MASTER SUB-ADVISORY AGREEMENT ADDENDUM THREE
Exhibit 10.4.4
ADDENDUM THREE
This Master Sub-Advisory Agreement Addendum Three is made this 29th day of June, 2018 (this “Addendum”), by and among Athene Asset Management LLC (f/k/a Athene Asset Management, L.P.), a Delaware limited liability company (the “Investment Manager”), Apollo Capital Management, L.P., a Delaware limited partnership (“ACM”), Apollo Global Real Estate Management, L.P., a Delaware limited partnership (“AGREM”), ARM Manager LLC, a Delaware limited liability company (“ARM”), Apollo Longevity, LLC, a Delaware limited liability company (“ALL”) and Apollo Emerging Markets, LLC, a Delaware limited liability company (“AEM” and together with ACM, AGREM, ARM and ALL, the “Sub-Advisors), pursuant to that certain Amended and Restated Master Sub-Advisory Agreement, effective as of April 1, 2014 (as further amended, supplemented or modified from time to time, the “Master Sub-Advisory Agreement”) by and among the Investment Manager and the Sub-Advisors. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Master Sub-Advisory Agreement.
WHEREAS, the Investment Manager and the Sub-Advisors entered into the Master Sub-Advisory Agreement pursuant to which the Investment Manager retained the Sub- Advisors to manage an investment portfolio of one or more Accounts;
WHEREAS, Section 2(k) of the Master Sub-Advisory Agreement provides that the parties may enter into an arrangement, either pursuant to an Addendum or other written arrangement, whereby the Sub-Advisor would have discretion with respect to certain transactions other than as set forth in Section 2(a) of the Master Sub-Advisory Agreement, such as to execute transactions for the Accounts without seeking prior consent from the Investment Manager so long as they fit within, among other things, certain prescribed guidelines;
WHEREAS, one or more Accounts desire to invest in Apollo Hybrid Value Fund,
(the “HV Fund”), and in connection with such investment, one or more Accounts also desire to invest on an incremental direct investment basis, following the same strategy as the HV Fund, alongside (but not through or part of) the HV Fund (the “Hybrid Value Managed Account”) via an investment in AA Direct, L.P., a Delaware limited partnership formed to facilitate the Hybrid Value Managed Account (“AA Direct”);
WHEREAS, the Investment Manager and Sub-Advisors desire to permit ACM to provide advice and execute certain transactions for the Accounts with respect to the Hybrid Value Managed Account and have agreed to the payment of certain fees for services provided by the Sub-Advisors to the Investment Manager in respect of the Hybrid Value Managed Account as set forth in Schedule 2-5 attached hereto; and
WHEREAS, this Addendum shall be attached to, amend and become a part of the Master Sub-Advisory Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Amendments to Schedule 2-1 of the Master Sub-Advisory Agreement. Schedule 2-1 of the Master Sub-Advisory Agreement is hereby amended and replaced in its entirety with Exhibit A attached hereto.
2.Amendments to Schedule 2 of the Master Sub-Advisory Agreement. Schedule 2 of the Master Sub-Advisory Agreement is hereby amended to include as Schedule 2-5, the form of Exhibit B attached hereto.
3.Amendments to Schedule 3 of the Master Sub-Advisory Agreement. Schedule 3 of the Master Sub-Advisory Agreement is hereby amended to include as Schedule 3-1, the form of Exhibit C hereto.
4.Addendum to Master Sub-Advisory Agreement. This Addendum constitutes an Addendum to the Master Sub-Advisory Agreement (as such term is defined in Section 1 of the Master Sub-Advisory Agreement). This Addendum shall be deemed to be attached to, amend and become a part of the Master Sub-Advisory Agreement and the terms of the Master Sub-Advisory Agreement shall be amended, supplemented or modified by the terms of this Addendum as applicable. Any reference to “this Agreement” in the Master Sub-Advisory Agreement shall be deemed to include the terms set forth in this Addendum.
