AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT
EXECUTION VERSION
AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT
This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of May 6, 2013, is hereby entered into by and among APO Corp., a Delaware corporation (“APO Corp.”), Apollo Principal Holdings II, L.P., a Delaware limited partnership (“Apollo Principal II”), Apollo Principal Holdings IV, L.P., a Cayman Islands exempted limited partnership (“Apollo Principal IV”), Apollo Principal Holdings VI, a Delaware limited partnership (“Apollo Principal VI”), Apollo Principal Holdings VIII, L.P., a Cayman Islands exempted limited partnership (“Apollo Principal VIII”), AMH Holdings (Cayman), L.P., a Cayman Islands exempted limited partnership (“AMH Holdings”) (together with all other Persons (as defined herein) in which APO Corp. acquires a partnership interest, member interest or similar interest after the date hereof and who execute and deliver a joinder contemplated in Section 7.14, the “Partnerships”), and each of the undersigned parties hereto identified as “Holders”.
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WHEREAS, the original Tax Receivable Agreement among APO Corp., Apollo Principal II, Apollo Principal IV, Apollo Management Holdings, L.P., a Delaware limited partnership, and the Holders party thereto, dated July 13, 2007 (the “Original Tax Receivable Agreement”) provided for certain arrangements with respect to the effect of the Basis Adjustment and Imputed Interest (in each case, as defined herein) on the actual liability for Taxes of APO Corp.;
WHEREAS, the parties to the Original Tax Receivable Agreement together with Apollo Principal VI, Apollo Principal VIII, and AMH Holdings now desire to enter into this Agreement to amend and restate the Original Tax Receivable Agreement in its entirety as more fully set forth below; and
“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, such first Person.
“Agreed Rate” means LIBOR plus 100 basis points.
“Agreement” is defined in the Preamble of this Agreement.
“Amended and Restated Exchange Agreement” means the Amended and Restated Exchange Agreement among the Issuer, each of the Apollo Principal Partnerships, APO Corp., APO FC and AP Professional dated the date hereof.
“Amended Schedule” is defined in Section 2.04(b) of this Agreement.
“Amended Tax Benefit Schedule” is defined in Section 3.01(b) of this Agreement.
“AMH Holdings” is defined in the Preamble of this Agreement.
“AOG Units” has the meaning ascribed to such term in the Amended and Restated Exchange Agreement.
“AP Professional” is defined in the Recitals of this Agreement.
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“APO Corp.” means APO Corp. (as defined in the Preamble of this Agreement), and any successor corporation thereof or similar blocker corporation owned, directly or indirectly, by the Issuer.
“APO Corp. Return” means the federal, state, local and/or foreign Tax Return, as applicable, of APO Corp. filed with respect to Taxes of any Taxable Year.
“APO FC” means APO (FC), LLC, an Anguilla limited liability company, and any successor thereof.
“APO LLC” means APO Asset Co., LLC, a Delaware limited liability company, and any successor thereof.
“Apollo Operating Group” shall have the meaning given to such term in the Shareholders Agreement, dated as of July 13, 2007, among the Issuer, AP Professional and the other parties named therein.
“Apollo Operating Group Members” means, collectively, APO Corp., APO FC and APO LLC.
“Apollo Principal II” means Apollo Principal II (as defined in the Preamble of this Agreement), and any successor thereto.
“Apollo Principal IV” means Apollo Principal IV (as defined in the Preamble of this Agreement), and any successor thereto.
“Apollo Principal VI” means Apollo Principal VI (as defined in the Preamble of this Agreement), and any successor thereto.
“Apollo Principal VIII” means Apollo Principal VIII (as defined in the Preamble of this Agreement), and any successor thereto.
“Apollo Principal Partnerships” means, collectively, Apollo Principal Holdings I L.P., a Delaware limited partnership, Apollo Principal Holdings III, a Cayman Islands exempted limited partnership, Apollo Principal Holdings V, a Delaware limited partnership, Apollo Principal Holdings VII, a Cayman Islands exempted limited partnership, Apollo Principal Holdings IX, a Cayman Islands exempted limited partnership, Apollo Principal II, Apollo Principal IV, Apollo Principal VI, Apollo Principal VIII, AMH Holdings and any successors thereto.
