholding or payment is required
pursuant to applicable Law but only to the extent amounts sufficient to pay such
taxes were not timely distributed to the Partner pursuant to Section 4.1(b))
with respect to income attributable to or distributions or other payments to
such Partner.

 

Section 5.8            Tax Matters.  The General Partner shall be the “tax
matters partner” of the Partnership for purposes of Section 6231(a)(7) of the
Code (prior to amendment by P.L. 114-74) and the “partnership representative” of
the Partnership for purposes of Section 6223 of the Code (after amendment by
P.L. 114-74). The Partnership shall file as a partnership for federal, state,
provincial and local income tax purposes, except where otherwise required by
Law. All elections required or permitted to be made by the Partnership, and all
other tax decisions and determinations relating to federal, state, provincial or
local tax matters of the Partnership, shall be made by the tax matters partner
or partnership representative, as applicable. Tax audits, controversies and
litigations shall be conducted under the direction of the tax matters partner or
partnership representative, as applicable. The General Partner shall cause all
required federal, state or local tax returns and reports of the Partnership to
be prepared and filed, and shall be responsible for all other tax matters of the
Partnership. All costs and expenses incurred by the General Partner related to
any tax matters provided for in this Section 5.8, including, without limitation,
all fees and expenses of any accounting firm engaged by the General Partner with
respect to the Partnership and any costs and expenses related to any audit,
declaration of any tax deficiency or any administrative proceeding or litigation
involving any Partnership tax matter, shall be Partnership expenses. Each
Partner agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner in connection
with the conduct of all such proceedings. The tax matters partner or partnership
representative, as applicable, shall keep the other Partners reasonably informed
as to any tax actions, examinations or proceedings relating to the Partnership
and shall submit to the other Partners, for their review and comment, any
settlement or compromise offer with respect to any disputed item of income,
gain, loss, deduction or credit of the Partnership. As soon as reasonably
practicable after the end of each Fiscal Year, the Partnership shall send to
each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any
comparable statements required by applicable U.S. state or local income tax Law
as a result of the Partnership’s activities or investments, with respect to such
Fiscal Year. The Partnership also shall provide the Partners with such other
information as may be reasonably requested for purposes of allowing the Partners
to prepare and file their own tax returns.

 

Section 5.9            Other Allocation Provisions.  Certain of the foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended

 

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to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with such regulations. In addition to
amendments effected in accordance with Section 11.6 or otherwise in accordance
with this Agreement, Sections 5.3, 5.4 and 5.5 may also, so long as any such
amendment does not materially change the relative economic interests of the
Partners, be amended at any time by the General Partner if necessary or
desirable, as determined by the General Partner in its discretion, to comply
with such regulations or any applicable Law.

 

ARTICLE VI

 

BOOKS AND RECORDS; REPORTS

 

Section 6.1            Books and Records.

 

(a)           At all times during the continuance of the Partnership, the
Partnership shall prepare and maintain separate books of account for the
Partnership in accordance with GAAP.

 

(b)           Except as limited by Section 6.1(c), each Limited Partner shall
have the right to receive, for a purpose reasonably related to such Limited
Partner’s interest as a Limited Partner in the Partnership, upon reasonable
written demand stating the purpose of such demand and at such Limited Partner’s
own expense:

 

(i)            a copy of the Certificate and this Agreement and all amendments
thereto, together with a copy of the executed copies of all powers of attorney
pursuant to which the Certificate and this Agreement and all amendments thereto
have been executed; and

 

(ii)           promptly after their becoming available, copies of the
Partnership’s federal income tax returns for the three most recent years.

 

(c)           The General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
discretion, (i) any information that the General Partner reasonably believes to
be in the nature of trade secrets or (ii) other information the disclosure of
which the General Partner believes is not in the best interests of the
Partnership, could damage the Partnership or its business or that the
Partnership is required by law or by agreement with any third party to keep
confidential.

 

ARTICLE VII

 

PARTNERSHIP UNITS

 

Section 7.1            Units.  Interests in the Partnership shall be represented
by Units. The Units are comprised of one Class of Common Units, the Class A
Units, and one Class of Preferred Units, the Series A Preferred Mirror Units.
The General Partner in its sole discretion may establish and issue, from time to
time in accordance with such procedures as the General Partner shall determine
from time to time, additional Units, in one or more Classes or series of Units,
or other Partnership securities, at such price, and with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties (which may be senior to existing Units, Classes and series of
Units or other Partnership securities), as shall be determined

 

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by the General Partner without the approval of any Partner or any other Person
who may acquire an interest in any of the Units, including (i) the right of such
Units to share in Profits and Losses or items thereof; (ii) the right of such
Units to share in Partnership distributions; (iii) the rights of such Units upon
dissolution and liquidation of the Partnership; (iv) whether, and the terms and
conditions upon which, the Partnership may or shall be required to redeem such
Units (including sinking fund provisions); (v) whether such Units are issued
with the privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange; (vi) the terms and conditions upon
which such Units will be issued, evidenced by certificates and assigned or
Transferred; (vii) the method for determining the Total Percentage Interest, if
any, as to such Units; (viii) the terms and conditions of the issuance of such
Units (including the amount and form of consideration, if any, to be received by
the Partnership in respect thereof, the General Partner being expressly
authorized, in its sole discretion, to cause the Partnership to issue such Units
for less than fair market value); and (ix) the right, if any, of the holder of
such Units to vote on Partnership matters, including matters relating to the
relative designations, preferences, rights, powers and duties of such Units. The
General Partner in its sole discretion, without the approval of any Partner or
any other Person, is authorized (i) to issue Units or other Partnership
securities of any newly established Class or any existing Class to Partners or
other Persons who may acquire an interest in the Partnership and (ii) to amend
this Agreement to reflect the creation of any such new Class, the issuance of
Units or other Partnership securities of such Class, and the admission of any
Person as a Partner which has received Units or other Partnership securities.
Except as expressly provided in this Agreement to the contrary, any reference to
“Units” shall include the Class A Units, the Preferred Units and Units of any
other Class or series that may be established in accordance with this Agreement.
All Units of a particular Class shall have identical rights in all respects as
all other Units of such Class, except in each case as otherwise specified in
this Agreement.

 

Section 7.2            Register.  The register of the Partnership shall be the
definitive record of ownership of each Unit and all relevant information with
respect to each Partner. Unless the General Partner shall determine otherwise,
Units shall be uncertificated and recorded in the books and records of the
Partnership.

 

Section 7.3            Registered Partners.  The Partnership shall be entitled
to recognize the exclusive right of a Person registered on its records as the
owner of Units for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in Units on the part of any other
Person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the Act or other applicable Law.

 

ARTICLE VIII

 

VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

 

Section 8.1            Vesting of Unvested Units.

 

(a)           A Partner’s Unvested Units shall vest and shall thereafter be
Vested Units for all purposes of this Agreement as set forth in any applicable
Supplemental Agreement and reflected in the books and records of the
Partnership.

 

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(b)           The General Partner in its sole discretion may authorize the
earlier vesting of all or a portion of Unvested Units owned by any one or more
Partners at any time and from time to time, and in such event, such Unvested
Units shall vest and thereafter be Vested Units for all purposes of this
Agreement. Any such determination in the General Partner’s discretion in respect
of Unvested Units shall be final and binding. Nothing in this Agreement shall
obligate the General Partner or the Partnership to treat any Partially Unvested
Partners alike, whether or not such Partners are similarly situated, and the
exercise of any power or discretion by the General Partner or the Partnership in
the case of any Partially Unvested Partner shall not create any obligation on
the part of the General Partner or the Partnership to take any similar action in
the case of any other Partially Unvested Partner, it being understood that any
power or discretion conferred upon the General Partner shall be treated as
having been so conferred as to each Partially Unvested Partner separately.

 

(c)           Upon the vesting of any Unvested Units in accordance with this
Section 8.1, the General Partner shall modify the books and records of the
Partnership to reflect such vesting.

 

Section 8.2            Forfeiture of Units.

 

(a)           Units owned by a Partner are subject to forfeiture or cancellation
as set forth in any Supplemental Agreement or schedule or exhibit to this
Agreement applicable to such Partner.

 

(b)           If any Ares Owners Mirror Units are forfeited or cancelled for no
consideration, a number of Class A Units held by Ares Owners LP equal to the
product of the number of Ares Owners Mirror Units, as applicable, so forfeited
or cancelled multiplied by the Corresponding Rate shall be automatically
forfeited or cancelled, as the case may be.

 

(c)           If any Common Units owned by Ares Owners LP or a Service Provider
(or a Person who is a Permitted Transferee of a Service Provider) are forfeited
or cancelled for no consideration, a number of Class A Units held by the Issuer
(or if the Issuer does not hold any Class A Units, by the General Partner) equal
to the product of the number of Common Units so forfeited or cancelled
multiplied by the Corresponding Rate shall be automatically forfeited or
cancelled, as the case may be.

