Document:

Exhibit 10.15

 

FORM OF PHANTOM UNIT AGREEMENT
 PURSUANT TO THE
 ARES MANAGEMENT, L.P. 2014 EQUITY INCENTIVE PLAN

 

THIS AGREEMENT (the “Agreement”) is entered into as of [grant date] (the “Grant Date”), by and between Ares Management, L.P., a Delaware limited partnership (the “Partnership”), and [Participant Name] (the “Participant”).  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Ares Management, L.P. 2014 Equity Incentive Plan (the “Plan”).

 

W I T N E S S E T H:

 

WHEREAS, the Partnership has adopted the Plan, a copy of which has been delivered to the Participant, which is administered by the Committee; and

 

WHEREAS, pursuant to Article VII of the Plan, the Committee may grant Other Unit-Based Awards to Service Providers under the Plan, including phantom units settled in cash; and

 

WHEREAS, the Participant is a Service Provider under the Plan.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      Grant of Phantom Units. Subject to the restrictions and other conditions set forth herein, the Committee hereby grants to the Participant [number] phantom units (the “Phantom Units”) as of the Grant Date.  Each Phantom Unit is an Other Unit-Based Award under the Plan that represents an unfunded, unsecured right of the Participant to receive an amount in cash (the “Settlement Amount”) per Phantom Unit equal to the Average Closing Price of a Common Unit on the Vesting Dates specified in Section 2 herein.

 

“Average Closing Price” with respect to any Vesting Date means, an average of the Closing Prices for the 15 trading days immediately prior to, and the 15 trading days immediately following, such Vesting Date.

 

“Closing Price” means, on any trading day, the closing sale price per Common Unit as reported on the principal national securities exchange in the United Stated on which Common Units are then traded, as determined by the Committee.

 

2.                                      Vesting and Payment.

 

(a)                                 The Phantom Units granted herein shall vest in five equal installments on each of the first five anniversaries of the Grant Date (the “Vesting Dates”); provided that the Participant has not had a Termination prior to such Vesting Date.  There shall be no proportionate or partial vesting in the periods prior to each Vesting Date.  All unvested Phantom Units will be forfeited without compensation on the Participant’s Termination.

 

(b)                                 The Partnership shall, within 45 days following a Vesting Date, pay (or cause to be paid) to the Participant, the Settlement Amount with respect to each Phantom Unit vesting on such Vesting Date, as settlement of such Phantom Unit and each such Phantom Unit shall thereafter be cancelled.

 

 

3.                                      No Distribution Equivalents. The Participant shall not receive distributions or distribution equivalents with respect to Phantom Units.

 

4.                                      Phantom Unit Transfer Restrictions. Unless otherwise determined by the Committee, Phantom Units may not be Transferred by the Participant other than by will or by the laws of descent and distribution, and any other purported Transfer shall be void and unenforceable against the Partnership and its Affiliates.

 

5.                                      Change in Control.

 

The Phantom Units shall not accelerate and vest upon a Change in Control unless otherwise determined by the Committee.  The provisions in the Plan regarding Change in Control shall apply to the Phantom Units.

 

6.                                      Rights as a Unitholder. The Participant shall have no rights as a unitholder with respect to Phantom Units.

 

7.                                      Provisions of Plan Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time.  The Plan is incorporated herein by reference. If and to the extent that this Agreement conflicts or is inconsistent with the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly.

 

8.                                      Notices. All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and sent to the party to which the notice, demand or request is being made:

 

(a)                                 unless otherwise specified by the Partnership in a notice delivered by the Partnership in accordance with this section, any notice required to be delivered to the Partnership shall be properly delivered if delivered to:

 

Ares Management, L.P.
 2000 Avenue of the Stars, 12th Floor
 Los Angeles, CA 90067
 Attention: General Counsel

 

(b)                                 If to the Participant, to the address on file with the Partnership.

 

Any notice, demand or request, if made in accordance with this section shall be deemed to have been duly given:  (i) when delivered in person; (ii) three days after being sent by United States mail, or foreign equivalent; or (iii) on the first business day following the date of deposit if delivered by a nationally or internationally recognized overnight delivery service.

 

9.                                      No Right to Employment or Services. This Agreement is not an agreement of employment or services.  None of this Agreement, the Plan or the grant of Phantom Units shall (a) obligate the Partnership to employ or otherwise retain, or to continue to employ or otherwise retain, the Participant for any specific time period or (b) modify or limit in any respect the Partnership’s or its Affiliates’ right to terminate or modify the Participant’s employment, services or compensation.

 

10.                               Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Partnership of any personal data information related to the

 

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Phantom Units awarded under this Agreement, for legitimate business purposes (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country.  This authorization/consent is freely given by the Participant.