5.Ratification. Except with respect to matters expressly provided for herein, all terms, provisions and conditions of the Master Sub-Advisory Agreement are hereby ratified and shall remain unchanged and continue in full force and effect.
6.Conflicts. In the event of any conflict or inconsistency between the terms of this Addendum and those of the Master Sub-Advisory Agreement, this Addendum will control.
1
Exhibit 10.4.4
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed by their respective duly authorized officers as of the date and year first above written.
ATHENE ASSET MANAGEMENT LLC
/s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
APOLLO CAPITAL MANAGEMENT, L.P.
By: Apollo Capital Management, GP, LLC,
its General Partner
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
APOLLO GLOBAL REAL ESTATE MANAGEMENT, L.P.
By: Apollo Global Real Estate Management, GP, LLC,
its General Partner
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
ARM MANAGER LLC
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
APOLLO LONGEVITY, LLC
By: Apollo Capital Management L.P., its sole member
By: Apollo Capital Management GP, LLC, its General Partner
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
APOLLO EMERGING MARKETS, LLC
By: Apollo Capital Management L.P., its sole member
By: Apollo Capital Management GP, LLC, its General Partner
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
Signature Page to Master Sub-Advisory Agreement Addendum Three
Exhibit 10.4.4
Exhibit A
Schedule 2-1
Management Fee Schedule (all Sub-Advisors other than Apollo Royalties Management LLC)
1. | Management Fee. In consideration of the services performed under the Agreement, the Investment Manager shall pay to the Sub-Advisors (allocated among such Sub-Advisors as such Sub-Advisors shall determine) a management fee (the “Management Fee”), calculated and paid quarterly in arrears as a percentage of Average Month-End Net Asset Value of assets in all the Accounts managed by the Sub-Advisors (unless otherwise agreed to by the parties1), (other than Third Party CLO Equity Managed Account (as described on Schedule 2-3)2 and the Hybrid Value Managed Account (as described on Schedule 2-53)) pursuant to the following schedule, which shall take effect with respect to new and existing assets as of January 1, 2017: |
1 For the avoidance of doubt but subject to Section 2(a), to the extent that a Sub-Adviser invests on behalf of the Account in an affiliate-managed CLO (a) to the extent that such investment is on a secondary basis in one of the debt and/or equity tranches of such CLO, the Account will be charged fees pursuant to this Schedule 2-1; and (b) to the extent that such investment is on a primary basis, the agreement governing the Account’s investment into the affiliate-managed CLO will govern the treatment of fees in such instance (and not, for the avoidance of doubt, this Schedule 2-1). In addition, the Investment Manager shall be responsible for any servicing fees associated with the sub-advised mortgage and mezzanine real estate loan portfolio.
2 For the avoidance of doubt, this fee schedule does not apply to future or existing investments in Apollo funds (which as of the date hereof includes but is not limited to TRF, COF 3, SCRF IV, AA Direct, EPFs, FCIs, all the ALM and ALME CLO sand related warehouses, the levered CMBS funds and APC), or to any investments made by Apollo Royalties Management LLC. Additionally, this fee schedule does not apply to investments in MCF CLO II (f/k/a Kirkwood), which is covered by Schedule 2-3 hereof). Fees with respect to the Third Party CLO Equity Managed Account are charged pursuant to Schedule 2-3, and the Project Orange Trade will be included in the Third Party CLO Equity Managed Account and charged accordingly.
3 Fees with respect to the Hybrid Value Managed Account are charged pursuant to Schedule 2-5. In addition, fees with respect to the Hybrid Value Managed Account are in addition to, and not set-off against, the fees charged by the HV Fund.