 

(d)           Notwithstanding anything otherwise to the contrary herein,
including Section 9.6 and Section 10.1, if any Person who is or was at any time
a Service Provider shall fail to perform when due any “giveback,” “true-up” or
“clawback” obligation owed by such Person to the Partnership or any of its
Affiliates or to any Fund managed by an Ares Company, the General Partner may in
its sole discretion and without the consent of any other Person, cause to be
forfeited a number of Units held by such Person (or any Permitted Transferee of
such Person), or in which such Person (or any Permitted Transferee of such
Person) has an indirect interest, as set forth in the books and records of the
Partnership, equivalent in value to the obligation which was not performed, as
determined by the General Partner in its sole discretion. Any such determination
shall be final and binding. Nothing in this Agreement shall obligate the General
Partner or the Partnership to treat any Persons alike, whether or not such
Persons are similarly situated, and the exercise of any power or discretion by
the General Partner or the

 

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Partnership in the case of any Person shall not create any obligation on the
part of the General Partner or the Partnership to take any similar action in the
case of any other Person, it being understood that any power or discretion
conferred upon the General Partner shall be treated as having been so conferred
as to each Person separately.

 

(e)           Upon the forfeiture of any Units in accordance with this
Section 8.2, such Units shall be cancelled, the Partnership shall have no
obligations with respect to such Units and the General Partner shall modify the
books and records of the Partnership to reflect such forfeiture and
cancellation.

 

Section 8.3            Limited Partner Transfers.

 

(a)           Except as otherwise agreed to in writing between the General
Partner and the applicable Limited Partner and reflected in the books and
records of the Partnership, no Limited Partner or Assignee thereof may Transfer
(including pursuant to an Exchange Transaction) all or any portion of its Units
or other interest in the Partnership (or beneficial interest therein) without
the prior consent of the General Partner, which consent may be given or
withheld, or made subject to such conditions (including the receipt of such
legal opinions and other documents that the General Partner may require) as are
determined by the General Partner, in each case in the General Partner’s sole
discretion, and which consent may be in the form of a plan or program entered
into or approved by the General Partner, in its sole discretion. Any such
determination in the General Partner’s discretion in respect of Units shall be
final and binding. Nothing in this Agreement shall obligate the General Partner
or the Partnership to treat any Limited Partners alike, whether or not such
Limited Partners are similarly situated, and the exercise of any power or
discretion by the General Partner or the Partnership in the case of any Limited
Partner shall not create any obligation on the part of the General Partner or
the Partnership to take any similar action in the case of any other Limited
Partner, it being understood that any power or discretion conferred upon the
General Partner shall be treated as having been so conferred as to each Limited
Partner separately. Any purported Transfer of Units that is not in accordance
with, or subsequently violates, this Agreement shall be, to the fullest extent
permitted by law, null and void.

 

(b)           Notwithstanding clause (a) above, subject to Section 8.6, each
Limited Partner may Transfer Units in Exchange Transactions pursuant to, and in
accordance with, the Exchange Agreement; provided that such Exchange
Transactions shall be effected in compliance with policies that the General
Partner (or any other Ares Company) may adopt or promulgate from time to time
(including policies requiring the use of designated administrators or brokers).

 

(c)           Notwithstanding anything otherwise to the contrary in this
Section 8.3, a Limited Partner (other than Alleghany) may Transfer Units to any
of its Permitted Transferees and Alleghany may Transfer Units to any Alleghany
Permitted Transferee.

 

(d)           Notwithstanding anything otherwise to the contrary in this
Section 8.3, upon the enforcement of the remedies available upon the occurrence
and during the continuance of an event of default under any Credit Agreement or
any Collateral Agreement, in each case in accordance with such agreements
(including any limitations set forth therein), to the extent that the interests
pledged under such agreements constitute collateral (or any similar term) under
such

 

25

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Credit Agreement or Collateral Agreement, the administrative agent, collateral
agent, trustee or other person acting in a similar capacity under such Credit
Agreement or Collateral Agreement or any transferee or assignee who forecloses
upon an interest in such collateral in connection with such permitted
enforcement of remedies upon the occurrence and during the continuance of an
event of default under such Credit Agreement or Collateral Agreement (to the
extent not prohibited pursuant to the terms of such Credit Agreement or any
applicable Collateral Agreement) shall be automatically admitted as a Limited
Partner and shall have all of the rights and powers of the Limited Partner that
previously owned such interest without any further consent of any Partner.

 

Section 8.4            Mandatory Exchanges.  The General Partner may in its sole
discretion at any time and from time to time, without the consent of any Limited
Partner or other Person, cause to be Transferred in an Exchange Transaction any
and all Units. Nothing in this Agreement shall obligate the General Partner or
the Partnership to treat any Limited Partners alike, whether or not such Limited
Partners are similarly situated, and the exercise of any power or discretion by
the General Partner or the Partnership in the case of any Limited Partner shall
not create any obligation on the part of the General Partner or the Partnership
to take any similar action in the case of any other Limited Partner, it being
understood that any power or discretion conferred upon the General Partner shall
be treated as having been so conferred as to each Limited Partner separately.

 

Section 8.5            Encumbrances.  No Partner or Assignee may create an
Encumbrance with respect to all or any portion of its Units (or any beneficial
interest therein) other than Encumbrances that run in favor of the Partner
unless the General Partner consents in writing thereto, which consent may be
given or withheld, or made subject to such conditions as are determined by the
General Partner, in the General Partner’s sole discretion. Consent of the
General Partner shall be withheld until the holder of the Encumbrance
acknowledges the terms and conditions of this Agreement. Any purported
Encumbrance that is not in accordance with this Agreement shall be, to the
fullest extent permitted by law, null and void.

 

Section 8.6            Further Restrictions.

 

(a)           Notwithstanding any contrary provision in this Agreement, the
General Partner may impose such vesting requirements, forfeiture provisions,
Transfer restrictions, minimum retained ownership requirements or other similar
provisions with respect to any Units that are outstanding as of the Effective
Date or are created thereafter, with the written consent of the holder of such
Units. Nothing in this Agreement shall obligate the General Partner or the
Partnership to treat any Partners alike, whether or not such Partners are
similarly situated, and such requirements, provisions and restrictions may be
waived or released by the General Partner in its sole discretion with respect to
all or a portion of the Units owned by any one or more Partners.  The exercise
of any power or discretion by the General Partner or the Partnership in the case
of any Partner shall not create any obligation on the part of the General
Partner or the Partnership to take any similar action in the case of any other
Partner, it being understood that any power or discretion conferred upon the
General Partner shall be treated as having been so conferred as to each Partner
separately.

 

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(b)           Notwithstanding any contrary provision in this Agreement, in no
event may any Transfer of a Unit be made by any Limited Partner or Assignee if:

 

(i)            such Transfer is made to any Person who lacks the legal right,
power or capacity to own such Unit;

 

(ii)           such Transfer would require the registration of such Transferred
Unit or of any Class of Units pursuant to any applicable U.S. federal or state
securities Laws (including the Securities Act or the Exchange Act) or other
non-U.S. securities Laws (including Canadian provincial or territorial
securities laws) or would constitute a non-exempt distribution pursuant to
applicable provincial or state securities Laws;

 

(iii)          such Transfer would cause (A) all or any portion of the assets of
the Partnership to (1) constitute “plan assets” (under ERISA, the Code or any
applicable Similar Law) of any existing or contemplated Limited Partner, or
(2) be subject to the provisions of ERISA, Section 4975 of the Code or any
applicable Similar Law, or (B) the General Partner to become a fiduciary with
respect to any existing or contemplated Limited Partner, pursuant to ERISA, any
applicable Similar Law, or otherwise;

 

(iv)          to the extent requested by the General Partner, the Partnership
does not receive such legal or tax opinions and written instruments (including
copies of any instruments of Transfer and such Assignee’s consent to be bound by
this Agreement as an Assignee) that are in a form satisfactory to the General
Partner, as determined in the General Partner’s discretion;

 

(v)           such Transfer would violate, or cause any Relevant Entity, to
violate, any applicable Law of any jurisdiction; or

 

(vi)          the General Partner shall determine in its sole discretion that
such Transfer would pose a material risk that the Partnership would be a
“publicly traded partnership” as defined in Section 7704 of the Code.

 

In addition, notwithstanding any contrary provision in this Agreement, to the
extent the General Partner shall determine that interests in the Partnership do
not meet the requirements of Treasury Regulation section 1.7704-1(h), the
General Partner may impose such restrictions on the Transfer of Units or other
interests in the Partnership as the General Partner may determine in its sole
discretion to be necessary or advisable so that the Partnership is not treated
as a publicly traded partnership taxable as a corporation under Section 7704 of
the Code.

 

(c)           Any Transfer in violation of this Article VIII shall be deemed
null and void ab initio and of no effect.

 

Section 8.7            Rights of Assignees.  Subject to Section 8.6(b), the
Transferee of any permitted Transfer pursuant to this Article VIII will be an
assignee only (“Assignee”), and only will receive, to the extent Transferred,
the distributions and allocations of income, gain, loss, deduction, credit or
similar item to which the Partner which Transferred its Units would be entitled,
and such Assignee will not be entitled or enabled to exercise any other rights
or powers of a Partner, such other rights, and all obligations relating to, or
in connection with, such interest

 

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remaining with the Transferring Partner. The Transferring Partner will remain a
Partner even if it has Transferred all of its Units to one or more Assignees
until such time as the Assignee(s) is admitted to the Partnership as a Partner
pursuant to Section 8.9.

