Exhibit 10.30

 

 

 

 

 

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CONFIDENTIAL

 

[FUND NAME]

 

20[●] Participation Award

 

ARES MANAGEMENT LLC

 

MEMORANDUM

 

_________, 20[●]

 

 

 

TO:

[EMPLOYEE NAME]

 

 

FROM:

Ares Management LLC

 

 

RE:

Profit Participation Interest Related to [FUND NAME] 

 

This Memorandum confirms the award to you for the period commencing on January
1, 20[●] and ending December 31, 20[●] (the “Award Period”) of a profit
participation interest (the “Participation Interest”) related to the
“performance fees” earned during the Award Period attributable to the investment
activities of [FUND NAME] (the “Fund”) during the Award Period (the “Performance
Fee”), to the extent such Performance Fee is actually paid to and received by
the general partner and/or the manager of the Fund (the “General
Partner”).  Notwithstanding the foregoing, the Performance Fee does not include
any “performance fees” that would otherwise be attributable to investments in
the Fund by any investors who are not subject to paying such performance fees,
including the affiliates, partners, members or accounts of Ares Management LLC,
including the General Partner (the “Affiliate Investment”).

 

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

 

The Participation Interest is based on the Performance Fees earned during the
Award Period to the extent actually paid to and received by the General Partner
(other than, as noted above, the Performance Fee attributable to any Affiliate
Investment).  The Participation Interest will be determined as and when the
Performance Fee is actually paid to and received by the General Partner without
reference to any accrued or deferred performance allocations or performance fees
(each a “Payment Determination Date”) and, subject to the terms set forth below,
will be payable so long as (i) you remain employed in good standing by and
actively associated with an Ares Management Entity1 and/or, to the extent
applicable, you do not otherwise become a Retired Partner or Retired Member
(whether for or without cause, including by disability or death) of an Ares
Management Entity as of the payment date and (ii) you have not otherwise
notified an Ares Management Entity of your intent to resign as an employee of
and/or, to the extent applicable, become a Retired Partner or Retired Member of
an Ares Management Entity as of the payment date.

 

We note the following with respect to the Fund, the General Partner and the
Participation Interest.

 

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1

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

 

 

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CONFIDENTIAL

 

[FUND NAME]

 

20[●] Participation Award

 

1.

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

 

2.

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

 

3.

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

 

4.

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

 

5.

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

 

6.

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

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CONFIDENTIAL

 

[FUND NAME]

 

20[●] Participation Award

 

cumulative amount of payments of Performance Fee made to you in respect of you
Participation Interest during the Award Period prior to the date of
determination of such Clawback Payment divided by the aggregate amount of
payments of Performance Fee made to all holders of Participation Interests prior
to the date of determination of such Clawback Payment and “Clawback Payment”
shall mean an amount equal to the portion of any payment required to be made by
the holders of Participation Interests to the General Partner in respect of its
clawback obligations pursuant to the Partnership Agreement.  In furtherance of
the foregoing obligations in this Section 6, you must sign and return the
guarantee attached hereto as Schedule II in order to be eligible to receive any
payments in respect of your Participation Interest.  The obligations set forth
in this Section 6 shall continue to apply to you if you cease to be employed by
or actively associated with the Ares Management Entities.

 

7.

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

 

8.

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

 

9.

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

 

10.

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

 

11.

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

 

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CONFIDENTIAL

 

[FUND NAME]

 

20[●] Participation Award

 

SCHEDULE I

 

ARES MANAGEMENT LLC

 

AWARD OF PROFIT PARTICIPATION INTERESTS RELATED TO

 

[FUND NAME]

 

 

Award of Points

 

 

The following sets forth the number of Points awarded to you for the period
commencing on January 1, 20[●] and ending on December 31, 20[●] respecting a
profit participation interest related to the Performance Fee paid to and
received by the General Partner related to the investment activities of [FUND
NAME], as described more fully in the accompanying Memorandum.  Points are not
transferable and have no voting or other governance rights and distributions, if
any, thereon are subject to a continued active association with an Ares
Management Entity as described in the Memorandum.  Capitalized terms not
otherwise defined herein have the meanings given to such terms in the
Memorandum. 

 

 

Points

 

·

Recipient:           [EMPLOYEE NAME]

 

·

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

 

[●] Points (out of [●] Points)

 

 

Confirmed by:

 

Ares Management LLC

 

 

By:

 

 

 

 

Authorized Signatory

 

 

 

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CONFIDENTIAL

 

[FUND NAME]

 

20[●] Participation Award

 

SCHEDULE II

 

Guarantee

 

[FORM OF GUARANTEE]

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