 

11.                               Withholding.

 

The Partnership or any Affiliate shall have the right and is hereby authorized to withhold from the Settlement Amount and any compensation or other amount owing to the Participant, applicable income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), with respect to any taxable event under this Agreement or the Plan and to take such action as may be necessary in the opinion of the Partnership or the applicable Affiliate to satisfy all obligations for the payment of such Tax-Related Items.  The Participant acknowledges that, regardless of any action taken by the Partnership or any of its Affiliates the ultimate liability for all Tax-Related Items, is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Partnership or any of its Affiliates.

 

12.                               Dispute Resolution.

 

(a)                                 The exclusive remedy for determining any and all disputes, claims or causes of action, in law or equity, arising out of or related to this Agreement, or the breach, termination, enforcement, interpretation or validity thereof will, to the fullest extent permitted by law, be determined by: (i) the dispute resolution provisions in any employment, consulting agreement, or similar agreement, between the Partnership or any of its Affiliates and the Participant or, if none, (ii) the Partnership’s or any of its Affiliates’ mandatory dispute resolution procedures as may be in effect from time to time with respect to matters arising out of or relating to Participant’s employment or service with the Partnership or, if none, (iii) by final, binding and confidential arbitration in [Los Angeles, California][New York, New York], before one arbitrator, conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor.  If disputes are settled pursuant to prong (iii) of this Section 12, Section 12(b) shall apply.

 

(b)                                 Disputes shall be resolved in accordance with the Federal Arbitration Act, 9 U.S.C. §§1—16, and JAMS’ Employment Arbitration Rules and Procedures then in effect.  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.  Judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.  This agreement to resolve any disputes by binding arbitration extends to claims by or against any of the Partnership or any of its Affiliates or any of their respective past or present representatives 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.  The prevailing party in any such arbitration proceeding, as determined by the arbitrator, or in any proceeding to enforce the arbitration award, will be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including the arbitrator’s compensation), expenses and attorneys’ fees.  If no party entirely prevails in such arbitration or proceeding, the arbitrator or court shall apportion an award of such fees based on the relative success of each party.  In the event of a

 

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conflict between this provision and any provision in the applicable rules of JAMS, the provisions of this Agreement will prevail.

 

13.                               Section 409A. The Phantom Units are intended to be exempt from the applicable requirements of Section 409A and shall be limited, construed and interpreted in accordance with such intent; provided, that the Partnership does not guarantee to the Participant any particular tax treatment of the Phantom Units.  In no event whatsoever shall the Partnership be liable for any additional tax, interest or penalties that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A.

 

14.                               Miscellaneous.

 

(a)                                 Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

(b)                                 Governing Law.  All matters arising out of or relating to this Agreement and the transactions contemplated hereby, including its validity, interpretation, construction, performance and enforcement, shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws.

 

(c)                                  Counterparts; Electronic Acceptance.  This Agreement may be executed in one or more counterparts (including by facsimile or electronic transmission), all of which taken together shall constitute one contract.  Alternatively, this Agreement may be granted to and accepted by the Participant electronically.

 

(d)                                 Interpretation.  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 the Plan or the 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 the 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 the Agreement; (viii) “including” (and with correlative meaning “include”) means including without limiting the generality of any 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.

 

(e)                                  No Strict Construction.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

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(f)                                   Waiver.  The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

 

15.                               Language.

 

If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

16.                               NO ACQUIRED RIGHTS. THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT: (A) THE PARTNERSHIP MAY TERMINATE OR AMEND THE PLAN AT ANY TIME; (B) THE AWARD OF PHANTOM UNITS MADE UNDER THIS AGREEMENT IS COMPLETELY INDEPENDENT OF ANY OTHER AWARD OR GRANT AND IS MADE AT THE SOLE DISCRETION OF THE PARTNERSHIP; (C) NO PAST GRANTS OR AWARDS (INCLUDING THE PHANTOM UNITS AWARDED HEREUNDER) GIVE THE PARTICIPANT ANY RIGHT TO ANY GRANTS OR AWARDS IN THE FUTURE WHATSOEVER; (D) THE PLAN AND THE AGREEMENT DO NOT FORM PART OF THE TERMS OF THE PARTICIPANT’S EMPLOYMENT; AND (E) BY PARTICIPATING IN THE PLAN AND RECEIVING AN AWARD PURSUANT TO THIS AGREEMENT, THE PARTICIPANT WAIVES ALL RIGHTS TO COMPENSATION FOR ANY LOSS IN RELATION TO THE PLAN OR THIS AGREEMENT, INCLUDING ANY LOSS OF RIGHTS IN ANY CIRCUMSTANCES INCLUDING TERMINATION OF EMPLOYMENT.