“B Exchange” has the meaning ascribed to such term in the Amended and Restated Exchange Agreement.
“Basis Adjustment” means, as a result of an Exchange and the payments made pursuant to this Agreement, the adjustment to the tax basis of an Original Asset under (i) Section 732 of the Code (in situations where, as a result of one or more Exchanges, a Partnership becomes an entity that is disregarded as separate from its owner for tax purposes), and (ii) Section 1012 of the Code, or Sections 743(b) and 754 of the Code (in situations where, following an Exchange, a Partnership
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remains in existence as an entity for tax purposes), and, in case of clauses (i) and (ii), comparable sections of state, local and foreign tax laws all as calculated under Section 2.01 of this Agreement. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of one or more Partnership Units shall be determined without regard to any Pre-Exchange Transfer of such Partnership Units, and as if any such Pre-Exchange Transfer had not occurred.
“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.
“Change of Control” means the occurrence of any Person, other than a Person approved by the current Manager, becoming the manager of the Issuer.
“Class A Shares” means the Class A Common Shares of the Issuer representing Class A limited liability company interests of the Issuer.
“Code” is defined in the Recitals of this Agreement.
“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.
“Default Rate” means LIBOR plus 500 basis points.
“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state, local and foreign tax law, as applicable, or any other event (including the execution of a Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.
“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.
“Early Termination Notice” is defined in Section 4.02 of this Agreement.
“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.
“Early Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 100 basis points.
“Early Termination Schedule” is defined in Section 4.02 of this Agreement.
“Exchange” is defined in the Recitals of this Agreement.
“Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.
“Exchange Date” is defined in the Recitals of this Agreement.
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“Exchange Payment” is defined in Section 5.01.
“Excluded Assets” is defined in Section 7.11(c) of this Agreement.
“Expert” is defined in Section 7.09 of this Agreement.
“Holder” means the parties hereto other than APO Corp., Apollo Principal II, Apollo Principal IV, Apollo Principal VI, Apollo Principal VIII, AMH Holdings, and each other individual who from time to time executes a joinder agreement in the form attached hereto as Exhibit A.
“Holder Group Member” means any Holder, Affiliate of a Holder, AP Professional, BRH Holdings, L.P., a Cayman Islands exempted limited partnership, and BRH Holdings GP Ltd., a Cayman Islands limited liability corporation.
“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and foreign tax law with respect to APO Corp.’s payment obligations under this Agreement.
“Initial Sale” is defined in the Recitals of this Agreement.
“Issuer” means Apollo Global Management, LLC, a limited liability company formed under the laws of the State of Delaware, and any successor thereto.
“LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “LIBO” or by any other publicly available source of such market rate) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).
“Manager” means AGM Management, LLC, a Delaware limited liability company and the manager of the Issuer.
“Market Value” shall mean the closing price of the Class A Shares on the applicable Exchange Date on the national securities exchange or interdealer quotation system on which such Class A Shares are then traded or listed, as reported by the Wall Street Journal; provided that if the closing price is not reported by the Wall Street Journal for the applicable Exchange Date, then the Market Value shall mean the closing price of the Class A Shares on the Business Day immediately preceding such Exchange Date on the national securities exchange or interdealer quotation system on which such Class A Shares are then traded or listed, as reported by the Wall Street Journal; provided further, that if the Class A Shares are not then listed on a national securities exchange or interdealer quotation system, “Market Value” shall mean the fair market value of the Class A Shares, as determined by the Manager in good faith.
“Material Objection Notice” has the meaning set forth in Section 4.02.
“Net Tax Benefit” has the meaning set forth in Section 3.01(b).
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“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the tax basis that such asset would have had at such time if no Basis Adjustment had been made.