Exhibit A
Exhibit 10.4.4
Assets Under Management4 | Management Fee Rate5 | |
< $10,000,000,000 | 40 bps (0.40%) per annum | |
≥ $10,000,000,000 and < $12,440,936,389 | 35 bps (0.35%) per annum | |
> $12,440,936,389 and < $16,000,000,000 | 40 bps (0.40%) per annum | |
> $16,000,000,000 | 35 bps (0.35%) per annum | |
The “Average Month-End Net Asset Value” shall be the average of the month-end aggregate net asset value of the Accounts during the calendar quarter. If the period in respect of which a Management Fee is payable is less than a calendar quarter, then the Management Fee shall be pro rated accordingly. For the avoidance of doubt, for a given month, Average Month-End Net Asset Value shall be calculated based on trade date holdings plus accrued interest.
2. | Valuation. Each Sub-Advisor, through its designee, shall (i) be responsible for determining the value of the assets that are purchased for the Accounts that it manages in accordance with such Sub-Advisor’s existing policies and procedures, and (ii) shall use commercially reasonable efforts to submit a proposed valuation of such Accounts within 5 business days (but in no event later than 6 business days) following each month-end to the Investment Manager. The parties hereto agree to negotiate in good faith as to any objections raised by the Investment Manager about the valuation of assets in the Accounts for purposes of determining the Management Fees. |
3. | Payment of Fees. The Management Fee will be calculated, billed, and paid quarterly in arrears, based on the Average Month-End Net Asset Value as of the last business day of each and all of the three calendar months during the relevant quarter, or in the case of any partial quarterly period, the last day of each calendar month during the relevant period and the last business day of such period. The Investment Manager will pay any Management Fees payable hereunder within 30 calendar days following receipt by the Investment Manager of an invoice for such fee, detailing the calculation of such fee. The Investment Manager and the Sub-Advisors shall agree on the form and substance of such invoice before the first Management Fee billing cycle. Upon termination of the Agreement, any outstanding Management Fee shall become immediately payable by the Investment Manager. |
4 “Assets Under Management” shall be calculated in the aggregate to include the investment assets of or relating to Athene Holding Ltd. (“Athene”) and its subsidiaries, managed by ACM, AGREM, ARM, ALL, AEM or an affiliate thereof, whether under this Agreement or separate sub-advisory agreement with the Investment Manager, including cash and all assets in surplus accounts and funds withheld accounts, modified coinsurance accounts and reinsurance trusts supporting reinsurance agreements entered into by Athene (collectively, “Athene Accounts”) and managed by ACM, AGREM, ARM, ALL and AEM. For the avoidance of doubt, Assets Under Management shall not include future or existing investments in Apollo managed funds (which as of the date hereof includes but is not limited to TRF, COF 3, EPFs, FCIs, all the ALM, ALME or other affiliated CLOs or CLO-sponsored vehicles and related warehouses, APC, the levered CMBS funds) or any investments made by Apollo Royalties Management LLC; provided, that, notwithstanding the foregoing, (a) Assets Under Management shall include investment by any Athene Accounts in the Hybrid Value Managed Account (including, without limitation investment through AA Direct) and (b) to the extent that the Account invests in any affiliated CLO or CLO-sponsored vehicle pursuant to which the Account is charged fees pursuant to this Schedule 2-1, such investment in such affiliated CLO or CLO-sponsored vehicle shall be included in Assets Under Management.
5 For the avoidance of doubt, this Schedule 2-1 shall not apply to any Apollo controlled investment entities, the fee schedule of which shall be governed by a separate schedule or other governing document.