 

Section 8.8            Admissions, Withdrawals and Removals.

 

(a)           No Person may be admitted to the Partnership as an additional or
substitute General Partner without the prior written consent of each incumbent
General Partner, which consent may be given or withheld, or made subject to such
conditions as are determined by each incumbent General Partner, in each case in
the sole discretion of each incumbent General Partner. A General Partner will
not be entitled to withdraw from being a General Partner of the Partnership
unless another General Partner shall have been admitted hereunder (and not have
previously been removed or withdrawn).

 

(b)           No Limited Partner will be removed or entitled to withdraw from
being a Partner of the Partnership except in accordance with Section 8.10
hereof. Any additional General Partner or substitute General Partner admitted as
a general partner of the Partnership pursuant to this Section 8.8 is hereby
authorized to, and shall, continue the Partnership without dissolution.

 

(c)           Except as otherwise provided in Article IX or the Act, no
admission, substitution, withdrawal or removal of a Partner will cause the
dissolution of the Partnership. To the fullest extent permitted by Law, any
purported admission, withdrawal or removal that is not in accordance with this
Agreement shall be null and void.

 

Section 8.9            Admission of Assignees as Substitute Limited Partners. 
An Assignee will become a substitute Limited Partner only if and when each of
the following conditions is satisfied:

 

(a)           the General Partner consents in writing to such admission, which
consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in each case in the General Partner’s sole
discretion;

 

(b)           if required by the General Partner, the General Partner receives
written instruments (including copies of any instruments of Transfer and such
Assignee’s consent to be bound by this Agreement as a substitute Limited
Partner) that are in a form satisfactory to the General Partner (as determined
in its sole discretion);

 

(c)           if required by the General Partner, the General Partner receives
an opinion of counsel satisfactory to the General Partner to the effect that
such Transfer is in compliance with this Agreement and all applicable Law; and

 

(d)           if required by the General Partner, the parties to the Transfer,
or any one of them, pays all of the Partnership’s reasonable expenses connected
with such Transfer (including the reasonable legal and accounting fees of the
Partnership).

 

Section 8.10          Withdrawal and Removal of Limited Partners.  Subject to
Section 8.7, if a Limited Partner ceases to hold any Units, including as a
result of a forfeiture of Units pursuant to Section 8.2, then such Limited
Partner shall cease to be a Limited Partner and to have

 

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the power to exercise any rights or powers of a Limited Partner, and shall be
deemed to have withdrawn from the Partnership.

 

ARTICLE IX

 

DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 9.1            No Dissolution.  Except as required by the Act, the
Partnership shall not be dissolved by the admission of additional Partners or
withdrawal of Partners in accordance with the terms of this Agreement. The
Partnership may be dissolved, liquidated, wound up and terminated only pursuant
to the provisions of this Article IX, and the Partners hereby irrevocably waive
any and all other rights they may have to cause a dissolution of the Partnership
or a sale or partition of any or all of the Partnership assets.

 

Section 9.2            Events Causing Dissolution.  The Partnership shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events (each, a “Dissolution Event”):

 

(a)           the entry of a decree of judicial dissolution of the Partnership
under Section 17-802 of the Act upon the finding by a court of competent
jurisdiction that it is not reasonably practicable to carry on the business of
the Partnership in conformity with this Agreement;

 

(b)           any event which makes it unlawful for the business of the
Partnership to be carried on by the Partners;

 

(c)           the written consent of all Partners;

 

(d)           at any time there are no limited partners, unless the Partnership
is continued in accordance with the Act;

 

(e)           the Incapacity or removal of the General Partner or the occurrence
of a Disabling Event with respect to the General Partner; provided that the
Partnership will not be dissolved or required to be wound up in connection with
any of the events specified in this Section 9.2(e) if: (i) at the time of the
occurrence of such event there is at least one other general partner of the
Partnership who is hereby authorized to, and elects to, carry on the business of
the Partnership; or (ii) all remaining Limited Partners consent to or ratify the
continuation of the business of the Partnership and the appointment of another
general partner of the Partnership, effective as of the event that caused the
General Partner to cease to be a general partner of the Partnership, within
120 days following the occurrence of any such event, which consent shall be
deemed (and if requested each Limited Partner shall provide a written consent or
ratification) to have been given for all Limited Partners if the holders of more
than 50% of the Vested Units then outstanding agree in writing to so continue
the business of the Partnership; or

 

(f)            the determination of the General Partner in its sole discretion;
provided that in the event of a dissolution pursuant to this clause (f), the
relative economic rights of each Class of Units immediately prior to such
dissolution shall be preserved to the greatest extent practicable with respect
to distributions made to Partners pursuant to Section 9.3 below in

 

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connection with the winding up of the Partnership, taking into consideration tax
and other legal constraints that may adversely affect one or more parties hereto
and subject to compliance with applicable Laws, unless, and to the extent that,
with respect to any Class of Units, holders of not less than 90% of the Units of
such Class consent in writing to a treatment other than as described above.

 

Section 9.3            Distribution upon Dissolution.  Upon dissolution, the
Partnership shall not be terminated and shall continue until the winding up of
the affairs of the Partnership is completed. Upon the winding up of the
Partnership, the General Partner, or any other Person designated by the General
Partner (the “Liquidation Agent”), shall take full account of the assets and
liabilities of the Partnership and shall, unless the General Partner determines
otherwise, liquidate the assets of the Partnership as promptly as is consistent
with obtaining the fair value thereof. The proceeds of any liquidation shall be
applied and distributed in the following order:

 

(a)           First, to the satisfaction of debts and liabilities of the
Partnership (including satisfaction of all indebtedness to Partners or their
Affiliates to the extent otherwise permitted by Law) including the expenses of
liquidation, and including the establishment of any reserve which the
Liquidation Agent shall deem reasonably necessary for any contingent,
conditional or unmatured contractual liabilities or obligations of the
Partnership (“Contingencies”). Any such reserve may be paid over by the
Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent,
to be held for disbursement in payment of any Contingencies and, at the
expiration of such period as shall be deemed advisable by the Liquidation Agent
for distribution of the balance in the manner hereinafter provided in this
Section 9.3; and

 

(b)           Subject to Article XII, the balance, if any, to the holders of
Class A Units; pro rata to each of the holders of Class A Units in accordance
with their Total Percentage Interests.

 

Section 9.4            Time for Liquidation.  A reasonable amount of time shall
be allowed for the orderly liquidation of the assets of the Partnership and the
discharge of liabilities to creditors so as to enable the Liquidation Agent to
minimize the losses attendant upon such liquidation.

 

Section 9.5            Termination.  The Partnership shall terminate when all of
the assets of the Partnership, after payment of or due provision for all debts,
liabilities and obligations of the Partnership, shall have been distributed to
the holders of Units in the manner provided for in this Article IX, and the
Certificate shall have been cancelled in the manner required by the Act.

 

Section 9.6            Claims of the Partners.  The Partners shall look solely
to the Partnership’s assets for the return of their Capital Contributions, and
if the assets of the Partnership remaining after payment of or due provision for
all debts, liabilities and obligations of the Partnership are insufficient to
return such Capital Contributions, the Partners shall have no recourse against
the Partnership or any other Partner or any other Person. No Partner with a
negative balance in such Partner’s Capital Account shall have any obligation to
the Partnership or to the other Partners or to any creditor or other Person to
restore such negative balance during the existence of the Partnership, upon
dissolution or termination of the Partnership or otherwise, except to the extent
required by the Act.

 

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Section 9.7            Survival of Certain Provisions.  Notwithstanding anything
to the contrary in this Agreement, the provisions of Sections 10.2, 11.1 and
11.10 shall survive the termination of the Partnership.

 

ARTICLE X

 

LIABILITY AND INDEMNIFICATION

 

Section 10.1          Duties; Liabilities; Exculpation.

 

(a)           This Agreement is not intended to, and does not, create or impose
any fiduciary duty on any Partner (including the General Partner) or on its
Affiliates.  Notwithstanding any other provision of this Agreement or any duty
otherwise existing at law or in equity, the Partners (including the General
Partner) and their respective Affiliates shall, to the maximum extent permitted
by Law, including Section 17-1101(d) of the Act, owe only such duties and
obligations as are expressly set forth in this Agreement, and no other duties
(including fiduciary duties), to the Partnership, the Limited Partners, the
General Partner, the Officers or any other Person otherwise bound by this
Agreement.

 

(b)           To the extent that, at law or in equity, any Partner (including
the General Partner) or its Affiliates has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership, the Limited Partners, the
General Partner, the Officers or any other Person who is party to or is
otherwise bound by this Agreement, any such Person acting under this Agreement
shall not be liable to the Partnership, the Limited Partners, the General
Partner, the Officers or any other Person who is party to or is otherwise bound
by this Agreement for its good faith reliance on the provisions of this
Agreement.  The provisions of this Agreement, to the extent that such provisions
restrict or eliminate the duties and liabilities relating thereto of any Partner
(including the General Partner) or its Affiliates otherwise existing at law or
in equity, are agreed by the Partners to replace to that extent such other
duties and liabilities relating thereto of such Person.