“Non-Stepped Up Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of APO Corp., including with respect, directly or indirectly, to the income and gains allocable to APO Corp. from any Partnership in which APO Corp. owns an interest (other than a Partnership in which APO Corp. holds AOG Units immediately after the relevant B Exchange, but in which APO LLC or APO FC ( or any other subsidiary of AGM) also owns AOG Units)) using the same methods, elections, conventions and similar practices used on APO Corp.’s Return, but calculated using the Non-Stepped Up Tax Basis instead of the tax basis of the Original Assets and excluding any deduction attributable to the Imputed Interest.
“Notes” has the meaning ascribed to such term in the Strategic Agreement.
“Objection Notice” has the meaning set forth in Section 2.04(a).
“Original Assets” is defined in the Recitals of this Agreement.
“Original Tax Receivable Agreement” is defined in the Recitals of this Agreement.
“Partnerships” is defined in the Preamble of this Agreement.
“Partnership Agreement” means, with respect to a Partnership, the Amended and Restated Limited Partnership Agreement of such Partnership.
“Partnership Units” is defined in the Recitals of this Agreement.
“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.
“Person” shall be construed broadly and includes any individual, corporation, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.
“Pre-Exchange Transfer” means any transfer (including upon the death of a Holder) of one or more Partnership Units (i) that occurs prior to an Exchange of such Partnership Units, and (ii) to which Section 743(b) of the Code applies.
“Prior Entities” is defined in the Recitals of this Agreement.
“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Non-Stepped Up Tax Liability over the actual liability for Taxes of APO Corp. or any Partnership in which APO Corp. owns, directly or indirectly, an interest (other than a Partnership in which APO Corp. holds AOG Units immediately after the relevant B Exchange, but in which APO LLC or APO FC ( or any other subsidiary of AGM) also owns AOG Units)), but only with respect to Taxes imposed with respect to income of such Partnership allocable to APO Corp. If all or a portion of the actual liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority for the
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Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.
“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the actual liability for Taxes of APO Corp. or any Partnership in which APO Corp. owns an interest (other than a Partnership in which APO Corp. holds AOG Units immediately after the relevant B Exchange, but in which APO LLC or APO FC ( or any other subsidiary of AGM) also owns AOG Units)), but only with respect to Taxes imposed with respect to income of such Partnership allocable to APO Corp., over the Non-Stepped Up Tax Liability for such Taxable Year. If all or a portion of the actual liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority for the Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.
“Reconciliation Dispute” has the meaning set forth in Section 7.09 of this Agreement.
“Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 of this Agreement.
“Schedule” means any Exchange Basis Schedule, Tax Benefit Schedule and the Early Termination Schedule.
“Senior Obligations” has the meaning set forth in Section 5.01 of this Agreement.
“Strategic Agreement” means the Strategic Agreement, dated as of July 13, 2007, by and among Apollo, APOC Holdings Ltd., a Cayman Islands exempted company, the California Public Employees’ Retirement System and the other parties thereto.
“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.
“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.
“Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.
“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.
“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or comparable section of state, local or foreign tax law, as applicable, (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made) ending on or after an Exchange Date in which there is a Basis Adjustment due to an Exchange.
“Taxes” means any and all U.S. federal, state, local and foreign taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Tax.
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“Taxing Authority” shall mean any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.
“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.
“Valuation Assumptions” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, APO Corp. will have taxable income sufficient to fully utilize the deductions arising from the Basis Adjustment and the Imputed Interest during such Taxable Year, (2) the federal income tax rates and state, local and foreign income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, (3) any loss carryovers or carryback generated by the Basis Adjustment or the Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by APO Corp. on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such loss carryovers or carrybacks, (4) any non-amortizable assets are deemed to be disposed of (A) with respect to private equity fund related assets, pro-rata over the number of years remaining under the original fund agreement until expected liquidation (without extensions) of the applicable fund (or, if such expected liquidation date has passed, on the Early Termination Date) and (B) with respect to all other assets, on the fifteenth anniversary of the earlier of the Basis Adjustment and the Early Termination Date and (5) if an Early Termination Date is effected prior to an Exchange of Partnership Units, clause (i) of Section 2.01 shall be read to include the Market Value of the Class A Shares and cash that would be transferred if the Exchange of all Partnership Units, that have not previously been Exchanged, occurred on the Early Termination Date.
