exhibit1023formofannu_image1.jpg [exhibit1023formofannu_image1.jpg]

ARES CAPITAL MANAGEMENT LLC

MEMORANDUM
[Date]

TO:    [NAME]

FROM:    Ares Capital Management LLC

RE:    Incentive Fee Compensation Related to Ares Capital Corporation

This Memorandum (the “Memorandum”) confirms the agreement between you and Ares
Capital Management LLC (the “Company”), effective as of [DATE] (the “Effective
Date”), with respect to your profit participation interest related to the
“incentive fees” earned by the Company, attributable to the investment
activities of Ares Capital Corporation (“ARCC”) as set forth below, until the
earlier of (x) the termination of the Management Agreement or (y) such date you
are no longer employed by the Company (such period, the “Term”). Unless
otherwise specified herein, capitalized terms not otherwise defined in the body
of this Memorandum are defined in Exhibit A.

This Memorandum should be retained in your files for future reference.

1.
Incentive Fees. The Company serves as the day-to-day investment manager to ARCC.
ARCC is as a closed-end publicly traded specialty finance company that has
elected to be treated as a business development company.

a.
Incentive Fee Allocation. Subject to Section 1.c. below, during the Term, on
each Incentive Payment Date, the Company shall pay you your Allocation
Percentage of any Incentive Fees and Capital Gains Fees (each as defined in the
Management Agreement) the Company is entitled to receive during the applicable
calendar quarter or year (the “Part I and Part II Incentive Compensation”).

b.
Deferred Incentive Fees. Subject to Section 1.c. below, during the Term, on each
Incentive Payment Date, the Company shall pay you your Allocation Percentage of
any Deferred Incentive Fees (as defined in the Management Agreement) the Company
is entitled to receive during the applicable calendar quarter or year, based on
your Allocation Percentage when such Deferred Incentive Fees were deferred (the
“Deferred Incentive Compensation” and, together with the Part I and II Incentive
Compensation, the “Incentive Compensation”).

c.
Limitations on Incentive Compensation. Notwithstanding anything to the contrary
in this Memorandum, the Company will only be obligated to pay you Incentive
Compensation to the extent the Company actually receives the related Incentive
Compensation from ARCC during the applicable quarter or year.

2.
Consequences of Termination of Employment. For the avoidance of doubt, this
confirms that your employment with the Company is “at will.” As such, your
employment may be terminated by you or the Company at any time, for any reason
or no reason, with or without Cause. Moreover, this Memorandum is not intended
as and is not a guaranty of future employment. In the event of your termination
of employment, the following consequences will apply with respect to your
Allocation Percentage of Incentive Compensation.

a.
Resignation for Good Reason. Subject to Section 2.f., if you terminate your
employment with the Company for Good Reason, on each of the first
[twelve][twenty] Incentive Payment Dates following such termination
(collectively, the “Severance Period”), the Company shall pay you the following
amounts (and you shall be entitled to no further compensation or benefits):

i.
On the first through the fourth Incentive Payment Dates following such
Termination, an amount equal to (x) [100]% of the Part I and Part II Incentive
Compensation that you would otherwise have been entitled to receive pursuant to
Section 1 as if you were still employed by the Company on such date based on
your Termination Allocation Percentage, plus (y) [100]% of the Deferred
Incentive Compensation that you would otherwise have been entitled to receive
pursuant to Section 1 as if you were still employed by the Company on such date
based on your Allocation Percentage when the associated Deferred Incentive Fees
were deferred;

ii.
On the fifth through the eighth Incentive Payment Dates following such
Termination, an amount equal to (x) [66.7]% of the Part I and Part II Incentive
Compensation that you would otherwise have been entitled to receive pursuant to
Section 1 as if you were still employed by the Company on such date based on
your Termination Allocation Percentage, plus (y) [100]% of the Deferred
Incentive Compensation that you would otherwise have been entitled to receive
pursuant to Section 1 as if you were still employed by the Company on such date
based on your Allocation Percentage when the associated Deferred Incentive Fees
were deferred (and if deferred during the Severance Period, determined in
accordance with the applicable percentage payable under this Section 2.a. with
respect to the Part I and Part II Incentive Compensation in effect at the time
such Deferred Incentive Fees were deferred); and