 

(c)           Notwithstanding any other provision of this Agreement, whether
express or implied, to the fullest extent permitted by Law, no Indemnitee shall
be liable to the Partnership or any Partner for any losses, claims, demands,
damages, liabilities (joint or several), expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising as a result of any act or omission (in relation to the Partnership, this
Agreement, any related document or any transaction or investment contemplated
hereby or thereby) of a Indemnitee, or for any breach of contract (including
breach of this Agreement) or any breach of duties (including breach of fiduciary
duties) whether arising hereunder, at law, in equity or otherwise, unless there
has been a final and non-appealable judgment entered by a court of competent
jurisdiction (a “final adjudication”) determining that, in respect of the matter
in question, the Indemnitee acted in bad faith or with criminal intent.

 

(d)           Each Indemnitee shall be entitled to rely in good faith on the
advice of legal counsel to the Partnership, accountants, other experts and
financial or professional advisors, and acting or omitting to act on behalf of
the Partnership or in furtherance of the interests of the Partnership, in each
case, in good faith reliance upon and in accordance with such advice will be

 

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full justification for any such act or omission, and each Indemnitee will be
fully protected in so acting or omitting to act so long as such counsel,
accountants, other experts and financial or professional advisors were selected
with reasonable care.

 

(e)           Notwithstanding any other provision of this Agreement or otherwise
applicable provision of law or in equity, whenever in this Agreement or any
other agreement contemplated hereby the General Partner is permitted to or
required to make or take (or omit to make or take) a determination, evaluation,
election, decision, approval, authorization, consent or other action (howsoever
described herein, each, a “Determination”) (i) in its “discretion” or “sole
discretion” or under a grant of similar authority or latitude, or (ii) pursuant
to any provision not subject to an express standard of “good faith” (regardless
of whether there is a reference to “discretion”, “sole discretion” or any other
standard), then the General Partner (or any of its Affiliates causing it to do
so), in making such Determination, shall not be subject to any fiduciary duty
and shall be entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty or obligation (fiduciary or
otherwise) to give any consideration to any interest of or factors affecting the
Partnership, the Partners, or any other Person (including any creditor of the
Partnership), and shall not be subject to any other or different standards
imposed by this Agreement or otherwise existing at law, in equity or otherwise. 
Notwithstanding the immediately preceding sentence, if a Determination under
this Agreement is to be made or taken by the General Partner in “good faith”,
the General Partner shall act under that express standard and shall not be
subject to any other or different standard under this Agreement or otherwise
existing at law, in equity or otherwise.

 

(f)            For all purposes of this Agreement and notwithstanding any
applicable provision of law or in equity, a Determination or failure to act by
the General Partner conclusively will be deemed to be made, taken or omitted to
be made or taken in “good faith”, and shall not be a breach of this Agreement,
unless the General Partner subjectively believed such Determination or failure
to act was opposed to the best interests of the Partnership.  In any proceeding
brought by the Partnership, any Limited Partner, any Person who acquires an
interest in a Unit or any other Person who is bound by this Agreement
challenging such Determination or failure to act, notwithstanding any provision
of law or equity to the contrary, the Person bringing or prosecuting such
proceeding shall have the burden of proving that such Determination or failure
to act was not in good faith.  Any Determination taken or made by the General
Partner or any other Indemnitee which is not in breach of this Agreement shall
be deemed taken or determined in compliance with this Agreement, the Act and any
other applicable fiduciary requirements.

 

(g)           The Limited Partners expressly acknowledge that the General
Partner is under no obligation to consider the separate interests of the Limited
Partners (including the tax consequences to Limited Partners) in deciding
whether to cause the Partnership to take (or decline to take) any
Determinations, and that the General Partner shall not be liable to the Limited
Partners for monetary damages or equitable relief for losses sustained,
liabilities incurred or benefits not derived by Limited Partners in connection
with such Determinations.

 

(h)           Notwithstanding any other provision of this Agreement, to the
extent that any provision of this Agreement, including the provisions of this
Section 10.1, purports (i) to restrict or otherwise modify or eliminate the
duties (including fiduciary duties), obligations and

 

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liabilities of the General Partner or any other Indemnitee otherwise existing at
law or in equity or (ii) to constitute a waiver or consent by the Partnership,
the Limited Partners or any other Person who acquires an interest in a Unit to
any such restriction, modification or elimination, such provision shall be
deemed to have been approved by the Partnership, all of the Partners, and each
other Person who has acquired an interest in a Unit.

 

Section 10.2          Indemnification.

 

(a)           Indemnification. To the fullest extent permitted by law, as the
same exists or hereafter be amended (but in the case of any such amendment, only
to the extent that such amendment permits the Partnership to provide broader
indemnification rights than such law permitted the Partnership to provide prior
to such amendment), the Partnership shall indemnify any Indemnitee who was or is
made or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding (brought in the
right of the Partnership or otherwise), whether civil, criminal, administrative,
arbitrative or investigative, and whether formal or informal, including appeals,
by reason of his or her or its status as an Indemnitee or by reason of any
action alleged to have been taken or omitted to be taken by Indemnitee in such
capacity, for and against all loss and liability suffered and expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
reasonably incurred by such Indemnitee in connection with such action, suit or
proceeding, including appeals; provided that such Indemnitee shall not be
entitled to indemnification hereunder if, but only to the extent that, such
Indemnitee acted in bad faith or with criminal intent. Notwithstanding the
preceding sentence, except as otherwise provided in Section 10.2(c), the
Partnership shall be required to indemnify an Indemnitee in connection with any
action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee
only if the commencement of such action, suit or proceeding (or part thereof) by
such Indemnitee was authorized by the General Partner and (ii) by or in the
right of the Partnership only if the General Partner has provided its prior
written consent. The indemnification of an Indemnitee of the type identified in
clause (d) of the definition of Indemnitee shall be secondary to any and all
indemnification to which such Indemnitee is entitled from (x) the relevant other
Person (including any payment made to such Indemnitee under any insurance policy
issued to or for the benefit of such Person or Indemnitee), and (y) the relevant
Fund (if applicable) (including any payment made to such Indemnitee under any
insurance policy issued to or for the benefit of such Fund or the Indemnitee)
(clauses (x) and (y) together, the “Primary Indemnification”), and will only be
paid to the extent the Primary Indemnification is not paid and/or does not
provide coverage (e.g., a self-insured retention amount under an insurance
policy). No such Person or Fund shall be entitled to contribution or
indemnification from or subrogation against the Partnership. The indemnification
of any other Indemnitee shall, to the extent not in conflict with such policy,
be secondary to any and all payment to which such Indemnitee is entitled from
any relevant insurance policy issued to or for the benefit of the Partnership or
any Indemnitee.

 

(b)           Advancement of Expenses. To the fullest extent permitted by law,
the Partnership shall promptly pay expenses (including attorneys’ fees) incurred
by any Indemnitee in appearing at, participating in or defending any action,
suit or proceeding in advance of the final disposition of such action, suit or
proceeding, including appeals, upon presentation of an undertaking on behalf of
such Indemnitee to repay such amount if it shall ultimately be determined that
such Indemnitee is not entitled to be indemnified under this Section 10.2 or

 

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otherwise. Notwithstanding the preceding sentence, except as otherwise provided
in Section 10.2(c), the Partnership shall be required to pay expenses of an
Indemnitee in connection with any action, suit or proceeding (or part thereof)
(i) commenced by such Indemnitee only if the commencement of such action, suit
or proceeding (or part thereof) by such Indemnitee was authorized by the General
Partner and (ii) by or in the right of the Partnership only if the General
Partner has provided its prior written consent.

 

(c)           Unpaid Claims. If a claim for indemnification (following the final
disposition of such action, suit or proceeding) or advancement of expenses under
this Section 10.2 is not paid in full within 30 days after a written claim
therefor by any Indemnitee has been received by the Partnership, such Indemnitee
may file proceedings to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Partnership shall have the burden
of proving that such Indemnitee is not entitled to the requested indemnification
or advancement of expenses under applicable Law.

 

(d)           Insurance.

 

(i)            To the fullest extent permitted by law, the Partnership may
purchase and maintain insurance on behalf of any person described in
Section 10.2(a) against any liability asserted against such person, whether or
not the Partnership would have the power to indemnify such person against such
liability under the provisions of this Section 10.2 or otherwise.

 

(ii)           In the event of any payment by the Partnership under this
Section 10.2, the Partnership shall be subrogated to the extent of such payment
to all of the rights of recovery of the Indemnitee from any relevant other
Person or under any insurance policy issued to or for the benefit of the
Partnership, such relevant other Person, or any Indemnitee. Each Indemnitee
agrees to execute all papers required and take all action necessary to secure
such rights, including the execution of such documents as are necessary to
enable the Partnership to bring suit to enforce any such rights in accordance
with the terms of such insurance policy or other relevant document. The
Partnership shall pay or reimburse all expenses actually and reasonably incurred
by the Indemnitee in connection with such subrogation.

 

(iii)          The Partnership shall not be liable under this Section 10.2 to
make any payment of amounts otherwise indemnifiable hereunder (including, but
not limited to, judgments, fines and amounts paid in settlement, and excise
taxes with respect to an employee benefit plan or penalties) if and to the
extent that the applicable Indemnitee has otherwise actually received such
payment under this Section 10.2 or any insurance policy, contract, agreement or
otherwise.