4. | Incentive Fees. For the avoidance of doubt, the provisions governing incentive fees on existing assets remain intact and shall not be deemed amended by this Agreement. The Investment Manager and each Sub-Advisor may agree in writing from time to time on an incentive fee with respect to particular investments or asset classes managed by such Sub-Advisor. |
Exhibit A
Exhibit 10.4.4
Exhibit B
Schedule 2-5
Hybrid Value Managed Account
1) | Management Fee. In consideration of the services performed under the Agreement and pursuant to this Schedule 2-5, the Investment Manager shall pay a management fee (the “Management Fee”), calculated and paid quarterly in arrears equal to 50 bps (0.50%) per annum on the quarter end cost basis of invested securities in the Hybrid Value Managed Account. |
2) | Payment of Fees. The Management Fee will be calculated, billed, and paid quarterly in arrears, as of the last business day of each and all of the four calendar quarters during the relevant calendar year, or in the case of any partial annual period, the last day of each calendar quarter during the relevant period and the last business day of such period. The Investment Manager will pay any Management Fees payable hereunder within 30 calendar days following receipt by the Investment Manager of an invoice for such fee, detailing the calculation of such fee. The Investment Manager and the Sub-Advisors shall agree on the form and substance of such invoice before the first Management Fee billing cycle. Upon termination of the Agreement, any outstanding Management Fee shall become immediately payable by the Investment Manager. |
3) | Incentive Fee. In addition to the Management Fee set forth above, the Investment Manager shall pay to ACM an incentive fee equal to three percent (3%) of the realized proceeds (including principal repayments and coupon payments, “Proceeds”) in excess of the cost of each investment recommended by ACM pursuant to this Schedule 2-5 and return of the Preferred Return with respect to each investment, each as fully described below (the “Incentive Fee” and together with the Management Fee, the “Fees”). Specifically, Proceeds from each investment will be allocated as follows: |
(i) | First, to the Investment Manager’s applicable clients (the “Clients”) until such Clients have received an amount equal to the aggregate amount of capital contributions made by such Clients to the Hybrid Value Managed Account (including any Management Fees paid pursuant to this Schedule 2-5 and related to the Hybrid Value Managed Account); |
(ii) | Second, to the applicable Clients until such Clients have received an amount equal to interest at the rate of eight percent (8%) per annum, compounded annually, on the aggregate amount of capital contributions made by such Clients to the Hybrid Value Managed Account (including on any Management Fees paid pursuant to this Schedule 2-5 and related to the Hybrid Value Managed Account) until the relevant dates on which amounts representing such capital contributions and the priority return thereon are distributed; |
(iii) | Third, 100% to ACM until ACM has received an amount equal to 3% of the sum of the allocations made pursuant to item (ii) above and amounts then and previously allocated pursuant to this item (iii); and |
(iv) | Finally, 97% to the applicable Clients and 3% to ACM. |
Upon the termination of the Agreement, a clawback calculation will be completed based on the aggregate Proceeds received from all realized investments recommended by ACM pursuant hereto, and ACM shall be required to repay any Incentive Fee previously paid to ACM to the extent that any realized losses from investments recommended by ACM pursuant to this Schedule 2-5 remain unreturned to the applicable Clients upon such termination.
4) | Incentive Fee Payment. Incentive Fee will be paid quarterly in arrears. As referenced in Schedule 2.1, provisions governing incentive fees on existing assets remain intact and shall not be deemed amended by this Agreement. The Investment Manager and each Sub-Advisor may in addition agree in writing from time to time on an incentive fee with respect to particular investments or asset classes managed by such Sub-Advisor. |
Exhibit B
Exhibit 10.4.4
Exhibit C
Schedule 3-1
Hybrid Value Managed Account - Investment Guidelines
The Investment Guidelines related to the Hybrid Value Managed Account shall be consistent with those contained in the governing documents of AA Direct. Furthermore, each investment made by the Accounts in respect of the HV Fund, shall also be made by the Accounts with respect to the Hybrid Value Managed Account on pro rata based on the amount of capital in the HV Fund and the Hybrid Value Managed Account by clients of the Investment Manager. Notwithstanding the foregoing, the Investment Manager may revoke such investment discretion at any time upon notice to ACM. This Schedule 3-1 and the Schedule 4 attached to the Agreement may otherwise be amended, supplemented or modified from time to time as agreed to in writing solely by the Investment Manager and ACM without a formal amendment to the Agreement.
Exhibit C