iii.
On (x) the ninth through the twelfth Incentive Payment Dates following such
Termination, an amount equal to [33.3]% of the Part I and Part II Incentive
Compensation that you would otherwise have been entitled to receive pursuant to
Section 1 as if you were still employed by the Company on such date based on
your Termination Allocation Percentage and (y) the ninth through the
[twelfth][twentieth] Incentive Payment Dates following such Termination, an
amount equal to [100]% of the Deferred Incentive Compensation that is deferred
during the Term or on or prior to the third anniversary of your Termination that
you would otherwise have been entitled to receive pursuant to Section 1 as if
you were still employed by the Company on such date based on your Allocation
Percentage when the associated Deferred Incentive Fees were deferred (and if
deferred during the Severance Period, determined in accordance with the
applicable percentage payable under this Section 2.a. with respect to the Part I
and Part II Incentive Compensation in effect at the time such Deferred Incentive
Fees were deferred).

b.
Resignation without Good Reason. Subject to Section 2.f., if you terminate your
employment with the Company without Good Reason (i.e., your voluntary
resignation), then subject to your continued compliance with your obligations
set forth herein, the Company shall pay you (x) on each of the first [twelve]
Incentive Payment Dates following such termination, an amount equal to the Part
I and Part II Incentive Compensation that you would otherwise have been entitled
to receive pursuant to Section 1 as if you were still employed by the Company on
such date, based on your Termination Allocation Percentage, and (y) on each of
the first [twelve][twenty] Incentive Payment Dates following such Termination,
[100]% of the Deferred Incentive Compensation that is deferred during the Term
or on or prior to the third anniversary of your Termination that you would
otherwise have been entitled to receive pursuant to Section 1 as if you were
still employed by the Company on such date based on your Allocation Percentage
when the associated Deferred Incentive Fees were deferred (and if deferred
during the Severance Period, determined in accordance with the applicable
percentage payable under Section 2.a. with respect to the Part I and Part II
Incentive Compensation at the time such Deferred Incentive Fees were deferred).
You shall be entitled to no further compensation or benefits.

c.
Termination for Cause. If the Company terminates your employment for Cause you
will not be entitled to any further compensation under this Memorandum.

d.
Termination without Cause. Subject to Section 2.f., if the Company terminates
your employment without Cause, the Company shall pay you the amount you would
have received if you had terminated your employment for Good Reason pursuant to
Section 2.a. (and you shall be entitled to no further compensation or benefits).

e.
Death or Disability. Subject to Section 2.f., if your employment is terminated
due to your death or Disability, the Company shall pay you (x) on each of the
first [twelve] Incentive Payment Dates following such termination, [50]% of the
Part I and Part II Incentive Compensation that you would otherwise have been
entitled to receive pursuant to Section 1 as if you were still employed by the
Company on such date, based on your Termination Allocation Percentage, and (y)
on each of the first [twelve][twenty] Incentive Payment Dates following such
termination, [100]% of the Deferred Incentive Compensation that is deferred
during the Term or on or prior to the third anniversary of your Termination that
you would otherwise have been entitled to receive pursuant to Section 1 as if
you were still employed by the Company on such date based on your Allocation
Percentage when the associated Deferred Incentive Fees were deferred (and if
deferred during the Severance Period, determined in accordance with the
percentage payable under this Section 2.e. with respect to the Part I and Part
II Incentive Compensation at the time such Deferred Incentive Fees were
deferred). You shall be entitled to no further compensation or benefits.

f.
Notwithstanding anything to the contrary in this Memorandum,

i.
you will not be entitled to any benefits payable pursuant to this Section 2
(“Severance Benefits”) unless you have, or your estate or representative has,
(a) executed and delivered, and not revoked, the Company’s (and any Related
Entity’s) then standard release of all claims against the Company and all
Related Entities so that the standard release becomes effective and irrevocable
on or before the sixtieth (60th) day after the date of Termination, and (b) if
requested by the Company, resigned from your then current positions, offices and
appointments with the Company and all Related Entities; for Severance Benefits
that would otherwise be paid to you prior to the sixtieth (60th) day after the
date of your Termination, such Severance Benefits shall be made on the sixtieth
(60th) day after the date of your termination if the standard release
requirement is then satisfied by you,

ii.
you will not be entitled to any Severance Benefits if you have breached any
material provision of this Memorandum or your Fair Competition Agreement,
whether during the Term or the Severance Period, commencing as of the date of
such breach,