 

(e)           Non-Exclusivity of Rights. The provisions of this Section 10.2
shall be applicable to all actions, claims, suits or proceedings made or
commenced after the date of this Agreement, whether arising from acts or
omissions to act occurring before or after its adoption. The provisions of this
Section 10.2 shall be deemed to be a contract between the Partnership and each
person entitled to indemnification under this Section 10.2 (or legal
representative thereof) who serves in such capacity at any time while this
Section 10.2 and the relevant provisions of

 

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applicable Law, if any, are in effect, and any amendment, modification or repeal
hereof shall not affect any rights or obligations then existing with respect to
any state of facts or any action, suit or proceeding then or theretofore
existing, or any action, suit or proceeding thereafter brought or threatened
based in whole or in part on any such state of facts. If any provision of this
Section 10.2 shall be found to be invalid or limited in application by reason of
any law or regulation, it shall not affect the validity of the remaining
provisions hereof. The rights of indemnification provided in this Section 10.2
shall neither be exclusive of, nor be deemed in limitation of, any rights to
which any person may otherwise be or become entitled or permitted by contract,
this Agreement or as a matter of law, both as to actions in such person’s
official capacity and actions in any other capacity, it being the policy of the
Partnership that indemnification of any person whom the Partnership is obligated
to indemnify pursuant to Section 10.2(a) shall be made to the fullest extent
permitted by law.

 

For purposes of this Section 10.2, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to “serving at the request of the Partnership” shall include any
service as a director, officer, employee or agent of the Partnership which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries.

 

This Section 10.2 shall not limit the right of the Partnership, to the extent
and in the manner permitted by law, to indemnify and to advance expenses to, and
purchase and maintain insurance on behalf of, persons other than persons
described in Section 10.2(a).

 

ARTICLE XI

 

MISCELLANEOUS

 

Section 11.1          Dispute Resolution.

 

(a)           The Partnership and each Partner, each other Person who acquires a
Unit or other interest in the Partnership and each other Person who is bound by
this Agreement (collectively, the “Consenting Parties” and each a “Consenting
Party”) agrees that any dispute, claim or controversy of whatever nature
directly or indirectly relating to or arising out of the Agreement, the
termination or validity thereof, or any alleged breach thereof, including the
determination of the scope or applicability of this agreement to arbitrate,
shall be determined  by arbitration in Los Angeles, California before a panel of
three arbitrators.  The arbitration shall be administered by JAMS/ENDISPUTE
pursuant to its Comprehensive Arbitration Rules and Procedures.  The language of
the arbitration shall be English.  Each party to such dispute shall be entitled
to choose one arbitrator, and the chosen arbitrators shall choose the third
arbitrator.  All arbitrators shall be chosen from the JAMS arbitration panel. 
The arbitrators shall, in their award, allocate all of the costs of the
arbitration (and the mediation, if applicable), including the fees of the
arbitrators and the reasonable attorneys’ fees of the prevailing party, against
the party who did not prevail.  The award in the arbitration shall be final and
binding.  The arbitration shall be governed by the federal arbitration act, 9
U.S.C. §§1—16, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof.  This arbitration clause shall
not preclude any party from obtaining provisional relief or interim measures of
protection,

 

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including injunctive relief, from a court of appropriate jurisdiction to protect
its rights under this Agreement.  Each party agrees and consents to personal
jurisdiction, service of process and exclusive venue in any federal or state
court within the State of California, County of Los Angeles, in connection with
any action brought pursuant to clause (b) below or in connection with a request
for any such provisional relief or interim measures of protection, and in
connection with any action to enforce this arbitration clause or an award in
arbitration and agrees not to assert, by way of motion, as a defense or
otherwise, that any action brought in any such court should be dismissed on
grounds of forum non conveniens.  Each party to this Agreement consents to
mailing of process or other papers in connection with any such arbitration or
action by certified mail in the manner and to the addresses provided in
Section 11.11.

 

(b)           The parties hereto agree that irreparable damage may occur if any
provision of this Agreement were not performed in accordance with the terms
hereof or thereof and that the parties shall be entitled to seek an injunction
to prevent breaches of this Agreement or to enforce specifically the performance
of the terms and provisions hereof or thereof in accordance with the provisions
of this Section 11.1(b), in addition to any other remedy to which they are
entitled at law or in equity. No party seeking relief under this
Section 11.1(b) shall be required to post a bond or prove special damages.

 

Section 11.2          Severability.  If any term or other provision of this
Agreement is held to be invalid, illegal or incapable of being enforced by any
rule of Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.

 

Section 11.3          Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, executors, administrators, heirs, legal
representatives and assigns.

 

Section 11.4          Further Assurances.  Each Limited Partner shall perform
all other acts and execute and deliver all other documents as may be necessary
or appropriate to carry out the purposes and intent of this Agreement.

 

Section 11.5          Expenses.  Except as otherwise specified in this
Agreement, the Partnership shall be responsible for all costs and expenses,
including fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with its operation.

 

Section 11.6          Amendments and Waivers.

 

(a)           This Agreement (including the Annexes hereto) may be amended,
supplemented, waived or modified by the General Partner in its sole discretion
without the approval of any Limited Partner or other Person; provided that no
amendment may (i) materially and adversely affect the rights of a holder of
Units, as such, other than on a pro rata basis with

 

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other holders of Units of the same Class without the consent of such holder (or,
if there is more than one such holder that is so affected, without the consent
of a majority in interest of such affected holders in accordance with their
holdings of such Class of Units) or (ii) materially and adversely affect the
rights of Alleghany without the prior written consent of Alleghany; provided
further, however, that notwithstanding the foregoing, the General Partner may,
without the written consent of any Limited Partner or any other Person, amend,
supplement, waive or modify any provision of this Agreement and execute, swear
to, acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect: (i) any amendment, supplement, waiver or
modification that the General Partner determines to be necessary, appropriate,
proper, advisable or incidental in connection with, or in furtherance of, the
creation, authorization or issuance of Units or any Class or series of equity
interest in the Partnership or options, rights, warrants or appreciation rights
relating to equity interest in the Partnership pursuant to Section 7.1 hereof;
(ii) the admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement, including pursuant to Section 7.1 hereof;
(iii) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership; (iv) any amendment, supplement, waiver
or modification that the General Partner determines in its sole discretion to be
necessary, appropriate, proper, advisable or incidental to, or in furtherance
of, addressing changes in U.S. federal, state or local income tax regulations,
legislation or interpretation; (v) a change in the Fiscal Year or taxable year
of the Partnership and any other changes that the General Partner determines to
be necessary or appropriate as a result of a change in the Fiscal Year or
taxable year of the Partnership including a change in the dates on which
distributions are to be made by the Partnership; (vi) a change that the General
Partner determines in its sole discretion is necessary, appropriate, proper,
advisable or incidental to, or in furtherance of, qualifying or continuing the
qualification of the Partnership as a limited partnership or a partnership in
which the Limited Partners have limited liability under the laws of any state or
other jurisdiction; (vii) an amendment that the General Partner determines is
necessary or appropriate, based on the advice of counsel, to prevent the
Partnership, or the General Partner or its Indemnitees, from having a material
risk of being in any manner subjected to registration under the provisions of
the U.S. Investment Company Act of 1940 or the U.S. Investment Advisers Act of
1940, or “plan asset” regulations adopted under the U.S. Employee Retirement
Income Security Act of 1974, regardless of whether such are substantially
similar to plan asset regulations currently applied or proposed by the United
States Department of Labor; (viii) any amendment expressly permitted in this
Agreement to be made by the General Partner acting alone; (ix) an amendment that
the General Partner determines in its sole discretion to be necessary,
appropriate, proper, advisable or incidental to, or in furtherance of,
reflecting and accounting for the formation by the Partnership of, or investment
by the Partnership in, any corporation, partnership, joint venture, limited
liability company or other entity; (x) any amendment to Section 11.1 that the
General Partner determines in good faith; (xi) any amendment that the General
Partner determines to be necessary, appropriate, proper, advisable or incidental
to, or in furtherance of, curing any ambiguity, omission, mistake, defect or
inconsistency; or (xii) any other amendments that the General Partner determines
to be substantially similar to the foregoing. If an amendment has been approved
in accordance with this Agreement, such amendment shall be adopted and effective
with respect to all Partners.  Upon obtaining such approvals as may be required
by this Agreement, and without further action or execution on the part of any
other Partner or other Person, any amendment to this Agreement

 

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may be implemented and reflected in a writing executed solely by the General
Partner and the Limited Partners shall be deemed a party to and bound by such
amendment.

 

(b)           No failure or delay by any party in exercising any right, power or
privilege hereunder (other than a failure or delay beyond a period of time
specified herein) shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.