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Code. For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.
Section 2.04. Procedures, Amendments.
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to the applicable Holder, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended APO Corp.’s Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this Agreement (such Schedule, an “Amended Schedule”).
Section 3.01. Payments.
b.A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of the sum of the Net Tax Benefit and the Imputed Interest amount. The “Net Tax Benefit” shall equal: (1) APO Corp.’s Realized Tax Benefit, if any, for a Taxable Year plus (2) the amount of the excess Realized Tax Benefit reflected on an Amended Tax Benefit Schedule for a previous Taxable Year over the Realized Tax Benefit (or Realized Tax Detriment (expressed as a negative number)) reflected on the Tax Benefit Schedule for such previous Taxable Year, minus (3) an amount equal to APO Corp.’s Realized Tax Detriment (if any) for the current or any previous Taxable Year, minus (4) the amount of the excess Realized Tax Benefit reflected on a Tax Benefit Schedule for a previous Taxable Year over the Realized Tax Benefit (or Realized Tax Detriment (expressed as a negative number)) reflected on the Amended Tax Benefit Schedule for such previous Taxable Year; provided, however, that to the extent of the amounts described in 3.01(b)(2), (3) and (4) that were taken into account in determining any Tax Benefit Payment in a preceding Taxable Year, such amounts shall not be taken into account in determining a Tax Benefit Payment in any other Taxable Year; provided, further, no applicable Holder shall be required to return any portion of any previously made Tax Benefit Payment. The “Interest Amount” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing APO Corp.’s Return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments, whether paid with respect to Partnership Units that were exchanged (i) prior to the date of such Change of Control or (ii) on or after the date of such Change of Control, shall be calculated by
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utilizing Valuation Assumptions (1), (3), and (4), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date”.
Section 4.01. Early Termination and Breach of Agreement.
a.APO Corp. may terminate this Agreement with respect to all of the Partnership Units held (or previously held and exchanged) by all Holders at any time by paying to all of the applicable Holders the Early Termination Payment; provided, however, that this Agreement shall only terminate upon the receipt of the Early Termination Payment by all Holders, and provided, further, that APO Corp. may withdraw any notice to execute its termination rights under this Section 4.01(a) prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payments by APO Corp., neither the applicable Holders nor APO Corp. shall have any further payment obligations under this Agreement in respect of such Holders, other than for any (a) Tax Benefit Payment agreed to by APO Corp. and the applicable Holder as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (b) is included in the Early Termination Payment). If an Exchange occurs after APO Corp. exercises its termination rights under this Section 4.01(a), APO Corp. shall have no obligations under this Agreement with respect to such Exchange.
b.In the event that APO Corp. breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and shall include, but not be limited to, (1)
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the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of a breach, (2) any Tax Benefit Payment agreed to by APO Corp. and any Holder as due and payable but unpaid as of the date of a breach, and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of a breach. Notwithstanding the foregoing, in the event that APO Corp. breaches this Agreement, the Holders shall be entitled to elect to receive the amounts set forth in (1), (2) and (3), above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due.
c.The undersigned parties agree that the aggregate value of the Tax Benefit Payments cannot be ascertained with any reasonable certainty for U.S. federal income tax purposes.
Section 4.03. Payment upon Early Termination.
a.Within three calendar days after agreement between the applicable Holder and APO Corp. of the Early Termination Schedule, APO Corp. shall pay to the applicable Holder an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account designated by the applicable Holder or as otherwise agreed by APO Corp. and the applicable Holder.
b.The Early Termination Payment as of the date of the delivery of an Early Termination Schedule shall equal with respect to the applicable Holder the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would
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be required to be paid by APO Corp. to the applicable Holder beginning from the Early Termination Date assuming the Valuation Assumptions are applied.
Section 5.01. Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by APO Corp. to the applicable Holder under this Agreement (an “Exchange Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of APO Corp. and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of APO Corp. that are not Senior Obligations.