iii.
the Company shall not be deemed “entitled to receive” any Incentive Compensation
that is waived under the Management Agreement and you shall not be entitled to
receive any Incentive Compensation that is waived whether or not earned during
the Term and/or the Severance Period as applicable, and

iv.
in the event that you terminate your employment in accordance with Section 2.b.
(resignation without Good Reason) hereof and the employment with the Company or
a Related Entity of two or more of the persons previously disclosed to you is or
has been also terminated in accordance with Sections 2.b. (resignation without
Good Reason) or 2.c. (termination for Cause) of their respective employment
agreements during the Term or the Severance Period (the final date as of which
your and two or more of such other persons’ employment is terminated being
referred to as the “Reduction Date”), then commencing as of the Reduction Date,
you shall only be entitled to receive, and the Company shall only be obligated
to pay to you, [50]% of the amount of any Incentive Compensation thereafter
payable to you (such reduced amount determined after application of any
additional reductions otherwise provided herein).

3.
General Provisions.

a.
This Memorandum is not transferable by you and constitutes an unsecured
obligation of the Company. The Company may assign this Memorandum to any
affiliate.

b.
This Memorandum, together with any corresponding annual award documentation
respecting your Allocation Percentage, constitutes our entire agreement with
respect to your profits participation interest attributable to the investment
activities of ARCC from and after the Effective Date and sets forth the entire
agreement as of the Effective Date with respect to your right to receive
severance or similar payments (other than entitlements to vested amounts under a
tax-qualified plan or rights to continued health coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended), and all prior and
contemporaneous agreements and representations whether oral or written, shall be
superseded as of the Effective Date. This Memorandum does not cover the terms of
any relationship, if any, you may have with any Related Entity. For the
avoidance of doubt, nothing in this Memorandum affects or amends in any way the
interests you have in any Related Entity other than the Company.

c.
This Memorandum may not be amended, waived or discharged except by a writing
signed by both parties.

d.
Any payments provided for hereunder will be paid net of any applicable
withholdings. Except in the case of amounts that constitute “deferred
compensation” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), the Company’s obligation to make any payments
provided for in this Memorandum will be subject to set-off, counterclaim or
recoupment of any amounts owed by you to the Company or any of its Related
Entities.

e.
By accepting this Memorandum you agree to the terms and conditions set forth in
this Memorandum.

f.
This Memorandum shall be governed by and construed in accordance with New York
law irrespective of conflicts of laws principles that would require the
application of the laws of another jurisdiction.

g.
The provisions of this Memorandum will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof.

h.
In the event there is any dispute between us that we are unable to resolve
ourselves, we both agree that the exclusive remedy for determining any and all
disputes, claims or causes of action, in law or equity, arising from or relating
to this Memorandum will be, to the fullest extent permitted by law, by final,
binding and confidential arbitration in New York, New York conducted by the
Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its
successor, pursuant to its then applicable rules. The arbitrator will have the
same, but no greater, remedial authority than would a court of law and shall
issue a written decision including the arbitrator’s essential findings and
conclusions and a statement of the award. This agreement to resolve any disputes
by binding arbitration extends to claims against the Company or any of its
Related Entities or any of their respective past or present stockholders,
members, partners, principals, directors, officers, managers, employees, agents,
representatives or service providers and applies to claims arising out of
federal, state and local laws, including claims of alleged discrimination on any
basis, as well as to claims arising under the common law. Nothing in this
Memorandum is intended to prevent the Company or any of its Related Entities
from obtaining injunctive relief in court to prevent irreparable harm pending
the conclusion of any such arbitration. The prevailing party in any such
arbitration proceeding, as determined by the arbitrator, or in any enforcement
or other court proceedings, will be entitled to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs
(including but not limited to the arbitrator’s compensation), expenses and
attorneys’ fees. In the event of a conflict between this provision and any
provision in the applicable rules of JAMS, the provisions of this Memorandum
will prevail.