 

[Remainder of This Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

 

	
 
    	
 
    	
ARES   MANAGEMENT, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Participant   Name:
    	
 
    	
 
    

 

6Exhibit 10.16

 

	

    	
 
    	
CONFIDENTIAL
    
	
 
    	
 
    	
ARCC

Participation   Award
    

 

FORM OF

 

ARES CAPITAL MANAGEMENT LLC

 

MEMORANDUM

 

[DATE]

 

	
TO:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
FROM:
    	
 
    	
Ares Capital Management   LLC
    
	
 
    	
 
    	
 
    
	
RE:
    	
 
    	
Profit Participation Interest Related to Ares Capital   Corporation
    

 

 

This Memorandum confirms the award to you for the period commencing on        and ending on        (the “Award Period”) of a profit participation interest (the “Participation Interest”) related to the “incentive fees” earned during the Award Period attributable to the investment activities of Ares Capital Corporation (“ARCC”) during the Award Period (the “Incentive Fees”), to the extent such Incentive Fees are actually paid to and received by Ares Capital Management LLC (“ACM”).

 

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

 

The Participation Interest is based on the Incentive Fees earned during the Award Period to the extent actually paid to and received by ACM as the same are determined based on the performance of the investment portfolio and activities of ARCC.  The Participation Interest will be determined as and when the Incentive Fees are actually paid to and received by ACM without reference to any accrued or deferred incentive fees 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 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, provided that Ares may waive any such conditions in its sole discretion.

 

We note the following with respect to ARCC, ACM and the Participation Interest.

 

1.                                    ACM serves as the day-to-day investment manager to ARCC.  ARCC has been established as closed-end publicly traded specialty finance company that has elected to be treated as a business development company.

 

 

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
    
	
 
    	
 
    	
ARCC

Participation   Award
    

2.                                    In connection with the investment management services provided by ACM and its affiliates to ARCC, ACM receives (i) annual base management and/or advisory fees (the “Base Fees”) and (ii) Incentive Fees based on the performance of the investment portfolio and activities of ARCC as determined in accordance with the provisions of the Investment Advisory and Management Agreement between ARCC and ACM, as such agreement may be amended from time to time.  The Participation Interest is not subject to vesting, and will be determined solely in relation to the Incentive Fees as and when actually paid to and received by ACM and exclusive of and without reference to the Base Fees (which are not a part of this award).

 

3.                                    The Participation Interest as referenced herein will be represented by a number of “points” out of an aggregate of 2,000 “points” (individually and collectively, “Points”) initially representing 100% of the Incentive Fees actually paid to and received from time to time by ACM.  ACM 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 ACM with respect to the Incentive Fees will be paid by ACM pro rata to holders of Points (subject to Paragraphs 4 and 6 below) based on the number of Points then held by each holder at the time of distribution.

 

4.                                    The Participation Interest will not entitle you to any corporate governance rights, voting rights, inspection rights or other rights or interests in ACM, ARCC, Ares or any other Ares Management Entity other than as specifically specified herein.

 

5.                                    The Participation Interest is dependent on the Incentive Fees being paid to and received by ACM with respect to which there is no assurance, notwithstanding the performance of ARCC, including the trading price of ARCC’s common stock, which is publicly traded.

 

6.                                    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 Incentive Fees attributable to ARCC during the Award Period to the extent such Incentive Fees are actually paid to and received by ACM.

 

7.                                    The Participation Interest is not subject to any vesting, is not transferable and constitutes an unsecured obligation of ACM.  You understand that your Participation Interest may change from one Award Period to another Award Period or at any time as determined by Ares.  ACM’s 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

 

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CONFIDENTIAL
    
	
 
    	
 
    	
ARCC

Participation   Award
    

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 New York law irrespective of conflicts of laws principles that would require the application of the laws of another jurisdiction.

 

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CONFIDENTIAL
    
	
 
    	
ARCC
    
	
 
    	
Participation Award
    

SCHEDULE I

 

ARES CAPITAL MANAGEMENT LLC

 

AWARD OF PARTICIPATION INTERESTS RELATED TO

 

ARES CAPITAL CORPORATION INCENTIVE FEES

 

 

Award of Points

 

 

The following sets forth the number of Points awarded to you for the period commencing on                  and ending on                respecting a profit participation interest related to the Incentive Fees paid to and received by Ares Capital Management LLC related to the investment activities of Ares Capital Corporation, 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:                                                                        

 

·                                         Total Points awarded for the Award Period                through               :

 

[            ] Points (out of 2,000 Points)

 

 

Confirmed as of the date first written above by:

 

 

Ares Capital Management LLC

 

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Michael D. Weiner
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    

 

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