 

(c)           The General Partner may, in its sole discretion, unilaterally
amend this Agreement on or before the effective date of the final regulations to
provide for (i) the election of a safe harbor under Proposed Treasury
Regulation Section 1.83-3(l) (or any similar provision) under which the fair
market value of a partnership interest (or interest in an entity treated as a
partnership for U.S. federal income tax purposes) that is Transferred is treated
as being equal to the liquidation value of that interest, (ii) an agreement by
the Partnership and each of its Partners to comply with all of the requirements
set forth in such regulations and Notice 2005-43 (and any other guidance
provided by the Internal Revenue Service with respect to such election) with
respect to all partnership interests (or interest in an entity treated as a
partnership for U.S. federal income tax purposes) Transferred in connection with
the performance of services while the election remains effective, (iii) the
allocation of items of income, gains, deductions and losses required by the
final regulations similar to Proposed Treasury
Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related
amendments.

 

(d)           Except as may be otherwise required by Law in connection with the
winding-up, liquidation, or dissolution of the Partnership, each Partner hereby
irrevocably waives any and all rights that it may have to maintain an action for
judicial accounting or for partition of any of the Partnership’s property.

 

Section 11.7          No Third Party Beneficiaries.  This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and successors and nothing herein, express or implied, is
intended to or shall confer upon any other Person or entity, any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement (other than pursuant to Section 10.2 hereof); provided that
each employee, officer, director or agent of any Consenting Party or its
Affiliates and each Indemnitee is an intended third party beneficiary of
Section 11.1(a) and shall be entitled to enforce its rights thereunder.

 

Section 11.8          Power of Attorney.  Each Limited Partner, by its execution
hereof, hereby makes, constitutes and appoints the General Partner as its true
and lawful agent and attorney in fact, with full power of substitution and full
power and authority in its name, place and stead, to make, execute, sign,
acknowledge, swear to, record and file (a) this Agreement and any amendment to
this Agreement that has been adopted as herein provided; (b) the original
certificate of limited partnership of the Partnership and all amendments thereto
required or permitted by law or the provisions of this Agreement; (c) all
certificates and other instruments (including consents and ratifications which
the Limited Partners have agreed to provide upon a matter receiving the agreed
support of Limited Partners) deemed advisable by the General

 

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Partner to carry out the provisions of this Agreement (including the provisions
of Section 8.5) and Law or to permit the Partnership to become or to continue as
a limited partnership or partnership wherein the Limited Partners have limited
liability in each jurisdiction where the Partnership may be doing business;
(d) all instruments that the General Partner deems appropriate to reflect a
change or modification of this Agreement or the Partnership in accordance with
this Agreement, including the admission of additional Limited Partners or
substituted Limited Partners pursuant to the provisions of this Agreement;
(e) all conveyances and other instruments or papers deemed advisable by the
General Partner to effect the liquidation and termination of the Partnership;
and (f) all fictitious or assumed name certificates required or permitted (in
light of the Partnership’s activities) to be filed on behalf of the Partnership.

 

Section 11.9          Letter Agreements; Schedules.  The General Partner may, or
may cause the Partnership to, without the approval of any other Person, enter
into separate letter agreements with individual Limited Partners with respect to
Total Percentage Interests, Capital Contributions or any other matter, which
have the effect of establishing rights under, or supplementing, the terms of,
this Agreement.  The Partnership may from time to time execute and deliver to
the Limited Partners schedules which set forth the then current Capital
Contributions and Total Percentage Interests of the Limited Partners and any
other matters deemed appropriate by the General Partner.  Such schedules shall
be for information purposes only and shall not be deemed to be part of this
Agreement for any purpose whatsoever.

 

Section 11.10       Governing Law; Separability.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware. 
In particular, it shall be construed to the maximum extent possible to comply
with all of the terms and conditions of the Act.  If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording of
this Agreement shall be invalid or unenforceable under such Act or other
applicable Law, such invalidity or unenforceability shall not invalidate the
entire Agreement.  In that case, this Agreement shall be construed so as to
limit any term or provision so as to make it enforceable or valid within the
requirements of any applicable Law, and, in the event such term or provision
cannot be so limited, this Agreement shall be construed to omit such invalid or
unenforceable provisions.

 

Section 11.11       Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by courier
service, by fax, by electronic mail, by registered or certified mail (postage
prepaid) or by any communication permitted by the Act to the respective parties
if addressed to a Person at such Person’s address as set forth on the signature
pages hereto or at such other address for a party as shall be specified in any
notice given in accordance with this Section 11.11.

 

Section 11.12       Counterparts.  This Agreement may be executed and delivered
in any number of counterparts (including by facsimile or electronic
transmission), each of which shall be an original and all of which together
shall constitute a single instrument.

 

Section 11.13       Cumulative Remedies.  Rights and remedies under this
Agreement are cumulative and do not preclude use of other rights and remedies
available under applicable Law.

 

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Section 11.14       Entire Agreement.  This Agreement, the Supplemental
Agreements and the Certificate embody the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein and
supersede all prior agreements and understandings between the parties with
respect to such subject matter.  There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein.  Each party hereto
acknowledges, represents, and warrants that (a) each such party hereto and such
party’s independent counsel have reviewed this Agreement; and (b) any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement.

 

Section 11.15       Partnership Status.  For U.S. federal income tax purposes,
the parties intend to treat the Partnership as a partnership, and the
Partnership shall be deemed to be the same entity as AH LLC.

 

Section 11.16       Limited Partner Representations.

 

(a)           Each Partner understands and agrees that:

 

(i)            The Units evidenced by this Agreement have not been registered
under the Securities Act of 1933, 15 U.S.C. § 15b et seq., the Delaware
Securities Act, the California Corporate Securities Law of 1968 or any other
state securities Laws (collectively, the “Securities Acts”) because the
Partnership is issuing interests in reliance upon the exemptions from the
registration requirements of the Securities Acts providing for issuance of
securities not involving a public offering;

 

(ii)           The Partnership has relied upon the representation made by each
Limited Partner that such Limited Partner’s interest is to be held by such
Limited Partner for investment;

 

(iii)          The Partnership is under no obligation to, and has no intention
to,  register the interests or to assist the Limited Partners in complying with
any exemption from registration under the Securities Acts if such Limited
Partner should at a later date wish to dispose of such Limited Partner’s
interest;

 

(iv)          The Partnership has not requested a tax ruling from the Internal
Revenue Service or any other tax authority nor an opinion of counsel with
respect to the tax status of the Partnership or as to the treatment of its
formation, issuance of interests, or other transactions of the Partnership, and
no assurances have been made that the treatment which the Partnership intends to
or does take with respect to such items will be accepted by the Internal Revenue
Service upon examination and audit; and

 

(v)           Such Limited Partner has been advised to obtain independent
counsel to advise such Limited Partner individually in connection with the
drafting, preparation and negotiation of this Agreement.  The attorneys,
accountants and other experts who perform services for any Limited Partner may
also perform services for the Partnership.  To the extent that any of the
foregoing representation constitutes a conflict of interest, the Partnership and
each Limited Partner hereby expressly waive any such conflict of interest.

 

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(b)           Each Limited Partner represents and warrants as follows:

 

(i)            Such Limited Partner is acquiring the interests for such Limited
Partner’s own account, for investment purposes only, and not with a view to or
for the resale, distribution or fractionalization thereof, in whole or in part,
and no other Person has a direct or indirect beneficial interest therein;

 

(ii)           Such Limited Partner is an “accredited investor” as defined in
Rule 501(a) of Regulation D promulgated by the Securities Acts; and

 

(iii)          The execution, delivery and performance of this Agreement have
been duly authorized by such Limited Partner.

 

ARTICLE XII

 

TERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR
UNITS

 

Section 12.1          Designation.

 

The Series A Preferred Mirror Units are hereby designated and created as a
series of Preferred Units hereunder.  Each Series A Preferred Mirror Unit shall
be identical in all respects to every other Series A Preferred Mirror Unit. 
8,542,820 Series A Preferred Mirror Units shall be initially issued to the
General Partner.  It is the intention of the General Partner that at all times
the number of outstanding 7.00% Series A Preferred Units issued by the Issuer
equal the aggregate number of GP Mirror Units issued by the Ares Operating Group
entities.

 

Section 12.2          Definitions.

 

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Article XII.

 

“Ares Group” means the Ares Operating Group entities, the direct and indirect
parents (including, without limitation, general partners) of the Ares Operating
Group entities (the “Parent Entities”), any direct or indirect subsidiaries of
the Parent Entities or the Ares Operating Group entities, the general partner or
similar controlling entities of any investment or vehicle that is managed,
advised or sponsored by the Ares Group (an “Ares Fund”), and any other entity
through which any of the foregoing directly or indirectly conduct its business,
but shall exclude any company in which an Ares Fund has an investment. For
purposes of this definition “subsidiary” means, with respect to any Person, any
subsidiary of such Person that is or would be consolidated with such Person in
the preparation of segment information with respect to the combined financial
statements of such Person prepared in accordance with U.S. GAAP and shall not
include (x) any private equity or other investment fund or vehicle or (y) any
portfolio company of any such fund or vehicle.

 

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in New York City are authorized or required by law to
close.

 

“Change of Control Event” has the meaning set forth in the Issuer Limited
Partnership Agreement.

 

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“Distribution Payment Date” means March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 2016.

 

“Distribution Period” is the period from and including a Distribution Payment
Date to, but excluding, the next Distribution Payment Date, except that the
initial Distribution Period commences on and includes June 8, 2016.

 

“Distribution Rate” means 7.00% per annum.