i.
Upon the receipt of reasonable notice from the Company (including outside
counsel), you agree that while employed by the Company and thereafter, you will
respond and provide information with regard to matters in which you have
knowledge as a result of your performing services for the Company or any of its
Related Entities, and will provide reasonable assistance to the Company and its
Related Entities and their respective representatives in defense of any claims
that may be made against them, and will assist them in the prosecution of any
claims that they may make, to the extent that such claims may relate to the
period of your employment with the Company. You also agree to promptly inform
the Company (to the extent you are legally permitted to do so) if you are asked
to assist in any investigation of the Company or any of its Related Entities or
any of their respective stockholders, members, partners, principals, directors,
officers, managers, employees, agents, representatives or service providers (or
their actions), regardless of whether a lawsuit or other proceeding has then
been filed against them with respect to such investigation, and shall not so
assist unless legally required. In addition, you shall not make or induce other
persons or entities to make any negative statements as to the Company or any of
its Related Entities or their respective past or present stockholders, members,
partners, principals, directors, officers, managers, employees, agents,
representatives, other service providers, products, services, businesses,
portfolio companies or reputation. The Company agrees to reimburse you for
reasonable pre-approved expenses incurred by you in connection with providing
the assistance described in this Section.

j.
The payments and benefits under this Memorandum are intended to comply with or
be exempt from Code Section 409A and shall be interpreted accordingly to the
maximum extent permitted. The Company does not guarantee you any particular tax
treatment with respect to this Memorandum or any payments hereunder. In no event
whatsoever shall the Company be liable for any additional tax, interest or
penalties that may be imposed on you by Code Section 409A or any damages for
failing to comply with Code Section 409A.

k.
Other than in the case of a payment upon death, if you are deemed by the Company
in good faith to be a “specified employee,” as defined in Code Section
409A(a)(2)(B)(i), in accordance with procedures set by the Company, any payments
required to be made under Section 2 of this Memorandum, to the extent such
payments constitute nonqualified deferred compensation, shall be delayed and not
be paid during the six month period following the date of your termination of
employment but such delayed or deferred amounts, as the case may be, shall be
paid in a lump sum on the first business day immediately following the
expiration of such six month period, or if earlier the date of your death, and
any remaining payments shall be paid on the date such payments would have
otherwise been paid without regard to this Section 3.k.

l.
You shall only be entitled to receive the amounts set forth under Section 2 of
this Memorandum upon your “separation from service” within the meaning of the
regulations issued under Code Section 409A.

m.
Your rights to receive any installment payments pursuant to this Memorandum
shall be treated as a right to receive a series of separate and distinct
payments.

n.
Nothing in this Memorandum shall prohibit you from: (i) reporting possible
violations of federal law or regulations, including any possible securities laws
violations, to any governmental agency or entity, including but not limited to
the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the
U.S. Congress, or any agency Inspector General; (ii) making any other
disclosures that are protected under the whistleblower provisions of federal law
or regulations; or (iii) otherwise fully participating in any federal
whistleblower programs, including but not limited to any such programs managed
by the U.S. Securities and Exchange Commission and/or the Occupational Safety
and Health Administration. Moreover, nothing in this Memorandum shall prohibit
or prevent you from receiving individual monetary awards or other individual
relief by virtue of participating in such federal whistleblower programs.

o.
Under the federal Defend Trade Secrets Act of 2016, you shall not be held
criminally or civilly liable under any federal or state trade secret law for the
disclosure of a trade secret that: (i) is made (A) in confidence to a federal,
state, or local government official, either directly or indirectly, or to an
attorney; and (B) solely for the purpose of reporting or investigating a
suspected violation of law; (ii) is made to your attorney in relation to a
lawsuit for retaliation against you for reporting a suspected violation of law;
or (iii) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal.

[Signature Page Follows]

Ares Capital Management LLC

By:____________________
Name:    
Title:    Authorized Signatory

I agree to the provisions of this Memorandum

_____________________________
By:

EXHIBIT A

Except as otherwise stated in the Memorandum to which this Exhibit A is
attached, the following terms have the meanings assigned below:

1.
“Affiliate” means, with respect to any person or entity, any other person or
entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with, such person or
entity; provided that, other than Ivy Hill Asset Management, L.P., portfolio
companies of any Related Entity will not be deemed to be Affiliates of the
Company or any Related Entities.

2.
“Allocation Percentage” means a percentage equal to ([ ] bps out of [2,000] bps)
[ ]% subject at any time and from time to time to dilution for allocations to
additional recipients or increased allocations to existing recipients, as
reflected in your annual memorandum setting forth your profits participation
interests (i.e., your Allocation Percentage of the Part I and/or Part II
Incentive Fee), or as otherwise determined by the Company. For example, if the
Company grants interests of 10% to new or other employees, your allocation
percentage will be correspondingly decreased by 10% to ([ ] bps out of [2,000]
bps) [ ]%.

3.
“Ares” means Ares Management L.P., a Delaware limited partnership, and its
related subsidiary managers.