Section 5.02. Late Payments by APO Corp. The amount of all or any portion of any Tax Benefit Payment not made to the applicable Holder when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Exchange Payment was due and payable.
Section 6.01. Holder Group Member Participation in APO Corp.’s and Partnerships’ Tax Matters. Except as otherwise provided herein, APO Corp. shall have full responsibility for, and sole discretion over, all Tax matters concerning APO Corp. and the Partnerships, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, APO Corp. shall notify the applicable Holder Group Member of, and keep the applicable Holder Group Member reasonably informed with respect to the portion of any audit of APO Corp. and the Partnerships by a Taxing Authority the outcome of which is reasonably expected to affect the applicable Holder Group Member’s rights and obligations under this Agreement, and shall provide to the applicable Holder Group Member reasonable opportunity to provide information and other input to APO Corp., the Partnerships and their respective advisors concerning the conduct of any such portion of such audit; provided, however, that APO Corp. and the Partnerships shall not be required to take any action that is inconsistent with any provision of any of the Partnership Agreements.
Section 6.02. Consistency. APO Crop. and the applicable Holder agree to report and cause to be reported for all purposes, including federal, state, local and foreign Tax purposes and financial reporting purposes, all Tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by APO Corp. in any Schedule required to be provided by or on behalf of APO Corp. under this Agreement.
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Section 6.03. Cooperation. The applicable Holder shall (a) furnish to APO Corp. in a timely manner such information, documents and other materials as APO Corp. may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to APO Corp. and its representatives to provide explanations of documents and materials and such other information as APO Corp. or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and APO Corp. shall reimburse the applicable Holder for any reasonable third-party costs and expenses incurred pursuant to this Section 6.03.
Section 7.01. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to APO Corp., to:
c/o Apollo Global Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Electronic Mail: xxxxxxx@xxxxxxxx.xxx
Electronic Mail: xxxxxxx@xxxxxxxx.xxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq. and Xxxx X. Xxxx, Esq.
Electronic mail: xxxxxxx@xxxxxxxxx.xxx and xxxxx@xxxxxxxxx.xxx
If to the applicable Holder, to:
The address and facsimile number set forth in the records of the Partnerships.
Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.
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Section 7.03. Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.04. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York.
Section 7.06. Successors; Assignment; Amendments; Waivers.
a.No Holder may assign this Agreement to any Person without the prior written consent of APO Corp.; provided, however, (i) that, to the extent Partnership Units are effectively transferred in accordance with the terms of the Partnership Agreements and any other agreements the Holders may have entered into with the Issuer, APO Corp. and/or any of the Apollo Operating Group Members or Apollo Principal Partnerships, the transferring Holder shall assign to the transferee of such Partnership Units the transferring Holder’s rights under this Agreement with respect to such transferred Partnership Units, as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to APO Corp., agreeing to become a “Holder” for all purposes of this Agreement, except as otherwise provided in such joinder, and (ii) that, once an Exchange has occurred, any and all payments that may become payable to a Holder pursuant to this Agreement with respect to such Exchange may be assigned to any Person or Persons, as long as any such Person has executed and delivered, or, in connection with such assignment, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to APO Corp., agreeing to be bound by Section 7.12 and acknowledging specifically the last sentence of the next paragraph. For the avoidance of doubt: (A) to the extent a Holder Group Member or other Person transfers
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Partnership Units to a Holder Group Member pursuant to the relevant Partnership Agreements, the Holder Group Member receiving such Partnership Units shall have all rights under this Agreement with respect to such transferred Partnership Units as such Holder Group Members has, under this Agreement, with respect to the other Partnership Units held by him; and (B) the requirement to execute and deliver a joinder pursuant to this Section 7.06(a) shall not be construed as requiring such execution and delivery prior to an assignment becoming effective.
b.Notwithstanding the provisions of Section 7.06(a), no transferee described in clause (i) of Section 7.06(a) shall have the right to enforce the provisions of Section 2.04, 4.02, or 6.01 of this Agreement, and no assignee described in clause (ii) of Section 7.06(a) shall have any rights under this Agreement except for the right to enforce its right to receive payments under this Agreement.