 

“GP Mirror Units” means, collectively, the Series A Preferred Mirror Units, the
7.00% Series Preferred Mirror Units of Ares Domestic Holdings L.P., the 7.00%
Series Preferred Mirror Units of Ares Offshore Holdings L.P., the 7.00%
Series Preferred Mirror Units of Ares Investments L.P., the 7.00%
Series Preferred Mirror Units of Ares Real Estate Holdings L.P. and any
preferred equity securities of a future Ares Operating Group entity with
economic terms consistent with the Series A Preferred Mirror Units.

 

“Junior Units” means the Class A Units and any other equity securities that the
Partnership may issue in the future ranking, as to the payment of distributions,
junior to the Series A Preferred Mirror Units.

 

“Parity Units” means any Preferred Units that the Partnership may authorize or
issue, the terms of which provide that such securities shall rank equally with
the Series A Preferred Mirror Units with respect to payment of distributions and
distribution of assets upon a Dissolution Event.

 

“Permitted Jurisdiction” means the United States or any state thereof, Belgium,
Bermuda, Canada, Cayman Islands, France, Germany, Gibraltar, Ireland, Italy,
Luxembourg, the Netherlands, Switzerland, the United Kingdom or British Crown
Dependencies, any other member country of the Organisation for Economic
Co-operation and Development, or any political subdivision of any of the
foregoing.

 

“Permitted Reorganization” means (i) the voluntary or involuntary liquidation,
dissolution or winding up of any of the Partnership’s subsidiaries or upon any
reorganization of the Partnership into another limited liability entity pursuant
to provisions of this Agreement that allows the Partnership to convert, merge or
convey our assets to another limited liability entity with or without limited
partner approval (including a merger or conversion of our partnership into a
corporation if the General Partner determines in its sole discretion that it is
no longer in the interests of the Partnership to continue as a partnership for
U.S. federal income tax purposes) or (ii) the Partnership engages in a
reorganization, merger or other transaction in which a successor to the
Partnership issues equity securities to the Series A Holders that have rights,
powers and preferences that are substantially similar to the rights, powers and
preferences of the Series A Preferred Mirror Units pursuant to provisions of
this Agreement that allow the Partnership to do so without limited partner
approval.

 

“Permitted Transfer” means the sale, conveyance, exchange or transfer, for cash,
units of capital stock, securities or other consideration, of all or
substantially all of the Partnership’s property or assets or the consolidation,
merger or amalgamation of the Partnership with or into any other entity or the
consolidation, merger or amalgamation of any other entity with or into the
Partnership.

 

“Series A Holder” means a holder of Series A Preferred Mirror Units.

 

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“Series A Liquidation Preference” means $25.00 per Series A Preferred Mirror
Unit. The Series A Liquidation Preference shall be the “Liquidation Preference”
with respect to the Series A Preferred Mirror Units.

 

“Series A Liquidation Value” means the sum of the Series A Liquidation
Preference and declared and unpaid distributions, if any, to, but excluding, the
date of the Dissolution Event on the Series A Preferred Mirror Units.

 

“Series A Record Date” means, with respect to any Distribution Payment Date, the
March 15, June 15, September 15 or December 15, as the case may be, immediately
preceding the relevant March 31, June 30, September 30 or December 31
Distribution Payment Date, respectively.

 

“Substantially All Merger” means a merger or consolidation of one or more of the
Ares Operating Group entities with or into another Person that would, in one or
a series of related transactions, result in the transfer or other disposition,
directly or indirectly, of all or substantially all of the combined assets of
the Ares Operating Group taken as a whole to a Person that is not an Ares
Operating Group entity immediately prior to such transaction.

 

“Substantially All Sale” means a sale, assignment, transfer, lease or
conveyance, in one or a series of related transactions, directly or indirectly,
of all or substantially all of the assets of the Ares Operating Group taken as a
whole to a Person that is not an Ares Operating Group entity immediately prior
to such transaction.

 

“Voting Preferred Units” means any series of Parity Units that is designated as
a “Voting Preferred Unit” from time to time.

 

Section 12.3          Distributions.

 

(a)           The Series A Holders shall be entitled to receive with respect to
each Series A Preferred Mirror Unit, when, as and if declared by the General
Partner in its sole discretion out of funds legally available therefor,
non-cumulative quarterly cash distributions on the applicable Distribution
Payment Date that corresponds to the Record Date for which the General Partner
has declared a distribution, if any, at a rate per annum equal to
the Distribution Rate (subject to Section 12.6 of this Agreement) of
the Series A Liquidation Preference.  Such distributions shall be
non-cumulative, and Series A Holders shall not be entitled to distributions to
the extent that such distributions would be expected to cause the Capital
Accounts of such Series A Holders to be less than $0, taking into account
reasonably expected allocations of Gross Ordinary Income for the taxable year of
such distribution. If a Distribution Payment Date is not a Business Day, the
related distribution (if declared) shall be paid on the next succeeding Business
Day with the same force and effect as though paid on such Distribution Payment
Date, without any increase to account for the period from such Distribution
Payment Date through the date of actual payment. Distributions payable on the
Series A Preferred Mirror Units for the initial Distribution Period and any
period less than a full Distribution Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months and the actual number of days
elapsed in such period.  Declared distributions will be payable on the
relevant Distribution Payment Date to Series A Holders as they appear on the
Partnership’s register at the close of business, New York City time, on the
Series A Record Dates, provided that if the Series A Record Date is not
a Business Day, the declared distributions will be payable on the relevant
Distribution Payment Date to the Series A Holders as it appears on the

 

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Partnership’s register at the close of business, New York City time on
the Business Day immediately preceding such Series A Record Date.

 

(b)           So long as any Series A Preferred Mirror Units are outstanding,
(i) no distribution, whether in cash or property, may be declared or paid or set
apart for payment on the Junior Units for the then-current
quarterly Distribution Period (other than distributions paid in Junior Units or
options, warrants or rights to subscribe for or purchase Junior Units) and
(ii) the Partnership and its subsidiaries shall not directly or indirectly
repurchase, redeem or otherwise acquire for consideration any Junior Units,
unless, in each case, distributions have been declared and paid or declared and
set apart for payment on GP Mirror Units for the then-current
quarterly Distribution Period, other than, in each case (x) repurchases,
redemptions or other acquisitions of Junior Units for Common Units pursuant to
the Exchange Agreement or otherwise, (y) grants or vesting of awards under the
Issuer’s or its subsidiaries’ equity incentive plans and (z) repurchases,
redemptions or other acquisitions of Junior Units pursuant to any put or call
agreements existing on June 8, 2016 (including any amendments, modifications or
replacements thereof that do not adversely affect the Series A Holders).

 

(c)           The General Partner, or a duly authorized committee thereof, may,
in its sole discretion, choose to pay distributions on the Series A Preferred
Mirror Units without the payment of any distributions on any Junior Units.

 

(d)           When distributions are not declared and paid (or duly provided
for) on any Distribution Payment Date (or, in the case of Parity Units having
distribution payment dates different from the Distribution Payment Dates
pertaining to the Series A Preferred Mirror Units, on a distribution payment
date falling within the related Distribution Period) in full upon the Series A
Preferred Mirror Units or any other Parity Units, all distributions declared
upon the Series A Preferred Mirror Units and all such Parity Units payable on
such Distribution Payment Date (or, in the case of Parity Units having
distribution payment dates different from the Distribution Payment Dates, on a
distribution payment date falling within the related Distribution Period) shall
be declared pro rata so that the respective amounts of such distributions shall
bear the same ratio to each other as all declared and unpaid distributions per
Unit on the Series A Preferred Mirror Units and all accumulated unpaid
distributions on all Parity Units payable on such Distribution Payment Date (or
in the case of non-cumulative Parity Units, unpaid distributions for the
then-current Distribution Period (whether or not declared) and in the case
of Parity Units having distribution payment dates different from the
Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on
a distribution payment date falling within the related Distribution Period) bear
to each other.

 

(e)           No distributions may be declared or paid or set apart for payment
on any Series A Preferred Mirror Units if at the same time any arrears exist or
default exists in the payment of distributions on any outstanding Units ranking,
as to the payment of distributions and distribution of assets upon a Dissolution
Event, senior to the Series A Preferred Mirror Units, subject to any applicable
terms of such outstanding Units, subject to any applicable terms of such
Outstanding Units.

 

(f)            A Series A Holder shall not be entitled to any distributions,
whether payable in cash or property, other than as provided in this Agreement
and shall not be entitled to

 

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interest, or any sum in lieu of interest, in respect of any distribution
payment, including any such payment which is delayed or foregone, including any
such payment which is delayed or foregone.

 

(g)           The Partners intend that no portion of the distributions paid to
a Series A Holder pursuant to this Section 12.3 shall be treated as a
“guaranteed payment” within the meaning of Section 707(c) of the Code, and no
Partner shall take any position inconsistent with such intention, except if
there is a change in applicable law or final determination by the Internal
Revenue Service that is inconsistent with such intention.

 

Section 12.4          Rank.