4.
“Ares Owners” means Ares Owners Holdings L.P., a Delaware limited partnership.

5.
[“Cause” means an occurrence of any of the following events:

a.
conviction of a felony or plea of guilty or nolo contendre thereto;

b.
intentional violation of law in connection with any transaction involving the
purchase, sale, loan or other disposition of, or the rendering of investment
advice with respect to, any security, futures or forward contract, insurance
contract, debt instrument or currency;

c.
bad faith, material dishonesty, gross negligence, willful misconduct, fraud or
willful or reckless disregard of duties in connection with the performance of
any service for or on behalf of the Company or any Related Entity;

d.
intentional failure to comply with any lawful directive of the investment
committee of the Company or any Related Entity (including, without limitation,
the Investment Committee of ARCC);

e.
intentional breach of any material provision of this Memorandum or any agreement
entered into by, or any constituent agreement of, the Company or any Related
Entity;

f.
intentional violation of any material written policies adopted by the Company or
any Related Entity governing the conduct of persons performing services for or
on behalf of the Company or such Related Entity that could have a material
adverse effect on the Company or such Related Entity;

g.
the intentional taking of any improper action or the intentional omission to
take any proper action that has caused or substantially contributed to a
material deterioration of the business or reputation of the Company or any
Related Entity, or that was otherwise materially disruptive of their business
affairs; provided, however, that this clause (h) does not include a mistake in
judgment made in good faith on the advice of legal counsel, activities taken or
omitted in accordance with the direction of the investment committee of the
Company or any Related Entity, or the making of an approved portfolio investment
whether or not successful;

h.
the obtaining of any material improper personal benefit as a result of a breach
of any covenant or agreement; or

i.
your engaging in a competitive business activity in violation of your Fair
Competition Agreement.]

6.
“Disability” means if you become physically or mentally disabled, whether
totally or partially, so that you are prevented from performing your usual
duties for a period of 90 days, including weekends and holidays, in any 365-day
period (it being acknowledged and agreed that in the event of your absence for a
significant period of time because of Disability or otherwise, the restoration
of your employment after such period of time would likely result in substantial
and grievous economic injury to the operations of the Company and its Related
Entities).

7.
“Fair Competition Agreement” means the Fair Competition Agreement between you
and Ares Owners dated on or about [DATE].

8.
[“Good Reason” means (i) the dilution, without your consent, of your Allocation
Percentage to less than [60]% of your Allocation Percentage as of [DATE] (the
“Minimum Percentage”) unless such Allocation Percentage is raised to or above
the Minimum Percentage by the Company within 30 days following written
notification by you to the Company that you intend to terminate your employment
for Good Reason or (ii) your involuntary removal from the Investment Committee
of the Company. To terminate your employment for Good Reason you must give
written notice of the termination of your employment within 30 days following
your knowledge of any such dilution or involuntary removal and, if you do not
give such notice, you will be deemed to have consented to such dilution or
involuntary removal.]

9.
“Incentive Payment Date” means, with respect to any calendar quarter or, in the
case of Capital Gains Fees, calendar year ending after the date of this
Memorandum, 74 days after the end of such quarter or year (or if such day is not
a business day, the business day immediately preceding such 74th day).

10.
“Investment Fund” means any (a) U.S. domiciled or offshore investment fund,
pooled investment vehicle, feeder fund, collective investment scheme, investment
portfolio or alternative investment vehicle (whether formed as a limited
partnership, limited liability company, corporation or other entity), (b)
managed account or (c) any similar contractual arrangement, in each case, for
which the Company or any of its Affiliates is compensated for acting, directly
or indirectly, as general partner, manager, managing member, investment manager,
trading manager, investment advisor or in a similar capacity.

11.
“Management Agreement” means the Restated Investment Advisory and Management
Agreement, dated as of June 6, 2011 (as amended, modified, restated, renewed or
replaced), between ARCC and the Company; provided, that if the rights and
obligations of the Company thereunder are subsequently performed by one of its
Affiliates references to the “Management Agreement” herein will refer to any
successor management agreement between ARCC and such Affiliate.

12.
“Related Entity” means any (a) Affiliate of the Company or (b) Investment Fund.

13.
“Termination” means the date of termination of your employment.

14.
“Termination Allocation Percentage” means your Allocation Percentage as of the
date of your Termination, subject to adjustment from time to time in accordance
herewith.