c.No provision of this Agreement may be amended unless such amendment is approved in writing by APO Corp., on behalf of itself and the respective Partnerships it Controls, and by Holder Group Members who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Holder Group Members hereunder if APO Corp. had exercised its right of early termination on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any Holder Group Member pursuant to this Agreement since the date of such most recent Exchange); provided, that no such amendment shall be effective if such amendment will have a disproportionate effect on the payments certain Holders will or may receive under this Agreement unless all such Holders disproportionately effected consent in writing to such amendment. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.
d.All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. APO Corp. shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of APO Corp., by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that APO Corp. would be required to perform if no such succession had taken place. Notwithstanding anything to the contrary herein, in the event an Holder Group Member transfers his Partnership Units to a Permitted Transferee (as defined in each Partnership Agreement), excluding any other Holder Group Member, such Holder Group Member shall have the right, on behalf of such transferee, to enforce the provisions of Sections 2.04, 4.02 or 6.01 with respect to such transferred Partnership Units.
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Section 7.08. Resolution of Disputes.
a.Any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) days of receipt of notice of arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the English language.
Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
b.Notwithstanding the provisions of paragraph (a) APO Corp. may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Holder (i) expressly consents to the application of paragraph (c) of this Section 7.08 to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints APO Corp. as such Holder’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Holder of any such service of process, shall be deemed in every respect effective service of process upon the Holder in any such action or proceeding.
c.(1) EACH HOLDER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 7.08, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forum designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another.
i.The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 7.08 and such parties agree not to plead or claim the same.
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Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by APO Corp., subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by APO Corp. APO Corp. and each applicable Holder Group Member shall bear their own costs and expenses of such proceeding, unless the Holder Group Member has a prevailing position that is more than 10% of the payment at issue, in which case APO Corp. shall reimburse such Holder Group Member for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be binding on APO Corp. and the applicable Holder Group Member and may be entered and enforced in any court having jurisdiction.
a.The other Apollo Operating Group Members shall provide that all provisions of this Agreement shall correspondingly apply, including the payment of Tax Benefit Payments by any corporation owned directly or indirectly in whole or in part, now or in the future, by other Apollo Operating Group Members, with respect to any Realized Tax Benefit with respect to limited partner interests in other Apollo Principal Partnerships, that are part of the Exchange and in which such corporation owns an interest, under the same terms and conditions as set forth in this Agreement, and the other Apollo Operating Group Members shall cause such corporation to execute and deliver a joinder to this Agreement to such effect. If either (i) the Issuer or any other Apollo Operating Group Members elects to be treated as a corporation for tax purposes, or (ii) the Issuer holds any other Apollo Operating Group Members directly or indirectly through an entity that is treated as a corporation for tax purposes, then the provisions of this Agreement shall apply (w) to
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such other Apollo Operating Group Members in the same manner as it applies to APO Corp. and (x) to each partnership, limited partnership and limited liability company Controlled by any other Apollo Operating Group Members as if each such entity were a Partnership; provided that, if any Partnership Units or limited partner interests in other Apollo Principal Partnerships were Exchanged prior to an event described in clause (i) or (ii) above, then (y) such Exchange shall be treated for purposes of this Agreement as having occurred immediately after such event at the Market Value in existence at the time of such prior Exchange, and (z) the entity that is to be treated in the same manner as APO Corp. shall be required to make the same Tax Benefit Payments pursuant to the terms of this Agreement that it would have been required to make had it been treated in the same manner as APO Corp. on the date of such Exchange; provided, however, that such Tax Benefit Payments shall be payable only with respect to (I) Original Assets that are still owned at the time of the event described in clause (i) or (ii) above, and (II) taxable years of such entity ending on or after the date of the event described in clause (i) or (ii) above. The parties agree that the terms of this Agreement will be applied to any corporation under this Section 7.11 only if the aggregate Tax Benefit Payments payable with respect to such corporation are reasonably expected to be more than $10 million.