 

The Series A Preferred Mirror Units shall rank, with respect to payment of
distributions and distribution of assets upon a Dissolution Event:

 

(a)           junior to all of the Partnership’s existing and future
indebtedness and any equity securities, including Preferred Units, that the
Partnership may authorize or issue, the terms of which provide that such
securities shall rank senior to the Series A Preferred Mirror Units with respect
to payment of distributions and distribution of assets upon a Dissolution Event;

 

(b)           equally to any Parity Units; and

 

(c)           senior to any Junior Units.

 

Section 12.5          Redemption.

 

(a)           If the Issuer redeems its 7.00% Series A Preferred Units, then the
Partnership may redeem the Series A Preferred Mirror Units, in whole or in part,
at a redemption price equal to the Series A Liquidation Preference plus an
amount equal to declared and unpaid distributions from the Distribution Payment
Date immediately preceding the redemption date to, but excluding, the redemption
date. If less than all of the outstanding Series A Preferred Mirror Units are to
be redeemed, the General Partner shall select the Series A Preferred Mirror
Units to be redeemed from the outstanding Series A Preferred Mirror Units not
previously called for redemption by lot or pro rata (as nearly as possible).

 

(b)           If the Issuer redeems its 7.00% Series A Preferred Units pursuant
to a Change of Control Event, then the Partnership may, in the General Partner’s
sole discretion, redeem the Series A Preferred Mirror Units, in whole but not in
part, out of funds legally available therefor, at a redemption price equal to
$25.25 per Series A Preferred Mirror Unit plus an amount equal to the declared
and unpaid distributions.  So long as funds sufficient to pay the redemption
price for all of the Series A Preferred Mirror Units called for redemption have
been set aside for payment, from and after the redemption date, such Series A
Preferred Mirror Units called for redemption shall no longer be deemed
outstanding, and all rights of the Series A Holders thereof shall cease other
than the right to receive the redemption price, without interest.

 

(c)           Without limiting clause (b) of this Section 12.5, if the
Partnership shall deposit on or prior to any date fixed for redemption of
Series A Preferred Mirror Units, with any bank or trust company, as a trust
fund, a fund sufficient to redeem the Series A Preferred Mirror

 

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Units called for redemption, with irrevocable instructions and authority to such
bank or trust company to pay on and after the date fixed for redemption or such
earlier date as the General Partner may determine, to the respective Series A
Holders, the redemption price thereof, then from and after the date of such
deposit (although prior to the date fixed for redemption) such Series A
Preferred Mirror Units so called shall be deemed to be redeemed and such deposit
shall be deemed to constitute full payment of said Series A Preferred Mirror
Units to the holders thereof and from and after the date of such deposit said
Series A Preferred Mirror Units shall no longer be deemed to be outstanding, and
the holders thereof shall cease to be holders of Units with respect to such
Series A Preferred Mirror Units, and shall have no rights with respect thereto
except only the right to receive from said bank or trust company, on the
redemption date or such earlier date as the General Partner may determine,
payment of the redemption price of such Series A Preferred Mirror Units without
interest.

 

Section 12.6          Distribution Rate.

 

If the distribution rate per annum on the 7.00% Series A Preferred Units issued
by the Issuer shall increase pursuant to Section 16.6 of the Issuer Limited
Partnership Agreement, then the Distribution Rate shall increase by the same
amount beginning on the same date as set forth in Article XVI of the Issuer
Limited Partnership Agreement.

 

Section 12.7          Voting.

 

Notwithstanding any other provision of this Agreement or the Act, the Series A
Preferred Mirror Units shall not have any relative, participating, optional or
other voting, consent or approval rights or powers, and the vote, consent or
approval of the Series A Holders shall not be required for the taking of any
Partnership action. The Partnership may, from time to time, issue additional
Series A Preferred Mirror Units.

 

Section 12.8          Liquidation Rights.

 

(a)           Upon any Dissolution Event, after payment or provision for the
liabilities of the Partnership (including the expenses of such Dissolution
Event) and the satisfaction of all claims ranking senior to the Series A
Preferred Mirror Units in accordance with Article IX of this Agreement, the
Series A Holders shall be entitled to receive out of the assets of the
Partnership or proceeds thereof available for distribution to Partners, before
any payment or distribution of assets is made in respect of Junior Units,
distributions equal to the lesser of (x) the Series A Liquidation Value and
(y) the positive balance in their Capital Accounts (to the extent such positive
balance is attributable to ownership of the Series A Preferred Mirror Units and
after taking into account allocations of Gross Ordinary Income to the Series A
Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in
which the Dissolution Event occurs). Upon a Dissolution Event, or in the event
that any Ares Operating Group entity liquidates, dissolves or winds up, no Ares
Operating Group entity may declare or pay or set apart payment on its Junior
Units unless the outstanding liquidation preference on all outstanding GP Mirror
Units of each Ares Operating Group entity have been repaid via redemption or
otherwise.

 

(b)           Upon a Dissolution Event, after each Series A Holder receives a
payment equal to the positive balance in its Capital Account (to the extent such
positive balance is

 

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attributable to ownership of the Series A Preferred Mirror Units and after
taking into account allocations of Gross Ordinary Income to the Series A Holders
pursuant to Section 5.5(d) of this Agreement for the taxable year in which the
Dissolution Event occurs), such Series A Holder shall not be entitled to any
further participation in any distribution of assets by the Partnership.

 

(c)           For the purposes of this Section 12.8, a Dissolution Event shall
not be deemed to have occurred in connection with (i) a Substantially All
Merger or a Substantially All Sale whereby an Ares Operating Group entity is the
surviving Person or the Person formed by such transaction is organized under the
laws of a Permitted Jurisdiction and has expressly assumed all of the
obligations under the GP Mirror Units, (ii) the sale or disposition of an Ares
Operating Group entity (whether by merger, consolidation or the sale of all or
substantially all of its assets) if such sale or disposition is not
a Substantially All Merger or Substantially All Sale, (iii) the sale or
disposition of an Ares Operating Group entity should such Ares Operating Group
entity not constitute a “significant subsidiary” of the Issuer under
Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange
Commission, (iv) an event where the Series A Preferred Mirror Units have been
fully redeemed pursuant to the terms of this Agreement or if proper notice of
redemption of the Series A Preferred Mirror Units has been given and funds
sufficient to pay the redemption price for all of the Series A Preferred Mirror
Units called for redemption have been set aside for payment pursuant this
Agreement, (v) transactions where the assets of the Ares Operating Group entity
being liquidated, dissolved or wound up are immediately contributed to another
Ares Operating Group entity or a subsidiary thereof, and (vi) with respect to an
Ares Operating Group entity, a Permitted Transfer or a Permitted Reorganization.

 

(d)           A Permitted Transfer will not be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Partnership,
notwithstanding that for other purposes, such as for tax purposes, such an event
may constitute a liquidation, dissolution or winding up.

 

Section 12.9          Amendments and Waivers.

 

The provisions of this Article XII may be amended, supplemented, waived or
modified in accordance with the provisions of Section 11.6 of the Agreement;
provided that any amendment, supplement, waiver or modification of this
Article XII that relates to the economic terms of the Series A Preferred Mirror
Units and is not consistent with a corresponding amendment, supplement, waiver
or modification of Article XVI of the Issuer Limited Partnership Agreement shall
require the consent of the Limited Partners that own a majority of the Class A
Units then outstanding.

 

Section 12.10       No Conversion.

 

The Series A Preferred Mirror Units are not convertible into Class A Units or
any other class or series of interests or any other security of the Partnership.

 

47

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Section 12.11       No Third Party Beneficiaries.

 

The provisions of Section 11.7 of the Agreement shall apply to this Article XII
without limitation.

 

[Remainder of Page Intentionally Left Blank]

 

48

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have
caused this Agreement to be duly executed by their respective authorized
officers, in each case as of the date first above stated.

 

 

GENERAL PARTNER:

 

 

 

 

 

 

 

ARES HOLDCO LLC

 

 

 

 

By: Ares Holdings, Inc., its sole member

 

 

 

 

 

 

 

By:

/s/ Michael D. Weiner

 

 

Name: Michael D. Weiner

 

 

Title: Authorized Signatory

 

 

 

 

 

 

 

Address:

 

 

 

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, CA 90067

 

[Signature Page to Ares Holdings L.P. — LP Agreement]

 

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LIMITED PARTNERS:

 

 

 

 

 

 

 

ARES OWNERS HOLDINGS L.P.

 

 

 

 

By: Ares Partners Holdco LLC,
its General Partner

 

 

 

 

 

 

 

By:

/s/ Michael D. Weiner

 

 

Name: Michael D. Weiner

 

 

Title: Authorized Signatory

 

 

 

 

 

 

 

Address:

 

 

 

 

2000 Avenue of the Stars

 

12th Floor

 

Los Angeles, CA 90067

 

[Signature Page to Ares Holdings L.P. — LP Agreement]

 

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ALLEGHANY INSURANCE HOLDINGS LLC

 

 

 

 

 

 

 

By:

/s/ Joseph P. Brandon

 

 

Name: Joseph P. Brandon

 

 

Title: President and CEO

 

 

 

 

 

 

 

Address:

 

 

 

 

c/o Alleghany Corporation

 

1411 Broadway, 34th Floor

 

New York, NY 10018

 

[Signature Page to Ares Holdings L.P. — LP Agreement]

 

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