b.If APO Corp. becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Section 1501 of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments shall be computed with reference to the consolidated taxable income of the group as a whole.
c.Notwithstanding any other provision of this Agreement, if Issuer acquires one or more assets that, as of an Exchange Date, have not been contributed to APO Corp. (other than Issuer’s interests in the other Apollo Operating Group Members) (such assets, “Excluded Assets”), then all Tax Benefit Payments due hereunder shall be computed as if such assets had been contributed to APO Corp. on a pro rata basis on the date such assets were first acquired by Issuer; provided, however, that if an Excluded Asset consists of stock in a corporation, then, for purposes of this Section 7.11(c), (i) such corporation (and any corporation Controlled by such corporation) shall be deemed to have contributed its assets to APO Corp. in a transaction described in Section 351 of the Code, and (ii) APO Corp. shall be deemed to have contributed all such assets to the Partnerships, in each case on the date on which the Issuer acquired stock of such corporation.
d.If any entity that is obligated to make an Exchange Payment hereunder transfers one or more assets to a corporation with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Exchange Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount of debt to which such asset is subject, in the case of a contribution of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a contribution of a partner interest.
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If a Holder or assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, APO Corp. shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to APO Corp. or any of its Subsidiaries or the other Holders and the accounts and funds managed by APO Corp. and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
Section 7.14. Partnerships. APO Corp. hereby agrees that, to the extent it acquires a general partner interest, managing member interest or similar interest in any Person after the date hereof, it shall cause such Person to execute and deliver a joinder to this Agreement and become a “Partnership” for all purposes of this Agreement; provided that APO Corp. shall not be required to cause an Apollo Principal Partnership in which APO Corp. holds interests immediately after the relevant B Exchange, but in which APO LLC or APO FC (or any other subsidiary of AGM) also
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owns interests, to execute and deliver such joinder and become a “Partnership” for purposes of this Agreement.
[Signatures on following pages]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first written above.
APO CORP.
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
Xxxx X. Xxxxxx
Vice President and Secretary
APOLLO PRINCIPAL HOLDINGS II L.P.
By: Principal Holdings II GP, LLC,
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
APOLLO PRINCIPAL HOLDINGS IV L.P.
By: Principal Holdings IV GP, LLC,
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
APOLLO PRINCIPAL HOLDINGS VI L.P.
By: Apollo Principal Holdings VI GP, LLC
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
APOLLO PRINCIPAL HOLDINGS VIII L.P.
By: Apollo Principal Holdings VIII GP,LLC
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
AMH HOLDINGS (CAYMAN), LP
By: AMH Holdings GP, Ltd.
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President and Secretary
HOLDERS:
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Xxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Xxxx X. Xxxxx
/r/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
HOLDERS:
BLACK FAMILY PARTNERS, LP
By: Black Family GP, LLC,
its General Partner
its General Partner
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Manager
MJR FOUNDATION LLC
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Manager
HOLDER:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
HOLDER:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
TRANSFEROR
XXXXXX CHILDREN’S TRUST
By: /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
As Trustee, and not in his individual
capacity
HOLDER:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
HOLDER:
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
TRANSFEROR
THE XXXXXXXX CHILDREN’S TRUST,
U/A/D OCTOBER 30, 2006
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Trustee
HOLDER:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
TRANSFEROR
STONE FAMILY PARTNERS, L.P.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
General Partner
TRANSFEROR
THE ZINTERHOFER DESCENDANTS
TRUST, U/A/D OCTOBER 30, 2006
By: /s/ Xxxxx Xxxxxx Zinterhofer
Xxxxx Xxxxxx Zinterhofer
Trustee
HOLDER:
/s/ Xxxx X. Xxxxxxxxxxx
Xxxx X. Xxxxxxxxxxx
Xxxx X. Xxxxxxxxxxx
HOLDER:
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
HOLDER:
/s/ Xxxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
HOLDER:
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
HOLDER:
GALT, XXXXXXX & XXXXX, LLC
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Manager
HOLDER:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx