10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File No. 001‑36429

ARES MANAGEMENT, L.P.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 80‑0962035 (I.R.S. Employer Identification Number)

2000 Avenue of the Stars, 12th Floor, Los Angeles, CA 90067

(Address of principal executive office) (Zip Code)

(310) 201‑4100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non‑accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ¨  No x

The number of common shares representing limited partner interests outstanding as of April 27, 2018 was 97,522,827.

TABLEOFCONTENTS

			Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Information - Unaudited		7
		Condensed Consolidated Statements of Financial Condition as of March 31, 2018 and December 31, 2017	7
		Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and March 31, 2017	8
		Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and March 31, 2017	9
		Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2017	10
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and March 31, 2017	11
		Notes to the Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		55
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		101
Item 4.	Controls and Procedures		101
PART II—OTHER INFORMATION			102
Item 1.	Legal Proceedings		102
Item 1A.	Risk Factors		102
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		102
Item 3.	Defaults Upon Senior Securities		102
Item 4.	Mine Safety Disclosures		102
Item 5.	Other Information		102
Item 6.	Exhibits		103
Signatures			104

2

Forward‑Looking Statements

This report contains forward‑looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward‑looking statements by the use of forward‑looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. The forward‑looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward‑looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. Some of these factors are described in this report and in our Annual report on Form 10-K for the year ended December 31, 2017, under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward‑looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward‑looking statements. Any forward‑looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward‑looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Under generally accepted accounting principles in the United States (“GAAP”), we are required to consolidate (a) entities other than limited partnerships and entities similar to limited partnerships in which we hold a majority voting interest or have majority ownership and control over the operational, financial and investing decisions of that entity, including Ares‑affiliates and affiliated funds and co‑investment entities, for which we are presumed to have controlling financial interests, and (b) entities that we concluded are variable interest entities (“VIEs”), including limited partnerships and collateralized loan obligations, for which we are deemed to be the primary beneficiary. When an entity is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the entity in our consolidated financial statements on a gross basis, subject to eliminations from consolidation, including the elimination of the management fees, performance income and other fees that we earn from the entity. However, the presentation of performance related compensation and other expenses associated with generating such revenues is not affected by the consolidation process. In addition, as a result of the consolidation process, the net income attributable to third‑party investors in consolidated entities is presented as net income attributable to redeemable interests and non‑controlling interests in Consolidated Funds in our Condensed Consolidated Statements of Operations.

In this quarterly report on Form 10-Q, in addition to presenting our results on a consolidated basis in accordance with GAAP, we present revenues, expenses and other results on a (i) “segment basis,” which deconsolidates these entities and therefore shows the results of our reportable segments without giving effect to the consolidation of the entities and (ii) “Unconsolidated Reporting basis,” which shows the results of our reportable segments on a combined segment basis together with our Operations Management Group. In addition to our three segments, we have an Operations Management Group (the “OMG”) that consists of five independent, shared resource groups to support our reportable segments by providing infrastructure and administrative support in the areas of accounting/finance, operations/information technology, business development/corporate strategy, legal/compliance and human resources. The OMG’s expenses are not allocated to our three reportable segments but we consider the cost structure of the OMG when evaluating our financial performance. This information constitutes non‑GAAP financial information within the meaning of Regulation G, as promulgated by the SEC. Our management uses this information to assess the performance of our reportable segments and our OMG, and we believe that this information enhances the ability of shareholders to analyze our performance. For more information, see “Notes to the Condensed Consolidated Financial Statements - Note 14. Segment Reporting.”

3

Glossary

When used in this report, unless the context otherwise requires:

• “ARCC Part I Fees” refers to a quarterly performance income on the investment income from Ares Capital Corporation (NASDAQ: ARCC) (“ARCC”);

• “Ares Operating Group Unit” or an “AOG Unit” refer to, collectively, a partnership unit in each of the Ares Operating Group entities;

• “assets under management” or “AUM” refers to the assets we manage. For our funds other than CLOs, our AUM represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund‑level including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). For our funds that are CLOs, our AUM represents subordinated notes (equity) plus all drawn and undrawn debt tranches;

• “available capital” is comprised of uncalled committed capital and undrawn amounts under credit facilities and may include AUM that may be canceled or not otherwise available to invest (also referred to as “dry powder”).

• “CLOs” refers to “our funds” which are structured as collateralized loan obligations;

• “Consolidated Funds” refers collectively to certain Ares‑ affiliated funds, related co‑investment entities and certain CLOs that are required under GAAP to be consolidated in our consolidated financial statements;

• “Co‑Founders” refers to Michael Arougheti, David Kaplan, John Kissick, Antony Ressler and Bennett Rosenthal;

• “Credit Facility” refers to the revolving credit facility of the Ares Operating Group;

• “economic net income” or “ENI”, a non-GAAP measure, is an operating metric used by management to evaluate total operating performance, a decision tool for deployment of resources, and an assessment of the performance of our business segments. ENI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, and (e) certain other items that we believe are not indicative of our total operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period;

• “fee paying AUM” or “FPAUM” refers to the AUM on which we directly earn management fees. Fee paying AUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees;

• “fee related earnings” or “FRE”, a non-GAAP measure, refers to a component of ENI that is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it adjusts for the items included in the calculation of ENI and excludes performance income, performance related compensation, investment income from our Consolidated Funds and non-consolidated funds and certain other items that we believe are not indicative of our core operating performance;

• “Holdco Members” refers to Messrs. Arougheti, Kaplan, Ressler and Rosenthal and Ryan Berry, R. Kipp deVeer and Michael McFerran;

• “Incentive generating AUM” or “IGAUM” refers to the AUM of our funds that are currently generating, on a realized or unrealized basis, performance income. It generally represents the NAV of our funds for which we are entitled to receive performance income, excluding capital committed by us and our professionals (which generally is not subject to performance income). With respect to ARCC, only ARCC Part II Fees can be generated from IGAUM;

4

• “Incentive eligible AUM” or “IEAUM” refers to the AUM of our funds that are eligible to produce performance income, regardless of whether or not they are currently generating performance income. It generally represents the NAV plus uncalled equity of our funds for which we are entitled to receive a performance income, excluding capital committed by us and our professionals (which generally is not subject to a performance income);

• “management fees” refers to fees we earn for advisory services provided to our funds, which are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of the investment portfolios managed by us and also include ARCC Part I Fees that are classified as management fees as they are predictable and recurring in nature, not subject to contingent repayment and generally cash‑settled each quarter;

• “net inflows of capital” refers to net new commitments during the period, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts, as well as equity offerings by our publicly traded vehicles minus redemptions from our open-ended funds, managed accounts and sub-advised accounts;

• “net performance income” refers to performance income net of performance related compensation, which is the portion of the performance income earned from certain funds that is payable to professionals;

• “our funds” refers to the funds, alternative asset companies, co-investment vehicles and other entities and accounts that are managed or co‑managed by the Ares Operating Group, and which are structured to pay fees. It also includes funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC, and a registered investment adviser;

• “permanent capital” refers to capital of our funds that do not have redemption provisions or a requirement to return capital to investors upon exiting the investments made with such capital, except as required by applicable law, which funds currently consist of ARCC, Ares Commercial Real Estate Corporation (“ACRE”) and Ares Dynamic Credit Allocation Fund, Inc. (“ARDC”). Such funds may be required, or elect, to return all or a portion of capital gains and investment income;

• “performance income” refers to income we earn based on the performance of a fund, which are generally based on certain specific hurdle rates as defined in the fund’s investment management or partnership agreements and may be either an incentive fee or carried interest;

• “performance related earnings” or “PRE”, a non-GAAP measure, is used to assess our investment performance net of performance related compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance income, performance related compensation and total investment and other income that we earn from our Consolidated Funds and non-consolidated funds;

• “realized income” or “RI”, a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (e) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate the Company's current business operations;

• “SEC” refers to the Securities and Exchange Commission;

• “Senior Notes” or the "AFC Notes" refers to senior notes of a wholly owned subsidiary of Ares Holdings; and

5

• “Term Loans” refers to term loans of a wholly owned subsidiary of AM LLC.

References in this Quarterly Report on Form 10-Q to (1) “common units” or “common shares” and “preferred units” or “preferred shares” outstanding prior to March 1, 2018 refer to our common units and preferred units, respectively, previously outstanding prior to March 1, 2018 and (2) “common unitholders” or “common shareholders” and “preferred unitholders” or “preferred shareholders” prior to March 1, 2018 refer to our common unitholders and preferred unitholders, respectively, prior to March 1, 2018. Note that the terms of our common shares and preferred shares, and the associated rights, remain unchanged.

Many of the terms used in this report, including AUM, FPAUM, ENI, FRE, PRE and RI, may not be comparable to similarly titled measures used by other companies. In addition, our definitions of AUM and FPAUM are not based on any definition of AUM or FPAUM that is set forth in the agreements governing the investment funds that we manage and may differ from definitions of AUM or FPAUM set forth in other agreements to which we are a party. Further, ENI, FRE, PRE and RI are not measures of performance calculated in accordance with GAAP. We use ENI, FRE, PRE and RI as measures of operating performance, not as measures of liquidity. ENI, FRE, PRE and RI should not be considered in isolation or as substitutes for operating income, net income, operating cash flows, or other income or cash flow statement data prepared in accordance with GAAP. The use of ENI, FRE, PRE and RI without consideration of related GAAP measures is not adequate due to the adjustments described above. Our management compensates for these limitations by using ENI, FRE, PRE and RI as supplemental measures to our GAAP results. We present these measures to provide a more complete understanding of our performance as our management measures it. Amounts and percentages throughout this report may reflect rounding adjustments and consequently totals may not appear to sum.

6

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

Ares Management, L.P.

Condensed Consolidated Statements of Financial Condition 

(Amounts in Thousands, ExceptShareData)

	As of March 31,			As of December 31,
	2018			2017
	(unaudited)			As adjusted
Assets
Cash and cash equivalents	$	115,540		$	118,929
Investments (includes accrued carried interest of $1,113,435 and $1,077,236 and pledged collateral of $17,575 and $0, at March 31, 2018 and December 31, 2017, respectively)	1,811,829			1,724,571
Due from affiliates	168,810			165,750
Deferred tax asset, net	50,986			8,326
Other assets	105,187			130,341
Intangible assets, net	37,178			40,465
Goodwill	143,968			143,895
Assets of Consolidated Funds:
Cash and cash equivalents	532,470			556,500
Investments, at fair value	5,479,136			5,582,842
Due from affiliates	17,782			15,884
Dividends and interest receivable	12,096			12,568
Receivable for securities sold	83,718			61,462
Other assets	1,382			1,989
Total assets	$	8,560,082		$	8,563,522
Liabilities
Accounts payable, accrued expenses and other liabilities	$	78,771		$	81,955
Accrued compensation	49,944			27,978
Due to affiliates	21,018			14,642
Performance related compensation payable	856,421			846,626
Debt obligations	590,169			616,176
Liabilities of Consolidated Funds:
Accounts payable, accrued expenses and other liabilities	81,508			64,316
Payable for securities purchased	239,139			350,145
CLO loan obligations, at fair value	4,937,264			4,963,194
Fund borrowings	140,653			138,198
Total liabilities	6,994,887			7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding at March 31, 2018 and December 31, 2017)	298,761			298,761
Non-controlling interest in Consolidated Funds	544,380			528,488
Non-controlling interest in Ares Operating Group entities	348,820			358,186
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235			279,065
Accumulated other comprehensive loss, net of tax	(4,001		)	(4,208		)
Total controlling interest in Ares Management, L.P.	373,234			274,857
Total equity	1,565,195			1,460,292
Total liabilities and equity	$	8,560,082		$	8,563,522

See accompanying notes to the condensed consolidated financial statements.

7

Ares Management, L.P.

Condensed Consolidated Statements of Operations 

(Amounts in Thousands, Except Share Data)

(unaudited)

	Three Months Ended March 31,
	2018			2017
				As adjusted
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	189,515		$	172,045
Carried interest allocation	54,129			52,007
Incentive fees	5,071			3,165
Principal investment income	4,909			2,587
Administrative, transaction and other fees	12,465			14,440
Total revenues	266,089			244,244
Expenses
Compensation and benefits	134,639			124,339
Performance related compensation	25,878			40,702
General, administrative and other expenses	44,450			47,338
Transaction support expense	—			275,177
Expenses of Consolidated Funds	1,316			3,911
Total expenses	206,283			491,467
Other income (expense)
Net realized and unrealized gain (loss) on investments	(839		)	888
Interest and dividend income	3,347			1,924
Interest expense	(6,869		)	(4,879		)
Other income (expense), net	(311		)	16,496
Net realized and unrealized gain (loss) on investments of the Consolidated Funds	(13,085		)	32,036
Interest and other income of Consolidated Funds	64,422			41,492
Interest expense of Consolidated Funds	(44,425		)	(31,322		)
Total other income	2,240			56,635
Income (loss) before taxes	62,046			(190,588		)
Income tax benefit	(12,375		)	(34,264		)
Net income (loss)	74,421			(156,324		)
Less: Net income attributable to non-controlling interests in Consolidated Funds	367			15,855
Less: Net income (loss) attributable to non-controlling interests in Ares Operating Group entities	33,106			(131,045		)
Net income (loss) attributable to Ares Management, L.P.	40,948			(41,134		)
Less: Preferred equity dividend paid	5,425			5,425
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Net income (loss) attributable to Ares Management, L.P. per common share:
Basic	$	0.39		$	(0.58	)
Diluted	$	0.28		$	(0.58	)
Weighted-average common shares:
Basic	85,617,932			81,106,734
Diluted	213,852,928			81,106,734
Dividend declared and paid per common share	$	0.40		$	0.28

Substantially all revenue is earned from affiliated funds of the Company. See accompanying notes to the condensed consolidated financial statements.  

8

Ares Management, L.P.

Condensed Consolidated Statements of Comprehensive Income 

(Amounts in Thousands)

(unaudited)

	Three Months Ended March 31,
	2018		2017
			As adjusted
Net income (loss)	$	74,421	$	(156,324	)
Other comprehensive income:
Foreign currency translation adjustments	5,485		3,442
Total comprehensive income (loss)	79,906		(152,882		)
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	3,542		15,856
Less: Comprehensive income (loss) attributable to non-controlling interests in Ares Operating Group entities	35,209		(128,805		)
Comprehensive income (loss) attributable to Ares Management, L.P.	$	41,155	$	(39,933	)

See accompanying notes to the condensed consolidated financial statements.

9

Ares Management, L.P.

Condensed Consolidated Statements of Changes in Equity 

(Amounts in Thousands)

(unaudited)

	Preferred Equity			Shareholders' Equity			Accumulated Other Comprehensive Loss			Non-controlling Interest in Ares Operating Group Entities			Non-controlling Interest in Consolidated Funds			Total Equity
Balance at December 31, 2017	$	298,761		$	279,065		$	(4,208	)	$	358,186		$	528,488		$	1,460,292
Cumulative effect of the adoption of ASC 606	—			(10,827		)	—			(17,117		)	5,333			(22,611		)
As adjusted balance at January 1, 2018	298,761			268,238			(4,208		)	341,069			533,821			1,437,681
Adoption of ASU 2018-02	—			1,202			(1,202		)	—			—			—
Changes in ownership interests	—			(26,120		)	—			18,809			—			(7,311		)
Effects arising from allocation of shareholders' equity on deferred tax assets	—			17,769			—			1			—			17,770
Contributions	—			105,441			—			—			8,000			113,441
Distributions	(5,425		)	(33,103		)	—			(58,677		)	(983		)	(98,188		)
Net income	5,425			35,523			—			33,106			367			74,421
Currency translation adjustment	—			—			1,409			2,103			3,175			6,687
Equity compensation	—			8,285			—			12,409			—			20,694
Balance at March 31, 2018	$	298,761		$	377,235		$	(4,001	)	$	348,820		$	544,380		$	1,565,195

See accompanying notes to the condensed consolidated financial statements.

10

Ares Management, L.P.

Condensed Consolidated Statements of Cash Flows 

(Amounts in Thousands)

(unaudited)

	For the Three Months Ended March 31,
	2018			2017
				As adjusted
Cash flows from operating activities:
Net income (loss)	$	74,421		$	(156,324	)
Adjustments to reconcile net income (loss) to net cash used in operating activities	(19,979		)	(18,522		)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities allocable to non-controlling interests in Consolidated Funds	152,375			(81,753		)
Cash flows due to changes in operating assets and liabilities	(37,718		)	(135,303		)
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(88,592		)	100,086
Net cash provided by (used in) operating activities	80,507			(291,816		)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(2,857		)	(10,252		)
Net cash used in investing activities	(2,857		)	(10,252		)
Cash flows from financing activities:
Proceeds from issuance of common shares	105,441			—
Proceeds from credit facility	240,000			165,000
Proceeds from term notes	44,050			17,600
Repayments of credit facility	(310,000		)	—
Repayments of term notes	(56		)	—
Distributions	(91,780		)	(68,595		)
Preferred equity distributions	(5,425		)	(5,425		)
Taxes paid in net settlement of vested common shares	(7,311		)	(3,913		)
Stock option exercise	—			1,036
Tax from share-based payment	—			81
Other financing activities	—			646
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	8,000			23,378
Distributions to non-controlling interests in Consolidated Funds	(983		)	(7,822		)
Borrowings under loan obligations by Consolidated Funds	1,303			505,714
Repayments under loan obligations by Consolidated Funds	(68,891		)	(566,919		)
Net cash provided by (used in) financing activities	(85,652		)	60,781
Effect of exchange rate changes	4,613			2,415
Net change in cash and cash equivalents	(3,389		)	(238,872		)
Cash and cash equivalents, beginning of period	118,929			342,861
Cash and cash equivalents, end of period	$	115,540		$	103,989

See accompanying notes to the condensed consolidated financial statements.

11

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

1. ORGANIZATION 

Ares Management, L.P. ("the Company"), a Delaware limited partnership treated as a corporation for U.S. federal income tax purposes, is a leading global alternative asset management firm that operates three distinct but complementary investment groups: the Credit Group, the Private Equity Group and the Real Estate Group. Information about segments should be read together with Note 14, “Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its general partner, Ares Management GP LLC. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P. together with its subsidiaries.

The Company is a holding company, and its sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P., each of which is directly or indirectly wholly owned by the Company. In this quarterly report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. The Company operates and controls all of the businesses and affairs of and conducts all of its material business activities through the Ares Operating Group.

Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in Ares Operating Group (“AOG”) entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period. 

Change in Company Tax Status Election

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes. The Company’s legal structure remains a Delaware limited partnership. In connection with the tax election, the Company amended and restated its partnership agreement to, among other things, reflect the new tax classification and change the name of its common units and preferred units to common shares and preferred shares, respectively. The terms of such common shares and preferred shares, and the associated rights, otherwise remain unchanged. Further, other terminology has been modified to be consistent with a corporation's results. For example, distributions are now referred to as dividends, and earnings per common unit are now referred to as earnings per common share. Comparative periods conform with the current period's presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds.These Consolidated Funds include certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries. Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying condensed consolidated financial

12

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds in the accompanying condensed consolidated financial statements. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Condensed Consolidated Statements of Cash Flows. All intercompany balances and transactions have been eliminated upon consolidation.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 606

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018.

Pursuant to ASC 606, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below.

The adoption of ASC 606 had the following impact on the Company’s revenue streams:

Revenues of the Company	Impact of ASC 606
Management fees	No Impact - Management fees are recognized as revenue in the period advisory services are rendered.
Performance income - Carried interest allocation	No impact. See discussion below for change in accounting policy.
Performance income - Incentive fees	See discussion below for impact.
Administrative, transaction and other fees	No Impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered.

Performance Income

Performance income consists of carried interest and incentive fees.

Carried Interest

In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally

13

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

do not become realized until the end of a fund’s life. As of March 31, 2018 and December 31, 2017, the Company had no accrued contingent repayment obligations that would need to be paid if the funds were liquidated at fair value at the reporting dates.

Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provides guidance on accounting for incentive-based performance income, including carried interest. Since Method 2 is no longer available following the adoption of ASC 606, the Company has reassessed its accounting policy for carried interest, and has determined that carried interest is within scope of ASC 323, Investments-Equity Method and Joint Ventures, andout of scope under the scoping provision of ASC 606. Therefore, following the election of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Condensed Consolidated Statements of Operations. Uncollected carried interest as of the reporting date is recorded within investments in the Condensed Consolidated Statements of Financial Condition.

The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest under ASC 323.

Incentive Fees

Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. Upon the adoption of ASC 606, the Company accounts for incentive fees in accordance with ASC 606. Accordingly, the Company will recognize incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company will no longer recognize unrealized incentive fees in revenues in the condensed consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the condensed consolidated financial statements until they become realized at the end of the measurement period, which is typically annually.

The Company adopted ASC 606 for incentive fees using the modified retrospective approach with effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

14

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements:

Condensed Consolidated Statement of Financial Condition
	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2017
	As Previously Reported		Adjustments			As Adjusted
Revenues
Performance fees	$	55,172	$	(55,172	)	$	—
Carried interest allocation	—		52,007			52,007
Incentive fees	—		3,165			3,165
Principal investment income	—		2,587			2,587
Total revenues	241,657		2,587			244,244
Other income (expense)
Net realized and unrealized gain on investments	2,655		(1,767		)	888
Interest and dividend income	2,744		(820		)	1,924

The Company's change in accounting policy related to carried interest under ASC 323 did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017.

15

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

(2) See detail below.

Condensed Consolidated Statement of Changes in Equity 

	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

16

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three months ended March 31, 2018:

Condensed Consolidated Statement of Financial Condition
	As of March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Deferred tax asset, net	$	50,986		$	(250	)	$	50,736
Other assets	105,187			23,704			128,891
Total assets	8,560,082			23,454			8,583,536
Commitments and contingencies
Non-controlling interest in Consolidated Funds	544,380			(7,052		)	537,328
Non-controlling interest in Ares Operating Group entities	348,820			18,803			367,623
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			11,603			388,838
Accumulated other comprehensive loss, net of tax	(4,001		)	100			(3,901		)
Total controlling interest in Ares Management, L.P	373,234			11,703			384,937
Total equity	1,565,195			23,454			1,588,649
Total liabilities and equity	8,560,082			23,454			8,583,536

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	5,071		$	856		$	5,927
Total revenues	266,089			856			266,945
Other income (expense)
Other income (expense), net	(311		)	(12		)	(323		)
Total other income	2,240			(12		)	2,228
Income before taxes	62,046			844			62,890
Income tax benefit	(12,375		)	250			(12,125		)
Net income	74,421			594			75,015
Net income attributable to Ares Management, L.P.	40,948			594			41,542
Net income attributable to Ares Management, L.P. common shareholders	35,523			594			36,117

17

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Condensed Consolidated Statement of Comprehensive Income

	Three Months Ended March 31, 2018
	As Reported		Adjustments			Balances without adoption of ASC 606
Net income	$	74,421	$	594		$	75,015
Other comprehensive income:
Foreign currency translation adjustments	5,485		249			5,734
Total comprehensive income	79,906		843			80,749
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	3,542		(1,719		)	1,823
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	35,209		1,686			36,895
Comprehensive income attributable to Ares Management, L.P.	$	41,155	$	876		$	42,031

Condensed Consolidated Statement of Cash Flows 

	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Cash flows from operating activities:
Net income	$	74,421		$	594		$	75,015
Cash flows due to changes in operating assets and liabilities	(37,718		)	(2,313		)	(40,031		)
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(88,592		)	1,719			(86,873		)

18

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Recent Accounting Pronouncements

The Company considers the applicability and impact of all FASB ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company is currently compiling all leases and right–of–use terms to evaluate the impact of this guidance on its condensed consolidated financial statements.

In January 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018.

19

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

3. GOODWILL AND INTANGIBLE ASSETS

Finite Lived Intangible Assets, Net

The Company's intangible assets include acquired management contracts, client relationships, a trade name, and the future benefits of managing new assets for existing clients that were recognized at fair value as of their acquisition dates.

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets:

	Weighted Average Amortization Period as of March 31, 2018	As of March 31,			As of December 31,
		2018			2017
Management contracts	2.2 years	$	42,335		$	67,306
Client relationships	10.3 years	38,600			38,600
Trade name	4.3 years	3,200			3,200
Total intangible assets		84,135			109,106
Less: accumulated amortization		(46,957		)	(68,641		)
Intangible assets, net		$	37,178		$	40,465

Amortization expense associated with intangible assets was $3.3 million and $5.3 million for the three months ended March 31, 2018 and 2017, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2018, the Company removed $25.0 million of intangible assets that were fully amortized.

Goodwill

The following table summarizes the carrying value of the Company's goodwill assets:

	Credit		Private Equity		Real Estate		Total
Balance as of December 31, 2017	$	32,196	$	58,600	$	53,099	$	143,895
Foreign currency translation	—		—		73		73
Balance as of March 31, 2018	$	32,196	$	58,600	$	53,172	$	143,968

There was no impairment of goodwill recorded during the three months ended March 31, 2018 and 2017. The impact of foreign currency translation is reflected within other comprehensive income.

20

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

4. INVESTMENTS

The Company’s investments are comprised of: 

					Percentage of total investments
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
			As adjusted				As adjusted
Private Investment Partnership Interests:
Equity method private investment partnership interests - principal (1)	$	347,406	$	340,354	19.2	%	19.7	%
Equity method - carried interest (1)	1,113,435		1,077,236		61.4	%	62.5	%
Equity method private investment partnership interests - other	69,342		74,439		3.8	%	4.3	%
Other private investment partnership interests	37,266		35,748		2.1	%	2.1	%
Total private investment partnership interests	1,567,449		1,527,777		86.5	%	88.6	%
Collateralized loan obligations	242,984		195,158		13.4	%	11.3	%
Common stock	1,396		1,636		0.1	%	0.1	%
Total investments	$	1,811,829	$	1,724,571

(1) Interest or portion of the interest is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant under SEC guidance. For the three months ended March 31, 2018 and 2017, no individual equity method investment held by the Company met the significance criteria.

The Company recognized net gains of $3.5 million and $5.8 million related to its equity method investments for the three months ended March 31, 2018 and 2017, respectively, that are included within both principal investment income and within net realized and unrealized gain on investments within the Consolidated Statements of Operations.

The material assets of the Company's equity method investments are expected to generate long-term capital appreciation and/or interest income; the material liabilities are debt instruments collateralized by, or related to, the financing of the assets; and net income is materially comprised of the changes in fair value of these net assets.

21

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
United States:
Fixed income securities:
Consumer discretionary	$	1,303,537	$	1,295,732	24.1	%	23.2	%
Consumer staples	56,917		55,073		1.0	%	1.0	%
Energy	173,698		176,836		3.2	%	3.2	%
Financials	270,317		270,520		4.9	%	4.8	%
Healthcare, education and childcare	453,622		449,888		8.3	%	8.1	%
Industrials	364,479		370,926		6.7	%	6.6	%
Information technology	146,733		167,089		2.7	%	3.0	%
Materials	170,309		185,170		3.1	%	3.3	%
Telecommunication services	385,829		399,617		7.0	%	7.2	%
Utilities	62,667		77,102		1.1	%	1.4	%
Total fixed income securities (cost: $3,393,506 and $3,459,318 at March 31, 2018 and December 31, 2017, respectively)	3,388,108		3,447,953		62.1	%	61.8	%
Equity securities:
Energy	60		126		0.0	%	0.0	%
Total equity securities (cost: $2,265 and $2,265 at March 31, 2018 and December 31, 2017, respectively)	60		126		0.0	%	0.0	%
Partnership and interests
Partnership and interests	252,700		232,332		4.6	%	4.2	%
Total partnership and LLC interests (cost: $200,000 and $190,000 at March 31, 2018 and December 31, 2017, respectively)	252,700		232,332		4.6	%	4.2	%

22

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Europe:
Fixed income securities:
Consumer discretionary	$	603,516	$	604,608	11.0	%	10.8	%
Energy	2,461		2,413		0.0	%	0.0	%
Consumer staples	72,317		76,361		1.3	%	1.4	%
Financials	116,836		81,987		2.1	%	1.5	%
Healthcare, education and childcare	187,032		209,569		3.4	%	3.8	%
Industrials	128,345		145,706		2.3	%	2.6	%
Information technology	20,603		21,307		0.4	%	0.4	%
Materials	184,625		213,395		3.4	%	3.8	%
Telecommunication services	181,917		182,543		3.3	%	3.3	%
Total fixed income securities (cost: $1,507,741 and $1,545,297 at March 31, 2018 and December 31, 2017, respectively)	1,497,652		1,537,889		27.2	%	27.6	%
Equity securities:
Healthcare, education and childcare	61,065		63,155		1.1	%	1.1	%
Total equity securities (cost: $67,198 and $67,198 at March 31, 2018 and December 31, 2017, respectively)	61,065		63,155		1.1	%	1.1	%
Asia and other:
Fixed income securities:
Consumer discretionary	2,019		2,008		0.0	%	0.0	%
Financials	22,476		12,453		0.4	%	0.2	%
Telecommunication services	21,679		21,848		0.4	%	0.4	%
Total fixed income securities (cost: $46,287 and $36,180 at March 31, 2018 and December 31, 2017, respectively)	46,174		36,309		0.8	%	0.6	%
Equity securities:
Consumer discretionary	50,071		59,630		0.9	%	1.1	%
Consumer staples	46,232		45,098		0.8	%	0.8	%
Healthcare, education and childcare	44,637		44,637		0.8	%	0.8	%
Industrials	16,578		16,578		0.3	%	0.3	%
Total equity securities (cost: $122,418 and $122,418 at March 31, 2018 and December 31, 2017, respectively)	157,518		165,943		2.8	%	3.0	%

23

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Canada:
Fixed income securities:
Consumer discretionary	$	7,474	$	6,757	0.1	%	0.1	%
Consumer staples	19,364		15,351		0.4	%	0.3	%
Energy	14,103		33,715		0.3	%	0.6	%
Industrials	18,667		18,785		0.3	%	0.3	%
Telecommunication services	6,045		6,189		0.1	%	0.1	%
Total fixed income securities (cost: $65,501 and $80,201 at March 31, 2018 and December 31, 2017, respectively)	65,653		80,797		1.2	%	1.4	%
Equity securities:
Consumer discretionary	—		5,912		—	%	0.1	%
Total equity securities (cost: $0 and $17,202 at March 31, 2018 and December 31, 2017, respectively)	—		5,912		—	%	0.1	%
Australia:
Fixed income securities:
Consumer discretionary	8,587		10,863		0.2	%	0.2	%
Energy	1,619		1,563		0.0	%	0.0	%
Total fixed income securities (cost: $10,446 and $12,714 at March 31, 2018 and December 31, 2017, respectively)	10,206		12,426		0.2	%	0.2	%
Total fixed income securities	5,007,793		5,115,374		91.5	%	91.6	%
Total equity securities	218,643		235,136		3.9	%	4.2	%
Total partnership interests	252,700		232,332		4.6	%	4.2	%
Total investments, at fair value	$	5,479,136	$	5,582,842

At March 31, 2018 and December 31, 2017, no single issuer or investment, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets.

24

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

5. FAIR VALUE

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of March 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	242,984	$	—	$	242,984
Equity securities	377		1,019			—		—		1,396
Partnership interests	—		—			44,769		37,266		82,035
Total investments, at fair value	377		1,019			287,753		37,266		326,415
Derivatives—foreign exchange contracts	—		230			—		—		230
Total assets, at fair value	$	377	$	1,249		$	287,753	$	37,266	$	326,645
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)
Total liabilities, at fair value	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)

25

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	67,741		$	6,570		$	74,311
Loans	—		4,648,235			234,193			4,882,428
Collateralized loan obligations	—		51,054			—			51,054
Total fixed income investments	—		4,767,030			240,763			5,007,793
Equity securities	58,221		—			160,422			218,643
Partnership interests	—		—			252,700			252,700
Total investments, at fair value	58,221		4,767,030			653,885			5,479,136
Derivatives:
Asset swaps - other	—		—			834			834
Total assets, at fair value	$	58,221	$	4,767,030		$	654,719		$	5,479,970
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(748	)	$	(748	)
Loan obligations of CLOs	—		(4,937,264		)	—			(4,937,264		)
Total liabilities, at fair value	$	—	$	(4,937,264	)	$	(748	)	$	(4,938,012	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	195,158	$	—	$	195,158
Equity securities	520		1,116			—		—		1,636
Partnership interests	—		—			44,769		35,998		80,767
Total investments, at fair value	520		1,116			239,927		35,998		277,561
Derivatives—foreign exchange contracts	—		498			—		—		498
Total assets, at fair value	$	520	$	1,614		$	239,927	$	35,998	$	278,059
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)
Total liabilities, at fair value	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)

26

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	82,151		$	7,041		$	89,192
Loans	—		4,755,335			260,848			5,016,183
Collateralized loan obligations	—		10,000			—			10,000
Total fixed income investments	—		4,847,486			267,889			5,115,375
Equity securities	72,558		—			162,577			235,135
Partnership interests	—		—			232,332			232,332
Other	—		—			—			—
Total investments, at fair value	72,558		4,847,486			662,798			5,582,842
Derivatives:
Foreign exchange contracts	—		—			—			—
Asset swaps - other	—		—			1,366			1,366
Total derivative assets, at fair value	—		—			1,366			1,366
Total assets, at fair value	$	72,558	$	4,847,486		$	664,164		$	5,584,208
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(462	)	$	(462	)
Loan obligations of CLOs	—		(4,963,194		)	—			(4,963,194		)
Total liabilities, at fair value	$	—	$	(4,963,194	)	$	(462	)	$	(4,963,656	)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2018:

	Level III Assets
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	195,158		$	44,769	$	239,927
Deconsolidation of fund	78			—		78
Purchases(1)	48,731			—		48,731
Sales/settlements(2)	(827		)	—		(827		)
Realized and unrealized depreciation, net	(156		)	—		(156		)
Balance, end of period	$	242,984		$	44,769	$	287,753
Decrease in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	(610	)	$	—	$	(610	)

27

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577		$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—			(233		)	—		—			(233		)
Transfer in	—			73,814			—		—			73,814
Transfer out	—			(102,045		)	—		—			(102,045		)
Purchases(1)	—			52,984			10,000		—			62,984
Sales(2)	—			(50,935		)	—		—			(50,935		)
Settlements, net	—			—			—		(177		)	(177		)
Amortized discounts/premiums	—			96			—		7			103
Realized and unrealized appreciation (depreciation), net	(2,155		)	(807		)	10,368		(648		)	6,758
Balance, end of period	$	160,422		$	240,763		$	252,700	$	86		$	653,971
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(2,156	)	$	(1,831	)	$	10,368	$	(749	)	$	5,632

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2017:

	Level III Assets									Level III Liabilities
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests			Total			Contingent Considerations
Balance, beginning of period	$	89,111		$	33,410		$	122,521		$	22,156
Purchases(1)	20,442			169			20,611			—
Sales/settlements(2)	(1,917		)	—			(1,917		)	—
Realized and unrealized appreciation (depreciation), net	617			(169		)	448			(20,247		)
Balance, end of period	$	108,253		$	33,410		$	141,663		$	1,909
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	470		$	—		$	470		$	30

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696	$	(2,708	)	$	541,931
Transfer in	—			86,197			—		—			86,197
Transfer out	(6,581		)	(66,805		)	—		—			(73,386		)
Purchases(1)	6,692			50,069			23,000		1,690			81,451
Sales(2)	—			(33,297		)	—		1,104			(32,193		)
Amortized discounts/premiums	—			118			—		310			428
Realized and unrealized appreciation, net	11,557			294			1,994		449			14,294
Balance, end of period	$	142,358		$	278,829		$	196,690	$	845		$	618,722
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,488	)	$	(42	)	$	1,994	$	(125	)	$	(1,661	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

28

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company recognizes transfers between the levels as of the beginning of the period. Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service. For the three months ended March 31, 2018, there were no transfers between Level I and Level II fair value measurements.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of March 31, 2018:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	242,984		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	287,753

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	195,158		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	239,927

29

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of March 31, 2018:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	61,065		Enterprise value market multiple analysis	EBITDA multiple(2)	3.0x	3.0
	61,216			Market approach (comparable companies)	Net income multiple	24.2x - 35.8x	32.7
					Illiquidity discount	25.0%	25.0%
	60			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent transaction price(1)	N/A	N/A	N/A
Partnership interest	252,700			Discounted cash flow	Discount rate	17.0%	17.0%
Fixed income securities
	192,660			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	48,103			Income approach	Yield	7.6% - 14.9%	11.1%
Derivative instruments	834			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	654,719
Liabilities
Derivatives instruments	$	(748	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(748	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2017:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	63,155		Enterprise value market multiple analysis	EBITDA multiple(2)	2.7x	2.7x
	61,215			Market approach (comparable companies)	Net income multiple Illiquidity discount	27.0x - 36.2x 25.0%	33.7x 25.0%
	126			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent Transaction price(1)	N/A	N/A	N/A
Partnership interest	232,332			Discounted cash flow	Discount rate	19.0%	19.0%
Fixed income securities
	222,413			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	45,243			Income approach	Yield	10.8% - 22.5%	12.1%
	233			Market approach (comparable companies)	EBITDA multiple(2)	6.5x	6.5x
Derivative instruments	1,366			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	664,164
Liabilities
Derivatives instruments	$	(462	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(462	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

30

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company's investments valued using net asset value (“NAV”) per share have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control. A summary of fair value by segment and the remaining unfunded commitments are presented below:

	As of March 31, 2018				As of December 31, 2017
Segment	Fair Value		Unfunded  Commitments		Fair Value		Unfunded  Commitments
Non-core investments(1)	$	37,266	$	16,317	$	35,998	$	16,492
Total	$	37,266	$	16,317	$	35,998	$	16,492

(1) Non-core investments are reported within the Company's Operations Management Group (“OMG”).

6. DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of March 31, 2018 and December 31, 2017:  

	As of March 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639
Total derivatives, at fair value(2)	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639

	As of March 31, 2018				As of December 31, 2017
	Assets		Liabilities		Assets		Liabilities
Consolidated Funds	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value
Asset swap - other	4,843	834	1,750	748	5,363	1,366	1,840	462
Total derivatives, at fair value(3)	4,843	834	1,750	748	5,363	1,366	1,840	462

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of March 31, 2018 and December 31, 2017, the Company had the right to, but elected not to, offset $0.2 million and $0.5 million of its derivative assets and liabilities, respectively.

(3) As of March 31, 2018 and December 31, 2017, the Consolidated Funds offset $0.4 million and $0.4 million of their derivative assets and liabilities, respectively.

31

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

7. DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of March 31, 2018			As of December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	140,000	3.38%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,469		4.21%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	35,205		35,042		3.24%	35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	26,376		25,959		3.44%	25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	17,600		17,413		3.26%	17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	35,198		35,066		3.26%	35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	17,155		17,025		3.26%	17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	30,450		30,339		3.07%	30,336		2.77%
2018 Term Loan A(4)	1/12/2018	1/15/2030	26,475		26,456		2.97%	—		N/A
Repurchase Agreement Loan(5)	3/13/2018	4/20/2030	17,575		17,400		1.68%	—		N/A
Total debt obligations					$	590,169		$	616,176

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of March 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount.

(4) The 2016, 2017 and 2018 Term Loans (“Term Loans”) were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient to cover the Term Loans, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee ranging from 0.03% to 0.04% of a maximum investment amount.

(5) See Repurchase Agreement below for details

As of March 31, 2018, the Company and its subsidiaries were in compliance with all covenants under the debt obligations.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company's Senior Notes and Term Loans are recorded as a reduction of the corresponding debt obligation and debt issuance costs related to the Credit Facility are included in other assets in the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the term of the related obligation.

32

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes			Term Loans			Repurchase Agreement Loan
Unamortized debt issuance costs as of December 31, 2017	$	6,543		$	1,571		$	1,171		$	—
Debt issuance costs incurred	—			—			19			176
Amortization of debt issuance costs	(393		)	(63		)	(32		)	(1		)
Unamortized debt issuance costs as of March 31, 2018	$	6,150		$	1,508		$	1,158		$	175

Repurchase Agreement

In the three months ended March 31, 2018, the Company entered into a repurchase agreement with a third party. Under the terms of the agreement, the Company transferred certain fixed maturity securities to the third party and received cash as collateral in an amount equal to the estimated fair value of the securities at the inception of the transaction. The transfer did not meet the criteria for sale treatment as the Company did not relinquish control over the transferred assets. Therefore, the transferred assets remained in the Company's Condensed Consolidated Statements of Financial Condition. The associated liability is recorded at the amount of cash received. The Company monitors the estimated fair value of the collateral and the securities throughout the duration of the transaction and additional collateral will be obtained if necessary. The repurchase agreement does not provide restrictions on the sale or re-pledge of the securities by the third party. At the termination of the repurchase agreement, the third party is required to return the securities to the Company, and the Company is required to return the cash received as collateral plus the applicable interest.

The followings are elements of the repurchase agreement as of March 31, 2018:

	Amounts
Securities transferred at carrying value	$	17,575
Estimated fair value of securities transferred(1)	$	17,575
Cash collateral received from counterparty(2)	$	17,575

(1) Included within the Company's investments.

(2) Included within the Company's debt obligations.

The following table shows cash collateral liability by security type:

	Remaining Contractual Maturity of the Agreement as of March 31, 2018
	Less than 1 year		1 - 3 years		4 - 5 years		Thereafter		Total
Collateralized loan obligations	$	—	$	—	$	—	$	17,575	$	17,575

33

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs ("Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs. Several of the Consolidated CLOs issued preferred shares representing the subordinated interests that are mandatorily redeemable upon the maturity dates of the senior secured loan obligations. As a result, these shares have been classified as liabilities and are included in CLO loan obligations in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018 and December 31, 2017 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs:

	As of March 31, 2018					As of December 31, 2017
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	4,765,180	$	4,758,121	10.39	$	4,801,582	$	4,776,883	10.57
Subordinated notes(2)	278,116		179,143		11.04	276,169		186,311		11.25
Total loan obligations of Consolidated CLOs	$	5,043,296	$	4,937,264		$	5,077,751	$	4,963,194

(1) Original borrowings under the senior secured notes totaled $4.8 billion, with various maturity dates ranging from October 2024 to October 2030. The weighted average interest rate as of March 31, 2018 was 5.02%.

(2) Original borrowings under the subordinated notes totaled $278.1 million, with various maturity dates ranging from October 2024 to October 2030. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company except to the extent the debt is guaranteed by a subsidiary or if a general partner is liable for the Consolidated Fund’s liabilities under applicable law. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018 and December 31, 2017, the Consolidated Funds were in compliance with all covenants under such credit facilities.

34

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of March 31, 2018 and December 31, 2017:

				As of March 31, 2018				As of December 31, 2017
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	12,942	3.56%		$	12,942	2.88%
	6/30/2018	49,194		49,194		1.55%	(2)	48,042		1.55%	(2)
	3/7/2019	71,500		71,500		3.10%		71,500		2.88%
Revolving Term Loan	1/31/2022	1,900		1,303		7.89%		—		—%
	8/19/2019	11,429		5,714		8.91%		5,714		5.86%
Total borrowings				$	140,653			$	138,198

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus an applicable margin.

8. COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of March 31, 2018 and December 31, 2017, the Company had aggregate unfunded commitments of $291.3 million and $285.7 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds. Total unfunded commitments included $16.3 million and $16.5 million in commitments to funds not managed by the Company as of March 31, 2018 and December 31, 2017, respectively.

ARCC Fee Waiver

In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began in the second quarter of 2017. ARCC Part I Fees will only be waived to the extent they are paid. The maximum amount of fees that may be waived in a quarter is $10 million, and if ARCC Part I Fees are less than $10 million in any single quarter, the shortfall will not carryover to subsequent quarters. As of March 31, 2018, there are six remaining quarters as part of the fee waiver agreement, with a maximum of $60 million in potential waivers. ARCC Part I Fees are reported net of the fee waiver.

Performance Income

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

At March 31, 2018 and December 31, 2017, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $479.4 million and $476.1 million, respectively, of which approximately $372.4 million and $370.0 million,

35

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of March 31, 2018 and December 31, 2017, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of either date.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

9. RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including management fees, carried interest allocation, incentive fees, investment income, other fees and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that accrued carried interest allocations and incentive fees receivable, which are presented within investments and other assets, respectively, within the Condensed Consolidated Statements of Financial Condition.

The Company has investment management agreements with various funds and accounts that it manages. In accordance with these agreements, the Consolidated Funds bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Consolidated Funds.

The Company also has entered into agreements with related parties to be reimbursed for its expenses incurred for providing administrative services to such related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P, and CION Ares Diversified Credit Fund.

Employees and other related parties may be permitted to participate in co-investment vehicles that invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These employee co-investment vehicles generally do not require the participants to pay management or incentive fees.

Performance income the Company earns from the funds can be distributed to professionals or their related entities on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint, and are limited to distributions received by the relevant recipient.

36

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of March 31,		As of December 31,
	2018		2017
Due from affiliates:
Management fees receivable from non-consolidated funds	$	130,346	$	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	38,464		39,244
Due from affiliates—Company	$	168,810	$	165,750
Amounts due from portfolio companies and non-consolidated funds	$	17,782	$	15,884
Due from affiliates—Consolidated Funds	$	17,782	$	15,884
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,560	$	5,213
Management fees received in advance	2,866		1,729
Tax receivable agreement liability	12,925		3,503
Payments made by non-consolidated funds on behalf of and payable by the Company	2,667		4,197
Due to affiliates—Company	$	21,018	$	14,642

Due from Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Amounts advanced on behalf of Consolidated Funds are eliminated in consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings are subject to reimbursement by the portfolio companies.

37

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

10. INCOME TAXES

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes, while remaining a limited partnership under state law. A portion of the Company’s operations was and continues to be held through AHI and corporate subsidiaries of Ares Investments. AHI and such corporate subsidiaries are U.S. corporations and subject to U.S. corporate tax on earnings that flow through from subsidiary entities. The income of such corporations has historically been subject to U.S. federal, state and local income taxes, and certain of its foreign subsidiaries continue to be subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company’s earnings flowed through to owners of the Company without being subject to entity level income taxes. Consequently, a significant portion of the Company’s earnings did not reflect a provision for income taxes except those for foreign, state, city and local income taxes incurred at the entity level. From March 1, 2018, this portion of the Company’s earnings was subject to U.S. corporate tax.

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. The Company had an income tax benefit of $12.4 millionfor the three months ended March 31, 2018. The net income tax benefit recorded for the three months ended March 31, 2018 includes a tax expense related to a deferred tax liability established for the anticipated future tax consequences of performance income and appreciation on certain investments that were previously exempt for tax purposes; however this tax expense was offset by a tax benefit related to a deferred tax asset established for certain equity based accounting adjustments. For the three months ended March 31, 2017, the Company had an income tax benefit of $34.3 million primarily driven by the one-time ARCC-ACAS transaction support payment.

Supplemental information on an unaudited pro forma basis, as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three months ended March 31, 2017 is as follows:

	Three Months Ended March 31,
							2017
	2018			2017			Pro forma
Provision for Income Taxes - The Company
Income tax benefit of the Company	$	(12,375	)	$	(34,733	)	$	(28,344	)
Provision for Income Taxes - Consolidated Funds
Income tax expense of the Consolidated Funds	—			469			469
Total Provision for Income Taxes	$	(12,375	)	$	(34,264	)	$	(27,875	)

The 2017 pro forma tax information was calculated as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three months ended March 31, 2017.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between U.S. corporate entities that are subject to income taxes and those subsidiaries that are not. For the three months ended March 31, 2018 and 2017, the Company has utilized the discrete effective tax rate method to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds that are consolidated in these financial statements. Consequently, the effective income tax rate is subject to significant variation from period to period.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local and foreign tax regulators. As of March 31, 2018, the Company’s U.S. federal income tax returns for the years 2014 through 2018 are open under the normal statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit from 2014 to 2018. Foreign tax returns are generally subject to audit from 2013 to 2018. Although the outcome of tax audits is always uncertain, the Company

38

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

11. EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing income available to common shareholders by the weighted‑average number of common shares outstanding during the period. Diluted earnings per common share are computed using the more dilutive method of either the two-class method or the treasury stock method.

For the three months ended March 31, 2018 and 2017, the two-class method was the more dilutive method for the unvested restricted units. No participating securities had rights to undistributed earnings during any period presented.

The computation of diluted earnings per common share for the three months ended March 31, 2018 and 2017 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended   March 31,
	2018	2017
Options	17,411,780	21,334,689
Restricted units	16,352,546	15,070,871
AOG Units	—	130,403,174

The following table presents the computation of basic and diluted earnings per common share:

	For the Three Months Ended   March 31,
	2018			2017
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Net income (loss) available to common shareholders	$	33,624		$	(47,384	)
Basic weighted-average common shares	85,617,932			81,106,734
Basic earnings (loss) per common share	$	0.39		$	(0.58	)
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Incremental net income from assumed exchange of AOG Units	26,606			—
Net income (loss) available to common shareholders	$	60,230		$	(47,384	)
Effect of dilutive shares:
AOG Units	128,234,996			—
Diluted weighted-average common shares	213,852,928			81,106,734
Diluted earnings (loss) per common share	$	0.28		$	(0.58	)

39

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

12. EQUITY COMPENSATION

Equity Incentive Plan

In 2014, the Company adopted the Ares Management, L.P. 2014 Equity Incentive Plan (the “Equity Incentive Plan”). Based on a formula as defined in the Equity Incentive Plan, the total number of shares available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year.  Accordingly, on January 1, 2018, the total number of shares available for issuance under the Equity Incentive Plan increased to 31,853,504 shares, and as of March 31, 2018, 28,637,981 shares remain available for issuance.

Generally, unvested phantom units, restricted units and options are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended   March 31,
	2018		2017
Restricted units	$	18,030	$	11,219
Options	2,664		3,482
Phantom units	393		388
Equity-based compensation expense	$	21,087	$	15,089

Restricted Units

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common share on a specific date. The restricted units generally vest and are settled in common shares either (i) at a rate of one-third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, or (iii) at a rate of one quarter per year, beginning on either the first or second anniversary of the grant date. Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

The holders of restricted units generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any distribution paid with respect to a common share multiplied by (ii) the number of restricted units held at the time such distributions are declared (“Dividend Equivalent”). For the three months ended March 31, 2018, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $6.6 million, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When restricted units are forfeited, the cumulative amount of dividend equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

The following table presents unvested restricted units' activity during the three months ended March 31, 2018:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	13,751,888		$	17.58
Granted	3,635,419		23.61
Vested	(835,124	)	15.33
Forfeited	(199,637	)	19.83
Balance - March 31, 2018	16,352,546		$	18.98

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $233.3 million as of March 31, 2018 and is expected to be recognized over the remaining weighted average period of 3.70 years.

40

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Options

A summary of options activity during the three months ended March 31, 2018 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2018	20,495,025		$	18.99	6.09	$	20,611
Granted	—		—		—
Exercised	—		—		—
Expired	(219,034	)	19.00		—
Forfeited	(444,203	)	19.00		—
Balance - March 31, 2018	19,831,788		$	18.99	5.84	$	47,762
Exercisable at March 31, 2018	7,235,214		$	18.99	5.38	$	17,420

As of March 31, 2018, there was $16.6 million of total unrecognized compensation expense that is expected to be recognized over the remaining weighted average period of 1.11 years.

Phantom Units

A summary of unvested phantom unit activity during the three months ended March 31, 2018 is presented below:

	Phantom Units		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2018	156,153		$	19.00
Vested	—
Forfeited	(9,362	)	19.00
Balance - March 31, 2018	146,791		$	19.00

The fair value of the phantom unit awards is remeasured at each reporting period and was $21.40 per unit as of March 31, 2018. Based on the fair value of the awards at March 31, 2018,  $1.7 million of unrecognized compensation expense in connection with phantom units outstanding is expected to be recognized over a weighted average period of 1.09 years. During the three months ended March 31, 2018, the Company did not pay to settle any vested phantom units.

41

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

13. EQUITY

Ares Management, L.P.

Common Shares

Common shares represent limited partnership interests in the Company. The holders of common shares are entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that are available to common shareholders under the Company’s partnership agreement. The common shareholders have limited voting rights and have no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner. During the quarter ended March 31, 2018, an affiliate of Alleghany Corporation (“Alleghany”) exchanged 9,750,000 of its AOG Units into 9,750,000 common shares. The common shares will be restricted from sale or transfer until May 18, 2018. Alleghany continues to hold 2,750,000 AOG units following the exchange.

Common Share Offering

On March 12, 2018, AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority (collectively, “ADIA”), and the Company completed a public offering of 15,000,000 common shares. In connection with this offering, ADIA sold 10,000,000 of its previously issued and outstanding common shares from which the Company received no proceeds. Additionally, the Company issued 5,000,000 common shares from which it received $105.9 million in gross proceeds. The Company incurred approximately $0.5 million of expenses in connection with this offering transaction. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis together with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity. Subsequent to March 31, 2018, the underwriters in the offering partially exercised their option to purchase additional common shares from ADIA. See Note 16, Subsequent Events.

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of March 31, 2018 and December 31, 2017, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three months ended March 31, 2018 and 2017.

							Daily Average Ownership
	As of March 31, 2018			As of December 31, 2017			For the Three Months Ended March 31,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2018		2017
Ares Management, L.P.	97,514,500	44.76	%	82,280,033	38.75	%	40.04	%	38.35	%
Ares Owners Holding L.P.	117,576,663	53.98	%	117,576,663	55.36	%	54.98	%	55.74	%
Affiliate of Alleghany Corporation	2,750,000	1.26	%	12,500,000	5.89	%	4.98	%	5.91	%
Total	217,841,163	100.00	%	212,356,696	100.00	%

Preferred Equity

As of March 31, 2018 and December 31, 2017, the Company had 12,400,000 shares of Series A Preferred Equity (the “Preferred Equity”) outstanding. When, as and if declared by the Company’s board of directors, distributions on the Preferred Equity are payable quarterly at a rate per annum equal to 7.00%. The Preferred Equity may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per share.

42

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

14. SEGMENT REPORTING

The Company operates through its three distinct operating segments. During the three months ended March 31, 2018, the Company reclassified certain expenses from OMG to its operating segments. Historical results have been modified to conform to the current period presentation.

The Company’s three operating segments are:

Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $77.3 billion of assets under management and 145 funds as of March 31, 2018. The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate issuers. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The structured credit strategy invests across the capital structures of syndicated collateralized loan obligation vehicles (CLOs) and in directly-originated asset-backed instruments composed of diversified portfolios of consumer and commercial assets. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. direct lending activities primarily through ARCC, the largest business development company as of March 31, 2018, by both market capitalization and total assets. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits.

Private Equity Group:  The Company’s Private Equity Group has approximately $24.3 billion of assets under management as of March 31, 2018, broadly categorizing its investment strategies as corporate private equity, U.S. power and energy infrastructure and special situations. As of March 31, 2018 the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, five commingled funds and six related co-investment vehicles focused on U.S. power and energy infrastructure and three special situations funds. In its North American and European flexible capital strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The U.S. power and energy infrastructure strategy targets U.S. energy infrastructure-related assets across the power generation, transmission and midstream sectors, seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special situations strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios.

Real Estate Group:  The Company’s Real Estate Group manages comprehensive public and private equity and debt strategies, with approximately $10.9 billion of assets under management across 41 funds as of March 31, 2018. Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.  The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe.  The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation.  In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage real estate investment trust, ACRE. 

43

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company has an Operations Management Group (the “OMG”) that consists of five shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations/information technology, business development/corporate strategy, legal/compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance.

Non-GAAP Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Consolidated Statements of Operations prepared in accordance with GAAP.

Economic net income (“ENI”), a non-GAAP measure, is an operating metric used by management to evaluate total operating performance, a decision tool for deployment of resources, and an assessment of the performance of the Company’s business segments. ENI differs from net income by excluding (a) income tax expense, (b) operating results of the Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, and (e) certain other items that the Company believes are not indicative of its total operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers and acquisitions and capital transactions, underwriting costs, and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period.

Fee related earnings (“FRE”), a non-GAAP measure, refers to a component of ENI that is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it adjusts for the items included in the calculation of ENI and excludes performance income, performance related compensation, investment income from the Consolidated Funds and non-consolidated funds and certain other items that the Company believes are not indicative of its core operating performance.

Performance related earnings (“PRE”), a non-GAAP measure, is used to assess the Company’s investment performance net of performance related compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance income, performance related compensation and total investment and other income earned from the Consolidated Funds and non-consolidated funds.

Realized income (“RI”), a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (e) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds.

44

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $28,417)	$	131,766		$	49,887		$	15,173		$	196,826		$	—		$	196,826
Other fees	5,730			340			3			6,073			—			6,073
Compensation and benefits	(50,280		)	(19,199		)	(7,639		)	(77,118		)	(30,606		)	(107,724		)
General, administrative and other expenses	(9,629		)	(4,041		)	(2,432		)	(16,102		)	(18,616		)	(34,718		)
Fee related earnings	77,587			26,987			5,105			109,679			(49,222		)	60,457
Performance income—realized	5,071			4,398			13,638			23,107			—			23,107
Performance income—unrealized	16,092			21,066			(2,040		)	35,118			—			35,118
Performance related compensation—realized	(3,088		)	(3,560		)	(8,221		)	(14,869		)	—			(14,869		)
Performance related compensation—unrealized	7,176			(18,694		)	509			(11,009		)	—			(11,009		)
Net performance income	25,251			3,210			3,886			32,347			—			32,347
Investment income—realized	771			671			3,350			4,792			838			5,630
Investment income (loss)—unrealized	(269		)	(4,150		)	(1,232		)	(5,651		)	1,231			(4,420		)
Interest and other investment income	2,196			329			1,017			3,542			1,247			4,789
Interest expense	(4,673		)	(1,228		)	(420		)	(6,321		)	(548		)	(6,869		)
Net investment income (loss)	(1,975		)	(4,378		)	2,715			(3,638		)	2,768			(870		)
Performance related earnings	23,276			(1,168		)	6,601			28,709			2,768			31,477
Economic net income	$	100,863		$	25,819		$	11,706		$	138,388		$	(46,454	)	$	91,934
Realized income	$	78,857		$	27,327		$	13,669		$	119,853		$	(47,780	)	$	72,073

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2017:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,257)	$	121,347		$	39,819		$	15,615		$	176,781		$	—		$	176,781
Other fees	4,503			340			(9		)	4,834			—			4,834
Compensation and benefits	(51,703		)	(13,218		)	(9,736		)	(74,657		)	(25,953		)	(100,610		)
General, administrative and other expenses	(8,041		)	(4,198		)	(2,731		)	(14,970		)	(19,313		)	(34,283		)
Fee related earnings	66,106			22,743			3,139			91,988			(45,266		)	46,722
Performance income—realized	8,778			—			27			8,805			—			8,805
Performance income—unrealized	2,936			32,237			14,088			49,261			—			49,261
Performance related compensation—realized	(5,285		)	—			(16		)	(5,301		)	—			(5,301		)
Performance related compensation—unrealized	(1,458		)	(25,505		)	(8,438		)	(35,401		)	—			(35,401		)
Net performance income	4,971			6,732			5,661			17,364			—			17,364
Investment income—realized	318			579			1,783			2,680			1,859			4,539
Investment income (loss)—unrealized	4,589			8,546			(444		)	12,691			(1,407		)	11,284
Interest and other investment income (expense)	(19		)	152			(181		)	(48		)	874			826
Interest expense	(2,458		)	(1,513		)	(432		)	(4,403		)	(476		)	(4,879		)
Net investment income	2,430			7,764			726			10,920			850			11,770
Performance related earnings	7,401			14,496			6,387			28,284			850			29,134
Economic net income	$	73,507		$	37,239		$	9,526		$	120,272		$	(44,416	)	$	75,856
Realized income	$	69,945		$	22,345		$	4,588		$	96,878		$	(43,205	)	$	53,673

45

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense):

	For the Three Months Ended   March 31,
	2018			2017
Segment Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	196,826		$	176,781
Other fees	6,073			4,834
Performance income—realized	23,107			8,805
Performance income—unrealized	35,118			49,261
Total segment revenues	$	261,124		$	239,681
Segment Expenses
Compensation and benefits	$	77,118		$	74,657
General, administrative and other expenses	16,102			14,970
Performance related compensation—realized	14,869			5,301
Performance related compensation—unrealized	11,009			35,401
Total segment expenses	$	119,098		$	130,329
Other Income (Expense)
Investment income—realized	$	4,792		$	2,680
Investment income (loss)—unrealized	(5,651		)	12,691
Interest and other investment income (expense)	3,542			(48		)
Interest expense	(6,321		)	(4,403		)
Total other income (expense)	$	(3,638	)	$	10,920

The following table reconciles segment revenue to Ares consolidated revenues:

	For the Three Months Ended   March 31,
	2018			2017
Total segment revenue	$	261,124		$	239,681
Revenue of Consolidated Funds eliminated in consolidation	(5,110		)	(18,188		)
Administrative fees(1)	6,412			9,606
Performance income reclass(2)	975			(24		)
Principal investment income	2,708			13,169
Revenue of non-controlling interests in consolidated subsidiaries(3)	(20		)	—
Total consolidated adjustments and reconciling items	4,965			4,563
Total consolidated revenue	$	266,089		$	244,244

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations.

(3) Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.

46

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table reconciles segment expenses to Ares consolidated expenses:

	For the Three Months Ended   March 31,
	2018			2017
Total segment expenses	$	119,098		$	130,329
Expenses of Consolidated Funds added in consolidation	8,629			10,509
Expenses of Consolidated Funds eliminated in consolidation	(7,313		)	(6,598		)
Administrative fees(1)	6,412			9,606
OMG expenses	49,222			45,266
Acquisition and merger-related expenses	(319		)	275,336
Equity compensation expense	21,087			15,089
Placement fees and underwriting costs	1,664			3,439
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Expenses of non-controlling interests in consolidated subsidiaries(2)	627			—
Total consolidation adjustments and reconciling items	87,185			361,138
Total consolidated expenses	$	206,283		$	491,467

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Costs being borne by certain of our joint venture partners.

The following table reconciles segment other income (expense) to Ares consolidated other income:

	For the Three Months Ended   March 31,
	2018			2017
Total other income (expense)	$	(3,638	)	$	10,920
Other income from Consolidated Funds added in consolidation, net	7,252			38,445
Other expense from Consolidated Funds eliminated in consolidation, net	(459		)	(23		)
Other income of non-controlling interests in consolidated subsidiaries	7			—
OMG other expense	2,768			850
Performance income reclass(1)	(975		)	24
Principal investment income	(2,708		)	(13,169		)
Changes in value of contingent consideration	—			20,248
Other non-cash expense	(7		)	—
Offering costs	—			(660		)
Total consolidation adjustments and reconciling items	5,878			45,715
Total consolidated other income	$	2,240		$	56,635

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations.

47

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, RI, FRE and PRE:

	For the Three Months Ended   March 31,
	2018			2017
Economic net income
Income (loss) before taxes	$	62,046		$	(190,588	)
Adjustments:
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Equity compensation expenses	21,087			15,089
Acquisition and merger-related expenses	(319		)	255,088
Placement fees and underwriting costs	1,664			3,439
OMG expenses, net	46,454			44,416
Offering costs	—			660
Other non-cash expense	7			—
Expense of non-controlling interests in consolidated subsidiaries(1)	640			—
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(367		)	(16,323		)
Total consolidation adjustments and reconciling items	76,342			310,860
Economic net income	138,388			120,272
Total performance income - unrealized	(35,118		)	(49,261		)
Total performance related compensation - unrealized	11,009			35,401
Total investment (income) loss - unrealized	5,574			(9,534		)
Realized income	119,853			96,878
Total performance income - realized	(23,107		)	(8,805		)
Total performance related compensation - realized	14,869			5,301
Total investment income - realized	(1,936		)	(1,386		)
Fee related earnings	109,679			91,988
Performance related earnings
Economic net income	$	138,388		$	120,272
Less: fee related earnings	(109,679		)	(91,988		)
Performance related earnings	$	28,709		$	28,284

(1) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners.

48

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

15. CONSOLIDATION

Investments in Consolidated Variable Interest Entities

The Company consolidates entities in which the Company has a variable interest and, as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at their carrying value, which approximates fair value, and represents the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.

The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of March 31,		As of December 31,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	266,833	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	174,849	$	175,620
Assets of consolidated VIEs	$	6,126,584	$	6,231,245
Liabilities of consolidated VIEs	$	5,417,561	$	5,538,054

	For the Three Months Ended   March 31,
	2018		2017
Net income attributable to non-controlling interests related to consolidated VIEs	$	367	$	15,855

49

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

CONSOLIDATING SCHEDULES

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of March 31, 2018 and December 31, 2017 and results from operations for the three months ended March 31, 2018 and 2017.  

	As of March 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	115,540		$	—	$	—		$	115,540
Investments ($1,113,435 of accrued carried interest, and $17,575 of pledged collateral)	1,986,678			—		(174,849		)	1,811,829
Due from affiliates	177,601			—		(8,791		)	168,810
Deferred tax asset, net	50,986			—		—			50,986
Other assets	105,187			—		—			105,187
Intangible assets, net	37,178			—		—			37,178
Goodwill	143,968			—		—			143,968
Assets of Consolidated Funds
Cash and cash equivalents	—			532,470		—			532,470
Investments, at fair value	—			5,479,136		—			5,479,136
Due from affiliates	—			17,782		—			17,782
Dividends and interest receivable	—			12,096		—			12,096
Receivable for securities sold	—			83,718		—			83,718
Other assets	—			1,382		—			1,382
Total assets	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082
Liabilities
Accounts payable, accrued expenses and other liabilities	$	78,771		$	—	$	—		$	78,771
Accrued compensation	49,944			—		—			49,944
Due to affiliates	21,018			—		—			21,018
Performance related compensation payable	856,421			—		—			856,421
Debt obligations	590,169			—		—			590,169
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			81,508		—			81,508
Due to affiliates	—			8,791		(8,791		)	—
Payable for securities purchased	—			239,139		—			239,139
CLO loan obligations, at fair value	—			4,947,470		(10,206		)	4,937,264
Fund borrowings	—			140,653		—			140,653
Total liabilities	1,596,323			5,417,561		(18,997		)	6,994,887
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			709,023		(164,643		)	544,380
Non-controlling interest in Ares Operating Group entities	348,820			—		—			348,820
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			—		—			377,235
Accumulated other comprehensive loss, net of tax	(4,001		)	—		—			(4,001		)
Total controlling interest in Ares Management, L.P.	373,234			—		—			373,234
Total equity	1,020,815			709,023		(164,643		)	1,565,195
Total liabilities and equity	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082

50

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	As of December 31, 2017
	As adjusted
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable, accrued expenses and other liabilities	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	14,642			—		—			14,642
Performance related compensation payable	846,626			—		—			846,626
Debt obligations	616,176			—		—			616,176
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations, at fair value	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Shareholders' equity (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522

51

Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Three Months Ended March 31, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $28,417)	$	196,826		$	—		$	(7,311	)	$	189,515
Carried interest allocation	54,129			—			—			54,129
Incentive fees	5,071			—			—			5,071
Principal investment income	2,708			—			2,201			4,909
Administrative, transaction and other fees	12,465			—			—			12,465
Total revenues	271,199			—			(5,110		)	266,089
Expenses
Compensation and benefits	134,639			—			—			134,639
Performance related compensation	25,878			—			—			25,878
General, administrative and other expense	44,450			—			—			44,450
Expenses of the Consolidated Funds	—			8,629			(7,313		)	1,316
Total expenses	204,967			8,629			(7,313		)	206,283
Other income (expense)
Net realized and unrealized loss on investments	(1,178		)	—			339			(839		)
Interest and dividend income	3,347			—			—			3,347
Interest expense	(6,869		)	—			—			(6,869		)
Other income (expense), net	147			—			(458		)	(311		)
Net realized and unrealized loss on investments of the Consolidated Funds	—			(12,452		)	(633		)	(13,085		)
Interest and other income of the Consolidated Funds	—			64,422			—			64,422
Interest expense of the Consolidated Funds	—			(44,718		)	293			(44,425		)
Total other income (expense)	(4,553		)	7,252			(459		)	2,240
Income (loss) before taxes	61,679			(1,377		)	1,744			62,046
Income tax benefit	(12,375		)	—			—			(12,375		)
Net income (loss)	74,054			(1,377		)	1,744			74,421
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—			(1,377		)	1,744			367
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	33,106			—			—			33,106
Net income attributable to Ares Management, L.P.	40,948			—			—			40,948
Less: Preferred equity dividend paid	5,425			—			—			5,425
Net income attributable to Ares Management, L.P. common shareholders	$	35,523		$	—		$	—		$	35,523

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Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Three Months Ended March 31, 2017
	As adjusted
	Consolidated Company  Entities				Consolidated Funds				Eliminations				Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,257)	$	176,781			$	—			$	(4,736	)		$	172,045
Carried interest allocation	53,015				—				(1,008		)		52,007
Incentive fees	5,027				—				(1,862		)		3,165
Principal investment income	13,169				—				(10,582		)		2,587
Administrative, transaction and other fees	14,440				—				—				14,440
Total revenues	262,432				—				(18,188		)		244,244
Expenses
Compensation and benefits	124,339				—				—				124,339
Performance related compensation	40,702				—				—				40,702
General, administrative and other expense	47,338				—				—				47,338
Transaction support expense	275,177												275,177
Expenses of the Consolidated Funds	—				10,509				(6,598		)		3,911
Total expenses	487,556				10,509				(6,598		)		491,467
Other income (expense)
Net realized and unrealized gain on investments	3,753				—				(2,865		)		888
Interest and dividend income	2,843				—				(919		)		1,924
Interest expense	(4,879		)		—				—				(4,879		)
Other income, net	16,496				—				—				16,496
Net realized and unrealized gain on investments of the Consolidated Funds	—				30,439				1,597				32,036
Interest and other income of the Consolidated Funds	—				41,492				—				41,492
Interest expense of Consolidated Funds	—			—	(33,486		)	—	2,164			—	(31,322		)
Total other income	18,213				38,445				(23		)		56,635
Income (loss) before taxes	(206,911		)		27,936				(11,613		)		(190,588		)
Income tax expense (benefit)	(34,732		)		468				—				(34,264		)
Net income (loss)	(172,179		)		27,468				(11,613		)		(156,324		)
Less: Net income attributable to non-controlling interests in Consolidated Funds	—				27,468				(11,613		)		15,855
Less: Net loss attributable to non-controlling interests in Ares Operating Group entities	(131,045		)		—				—				(131,045		)
Net loss attributable to Ares Management, L.P.	(41,134		)		—				—				(41,134		)
Less: Preferred equity dividend paid	5,425				—				—				5,425
Net loss attributable to Ares Management, L.P. common shareholders	$	(46,559	)		$	—			$	—			$	(46,559	)

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Ares Management, L.P.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

16. SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after March 31, 2018 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure:

In April 2018, the board of directors of the Company's general partner declared a quarterly dividend of $0.28 per common share to common shareholders of record at the close of business on June 15, 2018, with a payment date of June 29, 2018.

In April 2018, the board of directors of the Company's general partner declared a quarterly dividend of $0.4375 per preferred equity share to preferred equity shareholders of record at the close of business on June 15, 2018, with a payment date of June 30, 2018.

In April 2018, the underwriters of the recently registered offering of common shares by the Company and ADIA, which closed on March 12, 2018, exercised a portion of their option to purchase 1,130,000 additional common shares from ADIA. The Company did not receive any of the proceeds from the underwriters' exercise. The expenses incurred by the Company related to the option exercise will be included in other income (expense), net in the Condensed Consolidated Statements of Operations. ADIA paid the underwriting discounts and commissions and/or similar charges incurred for the sale of the common shares.

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Item 2.  Management’s Discussion And AnalysisOf Financial Condition And Results Of Operations

Ares Management, L.P. is a Delaware limited partnershiptreated as a corporation for U.S. federal income tax purposes, formed on November 15, 2013. Unless the context otherwise requires, references to “we,” “us,” “our,” “the Partnership” and “the Company” are intended to mean the business and operations of Ares Management, L.P. and its consolidated subsidiaries. The following discussion analyzes the financial condition and results of operations of the Partnership. “Consolidated Funds” refers collectively to certain Ares‑affiliated funds, related co‑ investment entities and certain CLOs that are required under generally accepted accounting principles in the United States (“GAAP”) to be consolidated in our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q. Additional terms used by the Company are defined in the Glossary and throughout the Management's Discussion and Analysis in this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included in this Quarterly Report on Form 10‑Q and the audited consolidated financial statements and the related notes included in the 2017 Annual Report on Form 10-K of Ares Management, L.P.

Amounts and percentages presented throughout our discussion and analysis of financial condition and results of operations may reflect rounded results in thousands (unless otherwise indicated) and consequently, totals may not appear to sum.

Our Business

We are a leading global alternative asset manager that operates through three distinct but complementary investment groups, which are our reportable segments. Our reportable segments are Credit Group, Private Equity Group and Real Estate Group. For a detailed description of our reportable segments, see Note 14, “Segment Reporting,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. During the three months ended March 31, 2018, we reclassified certain expenses from OMG to our operating segments. Historical results have been modified to conform to the current period presentation.

The focus of our business model is to provide our investment management capabilities through various funds and products that meet the needs of a wide range of institutional and retail investors. Our revenues primarily consist of management fees, carried interest allocation, incentive fees, as well as principal investment income and administrative expense reimbursements and transaction fees. Management fees are generally based on a defined percentage of average fair value of assets, total commitments, invested capital, net asset value, net investment income or par value of the investment portfolios we manage. Carried interest allocation and incentive fees are based on certain specific hurdle rates as defined in the funds' applicable investment management or partnership agreements. Carried interest allocation and incentive fees are collectively referred to as performance income in our segment results and non-GAAP measures. Principal investment income consists of interest and dividend income and net realized and unrealized gain (loss) from the equity method investments that we manage. Other income (expense) typically represents investment income, realized gains (losses) and unrealized appreciation (depreciation) resulting from equity method investments that we do not mange, investments in collateralized loan obligations and common stock as well as investments of the Consolidated Funds. Interest expense is also included within other income (expense). We provide administrative services to certain of our affiliated funds that are presented within administrative, transaction and other fees for GAAP reporting, but are presented net of respective expenses for segment reporting purposes. We also receive transaction fees from certain affiliated funds for activities related to fund transactions, such as loan originations. In accordance with GAAP, we are required to consolidate those funds in which we hold a significant economic interest and substantive control rights. However, for segment reporting purposes, we present revenues and expenses on a combined segment basis, which shows the results of our reportable segments without giving effect to the consolidation of the funds. Accordingly, our segment revenues consist of management fees, other income, realized and unrealized performance income, and net investment income. Our segment expenses consist of compensation and benefits, net of administrative fees, general, administrative and other expenses, net of administrative fees, as well as realized and unrealized performance related compensation.

Trends Affecting Our Business

We believe that our disciplined investment philosophy across our three distinct but complementary investment groups contributes to the stability of our firm’s performance throughout market cycles. Additionally, approximately 71% of our assets under management were in funds with a contractual life of three years or more and approximately 41% were in funds with a contractual life of seven years or more. As of March 31, 2018,our funds have a stable base of committed capital enabling us to invest in assets with a long term focus over different points in a market cycle and to take advantage of market volatility. However, our results of operations, including the fair value of our AUM, are affected by a variety of factors, including conditions in the global financial markets and the economic and political environments, particularly in the United States and Western Europe.

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U.S. credit markets were mixed in the first quarter of 2018 amidst prospects of higher rates, international trade concerns and equity volatility. As a result, the Credit Leveraged Loan Index returned 1.58% for the quarter, while the ICE BofAML High Yield Master II Index returned (0.91%). Leveraged loans benefited from floating rates as benchmark yields rose consistently throughout the quarter, additionally supported by a strong technical backdrop. High yield bond performance was negatively impacted by rising rates, valuation concerns and greater correlation to equities. Returns for both asset classes were higher on lower quality as CCC-rated high yield bonds returned 0.36% and the lower tier segment of the loan market returned 3.92%. Although mixed, credit markets were stable when compared to U.S. equities (measured by the S&P 500 Index) which returned (0.76%) for the quarter despite a strong January in which the asset class returned 5.73%. Non-investment grade credit appears well positioned in the current environment given the favorable economic conditions, strong credit fundamentals, a benign default outlook and supportive technical environment. We anticipate recent market volatility will continue and be focused on unique events, as opposed to macroeconomic trends, underscoring the importance of credit selection and active management.

European credit markets moved in a similar yet less dramatic nature relative to the U.S. markets in the first quarter of 2018 as the ICE BofAML European High Yield Index and the Credit Suisse Western European Leveraged Loan Index returned (0.48%) and 1.54% during the first quarter, respectively. Following the European economy’s fifth consecutive year of expansion in 2017, growth briefly plateaued in the first quarter as the Purchasing Managers’ Index reached an 8-month low in March. However, this trend may be temporary as the European Central Bank (“ECB”) raised its 2018 growth forecast to 2.4% matching the decade high pace set in 2017. The European labor market continued to strengthen during the quarter as the unemployment rate fell to its lowest level since 2008. The continued improvement of the labor market supported inflation in the region, which increased in March following four months of decreases. While strengthening, inflation remains below the 2% target and will be a focus for the ECB as it intends to taper its quantitative easing program starting September 2018. Meanwhile, political developments in the region generally supported market activity as a coalition government was secured in Germany, the Eurozone’s largest economy. While risks remain, we believe the geopolitical backdrop is relatively moderate for non-investment grade credit in the region as continued macroeconomic growth serves as a catalyst for improved corporate earnings in the region.

These markets and economies have created opportunities, particularly for the Credit Group’s direct lending and liquid alternative credit strategies, which utilize flexible investment mandates to manage portfolios through market cycles. As market conditions shift and default risk and interest rate risk come under greater focus, having the ability to move up and down the capital structure enables the Credit Group to reduce risk and enhance returns. Similarly, given our broad capabilities in leveraged loans, such flexibility enables our Credit Group to reduce sensitivities to changing interest rates by increasing allocations to floating rate leveraged loans. On a market value basis, approximately 76% of the debt assets within our Credit Group are floating rate instruments, which we believe helps mitigate volatility associated with changes in interest rates.

Notwithstanding the potential opportunities represented by market volatility, future earnings, cash flows, dividend payments and distributions are affected by a range of factors, including realizations of our funds’ investments, which are subject to significant fluctuations from period to period.

Change in Our Tax Status Election

Effective March 1, 2018, we filed an election with the Internal Revenue Service (“IRS”) to be treated as a corporation for U.S. federal income tax purposes (collectively, the “Tax Election”). Although we are treated as a corporation for U.S. federal income tax purposes, we remain a limited partnership under state law. In connection with the Tax Election, we amended and restated our partnership agreement to, among other things, reflect our new tax classification and change the name of our common units and preferred units to common shares and preferred shares, respectively. The terms of such common shares and preferred shares, and the associated rights, otherwise remain unchanged.

Asset managers structured as pass-through entities for income tax purposes have historically traded at substantial discounts to asset managers taxed as corporations. Further, we believe that our pass-through tax structure has historically limited our investor universe due to complexities related to this structure. The Tax Election is intended to simplify our tax structure and expand our eligible investor universe and, in turn, enhance our liquidity and trading volume, which may, among other things, provide us with a more liquid and attractive currency for potential strategic transactions to further long term growth. Moreover, we historically have paid corporate level taxes on our fee related earnings, which has averaged over 80% of total fee income since our initial public offering. This, combined with a reduction in the statutory federal corporate tax rate from 35% to 21%, also presented compelling reasons to make the Tax Election. The impact of the Tax Election on our reported results is limited to increased tax expense on performance related earnings, which was previously classified as pass-through income. Taxes on performance related earnings consist of current taxes on realized performance income and deferred taxes on unrealized performance related earnings that may change in subsequent periods until such income is realized.

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Consolidation and Deconsolidation of Ares Funds

Pursuant to GAAP, we consolidate the Consolidated Funds into our financial results as presented in this Quarterly Report on Form 10‑Q. These funds represented approximately 6.0% of our AUM as of March 31, 2018, 3.7% of our management fees and less than 1% of our performance income for the three months ended March 31, 2018. As of March 31, 2018, we consolidated nine CLOs and nine private funds, and as of March 31, 2017, we consolidated seven CLOs and nine private funds. Five of the CLOs as of March 31, 2018 were consolidated through risk retention vehicles.

The consolidation of these funds significantly impacted interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, net investment gains (losses) of Consolidated Funds and non-controlling interests in Consolidated Funds, among others, for the three months ended March 31, 2018 and 2017. Further, the consolidation of these funds may impact our management fees, incentive fees and carried interest allocation reported under GAAP to the extent these are eliminated upon consolidation.  For the actual impact that consolidation had on our results, see the Consolidating Schedules within Note 15, “Consolidation”, to our condensed consolidated financial statements included herein.

The assets and liabilities of our Consolidated Funds are held within separate legal entities and, as a result, the liabilities of our Consolidated Funds are typically non-recourse to us. Generally, the consolidation of our Consolidated Funds has a significant gross-up effect on our assets, liabilities and cash flows but has no direct net effect on our attributed net income. The net economic ownership interests of our Consolidated Funds, to which we have no economic rights, are reflected as non-controlling interests in the Consolidated Funds in our condensed consolidated financial statements.

We generally deconsolidate funds we advise and CLOs when we are no longer deemed to have a controlling interest in the entity. During the three months ended March 31, 2018, one entity was liquidated/dissolved, and no non-VIEs experienced a significant change in ownership or control that resulted in deconsolidation during the period.

The performance of our Consolidated Funds is not necessarily consistent with, or representative of, the combined performance trends of all of our funds.

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Managing Business Performance

Non‑GAAP Financial Measures

We use the following non-GAAP measures to assess and track our performance:

• Economic Net Income (ENI)

• Fee Related Earnings (FRE)

• Performance Related Earnings (PRE)

• Realized Income (RI)

The specific components and calculations of these non‑GAAP measures are discussed in greater detail in Note 14, “Segment Reporting,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q. These non‑GAAP financial measures supplement, and should be considered in addition to and not in lieu of, the results of operations, presented and discussed further under “Results of Operations—Consolidated Results of Operations,” which are prepared in accordance with GAAP. For a reconciliation of these measures to the most comparable measure in accordance with GAAP, see Note 14, “Segment Reporting,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q.

Operating Metrics

We monitor certain operating metrics that are common to the alternative asset management industry, which are discussed below.

Assets Under Management

AUM refers to the assets we manage. We view AUM as a metric to measure our investment and fundraising performance as it generally reflects assets at fair value plus available uncalled capital. For our funds other than CLOs, our AUM equals the sum of the following:

• net asset value (“NAV”) of such funds;

• the drawn and undrawn debt (at the fund‑level including amounts subject to restrictions); and

• uncalled committed capital (including commitments to funds that have yet to commence their investment periods).

NAV refers to the fair value of all the assets of a fund less the fair value of all liabilities of the fund.

For funds that are CLOs, our AUM is equal to subordinated notes (equity) plus all drawn and undrawn debt tranches.

The tables below provide the period-to-period rollforwards of our total AUM by segment for the three months ended March 31, 2018 and 2017 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 12/31/2017	$	71,732		$	24,530		$	10,229		$	106,491
Net new par/equity commitments	3,098			13			857			3,968
Net new debt commitments	2,755			—			—			2,755
Distributions	(1,337		)	(282		)	(291		)	(1,910		)
Change in fund value	1,062			42			101			1,205
Balance at 3/31/2018	$	77,310		$	24,303		$	10,896		$	112,509
Average AUM(1)	$	74,522		$	24,417		$	10,563		$	109,502

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	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 12/31/2016	$	60,466		$	25,041		$	9,752		$	95,259
Acquisitions	3,605			—			—			3,605
Net new par/equity commitments	2,271			42			19			2,332
Net new debt commitments	469			—			273			742
Distributions	(2,209		)	(644		)	(208		)	(3,061		)
Change in fund value	629			214			105			948
Balance at 3/31/2017	$	65,231		$	24,653		$	9,941		$	99,825
Average AUM(1)	$	62,850		$	24,848		$	9,847		$	97,545

(1) Represents the quarterly average of beginning and ending balances.

Please refer to “— Results of Operations by Segment” for a more detailed presentation of AUM by segment for each of the periods presented.

The graphs below present our Incentive Generating AUM and Incentive Eligible AUM by segment as of March 31, 2018 and 2017 (in millions):

Credit Private Equity Real Estate

As of March 31, 2018 and 2017, our available capital, which we refer to as dry powder, was $26.6 billion and $24.2 billion, respectively, primarily attributable to our funds in the Credit Group and the Private Equity Group.

Fee Paying Assets Under Management

The following components generally comprise our FPAUM:

• The amount of limited partner, third party capital commitments and debt commitments eligible to pay management fees for certain closed-end funds within the reinvestment period in the Credit Group, funds in the Private Equity Group and certain private funds in the Real Estate Group;

• The amount of limited partner invested capital for the aforementioned closed-end funds beyond the reinvestment period as well as the structured assets funds in the Credit Group, certain managed accounts within their reinvestment period, the mezzanine fund in the Credit Group, European commingled funds in the Credit Group and co-invest vehicles in the Real Estate Group;

• The gross amount of aggregate collateral balance, for CLOs, at par, adjusted for defaulted or discounted collateral; and

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• The portfolio value, gross asset value or NAV, adjusted in certain instances for cash or certain accrued expenses, for the remaining funds in the Credit Group, ARCC, certain managed accounts in the Credit Group and certain debt funds in the Real Estate Group.

The tables below provide the period‑to‑period rollforwards of our total FPAUM by segment for the three months ended March 31, 2018 and 2017 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 12/31/2017	$	49,450		$	16,858		$	6,189		$	72,497
Commitments	928			13			766			1,707
Subscriptions/deployment/increase in leverage	1,964			204			136			2,304
Redemptions/distributions/decrease in leverage	(1,226		)	(427		)	(182		)	(1,835		)
Change in fund value	430			15			46			491
Change in fee basis	(6		)	—			(204		)	(210		)
FPAUM Balance at 3/31/2018	$	51,540		$	16,663		$	6,751		$	74,954
Average FPAUM(1)	$	50,497		$	16,762		$	6,471		$	73,730

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 12/31/2016	$	42,709		$	11,314		$	6,540		$	60,563
Acquisitions	2,789			—			—			2,789
Commitments	531			7,641			—			8,172
Subscriptions/deployment/increase in leverage	1,016			380			55			1,451
Redemptions/distributions/decrease in leverage	(1,819		)	(347		)	(175		)	(2,341		)
Change in fund value	470			(279		)	(15		)	176
Change in fee basis	—			(1,527		)	(48		)	(1,575		)
FPAUM Balance at 3/31/2017	$	45,696		$	17,182		$	6,357		$	69,235
Average FPAUM(1)	$	44,204		$	14,249		$	6,450		$	64,903

(1) Represents the quarterly average of beginning and ending balances.

Please refer to “— Results of Operations by Segment” for detailed information by segment of the activity affecting total FPAUM for each of the periods presented.

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The charts below present FPAUM by its fee basis as of March 31, 2018 and 2017 (in millions):

FPAUM: $74,954 FPAUM: $69,235

The components of our AUM, including the portion that is FPAUM, are presented below as of March 31, 2018 and 2017 (in millions):

AUM: $112,509 AUM: $99,825

(1) Includes $6.2 billion and $6.3 billion of AUM of funds from which we indirectly earn management fees as of March 31, 2018 and 2017, respectively.

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Fund Performance Metrics

Fund performance information for our investment funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds include those that contributed at least 1% of our total management fees for the three months ended March 31, 2018 or composed of at least 1% of the Company’s total FPAUM as of March 31, 2018, and for which we have sole discretion for investment decisions within the fund. In addition to management fees, each of our significant funds may generate performance income upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in the Company is not an investment in any of our funds. Past performance is not indicative of future results. As with any investment there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.

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Adoption of New Revenue Guidance and Change in Accounting Principle

Effective January 1, 2018, we adopted the Financial Accounting Standards Board (“FASB") Topic 606 (“ASC 606”) Revenue from Contracts with Customers and implemented a change in accounting principle related to carried interest allocation.

Our adoption of ASC 606 resulted in a change to the recognition of contractual incentive fees and the presentation of these fees within our results. Incentive fees are now presented on the income statement as a separate line item, and we now only recognize incentive fee revenue when the amount is realized and no longer subject to reversal at the end of the measurement period, which is typically annually. Therefore, we no longer recognize unrealized incentive fees in revenues in the condensed consolidated financial statements. We adopted ASC 606 on a modified retrospective basis, as such prior periods have not been adjusted. We recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

Carried interest allocations are now accounted for under the GAAP guidance for equity method investments and presented as a separate line item on the Condensed Consolidated Statements of Operations and within investments on the Condensed Consolidated Statements of Financial Condition. We implemented this change in accounting principle on a full retrospective basis and all prior periods have been conformed. The implementation of the change in accounting principle resulted in no change to either our previously reported GAAP or non-GAAP results. Performance income in our results of operations by segment and non-GAAP measures collectively refers to carried interest allocation and incentive fees.

For further detail on our adoption of ASC 606 and change in accounting principles, see Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q.

Components of Consolidated Results of Operations - Post Adoption of New Revenue Guidance and Change in Accounting Principle

As a result of our adoption of new revenue guidance and change in accounting principle described above, the following financial statement captions have been updated in the Consolidated Results of Operations. For descriptions of financial statement line items not included below, see “— Components of Consolidated Results of Operations” within Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations in the 2017 Annual Report on Form 10-K of Ares Management, L.P.

Carried Interest Allocation. In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life.

Incentive Fees. Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Principal Investment Income. Principal investment income consists of interest and dividend income and net realized and unrealized gain (loss) on equity method investments that we manage. Interest and dividend income are recognized on an accrual basis to the extent that such amounts are expected to be collected. Net gain (loss) from investment activities include realized and unrealized gains and losses from our equity method investment portfolio. A realized gain (loss) is recognized when we redeem all or a portion of our investment or when we receive a distribution of capital. Unrealized gains (losses) on investments result from

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appreciation (depreciation) in the fair value of our investments, as well as reversals of previously recorded unrealized appreciation (depreciation) at the time the gain (loss) on an investment becomes realized.

Performance Related Compensation. Performance related compensation includes compensation directly related to segment performance income, which generally consists of percentage interests that we grant to our professionals. Depending on the nature of each fund, the performance income participation is generally structured as a fixed percentage or as an annual award. The liability is calculated based upon the changes to performance income but is not payable until the performance income is realized. We have an obligation to pay our professionals a portion of the performance income earned from certain funds, including performance income from Consolidated Funds that are eliminated in consolidation.

Although changes in performance related compensation are typically directly correlated with changes in performance income reported within our segment results, this correlation does not always exist when our results are reported on a fully consolidated basis in accordance with GAAP. This discrepancy is caused by the fact that incentive fees and carried interest allocation earned from our Consolidated Funds are eliminated upon consolidation while performance related compensation is not eliminated.

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Results of Operations

Consolidated Results of Operations

The following table and discussion sets forth information regarding our consolidated results of operations for the three months ended March 31, 2018 and 2017. We consolidate funds where we are deemed to hold a controlling financial interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners' rights, and the creation and termination of funds. The consolidation of these funds had no effect on net income attributable to us for the periods presented.

	Three Months Ended   March 31,						Favorable (Unfavorable)
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	189,515		$	172,045		$	17,470		10	%
Carried interest allocation	54,129			52,007			2,122			4	%
Incentive fees	5,071			3,165			1,906			60	%
Principal investment income	4,909			2,587			2,322			90	%
Administrative, transaction and other fees	12,465			14,440			(1,975		)	(14	)%
Total revenues	266,089			244,244			21,845			9	%
Expenses
Compensation and benefits	134,639			124,339			(10,300		)	(8	)%
Performance related compensation	25,878			40,702			14,824			36	%
General, administrative and other expenses	44,450			47,338			2,888			6	%
Transaction support expense	—			275,177			275,177			NM
Expenses of the Consolidated Funds	1,316			3,911			2,595			66	%
Total expenses	206,283			491,467			285,184			58	%
Other income (expense)
Net realized and unrealized gain (loss) on investments	(839		)	888			(1,727		)	NM
Interest and dividend income	3,347			1,924			1,423			74	%
Interest expense	(6,869		)	(4,879		)	(1,990		)	(41	)%
Other income (expense), net	(311		)	16,496			(16,807		)	NM
Net realized and unrealized gain (loss) on investments of the Consolidated Funds	(13,085		)	32,036			(45,121		)	NM
Interest and other income of the Consolidated Funds	64,422			41,492			22,930			55	%
Interest expense of Consolidated Funds	(44,425		)	(31,322		)	(13,103		)	(42	)%
Total other income	2,240			56,635			(54,395		)	(96	)%
Income (loss) before taxes	62,046			(190,588		)	252,634			NM
Income tax benefit	(12,375		)	(34,264		)	(21,889		)	(64	)%
Net income (loss)	74,421			(156,324		)	230,745			NM
Less: Net income attributable to non-controlling interests in Consolidated Funds	367			15,855			(15,488		)	(98	)%
Less: Net income (loss) attributable to non-controlling interests in Ares Operating Group entities	33,106			(131,045		)	164,151			NM
Net income (loss) attributable to Ares Management, L.P.	40,948			(41,134		)	82,082			NM
Less: Preferred equity dividend paid	5,425			5,425			—			—	%
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)	82,082			NM

NM - Not Meaningful

65

The following section discusses the period-over-period fluctuations of our consolidated results of operations for the three months ended March 31, 2018 compared to 2017. Additional details behind the fluctuations attributable to a particular segment are included in “—Results of Operations by Segment” for each of the segments.

Three Months Ended March 31, 2018Compared to Three Months Ended March 31, 2017

Revenues

Management Fees.  Total management fees increased by $17.5 million, or 10%, to $189.5 million, after giving effect to an increase in management fees of $2.6 million that were eliminated upon consolidation, for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Segment management fees attributable to the Credit Group and Private Equity Group increased by $10.4 million and $10.1 million, respectively, and segment management fees attributable to the Real Estate Group decreased by $0.4 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. For more detail regarding the fluctuations of management fees within each of the segments see “—Results of Operations by Segment.”

Carried Interest Allocation.  Carried interest allocation increased by $2.1 million to $54.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily driven by an increase in carried interest allocation attributable to direct lending funds, which generated returns in excess of their hurdle rates on an increased capital base for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, and by an increase in carried interest allocation attributable to Ares Corporate Opportunities Fund III, L.P. (“ACOF III”) for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 due to continued market appreciation in one of its publicly traded retail portfolio companies. These increases were offset by a decrease in carried interest allocation attributable to Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”) due to significant market appreciation of certain of the fund's underlying portfolio companies recognized during the three months ended March 31, 2017 and by a decrease in carried interest allocation attributable to Ares Energy Investors Fund V, L.P. (“EIF V”) due to lower market value appreciation of one of the fund's assets for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Incentive Fees. Incentive feesincreased by $1.9 million to $5.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. As a result of our adoption of ASC 606, using the modified retrospective approach, we now recognize incentive fee revenue only when the amount is realized and no longer subject to reversal and no longer recognize unrealized incentive fees in revenues subsequent to January 1, 2018. This adoption results in the delayed recognition of unrealized incentive fees until they become realized at the end of the measurement period, which is typically annually. During the three months ended March 31, 2018, we realized $5.0 million of incentive fees from one of our credit opportunity funds.

Principal Investment Income. Principal investment incomeincreased by $2.3 million to $4.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily attributable to a $1.7 million increase in investment income from greater market appreciation of property values within our real estate equity funds for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Administrative, Transaction and Other Fees.  Administrative fees and other fees decreased by $2.0 million, or 14%, to $12.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was primarily due to a decrease in transaction-based fees based on loan originations within certain funds in our Credit Group.

Expenses

Compensation and Benefits.  Compensation and benefits expenses increased by $10.3 million, or 8%, to $134.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily driven by annual merit increases and headcount growth for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. In addition, equity compensation increased by $6.0 million from the comparable period due to additional restricted units awarded as part of bonus and retention award grants during the three months ended March 31, 2018.

Performance Related Compensation.  Performance related compensation decreased by $14.8 million to $25.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. At March 31, 2018, we evaluated the unrealized performance related compensation payable balance that was recorded at December 31, 2017, and it was determined that $13.7 million of that liability was no longer probable of payment based on the terms of the payment arrangement as payment is not required until revenue is realized. Accordingly, we reversed $13.7 million of unrealized performance related compensation expense during the three months ended March 31, 2018.

66

General, Administrative and Other Expenses. General, administrative and other expenses decreased by $2.9 million, or 6%, to $44.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was the result of a $2.5 million one-time non-income tax payment made during the three months ended March 31, 2017 combined with a decrease in placement fees of $1.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was offset by an increase in professional services fees of $1.3 million, largely due to our election to change our tax classification from a partnership to a corporation for U.S. income tax purposes and by an increase in operating expenses from a joint venture distribution platform. The platform is used to raise capital for registered investment companies through independent brokerage networks.

Transaction Support Expense. Transaction support expense was a one–time payment of $275.2 million that we made, through our subsidiary Ares Capital Management LLC, to ACAS shareholders during the three months ended March 31, 2017 upon the closing of ARCC’s acquisition of ACAS. In connection with this acquisition, our AUM increased by $3.6 billion and FPAUM increased by $2.8 billion at closing. No similar expenses were incurred in the three months ended March 31, 2018.

Expenses of the Consolidated Funds. Expenses of the Consolidated Funds decreased by $2.6 million to $1.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was largely due to higher one-time professional service costs incurred to launch a European CLO fund and refinance two U.S. CLO funds during the three months ended March 31, 2017 compared to no new Consolidated Funds launching or refinancing during the three months ended March 31, 2018.

Other Income (Expense)

When evaluating the changes in other income (expense), we separately analyze the other income generated by the Company from the investment returns generated by our Consolidated Funds.

Net Realized and Unrealized Gain (Loss) on Investments. Net realized and unrealized gain (loss) on investments of the Company decreased by $1.7 million from a gain of $0.9 million for the three months ended March 31, 2017 to a loss of $0.8 million for the three months ended March 31, 2018. The decrease is primarily attributable to net losses of $0.9 million on certain investments in our CLOs for the three months ended March 31, 2018 compared to net gains of $0.3 million for the same funds during the three month period in 2017. Additionally, for the three months ended March 31, 2017, we experienced net gains of $0.6 million on other fund investments in non-core investment strategies.

Interest and Dividend Income. Interest and dividend income of the Company increased by $1.4 million to $3.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was driven by an increase of $1.0 million in interest income for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 from investments in our CLOs, which increased as a result of our compliance with risk retention requirements.

Interest Expense. Interest expense of the Company increased by $2.0 million to $6.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase in interest expense was primarily due to increased borrowings from term loans used to finance our investments in CLOs.

Other Income (Expense), Net. Other income (expense), net decreased by $16.8 million from other income of $16.5 million for the three months ended March 31, 2017 to $0.3 million of net expenses for the three months ended March 31, 2018. The decrease is primarily a result of the reversal of the Energy Investors Funds (“EIF”) contingent consideration of $20.3 million that was reflected as a gain during the three months ended March 31, 2017. This decrease was offset by a reduction in transaction losses of $3.3 million from losses of $3.1 million for the three months ended March 31, 2017 to gains of $0.2 million for the three months ended March 31, 2018 from the revaluation of certain assets and liabilities denominated in foreign currencies.

Net Realized and Unrealized Gain (Loss) on Investments of the Consolidated Funds. Net gain (loss) on investments of the Consolidated Funds decreased by $45.1 million from a net gain of $32.0 million for the three months ended March 31, 2017 to a net loss of $13.1 million for the three months ended March 31, 2018.

The net gain for the three months ended March 31, 2017 primarily included the following: (i) $15.1 million of unrealized gains attributable to an Asian private equity fund primarily due to an increase in share price of one of its publicly traded investment holdings; (ii) $6.3 million of net gains attributable to a special situations fund within the Private Equity Group that was deconsolidated subsequent to March 31, 2017; (iii) $7.0 million of net gains attributable to CLOs primarily driven by market appreciation, of which $2.7 million is attributable to a European CLO that was deconsolidated subsequent to March 31, 2017; and (iv) $3.6 million of net gains of certain consolidated U.S. direct lending funds primarily driven by increased loan values.

67

The net loss for the three months ended March 31, 2018 primarily included the following: (i) $8.4 million of net losses attributable to an Asian private equity fund primarily due to a decrease in share price of one of its publicly traded investment holdings; (ii) $5.2 million of net losses attributable to a European direct lending fund driven by a change in market value of the fund's sole remaining investment; (iii) $3.7 million of net losses attributable to CLOs primarily driven by market depreciation; and (iv) offset by $4.2 million of net gains of certain consolidated U.S. direct lending funds primarily driven by increased loan values.

Interest and Other Income of the Consolidated Funds. Interest and other income of the Consolidated Funds increased by $22.9 million, or 55%, to $64.4 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily driven by additional interest paying assets from three CLO funds that we began consolidating subsequent to March 31, 2017 resulting in an increase in interest income for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Interest Expense of the Consolidated Funds. Interest expense of the consolidated funds increased by $13.1 million, or 42%, to $44.4 million. The increase was primarily the result of interest expense from the issued debt from three CLO funds we began consolidating subsequent to March 31, 2017, which was offset by the impact of interest expense from one fund that was no longer consolidated for the three months ended March 31, 2018 and by a $4.0 million decrease in sub note distributions for one consolidated CLO fund for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Income Tax Benefit.  Income tax benefit decreased by $21.9 million to $12.4 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Income tax benefit for the three months ended March 31, 2017 was largely driven by pre-tax losses recognized by AHI, a U.S. taxable entity, resulting from the $275.2 million transaction support payment made in connection with ARCC's acquisition of ACAS. Income tax benefit for the three months ended March 31, 2018 was largely driven by one-time tax benefits related to our election to change our tax classification from a partnership to a corporation for U.S. federal income tax purposes.

Non-Controlling Interests.  Net income (loss) attributable to non-controlling interests in Ares Operating Group entities represents results attributable to the owners of AOG Units that are not held by Ares Management, L.P. and is allocated based on the weighted average daily ownership of the AOG unitholders.

Net income (loss) attributable to non-controlling interests in Ares Operating Group entities increased by $164.2 million to net income of $33.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The weighted average daily ownership for non-controlling AOG unitholders was 60.0% for the three months ended March 31, 2018 compared to 61.7% for the three months ended March 31, 2017.

68

Segment Analysis

For segment reporting purposes, revenues and expenses are presented excluding the results of our Consolidated Funds. As a result, segment revenues from management fees, performance income and investment income are different than those presented on a consolidated basis in accordance with GAAP because revenues recognized from Consolidated Funds are eliminated in consolidation. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of Consolidated Funds.

In addition to the three segments, we separately discuss the OMG. This information is used by our management to make operating decisions, assess performance and allocate resources. The results of operations for each of our reportable segments are discussed below.

ENI and Other Measures

The following table sets forth FRE, PRE, ENI and RI by segment for the three months ended March 31, 2018 and 2017. FRE, PRE, ENI and RI are non‑GAAP financial measures our management uses when making resource deployment decisions and in assessing performance of our segments (For definitions of each of these non-GAAP financial measures and how they are being used by management, see the Glossary).

	Three Months Ended						Favorable (Unfavorable)
	March 31,
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Fee related earnings:
Credit Group	$	77,587		$	66,106		$	11,481		17	%
Private Equity Group	26,987			22,743			4,244			19	%
Real Estate Group	5,105			3,139			1,966			63	%
Operations Management Group	(49,222		)	(45,266		)	(3,956		)	(9	)%
Fee related earnings	$	60,457		$	46,722		13,735			29	%
Performance related earnings:
Credit Group	$	23,276		$	7,401		15,875			214	%
Private Equity Group	(1,168		)	14,496			(15,664		)	NM
Real Estate Group	6,601			6,387			214			3	%
Operations Management Group	2,768			850			1,918			NM
Performance related earnings	$	31,477		$	29,134		2,343			8	%
Economic net income:
Credit Group	$	100,863		$	73,507		27,356			37	%
Private Equity Group	25,819			37,239			(11,420		)	(31	)%
Real Estate Group	11,706			9,526			2,180			23	%
Operations Management Group	(46,454		)	(44,416		)	(2,038		)	(5	)%
Economic net income	$	91,934		$	75,856		16,078			21	%
Realized income:
Credit Group	$	78,857		$	69,945		8,912			13	%
Private Equity Group	27,327			22,345			4,982			22	%
Real Estate Group	13,669			4,588			9,081			198	%
Operations Management Group	(47,780		)	(43,205		)	(4,575		)	(11	)%
Realized income	$	72,073		$	53,673		18,400			34	%

NM - Not Meaningful

69

Reconciliation of Certain Non-GAAP Measures to Consolidated GAAP Financial Measures

Income before provision for income taxes is the GAAP financial measure most comparable to ENI, RI, FRE and PRE.The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to ENI, RI, FRE, and PRE (in thousands):

	For the Three Months Ended   March 31,
	2018			2017
Economic net income
Income (loss) before taxes	$	62,046		$	(190,588	)
Adjustments:
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Equity compensation expenses	21,087			15,089
Acquisition and merger-related expenses	(319		)	255,088
Placement fees and underwriting costs	1,664			3,439
Offering costs	—			660
Other non-cash expense	7			—
Expense of non-controlling interests in consolidated subsidiaries	640			—
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(367		)	(16,323		)
Economic net income	91,934			75,856
Unconsolidated performance income - unrealized	(35,118		)	(49,261		)
Unconsolidated performance related compensation - unrealized	11,009			35,401
Unconsolidated net investment income	4,248			(8,323		)
Realized income	72,073			53,673
Unconsolidated performance income - realized	(23,107		)	(8,805		)
Unconsolidated performance related compensation - realized	14,869			5,301
Unconsolidated net investment income	(3,378		)	(3,447		)
Fee related earnings	$	60,457		$	46,722
Performance related earnings
Economic net income	$	91,934		$	75,856
Less: fee related earnings	(60,457		)	(46,722		)
Performance related earnings	$	31,477		$	29,134

The following table reconciles unconsolidated performance income to our consolidated carried interest allocation and incentive fees reported in accordance with GAAP (in thousands):

	For the Three Months Ended   March 31,
	2018		2017
Unconsolidated performance income - realized	$	23,107	$	8,805
Performance income - realized earned from Consolidated Funds	—		(3,422		)
Performance income - realized	23,107		5,383
Unconsolidated performance income - unrealized	35,118		49,261
Performance income - unrealized earned from Consolidated Funds	—		552
Performance income - unrealized reclass(1)	975		(24		)
Performance income - unrealized	36,093		49,789
Total GAAP carried interest allocation and incentive fees	$	59,200	$	55,172

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations.

70

The following table reconciles unconsolidated other income to our consolidated GAAP other income (in thousands):

	For the Three Months Ended   March 31,
	2018			2017
Unconsolidated net investment income	$	(870	)	$	11,770
Net investment income from Consolidated Funds	6,793			38,422
Performance income - reclass(1)	(975		)	24
Principal investment income	(2,708		)	(13,169		)
Change in value of contingent consideration	—			20,248
Other non-cash expense	(7		)	—
Offering costs	—			(660		)
Other income of non-controlling interests in consolidated subsidiaries	7			—
Total GAAP other income	$	2,240		$	56,635

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations.

71

Results of Operations by Segment

Credit Group

The following table sets forth certain statement of operations data and certain other data of our Credit Group segment for the periods presented.

	Three Months Ended						Favorable (Unfavorable)
	March 31,
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	131,766		$	121,347		$	10,419		9	%
Other fees	5,730			4,503			1,227			27	%
Compensation and benefits	(50,280		)	(51,703		)	1,423			3	%
General, administrative and other expenses	(9,629		)	(8,041		)	(1,588		)	(20	)%
Fee Related Earnings	77,587			66,106			11,481			17	%
Performance income-realized	5,071			8,778			(3,707		)	(42	)%
Performance income-unrealized	16,092			2,936			13,156			NM
Performance related compensation-realized	(3,088		)	(5,285		)	2,197			42	%
Performance related compensation-unrealized	7,176			(1,458		)	8,634			NM
Net performance income	25,251			4,971			20,280			NM
Investment income-realized	771			318			453			142	%
Investment income (loss)-unrealized	(269		)	4,589			(4,858		)	NM
Interest and other investment income (loss)	2,196			(19		)	2,215			NM
Interest expense	(4,673		)	(2,458		)	(2,215		)	(90	)%
Net investment income (loss)	(1,975		)	2,430			(4,405		)	NM
Performance related earnings	23,276			7,401			15,875			214	%
Economic net income	$	100,863		$	73,507		27,356			37	%
Realized income	$	78,857		$	69,945		8,912			13	%

NM - Not meaningful

Accrued carried interest and incentive fee receivable for the Credit Group include the following:

	As of March 31,		As of December 31,
	2018		2017
	(Dollars in thousands)
CLOs	$	—	$	451
CSF	23,793		28,158
ACE II	26,068		24,090
ACE III	55,194		43,595
Other credit funds	51,658		72,210
Total Credit Group	$	156,713	$	168,504

72

Performance income for the Credit Group is composed of the following:

	Three Months Ended March 31, 2018								Three Months Ended March 31, 2017
	Realized		Unrealized			Total			Realized		Unrealized			Total
	(Dollars in thousands)
CLOs	$	45	$	—		$	45		$	203	$	1,195		$	1,398
CSF	—		(4,366		)	(4,366		)	—		(5,295		)	(5,295		)
ACE II	—		1,734			1,734			—		3,210			3,210
ACE III	—		10,767			10,767			—		5,192			5,192
Other credit funds	5,026		7,957			12,983			8,575		(1,366		)	7,209
Total Credit Group	$	5,071	$	16,092		$	21,163		$	8,778	$	2,936		$	11,714

The following tables present the components of the change in performance income - unrealized for the Credit Group:

	Three Months Ended March 31, 2018										Three Months Ended March 31, 2017
	Performance Income - Realized		Increases		Decreases			Performance Income - Unrealized			Performance Income - Realized			Increases		Decreases			Performance Income - Unrealized
	(Dollars in thousands)
CLOs	$	—	$	—	$	—		$	—		$	(203	)	$	1,841	$	(443	)	$	1,195
CSF	—		—		(4,366		)	(4,366		)	—			—		(5,295		)	(5,295		)
ACE II	—		1,734		—			1,734			—			3,210		—			3,210
ACE III	—		10,767		—			10,767			—			5,192		—			5,192
Other credit funds	—		9,430		(1,473		)	7,957			(8,575		)	7,626		(417		)	(1,366		)
Total Credit Group	$	—	$	21,931	$	(5,839	)	$	16,092		$	(8,778	)	$	17,869	$	(6,155	)	$	2,936

73

Credit Group—Three Months Ended March 31, 2018Compared to Three Months Ended March 31, 2017

Fee Related Earnings:

Fee related earnings increased by $11.5 million, or 17%, to $77.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Fee related earnings were impacted by fluctuations of the following components:

Management Fees. Total management fees increased by $10.4 million, or 9%, to $131.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Additional invested capital into existing funds increased management fees by $14.2 million from the comparable period. The formation of 24 new funds with AUM of $9.7 billion subsequent to March 31, 2017 increased management fees by $6.7 million from the comparable period. These increases were offset by the liquidation of 14 funds with AUM of $5.6 billion subsequent to March 31, 2017 decreasing management fees by $5.6 million from the comparable period. Also offsetting the increase in management fees was a $4.8 million decrease in ARCC Part I Fees primarily due to the $10 million quarterly ARCC Part I Fee waiver that commenced in the second quarter of 2017. The impact of the fee waiver was offset by ARCC recognizing increased investment income from growth in the size of its portfolio combined with higher yields from recent increases in LIBOR as well as an increase in capital structuring fees from a greater number of new investment commitments.

The effective management fee rate decreased from 1.09% for the three months ended March 31, 2017 to 1.03% for the three months ended March 31, 2018. ARCC Part I Fees contributed 0.22% towards the total effective management fee rate of the Credit Group for the three months ended March 31, 2018, compared to 0.30% for the three months ended March 31, 2017. The decrease in the effective management fee rate was primarily due to the impact of the ARCC Part I Fee waiver, offset partially by new direct lending funds with higher effective fee rates.

Other Fees. Other fees increased by $1.2 million, or 27%, to $5.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. This increase was primarily driven by transaction fees generated from a growing volume of loans funded from certain direct lending funds.

Compensation and Benefits.  Compensation and benefits expenses decreased by $1.4 million, or 3%, to $50.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease primarily resulted from lower compensation expenses related to ARCC Part I Fees for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Compensation and benefits expenses represented 38.2% of management fees for the three months ended March 31, 2018 compared to 42.6% for the three months ended March 31, 2017.

General, Administrative and Other Expenses.  General, administrative and other expenses increased by $1.6 million, or 20%, to $9.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily driven by an increase in operating expenses from a joint venture distribution platform for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The platform raises capital for registered investment companies through independent brokerage networks.

Performance Related Earnings:

Performance related earnings increased by $15.9 million, or 214%, to $23.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Performance related earnings were impacted by fluctuations of the following components:

Net Performance Income. Net performance income includes realized and unrealized performance income, net of realized and unrealized performance related compensation. The impact of reversals of previously recognized performance income and the corresponding performance related compensation expense is reflected as a reduction in unrealized performance income and unrealized performance related compensation.  

Net performance income increased by $20.3 million to $25.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. At March 31, 2018, we evaluated the unrealized performance related compensation payable balance that was recorded at December 31, 2017, and it was determined that $13.7 million of that liability was no longer probable of payment based on the terms of the payment arrangement as payment is not required until revenue is realized. Accordingly, we reversed $13.7 million of unrealized performance related compensation expense during the three months ended March 31, 2018. The remaining portion of the increase was attributable to certain direct lending funds, which generated returns

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in excess of their hurdle rates on an increased capital base for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Net Investment Income (Loss).  Net investment income (loss)decreased by $4.4 million to a $2.0 million net investment loss for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease is primarily attributable to unrealized market depreciation of $1.6 million on investments in our syndicated loan funds for the three months ended March 31, 2018 compared to unrealized market appreciation of $3.1 million for the same funds during the same three month period in 2017.

Realized Income:

Realized income increased by $8.9 million, or 13%, to $78.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily attributable to an increase in FRE of $11.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, offset by decreases in net realized investment and other income of $1.1 million and in net realized performance income of $1.5 million.

Economic Net Income:

Economic net income is composed of fee related earnings and performance related earnings. Economic net income increased by $27.4 million, or 37%, to $100.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 as a result of the fluctuations described above.

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Credit Group—Assets Under Management

The tables below provide the period‑to‑period rollforwards of AUM for the Credit Group for the three months ended March 31, 2018 and 2017 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Structured Credit			U.S. Direct Lending			E.U. Direct Lending			Total Credit Group
Balance at 12/31/2017	$	16,530		$	4,630		$	3,333		$	4,791		$	30,640		$	11,808		$	71,732
Net new par/ equity commitments	103			144			3			60			2,570			218			3,098
Net new debt commitments	1,117			—			—			—			1,392			246			2,755
Distributions	(409		)	(158		)	(176		)	(3		)	(468		)	(123		)	(1,337		)
Change in fund value	72			(34		)	1			57			426			540			1,062
Balance at 3/31/2018	$	17,413		$	4,582		$	3,161		$	4,905		$	34,560		$	12,689		$	77,310
Average AUM(1)	$	16,972		$	4,606		$	3,247		$	4,848		$	32,600		$	12,249		$	74,522

	Syndicated Loans			High Yield			Credit Opportunities			Structured Credit			U.S. Direct Lending			E.U. Direct Lending			Total Credit Group
Balance at 12/31/2016	$	17,260		$	4,978		$	3,304		$	4,254		$	21,110		$	9,560		$	60,466
Acquisitions	—			—			—			—			3,605			—			3,605
Net new par/ equity commitments	54			57			7			—			1,939			214			2,271
Net new debt commitments	409			—			—			—			60			—			469
Distributions	(1,016		)	(425		)	(14		)	(114		)	(465		)	(175		)	(2,209		)
Change in fund value	54			83			69			120			44			259			629
Balance at 3/31/2017	$	16,761		$	4,693		$	3,366		$	4,260		$	26,293		$	9,858		$	65,231
Average AUM(1)	$	17,011		$	4,836		$	3,335		$	4,257		$	23,702		$	9,709		$	62,850

(1) Represents the quarterly average of beginning and ending balances.

Credit Group—Fee Paying AUM

The tables below provide the period‑to‑period rollforwards of fee paying AUM for the Credit Group for the three months ended March 31, 2018 and 2017 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Structured Credit			U.S. Direct Lending			E.U. Direct Lending			Total Credit Group
FPAUM Balance at 12/31/2017	$	15,251		$	4,629		$	2,809		$	3,434		$	16,869		$	6,458		$	49,450
Commitments	703			132			3			60			30			—			928
Subscriptions/deployment/increase in leverage	—			12			—			89			1,239			624			1,964
Redemptions/distributions/decrease in leverage	(403		)	(158		)	(192		)	(101		)	(246		)	(126		)	(1,226		)
Change in fund value	44			(34		)	1			33			266			120			430
Change in fee basis	(3		)	(3		)	—			—			—			—			(6		)
FPAUM Balance at 3/31/2018	$	15,592		$	4,578		$	2,621		$	3,515		$	18,158		$	7,076		$	51,540
Average FPAUM(1)	$	15,422		$	4,604		$	2,715		$	3,475		$	17,514		$	6,767		$	50,497

	Syndicated Loans			High Yield			Credit Opportunities			Structured Credit			U.S. Direct Lending			E.U. Direct Lending			Total Credit Group
FPAUM Balance at 12/31/2016	$	15,998		$	4,978		$	2,705		$	3,128		$	11,292		$	4,608		$	42,709
Acquisitions	—			—			—			—			2,789			—			2,789
Commitments	454			47			3			—			27			—			531
Subscriptions/deployment/increase in leverage	—			10			24			35			374			573			1,016
Redemptions/distributions/decrease in leverage	(926		)	(425		)	(14		)	(91		)	(312		)	(51		)	(1,819		)
Change in fund value	38			83			66			104			103			76			470
FPAUM Balance at 3/31/2017	$	15,564		$	4,693		$	2,784		$	3,176		$	14,273		$	5,206		$	45,696
Average FPAUM(1)	$	15,781		$	4,836		$	2,745		$	3,152		$	12,783		$	4,907		$	44,204

(1) Represents the quarterly average of beginning and ending balances.

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The charts below present FPAUM for the Credit Group by its fee basis as of March 31, 2018 and 2017 (in millions):

FPAUM: $51,540 FPAUM: $45,696

The components of our AUM, including the portion that is FPAUM, for the Credit Group are presented below as of March 31, 2018 and 2017 (in millions):

AUM: $77,310 AUM: $65,231

(1) Includes $6.2 billion and $6.3 billion of AUM of funds for which we indirectly earn management fees as of March 31, 2018 and 2017, respectively.

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Credit Group—Fund Performance Metrics as of March 31, 2018

The Credit Group managed 145 funds as of March 31, 2018 across the liquid and illiquid credit strategies. ARCC contributed approximately 56% of the Credit Group’s total management fees for the three months ended March 31, 2018. In addition to ARCC, four significant funds contributed approximately 8% of the Credit Group’s management fees for the three months ended March 31, 2018. Our significant non-drawdown funds are ARCC; one sub-advised fund; and one separately managed account over which we exercise sole investment discretion. Our significant drawdown funds are Ares Capital Europe II, L.P. (“ACE II”), a 2013 vintage commingled fund; and Ares Capital Europe III, L.P. (“ACE III”), a 2015 vintage commingled fund, both of which focus on direct lending to European middle market companies. We do not present fund performance metrics for significant funds with less than two years of historical information, except for those significant funds that pay management fees on invested capital, in which case performance is shown at the earlier of (i) the one year anniversary of the fund's first investment or (ii) such time the fund is 50% or more invested.

The following table presents the performance data for our significant funds in the Credit Group that are not drawdown funds:

		As of March 31, 2018
				Returns(%)(1)
	Year of	AUM		Current Quarter				Year-To-Date				Since Inception(2)		Primary Investment Strategy
Fund	Inception	(in millions)		Gross		Net		Gross		Net		Gross	Net
ARCC(3)	2004	$	14,982	N/A		3.4		N/A		3.4		N/A	11.8	U.S. Direct Lending
Sub-advised Client A(4)	2007	719		(1.0	)	(1.1	)	(1.0	)	(1.1	)	7.7	7.3	High Yield
Separately Managed Account Client B(4)	2016	704		(1.3	)	(1.4	)	(1.3	)	(1.4	)	5.1	4.7	High Yield

(1) Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses.

(2) Since inception returns are annualized.

(3) Net returns are calculated using the fund's NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its financial statements filed with the SEC, which are not part of this report.

(4) Gross returns do not reflect the deduction of management fees or any other expenses. Net returns are calculated by subtracting the applicable management fee from the gross returns on a monthly basis.

The following table presents the performance data of our significant drawdown funds:

				As of March 31, 2018 (Dollars in millions)
	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
ACE II(7)	2013	$	1,542	$	1,216	$	985	$	490	$	794	$	1,284	1.4x	1.3x	10.3	7.6	E.U. Direct Lending
ACE III(8)	2015	5,355		2,822		2,232		136		2,413		2,549		1.2x	1.1x	17.4	12.9	E.U. Direct Lending

(1) Realized proceeds represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner.

(2) Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.

(3) The gross multiple of invested capital (“MoIC”) is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance income. The gross MoIC is before giving effect to management fees, performance income as applicable and other expenses.

(4) The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance income. The net MoIC is after giving effect to management fees, performance income as applicable and other expenses.

(5) The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance income. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. Gross IRRs are calculated before giving effect to management fees, performance income as applicable, and other expenses.

(6) The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and if applicable, exclude interests attributable

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to the non-fee paying limited partners and/or the general partner who does not pay management fees or performance income. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, performance income as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7) ACE II is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and gross and net MoIC presented in the chart are for the U.S. dollar denominated feeder fund as that is the larger of the two feeders. The gross and net IRR for the Euro denominated feeder fund are 12.5% and 9.4%, respectively. The gross and net MoIC for the Euro denominated feeder fund are 1.5x and 1.3x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE II are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate. The variance between the gross and net MoICs and the net IRRs for the U.S. dollar denominated and Euro denominated feeder funds is driven by the U.S. GAAP mark-to-market reporting of the foreign currency hedging program in the U.S. dollar denominated feeder fund. The feeder fund will be holding the foreign currency hedges until maturity, and therefore is expected to ultimately recognize a gain while mitigating the currency risk associated with the initial principal investments.

(8) ACE III is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net MoIC presented in the chart are for the Euro denominated feeder fund as that is the larger of the two feeders. The gross and net IRR for the U.S. dollar denominated feeder fund are 17.2% and 12.7%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.2x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE III are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

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Private Equity Group

The following table sets forth certain statement of operations data and certain other data of our Private Equity Group segment for the periods presented.

	Three Months Ended						Favorable (Unfavorable)
	March 31,
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Management fees	$	49,887		$	39,819		$	10,068		25	%
Other fees	340			340			—			—	%
Compensation and benefits	(19,199		)	(13,218		)	(5,981		)	(45	)%
General, administrative and other expenses	(4,041		)	(4,198		)	157			4	%
Fee Related Earnings	26,987			22,743			4,244			19	%
Performance income-realized	4,398			—			4,398			NM
Performance income-unrealized	21,066			32,237			(11,171		)	(35	)%
Performance related compensation-realized	(3,560		)	—			(3,560		)	NM
Performance related compensation-unrealized	(18,694		)	(25,505		)	6,811			27	%
Net performance income	3,210			6,732			(3,522		)	(52	)%
Investment income-realized	671			579			92			16	%
Investment income (loss)-unrealized	(4,150		)	8,546			(12,696		)	NM
Interest and other investment income	329			152			177			116	%
Interest expense	(1,228		)	(1,513		)	285			19	%
Net investment income (loss)	(4,378		)	7,764			(12,142		)	NM
Performance related earnings	(1,168		)	14,496			(15,664		)	NM
Economic net income	$	25,819		$	37,239		(11,420		)	(31	)%
Realized income	$	27,327		$	22,345		4,982			22	%

NM - Not meaningful

Accrued carried interest for the Private Equity Group includes the following:

	As of March 31,		As of December 31,
	2018		2017
	(Dollars in thousands)
ACOF III	$	601,228	$	570,578
ACOF IV	225,782		217,354
EIF V	—		16,215
Other funds	9,463		11,260
Total Private Equity Group	$	836,473	$	815,407

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Performance income for the Private Equity Group includes the following:

	Three Months Ended March 31, 2018								Three Months Ended March 31, 2017
	Realized		Unrealized			Total			Realized		Unrealized			Total
	(Dollars in thousands)
ACOF III	$	2,794	$	30,650		$	33,444		$	—	$	(22,767	)	$	(22,767	)
ACOF IV	1,604		8,428			10,032			—		54,823			54,823
ACOF V	—		—			—			—		5,719			5,719
EIF V	—		(16,215		)	(16,215		)	—		38			38
Other funds	—		(1,797		)	(1,797		)	—		(5,576		)	(5,576		)
Total Private Equity Group	$	4,398	$	21,066		$	25,464		$	—	$	32,237		$	32,237

The following tables present the components of the change in performance income - unrealized for the Private Equity Group:

	Three Months Ended March 31, 2018											Three Months Ended March 31, 2017
	Performance Income - Realized			Increases		Decreases			Performance Income - Unrealized			Performance Income - Realized		Increases		Decreases			Performance Income - Unrealized
	(Dollars in thousands)
ACOF III	$	(2,794	)	$	33,444	$	—		$	30,650		$	—	$	—	$	(22,767	)	$	(22,767	)
ACOF IV	(1,604		)	10,032		—			8,428			—		54,823		—			54,823
ACOF V	—			—		—			—			—		5,719		—			5,719
EIF V	—			—		(16,215		)	(16,215		)	—		38		—			38
Other funds	—			1,099		(2,896		)	(1,797		)	—		1,009		(6,585		)	(5,576		)
Total Private Equity Group	$	(4,398	)	$	44,575	$	(19,111	)	$	21,066		$	—	$	61,589	$	(29,352	)	$	32,237

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Private Equity Group—Three Months Ended March 31, 2018Compared to Three Months Ended March 31, 2017

Fee Related Earnings:

Fee related earnings increased by $4.2 million, or 19%, to $27.0 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Fee related earnings were impacted by fluctuations of the following components:

Management Fees.  Total management fees increased by $10.1 million, or 25%, to $49.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Management fees from Ares Corporate Opportunities Fund V, L.P. (“ACOF V”), which began generating fees in March 2017, increased by $18.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Conversely, management fees from ACOF IV decreased by $8.1 million from the prior year period due to a reduced fee rate and change in fee basis in connection with the commencement of ACOF V's investment activities.

The effective management fee rate, excluding the effect of one-time catch-up fees, decreased from 1.22% for the three months ended March 31, 2017 to 1.20% for the three months ended March 31, 2018. The decrease in the effective fee rate was primarily the result of a reduced fee rate at ACOF IV.

Compensation and Benefits.  Compensation and benefits expenses increased by $6.0 million, or 45%, to $19.2 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was primarily due to an increase in salary and benefits expense as a result of additional headcount needed to support an increasing asset base and pool of investments, as well as merit based increases. Compensation and benefits expense represented 38.5% of management fees for the three months ended March 31, 2018 compared to 33.2% for the three months ended March 31, 2017.

Performance Related Earnings:

Performance related earnings decreased by $15.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Performance related earnings were impacted by fluctuations of the following components:

Net Performance Income. Net performance income includes realized and unrealized performance income, net of realized and unrealized performance related compensation. The impact of reversals of previously recognized performance income and the corresponding performance related compensation expense is reflected as a reduction in unrealized performance income and unrealized performance related compensation.

Net performance income decreased by $3.5 million, or 52%, to $3.2 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was primarily driven by a $9.0 million decrease of net performance income attributable to ACOF IV, resulting from lower market appreciation of certain portfolio companies from the comparable period. Additionally, net performance income from EIF V decreased by $4.9 million from the comparable period due to a reduction in the valuation of one of the fund's assets. Offsetting these decreases was an $11.2 million increase in net performance income attributable to ACOF III from the comparable period due to continued market appreciation in one of its publicly traded retail portfolio companies.

Net Investment Income (loss).  Net investment income (loss)decreased by $12.1 million to a $4.4 million net investment loss for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. For the three months ended March 31, 2018, the decrease was primarily composed of unrealized depreciation of $4.5 million in our EIF V investment as a result of a decrease in valuation of one of the fund's assets and a $3.3 million decrease in our investment in an Asian corporate private equity fund primarily attributable to the lower market value of its portfolio investment in a publicly traded consumer products company. These decreases were offset by unrealized appreciation in our investment in ACOF III of $5.2 million primarily due to continued market appreciation in one of its publicly traded retail portfolio companies. In comparison, for the three months ended March 31, 2017, the increase in net investment income was primarily driven by unrealized market appreciation of $8.1 million on our investment in an Asian corporate private equity fund.

Realized Income:

Realized income increased by $5.0 million, or 22% , to $27.3 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was driven by an increase in FRE of $4.2 million and in net realized performance income of $0.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

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Economic Net Income:

Economic net income is composed of fee related earnings and performance related earnings. Economic net income decreased by $11.4 million to $25.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, as a result of the fluctuations described above.

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Private Equity Group—Assets Under Management

The tables below provide the period‑to‑period rollforwards of AUM for the Private Equity Group for the three months ended March 31, 2018 and 2017 (in millions):

	Corporate Private Equity			Private Equity - EIF			Special Situations			Total Private Equity Group
Balance at 12/31/2017	$	18,557		$	4,423		$	1,550		$	24,530
Net new equity commitments	13			—			—			13
Distributions	(24		)	(218		)	(40		)	(282		)
Change in fund value	182			(144		)	4			42
Balance at 3/31/2018	$	18,728		$	4,061		$	1,514		$	24,303
Average AUM(1)	$	18,643		$	4,242		$	1,532		$	24,417

	Corporate Private Equity			Private Equity - EIF			Special Situations			Total Private Equity Group
Balance at 12/31/2016	$	18,162		$	5,143		$	1,736		$	25,041
Net new equity commitments	26			16			—			42
Distributions	(18		)	(578		)	(48		)	(644		)
Change in fund value	214			(7		)	7			214
Balance at 3/31/2017	$	18,384		$	4,574		$	1,695		$	24,653
Average AUM(1)	$	18,273		$	4,859		$	1,716		$	24,848

(1) Represents the quarterly average of beginning and ending balances.

Private Equity Group—Fee Paying AUM

The tables below provide the period‑to‑period rollforwards of fee paying AUM for the Private Equity Group for the three months ended March 31, 2018 and 2017 (in millions):

	Corporate Private Equity			Private Equity - EIF			Special Situations			Total Private Equity Group
FPAUM Balance at 12/31/2017	$	12,073		$	4,019		$	766		$	16,858
Commitments	13			—			—			13
Subscriptions/deployment/increase in leverage	29			1			174			204
Redemptions/distributions/decrease in leverage	(14		)	(386		)	(27		)	(427		)
Change in fund value	3			—			12			15
FPAUM Balance at 3/31/2018	$	12,104		$	3,634		$	925		$	16,663
Average FPAUM(1)	$	12,089		$	3,827		$	846		$	16,762

	Corporate Private Equity			Private Equity - EIF			Special Situations			Total Private Equity Group
FPAUM Balance at 12/31/2016	$	6,454		$	4,232		$	628		$	11,314
Commitments	7,625			16			—			7,641
Subscriptions/deployment/increase in leverage	179			160			41			380
Redemptions/distributions/decrease in leverage	(11		)	(307		)	(29		)	(347		)
Change in fund value	—			(236		)	(43		)	(279		)
Change in fee basis	(1,527		)	—			—			(1,527		)
FPAUM Balance at 3/31/2017	$	12,720		$	3,865		$	597		$	17,182
Average FPAUM(1)	$	9,587		$	4,049		$	613		$	14,249

(1) Represents the quarterly average of beginning and ending balances.

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The charts below present FPAUM for the Private Equity Group by its fee basis as of March 31, 2018 and 2017 (in millions):

FPAUM: $16,663 FPAUM: $17,182

The components of our AUM, including the portion that is FPAUM, for the Private Equity Group are presented below as of March 31, 2018 and 2017 (in millions):

AUM: $24,303 AUM: $24,653

85

Private Equity Group—Fund Performance Metrics as of March 31, 2018

The Private Equity Group managed 22 commingled funds and related co-investment vehicles as of March 31, 2018. ACOF III, ACOF IV, ACOF V, U.S. Power Fund III (“USPF III”), U.S. Power Fund IV (“USPF IV”) and EIF V, each considered a significant fund, combined for approximately 91% of the Private Equity Group’s management fees for the three months ended March 31, 2018. Our Corporate Private Equity funds focus on majority or shared-control investments, principally in under-capitalized companies in North America, Europe and Asia. ACOF III and ACOF IV are in harvest mode, meaning they are generally not seeking to deploy capital into new investment opportunities, while ACOF V is in deployment mode. Each of our U.S. power and energy infrastructure funds focuses on generating long-term, stable cash-flowing investments in the power generation, transmission and midstream energy sector. USPF III and USPF IV are in harvest mode, while EIF V is in deployment mode. We do not present fund performance metrics for significant funds with less than two years of historical information, except for those significant funds that pay management fees on invested capital, in which case performance is shown at the earlier of (i) the one year anniversary of the fund's first investment or (ii) such time the fund is 50% or more invested.

The following table presents the performance data for our significant funds in the Private Equity Group, all of which are drawdown funds:

				As of March 31, 2018 (Dollars in millions)
	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
USPF III	2007	$	719	$	1,350	$	1,808	$	1,851	$	709	$	2,560	1.4x	1.4x	7.5	4.8	U.S. Power and Energy Infrastructure
ACOF III	2008	4,713		3,510		3,867		6,216		4,369		10,585		2.7x	2.3x	31.2	23.3	Corporate Private Equity
USPF IV	2010	1,797		1,688		1,847		842		1,612		2,454		1.3x	1.2x	9.7	6.0	U.S. Power and Energy Infrastructure
ACOF IV	2012	5,527		4,700		4,004		2,502		4,539		7,041		1.8x	1.5x	22.7	15.5	Corporate Private Equity
EIF V	2015	785		802		332		77		297		374		1.1x	0.9x	NA	NA	U.S. Power and Energy Infrastructure
ACOF V	2017	7,753		7,850		2,445		12		2,502		2,514		1.0x	1.0x	NA	NA	Corporate Private Equity

(1) Realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments.

(2) Unrealized value represents the fair market value of remaining investments. There can be no assurance that unrealized investments will be realized at the valuations indicated.

(3) The gross MoIC is calculated at the investment-level and is based on the interests of all partners. The gross MoIC is before giving effect to management fees, performance fees as applicable and other expenses.

(4) The net MoIC for the U.S. power and energy infrastructure funds is calculated at the fund-level. The net MoIC for the corporate private equity funds is calculated at the investment-level. For all funds, the net MoIC is based on the interests of the fee-paying limited partnersand if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or performance income. The net MoIC is after giving effect to management fees, performance income as applicable and other expenses.

(5) The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. Cash flows used in the gross IRR calculation are assumed to occur at month-end. The gross IRRs are calculated before giving effect to management fees, performance income as applicable, and other expenses.

(6) The net IRR for the U.S. power and energy infrastructure funds is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRR for the corporate private equity funds is an annualized since inception net internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. Cash flows used in the net IRR calculations are assumed to occur at month end. For all funds, the net IRRs are calculated after giving effect to management fees, performance income as applicable, and other expenses and exclude commitments by the general partner and Schedule I investors who do not pay either management fees or carried interest. Including the timing on contribution and distributions to and from the corporate private equity funds, net investor IRRs since inception for ACOF III is 22.6% and for ACOF IV is 14.6%.

86

Real Estate Group

The following table sets forth certain statement of operations data and certain other data of our Real Estate Group segment for the periods presented.

	Three Months Ended						Favorable (Unfavorable)
	March 31,
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Management fees	$	15,173		$	15,615		$	(442	)	(3	)%
Other fees	3			(9		)	12			NM
Compensation and benefits	(7,639		)	(9,736		)	2,097			22	%
General, administrative and other expenses	(2,432		)	(2,731		)	299			11	%
Fee Related Earnings	5,105			3,139			1,966			63	%
Performance income-realized	13,638			27			13,611			NM
Performance income-unrealized	(2,040		)	14,088			(16,128		)	NM
Performance related compensation-realized	(8,221		)	(16		)	(8,205		)	NM
Performance related compensation-unrealized	509			(8,438		)	8,947			NM
Net performance income	3,886			5,661			(1,775		)	(31	)%
Investment income-realized	3,350			1,783			1,567			88	%
Investment loss-unrealized	(1,232		)	(444		)	(788		)	(177	)%
Interest and other investment income (loss)	1,017			(181		)	1,198			NM
Interest expense	(420		)	(432		)	12			3	%
Net investment income	2,715			726			1,989			274	%
Performance related earnings	6,601			6,387			214			3	%
Economic net income	$	11,706		$	9,526		2,180			23	%
Realized income	$	13,669		$	4,588		9,081			198	%

NM - Not Meaningful

Accrued carried interest and incentive fee receivable for the Real Estate Group include the following:

	As of March 31,		As of December 31,
	2018		2017
	(Dollars in thousands)
US VIII	$	37,269	$	32,940
EF IV	40,893		50,801
Other real estate funds	42,087		37,528
Subtotal	120,249		121,269
Other fee generating funds(1)	14,387		15,362
Total Real Estate Group	$	134,636	$	136,631

(1) Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.

87

Performance income for the Real Estate Group includes the following:

	Three Months Ended March 31, 2018								Three Months Ended March 31, 2017
	Realized		Unrealized			Total			Realized		Unrealized		Total
	(Dollars in thousands)
US VIII	$	—	$	4,329		$	4,329		$	—	$	4,060	$	4,060
EF IV	12,396		(9,907		)	2,489			—		9,091		9,091
Other real estate funds	1,242		4,513			5,755			27		913		940
Subtotal	13,638		(1,065		)	12,573			27		14,064		14,091
Other fee generating funds(1)	—		(975		)	(975		)	—		24		24
Total Real Estate Group	$	13,638	$	(2,040	)	$	11,598		$	27	$	14,088	$	14,115

(1) Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.

The following tables present the components of the change in performance income - unrealized for the Real Estate Group:

	Three Months Ended March 31, 2018											Three Months Ended March 31, 2017
	Performance Income - Realized			Increases		Decreases			Performance Income - Unrealized			Performance Income - Realized			Increases		Decreases			Performance Income - Unrealized
	(Dollars in thousands)
US VIII	$	—		$	4,329	$	—		$	4,329		$	—		$	4,060	$	—		$	4,060
EF IV	(12,396		)	2,489		—			(9,907		)	—			9,091		—			9,091
Other real estate funds	(1,242		)	6,828		(1,073		)	4,513			(27		)	1,973		(1,033		)	913
Subtotal	(13,638		)	13,646		(1,073		)	(1,065		)	(27		)	15,124		(1,033		)	14,064
Other fee generating funds(1)	—			210		(1,185		)	(975		)	—			375		(351		)	24
Total Real Estate Group	$	(13,638	)	$	13,856	$	(2,258	)	$	(2,040	)	$	(27	)	$	15,499	$	(1,384	)	$	14,088

(1) Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.

88

Real Estate Group—Three Months Ended March 31, 2018Compared to Three Months Ended March 31, 2017

Fee Related Earnings:

Fee related earnings increased by $2.0 million, or 63%, to $5.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Fee related earnings were impacted by fluctuations of the following components:

Management Fees.  Total management fees decreased by $0.4 million, or 3%, to $15.2 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was largely driven by the liquidation of one of our European real estate equity funds combined with the winding down of certain other real estate equity funds nearing the end of their fund terms. The decrease was offset by $1.2 million of management fees earned from a recently launched U.S. real estate equity fund that began generating fees in the second quarter of 2017.

The effective management fee rate, excluding the effect of one-time catch-up fees, decreased from 0.97% for the three months ended March 31, 2017, to 0.94% for the three months ended March 31, 2018.

Compensation and Benefits.  Compensation and benefits expenses decreased by $2.1 million, or 22%, to $7.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was primarily driven by a decrease in headcount and incentive based compensation. Compensation and benefits expenses represented 50.3% of management fees for the three months ended March 31, 2018 compared to 62.4% for the three months ended March 31, 2017.

Performance Related Earnings:

Performance related earnings increased by $0.2 million, or 3%, to $6.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Performance related earnings were impacted by fluctuations of the following components:

Net Performance Income.  Net performance income includes realized and unrealized performance income, net of realized and unrealized performance related compensation. The impact of reversals of previously recognized performance income and the corresponding performance related compensation expense is reflected as a reduction in unrealized performance income and performance related compensation.

Net performance income decreased by $1.8 million, or 31%, to $3.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was primarily driven by a $1.6 million decrease in net performance income from European real estate equity funds, as a result of greater market appreciation of certain investments of Ares European Real Estate Fund IV (“EF IV”) in the the prior period compared to the current period.

Net Investment Income.  Net investment incomeincreased by $2.0 million, or 274%, to $2.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was attributable to the following changes: (i) $0.9 million increase in unrealized gains in our investment in Ares European Property Enhancement Program II, L.P. (“EPEP II”) driven by appreciation of property values being greater in the current period than in the prior period; and (ii) $1.1 million increase in gains recognized from the revaluation of certain assets and liabilities denominated in foreign currencies as the Euro and pound sterling continued to strengthened against the U.S. dollar during the three months ended March 31, 2018.

Realized Income:

Realized incomeincreased by $9.1 million, or 198%, to $13.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was driven by an increase in FRE of $2.0 million, an increase in net realized performance income of $5.4 million, primarily a result of realizations from EF IV, and an increase in realized investment income of $1.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Economic Net Income:

Economic net income is composed of fee related earnings and performance related earnings. Economic net income increased by $2.2 million, or 23%, to $11.7 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, as a result of the fluctuations described above.

89

Real Estate Group—Assets Under Management

The tables below provide the period‑to‑period rollforwards of AUM for the Real Estate Group for the three months ended March 31, 2018 and 2017 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - E.U.			Real Estate Debt			Total Real Estate Group
Balance at 12/31/2017	$	4,578		$	2,704		$	2,947		$	10,229
Net new equity commitments	34			768			55			857
Distributions	(134		)	(149		)	(8		)	(291		)
Change in fund value	27			65			9			101
Balance at 3/31/2018	$	4,505		$	3,388		$	3,003		$	10,896
Average AUM(1)	$	4,542		$	3,046		$	2,975		$	10,563

	Real Estate Equity - U.S.			Real Estate Equity - E.U.			Real Estate Debt			Total Real Estate Group
Balance at 12/31/2016	$	4,106		$	3,100		$	2,546		$	9,752
Net new equity commitments	19			—			—			19
Net new debt commitments	—			—			273			273
Distributions	(19		)	(118		)	(71		)	(208		)
Change in fund value	30			68			7			105
Balance at 3/31/2017	$	4,136		$	3,050		$	2,755		$	9,941
Average AUM(1)	$	4,121		$	3,075		$	2,651		$	9,847

(1) Represents the quarterly average of beginning and ending balances.

Real Estate Group—Fee Paying AUM

The tables below provide the period‑to‑period rollforwards of fee paying AUM for the Real Estate Group for the three months ended March 31, 2018 and 2017 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - E.U.			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 12/31/2017	$	3,062		$	2,064		$	1,063		$	6,189
Commitments	29			737			—			766
Subscriptions/deployment/increase in leverage	38			98			—			136
Redemptions/distributions/decrease in leverage	(80		)	(43		)	(59		)	(182		)
Change in fund value	(3		)	39			10			46
Change in fee basis	(38		)	(166		)	—			(204		)
FPAUM Balance at 3/31/2018	$	3,008		$	2,729		$	1,014		$	6,751
Average FPAUM(1)	$	3,035		$	2,397		$	1,039		$	6,471

	Real Estate Equity - U.S.			Real Estate Equity - E.U.			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 12/31/2016	$	2,891		$	2,531		$	1,118		$	6,540
Subscriptions/deployment/increase in leverage	53			—			2			55
Redemptions/distributions/decrease in leverage	(137		)	(20		)	(18		)	(175		)
Change in fund value	(1		)	(27		)	13			(15		)
Change in fee basis	(48		)	—			—			(48		)
FPAUM Balance at 3/31/2017	$	2,758		$	2,484		$	1,115		$	6,357
Average FPAUM(1)	$	2,825		$	2,508		$	1,117		$	6,450

(1) Represents the quarterly average of beginning and ending balances.

90

The charts below present FPAUM for the Real Estate Group by its fee basis as of March 31, 2018 and 2017 (in millions):

FPAUM: $6,751 FPAUM: $6,357

(1)Market value/other includes ACRE fee paying AUM, which is based on ACRE's stockholders' equity.

The components of our AUM, including the portion that is FPAUM, for the Real Estate Group are presented below as of March 31, 2018 and 2017 (in millions):

AUM: $10,896 AUM: $9,941

91

Real Estate Group—Fund Performance Metrics as of March 31, 2018

The Real Estate Group managed 41 funds in real estate debt and in real estate equity as of March 31, 2018. Two funds in our Real Estate Group, each considered a significant fund, combined for approximately 32% of the Real Estate Group’s management fees for the three months ended March 31, 2018: EF IV, a commingled fund focused on real estate assets located in Europe, primarily in the United Kingdom, France and Germany, and EPEP II, a commingled fund focused on Europe.

The following table presents the performance data for our significant funds in the Real Estate Group, each of which are drawdown funds:

				As of March 31, 2018 (Dollars in millions)
	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
EF IV(7)	2014	$	1,026	$	1,302	$	1,087	$	465	$	1,072	$	1,537	1.4x	1.2x	20.2	12.7	E.U. Real Estate Equity
EPEP II(8)	2015	731		747		366		150		309		459		1.3x	1.2x	23.5	23.4	E.U. Real Estate Equity

(1) Realized proceeds include distributions of operating income, sales and financing proceeds received.

(2) Unrealized value represents the fair market value of remaining investments. There can be no assurance that unrealized investments will be realized at the valuations indicated.

(3) The gross MoIC is calculated at the investment level and is based on the interests of all partners. The gross MoIC for all funds is before giving effect to management fees, performance income as applicable and other expenses.

(4) The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying partners and, if applicable, excludes interests attributable to the non fee-paying partners and/or the general partner who does not pay management fees or performance income or has such fees rebated outside of the fund. The net MoIC is after giving effect to management fees, performance income as applicable and other expenses.

(5) The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. Cash flows used in the gross IRR calculation are assumed to occur at quarter-end. The gross IRRs are calculated before giving effect to management fees, performance income as applicable, and other expenses.

(6) The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying partners and, if applicable, excludes interests attributable to the non fee-paying partners and/or the general partner who does not pay management fees or performance income or has such fees rebated outside of the fund. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, performance income as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7) EF IV is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net MoIC and gross and net IRRs presented in the chart are for the U.S. dollar denominated parallel fund as that is the larger of the two funds. The gross and net IRRs for the Euro denominated parallel fund are 20.5% and 14.3%, respectively. The gross and net MoIC for the Euro denominated parallel fund are 1.4x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing.  All other values for EF IV are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(8) EPEP II is made up of dual currency investors and Euro currency investors. The gross and net MoIC presented in the chart are for dual currency investors as dual currency investors represent the largest group of investors in the fund. Multiples exclude foreign currency gains and losses since dual currency investors fund capital contributions and receive distributions in local deal currency (GBP or EUR) and therefore, do not realize foreign currency gains or losses. The gross and net IRRs for the euro currency investors, which include foreign currency gains and losses, are 23.1% and 22.8%, respectively. The gross and net MoIC for the Euro currency investors, which include foreign currency gains and losses, are 1.3x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing. All other values for EPEP II are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

92

Operations Management Group

The following table sets forth certain statement of operations data and certain other data of the OMG on a standalone basis for the periods presented.

	Three Months Ended						Favorable (Unfavorable)
	March 31,
	2018			2017			$ Change			% Change
	(Dollars in thousands)
Compensation and benefits	$	(30,606	)	$	(25,953	)	$	(4,653	)	(18	)%
General, administrative and other expenses	(18,616		)	(19,313		)	697			4	%
Fee Related Earnings	(49,222		)	(45,266		)	(3,956		)	(9	)%
Investment income-realized	838			1,859			(1,021		)	(55	)%
Investment income (loss)-unrealized	1,231			(1,407		)	2,638			NM
Interest and other investment income	1,247			874			373			43	%
Interest expense	(548		)	(476		)	(72		)	(15	)%
Net investment income	2,768			850			1,918			NM
Performance related earnings	2,768			850			1,918			NM
Economic net income	$	(46,454	)	$	(44,416	)	(2,038		)	(5	)%
Realized income	$	(47,780	)	$	(43,205	)	(4,575		)	(11	)%

NM - Not Meaningful

Operations Management Group—Three Months Ended March 31, 2018Compared to Three Months Ended March 31, 2017

Fee Related Earnings:

Fee related earnings decreased by $4.0 million, or 9%, for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Fee related earnings were impacted by fluctuations of the following components:

Compensation and Benefits.  Compensation and benefits expenses increased by $4.7 million, or 18%, to $30.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. This increase was primarily driven by annual merit increases and headcount growth from the comparable period.

General, Administrative and Other Expenses.  General, administrative and other expenses decreased by $0.7 million, or 4%, to $18.6 million for three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was the result of a $2.5 million one-time non-income tax payment made during the three months ended March 31, 2017. This decrease was offset by an increase in business support costs due to the growth and changes of our business.

Performance Related Earnings:

Performance related earnings increased by $1.9 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Performance related earnings were impacted by the fluctuations in net investment income.

Net Investment Income. Net investment incomeincreased by $1.9 million from $0.9 million for the three months ended March 31, 2017 to net investment income of $2.8 million for the three months ended March 31, 2018. The increase is primarily due to an increase in net investment income of $2.0 million from our non-core fund investments from the comparable period.

Realized Income:

Realized income decreased by $4.6 million, or 11%, to $47.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was primarily driven by a decrease in FRE of $4.0 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

93

Economic Net Income:

Economic net income is composed of fee related earnings and performance related earnings. Economic net income decreased by $2.0 million, or 5%, to $46.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The decrease was a result of the fluctuations described above.

94

Liquidity and Capital Resources

Sources and Uses of Liquidity

Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash from operations, including management fees, which are collected monthly, quarterly or semi-annually, and net realized performance income, which is unpredictable as to amount and timing, (4) fund distributions related to our investments that are also unpredictable as to amount and timing and (5) net borrowing from the Credit Facility. As of March 31, 2018, our cash and cash equivalents were $115.5 million and we had $140.0 million of borrowings outstanding under our Credit Facility. Our ability to draw from the Credit Facility is subject to debt covenants. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business for the foreseeable future.

We expect that our primary liquidity needs will continue to be to (1) provide capital to facilitate the growth of our existing investment management businesses, (2) fund a portion of our investment commitments, (3) provide capital to facilitate our expansion into businesses that are complementary to our existing investment management businesses, (4) pay operating expenses, including cash compensation to our employees and payments under the tax receivable agreement (“TRA”), (5) fund capital expenditures, (6) service our debt, (7) pay income taxes and (8) make dividend payments to our common and preferred shareholders in accordance with our dividend policy.

In the normal course of business, we have paid dividends to our existing owners, including dividends sourced from investment income and performance income. If cash flows from operations were insufficient to fund dividends over a sustained period of time, we expect that we would suspend paying such dividends. Unless quarterly dividends have been declared and paid (or declared and set apart for payment) on the preferred shares, we may not declare or pay or set apart payment for dividends on any common shares during the period. Dividends on the preferred shares are not cumulative and the preferred shares are not convertible into common shares or any other security.

Net realized performance income also provides a source of liquidity. Performance income is realized when a portfolio investment is profitably monetized and the fund’s cumulative returns are in excess of the preferred return or hurdle rate. Performance income is typically realized at the end of each fund’s measurement period when investment performance exceeds a stated benchmark or hurdle rate.

Our accrued carried interest by segment as of March 31, 2018 is set forth below. The Company did not record any contingent repayment obligation on accrued carried interest as of March 31, 2018.

	As of March 31, 2018
	Accrued Carried Interest		Eliminations(1)		Consolidated Accrued Carried Interest
Segment	(Dollars in thousands)
Credit Group	$	156,713	$	—	$	156,713
Private Equity Group	836,473		—		836,473
Real Estate Group	120,249		—		120,249
Total	$	1,113,435	$	—	$	1,113,435

(1) Amounts represent accrued performance income earned from Consolidated Funds that are eliminated in consolidation.

Our condensed consolidated financial statements reflect the cash flows of our operating businesses as well as the results of our Consolidated Funds. The assets of our Consolidated Funds, on a gross basis, are significantly larger than the assets of our operating businesses and therefore have a substantial effect on our reported cash flows. The primary cash flow activities of our Consolidated Funds include: (1) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds when required to be consolidated into our condensed consolidated financial statements, (2) financing certain investments by issuing debt, (3) purchasing and selling investment securities, (4) generating cash through the realization of certain investments, (5) collecting interest and dividend income and (6) distributing cash to investors. Our Consolidated Funds are treated as investment companies for financial accounting purposes under GAAP; therefore, Consolidated Funds' investment activities are presented as cash flows from operations.

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Cash Flows

The significant captions and amounts from our consolidated financial statements, which include the effects of our Consolidated Funds in accordance with GAAP, are summarized below. Negative amounts represent a net outflow, or use of cash.

	Three Months Ended March 31,
	2018			2017
	(Dollars in millions)
Statements of cash flows data
Net cash provided by (used in) operating activities	$	81		(292		)
Net cash used in investing activities	(3		)	(10		)
Net cash provided by (used in) financing activities	(86		)	61
Effect of foreign exchange rate change	5			2
Net change in cash and cash equivalents	$	(3	)	$	(239	)

Operating Activities

Net cash provided by (used in) operating activities is primarily driven by our earnings in the respective periods after adjusting for non-cash compensation and unrealized performance income. Cash used to purchase investments, as well as the proceeds from the sale of such investments, is also reflected in the operating activities of the Company and our Consolidated Funds.

Our net cash flows provided by operating activities was $80.5 million for the three months ended March 31, 2018 compared to net cash flows used in operating activities of $291.8 million for the three months ended March 31, 2017. For the three months ended March 31, 2018, net sales of investments were $96.4 million compared to net purchases of $64.7 million for the three months ended March 31, 2017. The change in cash used in operating activities was also driven by fluctuations in our net income.

Our increasing working capital needs reflect the growth of our business, while the capital requirements needed to support fund-related activities vary based upon the specific investment activities being conducted during such period. The movements within our Consolidated Funds do not adversely impact our liquidity or earnings trends. We believe that our ability to generate cash from operations, as well as the capacity under the Credit Facility, provides us with the necessary liquidity to manage short-term fluctuations in working capital and to meet our short-term commitments.

Investing Activities

Our investing activities generally reflect cash used for certain acquisitions and purchases of fixed assets. Purchases of fixed assets were $2.9 million and $10.3 million for the three months ended March 31, 2018 and 2017, respectively. For the three months ended March 31, 2017, fixed asset purchases largely related to furniture, fixtures, equipment and leasehold improvements purchased for a new office location in Los Angeles.

Financing Activities

Net cash used in financing activities was $85.7 million for the three months ended March 31, 2018 compared to net cash provided by financing activities of $60.8 million for the three months ended March 31, 2017. For the three months ended March 31, 2018, net cash outflows were primarily due to net repayments on debt facilities of the Company and our Consolidated funds and distributions to AOG unitholders and common shareholders offset by net proceeds from our common share issuance. For the three months ended March 31, 2017, net cash inflows were primarily from net borrowings on debt facilities of the Company and our Consolidated Funds partially offset by distributions to AOG unitholders and common shareholders.

Net repayments of our debt obligations were $26.0 million for the three months ended March 31, 2018 compared to net borrowings of $182.6 million for the three months ended March 31, 2017. During the three months ended March 31, 2018, we had net repayments under the Credit Facility offset by borrowings from a new Term Loan and Repurchase Agreement used to support purchases of CLOs that we manage within our risk retention vehicles. During the three months ended March 31, 2017, net borrowings under the Credit Facility were used to support payments of 2016 annual bonuses, whereas 2017 annual bonuses were paid in 2017. Our Consolidated Funds had net repayments of $67.6 million and $61.2 million for the three months ended March 31, 2018 and 2017, respectively.

    Distributions to our preferred, AOG and common shareholders were $97.2 million for the three months ended March 31, 2018 compared to $74.0 million for the three months ended March 31, 2017. The increase in distributions was primarily driven

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by a change in the timing of dividend payments to common shareholders as a result of our election to change our tax classification from a partnership to a corporation for U.S. federal income tax purposes. Dividends paid in the first quarter of 2017 reflected a portion of realized income generated in the fourth quarter of 2016, whereas dividends paid in the first quarter of 2018 reflected a portion of realized income generated in the five months ended on February 28, 2018, the last day of our election to be taxed as a partnership for U.S. federal income tax purposes. For our Consolidated Funds, net contributions were $7.0 million and $15.6 million for the three months ended March 31, 2018 and 2017, respectively.

Capital Resources

The following table summarizes the Company's debt obligations (in thousands):

					As of March 31, 2018			December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	140,000	3.38%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,469		4.21%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	$	35,205	35,042		3.24%	35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	$	26,376	25,959		3.44%	25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	$	17,600	17,413		3.26%	17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	$	35,198	35,066		3.26%	35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	$	17,155	17,025		3.26%	17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	$	30,450	30,339		3.07%	30,336		2.77%
2018 Term Loan A(4)	1/12/2018	1/15/2030	$	26,475	26,456		2.97%	—		N/A
Repurchase Agreement Loan(5)	3/13/2018	4/20/2030	$	17,575	17,400		1.68%	—		N/A
Total debt obligations					$	590,169		$	616,176

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of March 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount.

(4) The 2016, 2017 and 2018 Term Loans (“Term Loans”) were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient to cover the Term Loans, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee ranging from 0.03% to 0.04% of a maximum investment amount.

(5) See Repurchase Agreement below for details

As of March 31, 2018, we were in compliance with all covenants under our debt obligations.

Repurchase Agreement

In the first quarter ended March 31, 2018, we entered into a repurchase agreement with a third party. Under the terms of the agreement, we transferred certain fixed maturity securities to a third party and received cash as collateral in an amount equal to the estimated fair value of the securities at the inception of the transaction. The transfer did not meet the criteria for sale treatment as we did not relinquish control over the transferred assets. Therefore, the transferred assets remained in our Condensed Consolidated Statements of Financial Condition. The associated liability is recorded at the amount of cash received. We monitor the estimated fair value of the collateral and the securities throughout the duration of the transaction and additional collateral will be obtained

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if necessary. There is no restriction on the sale or re-pledge of the securities by the third party. At the termination of the repurchase agreement, the third party is expected to return the securities to us, and we are expected to return the cash received as collateral plus the applicable interest to the third party.

Common Share Offering

On March 12, 2018, we and AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority (collectively, “ADIA”), completed a public offering of 15,000,000 common shares. In connection with this offering, ADIA sold 10,000,000 of its previously issued and outstanding common shares from which we received no proceeds. Additionally, we issued 5,000,000 common shares from which we received $105.9 million in gross proceeds. We incurred approximately $0.5 million of expenses in connection with this offering. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity. Subsequent to March 31, 2018, the underwriters in the offering partially exercised their option to purchase additional common shares from ADIA. See Note 16, “Subsequent Events,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further detail.

We intend to use a portion of our available liquidity to make cash dividends to our preferred and common shareholders on a quarterly basis in accordance with our dividend policies. Our ability to make cash dividends to our preferred and common shareholders is dependent on a myriad of factors, including among others: general economic and business conditions; our strategic plans and prospects; our business and investment opportunities; timing of capital calls by our funds in support of our commitments; our financial condition and operating results; working capital requirements and other anticipated cash needs; contractual restrictions and obligations; legal, tax and regulatory restrictions; restrictions on the payment of distributions by our subsidiaries to us and other relevant factors.

We are required to maintain minimum net capital balances for regulatory purposes for our United Kingdom subsidiary and for our broker-dealer subsidiary. These net capital requirements are met in part by retaining cash, cash‑equivalents and investment securities. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of March 31, 2018, we were required to maintain approximately $25.6 million in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We remain in compliance with all regulatory requirements.

Holders of AOG Units, subject to the terms of the exchange agreement, may exchange their AOG Units for Ares Management, L.P. common shares on a one-for-one basis. Subsequent exchanges may result in increases in the tax basis of the tangible and intangible assets of Ares Management, L.P. that otherwise would not have been available. These increases in tax basis may increase depreciation and amortization for U.S. federal income tax purposes and thereby reduce the amount of tax that Ares Management, L.P. would otherwise be required to pay in the future. We and our wholly owned subsidiaries are parties to the tax receivable agreement (“TRA”), which provides payment to the TRA recipients of 85% of the amount of actual cash savings, if any, in U.S. federal, state, local and foreign income tax or franchise tax that Ares Management, L.P. actually realizes as a result of such increases in tax basis, including increases in tax basis attributable to payments under the TRA and certain interest accrued thereon. This payment obligation is an obligation of Ares Management, L.P. or its wholly owned subsidiaries. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial.

Preferred Equity

As of March 31, 2018 and December 31, 2017, we had 12,400,000 shares of Series A Preferred Equity (the “Preferred Equity”) outstanding. When, as and if declared by our board of directors, distributions on the Preferred Equity are paid quarterly at a rate per annum equal to 7.00%. The Preferred Equity may be redeemable at our option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per share.

Cash dividends to our common shareholders may be impacted by any corporate tax liability owed by us. In connection with the Preferred Equity issuance, the Ares Operating Group issued mirror preferred units (“GP Mirror Units”) to our wholly owned subsidiaries, which pay the same 7.00% rate per annum. Although income allocated to our wholly owned subsidiaries in respect of distributions on the GP Mirror Units is subject to tax, cash dividends to our preferred shareholders will not be reduced on account of any income taxes owed by us. As a result, the amounts ultimately distributed by us to our common shareholders may be reduced by any corporate taxes imposed on us.

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Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. For a summary of our significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q and in our Annual Report on Form 10-K. For a summary of our critical accounting estimates, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements and their impact on the Company can be found in Note 2, “Summary of Significant Accounting Policies,” in the “Notes to the Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10‑Q and in our Annual Report on Form 10-K.

Off‑Balance Sheet Arrangements

In the normal course of business, we engage in off‑balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. See Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Commitments and Contingencies

Capital Commitments

As of March 31, 2018 and December 31, 2017, we had aggregate unfunded commitments of $291.3 million and $285.7 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds. Total unfunded commitments included $16.3 million and $16.5 million in unfunded commitments to funds not managed by us as of March 31, 2018 and December 31, 2017, respectively.

ARCC Fee Waiver

In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began in the second quarter of 2017. ARCC Part I Fees will only be waived to the extent they are paid. The maximum amount of fees that may be waived in a quarter is $10 million, and if ARCC Part I Fees are less than $10 million in any single quarter, the shortfall will not carryover to subsequent quarters. As of March 31, 2018, there are six remaining quarters as part of the fee waiver agreement, with a maximum of $60 million in potential waivers. ARCC Part I Fees are reported net of the fee waiver.

Indemnifications

Consistent with standard business practices in the normal course of business, we enter into contracts that contain indemnities for our affiliates, persons acting on our behalf or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the maximum exposure under these arrangements, if any, cannot be determined and has not been recorded in our consolidated financial statements. As of March 31, 2018, we have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.

Contingent Obligations

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated

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to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

The partnership documents governing our funds generally include a contingent repayment provision that, if triggered, may give rise to a contingent obligation that may require the general partner to return amounts to the fund for distribution to investors. Therefore, performance income, generally, is subject to reversal in the event that the funds incur future losses. These losses are limited to the extent of the cumulative performance income recognized to date. Due in part to our investment performance and the fact that our performance income is generally determined on a liquidation basis, as of March 31, 2018 and December 31, 2017, if the funds were liquidated at their fair values, there would have been no contingent repayment obligation or liability. There can be no assurance that we will not incur a contingent repayment obligation in the future. If all of the existing investments were deemed worthless, the amount of cumulative revenues that have been recognized would be reversed. We believe that the possibility of all of the existing investments becoming worthless is remote. At March 31, 2018 and December 31, 2017, had we assumed all existing investments were worthless, the amount of carried interest, net of tax, subject to contingent repayment would have been approximately $479.4 million and $476.1 million, respectively, of which approximately $372.4 million and $370.0 million, respectively, would be reimbursable to the Company by certain professionals who are the recipients of such carried interest.

Performance income is also affected by changes in the fair values of the underlying investments in the funds that we advise. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, bond yields and industry trading multiples.

Our senior professionals who have received carried interest distributions are responsible for funding their proportionate share of any contingent repayment obligations. However, the governing agreements of certain of our funds provide that if a current or former professional does not fund his or her respective share for such fund, then we may have to fund additional amounts beyond what we received in carried interest, although we will generally retain the right to pursue any remedies that we have under such governing agreements against those carried interest recipients who fail to fund their obligations.

Additionally, at the end of the life of the funds there could be a payment due to a fund by us if we have recognized more performance income than was ultimately earned. The general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of the fund.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our primary exposure to market risk is related to our role as general partner or investment adviser to our investment funds and the sensitivity to movements in the fair value of their investments, including the effect on management fees, performance income and investment income.

The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. It may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

Our credit orientation has been a central tenet of our business across our debt and equity investment strategies. Our investment professionals benefit from our independent research and relationship networks in approximately 60 industries, and insights from our portfolio of active investments. We believe the combination of high-quality proprietary information flow and a consistent, rigorous approach to managing investments across our strategies has been, and we believe will continue to be, a major driver of our strong risk-adjusted returns and the stability and predictability of our income.

There have been no material changes in our market risks for the three months ended March 31, 2018. For additional information on our market risks, refer to our Annual Report on Form 10-K for the year ended December 31, 2017, which is accessible on the SEC's website at sec.gov.

Item 4.  Controls And Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our co-principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based upon that evaluation and subject to the foregoing, our principal executive officers and principal financial officer concluded that, as of March 31, 2018, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended March 31, 2018 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

Item 1.  Legal Proceedings

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. As of March 31, 2018 and December 31, 2017, we were not subject to any material pending legal proceedings. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A.  Risk Factors

For a discussion of our other potential risks and uncertainties, see the information under “Item 1A. Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2017, which is accessible on the SEC’s website at www.sec.gov.There have been no material changes to the risk factors disclosed in our 2017 Form 10‑K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

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Item 6.  Exhibits, Financial Statement Schedules

(a)Exhibits.

The following is a list of all exhibits filed or furnished as part of this report.

Exhibit No.	Description
3.1	Certificate of Limited Partnership of Ares Management, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-36429, filed with the SEC on February 29, 2016).
3.2	Third Amended and Restated Limited Partnership Agreement of Ares Management, L.P. dated March 1, 2018 (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-36429, filed with the SEC on March 1, 2018).
10.1*	Second Amended and Restated Limited Partnership Agreement of Ares Holdings L.P., effective March 1, 2018.
10.2*	Third Amended and Restated Limited Partnership Agreement of Ares Offshore Holdings L.P., effective March 1, 2018.
10.3*	Second Amended and Restated Limited Partnership Agreement of Ares Investments L.P., effective March 1, 2018.
10.4*	Amended and Restated Investor Rights Agreement, effective March 1, 2018.
10.5*	2014 Equity Incentive Plan.
10.6*	Third Amended and Restated Exchange Agreement, effective March 1, 2018.
10.7*	Amended and Restated Tax Receivable Agreement, effective March 1, 2018.
10.8*	Form of Restricted Unit Agreement under the 2014 Equity Incentive Plan.
10.9*	Form of Deferred Restricted Unit Agreement under the 2014 Equity Incentive Plan.
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a‑14(a).
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a‑14(a).
32.1*	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
99.1*	Third Amended and Restated Agreement of Limited Liability Company of the General Partner of the Registrant, effective March 1, 2018.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

*   Filed herewith.

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SIGNATURES

	ARES MANAGEMENT, L.P.
	By:		Ares Management GP LLC, its general partner
Dated: May 7, 2018	By:		/s/ Michael J Arougheti
		Name:	Michael J Arougheti
		Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)
Dated: May 7, 2018	By:		/s/ Michael R. McFerran
		Name:	Michael R. McFerran
		Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

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EX-10.1

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

9779/17956-003 CURRENT/96429043v3

OF

ARES HOLDINGS L.P.

Effective as of March 1, 2018

THE PARTNERSHIP UNITS OF ARES HOLDINGS L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS; THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BY THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

ARTICLE I DEFINITIONS    1

Section 1.1 Definitions    1

Section 1.2 Interpretation    10

ARTICLE II FORMATION, TERM, PURPOSE AND POWERS    11

Section 2.1 Conversion; Name; Foreign Jurisdictions    11

Section 2.2 Business Purpose    12

Section 2.3 Term    12

Section 2.4 Registered Office; Registered Agent    12

Section 2.5 Principal Office    12

Section 2.6 Powers of the Partnership    12

Section 2.7 Partners; Admission of New Partners    12

Section 2.8 Withdrawal    13

ARTICLE III MANAGEMENT    13

Section 3.1 General Partner    13

Section 3.2 Compensation    14

Section 3.3 Expenses    14

Section 3.4 Officers    15

Section 3.5 Authority of Partners    15

Section 3.6 Action by Written Consent or Ratification    16

ARTICLE IV DISTRIBUTIONS    16

Section 4.1 Distributions    16

Section 4.2 Liquidation Distribution    17

Section 4.3 Limitations on Distribution    17

Section 4.4 Clawbacks    17

ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS    18

Section 5.1 Initial Capital Contributions    18

Section 5.2 No Additional Capital Contributions    18

Section 5.3 Capital Accounts    18

Section 5.4 Allocations of Profits and Losses    18

Section 5.5 Special Allocations    19

Section 5.6 Tax Allocations    20

Section 5.7 Tax Advances    20

Section 5.8 Tax Matters    21

Section 5.9 Other Allocation Provisions    22

ARTICLE VI BOOKS AND RECORDS; REPORTS    22

Section 6.1 Books and Records    22

ARTICLE VII PARTNERSHIP UNITS    22

Section 7.1 Units    22

Section 7.2 Register    23

Section 7.3 Registered Partners    23

ARTICLE VIII VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS    23

Section 8.1 Vesting of Unvested Units    23

Section 8.2 Forfeiture of Units    24

Section 8.3 Limited Partner Transfers    25

Section 8.4 Mandatory Exchanges    26

Section 8.5 Encumbrances    26

Section 8.6 Further Restrictions    26

Section 8.7 Rights of Assignees    28

Section 8.8 Admissions, Withdrawals and Removals    28

Section 8.9 Admission of Assignees as Substitute Limited Partners    28

Section 8.10 Withdrawal and Removal of Limited Partners    29

ARTICLE IX DISSOLUTION, LIQUIDATION AND TERMINATION    29

Section 9.1 No Dissolution    29

Section 9.2 Events Causing Dissolution    29

Section 9.3 Distribution upon Dissolution    30

Section 9.4 Time for Liquidation    30

Section 9.5 Termination    30

Section 9.6 Claims of the Partners    31

Section 9.7 Survival of Certain Provisions    31

ARTICLE X LIABILITY AND INDEMNIFICATION    31

Section 10.1 Duties; Liabilities; Exculpation    31

Section 10.2 Indemnification    33

ARTICLE XI MISCELLANEOUS    35

Section 11.1 Dispute Resolution    35

Section 11.2 Severability    36

Section 11.3 Binding Effect    36

Section 11.4 Further Assurances    36

Section 11.5 Expenses    37

Section 11.6 Amendments and Waivers    37

Section 11.7 No Third Party Beneficiaries    38

Section 11.8 Power of Attorney    39

Section 11.9 Letter Agreements; Schedules    39

Section 11.10 Governing Law; Separability    39

Section 11.11 Notices    39

Section 11.12 Counterparts    40

Section 11.13 Cumulative Remedies    40

Section 11.14 Entire Agreement    40

Section 11.15 Partnership Status    40

Section 11.16 Limited Partner Representations    40

ARTICLE XII TERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS    41

Section 12.1 Designation    41

Section 12.2 Definitions    41

Section 12.3 Distributions    44

Section 12.4 Rank    45

Section 12.5 Redemption    46

Section 12.6 Distribution Rate    46

Section 12.7 Voting    46

Section 12.8 Liquidation Rights    47

Section 12.9 Amendments and Waivers    48

Section 12.10 No Conversion    48

Section 12.11 No Third Party Beneficiaries    48

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
ARES HOLDINGS L.P.

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Ares Holdings L.P., entered into as of March 8, 2018 and effective as of March 1, 2018 (the “Effective Date”), among Ares Holdco LLC, a Delaware limited liability company, as general partner, and the Limited Partners (as defined herein) of the Partnership.

WHEREAS, Ares Holdings LLC (“AH LLC”) was formed as a Delaware limited liability company on May 24, 2007;

WHEREAS, on or prior to June 8, 2016, all necessary action was taken to authorize AH LLC’s conversion to Ares Holdings L.P., a Delaware limited partnership (the “Partnership”), under the 2013 Amended and Restated Limited Liability Company Agreement of AH LLC, dated as of July 31, 2013 (the “LLC Agreement”), and the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.) (the “LLC Act”), including the approval by AH LLC’s manager of the conversion of AH LLC from a limited liability company to a limited partnership pursuant to an action by written consent dated on or about June 8, 2016;

WHEREAS, on June 8, 2016, AH LLC was converted to a limited partnership (the “Conversion”) pursuant to Section 17-217 of the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101, et seq.) (the “Act”) and Section 18-216 of the LLC Act by causing the filing in the office of the Secretary of State of the State of Delaware of a Certificate of Conversion to Limited Partnership of AH LLC and a Certificate of Limited Partnership of the Partnership (the “Certificate”);

WHEREAS, the parties hereto entered into the Amended and Restated Limited Partnership Agreement of the Partnership, dated as of June 8, 2016 (the “A&R Partnership Agreement”);

WHEREAS, effective as of the Effective Date, the Issuer amended and restated its limited partnership agreement to, among other things, change the name of its common units representing limited partner interests and preferred units representing limited partner interests to Common Shares and Preferred Shares, respectively; and

WHEREAS, the parties hereto now desire to amend and restate the A&R Partnership Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

“A&R Partnership Agreement” has the meaning set forth in the recitals.

“Act” has the meaning set forth in the recitals.

“Additional Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Adjusted Capital Account Balance” means, with respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“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, the Person in question. As used herein, the term “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; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“AH LLC” has the meaning set forth in the recitals.

“Alleghany” means Alleghany Insurance Holdings LLC, a Delaware limited liability company.

“Alleghany Permitted Transferee” means any Affiliate of Alleghany (other than any Person that is a competitor of any Ares Company or whose ownership of equity interests in any entity that is a member of the Ares Operating Group or the Issuer would restrict the operations of any Ares Company, in each case, as determined in good faith by the Issuer).

“Amended Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Ares Company”means any of (i) the Issuer, (ii) Ares GP, (iii) Ares Voting LLC, a Delaware limited liability company, (iv) any entity that is or becomes part of the Ares Operating Group and (v) any entity in which any the foregoing directly or indirectly owns a majority interest or which any of the foregoing controls, or through which any of the foregoing directly or indirectly manages, directs or invests in a Fund, but excluding any Fund.

“Ares Operating Group” means, collectively, (i) the Partnership, (ii) Ares Investments L.P., a Delaware limited partnership, (iii) Ares Offshore Holdings L.P., a Cayman Islands exempted limited partnership and (iv) any future entity designated by Ares GP in its discretion as an Ares Operating Group entity for purposes of this Agreement.

“Ares Owners Class IND Units” has the meaning given to “Class IND Units” in the Ares Owners LP Agreement.

“Ares Owners Class OG Units” has the meaning given to “Class OG Units” in the Ares Owners LP Agreement.

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

“Ares Owners LP Agreement” means the limited partnership agreement of Ares Owners LP.

“Ares Owners Mirror Units” means Class Mirror Units (as defined in the Ares Owners LP Agreement).

“Assignee” has the meaning set forth in Section 8.7.

“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual or corporate resident in Los Angeles, California or New York, New York, whichever is higher (taking into account (a) the nondeductiblity of expenses subject to the limitation described in Section 67(a) of the Code (if applicable) and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.

“Available Cash” means, with respect to any fiscal period, the amount of cash on hand which the General Partner, in its sole discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in its sole discretion, deems necessary to expend or retain for working capital or otherwise or to place into reserves.

“Capital Account” means the separate capital account maintained for each Partner in accordance with Section 5.3 hereof.

“Capital Contribution” means, with respect to any Partner, the aggregate amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V.

“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership interest is relinquished to the Partnership; or (d) any other date specified in the Treasury Regulations; provided that adjustments pursuant to clauses (a), (b), (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.

“Certificate” has the meaning set forth in the recitals.

“Class” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time by the General Partner in its sole discretion pursuant to the provisions of this Agreement. As of the Effective Date, the only Classes of Units are Class A Units and Series A Preferred Mirror Units. Subclasses within a Class shall not be separate Classes for purposes of this Agreement. For all purposes hereunder and under the Act, only such Classes expressly established under this Agreement, including by the General Partner in accordance with this Agreement, shall be deemed to be a class of interests in the Partnership. For the avoidance of doubt, to the extent that the General Partner holds interests of any Class, the General Partner shall not be deemed to hold a separate Class of such interests from any other Partner because it is the General Partner.

“Class A Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.

“Clawback Obligation” has the meaning set forth in Section 4.4.

“Code” means the Internal Revenue Code of 1986.

“Collateral Agreement” means any security agreement, pledge agreement or similar agreement relating to any Credit Agreement.

“Common Shares” means common shares representing partner interests of the Issuer.

“Consenting Party” has the meaning set forth in Section 11.1(a).

“Contingencies” has the meaning set forth in Section 9.3(a).

“Conversion” has the meaning set forth in the recitals.

“Corresponding Rate” means the number of Class A Units that would be forfeited or cancelled upon the forfeiture or cancellation of Ares Owners Mirror Units or Common Shares pursuant to any agreements governing such Ares Owners Mirror Units or Common Shares, as applicable. As of the Effective Date, the Corresponding Rate shall be 1 for 1. The Corresponding Rate shall be adjusted accordingly by the General Partner in its sole discretion upon: (a) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Class A Units that is not accompanied by an identical subdivision or combination of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable; or (b) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable, that is not accompanied by an identical subdivision or combination of the Class A Units.

“Credit Agreement” means any facility for borrowed money of Ares Management LLC or an affiliate of Ares Management LLC.

“Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Creditable Non-U.S. Tax” means a non-U.S. tax paid or accrued for U.S. federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount. This definition is intended to be consistent with the term “creditable foreign tax” in Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

“Disabling Event” means the General Partner ceasing to be the general partner of the Partnership pursuant to Section 17-402 of the Act.

“Dissolution Event” has the meaning set forth in Section 9.2.

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Encumbrance” means any mortgage, hypothecation, claim, lien, encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.

“ERISA” means The Employee Retirement Income Security Act of 1974.

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

“Exchange Agreement” means the exchange agreement, dated as of or about April 3, 2017, among the Issuer, the Ares Operating Group entities, the limited partners of the Ares Operating Group entities (or their designees or Affiliates) from time to time party thereto, and the other parties thereto.

“Exchange Transaction” means an exchange of Class A Units for Common Shares pursuant to, and in accordance with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Class A Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.

“Family Member”means, with respect to any Limited Partner who is a natural person, such Limited Partner’s spouse, parents, siblings and children and any other natural person who occupies the same principal residence as such Limited Partner, and the spouses, descendants and ancestors of each of the foregoing.

“Final Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Fiscal Year” means the period commencing on January 1 and ending on December 31 of each year, except (a) for the short taxable years in the years of the Partnership’s formation (i.e., the year in which AH LLC was formed) and termination and (b) as otherwise elected by the General Partner in its sole discretion or required by the Code.

“Fund” means any fund, investment vehicle or account whose investments are managed or advised by an Ares Company.

“GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.

“General Partner” means Ares Holdco LLC, a Delaware limited liability company, or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.

“Gross Ordinary Income” has the meaning assigned to such term in Section 5.5(d).

“Incapacity” means, with respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.

“Indemnitee” means (a) the General Partner, (b) any Person who is or was a “tax matters partner” (as defined in the Code prior to amendment by P.L 114-74) or “partnership representative” (as defined in Section 6223 of the Code after amendment by P.L. 114-74), officer or director of the General Partner, (c) any officer or director of the General Partner who is or was serving at the request of the General Partner as a director, officer, employee, trustee, fiduciary, partner, tax matters partner, partnership representative, member, representative, agent or advisor of another Person; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis or similar arm’s-length compensatory basis, agency, advisory, consulting, trustee, fiduciary or custodial services, (d) any Person the General Partner in its sole discretion designates as an “Indemnitee” for purposes of this Agreement and (e) any heir, executor or administrator with respect to Persons named in clauses (a) through (d).

“Issuer” means Ares Management, L.P., a Delaware limited partnership.

“Issuer General Partner” means Ares Management GP LLC, a Delaware limited liability company and the general partner of the Issuer, or any successor general partner of the Issuer.

“Issuer Limited Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated on or about the Effective Date.

“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may be.

“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records of the Partnership, and, for purposes of Sections 8.1, 8.2, 8.3, 8.4, 8.5 and 8.6, any Permitted Transferee of such Limited Partner.

“Liquidation Agent” has the meaning set forth in Section 9.3.

“LLC Act” has the meaning set forth in the recitals.

“LLC Agreement” has the meaning set forth in the recitals.

“Net Taxable Income” has the meaning set forth in Section 4.1(b)(i).

“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).

“Officer” means each Person designated as an officer of the Partnership by the General Partner pursuant to and in accordance with the provisions of Section 3.4, subject to any resolutions of the General Partner appointing such Person as an officer of the Partnership or relating to such appointment.

“Original Agreement” means the Limited Partnership Agreement of Ares Management, L.P., dated as of May 1, 2014.

“Partially Unvested Partner” means any Partner with Unvested Units.

“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).

“Partners” means, at any time, each Person listed as a Partner (including the General Partner) on the books and records of the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.

“Partnership” has the meaning set forth in the recitals.

“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Permitted Transferee” means, with respect to a Limited Partner, (a) its Principal, if any, (b) any trust for the primary benefit of the Family Members of such Limited Partner or the Family Members of such Limited Partner’s Principal; provided that, in each case, either (i) such Limited Partner or its Principal, if any or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such trust until the death or legal incapacity of such Limited Partner or its Principal, if any; or (c) any entity of which such Limited Partner and any Permitted Transferees or Family Members of such Limited Partner collectively are beneficial owners of 100% of the equity interests; provided that either such (i) Limited Partner or its Principal, if any, or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such entity until the death or legal incapacity of such Limited Partner or its Principal, if any.

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

“Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Preferred Units” means a Class of Units, in one or more series, designated as “Preferred Units,” which entitles the holder thereof to a preference with respect to the payment of distributions over the Class A Units and any other Junior Units then outstanding as set forth herein.

“Primary Indemnification” has the meaning set forth in Section 10.2(a).

“Principal,” with respect to any Limited Partner, has the meaning set forth in a Supplemental Agreement applicable to such Limited Partner.

“Prior General Partner” means Ares Holdings Inc., a Delaware corporation.

“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 5.5 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.

“Relevant Entity” means any Ares Company and any entity in which any Ares Company, directly or indirectly, owns any interest, and any Fund to which any Ares Company provides services.

“Securities Act” means the U.S. Securities Act of 1933.

“Series A Preferred Mirror Units” means the Class of Preferred Units designated as “7.00% Series A Preferred Mirror Units” pursuant to Section 12.1.

“Service Provider” means any Limited Partner (in his, her or its individual capacity) or other Person, who at the time in question, is employed by or providing services to any Ares Company. For the avoidance of doubt, Alleghany is not a Service Provider.

“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as assets of a Partner by virtue of its partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

“Supplemental Agreement” means, with respect to any Limited Partner, any unitization letter, fair competition agreement or other supplemental agreement with such Limited Partner or its Principal containing terms modifying, supplementing or otherwise affecting the rights or obligations of such Limited Partner hereunder.

“Tax Advances” has the meaning set forth in Section 5.7.

“Tax Amount” has the meaning set forth in Section 4.1(b)(i).

“Tax Distributions” has the meaning set forth in Section 4.1(b)(i).

“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Class A Units (vested and unvested) then owned by such Partner by the number of Class A Units (vested and unvested) then owned by all Partners.

“Transfer” means, in respect of any Unit, property or other asset, any sale, assignment, transfer, distribution, exchange, mortgage, pledge, hypothecation or other disposition thereof, whether voluntarily or by operation of Law, directly or indirectly, in whole or in part, including the exchange of any Unit for any other security. “Transferee”, “Transferor”, “Transferring”, “Transferred” and similar terms have meanings correlative to the foregoing.

“Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code.

“Units” means the Class A Units, the Preferred Units and any other Class of Units that is established in accordance with this Agreement, which shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and provisions of this Agreement.

“Unvested Units” means those Units from time to time listed as unvested Units in the books and records of the Partnership.

“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement.

Section 1.2Interpretation.

(a)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 this 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 this 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 this 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.

(b)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS

Section 2.1Conversion; Name; Foreign Jurisdictions.

(a)Effective as of the time of the Conversion, (i) the LLC Agreement and certificate of formation were replaced and superseded in their entirety by the Original Agreement and the Certificate, (ii) all of the limited liability company interests in AH LLC issued and outstanding immediately prior to the Conversion were converted into Class A Units, (iii) each of those Persons who executed a counterpart to this Agreement as a Limited Partner on May 1, 2014 was admitted to the Partnership as a Limited Partner, and (iv) the Prior General Partner was admitted to the Partnership as the general partner. On or about August 4, 2015, the Prior General Partner withdrew as the general partner of the Partnership and the General Partner was admitted and substituted as the general partner of the Partnership.

(b)The name of the Partnership is “Ares Holdings L.P.” or such other name as the General Partner may from time to time hereafter designate. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (i) the formation and operation of a limited partnership under the laws of the State of Delaware, (ii) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (iii) all other filings required to be made by the Partnership. The rights, powers, duties, obligations and liabilities of the Partners shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Partner are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. The execution and filing of the Certificate and each amendment thereto and the Conversion is hereby ratified, approved and confirmed by the Partners.

(c)The General Partner may take all action which may be necessary or appropriate (i) for the continuation of the Partnership’s valid existence as a limited partnership under the laws of the State of Delaware (and of each other jurisdiction in which such existence is necessary to enable the Partnership to conduct the business in which it is engaged) and (ii) for the maintenance, preservation and operation of the business of the Partnership in accordance with the provisions of this Agreement and applicable laws and regulations. The General Partner may file or cause to be filed for recordation in the proper office or offices in each other jurisdiction in which the Partnership is formed or qualified, such certificates (including certificates of limited partnership and fictitious name certificates) and other documents as are required by the applicable statutes, rules or regulations of any such jurisdiction or as are required to reflect the identity of the Partners. The General Partner may cause the Partnership to comply, to the extent procedures are available and those matters are reasonably within the control of the Officers, with all requirements necessary to qualify the Partnership to do business in any jurisdiction other than the State of Delaware.

Section 2.2Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the Act.

Section 2.3Term. The term of the Partnership shall continue until the Partnership is dissolved and its affairs are wound up in accordance with this Agreement.

Section 2.4Registered Office; Registered Agent. The address of the registered office of the Partnership in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The name and address of the registered agent of the Partnership for service of process on the Partnership in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The General Partner may from time to time change the registered agent or registered office of the Partnership in the State of Delaware by an amendment to the Certificate, and upon the filing of such an amendment, this Agreement shall be deemed amended accordingly.

Section 2.5Principal Office. The principal office address of the Partnership shall be at such place or places as the General Partner may determine from time to time.

Section 2.6Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership (i) will possess and may exercise all of the powers and privileges granted to it by the Act including the ownership and operation of the assets and other property contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all powers incidental thereto, and (ii) may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions, in each case, so far as such powers, activities or transactions are necessary, desirable, convenient or incidental to, or in furtherance of, the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.2.

Section 2.7Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement (or the Original Agreement), are admitted as Partners of the Partnership. The rights, duties and liabilities of the Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. Subject to Section 8.9 with respect to substitute Limited Partners, a Person may be admitted from time to time as a new Limited Partner with the written consent of the General Partner in its sole discretion. Each new Limited Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Limited Partner agrees to be bound by the terms and conditions of the Agreement, as it may be amended from time to time. A new General Partner or substitute General Partner may be admitted to the Partnership solely in accordance with Section 8.8 or Section 9.2(e) hereof.

Section 2.8Withdrawal. No Partner may withdraw from the Partnership, provided that (a) a Limited Partner may withdraw from the Partnership following the Transfer of all Units owned by such Limited Partner in accordance with Article VIII and (b) subject to Section 8.8, the General Partner may withdraw without the consent of any other Partner.

ARTICLE III
MANAGEMENT

Section 3.1General Partner.

(a)The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to Officers or to others to act on behalf of the Partnership.

(b)Without limiting the foregoing provisions of this Section 3.1, the General Partner shall have the general power to manage or cause the management of the Partnership (which may be delegated to Officers of the Partnership), including the following powers:

(i)to develop and prepare a business plan each year;

(ii)to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments of transfer and other documents on behalf of the Partnership;

(iii)the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;

(iv)the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(v)to select and dismiss employees (including employees having such titles as the General Partner may determine in its sole discretion) and agents, representatives, outside attorneys, accountants, consultants and contractors and to determine their compensation and other terms of employment or hiring;

(vi)to establish and enforce limits of authority and internal controls with respect to all personnel and functions;

(vii)to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account;

(viii)the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;

(ix)the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(x)the purchase, sale or other acquisition or disposition of Units; and

(xi)to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.

(c)In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation or duty to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have any liability to a Limited Partner for monetary damages, equitable relief or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions.

Section 3.2Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership in its capacity as General Partner.

Section 3.3Expenses. The Partnership shall pay, or cause to be paid, all costs, fees, operating expenses and other expenses of the Partnership (including the costs, fees and expenses of attorneys, accountants or other professionals) incurred in pursuing and conducting, or otherwise related to, the activities of the Partnership. The Partnership shall also, in the sole discretion of the General Partner, bear or reimburse the General Partner for (i) any costs, fees or expenses incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with serving as the General Partner, (ii) all other expenses allocable to the Partnership or otherwise incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with operating the Partnership’s business (including expenses allocated to the General Partner (or any direct or indirect equityholders of the General Partner) by its Affiliates) and (iii) all costs, fees or expenses owed directly or indirectly by the Partnership or the General Partner to the Issuer General Partner (or any direct or indirect equityholders of the Issuer General Partner) pursuant to their reimbursement obligations under, or which are otherwise allocated to the General Partner (or any direct or indirect equityholders of the General Partner) pursuant to, the Issuer Limited Partnership Agreement. If the General Partner determines in its sole discretion that such expenses are related to the business and affairs of the General Partner that are conducted through the Partnership or its subsidiaries (including expenses that relate to the business and affairs of the Partnership or its subsidiaries and that also relate to other activities of the General Partner), the General Partner may cause the Partnership to pay or bear all expenses of the General Partner (or any direct or indirect equityholders of the General Partner), including compensation and meeting costs of any board of directors or similar body of the General Partner, any salary, bonus, incentive compensation and other amounts paid to any Person including Affiliates of the General Partner to perform services for the Partnership, litigation costs and damages arising from litigation, accounting and legal costs and franchise taxes. Reimbursements pursuant to this Section 3.3 shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 10.2.

Section 3.4Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by persons who may be designated as officers by the General Partner, with titles including but not limited to “assistant secretary,” assistant treasurer,” “chief executive officer,” “chief financial officer,” “chief legal officer,” “chief operating officer,” “chief compliance officer,” “general counsel,” “managing director,” “president,” “executive vice president,” “senior vice president,” “vice president,” “principal accounting officer,” “secretary,” or “treasurer,” and as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such offices. Any number of offices may be held by the same person. In its sole discretion, the General Partner may choose not to fill any office for any period as it may deem advisable. All officers and other persons providing services to or for the benefit of the Partnership shall be subject to the supervision and direction of the General Partner and may be removed, with or without cause, from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, as a result of the performance of its duties hereunder or otherwise.

Section 3.5Authority of Partners. No Limited Partner, in its capacity as such, shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this Agreement. Except as expressly provided herein, no Limited Partner shall have any right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership, or any other matter that a limited partner might otherwise have the ability to vote on or consent with respect to under the Act, at law, in equity or otherwise. The conduct, control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.5 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may from time to time appoint one or more Partners as officers or employ one or more Partners as employees, and such Partners, in their capacity as officers or employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.

Section 3.6Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a consent or ratification in writing.

ARTICLE IVDISTRIBUTIONS

Section 4.1Distributions.

(a)The General Partner, in its sole discretion, may authorize distributions by the Partnership to the Partners. Distributions shall be made in accordance with Section 12.3 and this Article IV. Distributions (other than distributions made with respect to the Series A Preferred Mirror Units pursuant to Section 12.3) shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.

(b)

(i)In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal Year will give rise to taxable income for the Partners that hold Class A Units (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit under Section 743(b) of the Code will be ignored. Any Tax Distributions shall be made to all Partners that hold Class A Units pro rata in accordance with their Total Percentage Interests.

(ii)Tax Distributions shall be calculated and paid no later than one day prior to each quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this Section 4.1(b) for purposes of the computations herein.

Section 4.2Liquidation Distribution. Distributions made upon dissolution of the Partnership shall be made as provided in Section 9.3.

Section 4.3Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate Section 17-607 of the Act or other applicable Law.

Section 4.4Clawbacks. To the extent that the Partnership is directly or indirectly required to comply with a clawback or other similar obligation with respect to any Fund (a “Clawback Obligation”), upon the written request of the General Partner, Alleghany shall promptly return to the Partnership any distributions received from the Partnership in an amount equal to Alleghany’s pro rata share (based on its Total Percentage Interest) of the excess of (a) such Clawback Obligation less (b) all amounts returned by Alleghany with respect to such Clawback Obligation. Any returned amounts shall be treated as Capital Contributions but shall not affect Alleghany’s Total Percentage Interest. The Partnership shall be entitled to withhold from any distributions otherwise payable to Alleghany a reasonable amount sufficient to reserve for any potential Clawback Obligation. To the extent that any such reserve is not sufficient to satisfy any such Clawback Obligation, the Partnership shall be entitled to offset such deficiency with any amounts due and payable to Alleghany or its Affiliates. Notwithstanding the foregoing, at no time shall any Partner be liable for amounts in excess of amounts distributed to such Partner in connection with any Fund in respect of which a Clawback Obligation is or may be owing. For the avoidance of doubt, Alleghany shall not (i) be required to return to the Partnership any distributions, (ii) be subjected to any withholding or (iii) be subjected to any offset against amounts due and payable to Alleghany, in each case to the extent that a Clawback Obligation relates to any amounts distributed prior to July 31, 2013.

ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS

Section 5.1Initial Capital Contributions. The Partners have made, on or prior to the Effective Date, Capital Contributions, if any, and, in exchange, the Partnership has issued to the Partners the number of Class A Units and Series A Preferred Mirror Units as specified in the books and records of the Partnership.

Section 5.2No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.

Section 5.3Capital Accounts. A Capital Account shall be established and maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.4 and any items of income or gain which are specially allocated pursuant to Section 5.5; and shall be debited with all Losses allocated to such Partner pursuant to Section 5.4, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.5, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. In the event of any Transfer of any interest in the Partnership in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor to the extent it relates to the Transferred interest. For the avoidance of doubt, the Capital Account balance for each Series A Preferred Mirror Unit shall initially equal the Liquidation Preference per Series A Preferred Mirror Unit as of the date such Series A Preferred Mirror Unit is initially issued and shall be increased as set forth in Section 5.5(d).

Section 5.4Allocations of Profits and Losses. Subject to Section 5.5(d), except as otherwise provided in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the Special Allocations set forth in Section 5.5 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit may be treated as a Vested Unit.Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.

Section 5.5Special Allocations. Notwithstanding any other provision in this Article V:

(a)Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). This Section 5.5(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).

(b)Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.5(b) shall be made only to the extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.5(b) were not in this Agreement. This Section 5.5(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.

(c)Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.5(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.5(b) and this Section 5.5(c) were not in this Agreement.

(d)Gross Ordinary Income. Before giving effect to the allocations set forth in Section 5.4, Gross Ordinary Income for the Fiscal Year shall be specially allocated pro rata to the holders of Series A Preferred Mirror Units in an amount equal to the sum of (i) the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 during such Fiscal Year and (ii) the excess, if any, of the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 in all prior Fiscal Years over the amount of Gross Ordinary Income allocated to the holders of Series A Preferred Mirror Units pursuant to this Section 5.5(d) in all prior Fiscal Years. For purposes of this Section 5.5(d), “Gross Ordinary Income” means the Partnership’s gross income excluding any gross income attributable to the sale or exchange of “capital assets” as defined in Section 1221 of the Code. Allocations to holders of Series A Preferred Mirror Units of Gross Ordinary Income shall consist of a proportionate share of each Partnership item of Gross Ordinary Income for such Fiscal Year in accordance with each holder’s pro rata percentage of the Series A Preferred Mirror Units.

(e)Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Total Percentage Interests.

(f)Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).

(g)Creditable Non-U.S. Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the Partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.5(g) are intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

(h)Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.5(b) or 5.5(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.4 and this Section 5.5(h), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.5(b) or 5.5(c) had not occurred.

Section 5.6Tax Allocations. For income tax purposes, each item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.

Section 5.7Tax Advances. If the General Partner reasonably believes that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including any liability for taxes, penalties, additions to tax or interest  other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.1(b)) with respect to income attributable to or distributions or other payments to such Partner.

Section 5.8Tax Matters. The General Partner shall be the “tax matters partner” of the Partnership for purposes of Section 6231(a)(7) of the Code (prior to amendment by P.L. 114-74) and the “partnership representative” of the Partnership for purposes of Section 6223 of the Code (after amendment by P.L. 114-74). The Partnership shall file as a partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or local tax matters of the Partnership, shall be made by the tax matters partner or partnership representative, as applicable. Tax audits, controversies and litigations shall be conducted under the direction of the tax matters partner or partnership representative, as applicable. The General Partner shall cause all required federal, state or local tax returns and reports of the Partnership to be prepared and filed, and shall be responsible for all other tax matters of the Partnership. All costs and expenses incurred by the General Partner related to any tax matters provided for in this Section 5.8, including, without limitation, all fees and expenses of any accounting firm engaged by the General Partner with respect to the Partnership and any costs and expenses related to any audit, declaration of any tax deficiency or any administrative proceeding or litigation involving any Partnership tax matter, shall be Partnership expenses. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner in connection with the conduct of all such proceedings. The tax matters partner or partnership representative, as applicable, shall keep the other Partners reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.

Section 5.9Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. In addition to amendments effected in accordance with Section 11.6 or otherwise in accordance with this Agreement, Sections 5.3, 5.4 and 5.5 may also, so long as any such amendment does not materially change the relative economic interests of the Partners, be amended at any time by the General Partner if necessary or desirable, as determined by the General Partner in its discretion, to comply with such regulations or any applicable Law.

ARTICLE VI
BOOKS AND RECORDS; REPORTS

Section 6.1Books and Records.

(a)At all times during the continuance of the Partnership, the Partnership shall prepare and maintain separate books of account for the Partnership in accordance with GAAP.

(b)Except as limited by Section 6.1(c), each Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:

(i)a copy of the Certificate and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and

(ii)promptly after their becoming available, copies of the Partnership’s federal income tax returns for the three most recent years.

(c)The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.

ARTICLE VII
PARTNERSHIP UNITS

Section 7.1Units. Interests in the Partnership shall be represented by Units. The Units are comprised of one Class of common units, the Class A Units, and one Class of Preferred Units, the Series A Preferred Mirror Units. The General Partner in its sole discretion may establish and issue, from time to time in accordance with such procedures as the General Partner shall determine from time to time, additional Units, in one or more Classes or series of Units, or other Partnership securities, at such price, and with such designations, preferences and relative, participating, optional or other special rights, powers and duties (which may be senior to existing Units, Classes and series of Units or other Partnership securities), as shall be determined by the General Partner without the approval of any Partner or any other Person who may acquire an interest in any of the Units, including (i) the right of such Units to share in Profits and Losses or items thereof; (ii) the right of such Units to share in Partnership distributions; (iii) the rights of such Units upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem such Units (including sinking fund provisions); (v) whether such Units are issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which such Units will be issued, evidenced by certificates and assigned or Transferred; (vii) the method for determining the Total Percentage Interest, if any, as to such Units; (viii) the terms and conditions of the issuance of such Units (including the amount and form of consideration, if any, to be received by the Partnership in respect thereof, the General Partner being expressly authorized, in its sole discretion, to cause the Partnership to issue such Units for less than fair market value); and (ix) the right, if any, of the holder of such Units to vote on Partnership matters, including matters relating to the relative designations, preferences, rights, powers and duties of such Units. The General Partner in its sole discretion, without the approval of any Partner or any other Person, is authorized (i) to issue Units or other Partnership securities of any newly established Class or any existing Class to Partners or other Persons who may acquire an interest in the Partnership and (ii) to amend this Agreement to reflect the creation of any such new Class, the issuance of Units or other Partnership securities of such Class, and the admission of any Person as a Partner which has received Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A Units, the Preferred Units and Units of any other Class or series that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in this Agreement.

Section 7.2Register. The register of the Partnership shall be the definitive record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.

Section 7.3Registered Partners. The Partnership shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act or other applicable Law.

ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

Section 8.1Vesting of Unvested Units.

(a)A Partner’s Unvested Units shall vest and shall thereafter be Vested Units for all purposes of this Agreement as set forth in any applicable Supplemental Agreement and reflected in the books and records of the Partnership.

(b)The General Partner in its sole discretion may authorize the earlier vesting of all or a portion of Unvested Units owned by any one or more Partners at any time and from time to time, and in such event, such Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement. Any such determination in the General Partner’s discretion in respect of Unvested Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partially Unvested Partners alike, whether or not such Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Partially Unvested Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partially Unvested Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partially Unvested Partner separately.

(c)Upon the vesting of any Unvested Units in accordance with this Section 8.1, the General Partner shall modify the books and records of the Partnership to reflect such vesting.

Section 8.2Forfeiture of Units.

(a)Units owned by a Partner are subject to forfeiture or cancellation as set forth in any Supplemental Agreement or schedule or exhibit to this Agreement applicable to such Partner.

(b)If any Ares Owners Mirror Units are forfeited or cancelled for no consideration, a number of Class A Units held by Ares Owners LP equal to the product of the number of Ares Owners Mirror Units, as applicable, so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(c)If any Common Shares owned by Ares Owners LP or a Service Provider (or a Person who is a Permitted Transferee of a Service Provider) are forfeited or cancelled for no consideration, a number of Class A Units held by the Issuer (or if the Issuer does not hold any Class A Units, by the General Partner) equal to the product of the number of Common Shares so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(d)Notwithstanding anything otherwise to the contrary herein, including Section 9.6 and Section 10.1, if any Person who is or was at any time a Service Provider shall fail to perform when due any “giveback,” “true-up” or “clawback” obligation owed by such Person to the Partnership or any of its Affiliates or to any Fund managed by an Ares Company, the General Partner may in its sole discretion and without the consent of any other Person, cause to be forfeited a number of Units held by such Person (or any Permitted Transferee of such Person), or in which such Person (or any Permitted Transferee of such Person) has an indirect interest, as set forth in the books and records of the Partnership, equivalent in value to the obligation which was not performed, as determined by the General Partner in its sole discretion. Any such determination shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Persons alike, whether or not such Persons are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Person shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Person, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Person separately.

(e)Upon the forfeiture of any Units in accordance with this Section 8.2, such Units shall be cancelled, the Partnership shall have no obligations with respect to such Units and the General Partner shall modify the books and records of the Partnership to reflect such forfeiture and cancellation.

Section 8.3Limited Partner Transfers.

(a)Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, no Limited Partner or Assignee thereof may Transfer (including pursuant to an Exchange Transaction) all or any portion of its Units or other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including the receipt of such legal opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion, and which consent may be in the form of a plan or program entered into or approved by the General Partner, in its sole discretion. Any such determination in the General Partner’s discretion in respect of Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.

(b)Notwithstanding clause (a) above, subject to Section 8.6, each Limited Partner may Transfer Units in Exchange Transactions pursuant to, and in accordance with, the Exchange Agreement; provided that such Exchange Transactions shall be effected in compliance with policies that the General Partner (or any other Ares Company) may adopt or promulgate from time to time (including policies requiring the use of designated administrators or brokers).

(c)Notwithstanding anything otherwise to the contrary in this Section 8.3, a Limited Partner (other than Alleghany) may Transfer Units to any of its Permitted Transferees and Alleghany may Transfer Units to any Alleghany Permitted Transferee.

(d)Notwithstanding anything otherwise to the contrary in this Section 8.3, upon the enforcement of the remedies available upon the occurrence and during the continuance of an event of default under any Credit Agreement or any Collateral Agreement, in each case in accordance with such agreements (including any limitations set forth therein), to the extent that the interests pledged under such agreements constitute collateral (or any similar term) under such Credit Agreement or Collateral Agreement, the administrative agent, collateral agent, trustee or other person acting in a similar capacity under such Credit Agreement or Collateral Agreement or any transferee or assignee who forecloses upon an interest in such collateral in connection with such permitted enforcement of remedies upon the occurrence and during the continuance of an event of default under such Credit Agreement or Collateral Agreement (to the extent not prohibited pursuant to the terms of such Credit Agreement or any applicable Collateral Agreement) shall be automatically admitted as a Limited Partner and shall have all of the rights and powers of the Limited Partner that previously owned such interest without any further consent of any Partner.

Section 8.4Mandatory Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the consent of any Limited Partner or other Person, cause to be Transferred in an Exchange Transaction any and all Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately.

Section 8.5Encumbrances. No Partner or Assignee may create an Encumbrance with respect to all or any portion of its Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.

Section 8.6Further Restrictions.

(a)Notwithstanding any contrary provision in this Agreement, the General Partner may impose such vesting requirements, forfeiture provisions, Transfer restrictions, minimum retained ownership requirements or other similar provisions with respect to any Units that are outstanding as of the Effective Date or are created thereafter, with the written consent of the holder of such Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partners alike, whether or not such Partners are similarly situated, and such requirements, provisions and restrictions may be waived or released by the General Partner in its sole discretion with respect to all or a portion of the Units owned by any one or more Partners. The exercise of any power or discretion by the General Partner or the Partnership in the case of any Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partner separately.

(b)Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:

(i)such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;

(ii)such Transfer would require the registration of such Transferred Unit or of any Class of Units pursuant to any applicable U.S. federal or state securities Laws (including the Securities Act or the Exchange Act) or other non-U.S. securities Laws (including Canadian provincial or territorial securities laws) or would constitute a non-exempt distribution pursuant to applicable provincial or state securities Laws;

(iii)such Transfer would cause (A) all or any portion of the assets of the Partnership to (1) constitute “plan assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (2) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (B) the General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;

(iv)to the extent requested by the General Partner, the Partnership does not receive such legal or tax opinions and written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s discretion;

(v)such Transfer would violate, or cause any Relevant Entity, to violate, any applicable Law of any jurisdiction; or

(vi)the General Partner shall determine in its sole discretion that such Transfer would pose a material risk that the Partnership would be a “publicly traded partnership” as defined in Section 7704 of the Code.

In addition, notwithstanding any contrary provision in this Agreement, to the extent the General Partner shall determine that interests in the Partnership do not meet the requirements of Treasury Regulation section 1.7704-1(h), the General Partner may impose such restrictions on the Transfer of Units or other interests in the Partnership as the General Partner may determine in its sole discretion to be necessary or advisable so that the Partnership is not treated as a publicly traded partnership taxable as a corporation under Section 7704 of the Code.

(c)Any Transfer in violation of this Article VIII shall be deemed null and void ab initio and of no effect.

Section 8.7Rights of Assignees. Subject to Section 8.6(b), the Transferee of any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent Transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the Partner which Transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such interest remaining with the Transferring Partner. The Transferring Partner will remain a Partner even if it has Transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to Section 8.9.

Section 8.8Admissions, Withdrawals and Removals.

(a)No Person may be admitted to the Partnership as an additional or substitute General Partner without the prior written consent of each incumbent General Partner, which consent may be given or withheld, or made subject to such conditions as are determined by each incumbent General Partner, in each case in the sole discretion of each incumbent General Partner. A General Partner will not be entitled to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or withdrawn).

(b)No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with Section 8.10 hereof. Any additional General Partner or substitute General Partner admitted as a general partner of the Partnership pursuant to this Section 8.8 is hereby authorized to, and shall, continue the Partnership without dissolution.

(c)Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by Law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.

Section 8.9Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if and when each of the following conditions is satisfied:

(a)the General Partner consents in writing to such admission, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;

(b)if required by the General Partner, the General Partner receives written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);

(c)if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect that such Transfer is in compliance with this Agreement and all applicable Law; and

(d)if required by the General Partner, the parties to the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including the reasonable legal and accounting fees of the Partnership).

Section 8.10Withdrawal and Removal of Limited Partners. Subject to Section 8.7, if a Limited Partner ceases to hold any Units, including as a result of a forfeiture of Units pursuant to Section 8.2, then such Limited Partner shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner, and shall be deemed to have been withdrawn from the Partnership.

ARTICLE IXDISSOLUTION, LIQUIDATION AND TERMINATION

Section 9.1No Dissolution. Except as required by the Act, the Partnership shall not be dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated, wound up and terminated only pursuant to the provisions of this Article IX, and the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.

Section 9.2Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (each, a “Dissolution Event”):

(a)the entry of a decree of judicial dissolution of the Partnership under Section 17-802 of the Act upon the finding by a court of competent jurisdiction that it is not reasonably practicable to carry on the business of the Partnership in conformity with this Agreement;

(b)any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;

(c)the written consent of all Partners;

(d)at any time there are no limited partners, unless the Partnership is continued in accordance with the Act;

(e)the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner; provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.2(e) if: (i) at the time of the occurrence of such event there is at least one other general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which consent shall be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so continue the business of the Partnership; or

(f)the determination of the General Partner in its sole discretion; provided that in the event of a dissolution pursuant to this clause (f), the relative economic rights of each Class of Units immediately prior to such dissolution shall be preserved to the greatest extent practicable with respect to distributions made to Partners pursuant to Section 9.3 below in connection with the winding up of the Partnership, taking into consideration tax and other legal constraints that may adversely affect one or more parties hereto and subject to compliance with applicable Laws, unless, and to the extent that, with respect to any Class of Units, holders of not less than 90% of the Units of such Class consent in writing to a treatment other than as described above.

Section 9.3Distribution upon Dissolution. Upon dissolution, the Partnership shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:

(a)First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners or their Affiliates to the extent otherwise permitted by Law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.3; and

(b)Subject to Article XII, the balance, if any, to the holders of Class A Units; pro rata to each of the holders of Class A Units in accordance with their Total Percentage Interests.

Section 9.4Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.

Section 9.5Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX, and the Certificate shall have been cancelled in the manner required by the Act.

Section 9.6Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.

Section 9.7Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 10.2, 11.1 and 11.10 shall survive the termination of the Partnership.

ARTICLE X
LIABILITY AND INDEMNIFICATION

Section 10.1Duties; Liabilities; Exculpation.

(a)This Agreement is not intended to, and does not, create or impose any fiduciary duty on any Partner (including the General Partner) or on its Affiliates. Notwithstanding any other provision of this Agreement or any duty otherwise existing at law or in equity, the Partners (including the General Partner) and their respective Affiliates shall, to the maximum extent permitted by Law, including Section 17-1101(d) of the Act, owe only such duties and obligations as are expressly set forth in this Agreement, and no other duties (including fiduciary duties), to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person otherwise bound by this Agreement.

(b)To the extent that, at law or in equity, any Partner (including the General Partner) or its Affiliates has duties (including fiduciary duties) and liabilities relating thereto to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement, any such Person acting under this Agreement shall not be liable to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that such provisions restrict or eliminate the duties and liabilities relating thereto of any Partner (including the General Partner) or its Affiliates otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities relating thereto of such Person.

(c)Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent permitted by Law, no Indemnitee shall be liable to the Partnership or any Partner for any losses, claims, demands, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising as a result of any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) of a Indemnitee, or for any breach of contract (including breach of this Agreement) or any breach of duties (including breach of fiduciary duties) whether arising hereunder, at law, in equity or otherwise, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction (a “final adjudication”) determining that, in respect of the matter in question, the Indemnitee acted in bad faith or with criminal intent.

(d)Each Indemnitee shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants, other experts and financial or professional advisors, and acting or omitting to act on behalf of the Partnership or in furtherance of the interests of the Partnership, in each case, in good faith reliance upon and in accordance with such advice will be full justification for any such act or omission, and each Indemnitee will be fully protected in so acting or omitting to act so long as such counsel, accountants, other experts and financial or professional advisors were selected with reasonable care.

(e)Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or in equity, whenever in this Agreement or any other agreement contemplated hereby the General Partner is permitted to or required to make or take (or omit to make or take) a determination, evaluation, election, decision, approval, authorization, consent or other action (howsoever described herein, each, a “Determination”) (i) in its “discretion” or “sole discretion” or under a grant of similar authority or latitude, or (ii) pursuant to any provision not subject to an express standard of “good faith” (regardless of whether there is a reference to “discretion”, “sole discretion” or any other standard), then the General Partner (or any of its Affiliates causing it to do so), in making such Determination, shall not be subject to any fiduciary duty and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Partnership, the Partners, or any other Person (including any creditor of the Partnership), and shall not be subject to any other or different standards imposed by this Agreement or otherwise existing at law, in equity or otherwise. Notwithstanding the immediately preceding sentence, if a Determination under this Agreement is to be made or taken by the General Partner in “good faith”, the General Partner shall act under that express standard and shall not be subject to any other or different standard under this Agreement or otherwise existing at law, in equity or otherwise.

(f)For all purposes of this Agreement and notwithstanding any applicable provision of law or in equity, a Determination or failure to act by the General Partner conclusively will be deemed to be made, taken or omitted to be made or taken in “good faith”, and shall not be a breach of this Agreement, unless the General Partner subjectively believed such Determination or failure to act was opposed to the best interests of the Partnership. In any proceeding brought by the Partnership, any Limited Partner, any Person who acquires an interest in a Unit or any other Person who is bound by this Agreement challenging such Determination or failure to act, notwithstanding any provision of law or equity to the contrary, the Person bringing or prosecuting such proceeding shall have the burden of proving that such Determination or failure to act was not in good faith. Any Determination taken or made by the General Partner or any other Indemnitee which is not in breach of this Agreement shall be deemed taken or determined in compliance with this Agreement, the Act and any other applicable fiduciary requirements.

(g)The Limited Partners expressly acknowledge that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including the tax consequences to Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any Determinations, and that the General Partner shall not be liable to the Limited Partners for monetary damages or equitable relief for losses sustained, liabilities incurred or benefits not derived by Limited Partners in connection with such Determinations.

(h)Notwithstanding any other provision of this Agreement, to the extent that any provision of this Agreement, including the provisions of this Section 10.1, purports (i) to restrict or otherwise modify or eliminate the duties (including fiduciary duties), obligations and liabilities of the General Partner or any other Indemnitee otherwise existing at law or in equity or (ii) to constitute a waiver or consent by the Partnership, the Limited Partners or any other Person who acquires an interest in a Unit to any such restriction, modification or elimination, such provision shall be deemed to have been approved by the Partnership, all of the Partners, and each other Person who has acquired an interest in a Unit.

Section 10.2Indemnification.

(a)Indemnification. To the fullest extent permitted by law, as the same exists or hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Partnership to provide broader indemnification rights than such law permitted the Partnership to provide prior to such amendment), the Partnership shall indemnify any Indemnitee who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil, criminal, administrative, arbitrative or investigative, and whether formal or informal, including appeals, by reason of his or her or its status as an Indemnitee or by reason of any action alleged to have been taken or omitted to be taken by Indemnitee in such capacity, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred by such Indemnitee in connection with such action, suit or proceeding, including appeals; provided that such Indemnitee shall not be entitled to indemnification hereunder if, but only to the extent that, such Indemnitee acted in bad faith or with criminal intent. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to indemnify an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent. The indemnification of an Indemnitee of the type identified in clause (d) of the definition of Indemnitee shall be secondary to any and all indemnification to which such Indemnitee is entitled from (x) the relevant other Person (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Person or Indemnitee), and (y) the relevant Fund (if applicable) (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Fund or the Indemnitee) (clauses (x) and (y) together, the “Primary Indemnification”), and will only be paid to the extent the Primary Indemnification is not paid and/or does not provide coverage (e.g., a self-insured retention amount under an insurance policy). No such Person or Fund shall be entitled to contribution or indemnification from or subrogation against the Partnership. The indemnification of any other Indemnitee shall, to the extent not in conflict with such policy, be secondary to any and all payment to which such Indemnitee is entitled from any relevant insurance policy issued to or for the benefit of the Partnership or any Indemnitee.

(b)Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including attorneys’ fees) incurred by any Indemnitee in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals, upon presentation of an undertaking on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Section 10.2 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to pay expenses of an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent.

(c)Unpaid Claims. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.2 is not paid in full within 30 days after a written claim therefor by any Indemnitee has been received by the Partnership, such Indemnitee may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Partnership shall have the burden of proving that such Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable Law.

(d)Insurance.

(i)To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person described in Section 10.2(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.2 or otherwise.

(ii)In the event of any payment by the Partnership under this Section 10.2, the Partnership shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee from any relevant other Person or under any insurance policy issued to or for the benefit of the Partnership, such relevant other Person, or any Indemnitee. Each Indemnitee agrees to execute all papers required and take all action necessary to secure such rights, including the execution of such documents as are necessary to enable the Partnership to bring suit to enforce any such rights in accordance with the terms of such insurance policy or other relevant document. The Partnership shall pay or reimburse all expenses actually and reasonably incurred by the Indemnitee in connection with such subrogation.

(iii)The Partnership shall not be liable under this Section 10.2 to make any payment of amounts otherwise indemnifiable hereunder (including, but not limited to, judgments, fines and amounts paid in settlement, and excise taxes with respect to an employee benefit plan or penalties) if and to the extent that the applicable Indemnitee has otherwise actually received such payment under this Section 10.2 or any insurance policy, contract, agreement or otherwise.

(e)Non-Exclusivity of Rights. The provisions of this Section 10.2 shall be applicable to all actions, claims, suits or proceedings made or commenced after the date of this Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this Section 10.2 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.2 (or legal representative thereof) who serves in such capacity at any time while this Section 10.2 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.2 shall be found to be invalid or limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.2 shall neither be exclusive of, nor be deemed in limitation of, any rights to which any person may otherwise be or become entitled or permitted by contract, this Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.2(a) shall be made to the fullest extent permitted by law.

For purposes of this Section 10.2, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director, officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.

This Section 10.2 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.2(a).

ARTICLE XI
MISCELLANEOUS

Section 11.1Dispute Resolution.

(a)The Partnership and each Partner, each other Person who acquires a Unit or other interest in the Partnership and each other Person who is bound by this Agreement (collectively, the “Consenting Parties” and each a “Consenting Party”) agrees that any dispute, claim or controversy of whatever nature directly or indirectly relating to or arising out of the Agreement, the termination or validity thereof, or any alleged breach thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before a panel of three arbitrators. The arbitration shall be administered by JAMS/ENDISPUTE pursuant to its Comprehensive Arbitration Rules and Procedures. The language of the arbitration shall be English. Each party to such dispute shall be entitled to choose one arbitrator, and the chosen arbitrators shall choose the third arbitrator. All arbitrators shall be chosen from the JAMS arbitration panel. The arbitrators shall, in their award, allocate all of the costs of the arbitration (and the mediation, if applicable), including the fees of the arbitrators and the reasonable attorneys’ fees of the prevailing party, against the party who did not prevail. The award in the arbitration shall be final and binding. The arbitration shall be governed by the federal arbitration act, 9 U.S.C. §§1–16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. This arbitration clause shall not preclude any party from obtaining provisional relief or interim measures of protection, including injunctive relief, from a court of appropriate jurisdiction to protect its rights under this Agreement. Each party agrees and consents to personal jurisdiction, service of process and exclusive venue in any federal or state court within the State of California, County of Los Angeles, in connection with any action brought pursuant to clause (b) below or in connection with a request for any such provisional relief or interim measures of protection, and in connection with any action to enforce this arbitration clause or an award in arbitration and agrees not to assert, by way of motion, as a defense or otherwise, that any action brought in any such court should be dismissed on grounds of forum non conveniens. Each party to this Agreement consents to mailing of process or other papers in connection with any such arbitration or action by certified mail in the manner and to the addresses provided in Section 11.11.

(b)The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof or thereof and that the parties shall be entitled to seek an injunction to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof or thereof in accordance with the provisions of this Section 11.1(b), in addition to any other remedy to which they are entitled at law or in equity. No party seeking relief under this Section 11.1(b) shall be required to post a bond or prove special damages.

Section 11.2Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.3Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.

Section 11.4Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

Section 11.5Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.

Section 11.6Amendments and Waivers.

(a)This Agreement (including the Annexes hereto) may be amended, supplemented, waived or modified by the General Partner in its sole discretion without the approval of any Limited Partner or other Person; provided that no amendment may (i) materially and adversely affect the rights of a holder of Units, as such, other than on a pro rata basis with other holders of Units of the same Class without the consent of such holder (or, if there is more than one such holder that is so affected, without the consent of a majority in interest of such affected holders in accordance with their holdings of such Class of Units) or (ii) materially and adversely affect the rights of Alleghany without the prior written consent of Alleghany; providedfurther, however, that notwithstanding the foregoing, the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary, appropriate, proper, advisable or incidental in connection with, or in furtherance of, the creation, authorization or issuance of Units or any Class or series of equity interest in the Partnership or options, rights, warrants or appreciation rights relating to equity interest in the Partnership pursuant to Section 7.1 hereof; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement, including pursuant to Section 7.1 hereof; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, addressing changes in U.S. federal, state or local income tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership; (vi) a change that the General Partner determines in its sole discretion is necessary, appropriate, proper, advisable or incidental to, or in furtherance of, qualifying or continuing the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state or other jurisdiction; (vii) an amendment that the General Partner determines is necessary or appropriate, based on the advice of counsel, to prevent the Partnership, or the General Partner or its Indemnitees, from having a material risk of being in any manner subjected to registration under the provisions of the U.S. Investment Company Act of 1940 or the U.S. Investment Advisers Act of 1940, or “plan asset” regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor; (viii) any amendment expressly permitted in this Agreement to be made by the General Partner acting alone; (ix) an amendment that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, reflecting and accounting for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other entity; (x) any amendment to Section 11.1 that the General Partner determines in good faith; (xi) any amendment that the General Partner determines to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, curing any ambiguity, omission, mistake, defect or inconsistency; or (xii) any other amendments that the General Partner determines to be substantially similar to the foregoing. If an amendment has been approved in accordance with this Agreement, such amendment shall be adopted and effective with respect to all Partners. Upon obtaining such approvals as may be required by this Agreement, and without further action or execution on the part of any other Partner or other Person, any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner and the Limited Partners shall be deemed a party to and bound by such amendment.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

(c)The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest (or interest in an entity treated as a partnership for U.S. federal income tax purposes) that is Transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests (or interest in an entity treated as a partnership for U.S. federal income tax purposes) Transferred in connection with the performance of services while the election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.

(d)Except as may be otherwise required by Law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.

Section 11.7No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.2 hereof); provided that each employee, officer, director or agent of any Consenting Party or its Affiliates and each Indemnitee is an intended third party beneficiary of Section 11.1(a) and shall be entitled to enforce its rights thereunder.

Section 11.8Power of Attorney. Each Limited Partner, by its execution hereof, hereby makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.5) and Law or to permit the Partnership to become or to continue as a limited partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification of this Agreement or the Partnership in accordance with this Agreement, including the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the Partnership’s activities) to be filed on behalf of the Partnership.

Section 11.9Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, without the approval of any other Person, enter into separate letter agreements with individual Limited Partners with respect to Total Percentage Interests, Capital Contributions or any other matter, which have the effect of establishing rights under, or supplementing, the terms of, this Agreement. The Partnership may from time to time execute and deliver to the Limited Partners schedules which set forth the then current Capital Contributions and Total Percentage Interests of the Limited Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.

Section 11.10Governing Law; Separability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. In particular, it shall be construed to the maximum extent possible to comply with all of the terms and conditions of the Act. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under such Act or other applicable Law, such invalidity or unenforceability shall not invalidate the entire Agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable Law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

Section 11.11Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail, by registered or certified mail (postage prepaid) or by any communication permitted by the Act to the respective parties if addressed to a Person at such Person’s address as set forth on the signature pages hereto or at such other address for a party as shall be specified in any notice given in accordance with this Section 11.11.

Section 11.12Counterparts. This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which shall be an original and all of which together shall constitute a single instrument.

Section 11.13Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable Law.

Section 11.14Entire Agreement. This Agreement, the Supplemental Agreements and the Certificate embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements and understandings between the parties with respect to such subject matter. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. Each party hereto acknowledges, represents, and warrants that (a) each such party hereto and such party’s independent counsel have reviewed this Agreement; and (b) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

Section 11.15Partnership Status. For U.S. federal income tax purposes, the parties intend to treat the Partnership as a partnership, and the Partnership shall be deemed to be the same entity as AH LLC.

Section 11.16Limited Partner Representations.

(a)Each Partner understands and agrees that:

(i)The Units evidenced by this Agreement have not been registered under the Securities Act of 1933, 15 U.S.C. § 15b et seq., the Delaware Securities Act, the California Corporate Securities Law of 1968 or any other state securities Laws (collectively, the “Securities Acts”) because the Partnership is issuing interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering;

(ii)The Partnership has relied upon the representation made by each Limited Partner that such Limited Partner’s interest is to be held by such Limited Partner for investment;

(iii)The Partnership is under no obligation to, and has no intention to, register the interests or to assist the Limited Partners in complying with any exemption from registration under the Securities Acts if such Limited Partner should at a later date wish to dispose of such Limited Partner’s interest;

(iv)The Partnership has not requested a tax ruling from the Internal Revenue Service or any other tax authority nor an opinion of counsel with respect to the tax status of the Partnership or as to the treatment of its formation, issuance of interests, or other transactions of the Partnership, and no assurances have been made that the treatment which the Partnership intends to or does take with respect to such items will be accepted by the Internal Revenue Service upon examination and audit; and

(v)Such Limited Partner has been advised to obtain independent counsel to advise such Limited Partner individually in connection with the drafting, preparation and negotiation of this Agreement. The attorneys, accountants and other experts who perform services for any Limited Partner may also perform services for the Partnership. To the extent that any of the foregoing representation constitutes a conflict of interest, the Partnership and each Limited Partner hereby expressly waive any such conflict of interest.

(b)Each Limited Partner represents and warrants as follows:

(i)Such Limited Partner is acquiring the interests for such Limited Partner’s own account, for investment purposes only, and not with a view to or for the resale, distribution or fractionalization thereof, in whole or in part, and no other Person has a direct or indirect beneficial interest therein;

(ii)Such Limited Partner is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities Acts; and

(iii)The execution, delivery and performance of this Agreement have been duly authorized by such Limited Partner.

ARTICLE XIITERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS

Section 12.1Designation.

The Series A Preferred Mirror Units were constituted, designated and created as a series of Preferred Units pursuant to the A&R Partnership Agreement and continue to be constituted, designated and created as a series of Preferred Units under this Agreement. Each Series A Preferred Mirror Unit shall be identical in all respects to every other Series A Preferred Mirror Unit. 8,542,820 Series A Preferred Mirror Units have been constituted, designated, created and issued to the General Partner. It is the intention of the General Partner that at all times the number of outstanding 7.00% Series A Preferred Shares issued by the Issuer equal the aggregate number of GP Mirror Units issued by the Ares Operating Group entities.

Section 12.2Definitions.

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Article XII.

“7.00% Series A Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Ares Group” means the Ares Operating Group entities, the direct and indirect parents (including, without limitation, general partners) of the Ares Operating Group entities (the “Parent Entities”), any direct or indirect subsidiaries of the Parent Entities or the Ares Operating Group entities, the general partner or similar controlling entities of any investment or vehicle that is managed, advised or sponsored by the Ares Group (an “Ares Fund”), and any other entity through which any of the foregoing directly or indirectly conduct its business, but shall exclude any company in which an Ares Fund has an investment. For purposes of this definition “subsidiary” means, with respect to any Person, any subsidiary of such Person that is or would be consolidated with such Person in the preparation of segment information with respect to the combined financial statements of such Person prepared in accordance with U.S. GAAP and shall not include (x) any private equity or other investment fund or vehicle or (y) any portfolio company of any such fund or vehicle.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York City are authorized or required by law to close.

“Change of Control Event” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Distribution Payment Date” means March 31, June 30, September 30 and December 31 of each year, commencing September 30, 2016.

“Distribution Period” is the period from and including a Distribution Payment Date to, but excluding, the next Distribution Payment Date, except that the initial Distribution Period commences on and includes June 8, 2016.

“Distribution Rate” means 7.00% per annum.

“GP Mirror Units” means, collectively, the Series A Preferred Mirror Units, the 7.00% Series Preferred Mirror Units of Ares Offshore Holdings L.P., the 7.00% Series Preferred Mirror Units of Ares Investments L.P. and any preferred equity securities of a future Ares Operating Group entity with economic terms consistent with the Series A Preferred Mirror Units.

“Junior Units” means the Class A Units and any other equity securities that the Partnership may issue in the future ranking, as to the payment of distributions, junior to the Series A Preferred Mirror Units.

“Parity Units” means any Preferred Units that the Partnership may authorize or issue, the terms of which provide that such securities shall rank equally with the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event.

“Permitted Jurisdiction” means the United States or any state thereof, Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Gibraltar, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, the United Kingdom or British Crown Dependencies, any other member country of the Organisation for Economic Co-operation and Development, or any political subdivision of any of the foregoing.

“Permitted Reorganization” means (i) the voluntary or involuntary liquidation, dissolution or winding up of any of the Partnership’s subsidiaries or upon any reorganization of the Partnership into another limited liability entity pursuant to provisions of this Agreement that allows the Partnership to convert, merge or convey our assets to another limited liability entity with or without limited partner approval (including a merger or conversion of our partnership into a corporation if the General Partner determines in its sole discretion that it is no longer in the interests of the Partnership to continue as a partnership for U.S. federal income tax purposes) or (ii) the Partnership engages in a reorganization, merger or other transaction in which a successor to the Partnership issues equity securities to the Series A Holders that have rights, powers and preferences that are substantially similar to the rights, powers and preferences of the Series A Preferred Mirror Units pursuant to provisions of this Agreement that allow the Partnership to do so without limited partner approval.

“Permitted Transfer” means the sale, conveyance, exchange or transfer, for cash, units of capital stock, securities or other consideration, of all or substantially all of the Partnership’s property or assets or the consolidation, merger or amalgamation of the Partnership with or into any other entity or the consolidation, merger or amalgamation of any other entity with or into the Partnership.

“Series A Holder” means a holder of Series A Preferred Mirror Units.

“Series A Liquidation Preference” means $25.00 per Series A Preferred Mirror Unit. The Series A Liquidation Preference shall be the “Liquidation Preference” with respect to the Series A Preferred Mirror Units.

“Series A Liquidation Value” means the sum of the Series A Liquidation Preference and declared and unpaid distributions, if any, to, but excluding, the date of the Dissolution Event on the Series A Preferred Mirror Units.

“Series A Record Date” means, with respect to any Distribution Payment Date, the March 15, June 15, September 15 or December 15, as the case may be, immediately preceding the relevant March 31, June 30, September 30 or December 31 Distribution Payment Date, respectively.

“Substantially All Merger” means a merger or consolidation of one or more of the Ares Operating Group entities with or into another Person that would, in one or a series of related transactions, result in the transfer or other disposition, directly or indirectly, of all or substantially all of the combined assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

“Substantially All Sale” means a sale, assignment, transfer, lease or conveyance, in one or a series of related transactions, directly or indirectly, of all or substantially all of the assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

Section 12.3Distributions.

(a)The Series A Holders shall be entitled to receive with respect to each Series A Preferred Mirror Unit, when, as and if declared by the General Partner in its sole discretion out of funds legally available therefor, non-cumulative quarterly cash distributions on the applicableDistribution Payment Datethat corresponds to the Series A Record Date for which the General Partner has declared a distribution, if any, at a rate per annum equal to theDistribution Rate(subject to Section 12.6 of this Agreement) of theSeries A Liquidation Preference. Such distributions shall be non-cumulative, and Series A Holders shall not be entitled to distributions to the extent that such distributions would be expected to cause the Capital Accounts of such Series A Holders to be less than $0, taking into account reasonably expected allocations of Gross Ordinary Income for the taxable year of such distribution. If aDistribution Payment Dateis not aBusiness Day, the related distribution (if declared) shall be paid on the next succeedingBusiness Daywith the same force and effect as though paid on suchDistribution Payment Date, without any increase to account for the period from suchDistribution Payment Datethrough the date of actual payment. Distributions payable on the Series A Preferred Mirror Units for the initialDistribution Periodand any period less than a fullDistribution Periodshall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in such period. Declared distributions will be payable on the relevantDistribution Payment Dateto Series A Holders as they appear on the Partnership’s register at the close of business, New York City time, on the Series A Record Dates, provided that if theSeries A Record Dateis not aBusiness Day, the declared distributions will be payable on the relevant Distribution Payment Dateto the Series A Holders as it appears on the Partnership’s register at the close of business, New York City time on the Business Day immediately preceding such Series A Record Date.

(b)So long as any Series A Preferred Mirror Units are outstanding, (i) no distribution, whether in cash or property, may be declared or paid or set apart for payment on the Junior Units for the then-current quarterly Distribution Period (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) and (ii) the Partnership and its subsidiaries shall not directly or indirectly repurchase, redeem or otherwise acquire for consideration any Junior Units, unless, in each case, distributions have been declared and paid or declared and set apart for payment on GP Mirror Units for the then-current quarterly Distribution Period, other than, in each case (x) repurchases, redemptions or other acquisitions of Junior Units for Common Shares pursuant to the Exchange Agreement or otherwise, (y) grants or vesting of awards under the Issuer’s or its subsidiaries’ equity incentive plans and (z) repurchases, redemptions or other acquisitions of Junior Units pursuant to any put or call agreements existing on June 8, 2016 (including any amendments, modifications or replacements thereof that do not adversely affect the Series A Holders).

(c)The General Partner, or a duly authorized committee thereof, may, in its sole discretion, choose to pay distributions on the Series A Preferred Mirror Units without the payment of any distributions on any Junior Units.

(d)When distributions are not declared and paid (or duly provided for) on any Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) in full upon the Series A Preferred Mirror Units or any other Parity Units, all distributions declared upon the Series A Preferred Mirror Units and all such Parity Units payable on such Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates, on a distribution payment date falling within the related Distribution Period) shall be declared pro rata so that the respective amounts of such distributions shall bear the same ratio to each other as all declared and unpaid distributions per Unit on the Series A Preferred Mirror Units and all accumulated unpaid distributions on all Parity Units payable on such Distribution Payment Date (or in the case of non-cumulative Parity Units, unpaid distributions for the then-current Distribution Period (whether or not declared) and in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) bear to each other.

(e)No distributions may be declared or paid or set apart for payment on any Series A Preferred Mirror Units if at the same time any arrears exist or default exists in the payment of distributions on any outstanding Units ranking, as to the payment of distributions and distribution of assets upon a Dissolution Event, senior to the Series A Preferred Mirror Units, subject to any applicable terms of such outstanding Units, subject to any applicable terms of such outstanding Units.

(f)A Series A Holder shall not be entitled to any distributions, whether payable in cash or property, other than as provided in this Agreement and shall not be entitled to interest, or any sum in lieu of interest, in respect of any distribution payment, including any such payment which is delayed or foregone, including any such payment which is delayed or foregone.

(g)The Partners intend that no portion of the distributions paid to a Series A Holder pursuant to this Section 12.3 shall be treated as a “guaranteed payment” within the meaning of Section 707(c) of the Code, and no Partner shall take any position inconsistent with such intention, except if there is a change in applicable law or final determination by the Internal Revenue Service that is inconsistent with such intention.

Section 12.4Rank.

The Series A Preferred Mirror Units shall rank, with respect to payment of distributions and distribution of assets upon a Dissolution Event:

(a)junior to all of the Partnership’s existing and future indebtedness and any equity securities, including Preferred Units, that the Partnership may authorize or issue, the terms of which provide that such securities shall rank senior to the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event;

(b)equally to any Parity Units; and

(c)senior to any Junior Units.

Section 12.5Redemption.

(a)If the Issuer redeems its 7.00% Series A Preferred Shares, then the Partnership may redeem the Series A Preferred Mirror Units, in whole or in part, at a redemption price equal to the Series A Liquidation Preference plus an amount equal to declared and unpaid distributions from the Distribution Payment Date immediately preceding the redemption date to, but excluding, the redemption date. If less than all of the outstanding Series A Preferred Mirror Units are to be redeemed, the General Partner shall select the Series A Preferred Mirror Units to be redeemed from the outstanding Series A Preferred Mirror Units not previously called for redemption by lot orpro rata(as nearly as possible).

(b)If the Issuer redeems its 7.00% Series A Preferred Shares pursuant to a Change of Control Event, then the Partnership may, in the General Partner’s sole discretion, redeem the Series A Preferred Mirror Units, in whole but not in part, out of funds legally available therefor, at a redemption price equal to $25.25 per Series A Preferred Mirror Unit plus an amount equal to the declared and unpaid distributions. So long as funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment, from and after the redemption date, such Series A Preferred Mirror Units called for redemption shall no longer be deemed outstanding, and all rights of the Series A Holders thereof shall cease other than the right to receive the redemption price, without interest.

(c)Without limiting clause (b) of this Section 12.5, if the Partnership shall deposit on or prior to any date fixed for redemption of Series A Preferred Mirror Units, with any bank or trust company, as a trust fund, a fund sufficient to redeem the Series A Preferred Mirror Units called for redemption, with irrevocable instructions and authority to such bank or trust company to pay on and after the date fixed for redemption or such earlier date as the General Partner may determine, to the respective Series A Holders, the redemption price thereof, then from and after the date of such deposit (although prior to the date fixed for redemption) such Series A Preferred Mirror Units so called shall be deemed to be redeemed and such deposit shall be deemed to constitute full payment of said Series A Preferred Mirror Units to the holders thereof and from and after the date of such deposit said Series A Preferred Mirror Units shall no longer be deemed to be outstanding, and the holders thereof shall cease to be holders of Units with respect to such Series A Preferred Mirror Units, and shall have no rights with respect thereto except only the right to receive from said bank or trust company, on the redemption date or such earlier date as the General Partner may determine, payment of the redemption price of such Series A Preferred Mirror Units without interest.

Section 12.6Distribution Rate.

If the distribution rate per annum on the 7.00% Series A Preferred Shares issued by the Issuer shall increase pursuant to Section 16.6 of the Issuer Limited Partnership Agreement, then the Distribution Rate shall increase by the same amount beginning on the same date as set forth in Article XVI of the Issuer Limited Partnership Agreement.

Section 12.7Voting.

Notwithstanding any other provision of this Agreement or the Act, the Series A Preferred Mirror Units shall not have any relative, participating, optional or other voting, consent or approval rights or powers, and the vote, consent or approval of the Series A Holders shall not be required for the taking of any Partnership action. The Partnership may, from time to time, issue additional Series A Preferred Mirror Units.

Section 12.8Liquidation Rights.

(a)Upon any Dissolution Event, after payment or provision for the liabilities of the Partnership (including the expenses of such Dissolution Event) and the satisfaction of all claims ranking senior to the Series A Preferred Mirror Units in accordance with Article IX of this Agreement, the Series A Holders shall be entitled to receive out of the assets of the Partnership or proceeds thereof available for distribution to Partners, before any payment or distribution of assets is made in respect of Junior Units, distributions equal to the lesser of (x) the Series A Liquidation Value and (y) the positive balance in their Capital Accounts (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs). Upon a Dissolution Event, or in the event that any Ares Operating Group entity liquidates, dissolves or winds up, no Ares Operating Group entity may declare or pay or set apart payment on its Junior Units unless the outstanding liquidation preference on all outstanding GP Mirror Units of each Ares Operating Group entity have been repaid via redemption or otherwise.

(b)Upon a Dissolution Event, after each Series A Holder receives a payment equal to the positive balance in its Capital Account (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs), such Series A Holder shall not be entitled to any further participation in any distribution of assets by the Partnership.

(c)For the purposes of this Section 12.8, a Dissolution Event shall not be deemed to have occurred in connection with (i) a Substantially All Merger or a Substantially All Sale whereby an Ares Operating Group entity is the surviving Person or the Person formed by such transaction is organized under the laws of a Permitted Jurisdiction and has expressly assumed all of the obligations under the GP Mirror Units, (ii) the sale or disposition of an Ares Operating Group entity (whether by merger, consolidation or the sale of all or substantially all of its assets) if such sale or disposition is not a Substantially All Merger or Substantially All Sale, (iii) the sale or disposition of an Ares Operating Group entity should such Ares Operating Group entity not constitute a “significant subsidiary” of the Issuer under Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange Commission, (iv) an event where the Series A Preferred Mirror Units have been fully redeemed pursuant to the terms of this Agreement or if proper notice of redemption of the Series A Preferred Mirror Units has been given and funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment pursuant this Agreement, (v) transactions where the assets of the Ares Operating Group entity being liquidated, dissolved or wound up are immediately contributed to another Ares Operating Group entity or a subsidiary thereof, and (vi) with respect to an Ares Operating Group entity, a Permitted Transfer or a Permitted Reorganization.

(d)A Permitted Transfer will not be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Partnership, notwithstanding that for other purposes, such as for tax purposes, such an event may constitute a liquidation, dissolution or winding up.

Section 12.9Amendments and Waivers.

The provisions of this Article XII may be amended, supplemented, waived or modified in accordance with the provisions of Section 11.6 of the Agreement; provided that any amendment, supplement, waiver or modification of this Article XII that relates to the economic terms of the Series A Preferred Mirror Units and is not consistent with a corresponding amendment, supplement, waiver or modification of Article XVI of the Issuer Limited Partnership Agreement shall require the consent of the Limited Partners that own a majority of the Class A Units then outstanding.

Section 12.10No Conversion.

The Series A Preferred Mirror Units are not convertible into Class A Units or any other class or series of interests or any other security of the Partnership.

Section 12.11No Third Party Beneficiaries.

The provisions of Section 11.7 of the Agreement shall apply to this Article XII without limitation.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.

GENERAL PARTNER:

ARES HOLDCO LLC

By: Ares Holdings, Inc., its sole member

By:    _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

LIMITED PARTNERS:

ARES OWNERS HOLDINGS L.P.

By: Ares Partners Holdco LLC,
its General Partner

By:    _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

ALLEGHANY INSURANCE HOLDINGS LLC

By:    _/s/ John L. Sennott, Jr.______________    Name: John L. Sennott, Jr.    Title: Senior Vice President

Address:

_1411 Broadway, 34^th Floor_____________

_New York, NY 10018_________________

EX-10.2

THIRD AMENDED AND RESTATED AGREEMENT OF

9779/17956-003 CURRENT/96434437v7

EXEMPTED LIMITED PARTNERSHIP

OF

ARES OFFSHORE HOLDINGS L.P.

Dated on March 8, 2018 and intended to be effective March 1, 2018

THE PARTNERSHIP UNITS OF ARES OFFSHORE HOLDINGS L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS; THIS THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BY THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

ARTICLE I DEFINITIONS    1

Section 1.1 Definitions    1

Section 1.2 Interpretation    10

ARTICLE II FORMATION, TERM, PURPOSE AND POWERS    10

Section 2.1 Continuation; Name; Foreign Jurisdictions    10

Section 2.2 Business Purpose    11

Section 2.3 Term    11

Section 2.4 Registered Office    11

Section 2.5 Principal Office    12

Section 2.6 Powers of the Partnership    12

Section 2.7 Partners; Admission of New Partners    12

Section 2.8 Withdrawal    12

ARTICLE III MANAGEMENT    12

Section 3.1 General Partner    12

Section 3.2 Compensation    14

Section 3.3 Expenses    14

Section 3.4 Officers    14

Section 3.5 Authority of Partners    15

Section 3.6 Action by Written Consent or Ratification    15

ARTICLE IV DISTRIBUTIONS    15

Section 4.1 Distributions    16

Section 4.2 Liquidation Distribution    17

Section 4.3 Limitations on Distribution    17

Section 4.4 Clawbacks    17

ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS    17

Section 5.1 Initial Capital Contributions    17

Section 5.2 No Additional Capital Contributions    17

Section 5.3 Capital Accounts    17

Section 5.4 Allocations of Profits and Losses    18

Section 5.5 Special Allocations    18

Section 5.6 Tax Allocations    20

Section 5.7 Tax Advances    20

Section 5.8 Tax Matters    20

Section 5.9 Other Allocation Provisions    21

ARTICLE VI BOOKS AND RECORDS; REPORTS    21

Section 6.1 Books and Records    21

ARTICLE VII PARTNERSHIP UNITS    22

Section 7.1 Units    22

Section 7.2 Register    23

Section 7.3 Registered Partners    23

ARTICLE VIII VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS    23

Section 8.1 Vesting of Unvested Units    23

Section 8.2 Forfeiture of Units    24

Section 8.3 Limited Partner Transfers    25

Section 8.4 Mandatory Exchanges    25

Section 8.5 Encumbrances    26

Section 8.6 Further Restrictions    26

Section 8.7 Rights of Assignees    27

Section 8.8 Admissions, Withdrawals and Removals    27

Section 8.9 Admission of Assignees as Substitute Limited Partners    28

Section 8.10 Withdrawal and Removal of Limited Partners    28

ARTICLE IX DISSOLUTION, LIQUIDATION AND TERMINATION    28

Section 9.1 No Commencement of Winding Up    28

Section 9.2 Events Causing Commencement of Winding Up    29

Section 9.3 Distribution upon Dissolution    29

Section 9.4 Time for Liquidation    30

Section 9.5 Dissolution    30

Section 9.6 Claims of the Partners    30

Section 9.7 Survival of Certain Provisions    30

ARTICLE X LIABILITY AND INDEMNIFICATION    30

Section 10.1 Duties; Liabilities; Exculpation    30

Section 10.2 Indemnification    32

ARTICLE XI MISCELLANEOUS    35

Section 11.1 Dispute Resolution    35

Section 11.2 Severability    36

Section 11.3 Binding Effect    36

Section 11.4 Further Assurances    36

Section 11.5 Expenses    36

Section 11.6 Amendments and Waivers    36

Section 11.7 No Third Party Beneficiaries    38

Section 11.8 Power of Attorney    38

Section 11.9 Letter Agreements; Schedules    39

Section 11.10 Governing Law; Separability    39

Section 11.11 Notices    39

Section 11.12 Counterparts    39

Section 11.13 Cumulative Remedies    39

Section 11.14 Entire Agreement    39

Section 11.15 Partnership Status    40

Section 11.16 Limited Partner Representations    40

ARTICLE XII TERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS    41

Section 12.1 Designation    41

Section 12.2 Definitions    41

Section 12.3 Distributions    43

Section 12.4 Rank    45

Section 12.5 Redemption    45

Section 12.6 Distribution Rate    46

Section 12.7 Voting    46

Section 12.8 Liquidation Rights    46

Section 12.9 Amendments and Waivers    47

Section 12.10 No Conversion    47

Section 12.11 No Third Party Beneficiaries    47

THIRD AMENDED AND RESTATED AGREEMENT OF
EXEMPTED LIMITED PARTNERSHIP
OF
ARES OFFSHORE HOLDINGS L.P.

THIRD AMENDED AND RESTATED AGREEMENT OF EXEMPTED LIMITED PARTNERSHIP (this “Agreement”) of Ares Offshore Holdings L.P. (the “Partnership”), entered into on March 8, 2018, among AOF Holdco LLC, a Delaware limited liability company, as general partner, and the Limited Partners (as defined herein) of the Partnership.

WHEREAS, the Partnership was formed as a Cayman Islands exempted limited partnership by executing the Initial Exempted Limited Partnership Agreement of the Partnership, dated March 28, 2014 (the “Initial Partnership Agreement”), and by filing a registration statement pursuant to Section 9 of the ELP Law with the Registrar of Exempted Limited Partnerships of the Cayman Islands on March 28, 2014 (the “Registration Statement”);

WHEREAS, the parties hereto entered into the Second Amended and Restated Agreement of Exempted Limited Partnership of the Partnership, dated June 8, 2016 (the “Second A&R Partnership Agreement”);

WHEREAS, effective as of the Effective Date, the Issuer amended and restated its limited partnership agreement to, among other things, change the name of its common units representing limited partner interests and preferred units representing limited partner interests to Common Shares and Preferred Shares, respectively; and

WHEREAS, the parties hereto now desire to amend and restate the Second A&R Partnership Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

“A&R Partnership Agreement” means the Amended and Restated Agreement of Exempted Limited Partnership of the Partnership dated May 1, 2014.

“Additional Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Adjusted Capital Account Balance” means, with respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“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, the Person in question. As used herein, the term “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; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“Alleghany” means Alleghany Insurance Holdings LLC, a Delaware limited liability company.

“Alleghany Permitted Transferee” means any Affiliate of Alleghany (other than any Person that is a competitor of any Ares Company or whose ownership of equity interests in any entity that is a member of the Ares Operating Group or the Issuer would restrict the operations of any Ares Company, in each case, as determined in good faith by the Issuer).

“Amended Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Ares Company”means any of (i) the Issuer, (ii) Ares GP, (iii) Ares Voting LLC, a Delaware limited liability company, (iv) any entity that is or becomes part of the Ares Operating Group and (v) any entity in which any the foregoing directly or indirectly owns a majority interest or which any of the foregoing controls, or through which any of the foregoing directly or indirectly manages, directs or invests in a Fund, but excluding any Fund.

“Ares Operating Group” means, collectively, (i) the Partnership, (ii) Ares Holdings L.P., a Delaware limited partnership, (iii) Ares Investments L.P., a Delaware limited partnership, and (iv) any future entity designated by Ares GP in its discretion as an Ares Operating Group entity for purposes of this Agreement.

“Ares Owners Class IND Units” has the meaning given to “Class IND Units” in the Ares Owners LP Agreement.

“Ares Owners Class OG Units” has the meaning given to “Class OG Units” in the Ares Owners LP Agreement.

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

“Ares Owners LP Agreement” means the limited partnership agreement of Ares Owners LP.

“Ares Owners Mirror Units” means Class Mirror Units (as defined in the Ares Owners LP Agreement).

“Assignee” has the meaning set forth in Section 8.7.

“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual or corporate resident in Los Angeles, California or New York, New York, whichever is higher (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code (if applicable) and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.

“Available Cash” means, with respect to any fiscal period, the amount of cash on hand which the General Partner, in its sole discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in its sole discretion, deems necessary to expend or retain for working capital or otherwise or to place into reserves.

“Capital Account” means the separate capital account maintained for each Partner in accordance with Section 5.3 hereof.

“Capital Contribution” means, with respect to any Partner, the aggregate amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V.

“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership interest is relinquished to the Partnership; or (d) any other date specified in the Treasury Regulations; provided that adjustments pursuant to clauses (a), (b), (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.

“Class” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time by the General Partner in its sole discretion pursuant to the provisions of this Agreement. As of the Effective Date and the date of this Agreement, the only Classes of Units are Class A Units and Series A Preferred Mirror Units. Subclasses within a Class shall not be separate Classes for purposes of this Agreement. For all purposes hereunder and under the ELP Law, only such Classes expressly established under this Agreement, including by the General Partner in accordance with this Agreement, shall be deemed to be a class of interests in the Partnership. For the avoidance of doubt, to the extent that the General Partner holds interests of any Class, the General Partner shall not be deemed to hold a separate Class of such interests from any other Partner because it is the General Partner.

“Class A Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein, unlimited in number, and having the rights pertaining thereto as are set forth in this Agreement.

“Clawback Obligation” has the meaning set forth in Section 4.4.

“Code” means the Internal Revenue Code of 1986.

“Common Shares” means common shares representing partner interests of the Issuer.

“Consenting Party” has the meaning set forth in Section 11.1(a).

“Contingencies” has the meaning set forth in Section 9.3(a).

“Conversion” has the meaning set forth in the recitals.

“Corresponding Rate” means the number of Class A Units that would be forfeited or cancelled upon the forfeiture or cancellation of Ares Owners Mirror Units or Common Shares pursuant to any agreements governing such Ares Owners Mirror Units or Common Shares, as applicable. As of the Effective Date, the Corresponding Rate shall be 1 for 1. The Corresponding Rate shall be adjusted accordingly by the General Partner in its sole discretion upon: (a) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Class A Units that is not accompanied by an identical subdivision or combination of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable; or (b) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable, that is not accompanied by an identical subdivision or combination of the Class A Units.

“Covered Person” has the meaning set forth in Section 10.2.

“Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Creditable Non-U.S. Tax” means a non-U.S. tax paid or accrued for U.S. federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount. This definition is intended to be consistent with the term “creditable foreign tax” in Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

“Effective Date” has the meaning set forth in Section 2.1(a).

“ELP Law” means The Exempted Limited Partnership Law (2013 Revision).

“Encumbrance” means any mortgage, hypothecation, claim, lien, encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.

“ERISA” means The Employee Retirement Income Security Act of 1974.

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

“Exchange Agreement” means the exchange agreement, dated as of or about April 3, 2017, among the Issuer, the Ares Operating Group entities, the limited partners of the Ares Operating Group entities (or their designees or Affiliates) from time to time party thereto, and the other parties thereto.

“Exchange Transaction” means an exchange of Class A Units for Common Shares pursuant to, and in accordance with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Class A Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.

“Event of Withdrawal” has the meaning set forth in Section 9.2(d).

“Family Member”means, with respect to any Limited Partner who is a natural person, such Limited Partner’s spouse, parents, siblings and children and any other natural person who occupies the same principal residence as such Limited Partner, and the spouses, descendants and ancestors of each of the foregoing.

“Final Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Fiscal Year” means the period commencing on January 1 and ending on December 31 of each year, except (a) for the short taxable years in the years of the Partnership’s formation and termination and (b) as otherwise elected by the General Partner in its sole discretion or required by the Code.

“Fund” means any fund, investment vehicle or account whose investments are managed or advised by an Ares Company.

“GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.

“General Partner” means AOF Holdco LLC, a Delaware limited liability company, or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.

“Gross Ordinary Income” has the meaning assigned to such term in Section 5.5(d).

“Indemnitee” means (a) the General Partner, (b) any Person who is or was a “tax matters partner” (as defined in the Code prior to amendment by P.L. 114-74) or “partnership representative” (as defined in Section 6223 of the Code after amendment by P.L. 114-74), officer or director of the General Partner, (c) any officer or director of the General Partner who is or was serving at the request of the General Partner as a director, officer, employee, trustee, fiduciary, partner, tax matters partner, partnership representative, member, representative, agent or advisor of another Person; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis or similar arm’s-length compensatory basis, agency, advisory, consulting, trustee, fiduciary or custodial services, (d) any Person the General Partner in its sole discretion designates as an “Indemnitee” for purposes of this Agreement and (e) any heir, executor or administrator with respect to Persons named in clauses (a) through (d).

“Initial Limited Partner” means Ares Investments Holdings LLC.

“Initial Partnership Agreement” has the meaning set forth in the preamble of this Agreement.

“Issuer” means Ares Management, L.P., a Delaware limited partnership.

“Issuer General Partner” means Ares Management GP LLC, a Delaware limited liability company and the general partner of the Issuer, or any successor general partner of the Issuer.

“Issuer Limited Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated on or about the Effective Date.

“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may be.

“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records of the Partnership, and, for purposes of Sections 8.1, 8.2, 8.3, 8.4, 8.5 and 8.6, any Permitted Transferee of such Limited Partner.

“Liquidation Agent” has the meaning set forth in Section 9.3.

“Net Taxable Income” has the meaning set forth in Section 4.1(b)(i).

“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).

“Officer” means each Person designated as an officer of the Partnership by the General Partner pursuant to and in accordance with the provisions of Section 3.4, subject to any resolutions of the General Partner appointing such Person as an officer of the Partnership or relating to such appointment.

“Partially Unvested Partner” means any Partner with Unvested Units.

“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).

“Partners” means, at any time, each Person listed as a Partner (including the General Partner) on the books and records of the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.

“Partnership” has the meaning set forth in the preamble of this Agreement.

“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Permitted Transferee” means, with respect to a Limited Partner, (a) its Principal, if any, (b) any trust for the primary benefit of the Family Members of such Limited Partner or the Family Members of such Limited Partner’s Principal; provided that, in each case, either (i) such Limited Partner or its Principal, if any or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such trust until the death or legal incapacity of such Limited Partner or its Principal, if any; or (c) any entity of which such Limited Partner and any Permitted Transferees or Family Members of such Limited Partner collectively are beneficial owners of 100% of the equity interests; provided that either such (i) Limited Partner or its Principal, if any, or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such entity until the death or legal incapacity of such Limited Partner or its Principal, if any.

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

“Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Preferred Units” means a Class of Units, in one or more series, designated as “Preferred Units,” which entitles the holder thereof to a preference with respect to the payment of distributions over the Class A Units and any other Junior Units then outstanding as set forth herein.

“Primary Indemnification” has the meaning set forth in Section 10.2(a).

“Principal,” with respect to any Limited Partner, has the meaning set forth in a Supplemental Agreement applicable to such Limited Partner.

“Prior General Partner” means Ares Offshore Holdings, Ltd., a Cayman Islands limited company.

“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 5.5 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.

“Relevant Entity” means any Ares Company and any entity in which any Ares Company, directly or indirectly, owns any interest, and any Fund to which any Ares Company provides services.

“Registration Statement” has the meaning set forth in the recitals.

“Second A&R Partnership Agreement” has the meaning set forth in the recitals.

“Securities Act” means the U.S. Securities Act of 1933.

“Series A Preferred Mirror Units” means the Class of Preferred Units designated as “7.00% Series A Preferred Mirror Units” pursuant to Section 12.1.

“Service Provider” means any Limited Partner (in his, her or its individual capacity) or other Person, who at the time in question, is employed by or providing services to any Ares Company. For the avoidance of doubt, Alleghany is not a Service Provider.

“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as assets of a Partner by virtue of its partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

“Supplemental Agreement” means, with respect to any Limited Partner, any unitization letter, fair competition agreement or other supplemental agreement with such Limited Partner or its Principal containing terms modifying, supplementing or otherwise affecting the rights or obligations of such Limited Partner hereunder.

“Tax Advances” has the meaning set forth in Section 5.7.

“Tax Amount” has the meaning set forth in Section 4.1(b)(i).

“Tax Distributions” has the meaning set forth in Section 4.1(b)(i).

“Third Party Rights Law” has the meaning set forth in Section 11.7.

“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Class A Units (vested and unvested) then owned by such Partner by the number of Class A Units (vested and unvested) then owned by all Partners.

“Transfer” means, in respect of any Unit, property or other asset, any sale, assignment, transfer, distribution, exchange, mortgage, pledge, hypothecation or other disposition thereof, whether voluntarily or by operation of Law, directly or indirectly, in whole or in part, including the exchange of any Unit for any other security. “Transferee”, “Transferor”, “Transferring”, “Transferred” and similar terms have meanings correlative to the foregoing.

“Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code.

“Units” means the Class A Units, the Preferred Units and any other Class of Units that is established in accordance with this Agreement, which shall constitute divisible interests in the Partnership as provided in this Agreement, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and provisions of this Agreement.

“Unvested Units” means those Units from time to time listed as unvested Units in the books and records of the Partnership.

“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement.

Section 1.2Interpretation.

(a)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 this 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 this 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 this 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.

(b)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

ARTICLE II
FORMATION, TERM, PURPOSE AND POWERS

Section 2.1Continuation; Name; Foreign Jurisdictions.

(a)The General Partner and the Initial Limited Partner formed the Partnership pursuant to and in accordance with the ELP Law and the Initial Partnership Agreement. The term of the Partnership commenced upon its registration as an exempted limited partnership pursuant to the filing of the Registration Statement and shall continue until the commencement of winding up in accordance with the terms of this Agreement. On or about August 4, 2015, the Prior General Partner withdrew as the general partner of the Partnership and the General Partner was admitted and substituted as the general partner of the Partnership. The parties hereto continue the Partnership under and pursuant to the ELP Law and upon the terms of this Agreement. Notwithstanding the date of execution of this Agreement, the parties hereby agree among themselves to give effect to this Agreement, to the maximum extent permitted by law, as if it had been entered into on March 1, 2018 (the “Effective Date”) and to account to each other accordingly in order to give economic effect thereto.

(b)The name of the Partnership is “Ares Offshore Holdings L.P.” or such other name as the General Partner may from time to time hereafter designate. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (i) the formation and operation of an exempted limited partnership under the laws of the Cayman Islands, (ii) if the General Partner deems it advisable, the operation of the Partnership as an exempted limited partnership, or partnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (iii) all other filings required to be made by the Partnership. The rights, powers, duties, obligations and liabilities of the Partners shall be determined pursuant to the ELP Law and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Partner are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the ELP Law, control.

(c)The General Partner may take all action which may be necessary or appropriate (i) for the continuation of the Partnership’s valid existence as an exempted limited partnership under the laws of the Cayman Islands (and of each other jurisdiction in which such existence is necessary to enable the Partnership to conduct the business in which it is engaged) and (ii) for the maintenance, preservation and operation of the business of the Partnership in accordance with the provisions of this Agreement and applicable laws and regulations. The General Partner may file or cause to be filed for recordation in the proper office or offices in each other jurisdiction in which the Partnership is formed or qualified, such certificates (including certificates of limited partnership and fictitious name certificates) and other documents as are required by the applicable statutes, rules or regulations of any such jurisdiction or as are required to reflect the identity of the Partners. The General Partner may cause the Partnership to comply, to the extent procedures are available and those matters are reasonably within the control of the Officers, with all requirements necessary to qualify the Partnership to do business in any jurisdiction other than the Cayman Islands.

Section 2.2Business Purpose. The Partnership was formed for the object and purpose of, and the nature and character of the business to be conducted by the Partnership is, engaging in any lawful act or activity for which limited partnerships may be formed under the ELP Law.

Section 2.3Term. The term of the Partnership shall continue until commencement of winding up in accordance with this Agreement.

Section 2.4Registered Office. The address of the Partnership’s registered office in the Cayman Islands is c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The General Partner may change the Partnership’s registered office to any other address in the Cayman Islands.

Section 2.5Principal Office. The principal office address of the Partnership shall be at such place or places as the General Partner may determine from time to time.

Section 2.6Powers of the Partnership. Subject to the limitations set forth in this Agreement, (i) the Partnership will possess and may exercise all of the powers and privileges of an exempted limited partnership including the ownership and operation of the assets and other property contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all powers incidental thereto, and (ii) the General Partner on behalf of the Partnership may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions, in each case, so far as such powers, activities or transactions are necessary, desirable, convenient or incidental to, or in furtherance of, the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.2.

Section 2.7Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement (or the A&R Partnership Agreement), are admitted as Partners of the Partnership. The rights, duties and liabilities of the Partners shall be as provided in the ELP Law, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. Subject to Section 8.9 with respect to substitute Limited Partners, a Person may be admitted from time to time as a new Limited Partner with the written consent of the General Partner in its sole discretion. Except as otherwise contemplated in this Agreement, each new Limited Partner shall execute and deliver to the General Partner such documentation as the General Partner may require pursuant to which the new Limited Partner agrees to be bound by the terms and conditions of the Agreement, as it may be amended from time to time. A new General Partner or substitute General Partner may be admitted to the Partnership solely in accordance with Section 8.8 or Section 9.2(e) hereof.

Section 2.8Withdrawal. No Partner may withdraw from the Partnership, provided that (a) a Limited Partner may withdraw from the Partnership following the Transfer of all Units owned by such Limited Partner in accordance with Article VIII and (b) subject to Section 8.8, the General Partner may withdraw without the consent of any other Partner.

ARTICLE III
MANAGEMENT

Section 3.1General Partner.

(a)The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to Officers or to others to act on behalf of the Partnership.

(b)Without limiting the foregoing provisions of this Section 3.1, the General Partner shall have the general power to manage or cause the management of the Partnership (which may be delegated to Officers of the Partnership), including the following powers:

(i)to enter into Supplemental Agreements;

(ii)to develop and prepare a business plan each year;

(iii)to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments of transfer and other documents on behalf of the Partnership;

(iv)granting security over the assets of the Partnership, including the right to make capital calls and receive the proceeds therefrom;

(v)the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;

(vi)the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(vii)to select and dismiss employees (including employees having such titles as the General Partner may determine in its sole discretion) and agents, representatives, outside attorneys, accountants, consultants and contractors and to determine their compensation and other terms of employment or hiring;

(viii)to establish and enforce limits of authority and internal controls with respect to all personnel and functions;

(ix)to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account;

(x)the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;

(xi)the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(xii)the purchase, sale or other acquisition or disposition of Units; and

(xiii)to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.

(c)In exercising its authority under this Agreement, to the maximum extent permitted by Law, the General Partner may, but shall be under no obligation or duty to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have any liability to a Limited Partner for monetary damages, equitable relief or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions.

Section 3.2Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership in its capacity as General Partner. The General Partner shall have no duty to account to the Partnership in respect of profits derived from activities outside the Partnership.

Section 3.3Expenses. The Partnership shall pay, or cause to be paid, all costs, fees, operating expenses and other expenses of the Partnership (including the costs, fees and expenses of attorneys, accountants or other professionals) incurred in pursuing and conducting, or otherwise related to, the activities of the Partnership. The Partnership shall also, in the sole discretion of the General Partner, bear or reimburse the General Partner for (i) any costs, fees or expenses incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with serving as the General Partner, (ii) all other expenses allocable to the Partnership or otherwise incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with operating the Partnership’s business (including expenses allocated to the General Partner (or any direct or indirect equityholders of the General Partner) by its Affiliates) and (iii) all costs, fees or expenses owed directly or indirectly by the Partnership or the General Partner to the Issuer General Partner (or any direct or indirect equityholders of the Issuer General Partner) pursuant to their reimbursement obligations under, or which are otherwise allocated to the General Partner (or any direct or indirect equityholders of the General Partner) pursuant to, the Issuer Limited Partnership Agreement. If the General Partner determines in its sole discretion that such expenses are related to the business and affairs of the General Partner that are conducted through the Partnership or its subsidiaries (including expenses that relate to the business and affairs of the Partnership or its subsidiaries and that also relate to other activities of the General Partner), the General Partner may cause the Partnership to pay or bear all expenses of the General Partner (or any direct or indirect equityholders of the General Partner), including compensation and meeting costs of any board of directors or similar body of the General Partner, any salary, bonus, incentive compensation and other amounts paid to any Person including Affiliates of the General Partner to perform services for the Partnership, litigation costs and damages arising from litigation, accounting and legal costs and franchise taxes. Reimbursements pursuant to this Section 3.3 shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 10.2.

Section 3.4Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by persons who may be designated as officers by the General Partner, with titles including but not limited to “assistant secretary,” assistant treasurer,” “chief executive officer,” “chief financial officer,” “chief legal officer,” “chief operating officer,” “chief compliance officer,” “general counsel,” “managing director,” “president,” “executive vice president,” “senior vice president,” “vice president,” “principal accounting officer,” “secretary,” or “treasurer,” and as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such offices. Any number of offices may be held by the same person. In its sole discretion, the General Partner may choose not to fill any office for any period as it may deem advisable. All officers and other persons providing services to or for the benefit of the Partnership shall be subject to the supervision and direction of the General Partner and may be removed, with or without cause, from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, as a result of the performance of its duties hereunder or otherwise.

Section 3.5Authority of Partners. No Limited Partner, in its capacity as such, shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this Agreement. Except as expressly provided herein or pursuant to the ELP Law, no Limited Partner shall have any right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership, or any other matter that a limited partner might otherwise have the ability to vote on or consent with respect to under the ELP Law, at law, in equity or otherwise. The conduct, control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.5 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may from time to time appoint one or more Partners as officers or employ one or more Partners as employees, and such Partners, in their capacity as officers or employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.

Section 3.6Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a consent or ratification in writing.

ARTICLE IV
DISTRIBUTIONS

Section 4.1Distributions.

(a)The General Partner, in its sole discretion, may authorize distributions by the Partnership to the Partners. Distributions shall be made in accordance with Section 12.3 and this Article IV. Distributions (other than distributions made with respect to the Series A Preferred Mirror Units pursuant to Section 12.3) shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.

(b)

(i)In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal Year will give rise to taxable income for the Partners that hold Class A Units (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit under Section 743(b) of the Code will be ignored. Any Tax Distributions shall be made to all Partners that hold Class A Units pro rata in accordance with their Total Percentage Interests.

(ii)Tax Distributions shall be calculated and paid no later than one day prior to each quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this Section 4.1(b) for purposes of the computations herein.

Section 4.2Liquidation Distribution. Distributions made upon winding up of the Partnership shall be made as provided in Section 9.3.

Section 4.3Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner on behalf of the Partnership, shall not make a distribution to any Partner on account of its interest in the Partnership if such distribution would not be permitted under the ELP Law or any other applicable Law.

Section 4.4Clawbacks. To the extent that the Partnership is directly or indirectly required to comply with a clawback or other similar obligation with respect to any Fund (a “Clawback Obligation”), upon the written request of the General Partner, Alleghany shall promptly return to the Partnership any distributions received from the Partnership in an amount equal to Alleghany’s pro rata share (based on its Total Percentage Interest) of the excess of (a) such Clawback Obligation less (b) all amounts returned by Alleghany with respect to such Clawback Obligation. Any returned amounts shall be treated as Capital Contributions but shall not affect Alleghany’s Total Percentage Interest. The Partnership shall be entitled to withhold from any distributions otherwise payable to Alleghany a reasonable amount sufficient to reserve for any potential Clawback Obligation. To the extent that any such reserve is not sufficient to satisfy any such Clawback Obligation, the Partnership shall be entitled to offset such deficiency with any amounts due and payable to Alleghany or its Affiliates. Notwithstanding the foregoing, at no time shall any Partner be liable for amounts in excess of amounts distributed to such Partner in connection with any Fund in respect of which a Clawback Obligation is or may be owing. For the avoidance of doubt, Alleghany shall not (i) be required to return to the Partnership any distributions, (ii) be subjected to any withholding or (iii) be subjected to any offset against amounts due and payable to Alleghany, in each case to the extent that a Clawback Obligation relates to any amounts distributed prior to July 31, 2013.

ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS

Section 5.1Initial Capital Contributions. The Partners have made, on or prior to the Effective Date, Capital Contributions, if any, and, in exchange, the Partnership has issued to the Partners the number of Class A Units and Series A Preferred Mirror Units as specified in the books and records of the Partnership.

Section 5.2No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.

Section 5.3Capital Accounts. A Capital Account shall be established and maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.4 and any items of income or gain which are specially allocated pursuant to Section 5.5; and shall be debited with all Losses allocated to such Partner pursuant to Section 5.4, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.5, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. In the event of any Transfer of any interest in the Partnership in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor to the extent it relates to the Transferred interest. For the avoidance of doubt, the Capital Account balance for each Series A Preferred Mirror Unit shall initially equal the Liquidation Preference per Series A Preferred Mirror Unit as of the date such Series A Preferred Mirror Unit is initially issued and shall be increased as set forth in Section 5.5(d).

Section 5.4Allocations of Profits and Losses. Subject to Section 5.5(d), except as otherwise provided in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the Special Allocations set forth in Section 5.5 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit may be treated as a Vested Unit. Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.

Section 5.5Special Allocations. Notwithstanding any other provision in this Article V:

(a)Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). This Section 5.5(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).

(b)Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.5(b) shall be made only to the extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.5(b) were not in this Agreement. This Section 5.5(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.

(c)Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.5(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.5(b) and this Section 5.5(c) were not in this Agreement.

(d)Gross Ordinary Income. Before giving effect to the allocations set forth in Section 5.4, Gross Ordinary Income for the Fiscal Year shall be specially allocated pro rata to the holders of Series A Preferred Mirror Units in an amount equal to the sum of (i) the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 during such Fiscal Year and (ii) the excess, if any, of the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 in all prior Fiscal Years over the amount of Gross Ordinary Income allocated to the holders of Series A Preferred Mirror Units pursuant to this Section 5.5(d) in all prior Fiscal Years. For purposes of this Section 5.5(d), “Gross Ordinary Income” means the Partnership’s gross income excluding any gross income attributable to the sale or exchange of “capital assets” as defined in Section 1221 of the Code. Allocations to holders of Series A Preferred Mirror Units of Gross Ordinary Income shall consist of a proportionate share of each Partnership item of Gross Ordinary Income for such Fiscal Year in accordance with each holder’s pro rata percentage of the Series A Preferred Mirror Units.

(e)Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Total Percentage Interests.

(f)Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).

(g)Creditable Non-U.S. Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the Partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.5(g) are intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

(h)Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.5(b) or 5.5(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.4 and this Section 5.5(h), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.5(b) or 5.5(c) had not occurred.

Section 5.6Tax Allocations. For income tax purposes, each item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.

Section 5.7Tax Advances. If the General Partner reasonably believes that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.1(b)) with respect to income attributable to or distributions or other payments to such Partner.

Section 5.8Tax Matters. The General Partner shall be the “tax matters partner” of the Partnership for purposes of Section 6231(a)(7) of the Code (prior to amendment by P.L. 114-74) and the “partnership representative” of the Partnership for purposes of Section 6223 of the Code (after amendment by P.L. 114-74). The Partnership shall file as a partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or local tax matters of the Partnership, shall be made by the tax matters partner or partnership representative, as applicable. Tax audits, controversies and litigations shall be conducted under the direction of the tax matters partner or partnership representative, as applicable. The General Partner shall cause all required federal, state or local tax returns and reports of the Partnership to be prepared and filed, and shall be responsible for all other tax matters of the Partnership. All costs and expenses incurred by the General Partner related to any tax matters provided for in this Section 5.8, including, without limitation, all fees and expenses of any accounting firm engaged by the General Partner with respect to the Partnership and any costs and expenses related to any audit, declaration of any tax deficiency or any administrative proceeding or litigation involving any Partnership tax matter, shall be Partnership expenses. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner in connection with the conduct of all such proceedings. The tax matters partner or partnership representative, as applicable, shall keep the other Partners reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.

Section 5.9Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. In addition to amendments effected in accordance with Section 11.6 or otherwise in accordance with this Agreement, Sections 5.3, 5.4 and 5.5 may also, so long as any such amendment does not materially change the relative economic interests of the Partners, be amended at any time by the General Partner if necessary or desirable, as determined by the General Partner in its discretion, to comply with such regulations or any applicable Law.

ARTICLE VI
BOOKS AND RECORDS; REPORTS

Section 6.1Books and Records.

(a)At all times during the continuance of the Partnership, the General Partner shall prepare and maintain separate books of account for the Partnership in accordance with GAAP.

(b)Except as limited by Section 6.1(c), each Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:

(i)a copy of the Registration Statement and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of attorney pursuant to which the Registration Statement and this Agreement and all amendments thereto have been executed; and

(ii)promptly after their becoming available, copies of the Partnership’s federal income tax returns for the three most recent years.

(c)The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.

ARTICLE VII
PARTNERSHIP UNITS

Section 7.1Units.

(a)Interests in the Partnership shall be divisible. The Units are comprised of one Class of common units, the Class A Units, and one Class of Preferred Units, the Series A Preferred Mirror Units. The General Partner in its sole discretion may establish and issue, from time to time in accordance with such procedures as the General Partner shall determine from time to time, additional Units, in one or more Classes or series of Units, or other Partnership securities, at such price, and with such designations, preferences and relative, participating, optional or other special rights, powers and duties (which may be senior to existing Units, Classes and series of Units or other Partnership securities), as shall be determined by the General Partner without the approval of any Partner or any other Person who may acquire an interest in any of the Units, including (i) the right of such Units to share in Profits and Losses or items thereof; (ii) the right of such Units to share in Partnership distributions; (iii) the rights of such Units upon winding up of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem such Units (including sinking fund provisions) to the extent permitted by Law; (v) whether such Units are issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which such Units will be issued, evidenced by certificates and assigned or Transferred; (vii) the method for determining the Total Percentage Interest, if any, as to such Units; (viii) the terms and conditions of the issuance of such Units (including the amount and form of consideration, if any, to be received by the Partnership in respect thereof, the General Partner being expressly authorized, in its sole discretion, to cause the Partnership to issue such Units for less than fair market value); and (ix) the right, if any, of the holder of such Units to vote on Partnership matters, including matters relating to the relative designations, preferences, rights, powers and duties of such Units. The General Partner in its sole discretion, without the approval of any Partner or any other Person, is authorized (i) to issue Units or other Partnership securities of any newly established Class or any existing Class to Partners or other Persons who may acquire an interest in the Partnership (including the issuance of Units to the General Partner (in its own capacity)) and (ii) to amend this Agreement to reflect the creation of any such new Class, the issuance of Units or other Partnership securities of such Class, and the admission of any Person as a Partner which has received Units or other Partnership securities (including the issuance of Units to the General Partner (in its own capacity). Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A Units, the Preferred Units and Units of any other Class or series that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in this Agreement.    

(b)Upon receipt of one or more Capital Contributions by or on behalf of the General Partner (in its own capacity), including by the Issuer on behalf of the General Partner, the Partnership's books, records and registers shall be updated to reflect such Capital Contributions and the issuance of the applicable Units to the General Partner (in its own capacity). The General Partner (as general partner of the Partnership) may take all necessary actions and exercise all necessary discretions as are necessary to give full effect to this Section 7.1(b), including determining the applicable number of Units and the applicable Class of Units that are issued in each case (which may include any number of Class A Units or other Class of Units) and whether such Units are Vested Units or Unvested Units. The matters and transactions set forth in this Section 7.1(b) shall not require the consent of, or any action by, any Limited Partner.

Section 7.2Register. The register of the Partnership shall be the definitive record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.

Section 7.3Registered Partners. The Partnership shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the ELP Law or other applicable Law.

ARTICLE VIII
VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

Section 8.1Vesting of Unvested Units.

(a)A Partner’s Unvested Units shall vest and shall thereafter be Vested Units for all purposes of this Agreement as set forth in any applicable Supplemental Agreement and reflected in the books and records of the Partnership.

(b)The General Partner in its sole discretion may authorize the earlier vesting of all or a portion of Unvested Units owned by any one or more Partners at any time and from time to time, and in such event, such Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement. Any such determination in the General Partner’s discretion in respect of Unvested Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partially Unvested Partners alike, whether or not such Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Partially Unvested Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partially Unvested Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partially Unvested Partner separately.

(c)Upon the vesting of any Unvested Units in accordance with this Section 8.1, the General Partner shall modify the books and records of the Partnership to reflect such vesting.

Section 8.2Forfeiture of Units.

(a)Units owned by a Partner are subject to forfeiture or cancellation as set forth in any Supplemental Agreement or schedule or exhibit to this Agreement applicable to such Partner.

(b)If any Ares Owners Mirror Units are forfeited or cancelled for no consideration, a number of Class A Units held by Ares Owners LP equal to the product of the number of Ares Owners Mirror Units, as applicable, so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(c)If any Common Shares owned by Ares Owners LP or a Service Provider (or a Person who is a Permitted Transferee of a Service Provider) are forfeited or cancelled for no consideration, a number of Class A Units held by the Issuer (or if the Issuer does not hold any Class A Units, by the General Partner) equal to the product of the number of Common Shares so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(d)Notwithstanding anything otherwise to the contrary herein, including Section 9.6 and Section 10.1, if any Person who is or was at any time a Service Provider shall fail to perform when due any “giveback,” “true-up” or “clawback” obligation owed by such Person to the Partnership or any of its Affiliates or to any Fund managed by an Ares Company, the General Partner may in its sole discretion and without the consent of any other Person, cause to be forfeited a number of Units held by such Person (or any Permitted Transferee of such Person), or in which such Person (or any Permitted Transferee of such Person) has an indirect interest, as set forth in the books and records of the Partnership, equivalent in value to the obligation which was not performed, as determined by the General Partner in its sole discretion. Any such determination shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Persons alike, whether or not such Persons are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Person shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Person, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Person separately.

(e)Upon the forfeiture of any Units in accordance with this Section 8.2, such Units shall be cancelled, the Partnership shall have no obligations with respect to such Units and the General Partner shall modify the books and records of the Partnership to reflect such forfeiture and cancellation.

Section 8.3Limited Partner Transfers.

(a)Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, no Limited Partner or Assignee thereof may Transfer (including pursuant to an Exchange Transaction) all or any portion of its Units or other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including the receipt of such legal opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion, and which consent may be in the form of a plan or program entered into or approved by the General Partner, in its sole discretion. Any such determination in the General Partner’s discretion in respect of Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.

(b)Notwithstanding clause (a) above, subject to Section 8.6, each Limited Partner may Transfer Units in Exchange Transactions pursuant to, and in accordance with, the Exchange Agreement; provided that such Exchange Transactions shall be effected in compliance with policies that the General Partner (or any other Ares Company) may adopt or promulgate from time to time (including policies requiring the use of designated administrators or brokers).

(c)Notwithstanding anything otherwise to the contrary in this Section 8.3, a Limited Partner (other than Alleghany) may Transfer Units to any of its Permitted Transferees and Alleghany may Transfer Units to any Alleghany Permitted Transferee.

Section 8.4Mandatory Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the consent of any Limited Partner or other Person, cause to be Transferred in an Exchange Transaction any and all Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately.

Section 8.5Encumbrances. No Partner or Assignee may create an Encumbrance with respect to all or any portion of its Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.

Section 8.6Further Restrictions.

(a)Notwithstanding any contrary provision in this Agreement, the General Partner may impose such vesting requirements, forfeiture provisions, Transfer restrictions, minimum retained ownership requirements or other similar provisions with respect to any Units that are outstanding as of the Effective Date or are created thereafter, with the written consent of the holder of such Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partners alike, whether or not such Partners are similarly situated, and such requirements, provisions and restrictions may be waived or released by the General Partner in its sole discretion with respect to all or a portion of the Units owned by any one or more Partners. The exercise of any power or discretion by the General Partner or the Partnership in the case of any Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partner separately.

(b)Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:

(i)such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;

(ii)such Transfer would require the registration of such Transferred Unit or of any Class of Units pursuant to any applicable U.S. federal or state securities Laws (including the Securities Act or the Exchange Act) or other non-U.S. securities Laws (including Canadian provincial or territorial securities laws) or would constitute a non-exempt distribution pursuant to applicable provincial or state securities Laws;

(iii)such Transfer would cause (A) all or any portion of the assets of the Partnership to (1) constitute “plan assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (2) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (B) the General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;

(iv)to the extent requested by the General Partner, the Partnership does not receive such legal or tax opinions and written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s discretion;

(v)such Transfer would violate, or cause any Relevant Entity, to violate, any applicable Law of any jurisdiction; or

(vi)the General Partner shall determine in its sole discretion that such Transfer would pose a material risk that the Partnership would be a “publicly traded partnership” as defined in Section 7704 of the Code.

In addition, notwithstanding any contrary provision in this Agreement, to the extent the General Partner shall determine that interests in the Partnership do not meet the requirements of Treasury Regulation section 1.7704-1(h), the General Partner may impose such restrictions on the Transfer of Units or other interests in the Partnership as the General Partner may determine in its sole discretion to be necessary or advisable so that the Partnership is not treated as a publicly traded partnership taxable as a corporation under Section 7704 of the Code.

(c)Any Transfer in violation of this Article VIII shall be deemed null and void ab initio and of no effect.

Section 8.7Rights of Assignees. Subject to Section 8.6(b), the Transferee of any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent Transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the Partner which Transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such interest remaining with the Transferring Partner. The Transferring Partner will remain a Partner even if it has Transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to Section 8.9.

Section 8.8Admissions, Withdrawals and Removals.

(a)No Person may be admitted to the Partnership as an additional or substitute General Partner without the prior written consent of each incumbent General Partner, which consent may be given or withheld, or made subject to such conditions as are determined by each incumbent General Partner, in each case in the sole discretion of each incumbent General Partner. A General Partner will not be entitled to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or withdrawn).

(b)No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with Section 8.10 hereof. Any additional General Partner or substitute General Partner admitted as a general partner of the Partnership pursuant to this Section 8.8 is hereby authorized to, and shall, continue the Partnership without commencement of winding up and dissolution.

(c)Except as otherwise provided in Article IX or the ELP Law, no admission, substitution, withdrawal or removal of a Partner will cause the commencement of winding up and dissolution of the Partnership. To the fullest extent permitted by Law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.

Section 8.9Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if and when each of the following conditions is satisfied:

(a)the General Partner consents in writing to such admission, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;

(b)if required by the General Partner, the General Partner receives written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);

(c)if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect that such Transfer is in compliance with this Agreement and all applicable Law; and

(d)if required by the General Partner, the parties to the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including the reasonable legal and accounting fees of the Partnership).

Section 8.10Withdrawal and Removal of Limited Partners. Subject to Section 8.7, if a Limited Partner ceases to hold any Units, including as a result of a forfeiture of Units pursuant to Section 8.2, then such Limited Partner shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner, and shall be deemed to have been withdrawn from the Partnership.

ARTICLE IX
DISSOLUTION, LIQUIDATION AND TERMINATION

Section 9.1No Commencement of Winding Up. Except as required by the ELP Law, the Partnership shall not commence winding up by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be wound up and dissolved only pursuant to the provisions of this Article IX, and to the maximum extent permitted by Law the Partners hereby irrevocably waive any and all other rights they may have to cause winding up and dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.

Section 9.2Events Causing Commencement of Winding Up. The Partnership shall commence winding up upon the occurrence of any of the following events (each, a “Dissolution Event”):

(a)any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;

(b)the written consent of all Partners;

(c)at any time there are no limited partners;

(d)any of the events described in Section 15(5) of the ELP Law (an “Event of Withdrawal”); provided that within 90 days of the date of such Event of Withdrawal, the Limited Partners may elect, acting by unanimous vote, one or more successor general partners, who shall assume all obligations of the General Partner under this Agreement arising on or after the effective date of such Event of Withdrawal, on such terms as may be determined by the Limited Partnersand such successor general partner; or

(e)the determination of the General Partner in its sole discretion; provided that in the event of the commencement of winding up pursuant to this clause (e), the relative economic rights of each Class of Units immediately prior to the commencement of winding up shall be preserved to the greatest extent practicable with respect to distributions made to Partners pursuant to Section 9.3 below in connection with the winding up of the Partnership, taking into consideration tax and other legal constraints that may adversely affect one or more parties hereto and subject to compliance with applicable Laws, unless, and to the extent that, with respect to any Class of Units, holders of not less than 90% of the Units of such Class consent in writing to a treatment other than as described above.

Section 9.3Distribution upon Dissolution. Upon commencement of winding up, the Partnership shall not be dissolved and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:

(a)First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners or their Affiliates to the extent otherwise permitted by Law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.3; and

(b)Subject to Article XII, the balance, if any, to the holders of Class A Units; pro rata to each of the holders of Class A Units in accordance with their Total Percentage Interests.

Section 9.4Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.

Section 9.5Dissolution. Upon completion of winding up of the Partnership, the General Partner or Liquidation Agent shall file a notice of dissolution, following which the Partnership shall dissolve.

Section 9.6Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or other Person to restore such negative balance during the existence of the Partnership, upon winding up dissolution of the Partnership or otherwise, except to the extent required by the ELP Law.

Section 9.7Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 10.2, 11.1 and 11.10 shall survive the dissolution of the Partnership.

ARTICLE X
LIABILITY AND INDEMNIFICATION

Section 10.1Duties; Liabilities; Exculpation.

(a)To the maximum extent permitted by Law, this Agreement is not intended to, and does not, create or impose any fiduciary duty on any Partner (including the General Partner) or on its Affiliates. Notwithstanding any other provision of this Agreement or any duty otherwise existing at law or in equity, the Partners (including the General Partner) and their respective Affiliates shall, to the maximum extent permitted by Law, owe only such duties and obligations as are expressly set forth in this Agreement, and no other duties (including fiduciary duties), to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person otherwise bound by this Agreement.

(b)To the extent that, at law or in equity, any Partner (including the General Partner) or its Affiliates has duties (including fiduciary duties) and liabilities relating thereto to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement, any such Person acting under this Agreement shall not be liable to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement for its good faith reliance on the provisions of this Agreement to the maximum extent permitted by Law. The provisions of this Agreement, to the extent that such provisions restrict or eliminate the duties and liabilities relating thereto of any Partner (including the General Partner) or its Affiliates otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities relating thereto of such Person to the maximum extent permitted by Law.

(c)Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent permitted by Law, no Indemnitee shall be liable to the Partnership or any Partner for any losses, claims, demands, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising as a result of any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) of a Indemnitee, or for any breach of contract (including breach of this Agreement) or any breach of duties (including breach of fiduciary duties) whether arising hereunder, at law, in equity or otherwise, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction (a “final adjudication”) determining that, in respect of the matter in question, the Indemnitee acted in bad faith or with criminal intent.

(d)Each Indemnitee shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants, other experts and financial or professional advisors, and acting or omitting to act on behalf of the Partnership or in furtherance of the interests of the Partnership, in each case, in good faith reliance upon and in accordance with such advice will be full justification for any such act or omission, and each Indemnitee will be fully protected in so acting or omitting to act so long as such counsel, accountants, other experts and financial or professional advisors were selected with reasonable care.

(e)Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or in equity, to the maximum extent permitted by Law whenever in this Agreement or any other agreement contemplated hereby the General Partner is permitted to or required to make or take (or omit to make or take) a determination, evaluation, election, decision, approval, authorization, consent or other action (howsoever described herein, each, a “Determination”) (i) in its “discretion” or “sole discretion” or under a grant of similar authority or latitude, or (ii) pursuant to any provision not subject to an express standard of “good faith” (regardless of whether there is a reference to “discretion”, “sole discretion” or any other standard), then the General Partner (or any of its Affiliates causing it to do so), in making such Determination, shall not be subject to any fiduciary duty and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Partnership, the Partners, or any other Person (including any creditor of the Partnership), and shall not be subject to any other or different standards imposed by this Agreement or otherwise existing at law, in equity or otherwise. Notwithstanding the immediately preceding sentence, if a Determination under this Agreement is to be made or taken by the General Partner in “good faith”, the General Partner shall act under that express standard and shall not be subject to any other or different standard under this Agreement or otherwise existing at law, in equity or otherwise.

(f)For all purposes of this Agreement and notwithstanding any applicable provision of law or in equity, a Determination or failure to act by the General Partner conclusively will be deemed to be made, taken or omitted to be made or taken in “good faith”, and shall not be a breach of this Agreement, unless the General Partner subjectively believed such Determination or failure to act was opposed to the best interests of the Partnership. In any proceeding brought by the Partnership, any Limited Partner, any Person who acquires an interest in a Unit or any other Person who is bound by this Agreement challenging such Determination or failure to act, notwithstanding any provision of law or equity to the contrary, the Person bringing or prosecuting such proceeding shall have the burden of proving that such Determination or failure to act was not in good faith. Any Determination taken or made by the General Partner or any other Indemnitee which is not in breach of this Agreement shall be deemed taken or determined in compliance with this Agreement, the ELP Law and any other applicable fiduciary requirements.

(g)The Limited Partners expressly acknowledge that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including the tax consequences to Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any Determinations, and that the General Partner shall not be liable to the Limited Partners for monetary damages or equitable relief for losses sustained, liabilities incurred or benefits not derived by Limited Partners in connection with such Determinations.

(h)Notwithstanding any other provision of this Agreement, to the extent that any provision of this Agreement, including the provisions of this Section 10.1, purports (i) to restrict or otherwise modify or eliminate the duties (including fiduciary duties), obligations and liabilities of the General Partner or any other Indemnitee otherwise existing at law or in equity or (ii) to constitute a waiver or consent by the Partnership, the Limited Partners or any other Person who acquires an interest in a Unit to any such restriction, modification or elimination, such provision shall be deemed to have been approved by the Partnership, all of the Partners, and each other Person who has acquired an interest in a Unit.

Section 10.2Indemnification.

(a)Indemnification. To the fullest extent permitted by law, as the same exists or hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Partnership to provide broader indemnification rights than such law permitted the Partnership to provide prior to such amendment), the Partnership shall indemnify any Indemnitee who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil, criminal, administrative, arbitrative or investigative, and whether formal or informal, including appeals, by reason of his or her or its status as an Indemnitee or by reason of any action alleged to have been taken or omitted to be taken by Indemnitee in such capacity, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred by such Indemnitee in connection with such action, suit or proceeding, including appeals; provided that such Indemnitee shall not be entitled to indemnification hereunder if, but only to the extent that, such Indemnitee acted in bad faith or with criminal intent. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to indemnify an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent. The indemnification of an Indemnitee of the type identified in clause (d) of the definition of Indemnitee shall be secondary to any and all indemnification to which such Indemnitee is entitled from (x) the relevant other Person (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Person or Indemnitee), and (y) the relevant Fund (if applicable) (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Fund or the Indemnitee) (clauses (x) and (y) together, the “Primary Indemnification”), and will only be paid to the extent the Primary Indemnification is not paid and/or does not provide coverage (e.g., a self-insured retention amount under an insurance policy). No such Person or Fund shall be entitled to contribution or indemnification from or subrogation against the Partnership. The indemnification of any other Indemnitee shall, to the extent not in conflict with such policy, be secondary to any and all payment to which such Indemnitee is entitled from any relevant insurance policy issued to or for the benefit of the Partnership or any Indemnitee.

(b)Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including attorneys’ fees) incurred by any Indemnitee in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals, upon presentation of an undertaking on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Section 10.2 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to pay expenses of an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent.

(c)Unpaid Claims. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.2 is not paid in full within 30 days after a written claim therefor by any Indemnitee has been received by the Partnership, such Indemnitee may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Partnership shall have the burden of proving that such Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable Law.

(d)Insurance.

(i)To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person described in Section 10.2(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.2 or otherwise.

(ii)In the event of any payment by the Partnership under this Section 10.2, the Partnership shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee from any relevant other Person or under any insurance policy issued to or for the benefit of the Partnership, such relevant other Person, or any Indemnitee. Each Indemnitee agrees to execute all papers required and take all action necessary to secure such rights, including the execution of such documents as are necessary to enable the Partnership to bring suit to enforce any such rights in accordance with the terms of such insurance policy or other relevant document. The Partnership shall pay or reimburse all expenses actually and reasonably incurred by the Indemnitee in connection with such subrogation.

(iii)The Partnership shall not be liable under this Section 10.2 to make any payment of amounts otherwise indemnifiable hereunder (including, but not limited to, judgments, fines and amounts paid in settlement, and excise taxes with respect to an employee benefit plan or penalties) if and to the extent that the applicable Indemnitee has otherwise actually received such payment under this Section 10.2 or any insurance policy, contract, agreement or otherwise.

(e)Non-Exclusivity of Rights. The provisions of this Section 10.2 shall be applicable to all actions, claims, suits or proceedings made or commenced after the date of this Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this Section 10.2 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.2 (or legal representative thereof) who serves in such capacity at any time while this Section 10.2 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.2 shall be found to be invalid or limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.2 shall neither be exclusive of, nor be deemed in limitation of, any rights to which any person may otherwise be or become entitled or permitted by contract, this Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.2(a) shall be made to the fullest extent permitted by law.

For purposes of this Section 10.2, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director, officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.

This Section 10.2 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.2(a).

The General Partner may make, execute, record and file on its own behalf and on behalf of each Limited Partner all instruments and other documents (including one or more deeds poll in favor of the Persons to whom the benefit of the exculpation and indemnification provisions of this Agreement are intended (the “Covered Persons”) and one or more separate indemnification agreements between the General Partner, the Partnership, each Limited Partner (as applicable) and individual Covered Persons) that the General Partner deems necessary or appropriate in order to extend the benefit of the exculpation and indemnification provisions of this Agreement to the Covered Persons; provided that such other instruments and documents authorized hereunder shall be on the same terms as provided for in this Agreement except as otherwise may be required by applicable Law.

ARTICLE XI
MISCELLANEOUS

Section 11.1Dispute Resolution.

(a)The Partnership and each Partner, each other Person who acquires a Unit or other interest in the Partnership and each other Person who is bound by this Agreement (collectively, the “Consenting Parties” and each a “Consenting Party”) agrees that any dispute, claim or controversy of whatever nature directly or indirectly relating to or arising out of the Agreement, the termination or validity thereof, or any alleged breach thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before a panel of three arbitrators. The arbitration shall be administered by JAMS/ENDISPUTE pursuant to its Comprehensive Arbitration Rules and Procedures. The language of the arbitration shall be English. Each party to such dispute shall be entitled to choose one arbitrator, and the chosen arbitrators shall choose the third arbitrator. All arbitrators shall be chosen from the JAMS arbitration panel. The arbitrators shall, in their award, allocate all of the costs of the arbitration (and the mediation, if applicable), including the fees of the arbitrators and the reasonable attorneys’ fees of the prevailing party, against the party who did not prevail. The award in the arbitration shall be final and binding. The arbitration shall be governed by the federal arbitration act, 9 U.S.C. §§1–16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. This arbitration clause shall not preclude any party from obtaining provisional relief or interim measures of protection, including injunctive relief, from a court of appropriate jurisdiction to protect its rights under this Agreement. Each party agrees and consents to personal jurisdiction, service of process and exclusive venue in any federal or state court within the State of California, County of Los Angeles, in connection with any action brought pursuant to clause (b) below or in connection with a request for any such provisional relief or interim measures of protection, and in connection with any action to enforce this arbitration clause or an award in arbitration and agrees not to assert, by way of motion, as a defense or otherwise, that any action brought in any such court should be dismissed on grounds of forum non conveniens. Each party to this Agreement consents to mailing of process or other papers in connection with any such arbitration or action by certified mail in the manner and to the addresses provided in Section 11.11. Notwithstanding the foregoing, nothing in this Section 11.1 excludes the jurisdiction of the Cayman Islands courts with respect to any matter reserved to it pursuant to the ELP Law or Cayman Islands law.

(b)The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof or thereof and that the parties shall be entitled to seek an injunction to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof or thereof in accordance with the provisions of this Section 11.1(b), in addition to any other remedy to which they are entitled at law or in equity. No party seeking relief under this Section 11.1(b) shall be required to post a bond or prove special damages.

Section 11.2Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.3Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.

Section 11.4Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

Section 11.5Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.

Section 11.6Amendments and Waivers.

(a)This Agreement (including the Annexes hereto) may be amended, supplemented, waived or modified by the General Partner in its sole discretion without the approval of any Limited Partner or other Person; provided that no amendment may (i) materially and adversely affect the rights of a holder of Units, as such, other than on a pro rata basis with other holders of Units of the same Class without the consent of such holder (or, if there is more than one such holder that is so affected, without the consent of a majority in interest of such affected holders in accordance with their holdings of such Class of Units) or (ii) materially and adversely affect the rights of Alleghany without the prior written consent of Alleghany; providedfurther, however, that notwithstanding the foregoing, the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary, appropriate, proper, advisable or incidental in connection with, or in furtherance of, the creation, authorization or issuance of Units or any Class or series of equity interest in the Partnership or options, rights, warrants or appreciation rights relating to equity interest in the Partnership pursuant to Section 7.1 hereof; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement, including pursuant to Section 7.1 hereof; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, addressing changes in U.S. federal, state or local income tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership; (vi) a change that the General Partner determines in its sole discretion is necessary, appropriate, proper, advisable or incidental to, or in furtherance of, qualifying or continuing the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state or other jurisdiction; (vii) an amendment that the General Partner determines is necessary or appropriate, based on the advice of counsel, to prevent the Partnership, or the General Partner or its Indemnitees, from having a material risk of being in any manner subjected to registration under the provisions of the U.S. Investment Company Act of 1940 or the U.S. Investment Advisers Act of 1940, or “plan asset” regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor; (viii) any amendment expressly permitted in this Agreement to be made by the General Partner acting alone; (ix) an amendment that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, reflecting and accounting for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other entity; (x) any amendment to Section 11.1 that the General Partner determines in good faith; (xi) any amendment that the General Partner determines to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, curing any ambiguity, omission, mistake, defect or inconsistency; or (xii) any other amendments that the General Partner determines to be substantially similar to the foregoing. If an amendment has been approved in accordance with this Agreement, such amendment shall be adopted and effective with respect to all Partners. Upon obtaining such approvals as may be required by this Agreement, and without further action or execution on the part of any other Partner or other Person, any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner and the Limited Partners shall be deemed a party to and bound by such amendment.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

(c)The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest (or interest in an entity treated as a partnership for U.S. federal income tax purposes) that is Transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests (or interest in an entity treated as a partnership for U.S. federal income tax purposes) Transferred in connection with the performance of services while the election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.

(d)Except as may be otherwise required by Law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.

Section 11.7No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.2 hereof); provided that subject to and with effect from enactment of the Contracts (Rights of Third Parties) Law, 2014 (the “Third Party Rights Law”), each Covered Person may enforce directly its rights pursuant to this Agreement subject to and in accordance with the provisions of the Third Party Rights Law.

Notwithstanding any other term of this Agreement, the consent of any Person who is not a party to this Agreement (including any Covered Person) is not required for any variation of, amendment to, or release, rescission, or termination of, this Agreement.

Section 11.8Power of Attorney. Each Limited Partner, by its execution hereof, hereby makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the Registration Statement and all amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.5) and Law or to permit the Partnership to become or to continue as a limited partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification of this Agreement or the Partnership in accordance with this Agreement, including the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the Partnership’s activities) to be filed on behalf of the Partnership. This power of attorney is granted to secure obligations of each Limited Partner and a proprietary interest of the General Partner, and as such will be irrevocable.

Section 11.9Letter Agreements; Schedules. Notwithstanding any other provision of this Agreement (including Section 11.6), the General Partner may, or may cause the Partnership to, without the approval of any other Person, enter into separate letter agreements with individual Limited Partners with respect to Total Percentage Interests, Capital Contributions or any other matter, which have the effect of establishing rights under, or supplementing, the terms of, this Agreement. The Partnership may from time to time execute and deliver to the Limited Partners schedules which set forth the then current Capital Contributions and Total Percentage Interests of the Limited Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.

Section 11.10Governing Law; Separability. This Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands. In particular, it shall be construed to the maximum extent possible to comply with all of the mandatory terms and conditions of the ELP Law. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under such ELP Law or other applicable Law, such invalidity or unenforceability shall not invalidate the entire Agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable Law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

Section 11.11Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail, by registered or certified mail (postage prepaid) or by any communication permitted by the ELP Law to the respective parties if addressed to a Person at such Person’s address as set forth on the signature pages hereto or at such other address for a party as shall be specified in any notice given in accordance with this Section 11.11. Sections 8 and 19(3) of the Electronic Transactions Law shall not apply to this Agreement.

Section 11.12Counterparts. This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which shall be an original and all of which together shall constitute a single instrument.

Section 11.13Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable Law.

Section 11.14Entire Agreement. This Agreement, the Registration Statement, the Supplemental Agreements and the letter agreements referred to in Section 11.9 embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements and understandings between the parties with respect to such subject matter. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. Each party hereto acknowledges, represents, and warrants that (a) each such party hereto and such party’s independent counsel have reviewed this Agreement; and (b) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

Section 11.15Partnership Status. The parties intend to treat the Partnership as a partnership for U.S. federal income tax purposes.

Section 11.16Limited Partner Representations.

(a)Each Partner understands and agrees that:

(i)The Units evidenced by this Agreement have not been registered under the Securities Act of 1933, 15 U.S.C. § 15b et seq., the Delaware Securities Act, the California Corporate Securities Law of 1968 or any other state securities Laws (collectively, the “Securities Acts”) because the Partnership is issuing interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering;

(ii)The Partnership has relied upon the representation made by each Limited Partner that such Limited Partner’s interest is to be held by such Limited Partner for investment;

(iii)The Partnership is under no obligation to, and has no intention to, register the interests or to assist the Limited Partners in complying with any exemption from registration under the Securities Acts if such Limited Partner should at a later date wish to dispose of such Limited Partner’s interest;

(iv)The Partnership has not requested a tax ruling from the Internal Revenue Service or any other tax authority nor an opinion of counsel with respect to the tax status of the Partnership or as to the treatment of its formation, issuance of interests, or other transactions of the Partnership, and no assurances have been made that the treatment which the Partnership intends to or does take with respect to such items will be accepted by the Internal Revenue Service upon examination and audit; and

(v)Such Limited Partner has been advised to obtain independent counsel to advise such Limited Partner individually in connection with the drafting, preparation and negotiation of this Agreement. The attorneys, accountants and other experts who perform services for any Limited Partner may also perform services for the Partnership. To the extent that any of the foregoing representation constitutes a conflict of interest, the Partnership and each Limited Partner hereby expressly waive any such conflict of interest.

(b)Each Limited Partner represents and warrants as follows:

(i)Such Limited Partner is acquiring the interests for such Limited Partner’s own account, for investment purposes only, and not with a view to or for the resale, distribution or fractionalization thereof, in whole or in part, and no other Person has a direct or indirect beneficial interest therein;

(ii)Such Limited Partner is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities Acts; and

(iii)The execution, delivery and performance of this Agreement have been duly authorized by such Limited Partner.

ARTICLE XIITERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS

Section 12.1Designation.

The Series A Preferred Mirror Units were constituted, designated and created as a series of Preferred Units pursuant to the Second A&R Partnership Agreement and continue to be constituted, designated and created as a series of Preferred Units under this Agreement. Each Series A Preferred Mirror Unit shall be identical in all respects to every other Series A Preferred Mirror Unit. 766,260 Series A Preferred Mirror Units have been constituted, designated, created and issued by the Partnership (acting by the General Partner) to the General Partner (acting in its own capacity), and the General Partner (in its own capacity) is a Series A Holder in respect of such 766,260 Series A Preferred Mirror Units. It is the intention of the General Partner that at all times the number of outstanding 7.00% Series A Preferred Shares issued by the Issuer equal the aggregate number of GP Mirror Units issued by the Ares Operating Group entities.

Section 12.2Definitions.

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this ARTICLE XII.

“7.00% Series A Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Ares Group” means the Ares Operating Group entities, the direct and indirect parents (including, without limitation, general partners) of the Ares Operating Group entities (the “Parent Entities”), any direct or indirect subsidiaries of the Parent Entities or the Ares Operating Group entities, the general partner or similar controlling entities of any investment or vehicle that is managed, advised or sponsored by the Ares Group (an “Ares Fund”), and any other entity through which any of the foregoing directly or indirectly conduct its business, but shall exclude any company in which an Ares Fund has an investment. For purposes of this definition “subsidiary” means, with respect to any Person, any subsidiary of such Person that is or would be consolidated with such Person in the preparation of segment information with respect to the combined financial statements of such Person prepared in accordance with U.S. GAAP and shall not include (x) any private equity or other investment fund or vehicle or (y) any portfolio company of any such fund or vehicle.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York City are authorized or required by law to close.

“Change of Control Event” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Distribution Payment Date” means March 31, June 30, September 30 and December 31 of each year, commencing September 30, 2016.

“Distribution Period” is the period from and including a Distribution Payment Date to, but excluding, the next Distribution Payment Date, except that the initial Distribution Period commences on and includes June 8, 2016.

“Distribution Rate” means 7.00% per annum.

“GP Mirror Units” means, collectively, the Series A Preferred Mirror Units, the 7.00% Series Preferred Mirror Units of Ares Holdings L.P., the 7.00% Series Preferred Mirror Units of Ares Investments L.P. and any preferred equity securities of a future Ares Operating Group entity with economic terms consistent with the Series A Preferred Mirror Units.

“Junior Units” means the Class A Units and any other equity securities that the Partnership may issue in the future ranking, as to the payment of distributions, junior to the Series A Preferred Mirror Units.

“Parity Units” means any Preferred Units that the Partnership may authorize or issue, the terms of which provide that such securities shall rank equally with the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event.

“Permitted Jurisdiction” means the United States or any state thereof, Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Gibraltar, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, the United Kingdom or British Crown Dependencies, any other member country of the Organisation for Economic Co-operation and Development, or any political subdivision of any of the foregoing.

“Permitted Reorganization” means (i) the voluntary or involuntary liquidation, dissolution or winding up of any of the Partnership’s subsidiaries or upon any reorganization of the Partnership into another limited liability entity pursuant to provisions of this Agreement that allows the Partnership to convert, merge or convey our assets to another limited liability entity with or without limited partner approval (including a merger or conversion of our partnership into a corporation if the General Partner determines in its sole discretion that it is no longer in the interests of the Partnership to continue as a partnership for U.S. federal income tax purposes) or (ii) the Partnership engages in a reorganization, merger or other transaction in which a successor to the Partnership issues equity securities to the Series A Holders that have rights, powers and preferences that are substantially similar to the rights, powers and preferences of the Series A Preferred Mirror Units pursuant to provisions of this Agreement that allow the Partnership to do so without limited partner approval.

“Permitted Transfer” means the sale, conveyance, exchange or transfer, for cash, units of capital stock, securities or other consideration, of all or substantially all of the Partnership’s property or assets or the consolidation, merger or amalgamation of the Partnership with or into any other entity or the consolidation, merger or amalgamation of any other entity with or into the Partnership.

“Series A Holder” means a holder of Series A Preferred Mirror Units.

“Series A Liquidation Preference” means $25.00 per Series A Preferred Mirror Unit. The Series A Liquidation Preference shall be the “Liquidation Preference” with respect to the Series A Preferred Mirror Units.

“Series A Liquidation Value” means the sum of the Series A Liquidation Preference and declared and unpaid distributions, if any, to, but excluding, the date of the Dissolution Event on the Series A Preferred Mirror Units.

“Series A Record Date” means, with respect to any Distribution Payment Date, the March 15, June 15, September 15 or December 15, as the case may be, immediately preceding the relevant March 31, June 30, September 30 or December 31 Distribution Payment Date, respectively.

“Substantially All Merger” means a merger or consolidation of one or more of the Ares Operating Group entities with or into another Person that would, in one or a series of related transactions, result in the transfer or other disposition, directly or indirectly, of all or substantially all of the combined assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

“Substantially All Sale” means a sale, assignment, transfer, lease or conveyance, in one or a series of related transactions, directly or indirectly, of all or substantially all of the assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

Section 12.3Distributions.

(a)The Series A Holders shall be entitled to receive with respect to each Series A Preferred Mirror Unit, when, as and if declared by the General Partner in its sole discretion out of funds legally available therefor, non-cumulative quarterly cash distributions on the applicableDistribution Payment Datethat corresponds to the Series A Record Date for which the General Partner has declared a distribution, if any, at a rate per annum equal to theDistribution Rate(subject to Section 12.6 of this Agreement) of theSeries A Liquidation Preference. Such distributions shall be non-cumulative, and Series A Holders shall not be entitled to distributions to the extent that such distributions would be expected to cause the Capital Accounts of such Series A Holders to be less than $0, taking into account reasonably expected allocations of Gross Ordinary Income for the taxable year of such distribution. If aDistribution Payment Dateis not aBusiness Day, the related distribution (if declared) shall be paid on the next succeedingBusiness Daywith the same force and effect as though paid on suchDistribution Payment Date, without any increase to account for the period from suchDistribution Payment Datethrough the date of actual payment. Distributions payable on the Series A Preferred Mirror Units for the initialDistribution Periodand any period less than a fullDistribution Periodshall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in such period. Declared distributions will be payable on the relevantDistribution Payment Dateto Series A Holders as they appear on the Partnership’s register at the close of business, New York City time, on the Series A Record Dates, provided that if theSeries A Record Dateis not aBusiness Day, the declared distributions will be payable on the relevant Distribution Payment Dateto the Series A Holders as it appears on the Partnership’s register at the close of business, New York City time on the Business Day immediately preceding such Series A Record Date.

(b)So long as any Series A Preferred Mirror Units are outstanding, (i) no distribution, whether in cash or property, may be declared or paid or set apart for payment on the Junior Units for the then-current quarterly Distribution Period (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) and (ii) the Partnership and its subsidiaries shall not directly or indirectly repurchase, redeem or otherwise acquire for consideration any Junior Units, unless, in each case, distributions have been declared and paid or declared and set apart for payment on GP Mirror Units for the then-current quarterly Distribution Period, other than, in each case (x) repurchases, redemptions or other acquisitions of Junior Units for Common Shares pursuant to the Exchange Agreement or otherwise, (y) grants or vesting of awards under the Issuer’s or its subsidiaries’ equity incentive plans and (z) repurchases, redemptions or other acquisitions of Junior Units pursuant to any put or call agreements existing on June 8, 2016 (including any amendments, modifications or replacements thereof that do not adversely affect the Series A Holders).

(c)The General Partner, or a duly authorized committee thereof, may, in its sole discretion, choose to pay distributions on the Series A Preferred Mirror Units without the payment of any distributions on any Junior Units.

(d)When distributions are not declared and paid (or duly provided for) on any Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) in full upon the Series A Preferred Mirror Units or any other Parity Units, all distributions declared upon the Series A Preferred Mirror Units and all such Parity Units payable on such Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates, on a distribution payment date falling within the related Distribution Period) shall be declared pro rata so that the respective amounts of such distributions shall bear the same ratio to each other as all declared and unpaid distributions per Unit on the Series A Preferred Mirror Units and all accumulated unpaid distributions on all Parity Units payable on such Distribution Payment Date (or in the case of non-cumulative Parity Units, unpaid distributions for the then-current Distribution Period (whether or not declared) and in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) bear to each other.

(e)No distributions may be declared or paid or set apart for payment on any Series A Preferred Mirror Units if at the same time any arrears exist or default exists in the payment of distributions on any outstanding Units ranking, as to the payment of distributions and distribution of assets upon a Dissolution Event, senior to the Series A Preferred Mirror Units, subject to any applicable terms of such outstanding Units, subject to any applicable terms of such outstanding Units.

(f)A Series A Holder shall not be entitled to any distributions, whether payable in cash or property, other than as provided in this Agreement and shall not be entitled to interest, or any sum in lieu of interest, in respect of any distribution payment, including any such payment which is delayed or foregone, including any such payment which is delayed or foregone.

(g)The Partners intend that no portion of the distributions paid to a Series A Holder pursuant to this Section 12.3 shall be treated as a “guaranteed payment” within the meaning of Section 707(c) of the Code, and no Partner shall take any position inconsistent with such intention, except if there is a change in applicable law or final determination by the Internal Revenue Service that is inconsistent with such intention.

Section 12.4Rank.

The Series A Preferred Mirror Units shall rank, with respect to payment of distributions and distribution of assets upon a Dissolution Event:

(a)junior to all of the Partnership’s existing and future indebtedness and any equity securities, including Preferred Units, that the Partnership may authorize or issue, the terms of which provide that such securities shall rank senior to the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event;

(b)equally to any Parity Units; and

(c)senior to any Junior Units.

Section 12.5Redemption.

(a)If the Issuer redeems its 7.00% Series A Preferred Shares, then the Partnership may redeem the Series A Preferred Mirror Units, in whole or in part, at a redemption price equal to the Series A Liquidation Preference plus an amount equal to declared and unpaid distributions from the Distribution Payment Date immediately preceding the redemption date to, but excluding, the redemption date. If less than all of the outstanding Series A Preferred Mirror Units are to be redeemed, the General Partner shall select the Series A Preferred Mirror Units to be redeemed from the outstanding Series A Preferred Mirror Units not previously called for redemption by lot orpro rata(as nearly as possible).

(b)If the Issuer redeems its 7.00% Series A Preferred Shares pursuant to a Change of Control Event, then the Partnership may, in the General Partner’s sole discretion, redeem the Series A Preferred Mirror Units, in whole but not in part, out of funds legally available therefor, at a redemption price equal to $25.25 per Series A Preferred Mirror Unit plus an amount equal to the declared and unpaid distributions. So long as funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment, from and after the redemption date, such Series A Preferred Mirror Units called for redemption shall no longer be deemed outstanding, and all rights of the Series A Holders thereof shall cease other than the right to receive the redemption price, without interest.

(c)Without limiting clause (b) of this Section 12.5, if the Partnership shall deposit on or prior to any date fixed for redemption of Series A Preferred Mirror Units, with any bank or trust company, as a trust fund, a fund sufficient to redeem the Series A Preferred Mirror Units called for redemption, with irrevocable instructions and authority to such bank or trust company to pay on and after the date fixed for redemption or such earlier date as the General Partner may determine, to the respective Series A Holders, the redemption price thereof, then from and after the date of such deposit (although prior to the date fixed for redemption) such Series A Preferred Mirror Units so called shall be deemed to be redeemed and such deposit shall be deemed to constitute full payment of said Series A Preferred Mirror Units to the holders thereof and from and after the date of such deposit said Series A Preferred Mirror Units shall no longer be deemed to be outstanding, and the holders thereof shall cease to be holders of Units with respect to such Series A Preferred Mirror Units, and shall have no rights with respect thereto except only the right to receive from said bank or trust company, on the redemption date or such earlier date as the General Partner may determine, payment of the redemption price of such Series A Preferred Mirror Units without interest.

Section 12.6Distribution Rate.

If the distribution rate per annum on the 7.00% Series A Preferred Shares issued by the Issuer shall increase pursuant to Section 16.6 of the Issuer Limited Partnership Agreement, then the Distribution Rate shall increase by the same amount beginning on the same date as set forth in Article XVI of the Issuer Limited Partnership Agreement.

Section 12.7Voting.

Notwithstanding any other provision of this Agreement or the Act, the Series A Preferred Mirror Units shall not have any relative, participating, optional or other voting, consent or approval rights or powers, and the vote, consent or approval of the Series A Holders shall not be required for the taking of any Partnership action. The Partnership may, from time to time, issue additional Series A Preferred Mirror Units.

Section 12.8Liquidation Rights.

(a)Upon any Dissolution Event, after payment or provision for the liabilities of the Partnership (including the expenses of such Dissolution Event) and the satisfaction of all claims ranking senior to the Series A Preferred Mirror Units in accordance with Article IX of this Agreement, the Series A Holders shall be entitled to receive out of the assets of the Partnership or proceeds thereof available for distribution to Partners, before any payment or distribution of assets is made in respect of Junior Units, distributions equal to the lesser of (x) the Series A Liquidation Value and (y) the positive balance in their Capital Accounts (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs). Upon a Dissolution Event, or in the event that any Ares Operating Group entity liquidates, dissolves or winds up, no Ares Operating Group entity may declare or pay or set apart payment on its Junior Units unless the outstanding liquidation preference on all outstanding GP Mirror Units of each Ares Operating Group entity have been repaid via redemption or otherwise.

(b)Upon a Dissolution Event, after each Series A Holder receives a payment equal to the positive balance in its Capital Account (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs), such Series A Holder shall not be entitled to any further participation in any distribution of assets by the Partnership.

(c)For the purposes of this Section 12.8, a Dissolution Event shall not be deemed to have occurred in connection with (i) a Substantially All Merger or a Substantially All Sale whereby an Ares Operating Group entity is the surviving Person or the Person formed by such transaction is organized under the laws of a Permitted Jurisdiction and has expressly assumed all of the obligations under the GP Mirror Units, (ii) the sale or disposition of an Ares Operating Group entity (whether by merger, consolidation or the sale of all or substantially all of its assets) if such sale or disposition is not a Substantially All Merger or Substantially All Sale, (iii) the sale or disposition of an Ares Operating Group entity should such Ares Operating Group entity not constitute a “significant subsidiary” of the Issuer under Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange Commission, (iv) an event where the Series A Preferred Mirror Units have been fully redeemed pursuant to the terms of this Agreement or if proper notice of redemption of the Series A Preferred Mirror Units has been given and funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment pursuant this Agreement, (v) transactions where the assets of the Ares Operating Group entity being liquidated, dissolved or wound up are immediately contributed to another Ares Operating Group entity or a subsidiary thereof, and (vi) with respect to an Ares Operating Group entity, a Permitted Transfer or a Permitted Reorganization.

(d)A Permitted Transfer will not be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Partnership, notwithstanding that for other purposes, such as for tax purposes, such an event may constitute a liquidation, dissolution or winding up.

Section 12.9Amendments and Waivers.

The provisions of this Article XII may be amended, supplemented, waived or modified in accordance with the provisions of Section 11.6 of the Agreement; provided that any amendment, supplement, waiver or modification of this Article XII that relates to the economic terms of the Series A Preferred Mirror Units and is not consistent with a corresponding amendment, supplement, waiver or modification of Article XVI of the Issuer Limited Partnership Agreement shall require the consent of the Limited Partners that own a majority of the Class A Units then outstanding.

Section 12.10No Conversion.

The Series A Preferred Mirror Units are not convertible into Class A Units or any other class or series of interests or any other security of the Partnership.

Section 12.11No Third Party Beneficiaries.

The provisions of Section 11.7 of the Agreement shall apply to this Article XII without limitation.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this Agreement to be duly executed and delivered as a deed by their respective authorized officers, in each case as of the date first above stated.

GENERAL PARTNER, SOLE SERIES A HOLDER AND SUBSCRIBER FOR CLASS A UNITS:Executed and delivered as a deed by

AOF HOLDCO LLC

By: Ares Offshore Holdings, Ltd., its sole member

By:    _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

In the presence of:

Witness     _/s/ Cindy Bloch______________________        Name: Cindy Bloch        Title: Executive Assistant

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

LIMITED PARTNERS:

ARES OWNERS HOLDINGS L.P.

By: Ares Partners Holdco LLC, its General Partner

By:    _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

In the presence of:

Witness     _/s/ Cindy Bloch______________________        Name: Cindy Bloch        Title: Executive Assistant

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles CA, 90067_______________

ALLEGHANY INSURANCE HOLDINGS LLC

By:    _/s/ John L. Sennott, Jr.______________    Name: John L. Sennott, Jr.    Title: Senior Vice President

Address:

_1411 Broadway, 34^th Floor_____________

_New York, NY 10018_________________

In the presence of:

Witness     _/s/ Christopher K. Dalrymple___________        Name: Christopher K. Dalrymple        Title: Secretary

Address:

_1411 Broadway, 34^th Floor_____________

_New York, NY 10018_________________

EX-10.3

9779/17956-003 CURRENT/96426365v4

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

OF

ARES INVESTMENTS L.P.

Effective as of March 1, 2018

THE PARTNERSHIP UNITS OF ARES INVESTMENTS L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS; THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT; AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BY THE GENERAL PARTNER AND THE APPLICABLE LIMITED PARTNER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

ARTICLE I DEFINITIONS    1

Section 1.1 Definitions    1

Section 1.2 Interpretation    10

ARTICLE II FORMATION, TERM, PURPOSE AND POWERS    11

Section 2.1 Conversion; Name; Foreign Jurisdictions    11

Section 2.2 Business Purpose    12

Section 2.3 Term    12

Section 2.4 Registered Office; Registered Agent    12

Section 2.5 Principal Office    12

Section 2.6 Powers of the Partnership    12

Section 2.7 Partners; Admission of New Partners    12

Section 2.8 Withdrawal    13

ARTICLE III MANAGEMENT    13

Section 3.1 General Partner    13

Section 3.2 Compensation    14

Section 3.3 Expenses    14

Section 3.4 Officers    15

Section 3.5 Authority of Partners    15

Section 3.6 Action by Written Consent or Ratification    16

ARTICLE IV DISTRIBUTIONS    16

Section 4.1 Distributions    16

Section 4.2 Liquidation Distribution    17

Section 4.3 Limitations on Distribution    17

Section 4.4 Clawbacks    17

ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS    17

Section 5.1 Initial Capital Contributions    17

Section 5.2 No Additional Capital Contributions    18

Section 5.3 Capital Accounts    18

Section 5.4 Allocations of Profits and Losses    18

Section 5.5 Special Allocations    18

Section 5.6 Tax Allocations    20

Section 5.7 Tax Advances    20

Section 5.8 Tax Matters    21

Section 5.9 Other Allocation Provisions    21

ARTICLE VI BOOKS AND RECORDS; REPORTS    22

Section 6.1 Books and Records    22

ARTICLE VII PARTNERSHIP UNITS    22

Section 7.1 Units    22

Section 7.2 Register    23

Section 7.3 Registered Partners    23

ARTICLE VIII VESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS    23

Section 8.1 Vesting of Unvested Units    23

Section 8.2 Forfeiture of Units    24

Section 8.3 Limited Partner Transfers    25

Section 8.4 Mandatory Exchanges    26

Section 8.5 Encumbrances    26

Section 8.6 Further Restrictions    26

Section 8.7 Rights of Assignees    27

Section 8.8 Admissions, Withdrawals and Removals    27

Section 8.9 Admission of Assignees as Substitute Limited Partners    28

Section 8.10 Withdrawal and Removal of Limited Partners    28

ARTICLE IX DISSOLUTION, LIQUIDATION AND TERMINATION    28

Section 9.1 No Dissolution    29

Section 9.2 Events Causing Dissolution    29

Section 9.3 Distribution upon Dissolution    30

Section 9.4 Time for Liquidation    30

Section 9.5 Termination    30

Section 9.6 Claims of the Partners    30

Section 9.7 Survival of Certain Provisions    30

ARTICLE X LIABILITY AND INDEMNIFICATION    31

Section 10.1 Duties; Liabilities; Exculpation    31

Section 10.2 Indemnification    33

ARTICLE XI MISCELLANEOUS    35

Section 11.1 Dispute Resolution    35

Section 11.2 Severability    36

Section 11.3 Binding Effect    36

Section 11.4 Further Assurances    36

Section 11.5 Expenses    36

Section 11.6 Amendments and Waivers    36

Section 11.7 No Third Party Beneficiaries    38

Section 11.8 Power of Attorney    38

Section 11.9 Letter Agreements; Schedules    39

Section 11.10 Governing Law; Separability    39

Section 11.11 Notices    39

Section 11.12 Counterparts    39

Section 11.13 Cumulative Remedies    39

Section 11.14 Entire Agreement    39

Section 11.15 Partnership Status    40

Section 11.16 Limited Partner Representations    40

ARTICLE XII TERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS    41

Section 12.1 Designation    41

Section 12.2 Definitions    41

Section 12.3 Distributions    43

Section 12.4 Rank    45

Section 12.5 Redemption    45

Section 12.6 Distribution Rate    46

Section 12.7 Voting    46

Section 12.8 Liquidation Rights    46

Section 12.9 Amendments and Waivers    47

Section 12.10 No Conversion    48

Section 12.11 No Third Party Beneficiaries    48

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
ARES INVESTMENTS L.P.

SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of Ares Investments L.P., entered into as of March 8, 2018 and effective as of March 1, 2018 (the “Effective Date”), among AI Holdco LLC, a Delaware limited liability company, as general partner, and the Limited Partners (as defined herein) of the Partnership.

WHEREAS, Ares Investments LLC (“AI LLC”) was formed as a Delaware limited liability company on December 11, 2006;

WHEREAS, on or prior to the June 8, 2016, all necessary action was taken to authorize AI LLC’s conversion to Ares Investments L.P., a Delaware limited partnership (the “Partnership”), under the 2013 Amended and Restated Limited Liability Company Agreement of AI LLC, dated as of July 31, 2013 (the “LLC Agreement”), and the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.) (the “LLC Act”), including the approval by AI LLC’s manager of the conversion of AI LLC from a limited liability company to a limited partnership pursuant to an action by written consent dated on or about June 8, 2016;

WHEREAS, on June 8, 2016, AI LLC was converted to a limited partnership (the “Conversion”) pursuant to Section 17-217 of the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101, et seq.) (the “Act”) and Section 18-216 of the LLC Act by causing the filing in the office of the Secretary of State of the State of Delaware of a Certificate of Conversion to Limited Partnership of AI LLC and a Certificate of Limited Partnership of the Partnership (the “Certificate”);

WHEREAS, the parties hereto entered into the Amended and Restated Limited Partnership Agreement of the Partnership, dated as of June 8, 2016 (the “A&R Partnership Agreement”);

WHEREAS, effective as of the Effective Date, the Issuer amended and restated its limited partnership agreement to, among other things, change the name of its common units representing limited partner interests and preferred units representing limited partner interests to Common Shares and Preferred Shares, respectively; and

WHEREAS, the parties hereto now desire to amend and restate the A&R Partnership Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE IDEFINITIONS

Section 1.1Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

“A&R Partnership Agreement” has the meaning set forth in the recitals.

“Act” has the meaning set forth in the recitals.

“Additional Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Adjusted Capital Account Balance” means, with respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5), any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“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, the Person in question. As used herein, the term “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; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“AI LLC” has the meaning set forth in the recitals.

“Alleghany” means Alleghany Insurance Holdings LLC, a Delaware limited liability company.

“Alleghany Permitted Transferee” means any Affiliate of Alleghany (other than any Person that is a competitor of any Ares Company or whose ownership of equity interests in any entity that is a member of the Ares Operating Group or the Issuer would restrict the operations of any Ares Company, in each case, as determined in good faith by the Issuer).

“Amended Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Ares Company”means any of (i) the Issuer, (ii) Ares GP, (iii) Ares Voting LLC, a Delaware limited liability company, (iv) any entity that is or becomes part of the Ares Operating Group and (v) any entity in which any the foregoing directly or indirectly owns a majority interest or which any of the foregoing controls, or through which any of the foregoing directly or indirectly manages, directs or invests in a Fund, but excluding any Fund.

“Ares Operating Group” means, collectively, (i) the Partnership, (ii) Ares Holdings L.P., a Delaware limited partnership, (iii) Ares Offshore Holdings L.P., a Cayman Islands exempted limited partnership, and (iv) any future entity designated by Ares GP in its discretion as an Ares Operating Group entity for purposes of this Agreement.

“Ares Owners Class IND Units” has the meaning given to “Class IND Units” in the Ares Owners LP Agreement.

“Ares Owners Class OG Units” has the meaning given to “Class OG Units” in the Ares Owners LP Agreement.

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

“Ares Owners LP Agreement” means the limited partnership agreement of Ares Owners LP.

“Ares Owners Mirror Units” means Class Mirror Units (as defined in the Ares Owners LP Agreement).

“Assignee” has the meaning set forth in Section 8.7.

“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year prescribed for an individual or corporate resident in Los Angeles, California or New York, New York, whichever is higher (taking into account (a) the nondeductiblity of expenses subject to the limitation described in Section 67(a) of the Code (if applicable) and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for U.S. federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.

“Available Cash” means, with respect to any fiscal period, the amount of cash on hand which the General Partner, in its sole discretion, deems available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due and amounts which the General Partner, in its sole discretion, deems necessary to expend or retain for working capital or otherwise or to place into reserves.

“Capital Account” means the separate capital account maintained for each Partner in accordance with Section 5.3 hereof.

“Capital Contribution” means, with respect to any Partner, the aggregate amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V.

“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for U.S. federal income tax purposes, except that the initial carrying value of assets contributed to the Partnership shall be their respective gross fair market values on the date of contribution as determined by the General Partner, and the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of: (a) the date of the acquisition of any additional Partnership interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership interest is relinquished to the Partnership; or (d) any other date specified in the Treasury Regulations; provided that adjustments pursuant to clauses (a), (b), (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for U.S. federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.

“Certificate” has the meaning set forth in the recitals.

“Class” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time by the General Partner in its sole discretion pursuant to the provisions of this Agreement. As of the Effective Date, the only Classes of Units are Class A Units and Series A Preferred Mirror Units. Subclasses within a Class shall not be separate Classes for purposes of this Agreement. For all purposes hereunder and under the Act, only such Classes expressly established under this Agreement, including by the General Partner in accordance with this Agreement, shall be deemed to be a class of interests in the Partnership. For the avoidance of doubt, to the extent that the General Partner holds interests of any Class, the General Partner shall not be deemed to hold a separate Class of such interests from any other Partner because it is the General Partner.

“Class A Units” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.

“Clawback Obligation” has the meaning set forth in Section 4.4.

“Code” means the Internal Revenue Code of 1986.

“Collateral Agreement” means any security agreement, pledge agreement or similar agreement relating to any Credit Agreement.

“Common Shares” means common shares representing partner interests of the Issuer.

“Consenting Party” has the meaning set forth in Section 11.1(a).

“Contingencies” has the meaning set forth in Section 9.3(a).

“Conversion” has the meaning set forth in the recitals.

“Corresponding Rate” means the number of Class A Units that would be forfeited or cancelled upon the forfeiture or cancellation of Ares Owners Mirror Units or Common Shares pursuant to any agreements governing such Ares Owners Mirror Units or Common Shares, as applicable. As of the Effective Date, the Corresponding Rate shall be 1 for 1. The Corresponding Rate shall be adjusted accordingly by the General Partner in its sole discretion upon: (a) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Class A Units that is not accompanied by an identical subdivision or combination of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable; or (b) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Ares Owners Mirror Units, as applicable, or Common Shares, as applicable, that is not accompanied by an identical subdivision or combination of the Class A Units.

“Credit Agreement” means any facility for borrowed money of Ares Management LLC or an affiliate of Ares Management LLC.

“Credit Amount” has the meaning set forth in Section 4.1(b)(ii).

“Creditable Non-U.S. Tax” means a non-U.S. tax paid or accrued for U.S. federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-U.S. tax is a Creditable Non-U.S. Tax for these purposes without regard to whether a partner receiving an allocation of such non-U.S. tax elects to claim a credit for such amount. This definition is intended to be consistent with the term “creditable foreign tax” in Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

“Disabling Event” means the General Partner ceasing to be the general partner of the Partnership pursuant to Section 17-402 of the Act.

“Dissolution Event” has the meaning set forth in Section 9.2.

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Encumbrance” means any mortgage, hypothecation, claim, lien, encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.

“ERISA” means The Employee Retirement Income Security Act of 1974.

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

“Exchange Agreement” means the exchange agreement, dated as of or about April 3, 2017, among the Issuer, the Ares Operating Group entities, the limited partners of the Ares Operating Group entities (or their designees or Affiliates) from time to time party thereto, and the other parties thereto.

“Exchange Transaction” means an exchange of Class A Units for Common Shares pursuant to, and in accordance with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Class A Units to the Issuer, the Partnership or any of their subsidiaries for other consideration.

“Family Member”means, with respect to any Limited Partner who is a natural person, such Limited Partner’s spouse, parents, siblings and children and any other natural person who occupies the same principal residence as such Limited Partner, and the spouses, descendants and ancestors of each of the foregoing.

“Final Tax Amount” has the meaning set forth in Section 4.1(b)(ii).

“Fiscal Year” means the period commencing on January 1 and ending on December 31 of each year, except (a) for the short taxable years in the years of the Partnership’s formation (i.e., the year in which AI LLC was formed) and termination and (b) as otherwise elected by the General Partner in its sole discretion or required by the Code.

“Fund” means any fund, investment vehicle or account whose investments are managed or advised by an Ares Company.

“GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.

“General Partner” means AI Holdco LLC or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement.

“Gross Ordinary Income” has the meaning assigned to such term in Section 5.5(d).

“Incapacity” means, with respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.

“Indemnitee” means (a) the General Partner, (b) any Person who is or was a “tax matters partner” (as defined in the Code prior to amendment by P.L 114-74) or “partnership representative” (as defined in Section 6223 of the Code after amendment by P.L. 114-74), officer or director of the General Partner, (c) any officer or director of the General Partner who is or was serving at the request of the General Partner as a director, officer, employee, trustee, fiduciary, partner, tax matters partner, partnership representative, member, representative, agent or advisor of another Person; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis or similar arm’s-length compensatory basis, agency, advisory, consulting, trustee, fiduciary or custodial services, (d) any Person the General Partner in its sole discretion designates as an “Indemnitee” for purposes of this Agreement and (e) any heir, executor or administrator with respect to Persons named in clauses (a) through (d).

“Issuer” means Ares Management, L.P., a Delaware limited partnership.

“Issuer General Partner” means Ares Management GP LLC, a Delaware limited liability company and the general partner of the Issuer, or any successor general partner of the Issuer.

“Issuer Limited Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated on or about the Effective Date.

“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may be.

“Limited Partner” means each of the Persons from time to time listed as a limited partner in the books and records of the Partnership, and, for purposes of Sections 8.1, 8.2, 8.3, 8.4, 8.5 and 8.6, any Permitted Transferee of such Limited Partner.

“Liquidation Agent” has the meaning set forth in Section 9.3.

“LLC Act” has the meaning set forth in the recitals.

“LLC Agreement” has the meaning set forth in the recitals.

“Net Taxable Income” has the meaning set forth in Section 4.1(b)(i).

“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a fiscal year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that fiscal year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).

“Officer” means each Person designated as an officer of the Partnership by the General Partner pursuant to and in accordance with the provisions of Section 3.4, subject to any resolutions of the General Partner appointing such Person as an officer of the Partnership or relating to such appointment.

“Original Agreement” means the Limited Partnership Agreement of Ares Management, L.P., dated as of May 1, 2014.

“Partially Unvested Partner” means any Partner with Unvested Units.

“Partner Nonrecourse Debt Minimum Gain” means an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

“Partner Nonrecourse Deductions” has the meaning ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).

“Partners” means, at any time, each Person listed as a Partner (including the General Partner) on the books and records of the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.

“Partnership” has the meaning set forth in the recitals.

“Partnership Minimum Gain” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Permitted Transferee” means, with respect to a Limited Partner, (a) its Principal, if any, (b) any trust for the primary benefit of the Family Members of such Limited Partner or the Family Members of such Limited Partner’s Principal; provided that, in each case, either (i) such Limited Partner or its Principal, if any or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such trust until the death or legal incapacity of such Limited Partner or its Principal, if any; or (c) any entity of which such Limited Partner and any Permitted Transferees or Family Members of such Limited Partner collectively are beneficial owners of 100% of the equity interests; provided that either such (i) Limited Partner or its Principal, if any, or (ii) a bona fide third party trustee continues to hold, directly or indirectly, 100% of the voting interests of such entity until the death or legal incapacity of such Limited Partner or its Principal, if any.

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

“Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Preferred Units” means a Class of Units, in one or more series, designated as “Preferred Units,” which entitles the holder thereof to a preference with respect to the payment of distributions over the Class A Units and any other Junior Units then outstanding as set forth herein.

“Primary Indemnification” has the meaning set forth in Section 10.2(a).

“Principal,” with respect to any Limited Partner, has the meaning set forth in a Supplemental Agreement applicable to such Limited Partner.

“Prior General Partner” means Ares Management, L.P., a Delaware limited partnership..

“Profits” and “Losses” means, for each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 5.5 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.

“Relevant Entity” means any Ares Company and any entity in which any Ares Company, directly or indirectly, owns any interest, and any Fund to which any Ares Company provides services.

“Securities Act” means the U.S. Securities Act of 1933.

“Series A Preferred Mirror Units” means the Class of Preferred Units designated as “7.00% Series A Preferred Mirror Units” pursuant to Section 12.1.

“Service Provider” means any Limited Partner (in his, her or its individual capacity) or other Person, who at the time in question, is employed by or providing services to any Ares Company. For the avoidance of doubt, Alleghany is not a Service Provider.

“Similar Law” means any law or regulation that could cause the underlying assets of the Partnership to be treated as assets of a Partner by virtue of its partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

“Supplemental Agreement” means, with respect to any Limited Partner, any unitization letter, fair competition agreement or other supplemental agreement with such Limited Partner or its Principal containing terms modifying, supplementing or otherwise affecting the rights or obligations of such Limited Partner hereunder.

“Tax Advances” has the meaning set forth in Section 5.7.

“Tax Amount” has the meaning set forth in Section 4.1(b)(i).

“Tax Distributions” has the meaning set forth in Section 4.1(b)(i).

“Total Percentage Interest” means, with respect to any Partner, the quotient obtained by dividing the number of Class A Units (vested and unvested) then owned by such Partner by the number of Class A Units (vested and unvested) then owned by all Partners.

“Transfer” means, in respect of any Unit, property or other asset, any sale, assignment, transfer, distribution, exchange, mortgage, pledge, hypothecation or other disposition thereof, whether voluntarily or by operation of Law, directly or indirectly, in whole or in part, including the exchange of any Unit for any other security. “Transferee”, “Transferor”, “Transferring”, “Transferred” and similar terms have meanings correlative to the foregoing.

“Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code.

“Units” means the Class A Units, the Preferred Units and any other Class of Units that is established in accordance with this Agreement, which shall constitute interests in the Partnership as provided in this Agreement and under the Act, entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and provisions of this Agreement.

“Unvested Units” means those Units from time to time listed as unvested Units in the books and records of the Partnership.

“Vested Units” means those Units listed as vested Units in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement.

Section 1.2Interpretation.

(a)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 this 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 this 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 this 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.

(b)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

ARTICLE IIFORMATION, TERM, PURPOSE AND POWERS

Section 2.1Conversion; Name; Foreign Jurisdictions.

(a)Effective as of the time of the Conversion, (i) the LLC Agreement and certificate of formation were replaced and superseded in their entirety by the Original Agreement and the Certificate, (ii) all of the limited liability company interests in AI LLC issued and outstanding immediately prior to the Conversion were converted into Class A Units, (iii) each of those Persons who executed a counterpart to this Agreement as a Limited Partner on May 1, 2014 was admitted to the Partnership as a Limited Partner, and (iv) the Prior General Partner was admitted to the Partnership as the general partner. On or about August 4, 2015, the Prior General Partner withdrew as the general partner of the Partnership and the General Partner was admitted and substituted as the general partner of the Partnership.

(b)The name of the Partnership is “Ares Investments L.P.” or such other name as the General Partner may from time to time hereafter designate. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (i) the formation and operation of a limited partnership under the laws of the State of Delaware, (ii) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (iii) all other filings required to be made by the Partnership. The rights, powers, duties, obligations and liabilities of the Partners shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Partner are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. The execution and filing of the Certificate and each amendment thereto and the Conversion is hereby ratified, approved and confirmed by the Partners.

(c)The General Partner may take all action which may be necessary or appropriate (i) for the continuation of the Partnership’s valid existence as a limited partnership under the laws of the State of Delaware (and of each other jurisdiction in which such existence is necessary to enable the Partnership to conduct the business in which it is engaged) and (ii) for the maintenance, preservation and operation of the business of the Partnership in accordance with the provisions of this Agreement and applicable laws and regulations. The General Partner may file or cause to be filed for recordation in the proper office or offices in each other jurisdiction in which the Partnership is formed or qualified, such certificates (including certificates of limited partnership and fictitious name certificates) and other documents as are required by the applicable statutes, rules or regulations of any such jurisdiction or as are required to reflect the identity of the Partners. The General Partner may cause the Partnership to comply, to the extent procedures are available and those matters are reasonably within the control of the Officers, with all requirements necessary to qualify the Partnership to do business in any jurisdiction other than the State of Delaware.

Section 2.2Business Purpose. The Partnership was formed for the object and primary purpose of, and the nature and character of the business to be conducted by the Partnership is, making investments. The Partnership may engage in any lawful act or activity for which limited partnerships may be formed under the Act.

Section 2.3Term. The term of the Partnership shall continue until the Partnership is dissolved and its affairs are wound up in accordance with this Agreement.

Section 2.4Registered Office; Registered Agent. The address of the registered office of the Partnership in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The name and address of the registered agent of the Partnership for service of process on the Partnership in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The General Partner may from time to time change the registered agent or registered office of the Partnership in the State of Delaware by an amendment to the Certificate, and upon the filing of such an amendment, this Agreement shall be deemed amended accordingly.

Section 2.5Principal Office. The principal office address of the Partnership shall be at such place or places as the General Partner may determine from time to time.

Section 2.6Powers of the Partnership. Subject to the limitations set forth in this Agreement, the Partnership (i) will possess and may exercise all of the powers and privileges granted to it by the Act including the ownership and operation of the assets and other property contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all powers incidental thereto, and (ii) may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions, in each case, so far as such powers, activities or transactions are necessary, desirable, convenient or incidental to, or in furtherance of, the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.2.

Section 2.7Partners; Admission of New Partners. Each of the Persons listed in the books and records of the Partnership, as the same may be amended from time to time in accordance with this Agreement, by virtue of the execution of this Agreement (or the Original Agreement), are admitted as Partners of the Partnership. The rights, duties and liabilities of the Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. Subject to Section 8.9 with respect to substitute Limited Partners, a Person may be admitted from time to time as a new Limited Partner with the written consent of the General Partner in its sole discretion. Each new Limited Partner shall execute and deliver to the General Partner an appropriate supplement to this Agreement pursuant to which the new Limited Partner agrees to be bound by the terms and conditions of the Agreement, as it may be amended from time to time. A new General Partner or substitute General Partner may be admitted to the Partnership solely in accordance with Section 8.8 or Section 9.2(e) hereof.

Section 2.8Withdrawal. No Partner may withdraw from the Partnership, provided that (a) a Limited Partner may withdraw from the Partnership following the Transfer of all Units owned by such Limited Partner in accordance with Article VIII and (b) subject to Section 8.8, the General Partner may withdraw without the consent of any other Partner.

ARTICLE IIIMANAGEMENT

Section 3.1General Partner.

(a)The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to Officers or to others to act on behalf of the Partnership.

(b)Without limiting the foregoing provisions of this Section 3.1, the General Partner shall have the general power to manage or cause the management of the Partnership (which may be delegated to Officers of the Partnership), including the following powers:

(i)to develop and prepare a business plan each year;

(ii)to execute and deliver or to authorize the execution and delivery of contracts, deeds, leases, licenses, instruments of transfer and other documents on behalf of the Partnership;

(iii)the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any other obligations;

(iv)the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(v)to select and dismiss employees (including employees having such titles as the General Partner may determine in its sole discretion) and agents, representatives, outside attorneys, accountants, consultants and contractors and to determine their compensation and other terms of employment or hiring;

(vi)to establish and enforce limits of authority and internal controls with respect to all personnel and functions;

(vii)to develop or cause to be developed accounting procedures for the maintenance of the Partnership’s books of account;

(viii)the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;

(ix)the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(x)the purchase, sale or other acquisition or disposition of Units; and

(xi)to do all such other acts as shall be authorized in this Agreement or by the Partners in writing from time to time.

(c)In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation or duty to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have any liability to a Limited Partner for monetary damages, equitable relief or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions.

Section 3.2Compensation. The General Partner shall not be entitled to any compensation for services rendered to the Partnership in its capacity as General Partner.

Section 3.3Expenses. The Partnership shall pay, or cause to be paid, all costs, fees, operating expenses and other expenses of the Partnership (including the costs, fees and expenses of attorneys, accountants or other professionals) incurred in pursuing and conducting, or otherwise related to, the activities of the Partnership. The Partnership shall also, in the sole discretion of the General Partner, bear or reimburse the General Partner for (i) any costs, fees or expenses incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with serving as the General Partner, (ii) all other expenses allocable to the Partnership or otherwise incurred by the General Partner (or any direct or indirect equityholders of the General Partner) in connection with operating the Partnership’s business (including expenses allocated to the General Partner (or any direct or indirect equityholders of the General Partner) by its Affiliates) and (iii) all costs, fees or expenses owed directly or indirectly by the Partnership or the General Partner to the Issuer General Partner (or any direct or indirect equityholders of the Issuer General Partner) pursuant to their reimbursement obligations under, or which are otherwise allocated to the General Partner (or any direct or indirect equityholders of the General Partner) pursuant to, the Issuer Limited Partnership Agreement. If the General Partner determines in its sole discretion that such expenses are related to the business and affairs of the General Partner that are conducted through the Partnership or its subsidiaries (including expenses that relate to the business and affairs of the Partnership or its subsidiaries and that also relate to other activities of the General Partner), the General Partner may cause the Partnership to pay or bear all expenses of the General Partner (or any direct or indirect equityholders of the General Partner), including compensation and meeting costs of any board of directors or similar body of the General Partner, any salary, bonus, incentive compensation and other amounts paid to any Person including Affiliates of the General Partner to perform services for the Partnership, litigation costs and damages arising from litigation, accounting and legal costs and franchise taxes. Reimbursements pursuant to this Section 3.3 shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 10.2.

Section 3.4Officers. Subject to the direction and oversight of the General Partner, the day-to-day administration of the business of the Partnership may be carried out by persons who may be designated as officers by the General Partner, with titles including but not limited to “assistant secretary,” assistant treasurer,” “chief executive officer,” “chief financial officer,” “chief legal officer,” “chief operating officer,” “chief compliance officer,” “general counsel,” “managing director,” “president,” “executive vice president,” “senior vice president,” “vice president,” “principal accounting officer,” “secretary,” or “treasurer,” and as and to the extent authorized by the General Partner. The officers of the Partnership shall have such titles and powers and perform such duties as shall be determined from time to time by the General Partner and otherwise as shall customarily pertain to such offices. Any number of offices may be held by the same person. In its sole discretion, the General Partner may choose not to fill any office for any period as it may deem advisable. All officers and other persons providing services to or for the benefit of the Partnership shall be subject to the supervision and direction of the General Partner and may be removed, with or without cause, from such office by the General Partner and the authority, duties or responsibilities of any employee, agent or officer of the Partnership may be suspended by the General Partner from time to time, in each case in the sole discretion of the General Partner. The General Partner shall not cease to be a general partner of the Partnership as a result of the delegation of any duties hereunder. No officer of the Partnership, in its capacity as such, shall be considered a general partner of the Partnership by agreement, as a result of the performance of its duties hereunder or otherwise.

Section 3.5Authority of Partners. No Limited Partner, in its capacity as such, shall participate in or have any control over the business of the Partnership. Except as expressly provided herein, the Units do not confer any rights upon the Limited Partners to participate in the affairs of the Partnership described in this Agreement. Except as expressly provided herein, no Limited Partner shall have any right to vote on any matter involving the Partnership, including with respect to any merger, consolidation, combination or conversion of the Partnership, or any other matter that a limited partner might otherwise have the ability to vote on or consent with respect to under the Act, at law, in equity or otherwise. The conduct, control and management of the Partnership shall be vested exclusively in the General Partner. In all matters relating to or arising out of the conduct of the operation of the Partnership, the decision of the General Partner shall be the decision of the Partnership. Except as required or permitted by Law, or expressly provided in the ultimate sentence of this Section 3.5 or by separate agreement with the Partnership, no Partner who is not also a General Partner (and acting in such capacity) shall take any part in the management or control of the operation or business of the Partnership in its capacity as a Partner, nor shall any Partner who is not also a General Partner (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Partnership in his or its capacity as a Partner in any respect or assume any obligation or responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may from time to time appoint one or more Partners as officers or employ one or more Partners as employees, and such Partners, in their capacity as officers or employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.

Section 3.6Action by Written Consent or Ratification. Any action required or permitted to be taken by the Partners pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a consent or ratification in writing.

ARTICLE IVDISTRIBUTIONS

Section 4.1Distributions.

(a)The General Partner, in its sole discretion, may authorize distributions by the Partnership to the Partners. Distributions shall be made in accordance with Section 12.3 and this Article IV. Distributions (other than distributions made with respect to the Series A Preferred Mirror Units pursuant to Section 12.3) shall be made pro rata in accordance with the Partners’ respective Total Percentage Interests.

(b)

(i)In addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal Year will give rise to taxable income for the Partners that hold Class A Units (“Net Taxable Income”), the General Partner shall cause the Partnership to distribute Available Cash in respect of income tax liabilities (the “Tax Distributions”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities. The Tax Distributions payable with respect to any Fiscal Year shall be computed based upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V, multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit under Section 743(b) of the Code will be ignored. Any Tax Distributions shall be made to all Partners that hold Class A Units pro rata in accordance with their Total Percentage Interests.

(ii)Tax Distributions shall be calculated and paid no later than one day prior to each quarterly due date for the payment by corporations on a calendar year of estimated taxes under the Code in the following manner (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the General Partner shall make an amended calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to distribute a Tax Distribution, out of Available Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this Section 4.1(b) for purposes of the computations herein.

Section 4.2Liquidation Distribution. Distributions made upon dissolution of the Partnership shall be made as provided in Section 9.3.

Section 4.3Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate Section 17-607 of the Act or other applicable Law.

Section 4.4Clawbacks. To the extent that the Partnership is directly or indirectly required to comply with a clawback or other similar obligation with respect to any Fund (a “Clawback Obligation”), upon the written request of the General Partner, Alleghany shall promptly return to the Partnership any distributions received from the Partnership in an amount equal to Alleghany’s pro rata share (based on its Total Percentage Interest) of the excess of (a) such Clawback Obligation less (b) all amounts returned by Alleghany with respect to such Clawback Obligation. Any returned amounts shall be treated as Capital Contributions but shall not affect Alleghany’s Total Percentage Interest. The Partnership shall be entitled to withhold from any distributions otherwise payable to Alleghany a reasonable amount sufficient to reserve for any potential Clawback Obligation. To the extent that any such reserve is not sufficient to satisfy any such Clawback Obligation, the Partnership shall be entitled to offset such deficiency with any amounts due and payable to Alleghany or its Affiliates. Notwithstanding the foregoing, at no time shall any Partner be liable for amounts in excess of amounts distributed to such Partner in connection with any Fund in respect of which a Clawback Obligation is or may be owing. For the avoidance of doubt, Alleghany shall not (i) be required to return to the Partnership any distributions, (ii) be subjected to any withholding or (iii) be subjected to any offset against amounts due and payable to Alleghany, in each case to the extent that a Clawback Obligation relates to any amounts distributed prior to July 31, 2013.

ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS

Section 5.1Initial Capital Contributions. The Partners have made, on or prior to the Effective Date, Capital Contributions, if any, and, in exchange, the Partnership has issued to the Partners the number of Class A Units and Series A Preferred Mirror Units as specified in the books and records of the Partnership.

Section 5.2No Additional Capital Contributions. Except as otherwise provided in this Article V, no Partner shall be required to make additional Capital Contributions to the Partnership without the consent of such Partner or permitted to make additional capital contributions to the Partnership without the consent of the General Partner.

Section 5.3Capital Accounts. A Capital Account shall be established and maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.4 and any items of income or gain which are specially allocated pursuant to Section 5.5; and shall be debited with all Losses allocated to such Partner pursuant to Section 5.4, any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.5, and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. In the event of any Transfer of any interest in the Partnership in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor to the extent it relates to the Transferred interest. For the avoidance of doubt, the Capital Account balance for each Series A Preferred Mirror Unit shall initially equal the Liquidation Preference per Series A Preferred Mirror Unit as of the date such Series A Preferred Mirror Unit is initially issued and shall be increased as set forth in Section 5.5(d).

Section 5.4Allocations of Profits and Losses. Subject to Section 5.5(d), except as otherwise provided in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in a manner such that the Capital Account of each Partner after giving effect to the Special Allocations set forth in Section 5.5 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. For purposes of this Article V, each Unvested Unit may be treated as a Vested Unit.Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.

Section 5.5Special Allocations. Notwithstanding any other provision in this Article V:

(a)Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). This Section 5.5(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).

(b)Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.5(b) shall be made only to the extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.5(b) were not in this Agreement. This Section 5.5(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.

(c)Gross Income Allocation. If any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.5(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.5(b) and this Section 5.5(c) were not in this Agreement.

(d)Gross Ordinary Income. Before giving effect to the allocations set forth in Section 5.4, Gross Ordinary Income for the Fiscal Year shall be specially allocated pro rata to the holders of Series A Preferred Mirror Units in an amount equal to the sum of (i) the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 during such Fiscal Year and (ii) the excess, if any, of the amount of cash distributed to the holders of Series A Preferred Mirror Units pursuant to Section 12.3 in all prior Fiscal Years over the amount of Gross Ordinary Income allocated to the holders of Series A Preferred Mirror Units pursuant to this Section 5.5(d) in all prior Fiscal Years. For purposes of this Section 5.5(d), “Gross Ordinary Income” means the Partnership’s gross income excluding any gross income attributable to the sale or exchange of “capital assets” as defined in Section 1221 of the Code. Allocations to holders of Series A Preferred Mirror Units of Gross Ordinary Income shall consist of a proportionate share of each Partnership item of Gross Ordinary Income for such Fiscal Year in accordance with each holder’s pro rata percentage of the Series A Preferred Mirror Units.

(e)Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Total Percentage Interests.

(f)Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).

(g)Creditable Non-U.S. Taxes. Creditable Non-U.S. Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the Partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Non-U.S. Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.5(g) are intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

(h)Ameliorative Allocations. Any special allocations of income or gain pursuant to Sections 5.5(b) or 5.5(c) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.4 and this Section 5.5(h), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Sections 5.5(b) or 5.5(c) had not occurred.

Section 5.6Tax Allocations. For income tax purposes, each item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a partner’s interest in the Partnership.

Section 5.7Tax Advances. If the General Partner reasonably believes that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.1(b)) with respect to income attributable to or distributions or other payments to such Partner.

Section 5.8Tax Matters. The General Partner shall be the “tax matters partner” of the Partnership for purposes of Section 6231(a)(7) of the Code (prior to amendment by P.L. 114-74) and the “partnership representative” of the Partnership for purposes of Section 6223 of the Code (after amendment by P.L. 114-74). The Partnership shall file as a partnership for federal, state, provincial and local income tax purposes, except where otherwise required by Law. All elections required or permitted to be made by the Partnership, and all other tax decisions and determinations relating to federal, state, provincial or local tax matters of the Partnership, shall be made by the tax matters partner or partnership representative, as applicable. Tax audits, controversies and litigations shall be conducted under the direction of the tax matters partner or partnership representative, as applicable. The General Partner shall cause all required federal, state or local tax returns and reports of the Partnership to be prepared and filed, and shall be responsible for all other tax matters of the Partnership. All costs and expenses incurred by the General Partner related to any tax matters provided for in this Section 5.8, including, without limitation, all fees and expenses of any accounting firm engaged by the General Partner with respect to the Partnership and any costs and expenses related to any audit, declaration of any tax deficiency or any administrative proceeding or litigation involving any Partnership tax matter, shall be Partnership expenses. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner in connection with the conduct of all such proceedings. The tax matters partner or partnership representative, as applicable, shall keep the other Partners reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of U.S. Internal Revenue Service Schedule K-1, and any comparable statements required by applicable U.S. state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns.

Section 5.9Other Allocation Provisions. Certain of the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. In addition to amendments effected in accordance with Section 11.6 or otherwise in accordance with this Agreement, Sections 5.3, 5.4 and 5.5 may also, so long as any such amendment does not materially change the relative economic interests of the Partners, be amended at any time by the General Partner if necessary or desirable, as determined by the General Partner in its discretion, to comply with such regulations or any applicable Law.

ARTICLE VIBOOKS AND RECORDS; REPORTS

Section 6.1Books and Records.

(a)At all times during the continuance of the Partnership, the Partnership shall prepare and maintain separate books of account for the Partnership in accordance with GAAP.

(b)Except as limited by Section 6.1(c), each Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:

(i)a copy of the Certificate and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and

(ii)promptly after their becoming available, copies of the Partnership’s federal income tax returns for the three most recent years.

(c)The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.

ARTICLE VII
PARTNERSHIP UNITS

Section 7.1Units. Interests in the Partnership shall be represented by Units. The Units are comprised of one Class of common units, the Class A Units, and one Class of Preferred Units, the Series A Preferred Mirror Units. The General Partner in its sole discretion may establish and issue, from time to time in accordance with such procedures as the General Partner shall determine from time to time, additional Units, in one or more Classes or series of Units, or other Partnership securities, at such price, and with such designations, preferences and relative, participating, optional or other special rights, powers and duties (which may be senior to existing Units, Classes and series of Units or other Partnership securities), as shall be determined by the General Partner without the approval of any Partner or any other Person who may acquire an interest in any of the Units, including (i) the right of such Units to share in Profits and Losses or items thereof; (ii) the right of such Units to share in Partnership distributions; (iii) the rights of such Units upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem such Units (including sinking fund provisions); (v) whether such Units are issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which such Units will be issued, evidenced by certificates and assigned or Transferred; (vii) the method for determining the Total Percentage Interest, if any, as to such Units; (viii) the terms and conditions of the issuance of such Units (including the amount and form of consideration, if any, to be received by the Partnership in respect thereof, the General Partner being expressly authorized, in its sole discretion, to cause the Partnership to issue such Units for less than fair market value); and (ix) the right, if any, of the holder of such Units to vote on Partnership matters, including matters relating to the relative designations, preferences, rights, powers and duties of such Units. The General Partner in its sole discretion, without the approval of any Partner or any other Person, is authorized (i) to issue Units or other Partnership securities of any newly established Class or any existing Class to Partners or other Persons who may acquire an interest in the Partnership and (ii) to amend this Agreement to reflect the creation of any such new Class, the issuance of Units or other Partnership securities of such Class, and the admission of any Person as a Partner which has received Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A Units, the Preferred Units and Units of any other Class or series that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in this Agreement.

Section 7.2Register. The register of the Partnership shall be the definitive record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.

Section 7.3Registered Partners. The Partnership shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act or other applicable Law.

ARTICLE VIIIVESTING; FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

Section 8.1Vesting of Unvested Units.

(a)A Partner’s Unvested Units shall vest and shall thereafter be Vested Units for all purposes of this Agreement as set forth in any applicable Supplemental Agreement and reflected in the books and records of the Partnership.

(b)The General Partner in its sole discretion may authorize the earlier vesting of all or a portion of Unvested Units owned by any one or more Partners at any time and from time to time, and in such event, such Unvested Units shall vest and thereafter be Vested Units for all purposes of this Agreement. Any such determination in the General Partner’s discretion in respect of Unvested Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partially Unvested Partners alike, whether or not such Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Partially Unvested Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partially Unvested Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partially Unvested Partner separately.

(c)Upon the vesting of any Unvested Units in accordance with this Section 8.1, the General Partner shall modify the books and records of the Partnership to reflect such vesting.

Section 8.2Forfeiture of Units.

(a)Units owned by a Partner are subject to forfeiture or cancellation as set forth in any Supplemental Agreement or schedule or exhibit to this Agreement applicable to such Partner.

(b)If any Ares Owners Mirror Units are forfeited or cancelled for no consideration, a number of Class A Units held by Ares Owners LP equal to the product of the number of Ares Owners Mirror Units, as applicable, so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(c)If any Common Shares owned by Ares Owners LP or a Service Provider (or a Person who is a Permitted Transferee of a Service Provider) are forfeited or cancelled for no consideration, a number of Class A Units held by the Issuer (or if the Issuer does not hold any Class A Units, by the General Partner) equal to the product of the number of Common Shares so forfeited or cancelled multiplied by the Corresponding Rate shall be automatically forfeited or cancelled, as the case may be.

(d)Notwithstanding anything otherwise to the contrary herein, including Section 9.6 and Section 10.1, if any Person who is or was at any time a Service Provider shall fail to perform when due any “giveback,” “true-up” or “clawback” obligation owed by such Person to the Partnership or any of its Affiliates or to any Fund managed by an Ares Company, the General Partner may in its sole discretion and without the consent of any other Person, cause to be forfeited a number of Units held by such Person (or any Permitted Transferee of such Person), or in which such Person (or any Permitted Transferee of such Person) has an indirect interest, as set forth in the books and records of the Partnership, equivalent in value to the obligation which was not performed, as determined by the General Partner in its sole discretion. Any such determination shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Persons alike, whether or not such Persons are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Person shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Person, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Person separately.

(e)Upon the forfeiture of any Units in accordance with this Section 8.2, such Units shall be cancelled, the Partnership shall have no obligations with respect to such Units and the General Partner shall modify the books and records of the Partnership to reflect such forfeiture and cancellation.

Section 8.3Limited Partner Transfers.

(a)Except as otherwise agreed to in writing between the General Partner and the applicable Limited Partner and reflected in the books and records of the Partnership, no Limited Partner or Assignee thereof may Transfer (including pursuant to an Exchange Transaction) all or any portion of its Units or other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including the receipt of such legal opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion, and which consent may be in the form of a plan or program entered into or approved by the General Partner, in its sole discretion. Any such determination in the General Partner’s discretion in respect of Units shall be final and binding. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.

(b)Notwithstanding clause (a) above, subject to Section 8.6, each Limited Partner may Transfer Units in Exchange Transactions pursuant to, and in accordance with, the Exchange Agreement; provided that such Exchange Transactions shall be effected in compliance with policies that the General Partner (or any other Ares Company) may adopt or promulgate from time to time (including policies requiring the use of designated administrators or brokers).

(c)Notwithstanding anything otherwise to the contrary in this Section 8.3, a Limited Partner (other than Alleghany) may Transfer Units to any of its Permitted Transferees and Alleghany may Transfer Units to any Alleghany Permitted Transferee.

(d)Notwithstanding anything otherwise to the contrary in this Section 8.3, upon the enforcement of the remedies available upon the occurrence and during the continuance of an event of default under any Credit Agreement or any Collateral Agreement, in each case in accordance with such agreements (including any limitations set forth therein), to the extent that the interests pledged under such agreements constitute collateral (or any similar term) under such Credit Agreement or Collateral Agreement, the administrative agent, collateral agent, trustee or other person acting in a similar capacity under such Credit Agreement or Collateral Agreement or any transferee or assignee who forecloses upon an interest in such collateral in connection with such permitted enforcement of remedies upon the occurrence and during the continuance of an event of default under such Credit Agreement or Collateral Agreement (to the extent not prohibited pursuant to the terms of such Credit Agreement or any applicable Collateral Agreement) shall be automatically admitted as a Limited Partner and shall have all of the rights and powers of the Limited Partner that previously owned such interest without any further consent of any Partner.

Section 8.4Mandatory Exchanges. The General Partner may in its sole discretion at any time and from time to time, without the consent of any Limited Partner or other Person, cause to be Transferred in an Exchange Transaction any and all Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Limited Partners alike, whether or not such Limited Partners are similarly situated, and the exercise of any power or discretion by the General Partner or the Partnership in the case of any Limited Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Limited Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Limited Partner separately.

Section 8.5Encumbrances. No Partner or Assignee may create an Encumbrance with respect to all or any portion of its Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.

Section 8.6Further Restrictions.

(a)Notwithstanding any contrary provision in this Agreement, the General Partner may impose such vesting requirements, forfeiture provisions, Transfer restrictions, minimum retained ownership requirements or other similar provisions with respect to any Units that are outstanding as of the Effective Date or are created thereafter, with the written consent of the holder of such Units. Nothing in this Agreement shall obligate the General Partner or the Partnership to treat any Partners alike, whether or not such Partners are similarly situated, and such requirements, provisions and restrictions may be waived or released by the General Partner in its sole discretion with respect to all or a portion of the Units owned by any one or more Partners. The exercise of any power or discretion by the General Partner or the Partnership in the case of any Partner shall not create any obligation on the part of the General Partner or the Partnership to take any similar action in the case of any other Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each Partner separately.

(b)Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:

(i)such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;

(ii)such Transfer would require the registration of such Transferred Unit or of any Class of Units pursuant to any applicable U.S. federal or state securities Laws (including the Securities Act or the Exchange Act) or other non-U.S. securities Laws (including Canadian provincial or territorial securities laws) or would constitute a non-exempt distribution pursuant to applicable provincial or state securities Laws;

(iii)such Transfer would cause (A) all or any portion of the assets of the Partnership to (1) constitute “plan assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (2) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (B) the General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;

(iv)to the extent requested by the General Partner, the Partnership does not receive such legal or tax opinions and written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s discretion;

(v)such Transfer would violate, or cause any Relevant Entity, to violate, any applicable Law of any jurisdiction; or

(vi)the General Partner shall determine in its sole discretion that such Transfer would pose a material risk that the Partnership would be a “publicly traded partnership” as defined in Section 7704 of the Code.

In addition, notwithstanding any contrary provision in this Agreement, to the extent the General Partner shall determine that interests in the Partnership do not meet the requirements of Treasury Regulation section 1.7704-1(h), the General Partner may impose such restrictions on the Transfer of Units or other interests in the Partnership as the General Partner may determine in its sole discretion to be necessary or advisable so that the Partnership is not treated as a publicly traded partnership taxable as a corporation under Section 7704 of the Code.

(c)Any Transfer in violation of this Article VIII shall be deemed null and void ab initio and of no effect.

Section 8.7Rights of Assignees. Subject to Section 8.6(b), the Transferee of any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent Transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the Partner which Transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such interest remaining with the Transferring Partner. The Transferring Partner will remain a Partner even if it has Transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to Section 8.9.

Section 8.8Admissions, Withdrawals and Removals.

(a)No Person may be admitted to the Partnership as an additional or substitute General Partner without the prior written consent of each incumbent General Partner, which consent may be given or withheld, or made subject to such conditions as are determined by each incumbent General Partner, in each case in the sole discretion of each incumbent General Partner. A General Partner will not be entitled to withdraw from being a General Partner of the Partnership unless another General Partner shall have been admitted hereunder (and not have previously been removed or withdrawn).

(b)No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with Section 8.10 hereof. Any additional General Partner or substitute General Partner admitted as a general partner of the Partnership pursuant to this Section 8.8 is hereby authorized to, and shall, continue the Partnership without dissolution.

(c)Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or removal of a Partner will cause the dissolution of the Partnership. To the fullest extent permitted by Law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.

Section 8.9Admission of Assignees as Substitute Limited Partners. An Assignee will become a substitute Limited Partner only if and when each of the following conditions is satisfied:

(a)the General Partner consents in writing to such admission, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;

(b)if required by the General Partner, the General Partner receives written instruments (including copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);

(c)if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect that such Transfer is in compliance with this Agreement and all applicable Law; and

(d)if required by the General Partner, the parties to the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including the reasonable legal and accounting fees of the Partnership).

Section 8.10Withdrawal and Removal of Limited Partners. Subject to Section 8.7, if a Limited Partner ceases to hold any Units, including as a result of a forfeiture of Units pursuant to Section 8.2, then such Limited Partner shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner, and shall be deemed to have been withdrawn from the Partnership.

ARTICLE IXDISSOLUTION, LIQUIDATION AND TERMINATION

Section 9.1No Dissolution. Except as required by the Act, the Partnership shall not be dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated, wound up and terminated only pursuant to the provisions of this Article IX, and the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.

Section 9.2Events Causing Dissolution. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (each, a “Dissolution Event”):

(a)the entry of a decree of judicial dissolution of the Partnership under Section 17-802 of the Act upon the finding by a court of competent jurisdiction that it is not reasonably practicable to carry on the business of the Partnership in conformity with this Agreement;

(b)any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;

(c)the written consent of all Partners;

(d)at any time there are no limited partners, unless the Partnership is continued in accordance with the Act;

(e)the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner; provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.2(e) if: (i) at the time of the occurrence of such event there is at least one other general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) all remaining Limited Partners consent to or ratify the continuation of the business of the Partnership and the appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event, which consent shall be deemed (and if requested each Limited Partner shall provide a written consent or ratification) to have been given for all Limited Partners if the holders of more than 50% of the Vested Units then outstanding agree in writing to so continue the business of the Partnership; or

(f)the determination of the General Partner in its sole discretion; provided that in the event of a dissolution pursuant to this clause (f), the relative economic rights of each Class of Units immediately prior to such dissolution shall be preserved to the greatest extent practicable with respect to distributions made to Partners pursuant to Section 9.3 below in connection with the winding up of the Partnership, taking into consideration tax and other legal constraints that may adversely affect one or more parties hereto and subject to compliance with applicable Laws, unless, and to the extent that, with respect to any Class of Units, holders of not less than 90% of the Units of such Class consent in writing to a treatment other than as described above.

Section 9.3Distribution upon Dissolution. Upon dissolution, the Partnership shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the winding up of the Partnership, the General Partner, or any other Person designated by the General Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:

(a)First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners or their Affiliates to the extent otherwise permitted by Law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“Contingencies”). Any such reserve may be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.3; and

(b)Subject to Article XII, the balance, if any, to the holders of Class A Units; pro rata to each of the holders of Class A Units in accordance with their Total Percentage Interests.

Section 9.4Time for Liquidation. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.

Section 9.5Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or due provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX, and the Certificate shall have been cancelled in the manner required by the Act.

Section 9.6Claims of the Partners. The Partners shall look solely to the Partnership’s assets for the return of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.

Section 9.7Survival of Certain Provisions. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 10.2, 11.1 and 11.10 shall survive the termination of the Partnership.

ARTICLE XLIABILITY AND INDEMNIFICATION

Section 10.1Duties; Liabilities; Exculpation.

(a)This Agreement is not intended to, and does not, create or impose any fiduciary duty on any Partner (including the General Partner) or on its Affiliates. Notwithstanding any other provision of this Agreement or any duty otherwise existing at law or in equity, the Partners (including the General Partner) and their respective Affiliates shall, to the maximum extent permitted by Law, including Section 17-1101(d) of the Act, owe only such duties and obligations as are expressly set forth in this Agreement, and no other duties (including fiduciary duties), to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person otherwise bound by this Agreement.

(b)To the extent that, at law or in equity, any Partner (including the General Partner) or its Affiliates has duties (including fiduciary duties) and liabilities relating thereto to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement, any such Person acting under this Agreement shall not be liable to the Partnership, the Limited Partners, the General Partner, the Officers or any other Person who is party to or is otherwise bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that such provisions restrict or eliminate the duties and liabilities relating thereto of any Partner (including the General Partner) or its Affiliates otherwise existing at law or in equity, are agreed by the Partners to replace to that extent such other duties and liabilities relating thereto of such Person.

(c)Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent permitted by Law, no Indemnitee shall be liable to the Partnership or any Partner for any losses, claims, demands, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising as a result of any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) of a Indemnitee, or for any breach of contract (including breach of this Agreement) or any breach of duties (including breach of fiduciary duties) whether arising hereunder, at law, in equity or otherwise, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction (a “final adjudication”) determining that, in respect of the matter in question, the Indemnitee acted in bad faith or with criminal intent.

(d)Each Indemnitee shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants, other experts and financial or professional advisors, and acting or omitting to act on behalf of the Partnership or in furtherance of the interests of the Partnership, in each case, in good faith reliance upon and in accordance with such advice will be full justification for any such act or omission, and each Indemnitee will be fully protected in so acting or omitting to act so long as such counsel, accountants, other experts and financial or professional advisors were selected with reasonable care.

(e)Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or in equity, whenever in this Agreement or any other agreement contemplated hereby the General Partner is permitted to or required to make or take (or omit to make or take) a determination, evaluation, election, decision, approval, authorization, consent or other action (howsoever described herein, each, a “Determination”) (i) in its “discretion” or “sole discretion” or under a grant of similar authority or latitude, or (ii) pursuant to any provision not subject to an express standard of “good faith” (regardless of whether there is a reference to “discretion”, “sole discretion” or any other standard), then the General Partner (or any of its Affiliates causing it to do so), in making such Determination, shall not be subject to any fiduciary duty and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Partnership, the Partners, or any other Person (including any creditor of the Partnership), and shall not be subject to any other or different standards imposed by this Agreement or otherwise existing at law, in equity or otherwise. Notwithstanding the immediately preceding sentence, if a Determination under this Agreement is to be made or taken by the General Partner in “good faith”, the General Partner shall act under that express standard and shall not be subject to any other or different standard under this Agreement or otherwise existing at law, in equity or otherwise.

(f)For all purposes of this Agreement and notwithstanding any applicable provision of law or in equity, a Determination or failure to act by the General Partner conclusively will be deemed to be made, taken or omitted to be made or taken in “good faith”, and shall not be a breach of this Agreement, unless the General Partner subjectively believed such Determination or failure to act was opposed to the best interests of the Partnership. In any proceeding brought by the Partnership, any Limited Partner, any Person who acquires an interest in a Unit or any other Person who is bound by this Agreement challenging such Determination or failure to act, notwithstanding any provision of law or equity to the contrary, the Person bringing or prosecuting such proceeding shall have the burden of proving that such Determination or failure to act was not in good faith. Any Determination taken or made by the General Partner or any other Indemnitee which is not in breach of this Agreement shall be deemed taken or determined in compliance with this Agreement, the Act and any other applicable fiduciary requirements.

(g)The Limited Partners expressly acknowledge that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including the tax consequences to Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any Determinations, and that the General Partner shall not be liable to the Limited Partners for monetary damages or equitable relief for losses sustained, liabilities incurred or benefits not derived by Limited Partners in connection with such Determinations.

(h)Notwithstanding any other provision of this Agreement, to the extent that any provision of this Agreement, including the provisions of this Section 10.1, purports (i) to restrict or otherwise modify or eliminate the duties (including fiduciary duties), obligations and liabilities of the General Partner or any other Indemnitee otherwise existing at law or in equity or (ii) to constitute a waiver or consent by the Partnership, the Limited Partners or any other Person who acquires an interest in a Unit to any such restriction, modification or elimination, such provision shall be deemed to have been approved by the Partnership, all of the Partners, and each other Person who has acquired an interest in a Unit.

Section 10.2Indemnification.

(a)Indemnification. To the fullest extent permitted by law, as the same exists or hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Partnership to provide broader indemnification rights than such law permitted the Partnership to provide prior to such amendment), the Partnership shall indemnify any Indemnitee who was or is made or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Partnership or otherwise), whether civil, criminal, administrative, arbitrative or investigative, and whether formal or informal, including appeals, by reason of his or her or its status as an Indemnitee or by reason of any action alleged to have been taken or omitted to be taken by Indemnitee in such capacity, for and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred by such Indemnitee in connection with such action, suit or proceeding, including appeals; provided that such Indemnitee shall not be entitled to indemnification hereunder if, but only to the extent that, such Indemnitee acted in bad faith or with criminal intent. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to indemnify an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent. The indemnification of an Indemnitee of the type identified in clause (d) of the definition of Indemnitee shall be secondary to any and all indemnification to which such Indemnitee is entitled from (x) the relevant other Person (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Person or Indemnitee), and (y) the relevant Fund (if applicable) (including any payment made to such Indemnitee under any insurance policy issued to or for the benefit of such Fund or the Indemnitee) (clauses (x) and (y) together, the “Primary Indemnification”), and will only be paid to the extent the Primary Indemnification is not paid and/or does not provide coverage (e.g., a self-insured retention amount under an insurance policy). No such Person or Fund shall be entitled to contribution or indemnification from or subrogation against the Partnership. The indemnification of any other Indemnitee shall, to the extent not in conflict with such policy, be secondary to any and all payment to which such Indemnitee is entitled from any relevant insurance policy issued to or for the benefit of the Partnership or any Indemnitee.

(b)Advancement of Expenses. To the fullest extent permitted by law, the Partnership shall promptly pay expenses (including attorneys’ fees) incurred by any Indemnitee in appearing at, participating in or defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals, upon presentation of an undertaking on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Section 10.2 or otherwise. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.2(c), the Partnership shall be required to pay expenses of an Indemnitee in connection with any action, suit or proceeding (or part thereof) (i) commenced by such Indemnitee only if the commencement of such action, suit or proceeding (or part thereof) by such Indemnitee was authorized by the General Partner and (ii) by or in the right of the Partnership only if the General Partner has provided its prior written consent.

(c)Unpaid Claims. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Section 10.2 is not paid in full within 30 days after a written claim therefor by any Indemnitee has been received by the Partnership, such Indemnitee may file proceedings to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Partnership shall have the burden of proving that such Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable Law.

(d)Insurance.

(i)To the fullest extent permitted by law, the Partnership may purchase and maintain insurance on behalf of any person described in Section 10.2(a) against any liability asserted against such person, whether or not the Partnership would have the power to indemnify such person against such liability under the provisions of this Section 10.2 or otherwise.

(ii)In the event of any payment by the Partnership under this Section 10.2, the Partnership shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee from any relevant other Person or under any insurance policy issued to or for the benefit of the Partnership, such relevant other Person, or any Indemnitee. Each Indemnitee agrees to execute all papers required and take all action necessary to secure such rights, including the execution of such documents as are necessary to enable the Partnership to bring suit to enforce any such rights in accordance with the terms of such insurance policy or other relevant document. The Partnership shall pay or reimburse all expenses actually and reasonably incurred by the Indemnitee in connection with such subrogation.

(iii)The Partnership shall not be liable under this Section 10.2 to make any payment of amounts otherwise indemnifiable hereunder (including, but not limited to, judgments, fines and amounts paid in settlement, and excise taxes with respect to an employee benefit plan or penalties) if and to the extent that the applicable Indemnitee has otherwise actually received such payment under this Section 10.2 or any insurance policy, contract, agreement or otherwise.

(e)Non-Exclusivity of Rights. The provisions of this Section 10.2 shall be applicable to all actions, claims, suits or proceedings made or commenced after the date of this Agreement, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this Section 10.2 shall be deemed to be a contract between the Partnership and each person entitled to indemnification under this Section 10.2 (or legal representative thereof) who serves in such capacity at any time while this Section 10.2 and the relevant provisions of applicable Law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Section 10.2 shall be found to be invalid or limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof. The rights of indemnification provided in this Section 10.2 shall neither be exclusive of, nor be deemed in limitation of, any rights to which any person may otherwise be or become entitled or permitted by contract, this Agreement or as a matter of law, both as to actions in such person’s official capacity and actions in any other capacity, it being the policy of the Partnership that indemnification of any person whom the Partnership is obligated to indemnify pursuant to Section 10.2(a) shall be made to the fullest extent permitted by law.

For purposes of this Section 10.2, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Partnership” shall include any service as a director, officer, employee or agent of the Partnership which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.

This Section 10.2 shall not limit the right of the Partnership, to the extent and in the manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, persons other than persons described in Section 10.2(a).

ARTICLE XIMISCELLANEOUS

Section 11.1Dispute Resolution.

(a)The Partnership and each Partner, each other Person who acquires a Unit or other interest in the Partnership and each other Person who is bound by this Agreement (collectively, the “Consenting Parties” and each a “Consenting Party”) agrees that any dispute, claim or controversy of whatever nature directly or indirectly relating to or arising out of the Agreement, the termination or validity thereof, or any alleged breach thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before a panel of three arbitrators. The arbitration shall be administered by JAMS/ENDISPUTE pursuant to its Comprehensive Arbitration Rules and Procedures. The language of the arbitration shall be English. Each party to such dispute shall be entitled to choose one arbitrator, and the chosen arbitrators shall choose the third arbitrator. All arbitrators shall be chosen from the JAMS arbitration panel. The arbitrators shall, in their award, allocate all of the costs of the arbitration (and the mediation, if applicable), including the fees of the arbitrators and the reasonable attorneys’ fees of the prevailing party, against the party who did not prevail. The award in the arbitration shall be final and binding. The arbitration shall be governed by the federal arbitration act, 9 U.S.C. §§1–16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. This arbitration clause shall not preclude any party from obtaining provisional relief or interim measures of protection, including injunctive relief, from a court of appropriate jurisdiction to protect its rights under this Agreement. Each party agrees and consents to personal jurisdiction, service of process and exclusive venue in any federal or state court within the State of California, County of Los Angeles, in connection with any action brought pursuant to clause (b) below or in connection with a request for any such provisional relief or interim measures of protection, and in connection with any action to enforce this arbitration clause or an award in arbitration and agrees not to assert, by way of motion, as a defense or otherwise, that any action brought in any such court should be dismissed on grounds of forum non conveniens. Each party to this Agreement consents to mailing of process or other papers in connection with any such arbitration or action by certified mail in the manner and to the addresses provided in Section 11.11.

(b)The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof or thereof and that the parties shall be entitled to seek an injunction to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof or thereof in accordance with the provisions of this Section 11.1(b), in addition to any other remedy to which they are entitled at law or in equity. No party seeking relief under this Section 11.1(b) shall be required to post a bond or prove special damages.

Section 11.2Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.3Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.

Section 11.4Further Assurances. Each Limited Partner shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

Section 11.5Expenses. Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.

Section 11.6Amendments and Waivers.

(a)This Agreement (including the Annexes hereto) may be amended, supplemented, waived or modified by the General Partner in its sole discretion without the approval of any Limited Partner or other Person; provided that no amendment may (i) materially and adversely affect the rights of a holder of Units, as such, other than on a pro rata basis with other holders of Units of the same Class without the consent of such holder (or, if there is more than one such holder that is so affected, without the consent of a majority in interest of such affected holders in accordance with their holdings of such Class of Units) or (ii) materially and adversely affect the rights of Alleghany without the prior written consent of Alleghany; providedfurther, however, that notwithstanding the foregoing, the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary, appropriate, proper, advisable or incidental in connection with, or in furtherance of, the creation, authorization or issuance of Units or any Class or series of equity interest in the Partnership or options, rights, warrants or appreciation rights relating to equity interest in the Partnership pursuant to Section 7.1 hereof; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement, including pursuant to Section 7.1 hereof; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, addressing changes in U.S. federal, state or local income tax regulations, legislation or interpretation; (v) a change in the Fiscal Year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership; (vi) a change that the General Partner determines in its sole discretion is necessary, appropriate, proper, advisable or incidental to, or in furtherance of, qualifying or continuing the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state or other jurisdiction; (vii) an amendment that the General Partner determines is necessary or appropriate, based on the advice of counsel, to prevent the Partnership, or the General Partner or its Indemnitees, from having a material risk of being in any manner subjected to registration under the provisions of the U.S. Investment Company Act of 1940 or the U.S. Investment Advisers Act of 1940, or “plan asset” regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor; (viii) any amendment expressly permitted in this Agreement to be made by the General Partner acting alone; (ix) an amendment that the General Partner determines in its sole discretion to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, reflecting and accounting for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other entity; (x) any amendment to Section 11.1 that the General Partner determines in good faith; (xi) any amendment that the General Partner determines to be necessary, appropriate, proper, advisable or incidental to, or in furtherance of, curing any ambiguity, omission, mistake, defect or inconsistency; or (xii) any other amendments that the General Partner determines to be substantially similar to the foregoing. If an amendment has been approved in accordance with this Agreement, such amendment shall be adopted and effective with respect to all Partners. Upon obtaining such approvals as may be required by this Agreement, and without further action or execution on the part of any other Partner or other Person, any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner and the Limited Partners shall be deemed a party to and bound by such amendment.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

(c)The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(l) (or any similar provision) under which the fair market value of a partnership interest (or interest in an entity treated as a partnership for U.S. federal income tax purposes) that is Transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests (or interest in an entity treated as a partnership for U.S. federal income tax purposes) Transferred in connection with the performance of services while the election remains effective, (iii) the allocation of items of income, gains, deductions and losses required by the final regulations similar to Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any other related amendments.

(d)Except as may be otherwise required by Law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.

Section 11.7No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.2 hereof); provided that each employee, officer, director or agent of any Consenting Party or its Affiliates and each Indemnitee is an intended third party beneficiary of Section 11.1(a) and shall be entitled to enforce its rights thereunder.

Section 11.8Power of Attorney. Each Limited Partner, by its execution hereof, hereby makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear to, record and file (a) this Agreement and any amendment to this Agreement that has been adopted as herein provided; (b) the original certificate of limited partnership of the Partnership and all amendments thereto required or permitted by law or the provisions of this Agreement; (c) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.5) and Law or to permit the Partnership to become or to continue as a limited partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (d) all instruments that the General Partner deems appropriate to reflect a change or modification of this Agreement or the Partnership in accordance with this Agreement, including the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (e) all conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (f) all fictitious or assumed name certificates required or permitted (in light of the Partnership’s activities) to be filed on behalf of the Partnership.

Section 11.9Letter Agreements; Schedules. The General Partner may, or may cause the Partnership to, without the approval of any other Person, enter into separate letter agreements with individual Limited Partners with respect to Total Percentage Interests, Capital Contributions or any other matter, which have the effect of establishing rights under, or supplementing, the terms of, this Agreement. The Partnership may from time to time execute and deliver to the Limited Partners schedules which set forth the then current Capital Contributions and Total Percentage Interests of the Limited Partners and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.

Section 11.10Governing Law; Separability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. In particular, it shall be construed to the maximum extent possible to comply with all of the terms and conditions of the Act. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under such Act or other applicable Law, such invalidity or unenforceability shall not invalidate the entire Agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable Law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

Section 11.11Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail, by registered or certified mail (postage prepaid) or by any communication permitted by the Act to the respective parties if addressed to a Person at such Person’s address as set forth on the signature pages hereto or at such other address for a party as shall be specified in any notice given in accordance with this Section 11.11.

Section 11.12Counterparts. This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which shall be an original and all of which together shall constitute a single instrument.

Section 11.13Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable Law.

Section 11.14Entire Agreement. This Agreement, the Supplemental Agreements and the Certificate embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements and understandings between the parties with respect to such subject matter. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. Each party hereto acknowledges, represents, and warrants that (a) each such party hereto and such party’s independent counsel have reviewed this Agreement; and (b) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

Section 11.15Partnership Status. For U.S. federal income tax purposes, the parties intend to treat the Partnership as a partnership, and the Partnership shall be deemed to be the same entity as AI LLC.

Section 11.16Limited Partner Representations.

(a)Each Partner understands and agrees that:

(i)The Units evidenced by this Agreement have not been registered under the Securities Act of 1933, 15 U.S.C. § 15b et seq., the Delaware Securities Act, the California Corporate Securities Law of 1968 or any other state securities Laws (collectively, the “Securities Acts”) because the Partnership is issuing interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering;

(ii)The Partnership has relied upon the representation made by each Limited Partner that such Limited Partner’s interest is to be held by such Limited Partner for investment;

(iii)The Partnership is under no obligation to, and has no intention to, register the interests or to assist the Limited Partners in complying with any exemption from registration under the Securities Acts if such Limited Partner should at a later date wish to dispose of such Limited Partner’s interest;

(iv)The Partnership has not requested a tax ruling from the Internal Revenue Service or any other tax authority nor an opinion of counsel with respect to the tax status of the Partnership or as to the treatment of its formation, issuance of interests, or other transactions of the Partnership, and no assurances have been made that the treatment which the Partnership intends to or does take with respect to such items will be accepted by the Internal Revenue Service upon examination and audit; and

(v)Such Limited Partner has been advised to obtain independent counsel to advise such Limited Partner individually in connection with the drafting, preparation and negotiation of this Agreement. The attorneys, accountants and other experts who perform services for any Limited Partner may also perform services for the Partnership. To the extent that any of the foregoing representation constitutes a conflict of interest, the Partnership and each Limited Partner hereby expressly waive any such conflict of interest.

(b)Each Limited Partner represents and warrants as follows:

(i)Such Limited Partner is acquiring the interests for such Limited Partner’s own account, for investment purposes only, and not with a view to or for the resale, distribution or fractionalization thereof, in whole or in part, and no other Person has a direct or indirect beneficial interest therein;

(ii)Such Limited Partner is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Securities Acts; and

(iii)The execution, delivery and performance of this Agreement have been duly authorized by such Limited Partner.

ARTICLE XIITERMS, PREFERENCES, RIGHTS, POWERS AND DUTIES OF THE SERIES A PREFERRED MIRROR UNITS

Section 12.1Designation.

The Series A Preferred Mirror Units were constituted, designated and created as a series of Preferred Units pursuant to the A&R Partnership Agreement and continue to be constituted, designated and created as a series of Preferred Units under this Agreement. Each Series A Preferred Mirror Unit shall be identical in all respects to every other Series A Preferred Mirror Unit. 1,537,470 Series A Preferred Mirror Units have been constituted, designated, created and issued to the General Partner. It is the intention of the General Partner that at all times the number of outstanding 7.00% Series A Preferred Shares issued by the Issuer equal the aggregate number of GP Mirror Units issued by the Ares Operating Group entities.

Section 12.2Definitions.

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Article XII.

“7.00% Series A Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Ares Group” means the Ares Operating Group entities, the direct and indirect parents (including, without limitation, general partners) of the Ares Operating Group entities (the “Parent Entities”), any direct or indirect subsidiaries of the Parent Entities or the Ares Operating Group entities, the general partner or similar controlling entities of any investment or vehicle that is managed, advised or sponsored by the Ares Group (an “Ares Fund”), and any other entity through which any of the foregoing directly or indirectly conduct its business, but shall exclude any company in which an Ares Fund has an investment. For purposes of this definition “subsidiary” means, with respect to any Person, any subsidiary of such Person that is or would be consolidated with such Person in the preparation of segment information with respect to the combined financial statements of such Person prepared in accordance with U.S. GAAP and shall not include (x) any private equity or other investment fund or vehicle or (y) any portfolio company of any such fund or vehicle.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York City are authorized or required by law to close.

“Change of Control Event” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Distribution Payment Date” means March 31, June 30, September 30 and December 31 of each year, commencing September 30, 2016.

“Distribution Period” is the period from and including a Distribution Payment Date to, but excluding, the next Distribution Payment Date, except that the initial Distribution Period commences on and includes June 8, 2016.

“Distribution Rate” means 7.00% per annum.

“GP Mirror Units” means, collectively, the Series A Preferred Mirror Units, the 7.00% Series Preferred Mirror Units of Ares Offshore Holdings L.P., the 7.00% Series Preferred Mirror Units of Ares Holdings L.P. and any preferred equity securities of a future Ares Operating Group entity with economic terms consistent with the Series A Preferred Mirror Units.

“Junior Units” means the Class A Units and any other equity securities that the Partnership may issue in the future ranking, as to the payment of distributions, junior to the Series A Preferred Mirror Units.

“Parity Units” means any Preferred Units that the Partnership may authorize or issue, the terms of which provide that such securities shall rank equally with the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event.

“Permitted Jurisdiction” means the United States or any state thereof, Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Gibraltar, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, the United Kingdom or British Crown Dependencies, any other member country of the Organisation for Economic Co-operation and Development, or any political subdivision of any of the foregoing.

“Permitted Reorganization” means (i) the voluntary or involuntary liquidation, dissolution or winding up of any of the Partnership’s subsidiaries or upon any reorganization of the Partnership into another limited liability entity pursuant to provisions of this Agreement that allows the Partnership to convert, merge or convey our assets to another limited liability entity with or without limited partner approval (including a merger or conversion of our partnership into a corporation if the General Partner determines in its sole discretion that it is no longer in the interests of the Partnership to continue as a partnership for U.S. federal income tax purposes) or (ii) the Partnership engages in a reorganization, merger or other transaction in which a successor to the Partnership issues equity securities to the Series A Holders that have rights, powers and preferences that are substantially similar to the rights, powers and preferences of the Series A Preferred Mirror Units pursuant to provisions of this Agreement that allow the Partnership to do so without limited partner approval.

“Permitted Transfer” means the sale, conveyance, exchange or transfer, for cash, units of capital stock, securities or other consideration, of all or substantially all of the Partnership’s property or assets or the consolidation, merger or amalgamation of the Partnership with or into any other entity or the consolidation, merger or amalgamation of any other entity with or into the Partnership.

“Series A Holder” means a holder of Series A Preferred Mirror Units.

“Series A Liquidation Preference” means $25.00 per Series A Preferred Mirror Unit. The Series A Liquidation Preference shall be the “Liquidation Preference” with respect to the Series A Preferred Mirror Units.

“Series A Liquidation Value” means the sum of the Series A Liquidation Preference and declared and unpaid distributions, if any, to, but excluding, the date of the Dissolution Event on the Series A Preferred Mirror Units.

“Series A Record Date” means, with respect to any Distribution Payment Date, the March 15, June 15, September 15 or December 15, as the case may be, immediately preceding the relevant March 31, June 30, September 30 or December 31 Distribution Payment Date, respectively.

“Substantially All Merger” means a merger or consolidation of one or more of the Ares Operating Group entities with or into another Person that would, in one or a series of related transactions, result in the transfer or other disposition, directly or indirectly, of all or substantially all of the combined assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

“Substantially All Sale” means a sale, assignment, transfer, lease or conveyance, in one or a series of related transactions, directly or indirectly, of all or substantially all of the assets of the Ares Operating Group taken as a whole to a Person that is not an Ares Operating Group entity immediately prior to such transaction.

Section 12.3Distributions.

(a)The Series A Holders shall be entitled to receive with respect to each Series A Preferred Mirror Unit, when, as and if declared by the General Partner in its sole discretion out of funds legally available therefor, non-cumulative quarterly cash distributions on the applicable Distribution Payment Date that corresponds to the Series A Record Date for which the General Partner has declared a distribution, if any, at a rate per annum equal to the Distribution Rate (subject to Section 12.6 of this Agreement) of the Series A Liquidation Preference. Such distributions shall be non-cumulative, and Series A Holders shall not be entitled to distributions to the extent that such distributions would be expected to cause the Capital Accounts of such Series A Holders to be less than $0, taking into account reasonably expected allocations of Gross Ordinary Income for the taxable year of such distribution. If a Distribution Payment Date is not a Business Day, the related distribution (if declared) shall be paid on the next succeeding Business Day with the same force and effect as though paid on such Distribution Payment Date, without any increase to account for the period from such Distribution Payment Date through the date of actual payment. Distributions payable on the Series A Preferred Mirror Units for the initial Distribution Period and any period less than a full Distribution Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in such period. Declared distributions will be payable on the relevant Distribution Payment Date to Series A Holders as they appear on the Partnership’s register at the close of business, New York City time, on the Series A Record Dates, provided that if the Series A Record Date is not a Business Day, the declared distributions will be payable on the relevant Distribution Payment Date to the Series A Holders as it appears on the Partnership’s register at the close of business, New York City time on the Business Day immediately preceding such Series A Record Date.

(b)So long as any Series A Preferred Mirror Units are outstanding, (i) no distribution, whether in cash or property, may be declared or paid or set apart for payment on the Junior Units for the then-current quarterly Distribution Period (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) and (ii) the Partnership and its subsidiaries shall not directly or indirectly repurchase, redeem or otherwise acquire for consideration any Junior Units, unless, in each case, distributions have been declared and paid or declared and set apart for payment on GP Mirror Units for the then-current quarterly Distribution Period, other than, in each case (x) repurchases, redemptions or other acquisitions of Junior Units for Common Shares pursuant to the Exchange Agreement or otherwise, (y) grants or vesting of awards under the Issuer’s or its subsidiaries’ equity incentive plans and (z) repurchases, redemptions or other acquisitions of Junior Units pursuant to any put or call agreements existing on June 8, 2016 (including any amendments, modifications or replacements thereof that do not adversely affect the Series A Holders).

(c)The General Partner, or a duly authorized committee thereof, may, in its sole discretion, choose to pay distributions on the Series A Preferred Mirror Units without the payment of any distributions on any Junior Units.

(d)When distributions are not declared and paid (or duly provided for) on any Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) in full upon the Series A Preferred Mirror Units or any other Parity Units, all distributions declared upon the Series A Preferred Mirror Units and all such Parity Units payable on such Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates, on a distribution payment date falling within the related Distribution Period) shall be declared pro rata so that the respective amounts of such distributions shall bear the same ratio to each other as all declared and unpaid distributions per Unit on the Series A Preferred Mirror Units and all accumulated unpaid distributions on all Parity Units payable on such Distribution Payment Date (or in the case of non-cumulative Parity Units, unpaid distributions for the then-current Distribution Period (whether or not declared) and in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) bear to each other.

(e)No distributions may be declared or paid or set apart for payment on any Series A Preferred Mirror Units if at the same time any arrears exist or default exists in the payment of distributions on any outstanding Units ranking, as to the payment of distributions and distribution of assets upon a Dissolution Event, senior to the Series A Preferred Mirror Units, subject to any applicable terms of such outstanding Units, subject to any applicable terms of such outstanding Units.

(f)A Series A Holder shall not be entitled to any distributions, whether payable in cash or property, other than as provided in this Agreement and shall not be entitled to interest, or any sum in lieu of interest, in respect of any distribution payment, including any such payment which is delayed or foregone, including any such payment which is delayed or foregone.

(g)The Partners intend that no portion of the distributions paid to a Series A Holder pursuant to this Section 12.3 shall be treated as a “guaranteed payment” within the meaning of Section 707(c) of the Code, and no Partner shall take any position inconsistent with such intention, except if there is a change in applicable law or final determination by the Internal Revenue Service that is inconsistent with such intention.

Section 12.4Rank.

The Series A Preferred Mirror Units shall rank, with respect to payment of distributions and distribution of assets upon a Dissolution Event:

(a)junior to all of the Partnership’s existing and future indebtedness and any equity securities, including Preferred Units, that the Partnership may authorize or issue, the terms of which provide that such securities shall rank senior to the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event;

(b)equally to any Parity Units; and

(c)senior to any Junior Units.

Section 12.5Redemption.

(a)If the Issuer redeems its 7.00% Series A Preferred Shares, then the Partnership may redeem the Series A Preferred Mirror Units, in whole or in part, at a redemption price equal to the Series A Liquidation Preference plus an amount equal to declared and unpaid distributions from the Distribution Payment Date immediately preceding the redemption date to, but excluding, the redemption date. If less than all of the outstanding Series A Preferred Mirror Units are to be redeemed, the General Partner shall select the Series A Preferred Mirror Units to be redeemed from the outstanding Series A Preferred Mirror Units not previously called for redemption by lot or pro rata (as nearly as possible).

(b)If the Issuer redeems its 7.00% Series A Preferred Shares pursuant to a Change of Control Event, then the Partnership may, in the General Partner’s sole discretion, redeem the Series A Preferred Mirror Units, in whole but not in part, out of funds legally available therefor, at a redemption price equal to $25.25 per Series A Preferred Mirror Unit plus an amount equal to the declared and unpaid distributions. So long as funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment, from and after the redemption date, such Series A Preferred Mirror Units called for redemption shall no longer be deemed outstanding, and all rights of the Series A Holders thereof shall cease other than the right to receive the redemption price, without interest.

(c)Without limiting clause (b) of this Section 12.5, if the Partnership shall deposit on or prior to any date fixed for redemption of Series A Preferred Mirror Units, with any bank or trust company, as a trust fund, a fund sufficient to redeem the Series A Preferred Mirror Units called for redemption, with irrevocable instructions and authority to such bank or trust company to pay on and after the date fixed for redemption or such earlier date as the General Partner may determine, to the respective Series A Holders, the redemption price thereof, then from and after the date of such deposit (although prior to the date fixed for redemption) such Series A Preferred Mirror Units so called shall be deemed to be redeemed and such deposit shall be deemed to constitute full payment of said Series A Preferred Mirror Units to the holders thereof and from and after the date of such deposit said Series A Preferred Mirror Units shall no longer be deemed to be outstanding, and the holders thereof shall cease to be holders of Units with respect to such Series A Preferred Mirror Units, and shall have no rights with respect thereto except only the right to receive from said bank or trust company, on the redemption date or such earlier date as the General Partner may determine, payment of the redemption price of such Series A Preferred Mirror Units without interest.

Section 12.6Distribution Rate.

If the distribution rate per annum on the 7.00% Series A Preferred Shares issued by the Issuer shall increase pursuant to Section 16.6 of the Issuer Limited Partnership Agreement, then the Distribution Rate shall increase by the same amount beginning on the same date as set forth in Article XVI of the Issuer Limited Partnership Agreement.

Section 12.7Voting.

Notwithstanding any other provision of this Agreement or the Act, the Series A Preferred Mirror Units shall not have any relative, participating, optional or other voting, consent or approval rights or powers, and the vote, consent or approval of the Series A Holders shall not be required for the taking of any Partnership action. The Partnership may, from time to time, issue additional Series A Preferred Mirror Units.

Section 12.8Liquidation Rights.

(a)Upon any Dissolution Event, after payment or provision for the liabilities of the Partnership (including the expenses of such Dissolution Event) and the satisfaction of all claims ranking senior to the Series A Preferred Mirror Units in accordance with Article IX of this Agreement, the Series A Holders shall be entitled to receive out of the assets of the Partnership or proceeds thereof available for distribution to Partners, before any payment or distribution of assets is made in respect of Junior Units, distributions equal to the lesser of (x) the Series A Liquidation Value and (y) the positive balance in their Capital Accounts (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs). Upon a Dissolution Event, or in the event that any Ares Operating Group entity liquidates, dissolves or winds up, no Ares Operating Group entity may declare or pay or set apart payment on its Junior Units unless the outstanding liquidation preference on all outstanding GP Mirror Units of each Ares Operating Group entity have been repaid via redemption or otherwise.

(b)Upon a Dissolution Event, after each Series A Holder receives a payment equal to the positive balance in its Capital Account (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 5.5(d) of this Agreement for the taxable year in which the Dissolution Event occurs), such Series A Holder shall not be entitled to any further participation in any distribution of assets by the Partnership.

(c)For the purposes of this Section 12.8, a Dissolution Event shall not be deemed to have occurred in connection with (i) a Substantially All Merger or a Substantially All Sale whereby an Ares Operating Group entity is the surviving Person or the Person formed by such transaction is organized under the laws of a Permitted Jurisdiction and has expressly assumed all of the obligations under the GP Mirror Units, (ii) the sale or disposition of an Ares Operating Group entity (whether by merger, consolidation or the sale of all or substantially all of its assets) if such sale or disposition is not a Substantially All Merger or Substantially All Sale, (iii) the sale or disposition of an Ares Operating Group entity should such Ares Operating Group entity not constitute a “significant subsidiary” of the Issuer under Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange Commission, (iv) an event where the Series A Preferred Mirror Units have been fully redeemed pursuant to the terms of this Agreement or if proper notice of redemption of the Series A Preferred Mirror Units has been given and funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment pursuant this Agreement, (v) transactions where the assets of the Ares Operating Group entity being liquidated, dissolved or wound up are immediately contributed to another Ares Operating Group entity or a subsidiary thereof, and (vi) with respect to an Ares Operating Group entity, a Permitted Transfer or a Permitted Reorganization.

(d)A Permitted Transfer will not be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Partnership, notwithstanding that for other purposes, such as for tax purposes, such an event may constitute a liquidation, dissolution or winding up.

Section 12.9Amendments and Waivers.

The provisions of this Article XII may be amended, supplemented, waived or modified in accordance with the provisions of Section 11.6 of the Agreement; provided that any amendment, supplement, waiver or modification of this Article XII that relates to the economic terms of the Series A Preferred Mirror Units and is not consistent with a corresponding amendment, supplement, waiver or modification of Article XVI of the Issuer Limited Partnership Agreement shall require the consent of the Limited Partners that own a majority of the Class A Units then outstanding.

Section 12.10No Conversion.

The Series A Preferred Mirror Units are not convertible into Class A Units or any other class or series of interests or any other security of the Partnership.

Section 12.11No Third Party Beneficiaries.

The provisions of Section 11.7 of the Agreement shall apply to this Article XII without limitation.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement or have caused this Agreement to be duly executed by their respective authorized officers, in each case as of the date first above stated.

GENERAL PARTNER:

AI HOLDCO LLC

By: Ares AI Holdings L.P., its sole member

By: Ares Management, L.P., its general partner

By: Ares Management GP LLC, its general partner

By: _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles, CA 90067_______________

LIMITED PARTNERS:

ARES OWNERS HOLDINGS L.P.

By: Ares Partners Holdco LLC,
its General Partner

By: _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

Address:

_2000 Avenue of the Stars 12^th Floor______

_Los Angeles, CA 90067_______________

ALLEGHANY INSURANCE HOLDINGS LLC

By: _/s/ John L. Sennott, Jr.______________    Name: John L. Sennott, Jr.    Title: Senior Vice President

Address:

_1411 Broadway, 34^th Floor_____________

_New York, NY 10018_________________

EX-10.4

AMENDED AND RESTATED

INVESTOR RIGHTS AGREEMENT
BY AND AMONG
ARES MANAGEMENT, L.P.,

ARES MANAGEMENT GP LLC,
ARES OWNERS HOLDINGS L.P.,
AREC HOLDINGS LTD.,

BLUE SPECTRUM ZA 2015, L.P.,

ALLEGHANY INSURANCE HOLDINGS LLC,
AND
THE HOLDERS OF SECURITIES
PARTY HERETO
Effective March 1, 2018

TABLE OF CONTENTS

Page

ARTICLE I INFORMATION RIGHTS    1

1.1 Observer Rights    1

1.2 Confidentiality    2

ARTICLE II TRANSFERS OF SECURITIES    3

2.1 Restrictions on Transfer of Interests    3

ARTICLE III REGISTRATION RIGHTS    3

3.1 Demand Registrations    3

3.2 Shelf Registration    5

3.3 Incidental Registration    6

3.4 Holdback Agreements    7

3.5 Registration Procedures    7

3.6 Underwriting Procedures    10

3.7 Registration Expenses    10

3.8 Indemnification; Contribution    10

3.9 Underwritten Registrations    12

3.10 Lock-Up    12

ARTICLE IV AMENDMENT AND TERMINATION    13

4.1 Amendment and Waiver    13

4.2 Termination of Agreement    13

4.3 Termination as to a Party    13

ARTICLE V MISCELLANEOUS    13

5.1 Certain Defined Terms; Terms Generally    13

5.2 Severability    20

5.3 Entire Agreement    20

5.4 Successors and Assigns    21

5.5 Counterparts    21

5.6 Remedies    21

5.7 Notices    21

5.8 Governing Law    23

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

This AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Effective Date”), by and among (i) Ares Management, L.P, a Delaware limited partnership (the “Issuer”), (ii) Ares Management GP LLC, a Delaware limited partnership (“Ares GP”), (iii) Ares Owners Holdings L.P., a Delaware limited partnership (“Ares LP”), (iv) AREC Holdings Ltd., a Cayman exempted corporation, (v) Blue Spectrum ZA 2015, L.P., a Cayman exempted limited partnership, (vi) Alleghany Insurance Holdings LLC, a Delaware limited liability company (“Alleghany” and, together with AREC, the “Minority Investors”) and (vii) each other holder of equity interests in any Company who hereafter delivers a written agreement to be bound by the terms hereof in the form of Exhibit A. Certain capitalized terms used herein are defined in Section 5.1.

WHEREAS, the parties hereto entered into the Investor Rights Agreement, dated as of May 1, 2014 (the “Original Investor Rights Agreement”);

WHEREAS, effective as of the Effective Date, the Issuer has amended and restated its limited partnership agreement to, among other things, change the name of its common units representing limited partner interests and preferred units representing limited partner interests to Common Shares and preferred shares, respectively;

WHEREAS, following the Effective Date but prior to the date hereof, AREC Holdings Ltd. transferred its interest in the Issuer to Blue Spectrum ZA 2015, L.P.; and

WHEREAS, the parties hereto now desire to amend and restate the Original Investor Rights Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE IINFORMATION RIGHTS

1.1Observer Rights. Prior to the Cut-off Date, each of AREC and Alleghany shall have the right to designate a single representative, reasonably acceptable to Ares GP, to attend (in person or by means of telephonic conference) all meetings (each, a “Board Meeting”) of the board of directors (or equivalent governing body) of Ares GP (the “Board of Directors”), in a non-voting observer capacity (each such representative, an “Observer”). The Board of Directors shall invite each Observer to attend its Board Meetings and provide to such Observer copies of all notices, minutes, and consents that it provides to the members of the Board of Directors in their capacity as such at the same time such materials are provided to such members; provided, that (a) such Observer shall have executed and delivered a customary confidentiality agreement provided by the Issuer pursuant to which such Observer has agreed in writing to hold in confidence and trust all such materials and other information provided at, or in connection with, any such Board Meeting; and (b) Ares GP may exclude such Observer from access to any materials or attendance at any Board Meeting or portion thereof if such access or attendance (i) would reasonably be expected to affect the attorney-client privilege between any Entity and its counsel in an adverse manner, or (ii) would reasonably be expected to violate any other confidentiality obligation of any Entity.

1.2Confidentiality.

(a)Without limiting any other confidentiality obligation such Minority Investor may have to the Companies, their respective Affiliates or any Investment Fund, each Minority Investor shall, and shall cause each of its Representatives to, hold in confidence and not use (other than to negotiate, monitor and evaluate its investment in the Issuer or the Ares Operating Group or in connection with a dispute) or disclose to any Person (other than its Representatives) any information (with respect to each party, “Confidential Information”) provided by or on behalf of a party or any of its respective Representatives to such Minority Investor or any of its Representatives directly or indirectly in connection with or as a result of (i) its investment in the Issuer or the Ares Operating Group (or any predecessor entity), (ii) such Minority Investor’s rights under this Agreement (including any information received by a Board Observer) or the Original Investor Rights Agreement or (iii) such Minority Investor’s evaluation of any of its current or future investments in the Issuer or the Ares Operating Group or an existing or proposed Investment Fund or Co-invest Fund. Confidential Information will not include any information that (w) is or becomes generally available to the public other than as a result of a disclosure by a Minority Investor in violation of this Agreement, (x) was already known to such Minority Investor prior to its disclosure to such Minority Investor or any of its Affiliates or any of their respective Representatives by or on behalf of a Company or its Affiliates or any of their respective Representatives from a source that is not bound by a confidentiality agreement or other obligation of confidentiality with respect to such information, (y) was independently generated by such Minority Investor without the use of Confidential Information or (z) becomes available to such Minority Investor from a source (other than any of the Entities, any of their respective Affiliates or any Representative of any of the foregoing) that, to the Minority Investor’s knowledge, is not bound by a confidentiality agreement or other obligation of confidentiality with respect to such information.

(b)Each party hereto shall not, and shall cause each of its controlled Affiliates not to, make reference to another party or its equityholders in any press release, public disclosure, public notice or public publication, in each case, directly or indirectly relating to the matters contemplated hereby or such party’s ownership of Common Shares or Ares Operating Group Units, without the prior written consent of such party; provided that each party may make any such reference (i) as is required by applicable Law, any Governmental Authority or an Approved Exchange or (ii) in connection with any dispute.

(c)If a Minority Investor is obligated under the Issuer LP Agreement to provide Confidential Information regarding such Minority Investor or its Affiliates to the Issuer, the Issuer shall (i) keep such information confidential, except as may be required by applicable Law, any Governmental Authority or an Approved Exchange, but only after providing such Minority Investor, to the extent practicable and legally permissible, with prior written notice and an opportunity to limit or eliminate such disclosure by seeking a protective order or other appropriate remedy and (ii) at the request of such Minority Investor, reasonably cooperate with such Minority Investor in seeking such protective order or other appropriate remedy.

(d)Notwithstanding the foregoing, each Minority Investor may disclose any Confidential Information that is required by applicable Law to be disclosed, but only after providing the Issuer or the other Minority Investor, as applicable, to the extent practicable and legally permissible, with prior written notice and an opportunity to limit or eliminate such disclosure by seeking a protective order or other appropriate remedy.

(e)No party will be liable for any punitive, exemplary, special damages or lost profit in connection with a breach of its obligations under this Section 1.2.

ARTICLE II
TRANSFERS OF SECURITIES

2.1Restrictions on Transfer of Interests.

(a)(i) Prior to May 1, 2015, AREC shall not Transfer any of its equity interests in the Issuer and (ii) after May 1, 2015 and prior to May 1, 2016, AREC shall not Transfer more than 50% of the number of equity interests it owns as of the May 1, 2014 in the Issuer, in the case of each of clauses (i) and (ii), except as may be contemplated pursuant to Article III or to a Permitted Transferee; provided, that such Permitted Transferee continues to be an Affiliate of AREC at all times following such Transfer until the second anniversary. The foregoing volume restriction on Transfers of interests shall expire on May 1, 2016.

(a)(i) Prior to May 1, 2015, Alleghany shall not Transfer any of its equity interests in any entity that is a member of the Ares Operating Group or the Issuer and (ii) after May 1, 2015 and prior to May 1, 2016, Alleghany shall not Transfer more than 50% of the number of equity interests it owns as of May 1, 2014 in any entity that is a member of the Ares Operating Group or the Issuer, in the case of each of clauses (i) and (ii), except as may be contemplated pursuant to Article III or to a Permitted Transferee; provided, that such Transferee continues to be an Affiliate of Alleghany at all times following such Transfer until the second anniversary. The foregoing volume restriction on Transfers of interests shall expire on May 1, 2016.

ARTICLE III
REGISTRATION RIGHTS

3.1Demand Registrations.

(a)Requests for Registration. Subject to the provisions of this Article III, at any time or from time to time, each of (i) AREC (the “AREC Demand Right”), (ii) Ares LP (on its behalf and on behalf of its direct or indirect limited partners that agree to be bound by the obligations of Ares LP under this Agreement with respect to such registration), and (iii) Alleghany (the “Alleghany Demand Right”), shall have the right to request registration under the Securities Act of the sale of all or any portion of the Registrable Securities held by such Securityholders (in each case, the “Initiating Holders”), including, in the case of Ares LP, by its direct or indirect limited partners that agree to be bound by the obligations of Ares LP under this Agreement with respect to such registration, by delivering a written notice to the principal business office of the Issuer, which notice identifies the Initiating Holders and specifies the number of Registrable Securities to be included in such registration (a “Demand Registration”). Subject to the restrictions set forth in Section 3.1(c), the Issuer shall, as soon as practicable but in no event later than 90 days after it receives a Demand Registration request, file a registration statement under the Securities Act on any form available to the Issuer.

(b)Priority on Demand or Shelf Registration or Underwritten Shelf Takedowns. If the sole or managing underwriter of a public offering pursuant to a Demand Registration, Shelf Registration or Underwritten Shelf Takedown advises the Issuer that the number of Registrable Securities to be included exceeds the number of Registrable Securities that can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that shall be paid in such offering or the marketability thereof, the Issuer shall include in such registration the greatest number of Registrable Securities proposed to be registered by the Holders, which in the opinion of such underwriters can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that shall be paid in such offering or the marketability thereof, ratably among the Holders requesting registration (whether requested to be registered pursuant to Section 3.1 or Section 3.2), based on the respective amounts of Registrable Securities held by each such Holder.

(c)Restrictions on Demand Registrations. Except as otherwise provided in this Section 3.1(c), the Issuer shall not be obligated to effect (i) more than three Demand Registrations and Underwritten Shelf Takedowns, in the aggregate, pursuant to the AREC Demand Right, and (ii) more than one Demand Registration or Underwritten Shelf Takedown, in the aggregate, pursuant to the Alleghany Demand Right. The Issuer may effect a registration pursuant to any AREC Demand Right or Alleghany Demand Right on such forms available to the Issuer as it selects in its sole discretion (subject to the last sentence of Section 3.2(a)). In addition, the Issuer shall not be obligated to effect a Demand Registration, Shelf Registration and Underwritten Shelf Takedown: (v) prior to May 1, 2015 pursuant to the Alleghany Demand Right or the AREC Demand Right; (w) following May 1, 2015 and prior to May 1, 2016 (i) for more than 50% of the Registrable Securities held by Alleghany on May 1, 2014, in the case of an Alleghany Demand Right, or (ii) for more than 50% of the Registrable Securities held by AREC on May 1, 2014, in the case of an AREC Demand Right; (x) for 90 days from declaration of the effectiveness of a registration statement filed by the Issuer pursuant to this Section 3.1; (y) during the period starting with the date 30 days prior to the Issuer’s good faith estimate of the date of filing of, and ending on a date 60 days after the effective date of, a registration statement subject to Section 3.3 hereof; provided, that the Issuer is using reasonable efforts to cause such registration statement to become effective; or (z) if the Board of Directors has determined in good faith that the filing of a registration statement would require disclosure of material information which the Issuer has a bona fide business purpose for preserving as confidential (a “Valid Business Reason”). In such event, the Issuer shall not be obligated to effect the registration until the earlier of (A) the date upon which such material information is disclosed to the public or is no longer material and (B) 90 days after the Issuer first makes such good faith determination. Notwithstanding anything to the contrary contained herein, the Issuer may not postpone or withdraw a registration statement under this Section 3.1(c) more than twice for an aggregate period of 150 days in any 12 month period.

3.2Shelf Registration.

(a)Request for Shelf Registration. Upon the Issuer becoming eligible for use of Form S‑3 under the Securities Act in connection with a secondary public offering of its equity securities by the Holders, in the event that the Issuer shall receive from AREC, Alleghany, or Ares LP (the “Shelf Initiating Holder”), a written request that the Issuer register, under the Securities Act on Form S‑3 in an offering on a delayed or continuous basis pursuant to Rule 415 promulgated under the Securities Act (a “Shelf Registration Statement”), the sale of all or, to the extent the amount to be registered is equal to or greater than $50 million, any portion of the Registrable Securities owned by such Shelf Initiating Holder (a “Shelf Registration”), the Issuer shall give written notice of such request to all of the Holders (other than the Shelf Initiating Holder) as promptly as practicable but in no event later than 10 days before the anticipated filing date of such Form S-3, and such notice shall describe the proposed Shelf Registration, the intended method of disposition of such Registrable Securities and any other information that at the time would be appropriate to include in such notice, and offer such Holders the opportunity to register the number of Registrable Securities as each such Holder may request by written notice to the Issuer, given within 5 days after its receipt from the Issuer of the written notice of such Shelf Registration; provided, that such notice shall not be required with respect to any Registrable Securities with respect to which the Issuer delivers a Shelf Takedown Notice pursuant to Section 3.2(b). The “Plan of Distribution” section of such Form S-3 shall permit all lawful means of disposition of Registrable Securities. With respect to each Shelf Registration, the Issuer shall (i) as promptly as practicable after the written request of the Shelf Initiating Holders, but in any event not later than 45 days after it receives a request therefor, file a registration statement and (ii) use its reasonable best efforts to cause such registration statement to be declared effective as promptly as practicable and remain effective until there are no longer any Shelf Registered Securities. The obligations set forth in this Section 3.2(a) shall not apply if the Issuer has a currently effective Shelf Registration Statement covering all Registrable Securities. If the Issuer is eligible to file an automaticshelf registration statement at the time a Shelf Initiating Holder requests that the Issuer effect a Shelf Registration, the Issuer shall file an automaticshelf registration statement to effect such Shelf Registration.

(b)Underwritten Shelf Takedowns. Subject to Section 3.1(c) and 3.2(c), at any time and from time to time after the Shelf Registration Statement has been declared effective by the SEC, AREC, Alleghany, or Ares LP may request to sell all or any portion of their Registrable Securities in an underwritten offering that is registered pursuant to the Shelf Registration Statement (each, an “Underwritten Shelf Takedown”); providedthat the Issuer shall not be required to effect a Underwritten Shelf Takedown unless the aggregate gross proceeds of the offering (including the aggregate gross proceeds to the Holders making the request to be included in a Underwritten Shelf Takedown pursuant to this Section 3.2(b) as a consequence of such Underwritten Shelf Takedown) is estimated to be equal to or greater than $50million; provided, further, that the Issuer may take such actions (including deferring an Underwritten Shelf Takedown) as it deems necessary or appropriate to comply with its policies regarding trading windows or otherwise to coordinate the timing of such Underwritten Shelf Takedown with the Issuer’s earnings releases and SEC reporting obligations. All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Issuer specifying the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown and the expected or desired date of such Underwritten Shelf Takedown. No later than 10 days before the anticipated effective date of the Prospectus relating to such Underwritten Shelf Takedown, the Issuer shall give written notice of such requested Underwritten Shelf Takedown to all other Holders of Registrable Securities (the “Shelf Takedown Notice”) and, subject to the provisions of Section 3.1(b), shall include in such Underwritten Shelf Takedown all Registrable Securities with respect to which the Issuer has received written requests from any such Holder for inclusion therein within 5 days after receipt by such Holder of the Shelf Takedown Notice.

(c)Limitations on Registrations. If the Issuer has determined in good faith that a Valid Business Reason exists, (i) the Issuer may postpone filing a registration statement relating to a Shelf Registration or effecting an Underwritten Shelf Takedown until such Valid Business Reason no longer exists and (ii) in the case of a registration statement which has been filed relating to a Shelf Registration, may cause such registration statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such registration statement or may suspend other required registration actions under this Agreement. The Issuer shall give written notice to all Holders joining in the request for registration or an Underwritten Shelf Takedown of its determination to postpone or withdraw a registration statement and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof. The Issuer may not effect any such postponement or withdrawal due to a Valid Business Reason under this Section 3.2(c) more than twice in any twelve month period, and such postponement or withdrawal may not exceed an aggregate period of 150 days in any such twelve month period or 90 days individually.

3.3Incidental Registration.

(a)Requests for Incidental Registration. If the Issuer proposes to register any equity securities under the Securities Act, including registrations pursuant to Section 3.1(a), whether or not for sale for its own account (other than (i) a registration statement on Form S-4 or Form S-8 or any other form relating solely to the sale of securities to participants in an Issuer equity plan or a registration in which the only equity securities being registered are equity securities issuable upon the conversion of debt securities which are also being registered and (ii) a registration pursuant to Section 3.2(a)), the Issuer shall give written notice to each Holder at least 20 days prior to the initial filing of such registration statement with the SEC of its intent to file such registration statement and such notice shall describe the proposed registration and distribution arrangements, and offer such Holders the opportunity to register the number of Registrable Securities as each such Holder may request. Upon the written request of any Holder made within 15 days after any such notice is given (which request shall specify the Registrable Securities intended to be disposed of by such Holder), the Issuer shall use reasonable efforts to effect the registration (an “Incidental Registration”) under the Securities Act of all Registrable Securities which the Issuer has been so requested to register by the Holders thereof.

(b)Priority on Incidental Registration. Except in the case of a Demand Registration, Shelf Registration or Underwritten Shelf Takedown (which shall be governed by Section 3.1(b)), if the sole or managing underwriter of a registration advises the Issuer in writing that in its opinion the number of Registrable Securities and other securities requested to be included exceeds the number of Registrable Securities and other securities which can be sold in such offering without adversely affecting the distribution of the securities being offered, the price that shall be paid in such offering or the marketability thereof, the Issuer shall include in such registration the Registrable Securities and other securities of the Issuer in the following order of priority:

(i)first, to the Issuer for its own account; and

(ii)second, to the Holders requesting such Incidental Registration, ratably among such Holders based on the respective amounts of Registrable Securities held by each such Holder.

(c)Upon delivering a request under this Section 3.3, a Holder shall, if requested by the Issuer, execute and deliver execute such agreements as the Issuer may reasonably request to facilitate such Incidental Registration.

3.4Holdback Agreements. Each Holder agrees that in connection with an underwritten offering made pursuant to this Article III (whether or not such Holder is participating in such registration), if requested by the Issuer or the managing underwriter or underwriters of such underwritten offering, such Holder shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities or other capital stock of the Issuer (other than those included in the registration) without the prior written consent of the Issuer or such underwriters, as the case may be, for such period of time as the Issuer or such underwriters may specify; provided, that (i) any such agreement by a Minority Investor shall be on substantially similar terms to any such agreement executed by Ares LP or, to the extent applicable, the Co-Founders; and (ii) such period of time shall not exceed the shorter of (x) 90 days following the effective date of the applicable offering and (y) such other period as the underwriters may require of Ares LP or, to the extent applicable, the Co-Founders.

3.5Registration Procedures. In the case of each registration effected by the Issuer pursuant to this Agreement, the Issuer will keep each Holder participating therein advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Issuer shall use reasonable efforts to:

(a)prepare and file with the SEC a registration statement with respect to Registrable Securities requested to be included therein and use reasonable efforts to cause such registration statement to become effective as promptly as practicable and in the case of a Demand Registration, keep such registration effective for the lesser of 120 days or until the distribution contemplated in such registration statement has been completed; provided, however, that (i) before filing a registration statement or Prospectus, the Issuer shall provide counsel selected by each Holder of the Registrable Securities being registered in such registration and proposed to be sold in the offering under such Prospectus (“Holders’ Counsel”) with an adequate and appropriate opportunity to review and comment on such registration statement and each such Prospectus included therein to be filed with the SEC and (ii) the Issuer shall notify the Holders’ Counsel and each Holder of Registrable Securities to be registered pursuant to such registration statement of any stop order issued or threatened by the SEC and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

(b)promptly prepare and file with the SEC such amendments and supplements to such registration statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Section 3.5(a) above; provided, that in the case of a Shelf Registration, the Issuer shall keep such registration statement effective until all Registrable Securities covered by such registration statement shall have been sold, and shall comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(c)furnish to the Holders of Registrable Securities being registered in such registration and proposed to be sold in the offering under such Prospectus such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto), each Prospectus and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

(d)obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any U.S. jurisdiction;

(e)register or qualify such Registrable Securities for offer and sale under the securities or “blue sky” laws of such U.S. jurisdictions as any Holder or underwriter reasonably requires, and keep such registration or qualification effective during the period set forth in Section 3.5(a) or 3.5(b) above, except that the Issuer shall not be required to qualify to do business as a foreign corporation in any jurisdiction in which it is not and would not, but for the requirements of this Section 3.5(e), be obligated to be so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

(f)cause all Registrable Securities covered by such registrations to be listed on an Approved Exchange on which similar securities issued by the Issuer are then listed;

(g)cause its independent public accountants to issue to the underwriter, if any, and the Holders, comfort letters and updates thereof, in customary form and covering matters of the type customarily covered in such letters as the Holders’ Counsel or the managing underwriter reasonably requests with respect to underwritten offerings;

(h)enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Initiating Holder, or if none, then holders of a majority of the Registrable Securities being sold or the underwriters, reasonably request to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares); provided, that the Issuer shall not be required to enter into any lock-up agreement unless requested by the underwriters, if any, in an underwritten offering, such agreement to be on terms substantially similar to that entered into by the holders selling Registrable Securities, and in any event, not longer than 90 days from the date of the final Prospectus relating to such offering;

(i)in connection with an underwritten public offering, provide all reasonable cooperation, including causing appropriate officers to attend and participate in “road shows” and other information meetings organized by the managing underwriter which are customary for the type of offering contemplated, and include in the registration statement such additional information for marketing purposes as the managing underwriter reasonably requests;

(j)in connection with an underwritten public offering, make available for inspection by any Securityholder during normal business hours and upon reasonable notice, any underwriters participating in any disposition pursuant to a registration statement, and any attorney, accountant or other agent retained by any such Securityholder or underwriters, all financial and other records, pertinent corporate documents and properties of the Issuer, and cause the Issuer’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such Securityholder, underwriters, attorney, accountant or agent in connection with such registration statement; provided, that that to the extent practicable, the foregoing inspection and information gathering shall be coordinated on behalf of the Securityholders participating in such offering by one law firm designated by and on behalf of such Securityholders, which counsel the Issuer reasonably determines to be acceptable;

(k)at the request of any Securityholder, to furnish on the effective date of the registration statement or, if the offering is underwritten, on the date that Registrable Securities are delivered to the underwriters for sale, an opinion of counsel representing the Issuer for the purposes of such registration, dated such date and addressed to the underwriters and to such requesting party, stating that such registration statement has become effective under the Securities Act and that (i) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (ii) the registration statement and the related Prospectus comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements or other financial data contained therein) and (iii) such other effects as reasonably may be requested by counsel for the underwriters or by such Holder or its counsel;

(l)notify each Holder, at any time a Prospectus covered by such registration statement is required to be delivered under the Securities Act, of the happening of any event of which it has knowledge as a result of which the Prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances then existing; and

(m)take such other actions as shall be reasonably requested by any Holder.

The Issuer may require each Holder as to which any registration is being effected to furnish to the Issuer such information regarding such Holder and the distribution of such Registrable Securities as the Issuer may, from time to time, reasonably request in writing; provided that such information shall be used only in connection with such registration. The Issuer may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information promptly after receiving such request. Each Holder agrees that, upon receipt of any notice from the Issuer of the happening of any event of the kind described in Section 3.5(l), such Holder shall forthwith discontinue disposition of such Registrable Securities covered by such registration statement or Prospectus until it is advised in writing by the Issuer that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto.

3.6Underwriting Procedures. If the Issuer or the Initiating Holder so elects, the Issuer shall use its reasonable efforts to cause the offering made pursuant to any Demand Registration to be in the form of a firm commitment underwritten public offering, and the managing underwriter or underwriters for such offering shall be an investment banking firm or firms of national reputation selected to act as the managing underwriter or underwriters of the offering in accordance with this Section 3.6 (each, an “Approved Underwriter”). If an offering of Registrable Securities made pursuant to any Demand Registration is in the form of an underwritten public offering, the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders shall select the Approved Underwriters; provided, however, that the Approved Underwriters shall, in any case, also be reasonably acceptable to the Issuer.

3.7Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Issuer shall be borne by the Issuer, whether or not any registration statement is filed or becomes effective, including (a) SEC, stock exchange and FINRA registration and filing fees, (b) all fees and expenses incurred in complying with securities or “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (c) all printing, messenger and delivery expenses and (d) the fees, charges and expenses of the Issuer’s independent public accountants, and any other accounting fees, charges and expenses incurred by the Issuer (including any expenses arising from any “cold comfort” letters or any special audits incident to or required by any registration or qualification); provided, that the Issuer shall not be required to pay underwriters’ fees or legal fees for counsel to the selling Holders, discounts or commissions relating to Registrable Securities.

3.8Indemnification; Contribution.

(a)The Issuer shall indemnify and hold harmless each Holder, each of its directors, officers (and partners and managers, as applicable), each underwriter of Registrable Securities and Indemnified Affiliates of each of them, against any losses, expenses, claims, damages or liabilities (or actions in respect thereof), joint or several, to which such Holder, underwriter or Indemnified Affiliate may become subject under the Securities Act or otherwise, including reasonable costs of investigation and reasonable attorney’s fees and expenses (each, a “Liability” and collectively, “Liabilities”) and will reimburse such Holders, underwriters and Indemnified Affiliates for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such Liability, in each case to the extent such Liabilities directly or indirectly arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act or any Prospectus contained therein, or any amendment or supplement thereof, or any Disclosure Package, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of any such Prospectus, in light of the circumstances under which they were made, not misleading or (iii) any violation or alleged violation by the Issuer of any rule or regulation promulgated under the Securities Act or any state securities laws, and shall reimburse each such Holder, underwriter and Indemnified Affiliate for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such Liability; provided, that the Issuer shall not be liable in any such case to the extent that any Liability arises out of or is based on any untrue statement or omission based upon and in conformity with written information furnished to the Issuer by an instrument duly executed by such Holder or underwriter specifically for use therein.

(b)Each Holder shall, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration is being effected, indemnify and hold harmless the Issuer, each of its directors, officers (and partners and managers, as applicable), each underwriter, if any, of the Issuer’s securities covered by such a registration statement and each other such Holder and Indemnified Affiliates of each of them against all Liabilities arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement or any Prospectus contained therein, or any amendment or supplement thereof, or any Disclosure Package or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of any such Prospectus, in light of the circumstances under which they were made, not misleading, and will reimburse the Issuer, such Holders, underwriters and Indemnified Affiliates for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such Liability, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement or any Prospectus contained therein, or any amendment or supplement thereof, or any Disclosure Package, in reliance upon and in conformity with written information furnished to the Issuer by an instrument duly executed by such Holder specifically for use therein; provided, however, the total amount for which any Holder, its officers, directors and partners, and any Person controlling such Holder, shall be liable under this Section 3.8(b) shall not in any event exceed the aggregate net proceeds received by such Holder from the sale of Registrable Securities sold by such Holder in such registration.

(c)Each party entitled to indemnification under this Section 3.8 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has received written notice of any action, suit, proceeding or investigation or threat thereof as to which indemnity may be sought; provided, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent that such failure resulted in actual detriment to the Indemnifying Party.

(d)If the indemnification provided for in this Section 3.8 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Liability referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and of the Indemnified Party, on the other hand, in connection with the statements or omissions which resulted in such Liability as well as any other relevant equitable considerations. The relevant fault of the Indemnifying Party and the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information concerning the matter with respect to which the claim was asserted and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Holder shall be obligated to contribute pursuant to this Section 3.8(d) shall be limited to an amount equal to the net proceeds to such Holder of the Registrable Securities sold pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which the Holder has otherwise been required to pay in respect of such Liability or any substantially similar Liability arising from the sale of such Registrable Securities). The parties agree that it would be neither just nor equitable if contribution pursuant to this Section 3.8(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding sentences. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(e)The indemnification and contribution provided by this Section 3.8 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any Person entitled to indemnification and contribution hereunder and the expiration or termination of this Agreement.

(f)Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall control.

3.9Underwritten Registrations. No Holder may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

3.10Lock-Up. With respect to any underwritten offering of Registrable Securities by a Holder pursuant to Article III, the Issuer agrees to use reasonable efforts to cause such of its directors and senior executive officers to execute and deliver customary lock-up agreements in such form and for such time period (up to 90 days) as may be requested by the managing underwriter.

ARTICLE IVAMENDMENT AND TERMINATION

4.1Amendment and Waiver.

(a)This Agreement may not be amended, restated, modified or supplemented in any respect and the observance of any term of this Agreement may not be waived except by a written instrument executed by the Issuer, Ares LP, AREC and Alleghany; provided, that (i) the inclusion of additional parties to this Agreement in accordance with the terms of this Agreement shall not require the consent of any Minority Investor and this Agreement may be amended, restated, modified and supplemented in connection therewith to the extent (and only to the extent) such Minority Investor’s rights hereunder are not adversely affected by any such amendment, restatement, modification or supplement, it being expressly acknowledged that the grant of additional registration rights to any third party on a pari passu basis to the rights afforded herein to the Minority Investors shall not be deemed, in and of itself, to adversely affect the rights of the Minority Investors and (ii) any provision relating solely to AREC may be amended, restated, modified and supplemented without the consent of Alleghany to the extent (and only to the extent) Alleghany’s rights hereunder are not materially adversely affected by any such amendment, restatement, modification or supplement. The Issuer shall promptly provide a copy of any such amendment, restatement, modification or supplement to each Minority Investor; provided that the failure to so furnish any such amendment, restatement, modification or supplement shall not affect the effectiveness thereof. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

4.2Termination of Agreement. This Agreement shall terminate in respect of all Securityholders (a) with the written consent of the Issuer, Ares LP and the Minority Investors and (b) following the dissolution, liquidation or winding up of the Issuer. The termination of this Agreement shall not affect any indemnification or contribution obligations under Section 3.8, which shall survive such termination.

4.3Termination as to a Party. Any Person who ceases to hold any Common Shares and Ares Operating Group Units shall cease to be a Securityholder and shall have no further rights or obligations under this Agreement (except with respect to Section 1.2 and any indemnification and contribution obligations under Section 3.8, which shall survive).

ARTICLE VMISCELLANEOUS

5.1Certain Defined Terms; Terms Generally.

(a)Cross Reference Table. The following terms defined elsewhere in this Agreement in the Sections set forth below shall have the respective meaning therein defined:

Term	Definition
Agreement	Preamble
Alleghany	Preamble
Alleghany Demand Right	Section 3.1(a)
Approved Underwriter	Section 3.6
AREC Demand Right	Section 3.1(a)
Ares GP	Preamble
Ares LP	Preamble
Board Meeting	Section 1.1
Board of Directors	Section 1.1
Confidential Information	Section 1.2(a)
Demand Registration	Section 3.1(a)
Effective Date	Preamble
Holders’ Counsel	Section 3.5(a)
Incidental Registration	Section 3.3(a)
Indemnified Party	Section 3.8(c)
Indemnifying Party	Section 3.8(c)
Initiating Holders	Section 3.1(a)
Issuer	Preamble
Liability	Section 3.8(a)
Minority Investors	Preamble
Observer	Section 1.1
Original Investor Rights Agreement	Preamble
Shelf Initiating Holder	Section 3.2(a)
Shelf Registration	Section 3.2(a)
Shelf Registration Statement	Section 3.2(a)
Shelf Takedown Notice	Section 3.2(b)
Underwritten Shelf Takedown	Section 3.2(b)
Valid Business Reason	Section 3.1(c)

(b)As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:

“Affiliate” when used with reference to another Person means any Person (other than any Company), directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other Person. For purposes hereof, no Investment Fund managed by any Company or Subsidiary of any Company or portfolio company of any of them shall be deemed an Affiliate of any Entity.

“Approved Exchange” means any of The New York Stock Exchange (or any successor thereto), The NASDAQ Stock Market (or any successor thereto) or any other internationally recognized stock exchange.

“AREC” means (i) prior to April 10, 2018, AREC Holdings Ltd., and (ii) on or after April 10, 2018, Blue Spectrum ZA 2015, L.P.

“Ares LP Agreement” means the Third Amended and Restated Agreement of Limited Partnership of Ares LP, effective on or about the Effective Date.

“Ares Operating Group” has the meaning ascribed to such term in the Issuer LP Agreement.

“Ares Operating Group Unit” has the meaning ascribed to such term in the Issuer LP Agreement.

“Ares Partners” means Ares Partners Holdco LLC, a Delaware limited liability company.

“Ares VoteCo” means Ares Partners LLC, a Delaware limited liability company.

“Co-Founder” means each of Michael Arougheti, David Kaplan, John Kissick, Antony Ressler and Bennett Rosenthal.

“Co-invest Fund” means (i) any pooled investment vehicle formed to facilitate investments in any Investment Fund or portfolio company of an Investment Fund and (ii) any investment (whether or not through an investment vehicle) made in connection with an investment by an Investment Fund or Co-invest Fund.

“Common Shares” has the meaning ascribed to such term in the Issuer LP Agreement. For purposes of calculating the number of (i) Common Shares outstanding, such number shall be deemed to include the number of Common Shares that are deliverable upon (x) the exchange of all Ares Operating Group Units outstanding and (y) the grant or exercise of awards made under equity plans of the Issuer or any other Entity (whether or not then vested or subject to forfeiture) and (ii) Common Shares owned by a Person, each such Person shall be deemed to own Common Shares that are deliverable to such Person (or the proceeds from the sale of which are deliverable to such Person) pursuant to (x) an exchange agreement with the Issuer or any other Entity and (y) the exercise of awards made under equity plans of the Issuer or any other Entity that have vested or the restrictions thereto have lapsed as of the date of determination.

“Companies” means, collectively, the Issuer, each entity that is part of the Ares Operating Group, Ares Partners, Ares GP and Ares VoteCo.

“control” when used with reference to any Person means the power to direct the management or policies of such Person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or other understanding (written or oral); and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.

“Cut-off Date” means (a) with respect to AREC, the first date on which AREC owns less than 5% of the Common Shares then outstanding; and (b) with respect to Alleghany, the first date on which Alleghany owns less than 5% of the Common Shares then outstanding; provided, that if (i) Alleghany has not Transferred any Common Shares or Ares Operating Group Units (in each case, other than to a Permitted Transferee) and (ii) owns less than 5% of the Common Shares then outstanding prior to May 1, 2016, the “Cut-off Date” with respect to Alleghany shall mean May 1, 2016.

“Disclosure Package” means, with respect to any offering of securities, (i) any preliminary prospectus included in the registration statement or filed with the SEC pursuant to Rule 424(a) under the Securities Act, (ii) any “issuer free writing prospectus” (as defined in Rule 433 under the Securities Act), (iii) any “road show” (as defined in Rule 433 under the Securities Act) not constituting an “issuer free writing prospectus”, (iv) any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act and (v) any other Free Writing Prospectus (as defined in Rule 405 under the Securities Act) that the parties shall expressly agree to treat as part of the Disclosure Package, in each of clauses (i) through (v), that is deemed, under Rule 159 under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including a contract of sale).

“Entities” means the Companies and their respective Subsidiaries.

1“equity interests” means:

(i)with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock;

(ii)with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; and

(iii)any warrants, rights or options to purchase any of the instruments or interests referred to in clause (i) or (ii) above.

“Exchange Agreement” means the Third Amended and Restated Exchange Agreement, effective on or about the Effective Date, among the Issuer, Alleghany, Ares LP and the other parties thereto.

“Family Group” means, with respect to any individual, such individual, and such individual’s spouse, ancestors and descendants (whether natural or adopted), and any trust, partnership, limited liability company or other vehicle established and maintained for charitable, tax or estate planning purposes or for the benefit of (or the sole members, partners or beneficiaries of which are) such individual, and such individual’s spouse, ancestors and descendants (whether natural or adopted).

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the United States, any foreign government, any State of the United States or any political subdivision thereof, and any court or tribunal of competent jurisdiction.

“Holder” means any holder of outstanding Registrable Securities that is a party to this Agreement.

“Indemnified Affiliate” means with respect to any Person, each other Person, if any, who controls such Person within the meaning of the Securities Act, and any partner, member, stockholder, employee, officer, director or agent of such Person or of any other Person, if any, who controls such Person.

“Investment Fund” means any (i) U.S. domiciled or offshore investment fund, pooled investment vehicle, feeder fund, collective investment scheme, investment portfolio, or alternative investment vehicle, (whether formed as a limited partnership, limited liability company, corporation, or other entity) formed for the purpose of making private equity investments, collateralized loan obligation investments, distressed investments, private debt investments or hedge fund investments, (ii) managed account or (iii) any similar contractual arrangement, in each case, for which any of the Co-Founders or any Entity is compensated for acting, directly or indirectly, as general partner, manager, managing member, investment manager, trading manager, investment advisor or in a similar capacity. The term “Investment Fund” shall exclude any Person in a Co-Founder’s Family Group and any Co-invest Fund.

“IPO” means the initial public offering and sale of common units, as contemplated by the Issuer’s Registration Statement on Form S-1 (File No. 333-194919).

“Issuer LP Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated as of or about the Effective Date.

“Law” means any federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, statute, treaty or binding determination of any Governmental Authority.

2“Permitted Transferee” means (a) with respect AREC, any Affiliate of AREC that delivers to the Issuer a written agreement in the form of Exhibit A to become a Securityholder and to be bound by the terms of this Agreement to the same extent as the Transferor (unless such proposed Transferee is already so bound), and (b) with respect to Alleghany, any Affiliate of Alleghany that delivers to the Issuer a written agreement in the form of Exhibit A to become a Securityholder and to be bound by the terms of this Agreement to the same extent as the Transferor (unless such proposed Transferee is already so bound).

“Person” means an individual, a partnership (including a limited partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, association or other entity or a governmental entity.

“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit commenced, brought, conducted, or heard by or before any Governmental Authority, arbitrator or panel of arbitrators.

“Prospectus” means the prospectus that is part of any registration statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance on Rule 415 or Rule 430A under the Securities Act), as amended or supplemented by any amendment, pricing term sheet, “Free Writing Prospectus” (as defined in Rule 405 under the Securities Act) or prospectus supplement that is filed with the SEC, including post-effective amendments, and all material incorporated by reference in such prospectus.

“register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement, and compliance with applicable state securities laws of such states in which Holders notify the Issuer of their intention to offer Registrable Securities.

“Registrable Securities” means (i) any equity interests of the Issuer issued or issuable to any Securityholder, including any permitted transferee under the terms of the Exchange Agreement, (ii) any equity interests of the Issuer issued or issuable to any Securityholder upon the exchange of any Ares Operating Group Units pursuant to and in accordance with the Exchange Agreement and (iii) any securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) above by way of recapitalization, exchange, contribution, merger, consolidation and/or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they are (w) Transferred by a Person in a transaction in which such Person’s rights under this Agreement are not properly assigned, (x) Transferred pursuant to a Rule 144 Sale, (y) Transferable by the holder thereof pursuant to Rule 144(b)(1) (or any other similar provision then in force) without limitations on volume or manner of sale but treating them as voting securities for such analysis or (z) otherwise Transferred and new certificates not bearing the legend set forth in Section 5.2(a) shall have been delivered by the Issuer and subsequent disposition of such securities shall not require registration or qualification of such securities under the Securities Act or such state securities or blue sky laws then in force; provided, that if any Co-Founder is afforded registration rights in respect of any security that would otherwise be subject to clause (y) or (z), then clause (y) or (z) shall not apply to AREC. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire such Registrable Securities (upon conversion or exercise in connection with a Transfer of securities or otherwise), whether or not such acquisition has actually been effected. Notwithstanding anything herein to the contrary, until the earlier of a Minority Investor owning (1) less than 3.5% of the Common Shares then outstanding or (2) equity interests in the Issuer or any entity that is a member of the Ares Operating Group, in each case, with a fair market value that is less than $150 million in the aggregate, in the case of any securities held by such Minority Investor that cease to be Registrable Securities solely by reason of clause (y) in the definition of “Registrable Securities” above, the provisions of Sections 3.2, 3.3, 3.4, 3.5, 3.7, 3.8, 3.9 and 3.10 of this Agreement and, if the Issuer is ineligible for use of Form S-3, Sections 3.1 and 3.6, of this Agreement shall continue to apply until such securities otherwise cease to be Registrable Securities. In any such case, an “underwritten” offering or other disposition shall include any distribution of such securities on behalf of the Holder by one or more broker-dealers, an “underwriting agreement” or “underwriting arrangement” shall include any purchase agreement or other similar arrangements entered into by such broker-dealers, and any “registration statement” or “prospectus” shall include any offering document approved by the Issuer and used in connection with such distribution.

“registration statement” means any registration statement of the Issuer under which any of the Registrable Securities are included therein pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Representatives” means, with respect to any Person, such Person’s Affiliates, and the directors, officers, employees, advisors and representatives of such Person and its Affiliates.

“Rule 144” means Rule 144 adopted under the Securities Act.

“Rule 144 Sale” means a sale to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933.

“Securityholders” means Ares LP, AREC, Alleghany and each other Person (other than the Issuer) that is or may become a party to this Agreement.

“Shelf Registered Securities” means, with respect to any Shelf Registration, any Registrable Securities whose sale is registered pursuant to the registration statement filed in connection with such Shelf Registration.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency, unless such contingency has occurred or is reasonably likely to occur) to vote in the election of the directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a business entity other than a corporation, a majority of the total voting power of ownership interests entitled to vote in the election or appointment of the managers (or other similar governing persons) thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, (x) unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of any Company and (y) no (A) Investment Fund (or Co-invest Fund) managed by any Company or Subsidiary of any Company or (B) portfolio company of any of them shall be deemed a Subsidiary of (1) any Company or (2) any Subsidiary of any Company.

“Transfer” means (in either the noun or the verb form, including with respect to the verb form, all conjugations thereof within their correlative meanings) with respect to any security, the gift, sale, assignment, transfer, pledge, hypothecation, encumbrance or other disposition (whether for or without consideration, whether directly or indirectly, and whether voluntary, involuntary or by operation of law) of such security or any interest therein. The Transfer of any Person that owns a security or any interest therein shall be deemed to be a Transfer by such Person of such security or any interest therein (other than any transfers of equity interests of Alleghany Corporation, a Delaware corporation, so long as it is a publicly traded corporation). “Transferee”, “Transferor” and similar terms have meanings correlative to the foregoing.

“underwritten public offering” of securities means a public offering of such securities registered under the Securities Act in which an underwriter, placement agent or other intermediary participates in the distribution of such securities.

(c)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. 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 this 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 this 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 this 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; (xi) reference to dollars or $ shall be deemed to refer to U.S. dollars; (xii) references to “days” shall be deemed to refer to calendar days, determined in accordance with local time in New York, New York; and (xiii) any obligation by any party to consult with or give advance notice to any other party prior to any action or upon the occurrence of any event shall not be deemed to grant such other party any approval, consent, dissent or other right with respect to the subject matter of such consultation or advance notice obligation.

(d)It is the intention of the parties that every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party (notwithstanding any rule of law requiring an agreement to be strictly construed against the drafting party), it being understood that the parties to this Agreement are sophisticated and have had adequate opportunity and means to retain counsel to represent their interests and to otherwise negotiate the provisions of this Agreement.

5.2Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

5.3Entire Agreement. Except as otherwise expressly set forth herein, this Agreement embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements (including the Original Investor Rights Agreement) or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way; provided that nothing in this Agreement shall be deemed to terminate the Purchase Agreement, dated as of July 31, 2013, by and among Alleghany, Ares Holdings LLC and Ares Investments LLC.

5.4Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Issuer and its successors and assigns. Except as otherwise expressly set forth herein, nothing in this Agreement shall confer on any third parties any rights or remedies under or by reason of this Agreement. The Minority Investors shall not be entitled to assign any of their rights or obligations under this Agreement without the prior written consent of Ares LP, other than to a Permitted Transferee that delivers to the Issuer a written agreement to become a Securityholder in the form of Exhibit A. Ares LP shall not be entitled to assign any of its rights or obligations under this Agreement without the prior written consent of AREC, other than to any of its direct or indirect limited partners that deliver a written agreement in the form of Exhibit A. Whenever this Agreement refers to an amount contemplated by this Agreement to be received by, or paid to, any party, such reference shall include such amounts received by, or paid to, successors and assigns of such party.

5.5Counterparts. This Agreement or any amendment hereto may be signed in any number of counterparts (including by facsimile or pdf transmission), each of which shall be an original, but all of which taken together shall constitute one agreement or amendment, as the case may be.

5.6Remedies. The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof or thereof and that the parties shall be entitled to seek an injunction to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof or thereof in accordance with the provisions of this Section 5.6, in addition to any other remedy to which they are entitled at law or in equity.

5.7Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by electronic mail to any Company at the address set forth below and to any other recipient at the address indicated on any Company’s records, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party in accordance with this Section 5.7, Notices shall be deemed to have been given hereunder when sent by facsimile (receipt confirmed) or electronic mail (receipt confirmed), delivered personally, five calendar days after deposit in the U.S. mail and one calendar day after deposit with a reputable overnight courier service.

The address of each Company and Ares LP is:

2000 Avenue of the Stars
12^th Floor
Los Angeles, California 90067
Facsimile:    (310) 201-4141
Attention:    Michael D. WeinerE-Mail:    weiner@aresmgmt.com

with copies (which shall not constitute notice) to:

Proskauer Rose LLP2049 Century Park East, Suite 3200
Los Angeles, CA 90067
Facsimile:    (310) 557-2193
Attention:    Michael A. Woronoff, Esq.

Jonathan Benloulou, Esq.

E-Mail:     mworonoff@proskauer.com

jbenloulou@proskauer.com

The address for AREC is:
c/o ADIA Private Equities Department
P.O. Box 3600
Abu Dhabi, United Arab EmiratesFacsimile:    971 2 415 2614 or 971 2 415 2616Attention:    Directors
E-Mail:    Private.Equity@adia.ae, with copies to:        PED.Legal@adia.ae        Bodour.AlTamimi@adia.ae        Jerome.D’Algue@adia.ae

with copies (which shall not constitute notice) to:

Patton Boggs LLP2550 M Street, NW
Washington, DC 20037
Facsimile:    (202) 457-6315
Attention:    Courtney Nowell, Esq.E-Mail:    cnowell@pattonboggs.com

The address for Alleghany is:
Alleghany Corporation

7 Times Square Tower

17^th Floor

New York, New York 10036

Facsimile: (212) 759-3295

Attention: Christopher DalrympleElectronic Mail: cdalrymple@alleghany.com

with copies (which shall not constitute notice) to:

Willkie Farr & Gallagher

787 Seventh Avenue

New York, NY 10019

Facsimile:    (212) 728-8111

Attention:    Steven A. Seidman, Esq.

Laura L. Delanoy, Esq.

E-Mail:    sseidman@willkie.com

ldelanoy@willkie.com

5.8Governing Law.

(a)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware.

(b)Any dispute, claim or controversy of whatever nature directly or indirectly relating to or arising out of this Agreement, the termination or validity thereof, or any alleged breach thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before a panel of three arbitrators. The arbitration shall be administered by JAMS/ENDISPUTE pursuant to its Comprehensive Arbitration Rules and Procedures. The language of the arbitration shall be English. Each party to such dispute shall be entitled to choose one arbitrator, and the chosen arbitrators shall choose the third arbitrator. All arbitrators shall be chosen from the JAMS arbitration panel. The arbitrators shall, in their award, allocate all of the costs of the arbitration (and the mediation, if applicable), including the fees of the arbitrators and the reasonable attorneys’ fees of the prevailing party, against the party who did not prevail. The award in the arbitration shall be final and binding. The arbitration shall be governed by the federal arbitration act, 9 U.S.C. §§1–16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. This arbitration clause shall not preclude any party from obtaining provisional relief or interim measures of protection, including injunctive relief, from a court of appropriate jurisdiction to protect its rights under this Agreement. Each party agrees and consents to the personal jurisdiction, service of process and exclusive venue in any federal or state court within the State of California, County of Los Angeles, in connection with any Proceeding brought in connection with a request for any such provisional relief or interim measures of protection, and in connection with any action to enforce this arbitration clause or an award in arbitration and agrees not to assert, by way of motion, as a defense or otherwise, that any action brought in any such court should be dismissed on grounds of forum non coveniens. Each party to this Agreement consents to mailing of process or other papers in connection with any such arbitration or action by certified mail in the manner and to the addresses provided in Section 5.7. The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof or thereof and that the parties shall be entitled to seek an injunction to prevent breaches of this Agreement to enforce specifically the performance of the terms and provisions hereof or thereof in accordance with the provisions of this Section 5.8(b), in addition to any other remedy to which they are entitled at law or in equity. No party seeking relief under this Section 5.8(b) shall be required to post a bond or prove special damages.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties have entered into this Agreement effective as of the day and year first above written.

ARES OWNERS HOLDINGS L.P.

By: Ares Partners Holdco LLC, its General Partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

ARES MANAGEMENT, L.P.

By: Ares Management GP LLC, its General Partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

ARES MANAGEMENT GP LLC

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

AREC HOLDINGS LTD.

By: /s/ Humaid Bin Butti Bin Humaid Bin Bishr AlMarri
Name: Humaid Bin Butti Bin Humaid Bin Bishr AlMarri
Title: Authorised Signatory

By: /s/ Ahmed Abdullatif Ahmed Ibrahim Al Mosa
Name: Ahmed Abdullatif Ahmed Ibrahim Al MosaTitle: Authorised Signatory

BLUE SPECTRUM ZA 2015, L.P. ACTING BY ITS GENERAL PARTNER PROCIFIC

By: /s/ Mohamed Fahed Mohamed Abdulla AlMazrouei
Name: Mohamed Fahed Mohamed Abdulla AlMazrouei
Title: Authorised Signatory

By: /s/ Ahmed Abdullatif Ahmed Ibrahim Al Mosa
Name: Ahmed Abdullatif Ahmed Ibrahim Al Mosa
Title: Authorised Signatory

ALLEGHANY INSURANCE HOLDINGS LLC

By: /s/ John L. Sennott, Jr.
Name: John L. Sennott, Jr.
Title: Vice Chairman and Senior Vice President

Exhibit A

Form of Joinder Agreement

Reference is made to that certain Amended and Restated Investor Rights Agreement (the “Agreement”) entered into as of May 4, 2018 and effective as of March 1, 2018, by and among (i) Ares Management, L.P, a Delaware limited partnership, (ii) Ares Management GP LLC, a Delaware limited partnership, (iii) Ares Owners Holdings L.P., a Delaware limited partnership, (iv) AREC Holdings Ltd., a Cayman exempted corporation, (v) Blue Spectrum ZA 2015, L.P., a Cayman exempted limited partnership, (vi) Alleghany Insurance Holdings LLC, a Delaware limited liability company and (vii) the other persons party thereto. Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.

The undersigned hereby agrees, effective as of ________________, 20__, to become a party to the Agreement, and for all purposes of the Agreement, the undersigned shall be a Securityholder (as defined in the Agreement) and shall be bound by the terms and provisions of the Agreement to the same extent as the Transferor.

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of the day and year first above written.

By:     

EX-10.5

ARES MANAGEMENT, L.P.

__________________________

2014 EQUITY INCENTIVE PLAN

__________________________

ARTICLE IPURPOSE

The purpose of this Ares Management, L.P. 2014 Equity Incentive Plan is to (i) engender a true “owners” mentality by providing broad ownership of our Partnership across the entire professional population; (ii) create long-term alignment between owners and Service Providers and Non-Employee Directors; (iii) create long-term compensation opportunities for Service Providers and Non-Employee Directors; and (iv) recognize the contributions of certain Service Providers and Non-Employee Directors. The Plan, as set forth herein, is effective as of the Effective Date. In connection with the Partnership changing the name of its common units representing limited partnership interests to Common Shares, the Plan has been amended and restated as of the Amendment Effective Date.

ARTICLE IIDEFINITIONS

For purposes of the Plan, the following terms shall have the following meanings:

2.1“Acquisition Event” means a merger or consolidation in which the Partnership is not the surviving entity, any transaction that results in the acquisition of all or substantially all of the Partnership’s outstanding Common Shares by a single Person or by a group of Persons acting in concert, or the sale or transfer of all or substantially all of the Partnership’s assets.

2.2“Affiliate” means each of the following: (a) any corporation, limited liability company, partnership, entity, trade or business that is directly or indirectly controlled by the Partnership (whether by ownership of stock, partnership or membership interests, assets or an equivalent ownership interest or voting interest, through a general partner or manager or by contract); (b) any corporation, limited liability company, partnership, entity, trade or business that directly or indirectly controls the Partnership (whether by ownership of stock, partnership or membership interests, assets or an equivalent ownership interest or voting interest, through a general partner or manager or by contract); and (c) any other entity in which the Partnership or any Affiliate thereof has a material equity interest and that is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise determined by the Committee, in any event, no portfolio company in which a fund managed, directly or indirectly, by the Partnership, has an investment, shall be deemed an Affiliate of the Partnership.

2.3“Amendment Effective Date” means March 1, 2018.

2.4“Appreciation Award”means any Option or any Other Share-Based Award that is based on the appreciation in value of a Share in excess of an amount at least equal to the Fair Market Value on the date such Other Share-Based Award is granted.

2.5“Ares Operating Group Entities” means each of Ares Investments L.P., Ares Holdings L.P., and Ares Offshore Holdings L.P. and any future entity designated by the Board in its discretion as an Ares Operating Group Entity for purposes of the Plan.

2.6“Ares Operating Group Unit” means, collectively, one partnership unit in each of the Ares Operating Group Entities.

2.7“Award” means any award under the Plan of any Option or Other Share-Based Award.

2.8“Board” means the Board of Directors of the General Partner.

2.9“Cause” means, with respect to a Participant’s Termination of Services: (a) if there is no written employment agreement, consulting agreement, change in control agreement or similar agreement that defines “cause” (or words of like import) in effect between the Partnership or an Affiliate and the Participant at the time of the grant of the Award, termination due to (i) the Participant’s conviction of, or plea of guilty or nolo contendere to, (A) a felony, or (B) a misdemeanor where imprisonment of one or more months is imposed (including, in each case, a foreign law equivalent); (ii) perpetration by the Participant of an illegal act, dishonesty or fraud that could cause significant economic injury to the Partnership or any of its Affiliates; (iii) the Participant’s insubordination or willful and deliberate failure or refusal to perform his or her duties or responsibilities for any reason other than illness or incapacity; (iv) materially unsatisfactory performance by the Participant of his or her duties in any material respect, provided that the Participant is given notice and an opportunity to cure as determined by the Committee; or (v) the Participant’s willful misconduct with regard to the Partnership or any of its Affiliates, as determined by the Committee; or (b) if there is a written employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Partnership or any of its Affiliates and the Participant at the time of the grant of the Award that defines “cause” (or words of like import) or if “cause” is defined in the applicable Award agreement, “cause” as defined under such agreement; provided that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. With respect to a Participant’s Termination of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a director under Delaware law.

2.10“Change in Control” unless otherwise defined in the applicable Award agreement or other written agreement approved by the Committee and subject to Section 12.11(b), means the occurrence of any of the following: (a) any Person, other than a Person approved by the current General Partner, becoming the general partner of the Partnership; or (b) during any period of two consecutive years, Continuing Directors cease for any reason to constitute a majority of the directors serving on the Board. For purposes of this definition, “Continuing Director” means any director of the General Partner (i) serving on the Board at the beginning of the relevant period of two consecutive years referred to in the immediately preceding sentence, (ii) appointed or elected to the Board by the members of the General Partner or (iii) whose appointment or election to the Board by such Board, or nomination for election to the Board by the limited partners of the Partnership, was approved by a majority of the directors of the Board then still serving at the time of such approval who were so serving at the beginning of the relevant period of two consecutive years, were so appointed or elected by the members of the General Partner or whose appointment or election or nomination for election was so approved.

2.11“Change in Control Price” has the meaning set forth in Article IX.

2.12“Code” means the Internal Revenue Code of 1986.

2.13“Committee” means: (a) with respect to the application of the Plan to Service Providers, a committee or subcommittee of the Board consisting of at least two directors, who are granted the appropriate authority to administer the Plan in compliance with applicable law; and (b) with respect to the application of the Plan to Non-Employee Directors, the Board. To the extent that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall be deemed references to the Board.

2.14“Common Shares” means the common shares representing limited partnership interests in the Partnership, as defined in the Partnership Agreement.

2.15“Disability” means with respect to a Participant’s Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability. Notwithstanding the foregoing, for an Award that provides for payment or settlement triggered upon a Disability and that constitutes a Section 409A Covered Award, the foregoing definition shall apply for purposes of vesting of such Award, provided that for purposes of payment or settlement of such Award, such Award shall not be paid (or otherwise settled) until the earliest of: (A) the Participant’s “disability” within the meaning of Section 409A(a)(2)(C)(i) or (ii) of the Code, (B) the Participant’s “separation from service” within the meaning of Section 409A of the Code and (C) the date such Award would otherwise be settled pursuant to the terms of the Award agreement.

2.16“Effective Date” means the date on which the Board adopts the Plan, or such later date as is designated by the Board.

2.17“Exchange Act” means the Securities Exchange Act of 1934.

2.18“Exercisable Awards” has the meaning set forth in Section 4.2(d).

2.19“Fair Market Value” of a Share, means as of any date, unless otherwise required by any applicable provision of the Code and except as provided below, (a) the closing price reported for the Share on such date: (i) as reported on the principal national securities exchange in the United States on which it is then traded; or (ii) if not traded on any such national securities exchange, as quoted on an automated quotation system sponsored by the Financial Industry Regulatory Authority or (b) if the Share shall not have been reported or quoted on such date, on the first day prior thereto on which the Share was reported or quoted. If the Share is not traded, listed or otherwise reported or quoted, then Fair Market Value of a Share means the fair market value of the Share as determined by the Committee in good faith in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code.

2.20“Family Member” means “family member” as defined in Section A.1.(5) of the general instructions of Form S-8.

2.21“General Partner” means Ares Management GP LLC, a Delaware limited liability company.

2.22“Good Reason” with respect to a Participant’s voluntary Termination of Service shall have the meaning ascribed to such term under an employment or consulting agreement or Award agreement between the Partnership or any of its Affiliates and the Participant in effect as of the time of such Termination; provided that with regard to any agreement under which the definition of “good reason” only applies upon an occurrence of a change in control, such definition of “good reason” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. In the absence of any such agreement defining such term, a Participant shall not have “Good Reason”.

2.23“Non-Employee Director” means a director of the General Partner who is not a Service Provider of the Partnership or any of its Affiliates other than with respect to service as a director of the General Partner.

2.24“Option” means any option to purchase Shares granted to Service Providers or Non-Employee Directors pursuant to Article VI.

2.25“Other Extraordinary Event” has the meaning in Section 4.2(b).

2.26“Other Share-Based Award” means an Award under Article VII that is valued in whole or in part by reference to, or is payable in or otherwise based on, Shares.

2.27“Participant” means a Service Provider or Non-Employee Director to whom an Award has been granted pursuant to the Plan.

2.28“Partnership” means Ares Management, L.P., a Delaware limited partnership.

2.29“Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Partnership, dated on or about March 1, 2018.

2.30“Person” means any individual, entity (including any employee benefit plan or any trust for an employee benefit plan) or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision).

2.31“Plan” means this Ares Management, L.P. 2014 Equity Incentive Plan, as amended from time to time.

2.32“Rule 16b-3” means Rule 16b‑3 under Section 16(b) of the Exchange Act.

2.33“Section 4.2 Event” has the meaning set forth in Section 4.2(b).

2.34“Section 409A” means the nonqualified deferred compensation rules under Section 409A of the Code.

2.35“Section 409A Covered Award” has the meaning set forth in Section 12.11.

2.36“Securities Act” means the Securities Act of 1933.

2.37“Service Provider” means any natural person or, with the approval of the Committee, entity, that provides bona fide services to the Partnership or any of its Affiliates, including any natural person who is an employee, professional, consultant, member or partner of the Partnership or any of its Affiliates; provided that no consultant shall be a Service Provider for performing services in connection with the offer or sale of securities in a capital-raising transaction, or directly or indirectly promoting or maintaining a market for the Partnership’s or any of its Affiliates’ securities.

2.38“Shares” means Common Shares or Ares Operating Group Units that are issued or may be issued under the Plan.

2.39“Termination” means a Termination of Directorship or Termination of Services, as applicable.

2.40“Termination of Directorship” means that the Non‑Employee Director has ceased to be a director of the General Partner; except that if a Non‑Employee Director becomes a Service Provider upon the termination of his or her directorship, his or her ceasing to be a director of the Partnership shall not be treated as a Termination unless and until the Participant has a Termination of Services.

2.41“Termination of Services” means: (a) a termination of employment or service as a professional, consultant, partner or member (for reasons other than a military or approved personal leave of absence) of a Participant from the Partnership and its Affiliates; or (b) when an entity that is employing a Participant, or of which the Participant is a Service Provider, ceases to be an Affiliate of the Partnership, unless the Participant otherwise is, or thereupon becomes a Service Provider of, the Partnership or another Affiliate of the Partnership. If a Service Provider becomes a Non‑Employee Director upon his or her Termination of Services, unless otherwise determined by the Committee no Termination shall be deemed to occur until such time as such Service Provider is no longer a Non‑Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Services for any Service Provider in any Award agreement and, if no rights of a Service Provider are substantially impaired, may otherwise amend the definition of Termination of Services from time to time.

2.42“Transfer” means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in a Person), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, hypothecate, encumber or otherwise dispose of (including by issuing equity in a Person) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “Transferred” and “Transferable” shall have correlative meanings.

ARTICLE IIIADMINISTRATION

3.1The Committee. The Plan shall be administered and interpreted by the Committee.

3.2Grant and Administration of Awards. The Committee shall have full authority and discretion, as provided in Section 3.7, to grant and administer Awards including the authority to:

(a) select the Service Providers and Non-Employee Directors to whom Awards may from time to time be granted;

(b) determine the number of Shares to be covered by each Award;

(c) determine the type and the terms and conditions, not inconsistent with the terms of the Plan, of each Award (including the exercise or purchase price (if any), any restrictions or limitations thereon or any vesting schedule or acceleration thereof);

(d) determine whether to require a Participant, as a condition of the granting of any Award, to refrain from selling or otherwise disposing of Shares acquired pursuant to such Award for a period of time;

(e) amend, after the date of grant, the terms that apply to an Award upon a Participant’s Termination, provided that such amendment does not substantially impair the Participant’s rights under the Award, as determined by the Committee;

(f) determine the circumstances under which Shares and other amounts payable with respect to an Award may be deferred automatically or at the election of the Participant, in each case in a manner intended to comply with or be exempt from Section 409A;

(g) generally, exercise such powers and perform such acts as the Committee deems necessary or advisable to promote the best interests of the Partnership in connection with the Plan that are not inconsistent with the provisions of the Plan;

(h) construe and interpret the terms and provisions of the Plan and any Award (and all agreements relating thereto); and

(i) correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto.

3.3Award Agreements. All Awards shall be evidenced by, and subject to the terms and conditions of, a written notice provided by the Partnership to the Participant or a written agreement executed by the Partnership and the Participant.

3.4Guidelines. The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem necessary or advisable. The Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdiction to comply with applicable tax and securities laws and may impose such limitations and restrictions that it deems necessary or advisable to comply with the applicable tax and securities laws of such domestic or foreign jurisdiction.

3.5Sub-Plans. The Committee shall have the authority to adopt, alter and repeal such sub-plans to the Plan as it shall deem necessary or advisable. Such sub-plans may be a plan of the General Partner, the Partnership, or any Affiliate of the Partnership adopted to grant awards pursuant to the Plan.

3.6Delegation; Advisors. The Committee may as it deems advisable, to the extent permitted by applicable law and securities exchange rules:

(a) delegate its responsibilities to officers or employees of the Partnership or any of its Affiliates, including delegating authority to officers or Affiliates to grant Awards or execute agreements or other documents on behalf of the Committee; and

(b) engage legal counsel, consultants, professional advisors and agents to assist in the administration of the Plan and rely upon any opinion or computation received from any such Person.

3.7Decisions Final. All determinations, evaluations, elections, approvals, authorizations, consents, decisions, interpretations and other actions made or taken by or at the direction of the Partnership, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the sole and absolute discretion of all and each of them, and shall be final, binding and conclusive on all Service Providers and Participants and their respective beneficiaries, heirs, executors, administrators, successors and assigns. Except as otherwise required by applicable law, nothing in this Plan shall obligate the Partnership, the Board or the Committee (or any of its members) to treat any Service Provider or Participant alike, whether or not such Service Providers or Participants are similarly situated, and the exercise of any power or discretion by the Partnership, the Board or the Committee (or any of its members) in the case of any Service Provider or Participant shall not create any obligation on the part of the Partnership, the Board or the Committee (or any of its members) to take any similar action in the case of any other Service Provider or Participant, it being understood that any power or discretion conferred upon the the Partnership, the Board or the Committee (or any of its members) shall be treated as having been so conferred as to each Service Provider and Participant separately.

3.8Procedures. If the Committee is appointed, the Committee shall hold meetings, if any, at such times and places as it shall deem advisable, including by telephone conference. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. The Committee may also act by written consent.

3.9Payment of Taxes Due. The Committee may withhold or require payment of any amount it may determine to be necessary for federal, state, local or other taxes as a result of the exercise, grant or vesting of an Award. In connection therewith, the Partnership or any of its Affiliates shall have the right to withhold from any compensation or other amount owing to a Participant, applicable withholding taxes with respect to any issuance or transfer under the Plan and to take such action as may be necessary or advisable in the opinion of the Partnership to satisfy the payment of such withholding taxes. Additionally, the Committee may permit or require a Participant to sell, in a manner prescribed by the Committee, a sufficient number of Shares in connection with the settlement of an Award to cover applicable tax withholdings (with the sale proceeds going to the Partnership).

3.10Liability; Indemnification.

(a) To the maximum extent permitted by applicable law, the Board, the Committee, their respective members and any officer, employee delegate or other Person engaged pursuant to Section3.6shall not be liable for any action or determination made in good faith with respect to the Plan or any Award.

(b) To the maximum extent permitted by applicable law and to the extent not covered by insurance directly insuring such Person, each current or former (i) officer or employee of the Partnership or any of its Affiliates and (ii) member of the Committee or the Board shall be indemnified and held harmless by the Partnership against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such Person’s fraud or bad faith. Such indemnification shall be in addition to any rights of indemnification provided for under applicable law, the Partnership Agreement and the organizational documents of any of the Partnership’s Affiliates. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to him or her.

ARTICLE IVSHARE LIMITATIONS

4.1Shares.

(a) General Limitations.

(i)The aggregate number of Shares that may be issued or used for reference purposes or with respect to which Awards may be granted over the term of the Plan shall not exceed 31,704,545 Shares (subject to any increase or decrease pursuant to Section 4.2) of which all or any portion may be issued as Common Shares or Ares Operating Group Units. Notwithstanding the foregoing, the total number of Shares subject to the Plan shall be increased on the first day of each fiscal year beginning in calendar year 2015 by a number of Shares equal to the positive difference, if any, of (x) 15% of the aggregate number of Common Shares and Ares Operating Group Units outstanding on the last day of the immediately preceding fiscal year (excluding Ares Operating Group Units held by the Partnership or its wholly-owned subsidiaries) minus (y) the aggregate number of Shares that were available for the issuance of future Awards under the Plan on such last day of the immediately preceding fiscal year, unless the Committee should decide to increase the number of Shares covered by the Plan by a lesser amount on any such date. Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Partnership or any of its Affiliates or any entity acquired by the Partnership or with which the Partnership merges, consolidates or otherwise combines. The number of Shares underlying such substitute awards shall be counted against the aggregate number of Shares available for Awards under the Plan.

(ii)If any Appreciation Award expires, terminates or is canceled for any reason without having been exercised in full, the number of Shares underlying any unexercised portion shall again be available under the Plan. If Other Share-Based Awards that are not Appreciation Awards are forfeited for any reason, the number of forfeited Shares comprising or underlying the Award shall again be available under the Plan.

(iii)The number of Shares available under the Plan shall be reduced by (A) the total number of Appreciation Awards that have been exercised, regardless of whether any of the Shares underlying such Awards are not actually issued to the Participant as the result of a net exercise or settlement, and (B) all Shares used to pay any exercise price or tax withholding obligation with respect to any Award. In addition, the Partnership may not use the cash proceeds it receives from Option exercises to repurchase Shares on the open market for reuse under the Plan. Notwithstanding anything to the contrary herein, Awards that may be settled solely in cash shall not be deemed to use any Shares under the Plan.

(iv)Unless the Committee determines otherwise, Common Shares delivered by the Partnership or any of its Affiliates upon exchange of Ares Operating Group Units that have been issued under the Plan shall be deemed issued under the Plan.

4.2Changes.

(a) The existence of the Plan and the Awards shall not affect in any way the right or power of the Board or the shareholders of the Partnership to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Partnership’s capital structure, equity interests or its business, (ii) any merger or consolidation of the Partnership or any of its Affiliates, (iii) any issuance of bonds, debentures, preferred or prior preference equity interests senior to or otherwise affecting the Shares, (iv) the dissolution or liquidation of the Partnership or any of its Affiliates, (v) any sale or transfer of all or part of the assets or business of the Partnership or any of its Affiliates, or (vi) any Section 4.2 Event.

(b) Subject to the provisions of Section 4.2(d), in the event of any change in the capital structure, equity interests or business of the Partnership by reason of any share split, reverse split, distribution of equity interests, combination or reclassification of Shares, recapitalization, merger, consolidation, spin off, reorganization or partial or complete liquidation, issuance of rights to purchase Shares or other equity interests convertible into Shares, sale or transfer of all or part of the Partnership’s assets or business, or other transaction or event that would be considered an “equity restructuring” within the meaning of FASB ASC Topic 718 (each, a “Section 4.2 Event”), then (i) the aggregate number or kind of Shares or other securities that thereafter may be issued under the Plan, (ii) the number or kind of Shares or other property (including cash) subject to an Award, or (iii) the purchase or exercise price of Awards shall be adjusted by the Committee as the Committee determines, in good faith, to be necessary or advisable to prevent substantial dilution or enlargement of the rights of Participants under the Plan. In connection with any Section 4.2 Event, the Committee may provide for the cancellation of outstanding Awards and payment in cash or other property in exchange therefor. In addition, subject to Section 4.2(d), in the event of any change in the capital structure or equity interests of the Partnership that is not a Section 4.2 Event (an “Other Extraordinary Event”), then the Committee may (but shall not be obligated to) make the adjustments described in clauses (i), (ii) and (iii) above as it determines, in good faith, to be necessary or advisable to prevent substantial dilution or enlargement of the rights of Participants under the Plan. Notice of any such adjustment shall be given by the Committee, or otherwise made available, to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is provided) shall be binding for all purposes of the Plan. Except as expressly provided in this Section 4.2(b) or in an applicable Award agreement, a Participant shall have no rights by reason of any Section 4.2 Event or any Other Extraordinary Event. Notwithstanding the foregoing, (x) any adjustments made pursuant to Section 4.2(b) to Awards that are considered “non-qualified deferred compensation” within the meaning of Section 409A shall be made in a manner intending to comply with the requirements of Section 409A; and (y) any adjustments made pursuant to Section 4.2(b) to Awards that are not considered “non-qualified deferred compensation” subject to Section 409A shall be made in a manner intending that after such adjustment, the Awards either (A) continue not to be subject to Section 409A or (B) comply with the requirements of Section 409A.

(c) Fractional Shares resulting from any adjustment in Awards pursuant to Section4.2(a) or (b)shall be aggregated until, and eliminated at, the time of exercise by rounding down fractions to the nearest whole Share. Unless otherwise determined by the Committee, no cash settlements shall be made with respect to fractional Shares eliminated by rounding.

(d) Upon the occurrence of an Acquisition Event, the Committee may terminate all outstanding and unexercised Options or any Other Share-Based Award that provides for a Participant-elected exercise (collectively, “Exercisable Awards”), effective as of the date of the Acquisition Event, by delivering notice of termination to each Participant at least 20 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of such Exercisable Awards that are then outstanding to the extent vested on the date such notice of termination is given (or, at the discretion of the Committee, without regard to any limitations on exercisability otherwise contained in the Award agreements), but any such exercise shall be contingent on the occurrence of the Acquisition Event, and if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void and the applicable provisions of Section4.2(b)and Article IX shall apply. For the avoidance of doubt, in the event of an Acquisition Event, the Committee may terminate any Exercisable Award for which the exercise price is equal to or exceeds the Fair Market Value on the date of the Acquisition Event without payment of consideration therefor. If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards pursuant to this Section4.2(d), then the provisions of Section4.2(b)and Article IX shall apply.

ARTICLE VELIGIBILITY

5.1General Eligibility. All current and prospective Service Providers and current Non-Employee Directors, are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee. Notwithstanding anything herein to the contrary, no Award under which a Participant may receive Shares may be granted to a Service Provider or Non-Employee Director of any Affiliate of the Partnership if such Shares do not constitute “service recipient stock” for purposes of Section 409A of the Code with respect to such Service Provider or Non-Employee Director if such Shares are required to constitute “service recipient stock” for such Award to comply with, or be exempt from, Section 409A of the Code.

5.2General Requirement. The grant of Awards to a prospective Service Provider and the vesting and exercise of such Awards shall be conditioned upon such Person actually becoming a Service Provider; provided that no Award may be granted to a prospective Service Provider unless the Partnership determines that the Award will comply with applicable laws, including the securities laws of all relevant jurisdictions. Awards may be awarded in consideration for past services actually rendered to the Partnership or any of its Affiliates.

ARTICLE VIOPTIONS

6.1Options. The Committee shall have the authority to grant Options to any Service Provider or Non-Employee Director.

6.2Terms of Options. Options shall be subject to the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a) Exercise Price. The exercise price per Share subject to an Option shall be determined by the Committee on or before the date of grant, provided that the per Share exercise price of an Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant.

(b) Option Term. The term of each Option shall be fixed by the Committee, provided that no Option shall be exercisable more than ten years after the date such Option is granted.

(c) Exercisability. Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant.

(d) Method of Exercise. To the extent vested, an Option may be exercised in whole or in part at any time during the Option’s term, by giving written notice of exercise to the Committee (or its designee) specifying the number of Shares to be purchased. Such notice shall be in a form acceptable to the Committee and shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Partnership; or (ii) on such other terms and conditions as may be acceptable to the Committee (including the relinquishment of Options or by payment in full or in part in the form of Shares owned by the Participant (for which the Participant has good title free and clear of any liens and encumbrances)). No Shares shall be issued until payment therefor, as provided herein, has been made or provided for.

(e) Termination by Death or Disability. Unless otherwise determined by the Committee at grant, if a Participant’s Termination is by reason of death or Disability, allOptions that are held by such Participant that are vested and exercisable on the date of the Participant’s Termination may be exercised by the Participant (or, in the case of death, by the legal representative of the Participant’s estate) at any time within a period of 180 days after the date of such Termination, but in no event beyond the expiration of the stated term of such Options.

(f) Involuntary Termination Without Cause or for Good Reason. Unless otherwise determined by the Committee, if a Participant’s Termination is by involuntary termination without Cause or by the Participant for Good Reason, all Options that are held by such Participant that are vested and exercisable on the date of the Participant’s Termination may be exercised by the Participant at any time within a period of 180 days after the date of such Termination, but in no event beyond the expiration of the stated term of such Options.

(g) Termination for Cause; Voluntary Terminationwithout Good Reason. Unless otherwise determined by the Committee, if a Participant’s Termination (i) is for Cause, or (ii) is voluntary and without Good Reason, all Options that are held by such Participant that are vested and exercisable on the date of the Participant’s Termination may be exercised by the Participant at any time within a period of 30 days after the date of such Termination, but in no event beyond the expiration of the stated term of such Options.

(h) Unvested Options. Unless otherwise determined by the Committee, Options that are not vested as of the date of a Participant’s Termination for any reason shall terminate and expire on the date of such Termination.

(i) Form, Modification, Extension and Renewal of Options. Options may be evidenced by such form of agreement as is approved by the Committee. The Committee may (i) modify, extend or renew outstanding Options (provided that (A) the rights of a Participant are not substantially impaired without his or her consent and (B) such action does not subject the Options to Section 409A or otherwise extend the Options beyond their stated term), and (ii) accept the surrender of outstanding Options and authorize the granting of new Options in substitution therefor. Notwithstanding anything herein to the contrary, an outstanding Option may not be modified to reduce the exercise price thereof nor may a new Option at a lower price be substituted for a surrendered Option (other than adjustments or substitutions in accordance with Section 4.2), unless such action is approved in accordance with applicable securities exchange rules.

(j) No Reload Options. Options shall not provide for the grant of the same number of Options as the number of Shares used to pay for the exercise price of Options or Shares used to pay withholding taxes (i.e., “reloads”).

ARTICLE VIIOTHER SHARE-BASED AWARDS

7.1Other Awards. The Committee is authorized to grant Other Share-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, including phantom restricted units, phantom restricted shares, restricted Shares, Shares awarded purely as a bonus and not subject to any restrictions or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Partnership or any of its Affiliates, unit appreciation rights, share appreciation rights, unit equivalent awards, share equivalent awards, deferred restricted units, and deferred restricted shares valued by reference to book value of Shares.

The Committee shall have authority to determine the Participants, to whom, and the time or times at which, Other Share-Based Awards shall be made, the number of Shares to be awarded pursuant to such Awards, and all other terms and conditions of the Awards.

7.2Terms and Conditions. Other Share-Based Awards made pursuant to this Article VII shall be subject to the following terms and conditions:

(a) Distributions. The Committee shall determine to what extent, and under what conditions, the Participant shall have the right to receive distributions with respect to Shares covered by Other Share-Based Awards.

(b) Vesting. Other Share-Based Awards and any underlying Shares shall vest or be forfeited to the extent set forth in the applicable Award agreement or as otherwise determined by the Committee. The Committee may, at or after grant, accelerate the vesting of all or any part of any Other Share-Based Award.

(c) Payment. Following the vesting of the Other Share-Based Awards, Shares or, as determined by the Committee, the cash equivalent of such Shares shall be delivered to the Service Provider or Non-Employee Director, or his legal representative, in an amount equal to such individual’s earned Other Share-Based Award. Notwithstanding the foregoing, the Committee may subject the payment of all or part of any Other Share-Based Award to additional vesting, forfeiture and deferral conditions as it deems appropriate.

(d) Termination. Upon a Participant’s Termination for any reason prior to the vesting of the Other Share-Based Awards, all unvested Awards will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant, or, if no rights of a Participant are substantially impaired, thereafter.

ARTICLE VIIITRANSFERABILITY

8.1Non-Transferability of Awards. No Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Options shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine that an Option that otherwise is not Transferable pursuant to this section is Transferable to a Family Member in whole or in part. An Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be Transferred subsequently other than by will or by the laws of descent and distribution and (ii) remains subject to the terms of the Plan and the applicable Award agreement.

8.2Non-Transferability of Other Share-Based Awards. Unless otherwise determined by the Committee, no Other Share-Based Award shall be Transferable by the Participant other than by will or by the laws of descent and distribution.

8.3No Assignment of Benefits. Except as otherwise specifically provided in the Plan or permitted by the Committee, no Award or other benefit payable under the Plan shall be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be available for or subject to the debts, contracts, liabilities, engagements or torts of any Person entitled to such benefit, nor shall it be subject to attachment or legal process for or against such Person.

8.4Death/Disability. The Committee may require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary or advisable to establish the validity of the Transfer of an Award. The Committee also may require that the transferee agree to be bound by all of the terms and conditions of the Plan.

ARTICLE IXCHANGE IN CONTROL PROVISIONS

In the event of a Change in Control of the Partnership, except as otherwise provided by the Committee in an Award agreement or otherwise in writing, a Participant’s unvested Award shall not vest and a Participant’s Award shall be treated in accordance with one of the following methods as determined by the Committee:

(a) Awards, whether or not then vested, may be continued, assumed, have new rights substituted therefor or be treated in accordance with Section4.2(d), and Awards may, where appropriate in the discretion of the Committee, receive the same distribution as other Shares on such terms as determined by the Committee; provided that, the Committee may decide to award additional Awards in lieu of any cash distribution.

(b) Awards may be purchased by the Partnership or any of its Affiliates for an amount of cash equal to the Change in Control Price (as defined below) per Share covered by such Awards, less, in the case of an Appreciation Award, the exercise price per Share covered by such Award. The “Change in Control Price” means the price per Share paid in the Change in Control transaction, subject to adjustment as determined by the Committee for any contingent purchase price, escrow obligations, indemnification obligations or other adjustments to the purchase price after the consummation of such Change in Control.

(c) Appreciation Awards may be cancelled without payment therefor, if the Change in Control Price is less than the exercise price per Share of such Appreciation Awards.

Notwithstanding anything else herein, the Committee may provide for accelerated vesting or lapse of restrictions, of an Award at any time.

ARTICLE XTERMINATION OR AMENDMENT OF PLAN

Notwithstanding any other provision of the Plan, the Board or the Committee (to the extent permitted by law), may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary or advisable to ensure that the Partnership may comply with any regulatory requirement referred to in Article XII or Section 409A), or suspend or terminate it entirely, retroactively or otherwise; provided that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be substantially impaired without the consent of such Participant.

The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively; provided that no such amendment substantially impairs the rights of any Participant without the Participant’s consent. Actions taken by the Committee in accordance with Article IV shall be deemed to not substantially impair the rights of any Participant.

Notwithstanding anything herein to the contrary, the Board or the Committee may amend the Plan or any Award at any time without any Participant’s consent to comply with Section 409A or any other applicable law. 

ARTICLE XIUNFUNDED PLAN

The Plan is an “unfunded” plan for incentive and deferred compensation. With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Partnership, nothing contained herein shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Partnership.

ARTICLE XIIGENERAL PROVISIONS

12.1Legend. The Committee may require each Person receiving Shares pursuant to an Award to represent to and agree with the Partnership in writing that the Participant is acquiring the Shares without a view to distribution thereof and such other securities law related representations as the Committee shall request. In addition to any legend required by the Plan, the certificates or book entry accounts for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer.

All Shares delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed or any national automated quotation system on which the Shares are then quoted, any applicable Federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If necessary or advisable in order to prevent a violation of applicable securities laws then, notwithstanding anything herein to the contrary, any Share-settled Awards shall be paid in cash in an amount equal to the Fair Market Value on the date of settlement of such Awards.

12.2Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements; and such arrangements may be either generally applicable or applicable only in specific cases.

12.3No Right to Service/Directorship. Neither the Plan nor the grant of any Award thereunder shall give any Participant or other Person any right to employment, service, consultancy or directorship by the Partnership or any Affiliate, or limit in any way the right of the Partnership or any of its Affiliates to terminate any Participant’s employment, service, consultancy or directorship at any time.

12.4Listing and Other Conditions. If at any time counsel to the Partnership shall be of the opinion that any offer or sale of Shares pursuant to an Award is or may be unlawful or prohibited, or will or may result in the imposition of excise taxes on the Partnership or any of its Affiliates, under the statutes, rules or regulations of any applicable jurisdiction or under the rules of the national securities exchange on which the Common Shares then are listed, the Partnership shall have no obligation to make such offer or sale, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to the Shares or Awards, and the right to exercise any Option or Exercisable Award shall be suspended until, in the opinion of said counsel, such offer or sale shall be lawful, permitted or will not result in the imposition of excise taxes on the Partnership or any of its Affiliates.

12.5Governing Law. The Plan and matters arising under or related to it shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to its principles of conflicts of laws.

12.6Construction. 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 any Award 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 Plan 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 Plan; (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.

12.7Other Benefits. No Award, whether at grant or payment, shall be deemed compensation for purposes of computing benefits under any retirement plan of the Partnership or any of its Affiliates or shall affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation, unless expressly provided to the contrary in such benefit plan.

12.8Costs. The Partnership shall bear all expenses associated with administering the Plan, including expenses of issuing Shares pursuant to any Awards.

12.9No Right to Same Benefits. The provisions of Awards need not be the same with respect to each Participant, and each Award to an individual Participant need not be the same.

12.10Section 16(b) of the Exchange Act. All elections and transactions under the Plan by persons subject to Section 16 of the Exchange Act involving Shares are intended to comply with any applicable exemptive condition under Rule 16b-3. The Board may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or advisable for the administration and operation of the Plan and the transaction of business thereunder.

12.11Section 409A. Although the Partnership does not guarantee to a Participant the particular tax treatment of any Award, all Awards are intended to comply with, or be exempt from, the requirements of Section 409A and the Plan and any Award agreement shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award constitutes “non-qualified deferred compensation” pursuant to Section 409A (a “Section 409A Covered Award”), it is intended to be paid in a manner that will comply with Section 409A. In no event shall the Partnership be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A or for any damages for failing to comply with Section 409A. Notwithstanding anything in the Plan or in an Award to the contrary, the following provisions shall apply to Section 409A Covered Awards:

(a) A Termination of Services shall not be deemed to have occurred for purposes of any provision of a Section 409A Covered Award providing for payment upon or following a termination of the Participant’s services to the Partnership unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of a Section 409A Covered Award, references to a “termination,” “termination of employment” or like terms shall mean separation from service. For purposes of determining a service recipient or employer in connection with a “separation from service” under the Plan within the meaning of Section 409A and in accordance with Section 1.409A-1(h)(3) of the Treasury Regulations, in the application of Sections 1563(a)(1), (2) and (3) of the Code to determine the controlled group under Section 414(b) of the Code, “at least 20 percent” shall replace “at least 80 percent” in every place it appears in Sections 1563(a)(1), (2) and (3) of the Code and, in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 20 percent” shall replace “at least 80 percent” in every place it appears in Section 1.414(c)-2 of the Treasury Regulations. Notwithstanding any provision to the contrary in the Plan or the Award, to the extent applicable, if the Participant is deemed on the date of the Participant’s Termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the Partnership from time to time, or if none, the default methodology set forth in Section 409A, then with regard to any such payment under a Section 409A Covered Award, to the extent required to be delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier of (i) the expiration of the six-month period measured from the date of the Participant’s separation from service, and (ii) the date of the Participant’s death.

(b) With respect to any payment pursuant to a Section 409A Covered Award that is triggered upon a Change in Control, unless otherwise provided in the Award agreement at grant, the settlement of such Award shall not occur until the earliest of (i) the Change in Control if such Change in Control constitutes a “change in the ownership of the corporation,” a “change in effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Section 409A(a)(2)(A)(v) of the Code, (ii) the date such Award otherwise would be settled pursuant to the terms of the applicable Award agreement and (iii) the Participant’s “separation from service” within the meaning of Section 409A, subject to Section 12.11(a).

(c) For purposes of Section 409A, a Participant’s right to receive any installment payments under the Plan or pursuant to an Award shall be treated as a right to receive a series of separate and distinct payments.

(d) Whenever a payment under the Plan or pursuant to an Award specifies a payment period with reference to a number of days (e.g., “payment shall be made within 30 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Partnership.

12.12Successor and Assigns. The Plan shall be binding on all successors and permitted assigns of a Participant, including the estate of such Participant and the executor, administrator or trustee of such estate.

12.13Severability of Provisions. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

12.14Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Partnership, its Affiliates and their employees, agents and representatives with respect thereto.

12.15Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

12.16Recoupment. All Awards granted or other compensation paid by the Partnership under the Plan, including any Shares issued under any Award thereunder, will be subject to any compensation recapture policies established by the Board or the Committee from time to time, as well as any such policies required pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, other applicable law or the rules of any national securities exchange on which the Shares are then traded.

12.17Reformation. If any provision set forth in the Plan or an Award agreement is found by any court of competent jurisdiction or arbitrator to be invalid, void or unenforceable or to be excessively broad as to duration, activity, geographic application or subject, such provision or provisions shall be construed, by limiting or reducing them to the extent legally permitted, so as to be enforceable to the maximum extent compatible with then applicable law.

12.18Electronic Communications. Notwithstanding anything else herein to the contrary, any Award agreement, notice of exercise of an Exercisable Award, or other document or notice required or permitted by the Plan or an Award that is required to be delivered in writing may, to the extent determined by the Committee, be delivered and accepted electronically. Signatures also may be electronic unless otherwise determined by the Committee.

12.19Agreement. As a condition to the grant of an Award, if requested by the Partnership and the lead underwriter of any public offering of the Shares (the “Lead Underwriter”), a Participant shall irrevocably agree not to Transfer, grant any option to purchase, otherwise transfer the economic risk of ownership in, make any short sale of, or contract to do any of the foregoing with respect to, any interest in any Shares or any securities convertible into, derivative of, or exchangeable or exercisable for Shares, or any other rights to purchase or acquire Shares during such period of time as the Lead Underwriter shall specify (the “Lock-up Period”). The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Partnership may impose stop-transfer instructions with respect to Shares acquired pursuant to an Award until the end of such Lock-up Period.

ARTICLE XIIITERM OF PLAN

No Award shall be granted on or after the tenth anniversary of the Effective Date, provided that Awards granted prior to such tenth anniversary may extend beyond that date in accordance with the terms of the Plan.

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3211/17956-002 CURRENT/96545253v3

EX-10.6

THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT

THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT (the “Agreement”), entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Effective Date”), by and among the Issuer (as defined below), each Ares Operating Group Entity (as defined below), each AOG TopCo Entity (as defined below), each AOG IntermediateCo Entity (as defined below), the Issuer General Partner (as defined below) and each Ares Operating Group Limited Partner (as defined below) from time to time party to this Agreement.

WHEREAS, certain of the parties to this Agreement entered into the Exchange Agreement, dated as of May 1, 2014 (the “Original Agreement”), to provide for the exchange of certain Ares Operating Group Units (as defined below) for Common Shares (as defined below), on the terms and subject to the conditions set forth therein;

WHEREAS, effective as of August 4, 2015, (a) Ares Holdings TopCo (as defined below) contributed its interests in Ares Holdings LP (as defined below) to its subsidiary, Ares Holdings IntermediateCo (as defined below), (b) Ares Domestic Holdings, Inc., a Delaware corporation (“Ares Domestic TopCo”), contributed its interests in Ares Domestic Holdings L.P., a Delaware limited partnership (“Ares Domestic LP”), to its subsidiary, ADH Holdco LLC, a Delaware limited liability company (“Ares Domestic IntermediateCo”), (c) Ares Offshore TopCo (as defined below) contributed its interests in Ares Offshore LP (as defined below) to its subsidiary, Ares Offshore IntermediateCo (as defined below), (d) Issuer contributed its interests in Ares Investments LP (as defined below) to its subsidiary, Ares Investments IntermediateCo (as defined below), and (e) Ares Real Estate Holdings LLC, a Delaware limited liability company (“Ares Real Estate TopCo”), contributed its interests in Ares Real Estate Holdings L.P., a Delaware limited partnership (“Ares Real Estate LP”), to its subsidiary, AREH Holdco LLC, a Delaware limited liability company (“Ares Real Estate IntermediateCo”);

WHEREAS, effective as of July 1, 2016, (a) Ares Domestic TopCo merged with and into Ares Holdings TopCo, with Ares Holdings TopCo continuing as the surviving entity, (b) Ares Domestic IntermediateCo, a Delaware limited liability company, merged with and into Ares Holdings IntermediateCo, with Ares Holdings IntermediateCo continuing as the surviving entity, (c) Ares Domestic LP merged with and into Ares Holdings LP, with Ares Holdings LP continuing as the surviving entity, (d) Ares Real Estate TopCo distributed 100% of its interests in Ares Real Estate IntermediateCo to Issuer in liquidation, (e) Ares Real Estate IntermediateCo merged with and into Ares Investments IntermediateCo, with Ares Investments IntermediateCo continuing as the surviving entity, and (f) Ares Real Estate LP merged with and into Ares Investments LP, with Ares Investments LP continuing as the surviving entity;

WHEREAS, effective as of April 3, 2017, (a) the Issuer contributed 0.8% of its interest in Ares Investments IntermediateCo to Ares Holdings TopCo, (b) the Issuer contributed 99.2% of its interest in Ares Investments IntermediateCo to Ares Investments TopCo (as defined below) and (c) Ares Holdings TopCo contributed its 0.8% interest in Ares Investments IntermediateCo to Ares Investments TopCo;

WHEREAS, effective as of the Effective Date, the Issuer has elected to be classified as an association taxable as a corporation for U.S. federal income tax purposes pursuant to Treasury Regulation Section 301.7701-3(c);

WHEREAS, the right to exchange Ares Operating Group Units set forth in Section 2.1 below, once exercised, represents a several, and not a joint and several, obligation of the Ares Operating Group Entities (on a pro rata basis), and no Ares Operating Group Entity shall have any obligation or right to acquire Ares Operating Group Units issued by another Ares Operating Group Entity; and

WHEREAS, the parties hereto now desire to amend and restate the Original Agreement as hereinafter set forth.

NOW, THEREFORE, the parties to this Agreement hereby agree as follows:

Article IDEFINITIONS

1.1Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

“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.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“Alleghany” means Alleghany Insurance Holdings LLC, a Delaware limited liability company.

“AOG IntermediateCo Entity” means each of (i) Ares Holdings IntermediateCo, (ii) Ares Offshore IntermediateCo, (iii) Ares Investments IntermediateCo and (iv) any future entity designated by the Issuer General Partner in its discretion as an AOG IntermediateCo Entity for purposes of this Agreement.

“AOG TopCo Entity” means each of (i) Ares Holdings TopCo, (ii) Ares Offshore TopCo (iii) Ares Investments TopCo, and (iv) any future entity designated by the Issuer General Partner in its discretion as an AOG TopCo Entity for purposes of this Agreement.

“Ares Entity Parties” means, collectively, the Issuer, the Issuer General Partner, Ares Holdings TopCo, Ares Offshore TopCo, Ares Investments TopCo, Ares Holdings IntermediateCo, Ares Offshore IntermediateCo, Ares Investments IntermediateCo and each of the Ares Operating Group Entities.

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

“Ares Holdings LP Agreement” means the limited partnership agreement of Ares Holdings.

“Ares Holdings IntermediateCo” means Ares Holdco LLC, a Delaware limited liability company and the general partner of Ares Holdings, or any successor general partner thereof.

“Ares Holdings TopCo” means Ares Holdings Inc., a Delaware corporation and the sole member of Ares Holdings IntermediateCo, or any successor sole member thereof.

“Ares Holdings Units” means the units of limited partnership interest of Ares Holdings issued under the Ares Holdings LP Agreement.

“Ares Investments” means Ares Investments L.P., a Delaware limited partnership.

“Ares Investments LP Agreement” means the limited partnership agreement of Ares Investments.

“Ares Investments IntermediateCo” means AI Holdco LLC, a Delaware limited liability company and the general partner of Ares Investments, or any successor general partner thereof.

“Ares Investments TopCo” means Ares AI Holdings L.P., a Delaware limited partnership and the sole member of Ares Investments IntermediateCo, or any successor sole member thereof.

“Ares Investments Units” means the units of limited partnership interest of Ares Investments issued under the Ares Investments LP Agreement.

“Ares Offshore” means Ares Offshore Holdings L.P., a Cayman Islands exempted limited partnership.

“Ares Offshore LP Agreement” means the limited partnership agreement of Ares Offshore.

“Ares Offshore IntermediateCo” means AOF Holdco LLC, a Delaware limited liability company and the general partner of Ares Offshore, or any successor general partner thereof.

“Ares Offshore TopCo” means Ares Offshore Holdings, Ltd., a Cayman Islands exempted company and the sole member of Ares Offshore IntermediateCo, or any successor sole member thereof.

“Ares Offshore Units” means the units of limited partnership interest of Ares Offshore issued under the Ares Offshore LP Agreement.

“Ares Operating Group Entities” means, collectively, Ares Holdings, Ares Investments and Ares Offshore.

“Ares Operating Group Limited Partner” means each of Ares Owners, Alleghany and each other Person that becomes a limited partner of the Ares Operating Group Entities, including through a Redemption and Exchange Transaction.

“Ares Operating Group Partnership Agreements” means, collectively, the Ares Holdings LP Agreement, the Ares Investments LP Agreement and the Ares Offshore LP Agreement.

“Ares Operating Group Unit” means, collectively, one Ares Holdings Unit, one Ares Investments Unit and one Ares Offshore Unit.

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

“Ares Owners Partnership Agreement” means the Agreement of Limited Partnership of Ares Owners.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close.

“Change of Control” means (a) the occurrence of any Person, other than a Person approved by the current Issuer General Partner, becoming the general partner of the Issuer; or (b) during any period of two consecutive years, Continuing Directors cease for any reason to constitute a majority of the directors serving on the Issuer General Partner’s board of directors. For purposes of this definition, “Continuing Director” means any director of the Issuer General Partner (i) serving on the Issuer General Partner’s board of directors at the beginning of the relevant period of two consecutive years referred to in the immediately preceding sentence, (ii) appointed or elected to the Issuer General Partner’s board of directors by the members of the Issuer General Partner or (iii) whose appointment or election to the Issuer General Partner’s board of directors by such board, or nomination for election to the Issuer General Partner’s board of directors by the limited partners of the Issuer, was approved by a majority of the directors of the Issuer General Partner then still serving at the time of such approval who were so serving at the beginning of the relevant period of two consecutive years, were so appointed or elected by the members of the Issuer General Partner or whose appointment or election or nomination for election was so approved.

“Charity” means any organization that is organized and operated for a purpose described in Section 170(c) of the Code (determined without reference to Section 170(c)(2)(A) of the Code) and described in Sections 2055(a) and 2522 of the Code.

“Code” means the Internal Revenue Code of 1986.

“Co-Founder” means each of Michael Arougheti, David Kaplan, John Kissick, Antony Ressler and Bennett Rosenthal.

“Common Share” means a limited partner interest in the Issuer representing a fractional part of the limited partner interests in the Issuer having the rights and obligations specified with respect to Common Shares in the Issuer Partnership 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.

“Current Market Price” has the meaning set forth in the Issuer Partnership Agreement; provided that, with respect to each Ares Operating Group Limited Partner other than Alleghany, if, in connection with any Exchange, an Ares Entity Party adopts procedures relating to the sales of Common Shares acquired by Ares Operating Group Limited Partners (including by engaging or directing an agent or broker to effect sales on behalf of such Persons), “Current Market Price” shall mean the average price per Common Share received by such exchanging Ares Operating Group Limited Partners, as reasonably determined by the Issuer.

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Exchange” means an Issuer Exchange or an OG Exchange.

“Exchange Counterparty” means (a) in the case of an Issuer Exchange, the Issuer and (b) in the case of an OG Exchange, the Ares Operating Group Entities, collectively.

“Exchange Rate” means the number of Common Shares for which an Ares Operating Group Unit is entitled to be exchanged. On the Effective Date, the Exchange Rate shall be 1 for 1, which Exchange Rate shall be subject to modification only as provided in Section 2.4.

“IPO” means the initial public offering and sale of common units, as contemplated by the Issuer’s Registration Statement on Form S-1 (File No. 333-194919).

“Issuer” means Ares Management, L.P., a Delaware limited partnership.

“Issuer Exchange” has the meaning set forth in Section 2.1(a)(i) of this Agreement.

“Issuer General Partner” means Ares Management GP LLC, a Delaware limited liability company and the general partner of the Issuer, or any successor general partner of the Issuer.

“Issuer Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated as of March 1, 2018.

“JAMS” has the meaning set forth in Section 3.9(a) of this Agreement.

“Liens” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever.

“OG Exchange” has the meaning set forth in Section 2.1(a)(ii) of this Agreement.

“Other Exchange Date” means any date, other than a Quarterly Exchange Date, on which any Person is entitled to request that such Person’s Ares Operating Group Units (including Ares Operating Group Units held, directly or indirectly, through another entity) be redeemed by an Ares Entity Party or any Affiliate thereof in a Redemption and Exchange Transaction pursuant to an agreement with such Ares Entity Party or any Affiliate thereof.

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

“Permitted Transferee” has the meaning set forth in Section 3.1 of this Agreement.

“Quarter” means, unless the context requires otherwise, a fiscal quarter of the Issuer.

“Quarterly Exchange Date” means, for each Quarter, unless the Issuer cancels such Quarterly Exchange Date pursuant to Section 2.7 hereof, the date that is the latest to occur of: (i) the second Business Day after the date on which the Issuer makes a public news release of its quarterly earnings for the prior Quarter, (ii) the first day of such Quarter on which directors and executive officers of the Issuer General Partner are permitted to trade under the applicable polices of the Issuer relating to trading by directors and executive officers or (iii) such other date as the Issuer shall determine in its sole discretion; provided that with respect to clause (iii), the Issuer shall provide the Ares Operating Group Limited Partners with reasonable notice of such date. At least 75 days prior to each Quarterly Exchange Date, the Issuer will provide notice thereof to each Ares Operating Group Limited Partner eligible to Exchange Ares Operating Group Units for Common Shares on such Quarterly Exchange Date.

“Redemption and Exchange Transaction” means (a) any “Redemption and Exchange Transaction” as defined in the Ares Owners Partnership Agreement and (b) any other similar transaction as defined in any agreement with any Ares Entity Party or Affiliate thereof.

“Sale Transaction” has the meaning set forth in Section 2.7 of this Agreement.

“Securities Act” has the meaning set forth in Section 2.3(a) of this Agreement.

“Transfer Agent” means such bank, trust company or other Person as shall be appointed from time to time by the Issuer pursuant to the Issuer Partnership Agreement to act as registrar and transfer agent for the Common Shares.

1.2Interpretation.

(a)Unless a clear contrary intention appears: (i) the defined terms in this Agreement 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 this 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 this 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 this 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.

(b)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

ARTICLE II
EXCHANGE OF ARES OPERATING GROUP UNITS

2.1Exchange of Ares Operating Group Units.

(a)Subject to adjustment as provided in this Article II and to the provisions of the Ares Operating Group Partnership Agreements, the Issuer Partnership Agreement and the Ares Owners Partnership Agreement, each Ares Operating Group Limited Partner shall be entitled, on any Quarterly Exchange Date or Other Exchange Date, to Exchange Ares Operating Group Units held by such Ares Operating Group Limited Partner as follows:

(i)For the purpose of making a gratuitous transfer to any Charity or otherwise with the consent of the Issuer, an Ares Operating Group Limited Partner may surrender Ares Operating Group Units to the Issuer in exchange for the delivery by the Issuer of a number of Common Units equal to the product of the number of Ares Operating Group Units surrendered multiplied by the Exchange Rate (such exchange, a “Issuer Exchange”); or

(ii)An Ares Operating Group Limited Partner may surrender Ares Operating Group Units to the Ares Operating Group Entities in exchange for the delivery by such Ares Operating Group Entities of a number of Common Shares, in the aggregate, equal to the product of such number of Ares Operating Group Units surrendered multiplied by the Exchange Rate (such exchange, an “OG Exchange”).

Notwithstanding anything to the contrary in this Agreement, in lieu of delivering Common Shares with respect to any Ares Operating Group Units subject to an Exchange, the Exchange Counterparty may, in its sole discretion, elect to deliver cash equal to the Current Market Price of the Common Shares that would otherwise be delivered in such Exchange.

(b)Subject to adjustment as provided in this Article II and to the provisions of the Ares Operating Group Partnership Agreements and the Issuer Partnership Agreement, Alleghany shall be entitled at any time to Exchange all or any of its Ares Operating Group Units for Common Shares.

(c)Notwithstanding anything to the contrary herein, upon the occurrence of a Dissolution Event (as defined in the Ares Operating Group Partnership Agreements) with respect to any Ares Operating Group Entity, each Ares Operating Group Limited Partner shall be entitled, upon the terms and subject to the conditions hereof, to elect to Exchange Ares Operating Group Units for Common Shares; provided, that any such Exchange pursuant to this sentence shall be effective immediately prior to the effectiveness of the applicable dissolution of such Ares Operating Group Entity (and, for the avoidance of doubt, shall not be effective if such dissolution is not effective).

(d)Upon surrender of Ares Operating Group Units for Exchange, all rights of the exchanging Ares Operating Group Limited Partner as holder of such Ares Operating Group Units shall cease, and, unless the Exchange Counterparty elects to deliver cash to such exchanging Ares Operating Group Limited Partner in lieu of consummating an Exchange, such exchanging Ares Operating Group Limited Partner (or designated Charity) shall be treated for all purposes as having become the Record Holder (as defined in the Issuer Partnership Agreement) of such Common Shares and shall be admitted as a Limited Partner (as defined in the Issuer Partnership Agreement) of the Issuer in accordance and upon compliance with Section 10.2 of the Issuer Partnership Agreement. If the Exchange Counterparty elects to deliver cash to such exchanging Ares Operating Group Limited Partner in lieu of consummating an Exchange, such Ares Operating Group Limited Partner shall continue to own all Ares Operating Group Units subject to the Exchange, and shall still be treated as an Ares Operating Group Limited Partner with respect to such Ares Operating Group Units for all purposes under the relevant Ares Operating Group Partnership Agreements, until the Exchange Counterparty delivers such amount of cash to such Ares Operating Group Limited Partner.

(e)Where an Ares Operating Group Limited Partner has exercised its right to effect an OG Exchange, the AOG IntermediateCo Entities, or, in each case, their respective designees, shall have a superseding right to acquire interests in their respective Ares Operating Group Entities for (i) an amount of Common Shares equal to the amount of Common Shares that would be received pursuant to such Exchange or (ii) an amount of cash equal to the Current Market Price of the Common Shares that would otherwise be delivered in such Exchange.

(f)The number of Common Shares (or the amount of cash in lieu thereof) delivered to each exchanging Ares Operating Group Limited Partner in an OG Exchange by each of the Ares Operating Group Entities or pursuant to Section 2.1(e) shall be determined based on the relative fair market values of each of the Ares Operating Group Entities.

2.2Exchange Procedures.

(a)An Ares Operating Group Limited Partner may exercise the right to exchange Ares Operating Group Units by providing a written notice of exchange at least 60 days prior to the applicable Quarterly Exchange Date or Other Exchange Date (or if such Ares Operating Group Limited Partner or a partner in Ares Owners may deliver notice of a Redemption and Exchange Transaction no later than five Business Days prior to such Redemption and Exchange Transaction (including pursuant to Section 10.3(c)(iii) of the Ares Owners Partnership Agreement), at least three days prior to the applicable Quarterly Exchange Date or Other Exchange Date) to the Exchanging Counterparty substantially in the form of Exhibit A or Exhibit B hereto, as applicable, duly executed by such holder or such holder’s duly authorized attorney in respect of the Ares Operating Group Units to be exchanged, in each case, delivered during normal business hours at the principal executive offices of the Exchange Counterparty; provided that Ares Owners may exercise any such right, and deliver any such written notice, with respect to Ares Operating Group Units to be transferred to one or more partners of Ares Owners.

(b)As promptly as practicable following the surrender for exchange of the Ares Operating Group Units in the manner provided in this Article II, unless the Exchange Counterparty elects to deliver cash to such exchanging Ares Operating Group Limited Partner in lieu of consummating an Exchange, the Exchange Counterparty shall deliver or cause to be delivered at the offices of the then-acting Transfer Agent or, if there is no then-acting Transfer Agent, at the principal executive offices of the Issuer, the number of Common Shares issuable upon such Exchange, registered in the name of such exchanging Ares Operating Group Limited Partner, or its nominee. If the Common Shares are settled through the facilities of The Depository Trust Company, the Exchange Counterparty will, subject to Section 2.2(c) below, upon the written instruction of the exchanging Ares Operating Group Limited Partner deliver the Common Shares deliverable to such exchanging Ares Operating Group Limited Partner, through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such exchanging Ares Operating Group Limited Partner. The Issuer General Partner and the Issuer shall take such actions as may be required to ensure the performance by the Ares Operating Group Entities of their respective obligations under this Article II, including causing the issuance and sale of Common Shares to or for the account of the Ares Operating Group Entities in exchange for the delivery to the Issuer of a number of Ares Operating Group Units that is equal to the number of Ares Operating Group Units surrendered by an exchanging Ares Operating Group Limited Partner.

(c)The Ares Operating Group Entities, on the one hand, and each exchanging Ares Operating Group Limited Partner, on the other hand, shall bear their own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated, except that the Ares Operating Group Entities shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any such Exchange; provided that if any Common Shares are to be delivered in a name other than that of the exchanging Ares Operating Group Limited Partner that requested such Exchange (other than in the name of The Depository Trust Company or its nominee), then such Ares Operating Group Limited Partner or the Person in whose name such Common Shares are to be delivered shall pay to the Ares Operating Group Entities the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of the Ares Operating Group Entities that such tax has been paid or is not payable.

(d)The Ares Operating Group Entities may adopt reasonable procedures for the implementation of the exchange, sale or redemption provisions set forth in this Article II, including procedures for the giving of notice of an election for exchange. An Ares Operating Group Limited Partner may not revoke a notice of exchange delivered pursuant to Section 2.2(a) above without the consent of the Exchange Counterparty which consent may be provided or withheld, or made subject to such conditions, limitations or restrictions, as determined by the Exchange Counterparty in its sole discretion. Nothing in this Agreement shall obligate the Exchange Counterparty to treat any Ares Operating Group Limited Partners alike, whether or not such Ares Operating Group Limited Partners are similarly situated, and the exercise of any power or discretion by the Exchange Counterparty in the case of any Ares Operating Group Limited Partner shall not create any obligation on the part of the Issuer or the Issuer General Partner to take any similar action in the case of any other Ares Operating Group Limited Partner, it being understood that any power or discretion conferred upon the Exchange Counterparty shall be treated as having been so conferred as to each Ares Operating Group Limited Partner separately.

2.3Limitations on Exchanges. Notwithstanding anything to the contrary, an Ares Operating Group Limited Partner shall not be entitled to Exchange Ares Operating Group Units and the Exchange Counterparty shall have the right to refuse to honor any request for Exchange of Ares Operating Group Units, at any time or during any period if the Exchange Counterparty shall reasonably and in good faith determine that such Exchange:

(a)would be prohibited by law or regulation (including the unavailability of any requisite registration statement filed under the Securities Act of 1933 (the “Securities Act”) or any exemption from the registration requirements thereunder),

(b)would cause the Issuer to violate Section 4.7 of the Issuer Limited Partnership Agreement, or

(c)would otherwise not be permitted under any other agreements with the Issuer, any of its subsidiaries or Ares Owners to which such exchanging Ares Operating Group Limited Partner may be party (including the Ares Operating Group Partnership Agreements, the Ares Owners Partnership Agreement and any applicable registration rights agreements) or any written policies of the Issuer related to unlawful or inappropriate trading applicable to its directors, board observers, officers or other personnel.

2.4Splits, Distributions and Reclassifications. The Exchange Rate shall be adjusted accordingly if there is: (a) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Ares Operating Group Units that is not accompanied by an identical subdivision or combination of the Common Shares; or (b) any subdivision (by any share split, share distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse share split, reclassification, reorganization, recapitalization or otherwise) of the Common Shares that is not accompanied by an identical subdivision or combination of the Ares Operating Group Units. If there is any reclassification, reorganization, recapitalization or other similar transaction in which the Common Shares are converted or changed into another security, securities or other property, then upon any Exchange, an exchanging Ares Operating Group Limited Partner shall be entitled to receive the amount of such security, securities or other property that such exchanging Ares Operating Group Limited Partner would have received if such Exchange had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. Except as may be required in the immediately preceding sentence, no adjustments in respect of distributions shall be made upon the Exchange of any Ares Operating Group Unit.

2.5Common Shares to be Issued.

(a)The Issuer and the Ares Operating Group Entities covenant that all Common Shares issued upon an Exchange will be validly issued and shall be transferred free and clear of any Liens, other than restrictions provided in the Issuer Partnership Agreement or pursuant to the Securities Act or any applicable state securities laws. Nothing contained in this Agreement shall be construed to preclude the Issuer or Ares Operating Group Entities from satisfying their obligations in respect of the exchange of the Ares Operating Group Units by delivery of Common Shares which are held in the treasury of the Issuer or the Ares Operating Group Entities or any of their respective subsidiaries.

(b)The Issuer and the Ares Operating Group Entities covenant and agree that, if a registration statement under the Securities Act is effective and available for Common Shares to be delivered with respect to any Exchange, Common Shares that have been registered under the Securities Act shall be delivered in respect of such Exchange. If any Exchange in accordance with this Agreement is to be effected at a time when any required registration has not become effective or otherwise is unavailable, upon the request and with the reasonable cooperation of the exchanging Ares Operating Group Limited Partners requesting such Exchange, the Issuer and the Ares Operating Group Entities shall use commercially reasonable efforts to promptly facilitate such Exchange pursuant to any reasonably available exemption from such registration requirements. The Issuer shall use commercially reasonable efforts to list the Common Shares required to be delivered upon Exchange prior to such delivery upon each national securities exchange or inter-dealer quotation system upon which the outstanding Common Shares may be listed or traded at the time of such delivery.

(c)Common Shares issued upon an Exchange may contain such legends regarding restrictions under the Securities Act or any applicable state securities laws as the Issuer General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.

2.6Acquisition and Disposition of Common Shares. An Ares Operating Group Limited Partner (other than Alleghany or any other Ares Operating Group Limited Partner as the Issuer may determine from time to time) requesting an Exchange under this Agreement covenants, upon request of the Issuer, (a) to use reasonable best efforts to sell or otherwise dispose of any Common Shares received in such an Exchange within 10 days of the receipt thereof or any other specified period as the Issuer General Partner may determine from time to time, including by cooperating with any Ares Entity Party that effects (or directs a third party to effect) such sales of Common Shares on behalf of such exchanging Ares Operating Group Limited Partner, whether via brokered sales, “block-trades”, SEC-registered sales, program based sales, “prop desk” sales or otherwise, and (b) that no other Common Shares are held by such Ares Operating Group Limited Partner, such Ares Operating Group Limited Partner’s spouse, or any entity disregarded as an entity separate from such Ares Operating Group Limited Partner or such Ares Operating Group Limited Partner’s spouse for U.S. federal income tax purposes, at the time such Ares Operating Group Limited Partner gives notice of such Exchange pursuant to this Agreement or will be acquired by any such Person from such time through the sale or disposition described in clause (a). If the Issuer makes a request pursuant to the foregoing sentence, any Ares Operating Group Limited Partner (other than Alleghany) still holding any Common Shares on the last day of such period shall cause all such Common Shares to be transferred immediately to a partnership, trust or other entity (other than an entity disregarded as an entity separate from its parent for U.S. federal income tax purposes), including, at the Issuer’s request, to Ares Owners or other Person designated by the Issuer. The Issuer acknowledges that one or more events, such as an underwriter cutback, the unavailability of a registration, the possession of material non-public information, or general market dislocation, may affect the timing of a proposed sale or disposition following an exchange.

2.7Subsequent Offerings. The Issuer may from time to time cancel any Quarterly Exchange Date in a fiscal year and in lieu thereof, and in connection with one or more offerings of Common Shares, provide the opportunity for Ares Operating Group Limited Partners to sell their Ares Operating Group Units to the Issuer, the Ares Operating Group Entities or any of their respective subsidiaries in the same fiscal year (a “Sale Transaction”) for a cash amount per Ares Operating Group Unit equal to the net cash proceeds per Common Share, as reasonably determined by the Issuer, received pursuant to any such offerings of Common Shares. An Ares Operating Group Limited Partner selling Ares Operating Group Units in connection with a Sale Transaction must provide notice to the Issuer at least 30 days prior to the cash settlement of such Sale Transaction in respect of the Ares Operating Group Units to be sold, in each case delivered during normal business hours at the principal executive offices of the Issuer. For the avoidance of doubt, the total aggregate number of Quarterly Exchange Dates and Sale Transactions occurring during any fiscal year of the Issuer shall not exceed four.

2.8Waiting Period. The consummation of any Exchange pursuant to this Agreement shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

ARTICLE IIIGENERAL PROVISIONS

3.1Additional Ares Operating Group Limited Partners. If an Ares Operating Group Limited Partner validly transfers any or all of such holder’s Ares Operating Group Units to another Person in a transaction in accordance with, and not in contravention of, the Ares Operating Group Partnership Agreements or any other agreement or agreements with the Issuer or any of its subsidiaries to which a transferring Ares Operating Group Limited Partner may be party, then such transferee (each, a “Permitted Transferee”) shall have the right to execute and deliver a joinder to this Agreement, substantially in the form of Exhibit C hereto, whereupon such Permitted Transferee shall become an Ares Operating Group Limited Partner hereunder. If the Ares Operating Group Entities issue Ares Operating Group Units in the future, the Ares Operating Group Entities shall be entitled, in their sole discretion, to make any holder of such Ares Operating Group Units an Ares Operating Group Limited Partner hereunder through such holder’s execution and delivery of a joinder to this Agreement, substantially in the form of Exhibit C hereto.

3.2Amendment.

(a)The provisions of this Agreement may be amended by the affirmative vote or written consent of the Ares Operating Group Entities and the Issuer and, after a Change of Control, the holders of at least a majority of the Percentage Interests (as such term is defined in the Ares Operating Group Partnership Agreements) of the Ares Operating Group Units (excluding Ares Operating Group Units held by the Issuer or any direct or indirect wholly owned subsidiary thereof); provided that any amendment of this Agreement that is materially adverse to Alleghany, Ares Owners or any Co-Founder (or its affiliates) shall not be effective with respect to Alleghany, Ares Owners or such Co-Founder (or its affiliates), as the case may be, unless the prior written consent of Alleghany, Ares Owners or such Co-Founder (or its affiliates), as the case may be, has been obtained.

(b)Each Ares Operating Group Limited Partner hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or written consent of less than all of the Ares Operating Group Limited Partners, such action may be so taken upon the concurrence of less than all of the Ares Operating Group Limited Partners and each Ares Operating Group Limited Partner shall be bound by the results of such action.

3.3Addresses and Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be as specified in a notice given in accordance with this Section 3.3):

(a)If to any Ares Entity Party, to:

2000 Avenue of the Stars
12^th Floor
Los Angeles, CA 90067
Attention:     General Counsel, with a copy to        Global Head of Tax
Fax: (310) 201-4141
Electronic Mail: list_exchangenotice@aresmgmt.com

(b)If to any Ares Operating Group Limited Partner, to:

2000 Avenue of the Stars
12^th Floor
Los Angeles, CA 90067
Attention:     General Counsel, with a copy to        Global Head of TaxFax: (310) 201-4141Electronic Mail: list_exchangenotice@aresmgmt.com

The Issuer General Partner shall forward any such communication to the applicable Ares Operating Group Limited Partner’s address, email address or facsimile number as shown in the books and records of the Ares Operating Group Entities.

3.4Further Action. The parties shall execute and deliver all documents (including tax forms), provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, in each case, as may be requested by the Issuer or any Ares Operating Group Entity, including executing such sale, purchase or redemption agreements as may be reasonably requested by an Ares Entity Party to effect the transactions contemplated herein.

3.5Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any estate, trust, partnership or limited liability company or other similar entity of which any such Person is a trustee, partner, member or similar party which is or becomes a party hereto.

3.6Governing Law; Separability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict-of-law principles. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under applicable law, such invalidity or unenforceability shall not invalidate the entire Agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

3.7Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements and understandings between the parties with respect to such subject matter. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. Each party hereto agrees, represents, and warrants that (a) each such party hereto and such party’s independent counsel have reviewed this Agreement; and (b) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

3.8Waiver. Any provision of this Agreement may be waived if, and only if, such waiver is in writing and signed by the party or parties against whom the waiver is to be effective. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition. Nothing in this Agreement shall obligate the Issuer or any Ares Operating Group Entity to treat any Ares Operating Group Limited Partners alike, whether or not such Ares Operating Group Limited Partners are similarly situated, and the exercise of any power or discretion by the Issuer or any Ares Operating Group Entity in the case of any one Ares Operating Group Limited Partner shall not create any obligation on the part of the Issuer or any Ares Operating Group Entity to take any similar action in the case of any other Ares Operating Group Limited Partner, it being understood that any power or discretion conferred upon the Issuer or any Ares Operating Group Entity shall be treated as having been so conferred as to each Ares Operating Group Limited Partner separately.

3.9Dispute 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, including the determination of the scope or applicability of this agreement to arbitrate, will, to the fullest extent permitted by law, be determined by final, binding and confidential arbitration in Los Angeles, California, before one arbitrator, conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor. Disputes shall be resolved in accordance with the Federal Arbitration Act, 9 U.S.C. §§1–16, and JAMS’ Comprehensive 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. 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 but not limited to 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 conflict between this provision and any provision in the applicable rules of JAMS, the provisions of this Agreement will prevail.

(b)The parties agree that (i) irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof, (ii) the provisions of Section 3.9(a) shall not preclude any party from obtaining provisional relief, including injunctive relief, from a court of appropriate jurisdiction to protect its rights under this Agreement, and (iii) the parties shall be entitled to seek an injunction to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions thereof in accordance with the provisions of this Section 3.9(b), in addition to any other remedy to which they are entitled at law or in equity. No party seeking relief under this Section 3.9(b) shall be required to post a bond or prove special damages. Each party agrees and consents to personal jurisdiction, service of process and venue in any federal or state court within the State of California, County of Los Angeles, in connection with any action brought in connection with a request for any such provisional or injunctive relief, and in connection with any action to enforce this arbitration clause or an award in arbitration and agrees not to assert, by way of motion, as a defense or otherwise, that any action brought in any such court should be dismissed on grounds of forum non conveniens. Each party to this Agreement consents to mailing of process or other papers in connection with any such arbitration or action by certified mail.

3.10Counterparts. This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which shall be an original and all of which together shall constitute a single instrument.

3.11Tax Treatment. If this Agreement imposes obligations upon a particular Ares Operating Group Entity, this Agreement shall be treated as part of the relevant Ares Operating Group Partnership Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations. The parties shall report for U.S. federal and applicable state income tax purposes any OG Exchange consummated hereunder as a taxable sale of Ares Operating Group Units in such Ares Operating Group Entities by an Ares Operating Group Limited Partner to their respective AOG TopCo Entity. No party shall take a contrary position with respect to the tax treatment described in this Section 3.11 on any income tax return, amendment thereof or communication with a taxing authority.

3.12Independent Nature of Holdings Unitholders’ Rights and Obligations. The obligations of each Ares Operating Group Limited Partner hereunder are several and not joint with the obligations of any other Ares Operating Group Limited Partner, and no Ares Operating Group Limited Partner shall be responsible in any way for the performance of the obligations of any other Ares Operating Group Limited Partner hereunder. The decision of each Ares Operating Group Limited Partner to enter into to this Agreement has been made by such Ares Operating Group Limited Partner independently of any other Ares Operating Group Limited Partner. Nothing contained herein, and no action taken by any Ares Operating Group Limited Partner pursuant hereto, shall be deemed to constitute the Ares Operating Group Limited Partners as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Ares Operating Group Limited Partners are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby and the Issuer acknowledges that the Ares Operating Group Limited Partners are not acting in concert or as a group, and the Issuer will not assert any such claim, with respect to such obligations or the transactions contemplated hereby.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered as of the date first set forth above.

ARES HOLDINGS INC.

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

ARES HOLDCO LLC

By: Ares Holdings Inc.,
its Sole Member

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

ARES HOLDINGS L.P.

By: Ares Holdco LLC,its General Partner

By: Ares Holdings Inc.,
its Sole Member

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

ARES AI HOLDINGS L.P.

By: Ares Management, L.P.,
its General Partner

By: Ares Management GP LLC,

its General Partner

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

AI HOLDCO LLC

By: Ares AI Holdings L.P.,
its Sole Member

By: Ares Management, L.P.,
its General Partner

By: Ares Management GP LLC,

its General Partner

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

ARES INVESTMENTS L.P.

By: AI Holdco LLC,

its General Partner

By: Ares AI Holdings L.P.,
its Sole Member

By: Ares Management, L.P.,
its General Partner

By: Ares Management GP LLC,

its General Partner

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

ARES OFFSHORE HOLDINGS L.P.

By: AOF Holdco LLC
its General Partner

By: Ares Offshore Holdings, Ltd.,

its Sole Member

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

AOF HOLDCO LLC

By: Ares Offshore Holdings, Ltd.,
its Sole Member

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

ARES OFFSHORE HOLDINGS, LTD.

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Officer

ARES MANAGEMENT GP LLC

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

ARES MANAGEMENT, L.P.

By: Ares Management GP LLC,

its General Partner

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

ARES OWNERS HOLDINGS L.P.

By: Ares Partners Holdco LLC

By:    /s/ Michael D. Weiner    Name: Michael D. Weiner    Title: Authorized Person

ALLEGHANY INSURANCE HOLDINGS LLC

By:    /s/ John L. Sennott, Jr.    Name: John L. Sennott, Jr.    Title: Vice Chairman and Senior Vice President

EXHIBIT A

[FORM OF]

NOTICE OF ISSUER EXCHANGE

Ares Management, L.P.

2000 Avenue of the Stars
12^th Floor
Los Angeles, CA 90067
Attention: General Counsel
Fax: (310) 201-4141
Electronic Mail: list_exchangenotice@aresmgmt.com

Reference is hereby made to the Third Amended and Restated Exchange Agreement, entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Exchange Agreement”), among Ares Holdings Inc., Ares Holdco LLC, Ares Holdings L.P., Ares Investments L.P., AI Holdco LLC, Ares AI Holdings L.P. Ares Management, L.P., Ares Management GP LLC, Ares Offshore Holdings L.P., AOF Holdco LLC, Ares Offshore Holdings, Ltd. and each Ares Operating Group Limited Partner (as defined in the Exchange Agreement) from time to time party to the Exchange Agreement, as amended from time to time. Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.

The undersigned Ares Operating Group Limited Partner desires to exchange the number of Ares Operating Group Units set forth below in the form of a Issuer Exchange to be issued as set forth below.

Legal Name of Ares Operating Group Limited Partner:

Address:

Number of Ares Operating Group Units to be exchanged: The undersigned hereby represents and warrants that (i) the undersigned has full legal capacity to execute and deliver this Notice of Exchange and to perform the undersigned’s obligations hereunder; (ii) this Notice of Exchange has been duly executed and delivered by the undersigned; (iii) the Ares Operating Group Units subject to this Notice of Exchange will be transferred to the Issuer free and clear of any Liens, other than restrictions provided in the Ares Operating Group Partnership Agreement or pursuant to the Securities Act or any applicable state securities laws; and (iv) no consent, approval, authorization, order, registration or qualification of any third party or with any court or governmental agency or body having jurisdiction over the undersigned or the Ares Operating Group Units subject to this Notice of Exchange is required to be obtained by the undersigned for the transfer of such Ares Operating Group Units to the Issuer.

The undersigned hereby irrevocably constitutes and appoints any officer of each Ares Entity Party as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, to do any and all things and to take any and all actions that may be necessary to exchange the Ares Operating Group Units subject to this Notice of Exchange on the books of the Ares Operating Group Entities for Common Shares on the books of the Issuer.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has caused this Notice of Exchange to be executed and delivered by the undersigned or by its duly authorized attorney as of ________________________________.

Name:

EXHIBIT B

[FORM OF]

NOTICE OF OG EXCHANGE

Ares Management, L.P.
Ares Holdings L.P.Ares Investments L.P.

2000 Avenue of the Stars
12^th Floor
Los Angeles, CA 90067
Attention: General Counsel
Fax: (310) 201-4141Electronic Mail: list_exchangenotice@aresmgmt.com

Reference is hereby made to the Third Amended and Restated Exchange Agreement, entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Exchange Agreement”), among Ares Holdings Inc., Ares Holdco LLC, Ares Holdings L.P., Ares Investments L.P., AI Holdco LLC, Ares AI Holdings L.P., Ares Management, L.P., Ares Management GP LLC, Ares Offshore Holdings L.P., AOF Holdco LLC, Ares Offshore Holdings, Ltd. and each Ares Operating Group Limited Partner (as defined in the Exchange Agreement) from time to time party to the Exchange Agreement, as amended from time to time. Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.

The undersigned Ares Operating Group Limited Partner desires to exchange the number of Ares Operating Group Units set forth below in the form of an OG Exchange to be issued in its name as set forth below.

Legal Name of Ares Operating Group Limited Partner:

Address:

Number of Ares Operating Group Units to be exchanged: The undersigned hereby represents and warrants that (i) the undersigned has full legal capacity to execute and deliver this Notice of Exchange and to perform the undersigned’s obligations hereunder; (ii) this Notice of Exchange has been duly executed and delivered by the undersigned; (iii) the Ares Operating Group Units subject to this Notice of Exchange will be transferred to the Ares Operating Group Entities free and clear of any Liens, other than restrictions provided in the Ares Operating Group Partnership Agreement or pursuant to the Securities Act or any applicable state securities laws; (iv)in the case of an Ares Operating Group Limited Partner (other than Alleghany), none of the undersigned, the undersigned’s spouse or any entity disregarded as an entity separate from the undersigned or the undersigned’s spouse for U.S. federal income tax purposes holds any Common Shares or will acquire any Common Shares from the date hereof through the sale or disposition of the Common Shares acquired in the Exchange in accordance with the Exchange Agreement; and (v) no consent, approval, authorization, order, registration or qualification of any third party or with any court or governmental agency or body having jurisdiction over the undersigned or the Ares Operating Group Units subject to this Notice of Exchange is required to be obtained by the undersigned for the transfer of such Ares Operating Group Units to the Ares Operating Group Entities.

The undersigned hereby irrevocably constitutes and appoints any officer of each Ares Entity Party as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, to do any and all things and to take any and all actions that may be necessary to exchange the Ares Operating Group Units subject to this Notice of Exchange on the books of the Ares Operating Group Entities for Common Shares on the books of the Issuer.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has caused this Notice of Exchange to be executed and delivered by the undersigned or by its duly authorized attorney as of ________________________________.

Name:

EXHIBIT C

[FORM OF]

JOINDER AGREEMENT

This Joinder Agreement (“Joinder Agreement”) is a joinder to the Third Amended and Restated Exchange Agreement, entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Agreement”), among Ares Holdings Inc., Ares Holdco LLC, Ares Holdings L.P., Ares Investments L.P., AI Holdco LLC, Ares AI Holdings L.P., Ares Management, L.P., Ares Management GP LLC, Ares Offshore Holdings L.P., AOF Holdco LLC, Ares Offshore Holdings, Ltd. and each Ares Operating Group Limited Partner (as defined in the Agreement) from time to time party to the Agreement, as amended from time to time. Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement. This Joinder Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to its conflict-of-law principles. If there is a conflict between this Joinder Agreement and the Agreement, the terms of this Joinder Agreement shall control.

The undersigned hereby joins and enters into the Agreement having acquired Ares Operating Group Units in the Ares Operating Group Entities. By signing and returning this Joinder Agreement to the Issuer and the Ares Operating Group Entities, the undersigned accepts and agrees to be bound by and subject to all of the terms and conditions of and agreements of an Ares Operating Group Limited Partner contained in the Agreement, with all attendant rights, duties and obligations of an Ares Operating Group Limited Partner thereunder. The parties to the Agreement shall treat the execution and delivery hereof by the undersigned as the execution and delivery of the Agreement by the undersigned and, upon receipt of this Joinder Agreement by the Issuer and by the Ares Operating Group Entities, the signature of the undersigned set forth below shall constitute a counterpart signature to the signature page of the Agreement.

 Name:     

Address for Notices:

Attention:

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be executed as of ________________________________.

Name:

EX-10.7

AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT

This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (the “Agreement”), entered into as of May 4, 2018 and effective as of March 1, 2018 (the “Effective Date”), is entered into by and among Ares Management, L.P., a Delaware limited Partnership (the “Parent”), Ares Holdings Inc., a Delaware corporation (“Holdings Inc.”), Ares Offshore Holdings Ltd., a Cayman Islands exempted company (“Offshore Holdings Ltd.”), Ares AI Holdings L.P., a Delaware limited partnership (“AI Holdings” and together with the Parent, Holdings, Inc. and Offshore Holdings Ltd., the “AOG Topco Entities”), Ares Holdings L.P., a Delaware limited partnership (“Ares Holdings”), Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Investments L.P., (“Ares Investments” and together with Ares Holdings, Ares Offshore and all other Persons (as defined herein) in which the AOG Topco Entities acquire a partnership interest or similar interest after the Effective Date and who execute and deliver a joinder contemplated in Section 7.12, the “Partnerships”), Ares Owners Holdings L.P., a Delaware limited partnership (“AOH”), Alleghany Insurance Holdings LLC, a Delaware limited liability company (“Alleghany”) and each of the parties set forth on Schedule A hereto (the “Limited Partners” and together with AOH and Alleghany, the “TRA Holders”).

RECITALS

WHEREAS, TRA Holders directly or indirectly, hold limited partnership interests in each of the Partnerships (“Partnership Units”), and each of the Partnerships is classified as a partnership for U.S. federal income tax purposes;

WHEREAS, as of the Effective Date, each AOG Topco Entity or its direct or indirect Subsidiary is the general partner of the Partnership in which such AOG Topco Entity owns an interest;

WHEREAS, pursuant to and subject to the provisions of the Exchange Agreement (as defined below), TRA Holders are entitled to surrender Partnership Units to the Partnerships in exchange for the delivery by the Partnerships of Common Shares, cash or other consideration and the general partners of the Partnerships have a superseding right to acquire such Partnership Units for Common Shares, cash or other consideration;

WHEREAS, each of the Partnerships will, and certain of their direct and indirect Subsidiaries that are treated as partnerships for U.S. federal income tax purposes may, have in effect an election under Section 754 of the Code, for each Taxable Year in which a taxable exchange of Partnership Units for Common Shares, cash or other consideration occurs, which election is intended to result in an adjustment to the tax basis of the assets owned by the Partnerships at the time of such an exchange of Partnership Units for Common Shares, cash or other consideration (collectively, an “Exchange”, the date of such Exchange, the “Exchange Date”, and such assets and any asset whose tax basis is determined, in whole or in part, by reference to the adjusted basis of any such asset, the “Reference Assets”) by reason of such Exchange and the receipt of payments under this Agreement;

WHEREAS, the income, gain, loss, expense and other Tax items of (i) the Partnerships solely with respect to the AOG Topco Entities may be affected by the Basis Adjustment (defined below) and (ii) the AOG Topco Entities may be affected by the Imputed Interest (as defined below);

1202/11826-104 current/40988668v22

WHEREAS, certain of the parties to this Agreement entered into the Tax Receivables Agreement, dated as of May 1, 2014 (the “Original Agreement”), to make certain arrangements with respect to the effect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of the AOG Topco Entities;

WHEREAS, effective as of the Effective Date, the Parent has elected to be classified as an association taxable as a corporation for U.S. federal income tax purposes pursuant to Treasury Regulation Section 301.7701-3(c) (the “Tax Election”);

WHEREAS, the parties hereto now desire to amend and restate the Original Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE IDEFINITIONS

Section 1.01.Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings.

“Advisory Firm” means Proskauer Rose LLP, other advisors as indicated by the General Partner or any other accounting firm or law firm that is nationally recognized as being expert in Tax matters and that is designated as such by the Board.

“Advisory Firm Letter” means a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided or made available by the AOG Topco Entities to TRA Holders or the Principals, as the case may be, and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date such schedule, notice or other information is delivered or made available to the TRA Holders or the Principals, as the case may be.

“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 Schedule” is defined in Section 2.04(b) of this Agreement.

“AOG Topco Entities” is defined in the Preamble of this Agreement.

“AOG Topco Entity Return” means the U.S. federal, state or local or foreign Tax Return, as applicable, of each of the Holdcos filed with respect to Taxes of any Taxable Year.

“AOH” is defined in the preamble of this Agreement.

“AOH Partnership Agreement” means the limited partnership agreement of AOH.

“AOH Units” means limited partnership interests in AOH.

“Ares Group” means, collectively, the AOG Topco Entities, the Partnerships and any other entity designated by the Board as being a member of the Ares Group.

“Ares Holdco” means Ares Partners Holdco LLC, a Delaware limited liability company.

“Bankruptcy Code” means The Bankruptcy Reform Act of 1978, codified as 11 U.S.C. Section 101 et seq.

“Basis Adjustment” means the adjustment to the tax basis of a Reference Asset under Sections 1012, 732, 734(b), 743(b) and 754 of the Code and, in each case, comparable sections of U.S. state and local and foreign tax laws (as calculated under Section 2.01 of this Agreement) as a result of an Exchange and the payments made pursuant to this Agreement. In the case of an interest in a Partnership that owns a Reference Asset and that has been the subject of an Exchange, if at any time after such Exchange, the interest is transferred to (i) an AOG Topco Entity or (ii) any entity that is owned directly or indirectly in whole or in part by an AOG Topco Entity or that is a member of an affiliated or consolidated group of corporations described in Section 7.11(b) that includes an AOG Topco Entity, the Basis Adjustment for such Reference Asset shall include, to the extent reasonably determined to be appropriate by such AOG Topco Entity, any adjustment to the tax basis of the Reference Asset under Sections 1012, 732, 734(b), 743(b) and 754 of the Code and, in each case, comparable sections of U.S. state and local and foreign tax laws (as calculated under Section 2.01 of this Agreement) as a result of such transfer to the extent such adjustment does not exceed the unamortized Basis Adjustment for the Reference Asset as determined immediately before such transfer. 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 separately for each such Exchange and without regard to any Pre-Exchange Transfer of such Partnership Units and as if any such Pre-Exchange Transfer had not occurred.

A “Beneficial Owner” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security or (ii) investment power, which includes the power to dispose, or to direct the disposition of, such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“Board” means the board of directors of the General Partner.

“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the U.S. government or the State of New York shall not be regarded as a Business Day.

“Change of Control” means the occurrence of any of the following events:

(i) any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, excluding a group of Persons, which, if it includes any Principal or any of its Affiliates, includes all Principals then employed by the Parent or any of its Affiliates, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Parent representing more than 50% of the combined voting power of the Parent’s then outstanding voting securities;

(ii) Ares Holdco no longer has the right to appoint the members of the Board;

(iii) there is consummated a merger or consolidation of the Parent or any direct or indirect subsidiary of the Parent with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation Ares Holdco no longer has the right to appoint the members of the Board; or

(iv) the shareholders of the Parent approve a plan of complete liquidation or dissolution of the Parent or there is consummated an agreement or series of related agreements for the sale or other disposition, directly, or indirectly, by the Parent of all or substantially all of the Parent’s assets, other than such sale or other disposition by the Parent of all or substantially all of the Parent’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Parent in substantially the same proportions as their ownership of the Parent immediately prior to such sale.

Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii) above, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of the Parent immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Parent immediately following such transaction or series of transactions.

“Code” means the Internal Revenue Code of 1986.

“Common Shares” means Common Shares of the Parent, as defined in the partnership agreement of Parent.

“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” has the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of U.S. state and local and foreign tax law, as applicable, or any other event (including the execution of an IRS Form 870-AD (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment)) 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 Objection Notice” is defined in Section 4.02 of this Agreement.

“Early Termination Schedule” 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) the Agreed Rate.

“Exchange” means defined in the Recitals of this Agreement.

“Exchange Agreement” means the Third Amended and Restated Exchange Agreement among the AOG Topco Entities, the Partnerships and the other parties thereto.

“Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.

“Exchange Date” is defined in the Recitals of this Agreement.

“Exchange Payment” means any Tax Benefit Payment or Early Termination Payment required to be made by an AOG Topco Entity to the TRA Holders under this Agreement.

“Exchange Price” is the amount of cash, Common Shares or other consideration transferred to a holder of Partnership Units pursuant to an Exchange as payment for the exchanged Partnership Units, other than amounts payable pursuant to this Agreement.

“Expert” is defined in Section 7.09 of this Agreement.

“General Partner” means Ares Management GP, LLC or any successor general partner of Parent.

“Holdcos” means, collectively, each of the AOG Topco Entities and any other entity designated as a Holdco by the Board.

“Imputed Interest” means any interest imputed under Section 1272, 1274, 483 or other provision of the Code and any similar provision of state, local and foreign tax law with respect to payment obligations under this Agreement.

“IRS” means the U.S. Internal Revenue Service.

“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).

“Limited Partner” is defined in the Recitals of this Agreement.

“Market Value” means the closing price of the Common Shares on the applicable Exchange Date on the national securities exchange or interdealer quotation system on which such Common Shares are then traded or listed (the “National Exchange”), as reported in the principal consolidated transaction reporting system of the National Exchange; provided that if the closing price is not so reported on the applicable Exchange Date, then the Market Value shall mean the closing price of the Common Shares on the Business Day immediately preceding such Exchange Date on the National Exchange, as reported in the principal consolidated transaction reporting system of the National Exchange; provided further, that if the Common Shares are not then listed on a national securities exchange or interdealer quotation system, “Market Value” shall mean the cash consideration paid for Common Shares, or the fair market value of the other property delivered for Common Shares, as determined by the General Partner in good faith.

“Net Tax Benefit” is defined in Section 3.01(b) of this Agreement.

“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 the Parent or any Partnership in which the Parent directly or indirectly owns an interest, but only with respect to Taxes imposed on such Partnership and allocable to the Parent, but using the Non-Stepped Up Tax Basis instead of the tax basis of the Reference Assets attributable to each Partnership and excluding any deduction attributable to the Imputed Interest.

“Objection Notice” is defined in Section 2.04(a) of this Agreement.

“Parent” is defined in the Recitals of this Agreement.

“Partnerships” is defined in the Recitals of this Agreement.

“Partnership Agreement” means, with respect to a Partnership, the limited partnership agreement or similar 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” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“Pre-Exchange Transfer” means any direct or indirect transfer of one or more Partnership Units (i) that occurs prior to an Exchange of such Partnership Units, and (ii) to which either Section 734(b) or 743(b) of the Code applies.

“Principals” means the Persons set forth on Schedule B hereto and any additional Persons who may from time to time be designated by the Board as Principals; provided that (i) unless the Parent determines otherwise, if any Principal is an employee of the Parent or one or more of its Subsidiaries or Affiliates as of the date of this Agreement or hereafter, such Person shall cease to be a Principal once such Person ceases to be an employee of the Parent or one or more of its Subsidiaries or Affiliates and (ii) a Person will be a Principal only with respect to the provisions of this Agreement, and subject to the limitations, set forth on Schedule B.

“Put Right” means a contractual right, pursuant to which a TRA Holder has the right, but not the obligation, to cause the Partnerships or their Affiliates to redeem all, or a portion of, such TRA Holder’s Partnership Units at a predetermined price.

“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 the Parent or any Partnership in which the Parent directly or indirectly owns an interest, but only with respect to Taxes imposed on such Partnership and allocable to the Parent, using the “with or without” methodology. If all or a portion of the actual tax liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any 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 the Parent or any Partnership in which the Parent directly or indirectly owns an interest, but only with respect to Taxes imposed on such Partnership and allocable to the Parent, over the Non-Stepped Up Tax Liability for such Taxable Year using the “with or without” methodology. If all or a portion of the actual tax liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“Reconciliation Dispute” is defined in Section 7.09 of this Agreement.

“Reconciliation Procedures” means those procedures set forth in Section 7.09 of this Agreement.

“Reference Assets” is defined in the Recitals of this Agreement.

“Schedule” means any Exchange Basis Schedule, Tax Benefit Schedule and the Early Termination Schedule.

“Subsequent Exchange” is defined in Section 4.01 of this Agreement.

“Subsidiaries” means, with respect to any Person, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting shares or other similar interests or the general partner interest, managing member interest 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 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 the 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.

“Taxing Authority” means 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.

“TRA Holder” is defined in the Recitals of this Agreement, and for the avoidance of doubt shall not include any direct or indirect holder of Partnership Units that is not a party to this Agreement.

“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” means, as of an Early Termination Date, with respect to the Parent, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, Parent will have taxable income sufficient to fully utilize the tax benefits 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 generated by the Basis Adjustment or the Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by the Parent on a pro rata basis from the date of the Early Termination Date through the scheduled expiration date of such loss carryovers, (4) any non-amortizable assets are deemed to be disposed of (A) with respect to 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, (y) if such expected liquidation date has passed, on the Early Termination Date and (z) if with respect to “evergreen” funds, after eighteen (18) months) 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 is effected prior to an Exchange of Partnership Units, the first sentence of Section 2.01 shall be read to include the cash, Common Shares or other consideration that would be transferred if the Exchange occurred on the Early Termination Date.

Section 1.02.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 this 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 this 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 this 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.

ARTICLE IIDETERMINATION OF REALIZED TAX BENEFIT

Section 2.01.Basis Adjustment. The AOG Topco Entities and the Partnerships, on the one hand, and the TRA Holders, on the other hand, acknowledge that, as a result of an Exchange, each AOG Topco Entity’s tax basis in the applicable Reference Assets shall be increased, if at all, as provided in the definition of Basis Adjustment. 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. The parties agree that (i) all Tax Benefit Payments attributable to the Basis Adjustments (other than amounts treated as interest under the Code) (A) will be treated as purchase price adjustments that result in additional Basis Adjustments to the Reference Assets for the AOG Topco Entities and (B) have the effect of creating additional Basis Adjustments to the Reference Assets for each of the AOG Topco Entities in the year such Tax Benefit Payments are made, and (ii) as a result, such additional Basis Adjustments will be included in computing the current year’s Tax Benefit Payment calculation and included in computing future years’ Tax Benefit Payment calculations, as appropriate. Determination of the portion of Tax Benefit Payments attributable to each of the AOG Topco Entities shall be made by the Parent in its reasonable discretion.

Section 2.02.Exchange Basis Schedule. Within 90 calendar days after the filing of the U.S. federal income tax return of the Parent for each Taxable Year in which any Exchange has been effected, the Parent shall deliver to the Principals, at any Principal’s request, a schedule (an “Exchange Basis Schedule”) that shows, in reasonable detail, for purposes of Taxes, (i) the actual unadjusted tax basis of the Reference Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to the Reference Assets as a result of the Exchanges effected in such Taxable Year, calculated in the aggregate and separately stated for each applicable TRA Holder, (iii) the period or periods, if any, over which the Reference Assets are amortizable or depreciable and (iv) the period or periods, if any, over which each Basis Adjustment is amortizable or depreciable (which, for non-amortizable assets shall be based on the Valuation Assumptions). For the avoidance of doubt, after a Principal has surrendered all of its Partnership Units under the Exchange Agreement, the Parent shall no longer be obligated to provide an Exchange Basis Schedule (other than an Amended Schedule or an Exchange Basis Schedule for any previous Taxable Year in which the Principal surrendered its Partnership Units under the Exchange Agreement) with respect to such Principal under this Section 2.02.

Section 2.03.Tax Benefit Schedule. Within 90 calendar days after the filing of the U.S. federal income tax return of the Parent for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Parent shall provide to the Principals, at any Principal’s request, a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year setting forth the Realized Tax Benefit or Realized Tax Detriment, as the case may be, for each TRA Holder (a “Tax Benefit Schedule”). The Schedule will become final as provided in Section 2.04(a) and may be amended as provided, and subject to the procedures set forth, in Section 2.04(b). For the avoidance of doubt, if a Principal has surrendered all of its Partnership Units under the Exchange Agreement and is no longer entitled to receive a Tax Benefit Payment under this Agreement, the Parent shall no longer be obligated to provide a Tax Benefit Schedule (other than an Amended Schedule or a Tax Benefit Schedule for any previous Taxable Year with respect to which the Principal received a Tax Benefit Payment) with respect to such Principal under this Section 2.03.

Section 2.04.Procedures, Amendments

(a)Procedure. Every time the Parent delivers to the Principals an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, the Parent shall also (x) deliver to the Principals schedules and work papers providing reasonable detail regarding the preparation of the Schedule and an Advisory Firm Letter supporting such Schedule and (y) allow the Principals reasonable access at no cost to the appropriate representatives at the Parent and the Advisory Firm in connection with a review of such Schedule. The applicable Schedule shall become final and binding on all parties unless a Principal, within 30 calendar days after receiving an Exchange Basis Schedule or amendment thereto or 30 calendar days after receiving a Tax Benefit Schedule or amendment thereto, provides the Parent with notice (an “Objection Notice”) of a material objection to such Schedule made in good faith; provided that only Principals (or their designees) shall have the right to object to any Schedule or Amended Schedule pursuant to this Section 2.04. If the parties, for any reason, are unable to successfully resolve the issues raised in such Objection Notice within 30 calendar days of receipt by the Parent of the Objection Notice, if with respect to an Exchange Basis Schedule, or 30 calendar days of receipt by the Parent of the Objection Notice, if with respect to a Tax Benefit Schedule, after such Schedule was delivered to the Principals, the Parent and such Principal shall employ the reconciliation procedures as described in Section 7.09 of this Agreement (the “Reconciliation Procedures”).

(b)Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by the Parent (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was made available to the Principals, (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 Tax 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”).

ARTICLE III
TAX BENEFIT PAYMENTS

Section 3.01.Payments

(a)Payments. Within five calendar days of a Tax Benefit Schedule (or any amendment thereto) becoming final in accordance with Section 2.04(a), the Parent or the applicable AOG Topco Entity, as determined by the Parent, shall pay to each applicable TRA Holder for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.01(b). The portion of such Tax Benefit Payment that is payable to a particular TRA Holder shall be determined by taking into account (A) in the case of an Exchange by a TRA Holder (other than pursuant to the exercise of a Put Right), the portion of such Tax Benefit Payment attributable tosuch TRA Holder’s Exchanges and (B) in the case of AOH, the portion of such Tax Benefit Payment attributable to an Exchange pursuant to the exercise of a Put Right or an Exchange by a holder of Partnership Units who is not a TRA Holder, in all cases, for such Taxable Year, relative to the aggregate Tax Benefit Payments attributable to all Exchanges for such Taxable Year, provided that such accounting shall be determined by the Parent in good faith and exercising reasonable discretion. Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to a bank account previously designated by the applicable TRA Holder. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including federal income tax payments. For the avoidance of doubt, no Tax Benefit Payment shall be made to any current or former holder of AOH Units or Partnership Units that is not a party to this Agreement. Notwithstanding anything herein to the contrary, in no event shall the Aggregate Tax Benefit Payments to any TRA Holder (other than amounts treated as interest under the Code) in respect of the Exchanges under this Agreement exceed an amount equal to 85% of the portion of the Exchange Price paid to such TRA Holder (or in the case of AOH, the Exchange Price paid to the holders of Partnership Units who are not party to this Agreement or the Exchange Price paid pursuant to the exercise of a Put Right, as applicable) pursuant to such Exchanges.

(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 Interest Amount. The “Net Tax Benefit” shall equal: (1) the Parent’s Realized Tax Benefit, if any, for a Taxable Year plus (2) the excess of the 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 the Parent’s Realized Tax Detriment (if any) for the current or any previous Taxable Year, minus (4) the excess of the 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 that (x) to the extent the amounts described in 3.01(b)(2), (3) and (4) 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 attributable to any other Taxable Year and (y) no TRA 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 the Parent’s Tax Return with respect to Taxes for such Taxable Year until the Payment Date. For the avoidance of doubt, the Net Tax Benefit shall be calculated based on the Parent’s consolidated taxable income pursuant to Section 7.11(b), but the Imputed Interest shall be calculated based on the portion of the Tax Benefit Payment attributable to the Realized Tax Benefit generated by each Partnership. 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 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 3.02.No Duplicative Payments. It is intended that the above provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that 85% of the Parent’s Realized Tax Benefit and Interest Amount is paid to the TRA Holders pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner so that such intentions are realized.

Section 3.03.Pro Rata Payments. For the avoidance of doubt, to the extent the Parent’s utilization of tax benefits with respect to a Basis Adjustment is limited in a particular Taxable Year, or the Parent lacks sufficient funds to satisfy its obligations to make all Tax Benefit Payments due in a particular taxable year, the limitation on such tax benefit shall be taken into account, or the Tax Benefit Payments shall be made, as the case may be, to each TRA Holder on a pro rata basis which reflects the proportion of the total amount of tax benefits attributable to such TRA Holder relative to the aggregate tax benefits for all of the TRA holders (as determined by the Parent in good faith and exercising reasonable discretion).

ARTICLE IVTERMINATION

Section 4.01.Early Termination and Breach of Agreement.

(a)The Parent may terminate this Agreement with respect to all of the Partnership Units held (or previously held and exchanged) by the TRA Holders, or indirectly held by holders of AOH Units, at any time by paying to the TRA Holders the Early Termination Payment; provided that (a) this Agreement shall only terminate upon the receipt of the Early Termination Payment by the TRA Holders, and (b) the Parent may withdraw any notice to execute its termination rights under this Section 4.01 prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payments by the Parent, the Parent shall not have any further payment obligations under this Agreement in respect of the TRA Holders, other than for any (a) Tax Benefit Payment agreed to by the Parent and the Principals 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 the Parent exercises its termination rights under this Section 4.01, no AOG Topco Entity shall have obligations under this Agreement with respect to such Exchange.

(b)If an AOG Topco Entity 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) 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 such AOG Topco Entity and any TRA Holders 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, if an AOG Topco Entity breaches this Agreement, the TRA 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 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; provided 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 if such payment is made 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 4.02.Early Termination Notice. If the Parent chooses to exercise its right of early termination under Section 4.01 above, the Parent shall deliver to the TRA Holders notice of such intention to exercise such right (“Early Termination Notice”) and shall deliver to the Principals a schedule (the “Early Termination Schedule”) specifying the Parent’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment. The applicable Early Termination Schedule shall become final and binding on all parties unless a Principal, within 30 calendar days after receiving the Early Termination Schedule thereto provides the Parent with notice (“Early Termination Objection Notice”) of a material objection to such Schedule made in good faith. If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by the Parent of the Early Termination Objection Notice, the Parent and a Principal shall employ the Reconciliation Procedures as described in Section 7.09 of this Agreement.

Section 4.03.Payment upon Early Termination. (%3) Within three calendar days after agreement between the Principals and the Parent of the Early Termination Schedule, the Parent shall pay to the TRA Holders an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to the bank accounts designated by each of the TRA Holders.

(a)The “Early Termination Payment” as of the date of the delivery of an Early Termination Schedule shall equal with respect to a TRA Holder the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by the Parent to such TRA Holder beginning from the Early Termination Date assuming the Valuation Assumptions are applied.

ARTICLE VLATE PAYMENTS

Section 5.01.Late Payments by the Parent. The amount of all or any portion of any Exchange Payment not made to the TRA Holders 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.

ARTICLE VINO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01.Principal Participation in the AOG Topco Entities’ and Partnerships’ Tax Matters. Except as otherwise provided herein, the Parent shall have full responsibility for, and sole discretion over, all Tax matters concerning AOG Topco Entities and the Partnerships, including the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Parent shall notify each Principal of, and keep the Principals reasonably informed with respect to the portion of any audit of any AOG Topco Entity and the Partnerships by a Taxing Authority the outcome of which is reasonably expected to affect any TRA Holder’s rights and obligations under this Agreement, and shall provide to the Principals reasonable opportunity to provide information and other input to the Parent or such AOG Topco Entity, the Partnerships and their respective advisors concerning the conduct of any such portion of such audit; provided that each AOG Topco Entity 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. Except upon the written advice of an Advisory Firm, the Parent and the TRA Holders 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 the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by the Parent in any Schedule required to be provided by or on behalf of the Parent under this Agreement.

Section 6.03.Cooperation. The TRA Holders shall (a) furnish to the Parent in a timely manner such information, documents and other materials as the Parent 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 themselves reasonably available to the Parent and its representatives to provide explanations of documents and materials and such other information as the Parent 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 the Parent shall reimburse the TRA Holders for any reasonable and documented third-party costs and expenses incurred pursuant to this Section.

ARTICLE VII
 MISCELLANEOUS

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 email upon confirmation of transmission by the sender’s server 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 the Parent, to:

Ares Management, L.P.
2000 Avenue of the Stars, 12th Floor
Los Angeles, California 90067
(T) (310) 201-4100Attention: Michael D. WeinerEmail: list_taxreceivablenotice@aresmgmt.com

with a copy to:

Proskauer Rose LLP
2049 Century Park East, Suite 3200
Los Angeles, California 90067
(T) (310) 557-2900
Attention: Michael A. Woronoff

Jonathan Benloulou
Email: MWoronoff@proskauer.com

JBenloulou@proskauer.com

If to any AOG Topco Entity, any Partnership or AOH, to:

c/o Ares Management, L.P.
2000 Avenue of the Stars, 12th Floor
Los Angeles, California 90067
(T) (310) 201-4100Attention: Michael D. WeinerEmail: list_taxreceivablenotice@aresmgmt.com

with a copy to:

Proskauer Rose LLP
2049 Century Park East, Suite 3200
Los Angeles, California 90067
(T) (310) 557-2900
Attention: Michael A. Woronoff

Jonathan Benloulou
Email: MWoronoff@proskauer.com

JBenloulou@proskauer.com

If to Alleghany, to:

The address and electronic mail address set forth in the records of the Partnerships.

If to a Limited Partner, to:

The address and electronic mail address set forth in the records of the AOH.

Any party may change its address or electronic mail address by giving the other party written notice of such new address in the manner set forth above.

Section 7.02.Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile or electronic transmission), all of which shall constitute one and the same instrument.

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 construed and enforced, along with any rights, remedies, or obligations provided for hereunder, in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within the State of Delaware by residents of the State of Delaware; provided, that the enforceability of Section 7.08 shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 etseq., and not the laws of the State of Delaware.

Section 7.05.Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, if the economic and legal substance of the arrangements contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such a determination, the Parent and the Principals shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner that the transactions contemplated hereby shall be consummated as originally contemplated to the fullest extent possible.

Section 7.06.Successors; Assignment; Amendments; Waivers. No TRA Holder may assign this Agreement to any Person without the prior written consent of the Parent; provided that (i) except with respect to a transfer of Partnership Units (including indirectly through a transfer of AOH Units), to the extent the Partnership Units are effectively transferred by a TRA Holder (including indirectly through a transfer of AOH Units) in accordance with the terms of the relevant Partnership Agreements (or the AOH Partnership Agreement), the transferring TRA Holder shall have the option to assign to the transferee of such Partnership Units (including indirectly through a transfer of AOH Units) the transferring TRA Holder’s rights under this Agreement, 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 the Parent, agreeing to become a “TRA Holder” for all purposes of this Agreement, except as otherwise provided in such joinder, and (ii) once an Exchange has occurred, any and all payments that may become payable to a TRA 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 the Parent. For the avoidance of doubt, to the extent a Principal or other Person transfers Partnership Units (including indirectly through a transfer of AOH Units) to another Principal, the Principal receiving such Partnership Units (including indirectly through a transfer of AOH Units) shall have all rights under this Agreement with respect to such transferred Partnership Units as such Principal has, under this Agreement, with respect to the other Partnership Units directly or indirectly held by such Principal.

No provision of this Agreement may be amended unless such amendment is approved in writing by the Parent and by the Principals that control, directly or indirectly, at least two-thirds of the Partnership Units held by all Principals; provided that no such amendment shall be effective if such amendment will have a disproportionate adverse effect on the payments certain TRA Holders will or may receive under this Agreement unless all such TRA Holders disproportionately adversely affected consent in writing. 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.

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. Each AOG Topco Entity 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 such AOG Topco Entity, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that such AOG Topco Entity would be required to perform if no such succession had taken place. Notwithstanding anything to the contrary herein, if a Principal transfers Partnership Units (including indirectly through a transfer of AOH Units), to a Permitted Transferee (as defined in the relevant Partnership Agreements), excluding any other Principal, such Principal 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.

Section 7.07.Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

Section 7.08.Resolution of Disputes. (%3) Any and all disputes, claims or controversies arising out of or relating to this Agreement, including any and all disputes, claims or controversies arising out of or relating to (i) the parties to this Agreement, (ii) any party’s rights and obligations hereunder, (iii) the validity or scope of any provision of this Agreement, (iv) whether a particular dispute, claim or controversy is subject to arbitration under this Section 7.08, and (v) the power and authority of any arbitrator selected hereunder, that are not resolved by mutual agreement shall be submitted to final, binding and confidential arbitration in Los Angeles, California, before one arbitrator, conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor. Disputes shall be resolved in accordance with the Federal Arbitration Act, 9 U.S.C. §§1–16, and JAMS’ Comprehensive 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. 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 but not limited to 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 conflict between this provision and any provision in the applicable rules of JAMS, the provisions of this Agreement will prevail. The parties to the arbitration shall participate in the arbitration in good faith.

(a)The provisions of this Section 7.08 may be enforced by any court of competent jurisdiction, and, to the extent permitted by law, the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered. Notwithstanding any provision of this Agreement to the contrary, a party to an arbitration pursuant to this Section 7.08 shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any violation of the provisions of this Agreement pending a final determination on the merits by the arbitrator, and each party hereby consents that such a restraining order or injunction may be granted without the necessity of posting any bond.

(b)The details of any arbitration pursuant to this Section 7.08, including the existence and/or outcome of such arbitration and any information obtained in connection with any such arbitration, shall be kept strictly confidential and shall not be disclosed or discussed with any person not a party to the arbitration; provided that such party may make such disclosures as are required by applicable law or legal process; provided further that such party may make such disclosures to its, his or her attorneys, accountants or other agents and representatives who reasonably need to know the disclosed information in connection with any arbitration pursuant to this Section 7.08 and who are obligated to keep such information confidential to the same extent as such party. If either party to the arbitration, as the case may be, receives a subpoena or other request for information from a third party that seeks disclosure of any information that is required to be kept confidential pursuant to the prior sentence, or otherwise believes that it, he or she may be required to disclose any such information, such the party to the arbitration, as the case may be, shall (i) promptly notify the other party to the arbitration and (ii) reasonably cooperate with such other party in taking any legal or otherwise appropriate actions, including the seeking of a protective order, to prevent the disclosure, or otherwise protect the confidentiality, of such information.

Section 7.09.Reconciliation. If the Parent and a Principal are unable to resolve a disagreement with respect to the matters governed by Sections 2.04, 4.02 and 6.02 within the relevant period designated in this Agreement (“Reconciliation 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 (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Parent, an Affiliate of Parent or such Principal or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within 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 the Parent, 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 the Parent; except as provided in the next sentence. The Parent and each Principal shall bear their own costs and expenses of such proceeding, unless the Principal has a prevailing position that is more than 10% of the payment at issue, in which case the Parent shall reimburse such Principal 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 determinations of the Expert pursuant to this Section 7.09 shall be final and binding on the Parent and such Principal and may be entered and enforced in any court having jurisdiction.

Section 7.10.Withholding. Each AOG Topco Entity shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as such AOG Topco Entity is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the AOG Topco Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such TRA Holder. The TRA Holders shall provide each AOG Topco Entity with such withholding and other tax certificates (including all required attachments) as may be reasonably requested from time to time.

Section 7.11.Affiliated Corporations of the Holdcos; Consolidated Group; Transfers of Corporate Assets.

(a)Holdcos (other than the AOG Topco Entities) 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 such Holdcos, with respect to any Realized Tax Benefit with respect to limited partnership interests in the other Ares Group entities, 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 such Holdcos shall cause such corporation to execute and deliver a joinder to this Agreement to such effect. If any Holdco (other than the AOG Topco Entities) elects to be treated or is otherwise treated as a corporation for tax purposes (which, for the avoidance of doubt, shall include the Parent for this purpose), then the provisions of this Agreement shall apply (w) to such Holdco or such entity as the case may be in the same manner as it applies to the AOG Topco Entities and (x) to each partnership, limited partnership and limited liability company Controlled by any such Holdco as if each such entity were a Partnership; provided that, if any Partnership Units or limited partnership interests in other Ares Group entities were Exchanged prior to an event described in the foregoing clause above or prior to the effectiveness of the Tax Election, 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 the AOG Topco Entities shall be required to make, or the Parent shall make on its behalf, 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 the AOG Topco Entities on the date of such Exchange; provided that such Tax Benefit Payments shall be payable only with respect to (I) Reference Assets that are still owned at the time of the event described in the foregoing clause above or prior to the effectiveness of the Tax Election, and (II) taxable years of such entity ending on or after the date of the event described in the foregoing clause above or ending on or after the effectiveness of the Tax Election.

(b)Each of the parties hereto agree that (i) Holdings Inc. is a member of an affiliated or consolidated group of corporations that files a consolidated income tax return pursuant to Sections 1501 et seq. of the Code, the common parent of which is the Parent, and (ii) the liability for Taxes of the Parent shall be calculated based on the consolidated net income of such affiliated or consolidated group and the provisions of this Agreement shall be applied with respect to such group as a whole and Tax Benefit Payments shall be computed with reference to the consolidated taxable income of such group as a whole, including with respect to any Holdco that elects to be treated or is otherwise treated as a corporation for tax purposes that becomes a member of such group.

(c)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 or any corresponding provisions of state, local or foreign law, 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 partnership interest.

Section 7.12.Partnerships. Each AOG Topco Entity hereby agrees that, to the extent it acquires a general partnership interest, managing member interest or similar interest in any Person after the Effective Date, it shall cause such Person to execute and deliver a joinder to this Agreement and become a “Partnership” for all purposes of this Agreement.

Section 7.13.Conclusive Nature of Calculations. All determinations, interpretations, calculations, adjustments and other actions of an AOG Topco Entity or any Partnership or a designee of any of the foregoing that are within such Person’s authority hereunder (including in connection with the preparation of any Schedule) shall be made in good faith by such Person and shall be binding and conclusive absent manifest error. In connection with any such determination, interpretation, calculation, adjustment or other action, each AOG Topco Entity or any Partnership or the designee of any of the foregoing shall be entitled to resolve any ambiguity with respect to the manner in which such determination, interpretation, calculation, adjustment or other action is to be made or taken, and shall be entitled to interpret the provisions of this Agreement, in such a manner as it determines to be fair and equitable, and such resolution or interpretation shall be binding and conclusive absent manifest error.

[Signatures on following pages]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.

Ares Management, L.P.
By: Ares Management GP LLC, its general partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Holdings Inc.

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Offshore Holdings Ltd.

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares AI Holdings, L.P.
By: Ares Management L.P., its general partner
By: Ares Management GP LLC, its general partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Holdings L.P.
By: Ares Holdco LLC, its general partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Offshore Holdings L.P.
By: AOF Holdco, LLC, its general partner

By:/s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Investments L.P.
By: AI Holdco LLC, its general partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Ares Owners Holdings L.P.
By: Ares Partners Holdco LLC, its general partner

By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Authorized Signatory

Alleghany Insurance Holdings LLC

By: /s/ John L. Sennott, Jr.
Name: John L. Sennott, Jr.
Title: Vice Chairman and Senior Vice President

Each Limited Partner set forth on Schedule A hereto:

By: /s/ Michael D. WeinerName: Michael D. Weiner
Title: Attorney-in-fact

EX-10.8

RESTRICTED UNIT AGREEMENT
PURSUANT TO THE
ARES MANAGEMENT, L.P. 2014 EQUITY INCENTIVE PLAN

3211/17956-002 CURRENT/97331247v2

THIS AGREEMENT (the “Agreement”) is entered into as of (the “Grant Date”), by and between Ares Management, L.P., a Delaware limited partnership (the “Partnership”), and (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”).

WITNESSETH:

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 Share-Based Awards to Service Providers under the Plan, including restricted units that represent the right to receive Common Shares; and

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

NOW, THEREFORE, the parties agree as follows:

1. Grant of Restricted Units.

Subject to the restrictions and other conditions set forth herein, the Committee hereby grants to the Participant the right to receive Common Shares (the “Restricted Units”) as of the Grant Date. Each Restricted Unit is an Other Share-Based Award under the Plan that represents an unfunded, unsecured right of the Participant to receive a Common Share on the Vesting Date[s] specified in Section 2 herein.

2. Vesting and Payment.

(a) [The Restricted Units shall vest in three equal installments on the third, fourth and fifth anniversary 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. Except as expressly provided in Section 2(b), all unvested Restricted Units will be forfeited without compensation on the Participant’s Termination for any reason.]

[All of the Restricted Units shall vest on the fifth anniversary of the Grant Date (the “Vesting Date”); provided that the Participant has not had a Termination for any reason prior to such Vesting Date. There shall be no proportionate or partial vesting prior to the Vesting Date. All unvested Restricted Units will be forfeited without compensation on the Participant’s Termination for any reason.]

(b) [If the Participant incurs a Termination by the Partnership without Cause or on account of Participant’s death or Disability, (i) after the first anniversary of the Grant Date and prior to the second anniversary of the Grant Date, 11% of the Restricted Units shall vest on such Termination, which shall be a Vesting Date, or (ii) on or after the second anniversary of the Grant Date and prior to the third anniversary of the Grant Date, 22% of the Restricted Units shall vest on such Termination, which shall be a Vesting Date.]

(c) The Partnership shall, on or within 30 days following [a] [the] Vesting Date, deliver (or cause to be delivered) to the Participant one Common Share with respect to each vested Restricted Unit, as settlement of such Restricted Unit and each such Restricted Unit shall thereafter be cancelled.

3. Distribution Equivalents.

The Participant will have the right to receive an amount equal to (i) the amount of any distribution paid with respect to a Common Share multiplied by (ii) the number of Restricted Units held by the Participant, at the time such distributions are paid to holders of Common Shares.

4. Restricted Unit Transfer Restrictions.

Unless otherwise determined by the Committee, Restricted 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. Post-Settlement Restrictions.

(a) Post-Settlement Transfer Restrictions. Until the [fifth] anniversary of the Grant Date, without the prior written consent of the Committee (which may be withheld or conditioned in its sole discretion), other than as provided in Section 12, the Participant may not Transfer any Common Shares delivered upon settlement of Restricted Units (the “Transfer Restricted Common Shares”). The Committee may require Transfer Restricted Common Shares to be held in an account subject to terms and conditions to be determined by the Committee.

(b) Waiver; Additional Conditions. The Committee may, from time to time, waive the provisions of this Section 5, subject to the imposition of any conditions or further requirements, as determined by the Committee in its sole discretion. Without limiting the foregoing, (i) the Committee may impose equivalent transfer restrictions on the Participant’s other equity, if any, held directly or indirectly in the Ares Operating Group Entities, Ares Owners Holdings L.P., the Partnership or any of their respective Affiliates (or any of their respective equity incentive plans) to the extent that the provisions of this Section 5 are waived, and (ii) the Participant hereby consents in advance to the imposition of such equivalent transfer restrictions for purposes of the governing documents of Participant’s other equity, if any, held directly or indirectly in the Ares Operating Group Entities, the Partnership or any of their respective Affiliates (or any of their respective equity incentive plans) to the extent the Committee waives the application of this Section 5 to the Transfer Restricted Common Shares.

6. Change in Control.

The Restricted 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 Restricted Units.

7. Rights as a Shareholder.

The Participant shall have no rights as a shareholder with respect to Common Shares covered by Restricted Units.

8. 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.

9. 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.

10. 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 Restricted 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.

11. 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 Restricted 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.

12. Withholding.

The Participant hereby authorizes the Partnership, or an Affiliate thereof to which the Participant provides services, to satisfy 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 issuance, transfer, or other taxable event under this Agreement or the Plan by withholding from the proceeds of the sale of Common Shares acquired upon settlement of the Restricted Units either through a voluntary sale authorized by the Partnership or through a mandatory sale arranged by the Partnership or any of its Affiliates on the Participant’s behalf pursuant to this authorization, to cover the amount of such Tax Related Items. The Participant further authorizes the Partnership or the applicable Affiliate to take such action as may be necessary in the opinion of the Partnership or the applicable Affiliate to withhold from any compensation or other amount owing to the Participant to satisfy all obligations for the payment of such Tax-Related Items. Without limiting the foregoing, the Committee may, from time to time, permit the Participant to make arrangements prior to any Vesting Date described herein to pay the applicable Tax-Related Items in a manner prescribed by the Committee prior to the applicable Vesting Date, including by cash, check, bank draft or money order. 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. The Partnership may refuse to issue or deliver the Common Shares or the proceeds from the sale of Common Shares, if the Participant fails to comply with his or her obligations in connection with the Tax-Related Items.

13. 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 13, Section 13(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 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 conflict between this provision and any provision in the applicable rules of JAMS, the provisions of this Agreement will prevail.

14. Section 409A.

The Restricted 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 Restricted 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.

15. 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.

(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.

16. 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.

17. 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 RESTRICTED 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 RESTRICTED 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]

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:

EX-10.9

Deferred RU Form

RESTRICTED UNIT AGREEMENT
PURSUANT TO THE
ARES MANAGEMENT, L.P. 2014 EQUITY INCENTIVE PLAN

3133/17956-002 CURRENT/96544181v2

THIS AGREEMENT (the “Agreement”) is entered into as of (the “Grant Date”), by and between Ares Management, L.P., a Delaware limited partnership (the “Partnership”), and (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”).

WITNESSETH:

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 Share-Based Awards to Service Providers under the Plan, including restricted units that represent the right to receive Common Shares; and

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

NOW, THEREFORE, the parties agree as follows:

1. Grant of Restricted Units.

Subject to the restrictions and other conditions set forth herein, the Committee hereby grants to the Participant the right to receive Common Shares (the “Restricted Units”) as of the Grant Date. Each Restricted Unit is an Other Share-Based Award under the Plan that represents an unfunded, unsecured right of the Participant to receive a Common Share on the [Delivery] [Vesting] Dates specified in Section 2 herein.

2. Vesting and Payment.

(a) Except as expressly provided in Section 2(b) herein, the Restricted Units shall vest and be paid in four equal installments on each of the first four anniversaries of the Grant Date (the “[Delivery] [Vesting] Dates”); provided that the Participant has not had a Termination prior to such [Delivery] [Vesting] Date.

(b) Except as expressly provided in this Section 2(b), all unvested Restricted Units will be forfeited without compensation on the Participant’s Termination for any reason. If the Participant incurs a Termination (i) by the Partnership without Cause, (ii) on account of Participant’s death or Disability, (iii) by the Participant as a retirement after the Participant has attained age 65 (a “Retirement”) or (iv) by the Participant as an early retirement at a time when (x) the Participant has at least five years of service to the Partnership and/or its Affiliates and (y) the Participant’s age plus such years of service equals at least 65 (an “Early Retirement”), then the Restricted Units shall vest on such Termination [, which shall be a Vesting Date.] [and shall be paid in equal installments on the remaining Delivery Dates. Notwithstanding the foregoing, if at any time the Participant breaches any agreement with the Partnership or its Affiliates, in each

Deferred Restricted Unit Agreement

case, as determined by the Committee in its sole discretion, all vested and unvested Restricted Units will be forfeited by the Participant without compensation.]

(c) The Partnership shall, on an applicable [Delivery] [Vesting] Date, deliver (or cause to be delivered) to the Participant one Common Share with respect to each vested and outstanding Restricted Unit payable on such [Delivery] [Vesting] Date, as settlement of such Restricted Unit and each such Restricted Unit shall thereafter be cancelled.

3. Distribution Equivalents.

The Participant will have the right to receive an amount equal to (i) the amount of any distribution paid with respect to a Common Share multiplied by (ii) the number of Restricted Units held by the Participant, at the time such distributions are paid to holders of Common Shares.  

4. Restricted Unit Transfer Restrictions.

Unless otherwise determined by the Committee, Restricted 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 Restricted Units shall not vest upon a Change in Control unless otherwise determined by the Committee.

6. Rights as a Shareholder.

The Participant shall have no rights as a shareholder with respect to Common Shares covered by Restricted 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:

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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 Restricted 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 Restricted 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 Participant hereby authorizes the Partnership, or an Affiliate thereof to which the Participant provides services, to satisfy 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 issuance, transfer, or other taxable event under this Agreement or the Plan by withholding from the proceeds of the sale of Common Shares acquired upon settlement of the Restricted Units either through a voluntary sale authorized by the Partnership or through a mandatory sale arranged by the Partnership or any of its Affiliates on the Participant’s behalf pursuant to this authorization, to cover the amount of such Tax Related Items. The Participant further authorizes the Partnership or the applicable Affiliate to take such action as may be necessary in the opinion of the Partnership or the applicable Affiliate to withhold from any compensation or other amount owing to the Participant to satisfy all obligations for the payment of such Tax-Related Items. Without limiting the foregoing, the Committee may, from time to time, permit the Participant to make arrangements prior to any [Delivery] [Vesting] Date described herein to pay the applicable Tax-Related Items in a manner prescribed by the Committee prior to the applicable [Delivery] [Vesting] Date, including by cash, check, bank draft or money order. 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

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or any of its Affiliates. The Partnership may refuse to issue or deliver the Common Shares or the proceeds from the sale of Common Shares, if the Participant fails to comply with his or her obligations in connection with the Tax-Related Items.

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

13. Section 409A.

The Restricted Units are intended to comply with or 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 Restricted 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.

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(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.

(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.

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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 RESTRICTED 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 RESTRICTED 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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DeferredRestricted Unit Agreement

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

ARES MANAGEMENT, L.P.

By: Ares Management GP LLC, its general partner

By:
Name:
Title:

Participant Name:

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d- 14(a)

I, Michael J Arougheti, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ares Management, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2018

/s/ Michael J Arougheti
Name:	Michael J Arougheti
Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Michael R. McFerran, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ares Management, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2018

/s/ Michael R. McFerran
Name:	Michael R. McFerran
Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Ares Management, L.P. (the “Company”) for the quarter ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael J Arougheti, as Chief Executive Officer of the Company, and Michael R. McFerran, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2018

/s/ Michael J Arougheti
Name:	Michael J Arougheti
Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)
/s/ Michael R. McFerran
Name:	Michael R. McFerran
Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Ares Management, L.P and will be retained by Ares Management, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

ARES MANAGEMENT GP LLCEffective as of March 1, 2018

ARTICLE I DEFINITIONS    1

1.1 Definitions    1

1.2 Interpretation    3

ARTICLE II GENERAL PROVISIONS    4

2.1 Member    4

2.2 Formation; Name; Foreign Jurisdictions    4

2.3 Term    4

2.4 Purposes; Powers    5

2.5 Registered Office; Registered Agent    5

2.6 Principal Office    5

ARTICLE III MANAGEMENT    5

3.1 Management    5

3.2 Board of Directors    6

3.3 Officers    9

3.4 Additional Committees    9

3.5 Authorization    11

ARTICLE IV EXCULPATION AND INDEMNIFICATION    11

4.1 Duties; Liabilities; Exculpation    11

4.2 Indemnification    13

ARTICLE V CAPITAL OF THE COMPANY    15

5.1 Initial Capital Contributions by the Member    15

5.2 No Additional Capital Contributions    15

5.3 Withdrawals of Capital    16

ARTICLE VI PARTICIPATION IN THE COMPANY    16

6.1 Liability of Members and Certain Other Persons    16

6.2 Distributions    16

6.3 Limitation on Distributions    16

ARTICLE VII ADDITIONAL MEMBERS    16

7.1 Additional Members    16

7.2 Transfers    16

ARTICLE VIII DISSOLUTION    16

8.1 Dissolution    16

8.2 Final Distribution    17

ARTICLE IX MISCELLANEOUS    17

9.1 Amendments and Waivers    17

9.2 Governing Law; Separability    17

9.3 Successors and Assigns    18

9.4 Notices    18

9.5 Counterparts    18

9.6 Power of Attorney    18

9.7 Cumulative Remedies    18

9.8 Entire Agreement    18

9.9 Tax Treatment    19

THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
ARES MANAGEMENT GP LLC

THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (the “Agreement”) of ARES MANAGEMENT GP LLC (the “Company”), entered into as of March 8, 2018 and effective as of March 1, 2018 (the “Effective Date”), by Ares Partners Holdco LLC, a Delaware limited liability company (“Holdco”) and such other Persons that are admitted to the Company as members of the Company after the Effective Date in accordance herewith.

RECITALS

WHEREAS, the Certificate of Formation of the Company was executed and filed in the office of the Secretary of State of the State of Delaware on November 15, 2013, thereby forming the Company under the Delaware Limited Liability Company Act (6 Del. C. §18-101, et seq.) (the “Act”);

WHEREAS, Ares Partners Management Company LLC entered into a Limited Liability Company Agreement of the Company, dated as of November 15, 2013;

WHEREAS, the Second Amended and Restated Limited Liability Company Agreement of the Company (the “Existing LLC Agreement”) was executed, as of June 8, 2016;

WHEREAS, effective as of the Effective Date, the Issuer amended and restated its limited partnership agreement to, among other things, change the name of its common units representing limited partner interests and preferred units representing limited partner interests to Common Shares and Preferred Shares, respectively; and

WHEREAS, the Member now desires to amend and restate the Existing LLC Agreement as hereinafter set forth.

NOW, THEREFORE, the parties hereto agree as follows:

Article I
DEFINITIONS

1.1Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

“Act” has the meaning set forth in the recitals.

“Affiliate” means, with respect to any Person, any other Person (other than the Company) directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such Person.

“Agreement” has the meaning set forth in the preamble hereto.

“Ares Entity” has the meaning set forth in Section 3.5.

“Ares Entity Governing Agreement” has the meaning set forth in Section 3.5.

“Ares Partners Ownership Condition” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Board”means the Board of Directors of the Company.

“Capital Contribution” means, with respect to any Member, the aggregate amount of capital contributed to the Company.

“Company” has the meaning set forth in the preamble hereto.

“Contingencies” has the meaning set forth in Section 8.2(a).

“control” when used with reference to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Covered Person” means (i) any Member, (ii) a Member’s representatives and agents, (iii) any manager, Director, Officer or member of a Management Committee, (iv) any Person who is or was serving at the request of a Member, manager, Director, Officer or member of a Management Committee as a director, officer, manager, employee, trustee, fiduciary, partner, Tax Matters Partner or Partnership Representative (in each case, as defined in the Code), member, representative, agent or advisor of another Person; provided that a Person shall not be a Covered Person by reason of providing, on a fee-for-services basis or similar arm’s-length compensatory basis, agency, advisory, consulting, trustee, fiduciary or custodial services and (v) any Person that the Governing Entity in its sole discretion designates is a “Covered Person” for purposes of this Agreement.

“Delaware General Corporation Law” means the General Corporation Law of the State of Delaware, 8 Del. C. § 101, et seq.

“Determination” has the meaning set forth in Section 4.1(g).

“Director” means a member of the Board.

“Effective Date” has the meaning set forth in the preamble hereto.

“Existing LLC Agreement” has the meaning set forth in the recitals.

“Fund” means any fund, investment vehicle or account.

“Governing Entity” means (i) for so long as the Ares Partners Ownership Condition continues to be satisfied, the Member and (ii) thereafter, the Board.

“Holdco” has the meaning set forth in the preamble hereto.

“Initial Member” has the meaning set forth in the recitals.

“Interest” means a limited liability company interest (as defined in § 18-101(8) of the Act) in the Company.

“Issuer” means Ares Management, L.P., a Delaware limited partnership.

“Issuer Limited Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of the Issuer, dated on or about the Effective Date.

“Management Committee” has the meaning set forth in Section 3.4(a).

“Member” means any Person admitted to the Company as a member. A Member shall constitute a “member” for purposes of the Act.

“Nonpayment Event” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Officers” has the meaning set forth in Section 3.3(a).

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

“Preferred Directors” has the meaning set forth in Section 3.2(k).

“Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Series A Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement.

“Voting Preferred Shares” has the meaning set forth in the Issuer Limited Partnership Agreement but for purposes of this Agreement shall include the Series A Preferred Shares.

1.2Interpretation.

(a)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 this 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 this 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 this 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.

(b)All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

ARTICLE II
GENERAL PROVISIONS

2.1Member. The sole Member of the Company as of the Effective Date is Holdco. The books and records of the Company shall be amended from time to time to reflect the admission and withdrawal of Members and the transfer or assignment of Interests pursuant to the terms of this Agreement. Additional persons may be admitted to the Company as Members from time to time on such terms and conditions as may be determined by the Member.

2.2Formation; Name; Foreign Jurisdictions. The name of the Company shall be Ares Management GP LLC or such other name as the Governing Entity may from time to time hereafter designate. The certificate of formation of the Company may be amended or restated from time to time by the Member or a Director, as an “authorized person” of the Company (within the meaning of the Act), upon approval by the Governing Entity. Each of the Directors and Officers is further authorized to execute, deliver and file (i) as an “authorized person” within the meaning of the Act any other certificates (and any corrections, amendments or restatements thereof) permitted or required to be filed in the office of the Secretary of State of the State of Delaware and (ii) any other certificates (and any amendments or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business.

2.3Term. The term of the Company shall continue until the Company is dissolved and its affairs are wound up in accordance with this Agreement.

2.4Purposes; Powers.

(a)The principal purposes of the Company are to (i) act as the general partner of the Issuer and (ii) engage in any lawful act or activity for which limited liability companies may be formed under the Act.

(b)Subject to the limitations set forth in this Agreement, the Company (i) will possess and may exercise all of the powers and privileges granted to it by the Act including the ownership and operation of the assets owned by the Company, by any other law or this Agreement, together with all powers incidental thereto, and (ii) may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions, in each case, so far as such powers, activities or transactions are necessary, desirable, convenient or incidental to, or in furtherance of, the conduct, promotion or attainment of the purpose of the Company set forth in Section 2.4(a).

2.5Registered Office; Registered Agent. The address of the registered office of the Company in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The Governing Entity may from time to time change the registered agent or registered office of the Company in the State of Delaware by an amendment to the certificate of formation of the Company, and upon the filing of such an amendment, this Agreement shall be deemed amended accordingly.

2.6Principal Office. The principal office address of the Company shall be at such place or places as the Governing Entity may determine from time to time.

ARTICLE III
MANAGEMENT

3.1Management.

(a)Except as otherwise expressly provided in this Agreement, if the Member is the Governing Entity the Member shall have exclusive and complete authority and discretion to manage the operations and affairs of the Company and to make all decisions regarding the business of the Company. If the Member is the Governing Entity (i) the Member shall be a “manager” of the Company within the meaning of the Act, and (ii) in addition to the powers that now or hereafter can be granted to managers under the Act and to all other powers granted under any other provision of this Agreement, but subject to the provisions of this Agreement, the Member shall have full power and authority to do all things and on such terms as it determines to be necessary, desirable, convenient or incidental to, or in furtherance of, the conduct the business of the Company, and to exercise all powers and effectuate the purposes set forth in this Agreement. Without limiting the foregoing, if the Member is the Governing Entity, the Member shall have the right to delegate to the Board such of its powers and authorities over the business and affairs of the Company as the Member determines in its discretion. Any delegation pursuant to this Section 3.1(a) may be revoked at any time by the Member.

(b)Except as otherwise expressly provided in this Agreement, if the Board is the Governing Entity (i) the Board or its designees shall have exclusive and complete authority to manage the operations and affairs of the Company and to make all decisions regarding the business of the Company and (ii) each Director shall be a “manager” of the Company within the meaning of the Act. In addition to the powers that now or hereafter can be granted to managers under the Act and to all other powers granted under any other provision of this Agreement, but subject to the provisions of this Agreement, if the Board is the Governing Entity, the Board shall have full power and authority to do all things and on such terms as it determines to be necessary, desirable, convenient or incidental to, or in furtherance of, the conduct the business of the Company, and to exercise all powers and effectuate the purposes set forth in this Agreement.

3.2Board of Directors.

(a)Except as provided in Section 3.2(j) and Section 3.2(k), the Member shall have full authority to (i) determine from time to time the number of Directors to constitute the Board and the term of office (if any) in connection therewith, (ii) appoint such individuals to be Directors as it shall choose in its discretion, (iii) remove and replace any Director, with or without cause, at any time and for any reason or no reason, and (iv) fill any positions created on the Board as a result of an increase in the size of the Board or vacancies.

(b)Each Director appointed shall hold office until a successor is appointed and qualified or until such Director’s earlier death, resignation or removal. Any Director may resign at any time by giving notice of such Director’s resignation in writing or by electronic transmission to the Member or the Chairman of the Board or the Secretary of the Company. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Company. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(c)The Governing Entity shall have the authority to fix the compensation of Directors or to establish policies for the compensation of Directors and for the reimbursement of expenses of Directors, in each case, in connection with services provided by Directors to the Company. The Directors may be paid their expenses, if any, at meetings of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary as Director. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings, or their service as committee members may be compensated as part of their stated salary as a Director.

(d)The Board may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board may be called by the Chairman of the Board on 10 days’ notice to each other Director, either in person or by telephone or by mail, telegram, telex, cable, electronic mail or other form of recorded or electronic communication, or upon a resolution adopted by the Board, or on such shorter notice as the Chairman of the Board may deem necessary or appropriate in the circumstances. The Governing Entity may appoint, remove or replace one or more members of the Board to serve as “Chairman” or “Vice Chairman.” At each meeting of the Board, the Chairman of the Board or, in the Chairman of the Board’s absence, the Vice Chairman of the Board or, in the Vice Chairman of the Board’s absence, a Director chosen by a majority of the Directors present, shall act as chairman of the meeting.

(e)At all meetings of the Board, a majority of the then total number of Directors shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the Directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. If a Director abstains from voting on any matter in which he or she has a conflict of interest, the vote of a majority of the then total number of Directors present who have not so abstained shall be the act of the Board.

(f)Directors and members of any committee of the Board may participate in meetings of the Board, or any committee thereof, by means of telephone conference or other communications equipment that allows all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting. If all the participants are participating by telephone conference or other communications equipment that allows all persons participating in the meeting to hear each other, the meeting shall be deemed to be held at the principal place of business of the Company.

(g)Any action required or permitted to be taken at any meeting by the Board or any committee thereof, as the case may be, may be taken without a meeting if a consent or consents thereto is signed or transmitted electronically, as the case may be, by all members of the Board or such committee, as the case may be, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or such committee.

(h)The Governing Entity may, by resolution or resolutions, designate one or more committees of the Board, each committee to consist of one or more of the Directors of the Company, which, to the extent provided in such resolution or resolutions, shall have and may exercise, subject to the provisions of this Agreement, the powers and authority of the Board granted hereunder. Unless the Governing Entity shall otherwise provide (in the charter of any such committee or otherwise), a majority of all the members of any such committee may determine its action and fix the time and place, if any, of its meetings and specify what notice thereof, if any, shall be given. The Governing Entity shall have power to change the members of any such committee at any time, to fill vacancies and to discharge any such committee, either with or without cause, at any time. The Governing Entity may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Unless the Governing Entity shall otherwise provide (in the charter of any such committee or otherwise), in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Unless the Governing Entity shall otherwise provide (in the charter of any such committee or otherwise), each committee shall keep regular minutes of its meetings and report the same to the Board when required.

(i)To the extent of their powers set forth in this Agreement, the Directors are agents of the Company for the purpose of the Company’s business, and the actions of the Directors taken in accordance with such powers set forth in this Agreement shall bind the Company. Notwithstanding the last sentence of Section 18-402 of the Act, except as provided in this Agreement or in a resolution of the Directors, a Director may not bind the Company.

(j)(i)    Notwithstanding anything otherwise to the contrary herein, but subject to Section 3.2(k), during any period in which the limited partners of the Issuer are entitled to elect the members of the Board pursuant to Sections 7.13 and 13.4(b) of the Issuer Limited Partnership Agreement, the method for nominating, electing and removing Directors and the term office of the Directors shall be as otherwise provided in the Issuer Limited Partnership Agreement and the Board shall have the full authority to determine from time to time the number of Directors to constitute the Board. The Member, the Directors and the Company shall use their commercially reasonable best efforts to take such action as shall be necessary or appropriate to give effect to and implement the provisions of Section 13.4(b) of the Issuer Limited Partnership Agreement as adopted in this Section 3.2(j) and the Member may, but shall not be under any obligation to, transfer its Interests to a corporate trustee.

(i)The Member and the Company hereby adopt as part of the terms of this Agreement, and agree to be bound by, Section 13.4(b) of the Issuer Limited Partnership Agreement as if such section were set forth in full herein and hereby delegate to the limited partners of the Issuer, subject to the conditions provided in the Issuer Limited Partnership Agreement, the right to nominate, elect and remove Directors in the circumstances determined by and otherwise in accordance with Section 13.4(b) of the Issuer Limited Partnership Agreement. Such delegation shall not cause the Member to cease to be a member of the Company and shall not constitute a delegation of any other rights, powers, privileges or duties of the Member with respect to the Company. A Director need not be a Member or a limited partner of the Issuer. Notwithstanding any other provision of this Agreement, the Company, and the Board on behalf of the Company, shall not amend Sections 7.13 or 13.4(b) of the Issuer Limited Partnership Agreement without the consent of the Member.

(ii)The limited partners of the Issuer shall not, as a result of exercising the rights granted under Sections 13.4(b) or 16.7 of the Issuer Limited Partnership Agreement, be deemed to be Members or holders of Interests as such terms are defined in this Agreement or to be “members,” “managers” or holders of “limited liability company interests” of the Company as such terms are defined in the Act. The exercise by a limited partner of the Issuer of the right to elect Directors and any other rights afforded to such limited partner hereunder and under Sections 13.4(b) or 16.7 of the Issuer Limited Partnership Agreement shall be in such limited partner’s capacity as a limited partner of the Issuer, and no limited partner of the Issuer shall be liable for any debts, obligations or liabilities of the Company by reason of the foregoing.

(a)Upon the occurrence of a Nonpayment Event, the number of Directors then constituting the Board shall automatically be increased by two and the holders of Voting Preferred Shares, voting as a single class, shall have the right to elect these two additional Directors (the “Preferred Directors”) at a meeting of the holders of such Voting Preferred Shares in accordance with, and subject to, the Issuer Limited Partnership Agreement; provided that the Board shall at no time include more than two Preferred Directors. When quarterly distributions have been declared and paid on the Preferred Shares for four consecutive quarters following a Nonpayment Event, the rights of the holders of the Voting Preferred Shares to elect the Preferred Directors shall automatically cease, the terms of office of the Preferred Directors shall forthwith terminate immediately and the number of Directors constituting the Board shall automatically be reduced by two. However, the right of the holders of the Voting Preferred Shares to elect two additional directors shall again vest if and whenever any subsequent Nonpayment Event shall occur. To the extent the provisions of the Issuer Limited Partnership Agreement relating to the election and removal of Directors upon a Nonpayment Event conflicts with this Agreement, such provisions of the Issuer Limited Partnership Agreement shall control. The holders of the Voting Preferred Shares, voting together as a class, may remove any Preferred Director. If any vacancy shall occur among the Preferred Directors, a successor shall be elected as set forth in Section 16.7 of the Issuer Limited Partnership Agreement. The provisions of this Section 3.2(k) shall inure to the benefit of the holders of the Voting Preferred Shares, and each such holder is an intended third-party beneficiary of this Section 3.2(k).

3.3Officers.

(a)The Governing Entity is authorized to appoint officers of the Company (the “Officers”) and to delegate to the Officers responsibilities for the day to day business of the Company or as otherwise delegated or authorized by the Governing Entity.

(b)Unless the Governing Entity decides otherwise, if an Officer’s title is one commonly used for officers of a business corporation formed under the Delaware General Corporation Law, the assignment of such title shall constitute the delegation to such person of the authority and duties that are normally associated with that office, subject to any specific delegation or limitation of authority and duties made pursuant to this Section 3.3. The salaries or other compensation, if any, of Officers and other employees and agents of the Company shall be determined by the Governing Entity at any time. Any Officer may be removed as such, either with or without cause, by the Governing Entity. Any Officer also may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Governing Entity. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Designation of an Officer shall not of itself create any contract rights.

3.4Additional Committees.

(a)If the Member is the Governing Entity, the Member may designate any committee of the Company (a “Management Committee”) which, to the extent provided in resolution or resolutions adopted by the Member, shall have and may exercise, subject to the provisions of this Agreement, the powers and authority of the Member granted hereunder. If the Member is the Governing Entity, the Member shall have full authority to (i) determine from time to time the number of members to constitute any such Management Committee and the term of office (if any) in connection therewith, (ii) appoint such individuals to be members thereof as it shall choose in its discretion, (iii) remove and replace any member thereof, with or without cause, at any time and for any reason or no reason, and (iv) fill any positions created on any such Management Committee as a result of an increase in the size of such Management Committee or vacancies. Members of any Management Committee need not be Officers, Directors or Members. If the Member ceases to be the Governing Entity, each Management Committee shall automatically be dissolved.

(b)Each member of a Management Committee appointed shall hold office until a successor is appointed and qualified or until such individual’s earlier death, resignation or removal. Any member of a Management Committee may resign at any time by giving notice of such individual’s resignation in writing or by electronic transmission to the Member, the Chairman of the Board or the Secretary of the Company. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Company. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(c)Unless the Member shall otherwise provide (in the charter of such Management Committee or otherwise), (i) a Management Committee shall not be required to hold any meetings, (ii) a majority of all the members of any such Management Committee may determine its action and fix the time and place of its meetings, if any, and specify what notice thereof, if any, shall be given and (iii) a Management Committee shall not be required to keep regular minutes of its meetings or report the same to the Member.

(d)Members of any Management Committee may participate in any meetings by means of telephone conference or other communications equipment that allows all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting. If all the participants are participating by telephone conference or other communications equipment that allows all persons participating in the meeting to hear each other, the meeting shall be deemed to be held at the principal place of business of the Company.

(e)Any action required or permitted to be taken at any meeting by a Management Committee may be taken without a meeting if a consent or consents thereto is signed or transmitted electronically, as the case may be, by all members of the Management Committee and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of such Management Committee.

(f)To the extent of their powers set forth in this Agreement and in a resolution or resolutions adopted by the Member, the members of any Management Committee are agents of the Company for the purpose of the Company’s business, and the actions of the members of any Management Committee taken in accordance with such powers set forth in this Agreement and in a resolution or resolutions adopted by the Member shall bind the Company. Notwithstanding the last sentence of Section 18-402 of the Act, except as provided in this Agreement or in a resolution of the members of any Management Committee, a member of any Management Committee may not bind the Company.

(g)If the Member is the Governing Entity, the Member may (directly or indirectly through one or more other entities, in the name and on behalf of the Company, on its own behalf or in its capacity as general partner of the Issuer, or as general or limited partner, member or other equity owner of any Ares Entity) take such actions as are necessary or appropriate to (i) designate one or more committees (including any investment committees) of the Issuer or any Ares Entity, (ii) appoint such individuals to be members thereof as it shall choose in its discretion, (iii) remove and replace any member thereof, with or without cause, at any time and for any reason or no reason, and (iv) fill any positions created on any such committee as a result of an increase in the size of such committee or vacancies.

3.5Authorization. Notwithstanding any provision in this Agreement to the contrary, the Company, and any Officer on behalf of the Company, is hereby authorized, without the need for any further act, vote or consent of any Member or other Person (directly or indirectly through one or more other entities, in the name and on behalf of the Company, on its own behalf or in its capacity as general partner of the Issuer, or as general or limited partner, member or other equity owner of any Ares Entity) (i) to execute and deliver, and to perform the Company’s obligations under, the Issuer Limited Partnership Agreement, including serving as a general partner thereof, (ii) to execute and deliver, and to cause the Issuer to perform its obligations under, the governing agreement, as amended, restated or supplemented (each an “Ares Entity Governing Agreement”), of any other partnership, limited liability company or other entity (each an “Ares Entity”) of which the Issuer is or is to become a direct or indirect general or limited partner, member or other equity owner or manager, including serving as a direct or indirect general or limited partner, member or other equity owner or manager of each Ares Entity, and (iii) to take any action, in the applicable capacity, contemplated by or arising out of this Agreement, the Issuer Limited Partnership Agreement or each Ares Entity Governing Agreement (and any amendment, restatement or supplement of any of the foregoing).

ARTICLE IV
EXCULPATION AND INDEMNIFICATION

4.1Duties; Liabilities; Exculpation.

(a)This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Covered Persons or on their respective Affiliates. Notwithstanding any other provision of this Agreement or any duty otherwise existing at law or in equity, the Covered Persons shall, to the maximum extent permitted by law, including Section 18-1101(c) of the Act, owe only such duties and obligations as are expressly set forth in this Agreement, and no other duties (including fiduciary duties), to the Company, the Member, the Directors, the Officers or any other person otherwise bound by this Agreement.

(b)To the extent that, at law or in equity, any Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, any such Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that such provisions restrict or eliminate the duties and liabilities relating thereto of any Covered Person otherwise existing at law or in equity replace to that extent such other duties and liabilities relating thereto of such Covered Person.

(c)Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent permitted by law, no Covered Person shall be liable to the Company or, in the case of a Covered Person who is not the Member, the Member, for any losses, claims, demands, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising as a result of any act or omission (in relation to the Company, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) of a Covered Person, or for any breach of contract (including breach of this Agreement) or any breach of duties (including breach of fiduciary duties) whether arising hereunder, at law, in equity or otherwise, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction (a “final adjudication”) determining that, in respect of the matter in question, the Covered Person acted in bad faith or with criminal intent.

(d)The Governing Entity and any other Covered Person may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

(e)Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Company, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be take in reliance upon the advice or opinion of such Persons as to matters that the Member or such Covered Person believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such advice or opinion.

(f)The Governing Entity shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers or any duly appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided by the Governing Entity in the power of attorney, have full power and authority to do and perform each and every act and duty that is permitted or required to be done by the Governing Entity hereunder.

(g)All determinations, evaluations, elections, decisions, approvals, authorizations, consents or other actions (howsoever described herein, each, a “Determination”) to be made by the Member, the Board, any committee thereof, any Management Committee or any individual Director, Officer or member of any Management Committee pursuant to this Agreement shall be made in their sole and absolute discretion. Notwithstanding any other provision of this Agreement or otherwise applicable provision of law or equity, whenever in this Agreement or any other agreement contemplated hereby the Member, the Board, any committee thereof, any Management Committee or any individual Director, Officer or member of any Management Committee are permitted or required to make (or omit to make or take) a Determination (i) in their “discretion” or “sole discretion” or under a grant of similar authority or latitude, or (ii) pursuant to any provision not subject to an express standard of “good faith” (regardless of whether there is a reference to “discretion”, “sole discretion” or any other standard), then the Member (or any of its Affiliates causing it to do so), the Board, any committee thereof, any such Management Committee or such individual Director, Officer or member of such Management Committee, as the case may be, in making such Determination, shall not be subject to any fiduciary duty and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Company, the Covered Persons, or any other Person (including any creditor of the Company), and shall not be subject to any other or different standards imposed by this Agreement or otherwise existing at law, in equity or otherwise. Notwithstanding the immediately preceding sentence, if a Determination under this Agreement is to be made or taken by the Member in “good faith”, the Member shall act under that express standard and shall not be subject to any other or different standard under this Agreement or otherwise existing at law, in equity or otherwise. For purposes of this Agreement and notwithstanding any applicable provision of law or in equity, a Determination or failure to act by the Member, the Board, any committee thereof, any Management Committee or any individual Director, Officer or member of any Management Committee pursuant to this Agreement will conclusively be deemed to be made, taken or omitted to be taken in “good faith”, and shall not be a breach of this Agreement unless the Member, the Board, any committee thereof, any Management Committee or any individual Director, Officer or member of any Management Committee, as applicable, subjectively believed such Determination or failure to act was opposed to the best interests of the Company.

4.2Indemnification.

(a)Subject to the limitations set forth in this Section 4.2, a Covered Person shall be indemnified to the fullest extent permitted by law by the Company against any losses, claims, damages, liabilities, and expenses (including attorneys’ fees, judgments, fines, penalties and amounts paid in settlement) incurred by or imposed upon it by reason or in connection with any action taken or omitted by such Person arising out of the Covered Person’s status as such or its activities on behalf of the Company, including in connection with any action, suit or proceeding before any judicial, administrative or legislative body or agency to which it may be made a party or otherwise involved or with which it shall be threatened by reason of being or having been a Covered Person; provided that a Covered Person shall not be so indemnified with respect to any matter as to which there has been a final adjudication that its acts or its failure to act were in bad faith or with criminal intent. The right to indemnification granted by this Section 4.2 shall be in addition to any rights to which the Covered Person may otherwise be entitled and shall inure to the benefit of the successors or assigns of the Covered Person.

(b)To the fullest extent permitted by law and subject to the limitations stated herein, the Company shall pay the expenses (including attorneys’ fees and expenses) incurred by the Covered Person in defending and investigating a civil or criminal action, suit or proceeding in advance of the final disposition of such, action, suit or proceeding, upon receipt of an undertaking by the Covered Person to repay such payment if there shall be a final adjudication that it is not entitled to indemnification as provided herein. In (i) any suit brought by the Covered Person (or other Person entitled to indemnification hereunder) to enforce a right to indemnification hereunder it shall be a defense that, and (ii) any suit in the name of the Company to recover expenses advanced pursuant to the terms of an undertaking the Company shall be entitled to recover such expenses upon final adjudication that, the Covered Person or other Person claiming a right to indemnification hereunder has not met the applicable standard of conduct set forth in this Section 4.2. The Company shall not impose any additional conditions, other than those expressly set forth in this Agreement, to indemnification or the advancement of expenses and shall not seek or agree to any judicial or regulatory bar order that would prohibit a Covered Person entitled to indemnification or the advancement of expenses hereunder from enforcing such Covered Person’s rights to such indemnification or advancement of expenses. In any such suit brought to enforce a right to indemnification or to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person or other Person claiming a right to indemnification is not entitled to be indemnified, or to an advancement of expenses, hereunder shall be on the Company (or any Member acting derivatively or otherwise on behalf of the Company, or the Member).

(c)The Covered Person may not satisfy any right of indemnity or reimbursement granted in this Section 4.2 or to which it may be otherwise entitled except out of the assets of the Company, and no Member shall be personally liable with respect to any such claim for indemnity or reimbursement. To the fullest extent permitted by law, the Company may purchase and maintain insurance on behalf of any Covered Person against any liability asserted against such person, whether or not the Company would have the power to indemnify such person against such liability under the provisions of this Section 4.2 or otherwise.

(d)In the event that any Member or other Person whose capacity is included in the definition of Covered Person ceases to be a Member or such other Person, he, she or it shall continue to be treated as a Covered Person, and to be a beneficiary of such insurance coverage, with respect to his, her or its having been a Member or such other Person, respectively.

(e)In the event of any payment by the Company under this Section 4.2, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Covered Person from any relevant other Person or relevant Fund or under any insurance policy issued to or for the benefit of the Company, other Person, Fund, or any Covered Person. Each Covered Person agrees to execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce any such rights in accordance with the terms of such insurance policy or other relevant document. The Company shall pay or reimburse all expenses actually and reasonably incurred by the Covered Person in connection with such subrogation.

(f)The Company shall not be liable under this Section 4.2 to make any payment of amounts otherwise indemnifiable hereunder (including judgments, fines and amounts paid in settlement, and excise taxes with respect to an employee benefit plan or penalties) if and to the extent that the applicable Covered Person has otherwise actually received such payment under this Section 4.2 or any insurance policy, contract, agreement or otherwise.

(g)The provisions of this Section 4.2 shall be applicable to all actions, claims, suits or proceedings made or commenced on or after May 1, 2014, whether arising from acts or omissions to act occurring on, before or after its adoption. The provisions of this Section 4.2 shall be deemed to be a contract between the Company and each Person entitled to indemnification under this Section 4.2 (or legal representative thereof) who serves in such capacity at any time while this Section 4.2 and the relevant provisions of applicable law, if any, are in effect, and any amendment, modification or repeal hereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, claim, suit or proceeding then or theretofore existing, or any action, suit, claim, demand or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. The rights of indemnification provided in this Section 4.2 shall neither be exclusive of, nor be deemed in limitation of, any rights to which any Person may otherwise be or become entitled or permitted by contract, this Agreement, insurance or as a matter of law, both as to actions in such Person’s official capacity and actions in any other capacity, it being the policy of the Company that indemnification of any Person whom the Company is obligated to indemnify pursuant to Section 4.2(a) shall be made to the fullest extent permitted by law.

(h)For purposes of this Section 4.2, references to “Persons” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a Person with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, manager, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, manager, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries.

(i)This Section 4.2 shall not limit the right of the Company (and the Board on behalf of the Company in its discretion), to the extent and in the manner permitted by law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, (i) persons other than persons described in Section 4.2(a), or (ii) Covered Persons in addition to the rights provided under this Agreement.

ARTICLE V
CAPITAL OF THE COMPANY

5.1Initial Capital Contributions by the Member. The Member has made, on or prior to May 1, 2014, such Capital Contribution, if any, and has acquired the number of Interests as specified in the books and records of the Company.

5.2No Additional Capital Contributions. Except as otherwise provided in Article VII, the Member may, but shall not be required to, make additional Capital Contributions to the Company.

5.3Withdrawals of Capital. The Member may withdraw any Capital Contributions related to its Interest from the Company.

ARTICLE VI
PARTICIPATION IN THE COMPANY

6.1Liability of Members and Certain Other Persons. No Covered Person shall have any liability under this Agreement or under the Act except as provided herein or as required by the Act. Except as required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company or, in the case of a Covered Person who is not the Member, of the Member, solely by reason of being a Member or otherwise acting on behalf of the Company. In no event shall any Member (a) be obligated to make any Capital Contribution or payment to or on behalf of the Company or (b) have any liability to return distributions received by such Member from the Company, in each case except as otherwise provided in this Agreement or by the Act, as such Member shall otherwise expressly agree in writing or as may be required by applicable law. No Member shall be required to loan the Company any funds.

6.2Distributions. The Company may make distributions of available cash (subject to reserves and other adjustments as provided herein) or other property to the Member at such times and in such amounts as are determined by the Member in its discretion.

6.3Limitation on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to the Member if such distribution would violate Section 18-607 of the Act or other applicable law.

ARTICLE VII
ADDITIONAL MEMBERS

7.1Additional Members. At any time and from time to time the Member shall have the right to admit one or more additional persons to the Company as Members. The Member shall determine all terms of such additional Member’s participation in the Company, including the additional Member’s initial Capital Contributions (if any) and Interest.

7.2Transfers. The Member may sell, assign, pledge or otherwise transfer or encumber all or any portion of its Interest. If the Member transfers all of its interest in the Company, immediately following the admission of the transferee of such interest, the transferor Member shall cease to be a member of the Company.

ARTICLE VIII
DISSOLUTION

8.1Dissolution. The Company shall be dissolved, and its affairs shall be wound up, upon the first to occur of the following: (a) the determination of the Member or (b) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act.

8.2Final Distribution. Upon dissolution, the Company shall not be terminated and shall continue until the winding up of the affairs of the Company is completed. The assets of the Company shall be applied and distributed in the following order:

(a)First, to the satisfaction of debts and liabilities of the Company (including satisfaction of all indebtedness to the Member or its Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserves which the Member shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Company (“Contingencies”). Any such reserves may be paid over by the Company to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Member for application of the balance in the manner provided in this Section 8.2; and

(b)The balance, if any, to the Member.

The Governing Entity shall be the liquidator. In the event that the Governing Entity is unable to serve as liquidator, a liquidating trustee shall be chosen by the Governing Entity.

ARTICLE IX
MISCELLANEOUS

9.1Amendments and Waivers.

(a)This Agreement may be amended, supplemented, waived or modified at any time and from time to time only by the Member. Any such amendment, supplement, waiver or modification shall not require the consent of any other Person.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

9.2Governing Law; Separability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. In particular, it shall be construed to the maximum extent possible to comply with all of the terms and conditions of the Act. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under such Act or other applicable law, such invalidity or unenforceability shall not invalidate the entire Agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

9.3Successors and Assigns. This Agreement shall be binding upon and shall, subject to the provisions of Article VII, inure to the benefit of the parties hereto, their respective heirs and personal representatives, and any estate, trust, partnership or limited liability company or other similar entity of which any such person is a trustee, partner, member or similar party which is or becomes a party hereto; provided that no person claiming by, through or under the Member (whether the Member’s heir, personal representative or otherwise), as distinct from the Member itself, shall have any rights as, or in respect to, the Member (including the right to approve or vote on any matter or to notice thereof) except the right to receive only those distributions expressly payable to such person pursuant to Article VI. The Member shall remain liable for the obligations under this Agreement of any transferee of all or any portion of the Member’s Interest, unless otherwise determined by the Member. Nothing in this Agreement is intended, nor shall anything herein be construed, to confer any rights, legal or equitable, on any person other than the Member and its legal representatives, heirs, successors and permitted assigns and the Covered Persons.

9.4Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail, by registered or certified mail (postage prepaid) or by any communication permitted by the Act to the respective parties at the addresses shown in the Company’s books and records (or at such other address for a party as shall be specified in any notice given in accordance with this Section 9.4).

9.5Counterparts. This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which shall be an original and all of which together shall constitute a single instrument.

9.6Power of Attorney. The Member hereby irrevocably appoints each of the Directors and Officers as the Member’s true and lawful representative and attorney-in-fact, each acting alone, in the Member’s name, place and stead, to make, execute, sign and file all instruments, documents and certificates which, from time to time, may be required to set forth any amendment to this Agreement or may be required by this Agreement or by the laws of the United States of America, the State of Delaware or any other state in which the Company shall determine to do business, or any political subdivision or agency thereof, to execute, implement and continue the valid and subsisting existence of the Company. Such power of attorney is coupled with an interest and shall survive and continue in full force and effect notwithstanding the subsequent withdrawal from the Company of the Member for any reason and shall not be affected by the subsequent disability or incapacity of the Member.

9.7Cumulative Remedies. Rights and remedies under this Agreement are cumulative and do not preclude use of other rights and remedies available under applicable law.

9.8Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements and understandings between the parties with respect to such subject matter. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein.

9.9Tax Treatment. The Member has determined it is in the Company’s best interest to make an election to be treated as an association taxable  as a corporation for U.S. federal (and applicable state) income tax purposes.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has executed this Agreement effective as of the day and year first above written.

MEMBER:

ARES PARTNERS HOLDCO LLC,
a Delaware limited liability company

By:    _/s/ Michael D. Weiner______________    Name: Michael D. Weiner    Title: Authorized Signatory

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Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 27, 2018
Document and Entity Information
Entity Registrant Name	ARES MANAGEMENT LP
Entity Central Index Key	0001176948
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		97,522,827
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Assets
Investments, at fair value		$ 1,724,571
Other assets		130,341
Goodwill	$ 143,968	143,895
Total assets	8,560,082	8,563,522
Liabilities
Total liabilities	6,994,887	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding at March 31, 2018 and December 31, 2017)	298,761	298,761
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235	279,065
Accumulated other comprehensive loss, net of tax	(4,001)	(4,208)
Total controlling interest in Ares Management, L.P.	373,234	274,857
Total equity	1,565,195	1,460,292
Total liabilities and equity	8,560,082	8,563,522
Ares Management L.P
Assets
Cash and cash equivalents	115,540	118,929	$ 103,989	$ 342,861
Investments, at fair value	1,811,829	1,724,571
Due from affiliates	168,810	165,750
Deferred tax asset, net	50,986	8,326
Other assets	105,187	130,341
Intangible assets, net	37,178	40,465
Goodwill	143,968	143,895
Liabilities
Accounts payable, accrued expenses and other liabilities	78,771	81,955
Accrued compensation	49,944	27,978
Due to affiliates	21,018	14,642
Performance related compensation payable	856,421	846,626
Debt obligations	590,169	616,176
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235	279,065
Accumulated other comprehensive loss, net of tax	(4,001)	(4,208)
Total controlling interest in Ares Management, L.P.	373,234	274,857
Consolidated Funds
Assets
Cash and cash equivalents	532,470	556,500
Investments, at fair value	5,479,136	5,582,842
Due from affiliates	17,782	15,884
Other assets	1,382	1,989
Dividends and interest receivable	12,096	12,568
Receivable for securities sold	83,718	61,462
Liabilities
Accounts payable, accrued expenses and other liabilities	81,508	64,316
Due to affiliates	0	0
Payable for securities purchased	239,139	350,145
CLO loan obligations, at fair value	4,937,264	4,963,194
Fund borrowings	140,653	138,198
Non-controlling interest in Consolidated Funds	544,380	528,488
Non-controlling interest in Ares Operating Group entities	544,380	528,488
AOG
Liabilities
Non-controlling interest in Ares Operating Group entities	$ 348,820	$ 358,186

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Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Investments		$ 1,724,571
Preferred equity, shares issued (in shares)	12,400,000	12,400,000
Preferred equity, shares outstanding (in shares)	12,400,000	12,400,000
Partners' Capital shares issued (in shares)	97,514,500	82,280,033
Partners' Capital shares outstanding (in shares)	97,514,500	82,280,033
Ares Management L.P
Investments	$ 1,811,829	$ 1,724,571
Ares Management L.P | Accrued Interest
Investments	1,113,435	1,077,236
Ares Management L.P | Collateral Pledged
Investments	$ 17,575	$ 0

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues
Administrative, transaction and other fees	$ 0	$ 0
Total revenues	266,089	244,244
Expenses
Total expenses	206,283	491,467
Other income (expense)
Total other income	2,240	56,635
Income (loss) before taxes	62,046	(190,588)
Income tax benefit	(12,375)	(34,264)
Net income (loss)	74,421	(156,324)
Net income (loss) attributable to Ares Management, L.P.	40,948	(41,134)
Less: Preferred equity dividend paid	5,425	5,425
Net income (loss) attributable to Ares Management, L.P. common shareholders	$ 35,523	$ (46,559)
Net income (loss) attributable to Ares Management, L.P. per common share:
Basic (in dollars per share)	$ 0.39	$ (0.58)
Diluted (in dollars per unit)	$ 0.28	$ (0.58)
Weighted-average common shares:
Basic (in shares)	85,617,932	81,106,734
Diluted (in shares)	213,852,928	81,106,734
Dividend declared and paid per common share (in dollar per share)	$ 0.4	$ 0.28
Ares Management L.P
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$ 189,515	$ 172,045
Carried interest allocation	54,129	52,007
Incentive fees	5,071	3,165
Principal investment income	4,909	2,587
Administrative, transaction and other fees	12,465	14,440
Total revenues	266,089	244,244
Expenses
Compensation and benefits	134,639	124,339
Performance related compensation	25,878	40,702
General, administrative and other expenses	44,450	47,338
Transaction support expense	0	275,177
Other income (expense)
Net realized and unrealized gain (loss) on investments	(839)	888
Interest and dividend income	3,347	1,924
Interest expense	(6,869)	(4,879)
Other income (expense), net	(311)	16,496
Income tax benefit	(12,375)	(34,733)
Consolidated Funds
Expenses
Expenses of Consolidated Funds	1,316	3,911
Other income (expense)
Net realized and unrealized gain (loss) on investments	(13,085)	32,036
Interest and dividend income	64,422	41,492
Interest expense	(44,425)	(31,322)
Income tax benefit	0	469
Net income attributable to non-controlling interests related to consolidated VIEs	367	15,855
AOG
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	$ 33,106	$ (131,045)

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Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Ares Management L.P | Affiliated entity | ARCC
Management fees, part I fees	$ 28,417	$ 33,257

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income (loss)	$ 74,421	$ (156,324)
Other comprehensive income:
Foreign currency translation adjustments	6,687
Ares Management L.P
Other comprehensive income:
Foreign currency translation adjustments	5,485	3,442
Total comprehensive income (loss)	79,906	(152,882)
Comprehensive income (loss) attributable to Ares Management, L.P.	41,155	(39,933)
Consolidated Funds
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	3,542	15,856
AOG
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	$ 35,209	$ (128,805)

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Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Ares Management L.P	Ares Management L.P Accumulated Other Comprehensive Loss	AOG Non-Controlling interest	Consolidated Funds Non-Controlling interest	Partners' Capital Ares Management L.P	Partners' Capital Preferred Partner	Non-Controlling interest AOG
Increase (Decrease) in Stockholders' Equity
Adoption of ASU	$ 0
Adoption of ASU | ASC 606	(22,611)		$ 0	$ (17,117)	$ 5,333	$ (10,827)	$ 0	$ (17,117)
Adoption of ASU | ASU 2018-02	0		(1,202)			1,202
As adjusted balance at January 1, 2018	1,437,681		(4,208)	341,069	533,821	268,238	298,761
Balance at Dec. 31, 2017	1,460,292		(4,208)	358,186	528,488	279,065	298,761
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests	(7,311)			18,809		(26,120)
Effects arising from allocation of shareholders' equity on deferred tax assets	17,770				0	17,769		$ 1
Contributions	113,441			0	8,000	105,441
Distributions	(98,188)			(58,677)	(983)	(33,103)	(5,425)
Net income	74,421			33,106	367	35,523	5,425
Currency translation adjustment	6,687	$ 5,485	1,409	2,103	3,175
Equity compensation	20,694			12,409		8,285
Balance at Mar. 31, 2018	$ 1,565,195		$ (4,001)	$ 348,820	$ 544,380	$ 377,235	$ 298,761

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income (loss)	$ 74,421	$ (156,324)
Adjustments to reconcile net income (loss) to net cash used in operating activities	(19,979)	(18,522)
Cash flows due to changes in operating assets and liabilities	(37,718)	(135,303)
Net cash provided by (used in) operating activities	80,507	(291,816)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(2,857)	(10,252)
Net cash used in investing activities	(2,857)	(10,252)
Allocable to non-controlling interests in Consolidated Funds:
Net cash provided by (used in) financing activities	(85,652)	60,781
Ares Management L.P
Cash flows from financing activities:
Proceeds from issuance of common shares	105,441	0
Proceeds from credit facility	240,000	165,000
Proceeds from term notes	44,050	17,600
Repayments of credit facility	(310,000)	0
Repayments of term notes	(56)	0
Distributions	(91,780)	(68,595)
Preferred equity distributions	(5,425)	(5,425)
Taxes paid in net settlement of vested common shares	(7,311)	(3,913)
Stock option exercise	0	1,036
Tax from share-based payment	0	81
Other financing activities	0	646
Allocable to non-controlling interests in Consolidated Funds:
Effect of exchange rate changes	4,613	2,415
Net change in cash and cash equivalents	(3,389)	(238,872)
Cash and cash equivalents, beginning of period	118,929	342,861
Cash and cash equivalents, end of period	115,540	103,989
Consolidated Funds
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities	152,375	(81,753)
Cash flows due to changes in operating assets and liabilities	(88,592)	100,086
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	8,000	23,378
Distributions to non-controlling interests in Consolidated Funds	(983)	(7,822)
Borrowings under loan obligations by Consolidated Funds	1,303	505,714
Repayments under loan obligations by Consolidated Funds	(68,891)	$ (566,919)
Cash and cash equivalents, beginning of period	556,500
Cash and cash equivalents, end of period	$ 532,470

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ORGANIZATION

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION 

Ares Management, L.P. ("the Company"), a Delaware limited partnership treated as a corporation for U.S. federal income tax purposes, is a leading global alternative asset management firm that operates three distinct but complementary investment groups: the Credit Group, the Private Equity Group and the Real Estate Group. Information about segments should be read together with Note 14, “Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its general partner, Ares Management GP LLC. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P. together with its subsidiaries.

The Company is a holding company, and its sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P., each of which is directly or indirectly wholly owned by the Company. In this quarterly report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. The Company operates and controls all of the businesses and affairs of and conducts all of its material business activities through the Ares Operating Group.

Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in Ares Operating Group (“AOG”) entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period. 

Change in Company Tax Status Election

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes. The Company’s legal structure remains a Delaware limited partnership. In connection with the tax election, the Company amended and restated its partnership agreement to, among other things, reflect the new tax classification and change the name of its common units and preferred units to common shares and preferred shares, respectively. The terms of such common shares and preferred shares, and the associated rights, otherwise remain unchanged. Further, other terminology has been modified to be consistent with a corporation's results. For example, distributions are now referred to as dividends, and earnings per common unit are now referred to as earnings per common share. Comparative periods conform with the current period's presentation.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds.These Consolidated Funds include certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries. Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying condensed consolidated financial statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds in the accompanying condensed consolidated financial statements. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Condensed Consolidated Statements of Cash Flows. All intercompany balances and transactions have been eliminated upon consolidation.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 606

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018.

Pursuant to ASC 606, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below.

The adoption of ASC 606 had the following impact on the Company’s revenue streams:

Revenues of the Company	Impact of ASC 606
Management fees	No Impact - Management fees are recognized as revenue in the period advisory services are rendered.
Performance income - Carried interest allocation	No impact. See discussion below for change in accounting policy.
Performance income - Incentive fees	See discussion below for impact.
Administrative, transaction and other fees	No Impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered.

Performance Income

Performance income consists of carried interest and incentive fees.

Carried Interest

In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life. As of March 31, 2018 and December 31, 2017, the Company had no accrued contingent repayment obligations that would need to be paid if the funds were liquidated at fair value at the reporting dates.

Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provides guidance on accounting for incentive-based performance income, including carried interest. Since Method 2 is no longer available following the adoption of ASC 606, the Company has reassessed its accounting policy for carried interest, and has determined that carried interest is within scope of ASC 323, Investments-Equity Method and Joint Ventures, andout of scope under the scoping provision of ASC 606. Therefore, following the election of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Condensed Consolidated Statements of Operations. Uncollected carried interest as of the reporting date is recorded within investments in the Condensed Consolidated Statements of Financial Condition.

The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest under ASC 323.

Incentive Fees

Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. Upon the adoption of ASC 606, the Company accounts for incentive fees in accordance with ASC 606. Accordingly, the Company will recognize incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company will no longer recognize unrealized incentive fees in revenues in the condensed consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the condensed consolidated financial statements until they become realized at the end of the measurement period, which is typically annually.

The Company adopted ASC 606 for incentive fees using the modified retrospective approach with effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements:

Condensed Consolidated Statement of Financial Condition
	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2017
	As Previously Reported		Adjustments			As Adjusted
Revenues
Performance fees	$	55,172	$	(55,172	)	$	—
Carried interest allocation	—		52,007			52,007
Incentive fees	—		3,165			3,165
Principal investment income	—		2,587			2,587
Total revenues	241,657		2,587			244,244
Other income (expense)
Net realized and unrealized gain on investments	2,655		(1,767		)	888
Interest and dividend income	2,744		(820		)	1,924

The Company's change in accounting policy related to carried interest under ASC 323 did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017.

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

(2) See detail below.

Condensed Consolidated Statement of Changes in Equity 

	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three months ended March 31, 2018:

Condensed Consolidated Statement of Financial Condition
	As of March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Deferred tax asset, net	$	50,986		$	(250	)	$	50,736
Other assets	105,187			23,704			128,891
Total assets	8,560,082			23,454			8,583,536
Commitments and contingencies
Non-controlling interest in Consolidated Funds	544,380			(7,052		)	537,328
Non-controlling interest in Ares Operating Group entities	348,820			18,803			367,623
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			11,603			388,838
Accumulated other comprehensive loss, net of tax	(4,001		)	100			(3,901		)
Total controlling interest in Ares Management, L.P	373,234			11,703			384,937
Total equity	1,565,195			23,454			1,588,649
Total liabilities and equity	8,560,082			23,454			8,583,536

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	5,071		$	856		$	5,927
Total revenues	266,089			856			266,945
Other income (expense)
Other income (expense), net	(311		)	(12		)	(323		)
Total other income	2,240			(12		)	2,228
Income before taxes	62,046			844			62,890
Income tax benefit	(12,375		)	250			(12,125		)
Net income	74,421			594			75,015
Net income attributable to Ares Management, L.P.	40,948			594			41,542
Net income attributable to Ares Management, L.P. common shareholders	35,523			594			36,117

Condensed Consolidated Statement of Comprehensive Income

	Three Months Ended March 31, 2018
	As Reported		Adjustments			Balances without adoption of ASC 606
Net income	$	74,421	$	594		$	75,015
Other comprehensive income:
Foreign currency translation adjustments	5,485		249			5,734
Total comprehensive income	79,906		843			80,749
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	3,542		(1,719		)	1,823
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	35,209		1,686			36,895
Comprehensive income attributable to Ares Management, L.P.	$	41,155	$	876		$	42,031

Condensed Consolidated Statement of Cash Flows 

	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Cash flows from operating activities:
Net income	$	74,421		$	594		$	75,015
Cash flows due to changes in operating assets and liabilities	(37,718		)	(2,313		)	(40,031		)
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(88,592		)	1,719			(86,873		)

Recent Accounting Pronouncements

The Company considers the applicability and impact of all FASB ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company is currently compiling all leases and right–of–use terms to evaluate the impact of this guidance on its condensed consolidated financial statements.

In January 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018.

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GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Finite Lived Intangible Assets, Net

The Company's intangible assets include acquired management contracts, client relationships, a trade name, and the future benefits of managing new assets for existing clients that were recognized at fair value as of their acquisition dates.

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets:

	Weighted Average Amortization Period as of March 31, 2018	As of March 31,			As of December 31,
		2018			2017
Management contracts	2.2 years	$	42,335		$	67,306
Client relationships	10.3 years	38,600			38,600
Trade name	4.3 years	3,200			3,200
Total intangible assets		84,135			109,106
Less: accumulated amortization		(46,957		)	(68,641		)
Intangible assets, net		$	37,178		$	40,465

Amortization expense associated with intangible assets was $3.3 million and $5.3 million for the three months ended March 31, 2018 and 2017, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2018, the Company removed $25.0 million of intangible assets that were fully amortized.

Goodwill

The following table summarizes the carrying value of the Company's goodwill assets:

	Credit		Private Equity		Real Estate		Total
Balance as of December 31, 2017	$	32,196	$	58,600	$	53,099	$	143,895
Foreign currency translation	—		—		73		73
Balance as of March 31, 2018	$	32,196	$	58,600	$	53,172	$	143,968

There was no impairment of goodwill recorded during the three months ended March 31, 2018 and 2017. The impact of foreign currency translation is reflected within other comprehensive income.

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INVESTMENTS

3 Months Ended

Mar. 31, 2018

Investments In And Advances To Affiliates [Abstract]

INVESTMENTS

INVESTMENTS

The Company’s investments are comprised of: 

					Percentage of total investments
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
			As adjusted				As adjusted
Private Investment Partnership Interests:
Equity method private investment partnership interests - principal (1)	$	347,406	$	340,354	19.2	%	19.7	%
Equity method - carried interest (1)	1,113,435		1,077,236		61.4	%	62.5	%
Equity method private investment partnership interests - other	69,342		74,439		3.8	%	4.3	%
Other private investment partnership interests	37,266		35,748		2.1	%	2.1	%
Total private investment partnership interests	1,567,449		1,527,777		86.5	%	88.6	%
Collateralized loan obligations	242,984		195,158		13.4	%	11.3	%
Common stock	1,396		1,636		0.1	%	0.1	%
Total investments	$	1,811,829	$	1,724,571

(1) Interest or portion of the interest is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant under SEC guidance. For the three months ended March 31, 2018 and 2017, no individual equity method investment held by the Company met the significance criteria.

The Company recognized net gains of $3.5 million and $5.8 million related to its equity method investments for the three months ended March 31, 2018 and 2017, respectively, that are included within both principal investment income and within net realized and unrealized gain on investments within the Consolidated Statements of Operations.

The material assets of the Company's equity method investments are expected to generate long-term capital appreciation and/or interest income; the material liabilities are debt instruments collateralized by, or related to, the financing of the assets; and net income is materially comprised of the changes in fair value of these net assets.

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
United States:
Fixed income securities:
Consumer discretionary	$	1,303,537	$	1,295,732	24.1	%	23.2	%
Consumer staples	56,917		55,073		1.0	%	1.0	%
Energy	173,698		176,836		3.2	%	3.2	%
Financials	270,317		270,520		4.9	%	4.8	%
Healthcare, education and childcare	453,622		449,888		8.3	%	8.1	%
Industrials	364,479		370,926		6.7	%	6.6	%
Information technology	146,733		167,089		2.7	%	3.0	%
Materials	170,309		185,170		3.1	%	3.3	%
Telecommunication services	385,829		399,617		7.0	%	7.2	%
Utilities	62,667		77,102		1.1	%	1.4	%
Total fixed income securities (cost: $3,393,506 and $3,459,318 at March 31, 2018 and December 31, 2017, respectively)	3,388,108		3,447,953		62.1	%	61.8	%
Equity securities:
Energy	60		126		0.0	%	0.0	%
Total equity securities (cost: $2,265 and $2,265 at March 31, 2018 and December 31, 2017, respectively)	60		126		0.0	%	0.0	%
Partnership and interests
Partnership and interests	252,700		232,332		4.6	%	4.2	%
Total partnership and LLC interests (cost: $200,000 and $190,000 at March 31, 2018 and December 31, 2017, respectively)	252,700		232,332		4.6	%	4.2	%

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Europe:
Fixed income securities:
Consumer discretionary	$	603,516	$	604,608	11.0	%	10.8	%
Energy	2,461		2,413		0.0	%	0.0	%
Consumer staples	72,317		76,361		1.3	%	1.4	%
Financials	116,836		81,987		2.1	%	1.5	%
Healthcare, education and childcare	187,032		209,569		3.4	%	3.8	%
Industrials	128,345		145,706		2.3	%	2.6	%
Information technology	20,603		21,307		0.4	%	0.4	%
Materials	184,625		213,395		3.4	%	3.8	%
Telecommunication services	181,917		182,543		3.3	%	3.3	%
Total fixed income securities (cost: $1,507,741 and $1,545,297 at March 31, 2018 and December 31, 2017, respectively)	1,497,652		1,537,889		27.2	%	27.6	%
Equity securities:
Healthcare, education and childcare	61,065		63,155		1.1	%	1.1	%
Total equity securities (cost: $67,198 and $67,198 at March 31, 2018 and December 31, 2017, respectively)	61,065		63,155		1.1	%	1.1	%
Asia and other:
Fixed income securities:
Consumer discretionary	2,019		2,008		0.0	%	0.0	%
Financials	22,476		12,453		0.4	%	0.2	%
Telecommunication services	21,679		21,848		0.4	%	0.4	%
Total fixed income securities (cost: $46,287 and $36,180 at March 31, 2018 and December 31, 2017, respectively)	46,174		36,309		0.8	%	0.6	%
Equity securities:
Consumer discretionary	50,071		59,630		0.9	%	1.1	%
Consumer staples	46,232		45,098		0.8	%	0.8	%
Healthcare, education and childcare	44,637		44,637		0.8	%	0.8	%
Industrials	16,578		16,578		0.3	%	0.3	%
Total equity securities (cost: $122,418 and $122,418 at March 31, 2018 and December 31, 2017, respectively)	157,518		165,943		2.8	%	3.0	%

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Canada:
Fixed income securities:
Consumer discretionary	$	7,474	$	6,757	0.1	%	0.1	%
Consumer staples	19,364		15,351		0.4	%	0.3	%
Energy	14,103		33,715		0.3	%	0.6	%
Industrials	18,667		18,785		0.3	%	0.3	%
Telecommunication services	6,045		6,189		0.1	%	0.1	%
Total fixed income securities (cost: $65,501 and $80,201 at March 31, 2018 and December 31, 2017, respectively)	65,653		80,797		1.2	%	1.4	%
Equity securities:
Consumer discretionary	—		5,912		—	%	0.1	%
Total equity securities (cost: $0 and $17,202 at March 31, 2018 and December 31, 2017, respectively)	—		5,912		—	%	0.1	%
Australia:
Fixed income securities:
Consumer discretionary	8,587		10,863		0.2	%	0.2	%
Energy	1,619		1,563		0.0	%	0.0	%
Total fixed income securities (cost: $10,446 and $12,714 at March 31, 2018 and December 31, 2017, respectively)	10,206		12,426		0.2	%	0.2	%
Total fixed income securities	5,007,793		5,115,374		91.5	%	91.6	%
Total equity securities	218,643		235,136		3.9	%	4.2	%
Total partnership interests	252,700		232,332		4.6	%	4.2	%
Total investments, at fair value	$	5,479,136	$	5,582,842

At March 31, 2018 and December 31, 2017, no single issuer or investment, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets.

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FAIR VALUE

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of March 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	242,984	$	—	$	242,984
Equity securities	377		1,019			—		—		1,396
Partnership interests	—		—			44,769		37,266		82,035
Total investments, at fair value	377		1,019			287,753		37,266		326,415
Derivatives—foreign exchange contracts	—		230			—		—		230
Total assets, at fair value	$	377	$	1,249		$	287,753	$	37,266	$	326,645
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)
Total liabilities, at fair value	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	67,741		$	6,570		$	74,311
Loans	—		4,648,235			234,193			4,882,428
Collateralized loan obligations	—		51,054			—			51,054
Total fixed income investments	—		4,767,030			240,763			5,007,793
Equity securities	58,221		—			160,422			218,643
Partnership interests	—		—			252,700			252,700
Total investments, at fair value	58,221		4,767,030			653,885			5,479,136
Derivatives:
Asset swaps - other	—		—			834			834
Total assets, at fair value	$	58,221	$	4,767,030		$	654,719		$	5,479,970
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(748	)	$	(748	)
Loan obligations of CLOs	—		(4,937,264		)	—			(4,937,264		)
Total liabilities, at fair value	$	—	$	(4,937,264	)	$	(748	)	$	(4,938,012	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	195,158	$	—	$	195,158
Equity securities	520		1,116			—		—		1,636
Partnership interests	—		—			44,769		35,998		80,767
Total investments, at fair value	520		1,116			239,927		35,998		277,561
Derivatives—foreign exchange contracts	—		498			—		—		498
Total assets, at fair value	$	520	$	1,614		$	239,927	$	35,998	$	278,059
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)
Total liabilities, at fair value	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	82,151		$	7,041		$	89,192
Loans	—		4,755,335			260,848			5,016,183
Collateralized loan obligations	—		10,000			—			10,000
Total fixed income investments	—		4,847,486			267,889			5,115,375
Equity securities	72,558		—			162,577			235,135
Partnership interests	—		—			232,332			232,332
Other	—		—			—			—
Total investments, at fair value	72,558		4,847,486			662,798			5,582,842
Derivatives:
Foreign exchange contracts	—		—			—			—
Asset swaps - other	—		—			1,366			1,366
Total derivative assets, at fair value	—		—			1,366			1,366
Total assets, at fair value	$	72,558	$	4,847,486		$	664,164		$	5,584,208
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(462	)	$	(462	)
Loan obligations of CLOs	—		(4,963,194		)	—			(4,963,194		)
Total liabilities, at fair value	$	—	$	(4,963,194	)	$	(462	)	$	(4,963,656	)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2018:

	Level III Assets
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	195,158		$	44,769	$	239,927
Deconsolidation of fund	78			—		78
Purchases(1)	48,731			—		48,731
Sales/settlements(2)	(827		)	—		(827		)
Realized and unrealized depreciation, net	(156		)	—		(156		)
Balance, end of period	$	242,984		$	44,769	$	287,753
Decrease in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	(610	)	$	—	$	(610	)

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577		$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—			(233		)	—		—			(233		)
Transfer in	—			73,814			—		—			73,814
Transfer out	—			(102,045		)	—		—			(102,045		)
Purchases(1)	—			52,984			10,000		—			62,984
Sales(2)	—			(50,935		)	—		—			(50,935		)
Settlements, net	—			—			—		(177		)	(177		)
Amortized discounts/premiums	—			96			—		7			103
Realized and unrealized appreciation (depreciation), net	(2,155		)	(807		)	10,368		(648		)	6,758
Balance, end of period	$	160,422		$	240,763		$	252,700	$	86		$	653,971
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(2,156	)	$	(1,831	)	$	10,368	$	(749	)	$	5,632

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2017:

	Level III Assets									Level III Liabilities
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests			Total			Contingent Considerations
Balance, beginning of period	$	89,111		$	33,410		$	122,521		$	22,156
Purchases(1)	20,442			169			20,611			—
Sales/settlements(2)	(1,917		)	—			(1,917		)	—
Realized and unrealized appreciation (depreciation), net	617			(169		)	448			(20,247		)
Balance, end of period	$	108,253		$	33,410		$	141,663		$	1,909
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	470		$	—		$	470		$	30

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696	$	(2,708	)	$	541,931
Transfer in	—			86,197			—		—			86,197
Transfer out	(6,581		)	(66,805		)	—		—			(73,386		)
Purchases(1)	6,692			50,069			23,000		1,690			81,451
Sales(2)	—			(33,297		)	—		1,104			(32,193		)
Amortized discounts/premiums	—			118			—		310			428
Realized and unrealized appreciation, net	11,557			294			1,994		449			14,294
Balance, end of period	$	142,358		$	278,829		$	196,690	$	845		$	618,722
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,488	)	$	(42	)	$	1,994	$	(125	)	$	(1,661	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The Company recognizes transfers between the levels as of the beginning of the period. Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service. For the three months ended March 31, 2018, there were no transfers between Level I and Level II fair value measurements.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of March 31, 2018:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	242,984		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	287,753

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	195,158		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	239,927

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of March 31, 2018:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	61,065		Enterprise value market multiple analysis	EBITDA multiple(2)	3.0x	3.0
	61,216			Market approach (comparable companies)	Net income multiple	24.2x - 35.8x	32.7
					Illiquidity discount	25.0%	25.0%
	60			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent transaction price(1)	N/A	N/A	N/A
Partnership interest	252,700			Discounted cash flow	Discount rate	17.0%	17.0%
Fixed income securities
	192,660			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	48,103			Income approach	Yield	7.6% - 14.9%	11.1%
Derivative instruments	834			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	654,719
Liabilities
Derivatives instruments	$	(748	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(748	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2017:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	63,155		Enterprise value market multiple analysis	EBITDA multiple(2)	2.7x	2.7x
	61,215			Market approach (comparable companies)	Net income multiple Illiquidity discount	27.0x - 36.2x 25.0%	33.7x 25.0%
	126			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent Transaction price(1)	N/A	N/A	N/A
Partnership interest	232,332			Discounted cash flow	Discount rate	19.0%	19.0%
Fixed income securities
	222,413			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	45,243			Income approach	Yield	10.8% - 22.5%	12.1%
	233			Market approach (comparable companies)	EBITDA multiple(2)	6.5x	6.5x
Derivative instruments	1,366			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	664,164
Liabilities
Derivatives instruments	$	(462	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(462	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The Company's investments valued using net asset value (“NAV”) per share have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control. A summary of fair value by segment and the remaining unfunded commitments are presented below:

	As of March 31, 2018				As of December 31, 2017
Segment	Fair Value		Unfunded  Commitments		Fair Value		Unfunded  Commitments
Non-core investments(1)	$	37,266	$	16,317	$	35,998	$	16,492
Total	$	37,266	$	16,317	$	35,998	$	16,492

(1) Non-core investments are reported within the Company's Operations Management Group (“OMG”).

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of March 31, 2018 and December 31, 2017:  

	As of March 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639
Total derivatives, at fair value(2)	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639

	As of March 31, 2018				As of December 31, 2017
	Assets		Liabilities		Assets		Liabilities
Consolidated Funds	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value
Asset swap - other	4,843	834	1,750	748	5,363	1,366	1,840	462
Total derivatives, at fair value(3)	4,843	834	1,750	748	5,363	1,366	1,840	462

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of March 31, 2018 and December 31, 2017, the Company had the right to, but elected not to, offset $0.2 million and $0.5 million of its derivative assets and liabilities, respectively.

(3) As of March 31, 2018 and December 31, 2017, the Consolidated Funds offset $0.4 million and $0.4 million of their derivative assets and liabilities, respectively.

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DEBT

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

DEBT

DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of March 31, 2018			As of December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	140,000	3.38%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,469		4.21%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	35,205		35,042		3.24%	35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	26,376		25,959		3.44%	25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	17,600		17,413		3.26%	17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	35,198		35,066		3.26%	35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	17,155		17,025		3.26%	17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	30,450		30,339		3.07%	30,336		2.77%
2018 Term Loan A(4)	1/12/2018	1/15/2030	26,475		26,456		2.97%	—		N/A
Repurchase Agreement Loan(5)	3/13/2018	4/20/2030	17,575		17,400		1.68%	—		N/A
Total debt obligations					$	590,169		$	616,176

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of March 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount.

(4) The 2016, 2017 and 2018 Term Loans (“Term Loans”) were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient to cover the Term Loans, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee ranging from 0.03% to 0.04% of a maximum investment amount.

(5) See Repurchase Agreement below for details

As of March 31, 2018, the Company and its subsidiaries were in compliance with all covenants under the debt obligations.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company's Senior Notes and Term Loans are recorded as a reduction of the corresponding debt obligation and debt issuance costs related to the Credit Facility are included in other assets in the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the term of the related obligation.

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes			Term Loans			Repurchase Agreement Loan
Unamortized debt issuance costs as of December 31, 2017	$	6,543		$	1,571		$	1,171		$	—
Debt issuance costs incurred	—			—			19			176
Amortization of debt issuance costs	(393		)	(63		)	(32		)	(1		)
Unamortized debt issuance costs as of March 31, 2018	$	6,150		$	1,508		$	1,158		$	175

Repurchase Agreement

In the three months ended March 31, 2018, the Company entered into a repurchase agreement with a third party. Under the terms of the agreement, the Company transferred certain fixed maturity securities to the third party and received cash as collateral in an amount equal to the estimated fair value of the securities at the inception of the transaction. The transfer did not meet the criteria for sale treatment as the Company did not relinquish control over the transferred assets. Therefore, the transferred assets remained in the Company's Condensed Consolidated Statements of Financial Condition. The associated liability is recorded at the amount of cash received. The Company monitors the estimated fair value of the collateral and the securities throughout the duration of the transaction and additional collateral will be obtained if necessary. The repurchase agreement does not provide restrictions on the sale or re-pledge of the securities by the third party. At the termination of the repurchase agreement, the third party is required to return the securities to the Company, and the Company is required to return the cash received as collateral plus the applicable interest.

The followings are elements of the repurchase agreement as of March 31, 2018:

	Amounts
Securities transferred at carrying value	$	17,575
Estimated fair value of securities transferred(1)	$	17,575
Cash collateral received from counterparty(2)	$	17,575

(1) Included within the Company's investments.

(2) Included within the Company's debt obligations.

The following table shows cash collateral liability by security type:

	Remaining Contractual Maturity of the Agreement as of March 31, 2018
	Less than 1 year		1 - 3 years		4 - 5 years		Thereafter		Total
Collateralized loan obligations	$	—	$	—	$	—	$	17,575	$	17,575

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs ("Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs. Several of the Consolidated CLOs issued preferred shares representing the subordinated interests that are mandatorily redeemable upon the maturity dates of the senior secured loan obligations. As a result, these shares have been classified as liabilities and are included in CLO loan obligations in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018 and December 31, 2017 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs:

	As of March 31, 2018					As of December 31, 2017
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	4,765,180	$	4,758,121	10.39	$	4,801,582	$	4,776,883	10.57
Subordinated notes(2)	278,116		179,143		11.04	276,169		186,311		11.25
Total loan obligations of Consolidated CLOs	$	5,043,296	$	4,937,264		$	5,077,751	$	4,963,194

(1) Original borrowings under the senior secured notes totaled $4.8 billion, with various maturity dates ranging from October 2024 to October 2030. The weighted average interest rate as of March 31, 2018 was 5.02%.

(2) Original borrowings under the subordinated notes totaled $278.1 million, with various maturity dates ranging from October 2024 to October 2030. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company except to the extent the debt is guaranteed by a subsidiary or if a general partner is liable for the Consolidated Fund’s liabilities under applicable law. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018 and December 31, 2017, the Consolidated Funds were in compliance with all covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of March 31, 2018 and December 31, 2017:

				As of March 31, 2018				As of December 31, 2017
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	12,942	3.56%		$	12,942	2.88%
	6/30/2018	49,194		49,194		1.55%	(2)	48,042		1.55%	(2)
	3/7/2019	71,500		71,500		3.10%		71,500		2.88%
Revolving Term Loan	1/31/2022	1,900		1,303		7.89%		—		—%
	8/19/2019	11,429		5,714		8.91%		5,714		5.86%
Total borrowings				$	140,653			$	138,198

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus an applicable margin.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Condensed Consolidated Statements of Financial Condition. As of March 31, 2018, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of March 31, 2018 and December 31, 2017, the Company had aggregate unfunded commitments of $291.3 million and $285.7 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds. Total unfunded commitments included $16.3 million and $16.5 million in commitments to funds not managed by the Company as of March 31, 2018 and December 31, 2017, respectively.

ARCC Fee Waiver

In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began in the second quarter of 2017. ARCC Part I Fees will only be waived to the extent they are paid. The maximum amount of fees that may be waived in a quarter is $10 million, and if ARCC Part I Fees are less than $10 million in any single quarter, the shortfall will not carryover to subsequent quarters. As of March 31, 2018, there are six remaining quarters as part of the fee waiver agreement, with a maximum of $60 million in potential waivers. ARCC Part I Fees are reported net of the fee waiver.

Performance Income

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

At March 31, 2018 and December 31, 2017, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $479.4 million and $476.1 million, respectively, of which approximately $372.4 million and $370.0 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of March 31, 2018 and December 31, 2017, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of either date.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including management fees, carried interest allocation, incentive fees, investment income, other fees and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that accrued carried interest allocations and incentive fees receivable, which are presented within investments and other assets, respectively, within the Condensed Consolidated Statements of Financial Condition.

The Company has investment management agreements with various funds and accounts that it manages. In accordance with these agreements, the Consolidated Funds bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Consolidated Funds.

The Company also has entered into agreements with related parties to be reimbursed for its expenses incurred for providing administrative services to such related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P, and CION Ares Diversified Credit Fund.

Employees and other related parties may be permitted to participate in co-investment vehicles that invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These employee co-investment vehicles generally do not require the participants to pay management or incentive fees.

Performance income the Company earns from the funds can be distributed to professionals or their related entities on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint, and are limited to distributions received by the relevant recipient.

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of March 31,		As of December 31,
	2018		2017
Due from affiliates:
Management fees receivable from non-consolidated funds	$	130,346	$	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	38,464		39,244
Due from affiliates—Company	$	168,810	$	165,750
Amounts due from portfolio companies and non-consolidated funds	$	17,782	$	15,884
Due from affiliates—Consolidated Funds	$	17,782	$	15,884
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,560	$	5,213
Management fees received in advance	2,866		1,729
Tax receivable agreement liability	12,925		3,503
Payments made by non-consolidated funds on behalf of and payable by the Company	2,667		4,197
Due to affiliates—Company	$	21,018	$	14,642

Due from Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Amounts advanced on behalf of Consolidated Funds are eliminated in consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings are subject to reimbursement by the portfolio companies.

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INCOME TAXES

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes, while remaining a limited partnership under state law. A portion of the Company’s operations was and continues to be held through AHI and corporate subsidiaries of Ares Investments. AHI and such corporate subsidiaries are U.S. corporations and subject to U.S. corporate tax on earnings that flow through from subsidiary entities. The income of such corporations has historically been subject to U.S. federal, state and local income taxes, and certain of its foreign subsidiaries continue to be subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company’s earnings flowed through to owners of the Company without being subject to entity level income taxes. Consequently, a significant portion of the Company’s earnings did not reflect a provision for income taxes except those for foreign, state, city and local income taxes incurred at the entity level. From March 1, 2018, this portion of the Company’s earnings was subject to U.S. corporate tax.

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. The Company had an income tax benefit of $12.4 millionfor the three months ended March 31, 2018. The net income tax benefit recorded for the three months ended March 31, 2018 includes a tax expense related to a deferred tax liability established for the anticipated future tax consequences of performance income and appreciation on certain investments that were previously exempt for tax purposes; however this tax expense was offset by a tax benefit related to a deferred tax asset established for certain equity based accounting adjustments. For the three months ended March 31, 2017, the Company had an income tax benefit of $34.3 million primarily driven by the one-time ARCC-ACAS transaction support payment.

Supplemental information on an unaudited pro forma basis, as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three months ended March 31, 2017 is as follows:

	Three Months Ended March 31,
							2017
	2018			2017			Pro forma
Provision for Income Taxes - The Company
Income tax benefit of the Company	$	(12,375	)	$	(34,733	)	$	(28,344	)
Provision for Income Taxes - Consolidated Funds
Income tax expense of the Consolidated Funds	—			469			469
Total Provision for Income Taxes	$	(12,375	)	$	(34,264	)	$	(27,875	)

The 2017 pro forma tax information was calculated as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three months ended March 31, 2017.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between U.S. corporate entities that are subject to income taxes and those subsidiaries that are not. For the three months ended March 31, 2018 and 2017, the Company has utilized the discrete effective tax rate method to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds that are consolidated in these financial statements. Consequently, the effective income tax rate is subject to significant variation from period to period.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local and foreign tax regulators. As of March 31, 2018, the Company’s U.S. federal income tax returns for the years 2014 through 2018 are open under the normal statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit from 2014 to 2018. Foreign tax returns are generally subject to audit from 2013 to 2018. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

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EARNINGS PER COMMON SHARE

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing income available to common shareholders by the weighted‑average number of common shares outstanding during the period. Diluted earnings per common share are computed using the more dilutive method of either the two-class method or the treasury stock method.

For the three months ended March 31, 2018 and 2017, the two-class method was the more dilutive method for the unvested restricted units. No participating securities had rights to undistributed earnings during any period presented.

The computation of diluted earnings per common share for the three months ended March 31, 2018 and 2017 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended   March 31,
	2018	2017
Options	17,411,780	21,334,689
Restricted units	16,352,546	15,070,871
AOG Units	—	130,403,174

The following table presents the computation of basic and diluted earnings per common share:

	For the Three Months Ended   March 31,
	2018			2017
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Net income (loss) available to common shareholders	$	33,624		$	(47,384	)
Basic weighted-average common shares	85,617,932			81,106,734
Basic earnings (loss) per common share	$	0.39		$	(0.58	)
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Incremental net income from assumed exchange of AOG Units	26,606			—
Net income (loss) available to common shareholders	$	60,230		$	(47,384	)
Effect of dilutive shares:
AOG Units	128,234,996			—
Diluted weighted-average common shares	213,852,928			81,106,734
Diluted earnings (loss) per common share	$	0.28		$	(0.58	)

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EQUITY COMPENSATION

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY COMPENSATION

EQUITY COMPENSATION

Equity Incentive Plan

In 2014, the Company adopted the Ares Management, L.P. 2014 Equity Incentive Plan (the “Equity Incentive Plan”). Based on a formula as defined in the Equity Incentive Plan, the total number of shares available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year.  Accordingly, on January 1, 2018, the total number of shares available for issuance under the Equity Incentive Plan increased to 31,853,504 shares, and as of March 31, 2018, 28,637,981 shares remain available for issuance.

Generally, unvested phantom units, restricted units and options are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended   March 31,
	2018		2017
Restricted units	$	18,030	$	11,219
Options	2,664		3,482
Phantom units	393		388
Equity-based compensation expense	$	21,087	$	15,089

Restricted Units

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common share on a specific date. The restricted units generally vest and are settled in common shares either (i) at a rate of one-third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, or (iii) at a rate of one quarter per year, beginning on either the first or second anniversary of the grant date. Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

The holders of restricted units generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any distribution paid with respect to a common share multiplied by (ii) the number of restricted units held at the time such distributions are declared (“Dividend Equivalent”). For the three months ended March 31, 2018, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $6.6 million, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When restricted units are forfeited, the cumulative amount of dividend equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

The following table presents unvested restricted units' activity during the three months ended March 31, 2018:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	13,751,888		$	17.58
Granted	3,635,419		23.61
Vested	(835,124	)	15.33
Forfeited	(199,637	)	19.83
Balance - March 31, 2018	16,352,546		$	18.98

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $233.3 million as of March 31, 2018 and is expected to be recognized over the remaining weighted average period of 3.70 years.

Options

A summary of options activity during the three months ended March 31, 2018 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2018	20,495,025		$	18.99	6.09	$	20,611
Granted	—		—		—
Exercised	—		—		—
Expired	(219,034	)	19.00		—
Forfeited	(444,203	)	19.00		—
Balance - March 31, 2018	19,831,788		$	18.99	5.84	$	47,762
Exercisable at March 31, 2018	7,235,214		$	18.99	5.38	$	17,420

As of March 31, 2018, there was $16.6 million of total unrecognized compensation expense that is expected to be recognized over the remaining weighted average period of 1.11 years.

Phantom Units

A summary of unvested phantom unit activity during the three months ended March 31, 2018 is presented below:

	Phantom Units		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2018	156,153		$	19.00
Vested	—
Forfeited	(9,362	)	19.00
Balance - March 31, 2018	146,791		$	19.00

The fair value of the phantom unit awards is remeasured at each reporting period and was $21.40 per unit as of March 31, 2018. Based on the fair value of the awards at March 31, 2018,  $1.7 million of unrecognized compensation expense in connection with phantom units outstanding is expected to be recognized over a weighted average period of 1.09 years. During the three months ended March 31, 2018, the Company did not pay to settle any vested phantom units.

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EQUITY

3 Months Ended

Mar. 31, 2018

Stockholders' Equity Note [Abstract]

EQUITY

EQUITY

Ares Management, L.P.

Common Shares

Common shares represent limited partnership interests in the Company. The holders of common shares are entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that are available to common shareholders under the Company’s partnership agreement. The common shareholders have limited voting rights and have no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner. During the quarter ended March 31, 2018, an affiliate of Alleghany Corporation (“Alleghany”) exchanged 9,750,000 of its AOG Units into 9,750,000 common shares. The common shares will be restricted from sale or transfer until May 18, 2018. Alleghany continues to hold 2,750,000 AOG units following the exchange.

Common Share Offering

On March 12, 2018, AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority (collectively, “ADIA”), and the Company completed a public offering of 15,000,000 common shares. In connection with this offering, ADIA sold 10,000,000 of its previously issued and outstanding common shares from which the Company received no proceeds. Additionally, the Company issued 5,000,000 common shares from which it received $105.9 million in gross proceeds. The Company incurred approximately $0.5 million of expenses in connection with this offering transaction. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis together with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity. Subsequent to March 31, 2018, the underwriters in the offering partially exercised their option to purchase additional common shares from ADIA. See Note 16, Subsequent Events.

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of March 31, 2018 and December 31, 2017, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three months ended March 31, 2018 and 2017.

							Daily Average Ownership
	As of March 31, 2018			As of December 31, 2017			For the Three Months Ended March 31,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2018		2017
Ares Management, L.P.	97,514,500	44.76	%	82,280,033	38.75	%	40.04	%	38.35	%
Ares Owners Holding L.P.	117,576,663	53.98	%	117,576,663	55.36	%	54.98	%	55.74	%
Affiliate of Alleghany Corporation	2,750,000	1.26	%	12,500,000	5.89	%	4.98	%	5.91	%
Total	217,841,163	100.00	%	212,356,696	100.00	%

Preferred Equity

As of March 31, 2018 and December 31, 2017, the Company had 12,400,000 shares of Series A Preferred Equity (the “Preferred Equity”) outstanding. When, as and if declared by the Company’s board of directors, distributions on the Preferred Equity are payable quarterly at a rate per annum equal to 7.00%. The Preferred Equity may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per share.

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company operates through its three distinct operating segments. During the three months ended March 31, 2018, the Company reclassified certain expenses from OMG to its operating segments. Historical results have been modified to conform to the current period presentation.

The Company’s three operating segments are:

Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $77.3 billion of assets under management and 145 funds as of March 31, 2018. The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate issuers. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The structured credit strategy invests across the capital structures of syndicated collateralized loan obligation vehicles (CLOs) and in directly-originated asset-backed instruments composed of diversified portfolios of consumer and commercial assets. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. direct lending activities primarily through ARCC, the largest business development company as of March 31, 2018, by both market capitalization and total assets. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits.

Private Equity Group:  The Company’s Private Equity Group has approximately $24.3 billion of assets under management as of March 31, 2018, broadly categorizing its investment strategies as corporate private equity, U.S. power and energy infrastructure and special situations. As of March 31, 2018 the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, five commingled funds and six related co-investment vehicles focused on U.S. power and energy infrastructure and three special situations funds. In its North American and European flexible capital strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The U.S. power and energy infrastructure strategy targets U.S. energy infrastructure-related assets across the power generation, transmission and midstream sectors, seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special situations strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios.

Real Estate Group:  The Company’s Real Estate Group manages comprehensive public and private equity and debt strategies, with approximately $10.9 billion of assets under management across 41 funds as of March 31, 2018. Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.  The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe.  The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation.  In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage real estate investment trust, ACRE. 

The Company has an Operations Management Group (the “OMG”) that consists of five shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations/information technology, business development/corporate strategy, legal/compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance.

Non-GAAP Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Consolidated Statements of Operations prepared in accordance with GAAP.

Economic net income (“ENI”), a non-GAAP measure, is an operating metric used by management to evaluate total operating performance, a decision tool for deployment of resources, and an assessment of the performance of the Company’s business segments. ENI differs from net income by excluding (a) income tax expense, (b) operating results of the Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, and (e) certain other items that the Company believes are not indicative of its total operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers and acquisitions and capital transactions, underwriting costs, and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period.

Fee related earnings (“FRE”), a non-GAAP measure, refers to a component of ENI that is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it adjusts for the items included in the calculation of ENI and excludes performance income, performance related compensation, investment income from the Consolidated Funds and non-consolidated funds and certain other items that the Company believes are not indicative of its core operating performance.

Performance related earnings (“PRE”), a non-GAAP measure, is used to assess the Company’s investment performance net of performance related compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance income, performance related compensation and total investment and other income earned from the Consolidated Funds and non-consolidated funds.

Realized income (“RI”), a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (e) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $28,417)	$	131,766		$	49,887		$	15,173		$	196,826		$	—		$	196,826
Other fees	5,730			340			3			6,073			—			6,073
Compensation and benefits	(50,280		)	(19,199		)	(7,639		)	(77,118		)	(30,606		)	(107,724		)
General, administrative and other expenses	(9,629		)	(4,041		)	(2,432		)	(16,102		)	(18,616		)	(34,718		)
Fee related earnings	77,587			26,987			5,105			109,679			(49,222		)	60,457
Performance income—realized	5,071			4,398			13,638			23,107			—			23,107
Performance income—unrealized	16,092			21,066			(2,040		)	35,118			—			35,118
Performance related compensation—realized	(3,088		)	(3,560		)	(8,221		)	(14,869		)	—			(14,869		)
Performance related compensation—unrealized	7,176			(18,694		)	509			(11,009		)	—			(11,009		)
Net performance income	25,251			3,210			3,886			32,347			—			32,347
Investment income—realized	771			671			3,350			4,792			838			5,630
Investment income (loss)—unrealized	(269		)	(4,150		)	(1,232		)	(5,651		)	1,231			(4,420		)
Interest and other investment income	2,196			329			1,017			3,542			1,247			4,789
Interest expense	(4,673		)	(1,228		)	(420		)	(6,321		)	(548		)	(6,869		)
Net investment income (loss)	(1,975		)	(4,378		)	2,715			(3,638		)	2,768			(870		)
Performance related earnings	23,276			(1,168		)	6,601			28,709			2,768			31,477
Economic net income	$	100,863		$	25,819		$	11,706		$	138,388		$	(46,454	)	$	91,934
Realized income	$	78,857		$	27,327		$	13,669		$	119,853		$	(47,780	)	$	72,073

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2017:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,257)	$	121,347		$	39,819		$	15,615		$	176,781		$	—		$	176,781
Other fees	4,503			340			(9		)	4,834			—			4,834
Compensation and benefits	(51,703		)	(13,218		)	(9,736		)	(74,657		)	(25,953		)	(100,610		)
General, administrative and other expenses	(8,041		)	(4,198		)	(2,731		)	(14,970		)	(19,313		)	(34,283		)
Fee related earnings	66,106			22,743			3,139			91,988			(45,266		)	46,722
Performance income—realized	8,778			—			27			8,805			—			8,805
Performance income—unrealized	2,936			32,237			14,088			49,261			—			49,261
Performance related compensation—realized	(5,285		)	—			(16		)	(5,301		)	—			(5,301		)
Performance related compensation—unrealized	(1,458		)	(25,505		)	(8,438		)	(35,401		)	—			(35,401		)
Net performance income	4,971			6,732			5,661			17,364			—			17,364
Investment income—realized	318			579			1,783			2,680			1,859			4,539
Investment income (loss)—unrealized	4,589			8,546			(444		)	12,691			(1,407		)	11,284
Interest and other investment income (expense)	(19		)	152			(181		)	(48		)	874			826
Interest expense	(2,458		)	(1,513		)	(432		)	(4,403		)	(476		)	(4,879		)
Net investment income	2,430			7,764			726			10,920			850			11,770
Performance related earnings	7,401			14,496			6,387			28,284			850			29,134
Economic net income	$	73,507		$	37,239		$	9,526		$	120,272		$	(44,416	)	$	75,856
Realized income	$	69,945		$	22,345		$	4,588		$	96,878		$	(43,205	)	$	53,673

The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense):

	For the Three Months Ended   March 31,
	2018			2017
Segment Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	196,826		$	176,781
Other fees	6,073			4,834
Performance income—realized	23,107			8,805
Performance income—unrealized	35,118			49,261
Total segment revenues	$	261,124		$	239,681
Segment Expenses
Compensation and benefits	$	77,118		$	74,657
General, administrative and other expenses	16,102			14,970
Performance related compensation—realized	14,869			5,301
Performance related compensation—unrealized	11,009			35,401
Total segment expenses	$	119,098		$	130,329
Other Income (Expense)
Investment income—realized	$	4,792		$	2,680
Investment income (loss)—unrealized	(5,651		)	12,691
Interest and other investment income (expense)	3,542			(48		)
Interest expense	(6,321		)	(4,403		)
Total other income (expense)	$	(3,638	)	$	10,920

The following table reconciles segment revenue to Ares consolidated revenues:

	For the Three Months Ended   March 31,
	2018			2017
Total segment revenue	$	261,124		$	239,681
Revenue of Consolidated Funds eliminated in consolidation	(5,110		)	(18,188		)
Administrative fees(1)	6,412			9,606
Performance income reclass(2)	975			(24		)
Principal investment income	2,708			13,169
Revenue of non-controlling interests in consolidated subsidiaries(3)	(20		)	—
Total consolidated adjustments and reconciling items	4,965			4,563
Total consolidated revenue	$	266,089		$	244,244

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations.

(3) Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.

The following table reconciles segment expenses to Ares consolidated expenses:

	For the Three Months Ended   March 31,
	2018			2017
Total segment expenses	$	119,098		$	130,329
Expenses of Consolidated Funds added in consolidation	8,629			10,509
Expenses of Consolidated Funds eliminated in consolidation	(7,313		)	(6,598		)
Administrative fees(1)	6,412			9,606
OMG expenses	49,222			45,266
Acquisition and merger-related expenses	(319		)	275,336
Equity compensation expense	21,087			15,089
Placement fees and underwriting costs	1,664			3,439
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Expenses of non-controlling interests in consolidated subsidiaries(2)	627			—
Total consolidation adjustments and reconciling items	87,185			361,138
Total consolidated expenses	$	206,283		$	491,467

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Costs being borne by certain of our joint venture partners.

The following table reconciles segment other income (expense) to Ares consolidated other income:

	For the Three Months Ended   March 31,
	2018			2017
Total other income (expense)	$	(3,638	)	$	10,920
Other income from Consolidated Funds added in consolidation, net	7,252			38,445
Other expense from Consolidated Funds eliminated in consolidation, net	(459		)	(23		)
Other income of non-controlling interests in consolidated subsidiaries	7			—
OMG other expense	2,768			850
Performance income reclass(1)	(975		)	24
Principal investment income	(2,708		)	(13,169		)
Changes in value of contingent consideration	—			20,248
Other non-cash expense	(7		)	—
Offering costs	—			(660		)
Total consolidation adjustments and reconciling items	5,878			45,715
Total consolidated other income	$	2,240		$	56,635

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations.

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, RI, FRE and PRE:

	For the Three Months Ended   March 31,
	2018			2017
Economic net income
Income (loss) before taxes	$	62,046		$	(190,588	)
Adjustments:
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Equity compensation expenses	21,087			15,089
Acquisition and merger-related expenses	(319		)	255,088
Placement fees and underwriting costs	1,664			3,439
OMG expenses, net	46,454			44,416
Offering costs	—			660
Other non-cash expense	7			—
Expense of non-controlling interests in consolidated subsidiaries(1)	640			—
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(367		)	(16,323		)
Total consolidation adjustments and reconciling items	76,342			310,860
Economic net income	138,388			120,272
Total performance income - unrealized	(35,118		)	(49,261		)
Total performance related compensation - unrealized	11,009			35,401
Total investment (income) loss - unrealized	5,574			(9,534		)
Realized income	119,853			96,878
Total performance income - realized	(23,107		)	(8,805		)
Total performance related compensation - realized	14,869			5,301
Total investment income - realized	(1,936		)	(1,386		)
Fee related earnings	109,679			91,988
Performance related earnings
Economic net income	$	138,388		$	120,272
Less: fee related earnings	(109,679		)	(91,988		)
Performance related earnings	$	28,709		$	28,284

(1) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners.

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CONSOLIDATION

3 Months Ended

Mar. 31, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

CONSOLIDATION

CONSOLIDATION

Investments in Consolidated Variable Interest Entities

The Company consolidates entities in which the Company has a variable interest and, as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at their carrying value, which approximates fair value, and represents the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.

The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of March 31,		As of December 31,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	266,833	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	174,849	$	175,620
Assets of consolidated VIEs	$	6,126,584	$	6,231,245
Liabilities of consolidated VIEs	$	5,417,561	$	5,538,054

	For the Three Months Ended   March 31,
	2018		2017
Net income attributable to non-controlling interests related to consolidated VIEs	$	367	$	15,855

CONSOLIDATING SCHEDULES

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of March 31, 2018 and December 31, 2017 and results from operations for the three months ended March 31, 2018 and 2017.  

	As of March 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	115,540		$	—	$	—		$	115,540
Investments ($1,113,435 of accrued carried interest, and $17,575 of pledged collateral)	1,986,678			—		(174,849		)	1,811,829
Due from affiliates	177,601			—		(8,791		)	168,810
Deferred tax asset, net	50,986			—		—			50,986
Other assets	105,187			—		—			105,187
Intangible assets, net	37,178			—		—			37,178
Goodwill	143,968			—		—			143,968
Assets of Consolidated Funds
Cash and cash equivalents	—			532,470		—			532,470
Investments, at fair value	—			5,479,136		—			5,479,136
Due from affiliates	—			17,782		—			17,782
Dividends and interest receivable	—			12,096		—			12,096
Receivable for securities sold	—			83,718		—			83,718
Other assets	—			1,382		—			1,382
Total assets	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082
Liabilities
Accounts payable, accrued expenses and other liabilities	$	78,771		$	—	$	—		$	78,771
Accrued compensation	49,944			—		—			49,944
Due to affiliates	21,018			—		—			21,018
Performance related compensation payable	856,421			—		—			856,421
Debt obligations	590,169			—		—			590,169
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			81,508		—			81,508
Due to affiliates	—			8,791		(8,791		)	—
Payable for securities purchased	—			239,139		—			239,139
CLO loan obligations, at fair value	—			4,947,470		(10,206		)	4,937,264
Fund borrowings	—			140,653		—			140,653
Total liabilities	1,596,323			5,417,561		(18,997		)	6,994,887
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			709,023		(164,643		)	544,380
Non-controlling interest in Ares Operating Group entities	348,820			—		—			348,820
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			—		—			377,235
Accumulated other comprehensive loss, net of tax	(4,001		)	—		—			(4,001		)
Total controlling interest in Ares Management, L.P.	373,234			—		—			373,234
Total equity	1,020,815			709,023		(164,643		)	1,565,195
Total liabilities and equity	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082

	As of December 31, 2017
	As adjusted
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable, accrued expenses and other liabilities	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	14,642			—		—			14,642
Performance related compensation payable	846,626			—		—			846,626
Debt obligations	616,176			—		—			616,176
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations, at fair value	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Shareholders' equity (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522

	For the Three Months Ended March 31, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $28,417)	$	196,826		$	—		$	(7,311	)	$	189,515
Carried interest allocation	54,129			—			—			54,129
Incentive fees	5,071			—			—			5,071
Principal investment income	2,708			—			2,201			4,909
Administrative, transaction and other fees	12,465			—			—			12,465
Total revenues	271,199			—			(5,110		)	266,089
Expenses
Compensation and benefits	134,639			—			—			134,639
Performance related compensation	25,878			—			—			25,878
General, administrative and other expense	44,450			—			—			44,450
Expenses of the Consolidated Funds	—			8,629			(7,313		)	1,316
Total expenses	204,967			8,629			(7,313		)	206,283
Other income (expense)
Net realized and unrealized loss on investments	(1,178		)	—			339			(839		)
Interest and dividend income	3,347			—			—			3,347
Interest expense	(6,869		)	—			—			(6,869		)
Other income (expense), net	147			—			(458		)	(311		)
Net realized and unrealized loss on investments of the Consolidated Funds	—			(12,452		)	(633		)	(13,085		)
Interest and other income of the Consolidated Funds	—			64,422			—			64,422
Interest expense of the Consolidated Funds	—			(44,718		)	293			(44,425		)
Total other income (expense)	(4,553		)	7,252			(459		)	2,240
Income (loss) before taxes	61,679			(1,377		)	1,744			62,046
Income tax benefit	(12,375		)	—			—			(12,375		)
Net income (loss)	74,054			(1,377		)	1,744			74,421
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—			(1,377		)	1,744			367
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	33,106			—			—			33,106
Net income attributable to Ares Management, L.P.	40,948			—			—			40,948
Less: Preferred equity dividend paid	5,425			—			—			5,425
Net income attributable to Ares Management, L.P. common shareholders	$	35,523		$	—		$	—		$	35,523

	For the Three Months Ended March 31, 2017
	As adjusted
	Consolidated Company  Entities				Consolidated Funds				Eliminations				Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,257)	$	176,781			$	—			$	(4,736	)		$	172,045
Carried interest allocation	53,015				—				(1,008		)		52,007
Incentive fees	5,027				—				(1,862		)		3,165
Principal investment income	13,169				—				(10,582		)		2,587
Administrative, transaction and other fees	14,440				—				—				14,440
Total revenues	262,432				—				(18,188		)		244,244
Expenses
Compensation and benefits	124,339				—				—				124,339
Performance related compensation	40,702				—				—				40,702
General, administrative and other expense	47,338				—				—				47,338
Transaction support expense	275,177												275,177
Expenses of the Consolidated Funds	—				10,509				(6,598		)		3,911
Total expenses	487,556				10,509				(6,598		)		491,467
Other income (expense)
Net realized and unrealized gain on investments	3,753				—				(2,865		)		888
Interest and dividend income	2,843				—				(919		)		1,924
Interest expense	(4,879		)		—				—				(4,879		)
Other income, net	16,496				—				—				16,496
Net realized and unrealized gain on investments of the Consolidated Funds	—				30,439				1,597				32,036
Interest and other income of the Consolidated Funds	—				41,492				—				41,492
Interest expense of Consolidated Funds	—			—	(33,486		)	—	2,164			—	(31,322		)
Total other income	18,213				38,445				(23		)		56,635
Income (loss) before taxes	(206,911		)		27,936				(11,613		)		(190,588		)
Income tax expense (benefit)	(34,732		)		468				—				(34,264		)
Net income (loss)	(172,179		)		27,468				(11,613		)		(156,324		)
Less: Net income attributable to non-controlling interests in Consolidated Funds	—				27,468				(11,613		)		15,855
Less: Net loss attributable to non-controlling interests in Ares Operating Group entities	(131,045		)		—				—				(131,045		)
Net loss attributable to Ares Management, L.P.	(41,134		)		—				—				(41,134		)
Less: Preferred equity dividend paid	5,425				—				—				5,425
Net loss attributable to Ares Management, L.P. common shareholders	$	(46,559	)		$	—			$	—			$	(46,559	)

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after March 31, 2018 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure:

In April 2018, the board of directors of the Company's general partner declared a quarterly dividend of $0.28 per common share to common shareholders of record at the close of business on June 15, 2018, with a payment date of June 29, 2018.

In April 2018, the board of directors of the Company's general partner declared a quarterly dividend of $0.4375 per preferred equity share to preferred equity shareholders of record at the close of business on June 15, 2018, with a payment date of June 30, 2018.

In April 2018, the underwriters of the recently registered offering of common shares by the Company and ADIA, which closed on March 12, 2018, exercised a portion of their option to purchase 1,130,000 additional common shares from ADIA. The Company did not receive any of the proceeds from the underwriters' exercise. The expenses incurred by the Company related to the option exercise will be included in other income (expense), net in the Condensed Consolidated Statements of Operations. ADIA paid the underwriting discounts and commissions and/or similar charges incurred for the sale of the common shares.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds.These Consolidated Funds include certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries. Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying condensed consolidated financial statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds in the accompanying condensed consolidated financial statements. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Condensed Consolidated Statements of Cash Flows. All intercompany balances and transactions have been eliminated upon consolidation.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 606 and Recent Accounting Pronouncements

Adoption of ASC 606

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018.

Pursuant to ASC 606, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all FASB ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company is currently compiling all leases and right–of–use terms to evaluate the impact of this guidance on its condensed consolidated financial statements.

In January 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018.

Performance Income

Performance Income

Performance income consists of carried interest and incentive fees.

Carried Interest

In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life. As of March 31, 2018 and December 31, 2017, the Company had no accrued contingent repayment obligations that would need to be paid if the funds were liquidated at fair value at the reporting dates.

Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provides guidance on accounting for incentive-based performance income, including carried interest. Since Method 2 is no longer available following the adoption of ASC 606, the Company has reassessed its accounting policy for carried interest, and has determined that carried interest is within scope of ASC 323, Investments-Equity Method and Joint Ventures, andout of scope under the scoping provision of ASC 606. Therefore, following the election of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Condensed Consolidated Statements of Operations. Uncollected carried interest as of the reporting date is recorded within investments in the Condensed Consolidated Statements of Financial Condition.

The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest under ASC 323.

Incentive Fees

Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. Upon the adoption of ASC 606, the Company accounts for incentive fees in accordance with ASC 606. Accordingly, the Company will recognize incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company will no longer recognize unrealized incentive fees in revenues in the condensed consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the condensed consolidated financial statements until they become realized at the end of the measurement period, which is typically annually.

The Company adopted ASC 606 for incentive fees using the modified retrospective approach with effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

Fair Value Measurements

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

Derivative Financial Instruments

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements

The adoption of ASC 606 had the following impact on the Company’s revenue streams:

Revenues of the Company	Impact of ASC 606
Management fees	No Impact - Management fees are recognized as revenue in the period advisory services are rendered.
Performance income - Carried interest allocation	No impact. See discussion below for change in accounting policy.
Performance income - Incentive fees	See discussion below for impact.
Administrative, transaction and other fees	No Impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered.

The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements:

Condensed Consolidated Statement of Financial Condition
	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2017
	As Previously Reported		Adjustments			As Adjusted
Revenues
Performance fees	$	55,172	$	(55,172	)	$	—
Carried interest allocation	—		52,007			52,007
Incentive fees	—		3,165			3,165
Principal investment income	—		2,587			2,587
Total revenues	241,657		2,587			244,244
Other income (expense)
Net realized and unrealized gain on investments	2,655		(1,767		)	888
Interest and dividend income	2,744		(820		)	1,924

The Company's change in accounting policy related to carried interest under ASC 323 did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017.

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911

(1) Unrealized incentive fees receivable balance as of December 31, 2017.

(2) See detail below.

Condensed Consolidated Statement of Changes in Equity 

	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three months ended March 31, 2018:

Condensed Consolidated Statement of Financial Condition
	As of March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Deferred tax asset, net	$	50,986		$	(250	)	$	50,736
Other assets	105,187			23,704			128,891
Total assets	8,560,082			23,454			8,583,536
Commitments and contingencies
Non-controlling interest in Consolidated Funds	544,380			(7,052		)	537,328
Non-controlling interest in Ares Operating Group entities	348,820			18,803			367,623
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			11,603			388,838
Accumulated other comprehensive loss, net of tax	(4,001		)	100			(3,901		)
Total controlling interest in Ares Management, L.P	373,234			11,703			384,937
Total equity	1,565,195			23,454			1,588,649
Total liabilities and equity	8,560,082			23,454			8,583,536

Condensed Consolidated Statement of Operations
	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	5,071		$	856		$	5,927
Total revenues	266,089			856			266,945
Other income (expense)
Other income (expense), net	(311		)	(12		)	(323		)
Total other income	2,240			(12		)	2,228
Income before taxes	62,046			844			62,890
Income tax benefit	(12,375		)	250			(12,125		)
Net income	74,421			594			75,015
Net income attributable to Ares Management, L.P.	40,948			594			41,542
Net income attributable to Ares Management, L.P. common shareholders	35,523			594			36,117

Condensed Consolidated Statement of Comprehensive Income

	Three Months Ended March 31, 2018
	As Reported		Adjustments			Balances without adoption of ASC 606
Net income	$	74,421	$	594		$	75,015
Other comprehensive income:
Foreign currency translation adjustments	5,485		249			5,734
Total comprehensive income	79,906		843			80,749
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	3,542		(1,719		)	1,823
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	35,209		1,686			36,895
Comprehensive income attributable to Ares Management, L.P.	$	41,155	$	876		$	42,031

Condensed Consolidated Statement of Cash Flows 

	For the Three Months Ended March 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Cash flows from operating activities:
Net income	$	74,421		$	594		$	75,015
Cash flows due to changes in operating assets and liabilities	(37,718		)	(2,313		)	(40,031		)
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(88,592		)	1,719			(86,873		)

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of carrying value for the Company's intangible assets

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets:

	Weighted Average Amortization Period as of March 31, 2018	As of March 31,			As of December 31,
		2018			2017
Management contracts	2.2 years	$	42,335		$	67,306
Client relationships	10.3 years	38,600			38,600
Trade name	4.3 years	3,200			3,200
Total intangible assets		84,135			109,106
Less: accumulated amortization		(46,957		)	(68,641		)
Intangible assets, net		$	37,178		$	40,465

Schedule of goodwill rollforward

The following table summarizes the carrying value of the Company's goodwill assets:

	Credit		Private Equity		Real Estate		Total
Balance as of December 31, 2017	$	32,196	$	58,600	$	53,099	$	143,895
Foreign currency translation	—		—		73		73
Balance as of March 31, 2018	$	32,196	$	58,600	$	53,172	$	143,968

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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Investments In And Advances To Affiliates [Abstract]

Summary of investments held

					Percentage of total investments
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
			As adjusted				As adjusted
Private Investment Partnership Interests:
Equity method private investment partnership interests - principal (1)	$	347,406	$	340,354	19.2	%	19.7	%
Equity method - carried interest (1)	1,113,435		1,077,236		61.4	%	62.5	%
Equity method private investment partnership interests - other	69,342		74,439		3.8	%	4.3	%
Other private investment partnership interests	37,266		35,748		2.1	%	2.1	%
Total private investment partnership interests	1,567,449		1,527,777		86.5	%	88.6	%
Collateralized loan obligations	242,984		195,158		13.4	%	11.3	%
Common stock	1,396		1,636		0.1	%	0.1	%
Total investments	$	1,811,829	$	1,724,571

(1) Interest or portion of the interest is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
United States:
Fixed income securities:
Consumer discretionary	$	1,303,537	$	1,295,732	24.1	%	23.2	%
Consumer staples	56,917		55,073		1.0	%	1.0	%
Energy	173,698		176,836		3.2	%	3.2	%
Financials	270,317		270,520		4.9	%	4.8	%
Healthcare, education and childcare	453,622		449,888		8.3	%	8.1	%
Industrials	364,479		370,926		6.7	%	6.6	%
Information technology	146,733		167,089		2.7	%	3.0	%
Materials	170,309		185,170		3.1	%	3.3	%
Telecommunication services	385,829		399,617		7.0	%	7.2	%
Utilities	62,667		77,102		1.1	%	1.4	%
Total fixed income securities (cost: $3,393,506 and $3,459,318 at March 31, 2018 and December 31, 2017, respectively)	3,388,108		3,447,953		62.1	%	61.8	%
Equity securities:
Energy	60		126		0.0	%	0.0	%
Total equity securities (cost: $2,265 and $2,265 at March 31, 2018 and December 31, 2017, respectively)	60		126		0.0	%	0.0	%
Partnership and interests
Partnership and interests	252,700		232,332		4.6	%	4.2	%
Total partnership and LLC interests (cost: $200,000 and $190,000 at March 31, 2018 and December 31, 2017, respectively)	252,700		232,332		4.6	%	4.2	%

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Europe:
Fixed income securities:
Consumer discretionary	$	603,516	$	604,608	11.0	%	10.8	%
Energy	2,461		2,413		0.0	%	0.0	%
Consumer staples	72,317		76,361		1.3	%	1.4	%
Financials	116,836		81,987		2.1	%	1.5	%
Healthcare, education and childcare	187,032		209,569		3.4	%	3.8	%
Industrials	128,345		145,706		2.3	%	2.6	%
Information technology	20,603		21,307		0.4	%	0.4	%
Materials	184,625		213,395		3.4	%	3.8	%
Telecommunication services	181,917		182,543		3.3	%	3.3	%
Total fixed income securities (cost: $1,507,741 and $1,545,297 at March 31, 2018 and December 31, 2017, respectively)	1,497,652		1,537,889		27.2	%	27.6	%
Equity securities:
Healthcare, education and childcare	61,065		63,155		1.1	%	1.1	%
Total equity securities (cost: $67,198 and $67,198 at March 31, 2018 and December 31, 2017, respectively)	61,065		63,155		1.1	%	1.1	%
Asia and other:
Fixed income securities:
Consumer discretionary	2,019		2,008		0.0	%	0.0	%
Financials	22,476		12,453		0.4	%	0.2	%
Telecommunication services	21,679		21,848		0.4	%	0.4	%
Total fixed income securities (cost: $46,287 and $36,180 at March 31, 2018 and December 31, 2017, respectively)	46,174		36,309		0.8	%	0.6	%
Equity securities:
Consumer discretionary	50,071		59,630		0.9	%	1.1	%
Consumer staples	46,232		45,098		0.8	%	0.8	%
Healthcare, education and childcare	44,637		44,637		0.8	%	0.8	%
Industrials	16,578		16,578		0.3	%	0.3	%
Total equity securities (cost: $122,418 and $122,418 at March 31, 2018 and December 31, 2017, respectively)	157,518		165,943		2.8	%	3.0	%

	Fair value at				Fair value as a percentage of total investments at
	March 31,		December 31,		March 31,		December 31,
	2018		2017		2018		2017
Canada:
Fixed income securities:
Consumer discretionary	$	7,474	$	6,757	0.1	%	0.1	%
Consumer staples	19,364		15,351		0.4	%	0.3	%
Energy	14,103		33,715		0.3	%	0.6	%
Industrials	18,667		18,785		0.3	%	0.3	%
Telecommunication services	6,045		6,189		0.1	%	0.1	%
Total fixed income securities (cost: $65,501 and $80,201 at March 31, 2018 and December 31, 2017, respectively)	65,653		80,797		1.2	%	1.4	%
Equity securities:
Consumer discretionary	—		5,912		—	%	0.1	%
Total equity securities (cost: $0 and $17,202 at March 31, 2018 and December 31, 2017, respectively)	—		5,912		—	%	0.1	%
Australia:
Fixed income securities:
Consumer discretionary	8,587		10,863		0.2	%	0.2	%
Energy	1,619		1,563		0.0	%	0.0	%
Total fixed income securities (cost: $10,446 and $12,714 at March 31, 2018 and December 31, 2017, respectively)	10,206		12,426		0.2	%	0.2	%
Total fixed income securities	5,007,793		5,115,374		91.5	%	91.6	%
Total equity securities	218,643		235,136		3.9	%	4.2	%
Total partnership interests	252,700		232,332		4.6	%	4.2	%
Total investments, at fair value	$	5,479,136	$	5,582,842

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FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Summary of valuation of investments and other financial instruments by fair value hierarchy levels

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of March 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	242,984	$	—	$	242,984
Equity securities	377		1,019			—		—		1,396
Partnership interests	—		—			44,769		37,266		82,035
Total investments, at fair value	377		1,019			287,753		37,266		326,415
Derivatives—foreign exchange contracts	—		230			—		—		230
Total assets, at fair value	$	377	$	1,249		$	287,753	$	37,266	$	326,645
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)
Total liabilities, at fair value	$	—	$	(4,229	)	$	—	$	—	$	(4,229	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	67,741		$	6,570		$	74,311
Loans	—		4,648,235			234,193			4,882,428
Collateralized loan obligations	—		51,054			—			51,054
Total fixed income investments	—		4,767,030			240,763			5,007,793
Equity securities	58,221		—			160,422			218,643
Partnership interests	—		—			252,700			252,700
Total investments, at fair value	58,221		4,767,030			653,885			5,479,136
Derivatives:
Asset swaps - other	—		—			834			834
Total assets, at fair value	$	58,221	$	4,767,030		$	654,719		$	5,479,970
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(748	)	$	(748	)
Loan obligations of CLOs	—		(4,937,264		)	—			(4,937,264		)
Total liabilities, at fair value	$	—	$	(4,937,264	)	$	(748	)	$	(4,938,012	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income-collateralized loan obligations	$	—	$	—		$	195,158	$	—	$	195,158
Equity securities	520		1,116			—		—		1,636
Partnership interests	—		—			44,769		35,998		80,767
Total investments, at fair value	520		1,116			239,927		35,998		277,561
Derivatives—foreign exchange contracts	—		498			—		—		498
Total assets, at fair value	$	520	$	1,614		$	239,927	$	35,998	$	278,059
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)
Total liabilities, at fair value	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	82,151		$	7,041		$	89,192
Loans	—		4,755,335			260,848			5,016,183
Collateralized loan obligations	—		10,000			—			10,000
Total fixed income investments	—		4,847,486			267,889			5,115,375
Equity securities	72,558		—			162,577			235,135
Partnership interests	—		—			232,332			232,332
Other	—		—			—			—
Total investments, at fair value	72,558		4,847,486			662,798			5,582,842
Derivatives:
Foreign exchange contracts	—		—			—			—
Asset swaps - other	—		—			1,366			1,366
Total derivative assets, at fair value	—		—			1,366			1,366
Total assets, at fair value	$	72,558	$	4,847,486		$	664,164		$	5,584,208
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(462	)	$	(462	)
Loan obligations of CLOs	—		(4,963,194		)	—			(4,963,194		)
Total liabilities, at fair value	$	—	$	(4,963,194	)	$	(462	)	$	(4,963,656	)

Summary of changes in the fair value of the Level III investments

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2018:

	Level III Assets
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	195,158		$	44,769	$	239,927
Deconsolidation of fund	78			—		78
Purchases(1)	48,731			—		48,731
Sales/settlements(2)	(827		)	—		(827		)
Realized and unrealized depreciation, net	(156		)	—		(156		)
Balance, end of period	$	242,984		$	44,769	$	287,753
Decrease in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	(610	)	$	—	$	(610	)

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577		$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—			(233		)	—		—			(233		)
Transfer in	—			73,814			—		—			73,814
Transfer out	—			(102,045		)	—		—			(102,045		)
Purchases(1)	—			52,984			10,000		—			62,984
Sales(2)	—			(50,935		)	—		—			(50,935		)
Settlements, net	—			—			—		(177		)	(177		)
Amortized discounts/premiums	—			96			—		7			103
Realized and unrealized appreciation (depreciation), net	(2,155		)	(807		)	10,368		(648		)	6,758
Balance, end of period	$	160,422		$	240,763		$	252,700	$	86		$	653,971
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(2,156	)	$	(1,831	)	$	10,368	$	(749	)	$	5,632

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2017:

	Level III Assets									Level III Liabilities
Level III Assets and Liabilities of the Company	Fixed Income			Partnership  Interests			Total			Contingent Considerations
Balance, beginning of period	$	89,111		$	33,410		$	122,521		$	22,156
Purchases(1)	20,442			169			20,611			—
Sales/settlements(2)	(1,917		)	—			(1,917		)	—
Realized and unrealized appreciation (depreciation), net	617			(169		)	448			(20,247		)
Balance, end of period	$	108,253		$	33,410		$	141,663		$	1,909
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	470		$	—		$	470		$	30

Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696	$	(2,708	)	$	541,931
Transfer in	—			86,197			—		—			86,197
Transfer out	(6,581		)	(66,805		)	—		—			(73,386		)
Purchases(1)	6,692			50,069			23,000		1,690			81,451
Sales(2)	—			(33,297		)	—		1,104			(32,193		)
Amortized discounts/premiums	—			118			—		310			428
Realized and unrealized appreciation, net	11,557			294			1,994		449			14,294
Balance, end of period	$	142,358		$	278,829		$	196,690	$	845		$	618,722
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,488	)	$	(42	)	$	1,994	$	(125	)	$	(1,661	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

Summary of quantitative inputs and assumptions used for Level III inputs

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of March 31, 2018:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	242,984		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	287,753

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017:

	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	195,158		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	239,927

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of March 31, 2018:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	61,065		Enterprise value market multiple analysis	EBITDA multiple(2)	3.0x	3.0
	61,216			Market approach (comparable companies)	Net income multiple	24.2x - 35.8x	32.7
					Illiquidity discount	25.0%	25.0%
	60			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent transaction price(1)	N/A	N/A	N/A
Partnership interest	252,700			Discounted cash flow	Discount rate	17.0%	17.0%
Fixed income securities
	192,660			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	48,103			Income approach	Yield	7.6% - 14.9%	11.1%
Derivative instruments	834			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	654,719
Liabilities
Derivatives instruments	$	(748	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(748	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2017:

	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	63,155		Enterprise value market multiple analysis	EBITDA multiple(2)	2.7x	2.7x
	61,215			Market approach (comparable companies)	Net income multiple Illiquidity discount	27.0x - 36.2x 25.0%	33.7x 25.0%
	126			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Recent Transaction price(1)	N/A	N/A	N/A
Partnership interest	232,332			Discounted cash flow	Discount rate	19.0%	19.0%
Fixed income securities
	222,413			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	45,243			Income approach	Yield	10.8% - 22.5%	12.1%
	233			Market approach (comparable companies)	EBITDA multiple(2)	6.5x	6.5x
Derivative instruments	1,366			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	664,164
Liabilities
Derivatives instruments	$	(462	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(462	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

Summary of fair value by segment along with the remaining unfunded commitment and any redemption restriction of investments valued using NAV per share

The Company's investments valued using net asset value (“NAV”) per share have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control. A summary of fair value by segment and the remaining unfunded commitments are presented below:

	As of March 31, 2018				As of December 31, 2017
Segment	Fair Value		Unfunded  Commitments		Fair Value		Unfunded  Commitments
Non-core investments(1)	$	37,266	$	16,317	$	35,998	$	16,492
Total	$	37,266	$	16,317	$	35,998	$	16,492

(1) Non-core investments are reported within the Company's Operations Management Group (“OMG”).

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of March 31, 2018 and December 31, 2017:  

	As of March 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639
Total derivatives, at fair value(2)	$	4,724	$	230	$	49,668	$	4,229	$	13,724	$	498	$	51,026	$	2,639

	As of March 31, 2018				As of December 31, 2017
	Assets		Liabilities		Assets		Liabilities
Consolidated Funds	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value	Notional(1)	Fair Value
Asset swap - other	4,843	834	1,750	748	5,363	1,366	1,840	462
Total derivatives, at fair value(3)	4,843	834	1,750	748	5,363	1,366	1,840	462

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of March 31, 2018 and December 31, 2017, the Company had the right to, but elected not to, offset $0.2 million and $0.5 million of its derivative assets and liabilities, respectively.

(3) As of March 31, 2018 and December 31, 2017, the Consolidated Funds offset $0.4 million and $0.4 million of their derivative assets and liabilities, respectively.

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DEBT (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of borrowings outstanding

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of March 31, 2018			As of December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	140,000	3.38%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,469		4.21%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	35,205		35,042		3.24%	35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	26,376		25,959		3.44%	25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	17,600		17,413		3.26%	17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	35,198		35,066		3.26%	35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	17,155		17,025		3.26%	17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	30,450		30,339		3.07%	30,336		2.77%
2018 Term Loan A(4)	1/12/2018	1/15/2030	26,475		26,456		2.97%	—		N/A
Repurchase Agreement Loan(5)	3/13/2018	4/20/2030	17,575		17,400		1.68%	—		N/A
Total debt obligations					$	590,169		$	616,176

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of March 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount.

(4) The 2016, 2017 and 2018 Term Loans (“Term Loans”) were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient to cover the Term Loans, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee ranging from 0.03% to 0.04% of a maximum investment amount.

(5) See Repurchase Agreement below for details

The followings are elements of the repurchase agreement as of March 31, 2018:

	Amounts
Securities transferred at carrying value	$	17,575
Estimated fair value of securities transferred(1)	$	17,575
Cash collateral received from counterparty(2)	$	17,575

(1) Included within the Company's investments.

(2) Included within the Company's debt obligations.

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes			Term Loans			Repurchase Agreement Loan
Unamortized debt issuance costs as of December 31, 2017	$	6,543		$	1,571		$	1,171		$	—
Debt issuance costs incurred	—			—			19			176
Amortization of debt issuance costs	(393		)	(63		)	(32		)	(1		)
Unamortized debt issuance costs as of March 31, 2018	$	6,150		$	1,508		$	1,158		$	175

he Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of March 31, 2018 and December 31, 2017:

				As of March 31, 2018				As of December 31, 2017
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	12,942	3.56%		$	12,942	2.88%
	6/30/2018	49,194		49,194		1.55%	(2)	48,042		1.55%	(2)
	3/7/2019	71,500		71,500		3.10%		71,500		2.88%
Revolving Term Loan	1/31/2022	1,900		1,303		7.89%		—		—%
	8/19/2019	11,429		5,714		8.91%		5,714		5.86%
Total borrowings				$	140,653			$	138,198

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus an applicable margin.

s of March 31, 2018 and December 31, 2017 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs:

	As of March 31, 2018					As of December 31, 2017
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	4,765,180	$	4,758,121	10.39	$	4,801,582	$	4,776,883	10.57
Subordinated notes(2)	278,116		179,143		11.04	276,169		186,311		11.25
Total loan obligations of Consolidated CLOs	$	5,043,296	$	4,937,264		$	5,077,751	$	4,963,194

(1) Original borrowings under the senior secured notes totaled $4.8 billion, with various maturity dates ranging from October 2024 to October 2030. The weighted average interest rate as of March 31, 2018 was 5.02%.

(2) Original borrowings under the subordinated notes totaled $278.1 million, with various maturity dates ranging from October 2024 to October 2030. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Schedule of remaining contractual maturity

The following table shows cash collateral liability by security type:

	Remaining Contractual Maturity of the Agreement as of March 31, 2018
	Less than 1 year		1 - 3 years		4 - 5 years		Thereafter		Total
Collateralized loan obligations	$	—	$	—	$	—	$	17,575	$	17,575

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RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Schedule of amounts due from and to affiliates

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of March 31,		As of December 31,
	2018		2017
Due from affiliates:
Management fees receivable from non-consolidated funds	$	130,346	$	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	38,464		39,244
Due from affiliates—Company	$	168,810	$	165,750
Amounts due from portfolio companies and non-consolidated funds	$	17,782	$	15,884
Due from affiliates—Consolidated Funds	$	17,782	$	15,884
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,560	$	5,213
Management fees received in advance	2,866		1,729
Tax receivable agreement liability	12,925		3,503
Payments made by non-consolidated funds on behalf of and payable by the Company	2,667		4,197
Due to affiliates—Company	$	21,018	$	14,642

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INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of provision for income taxes

Supplemental information on an unaudited pro forma basis, as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three months ended March 31, 2017 is as follows:

	Three Months Ended March 31,
							2017
	2018			2017			Pro forma
Provision for Income Taxes - The Company
Income tax benefit of the Company	$	(12,375	)	$	(34,733	)	$	(28,344	)
Provision for Income Taxes - Consolidated Funds
Income tax expense of the Consolidated Funds	—			469			469
Total Provision for Income Taxes	$	(12,375	)	$	(34,264	)	$	(27,875	)

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EARNINGS PER COMMON SHARE (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Schedule of antidilutive securities excluded from earnings per common unit

The computation of diluted earnings per common share for the three months ended March 31, 2018 and 2017 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended   March 31,
	2018	2017
Options	17,411,780	21,334,689
Restricted units	16,352,546	15,070,871
AOG Units	—	130,403,174

Schedule of the computation of basic and diluted earnings per common unit

The following table presents the computation of basic and diluted earnings per common share:

	For the Three Months Ended   March 31,
	2018			2017
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Net income (loss) available to common shareholders	$	33,624		$	(47,384	)
Basic weighted-average common shares	85,617,932			81,106,734
Basic earnings (loss) per common share	$	0.39		$	(0.58	)
Net income (loss) attributable to Ares Management, L.P. common shareholders	$	35,523		$	(46,559	)
Earnings distributed to participating securities (restricted units)	(1,899		)	(825		)
Incremental net income from assumed exchange of AOG Units	26,606			—
Net income (loss) available to common shareholders	$	60,230		$	(47,384	)
Effect of dilutive shares:
AOG Units	128,234,996			—
Diluted weighted-average common shares	213,852,928			81,106,734
Diluted earnings (loss) per common share	$	0.28		$	(0.58	)

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EQUITY COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of equity-based compensation expense, net of assumed forfeitures

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended   March 31,
	2018		2017
Restricted units	$	18,030	$	11,219
Options	2,664		3,482
Phantom units	393		388
Equity-based compensation expense	$	21,087	$	15,089

Summary of unvested restricted units' activity

The following table presents unvested restricted units' activity during the three months ended March 31, 2018:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	13,751,888		$	17.58
Granted	3,635,419		23.61
Vested	(835,124	)	15.33
Forfeited	(199,637	)	19.83
Balance - March 31, 2018	16,352,546		$	18.98

Summary of unvested options activity

A summary of options activity during the three months ended March 31, 2018 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2018	20,495,025		$	18.99	6.09	$	20,611
Granted	—		—		—
Exercised	—		—		—
Expired	(219,034	)	19.00		—
Forfeited	(444,203	)	19.00		—
Balance - March 31, 2018	19,831,788		$	18.99	5.84	$	47,762
Exercisable at March 31, 2018	7,235,214		$	18.99	5.38	$	17,420

Summary of unvested phantom units activity

A summary of unvested phantom unit activity during the three months ended March 31, 2018 is presented below:

	Phantom Units		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2018	156,153		$	19.00
Vested	—
Forfeited	(9,362	)	19.00
Balance - March 31, 2018	146,791		$	19.00

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule of financial results for Company's operating segments, as well as the OMG

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $28,417)	$	131,766		$	49,887		$	15,173		$	196,826		$	—		$	196,826
Other fees	5,730			340			3			6,073			—			6,073
Compensation and benefits	(50,280		)	(19,199		)	(7,639		)	(77,118		)	(30,606		)	(107,724		)
General, administrative and other expenses	(9,629		)	(4,041		)	(2,432		)	(16,102		)	(18,616		)	(34,718		)
Fee related earnings	77,587			26,987			5,105			109,679			(49,222		)	60,457
Performance income—realized	5,071			4,398			13,638			23,107			—			23,107
Performance income—unrealized	16,092			21,066			(2,040		)	35,118			—			35,118
Performance related compensation—realized	(3,088		)	(3,560		)	(8,221		)	(14,869		)	—			(14,869		)
Performance related compensation—unrealized	7,176			(18,694		)	509			(11,009		)	—			(11,009		)
Net performance income	25,251			3,210			3,886			32,347			—			32,347
Investment income—realized	771			671			3,350			4,792			838			5,630
Investment income (loss)—unrealized	(269		)	(4,150		)	(1,232		)	(5,651		)	1,231			(4,420		)
Interest and other investment income	2,196			329			1,017			3,542			1,247			4,789
Interest expense	(4,673		)	(1,228		)	(420		)	(6,321		)	(548		)	(6,869		)
Net investment income (loss)	(1,975		)	(4,378		)	2,715			(3,638		)	2,768			(870		)
Performance related earnings	23,276			(1,168		)	6,601			28,709			2,768			31,477
Economic net income	$	100,863		$	25,819		$	11,706		$	138,388		$	(46,454	)	$	91,934
Realized income	$	78,857		$	27,327		$	13,669		$	119,853		$	(47,780	)	$	72,073

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2017:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,257)	$	121,347		$	39,819		$	15,615		$	176,781		$	—		$	176,781
Other fees	4,503			340			(9		)	4,834			—			4,834
Compensation and benefits	(51,703		)	(13,218		)	(9,736		)	(74,657		)	(25,953		)	(100,610		)
General, administrative and other expenses	(8,041		)	(4,198		)	(2,731		)	(14,970		)	(19,313		)	(34,283		)
Fee related earnings	66,106			22,743			3,139			91,988			(45,266		)	46,722
Performance income—realized	8,778			—			27			8,805			—			8,805
Performance income—unrealized	2,936			32,237			14,088			49,261			—			49,261
Performance related compensation—realized	(5,285		)	—			(16		)	(5,301		)	—			(5,301		)
Performance related compensation—unrealized	(1,458		)	(25,505		)	(8,438		)	(35,401		)	—			(35,401		)
Net performance income	4,971			6,732			5,661			17,364			—			17,364
Investment income—realized	318			579			1,783			2,680			1,859			4,539
Investment income (loss)—unrealized	4,589			8,546			(444		)	12,691			(1,407		)	11,284
Interest and other investment income (expense)	(19		)	152			(181		)	(48		)	874			826
Interest expense	(2,458		)	(1,513		)	(432		)	(4,403		)	(476		)	(4,879		)
Net investment income	2,430			7,764			726			10,920			850			11,770
Performance related earnings	7,401			14,496			6,387			28,284			850			29,134
Economic net income	$	73,507		$	37,239		$	9,526		$	120,272		$	(44,416	)	$	75,856
Realized income	$	69,945		$	22,345		$	4,588		$	96,878		$	(43,205	)	$	53,673

Schedule of segment’ revenue, expenses and other income (expense)

The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense):

	For the Three Months Ended   March 31,
	2018			2017
Segment Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	$	196,826		$	176,781
Other fees	6,073			4,834
Performance income—realized	23,107			8,805
Performance income—unrealized	35,118			49,261
Total segment revenues	$	261,124		$	239,681
Segment Expenses
Compensation and benefits	$	77,118		$	74,657
General, administrative and other expenses	16,102			14,970
Performance related compensation—realized	14,869			5,301
Performance related compensation—unrealized	11,009			35,401
Total segment expenses	$	119,098		$	130,329
Other Income (Expense)
Investment income—realized	$	4,792		$	2,680
Investment income (loss)—unrealized	(5,651		)	12,691
Interest and other investment income (expense)	3,542			(48		)
Interest expense	(6,321		)	(4,403		)
Total other income (expense)	$	(3,638	)	$	10,920

Schedule of segment revenues components

The following table reconciles segment revenue to Ares consolidated revenues:

	For the Three Months Ended   March 31,
	2018			2017
Total segment revenue	$	261,124		$	239,681
Revenue of Consolidated Funds eliminated in consolidation	(5,110		)	(18,188		)
Administrative fees(1)	6,412			9,606
Performance income reclass(2)	975			(24		)
Principal investment income	2,708			13,169
Revenue of non-controlling interests in consolidated subsidiaries(3)	(20		)	—
Total consolidated adjustments and reconciling items	4,965			4,563
Total consolidated revenue	$	266,089		$	244,244

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations.

(3) Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.

Schedule of segment expenses components

The following table reconciles segment expenses to Ares consolidated expenses:

	For the Three Months Ended   March 31,
	2018			2017
Total segment expenses	$	119,098		$	130,329
Expenses of Consolidated Funds added in consolidation	8,629			10,509
Expenses of Consolidated Funds eliminated in consolidation	(7,313		)	(6,598		)
Administrative fees(1)	6,412			9,606
OMG expenses	49,222			45,266
Acquisition and merger-related expenses	(319		)	275,336
Equity compensation expense	21,087			15,089
Placement fees and underwriting costs	1,664			3,439
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Expenses of non-controlling interests in consolidated subsidiaries(2)	627			—
Total consolidation adjustments and reconciling items	87,185			361,138
Total consolidated expenses	$	206,283		$	491,467

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Costs being borne by certain of our joint venture partners.

Schedule of segment other income (expense) components

The following table reconciles segment other income (expense) to Ares consolidated other income:

	For the Three Months Ended   March 31,
	2018			2017
Total other income (expense)	$	(3,638	)	$	10,920
Other income from Consolidated Funds added in consolidation, net	7,252			38,445
Other expense from Consolidated Funds eliminated in consolidation, net	(459		)	(23		)
Other income of non-controlling interests in consolidated subsidiaries	7			—
OMG other expense	2,768			850
Performance income reclass(1)	(975		)	24
Principal investment income	(2,708		)	(13,169		)
Changes in value of contingent consideration	—			20,248
Other non-cash expense	(7		)	—
Offering costs	—			(660		)
Total consolidation adjustments and reconciling items	5,878			45,715
Total consolidated other income	$	2,240		$	56,635

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations.

Reconciliation of segment results to the Company's income before taxes and total assets

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, RI, FRE and PRE:

	For the Three Months Ended   March 31,
	2018			2017
Economic net income
Income (loss) before taxes	$	62,046		$	(190,588	)
Adjustments:
Amortization of intangibles	3,287			5,275
Depreciation expense	3,889			3,216
Equity compensation expenses	21,087			15,089
Acquisition and merger-related expenses	(319		)	255,088
Placement fees and underwriting costs	1,664			3,439
OMG expenses, net	46,454			44,416
Offering costs	—			660
Other non-cash expense	7			—
Expense of non-controlling interests in consolidated subsidiaries(1)	640			—
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(367		)	(16,323		)
Total consolidation adjustments and reconciling items	76,342			310,860
Economic net income	138,388			120,272
Total performance income - unrealized	(35,118		)	(49,261		)
Total performance related compensation - unrealized	11,009			35,401
Total investment (income) loss - unrealized	5,574			(9,534		)
Realized income	119,853			96,878
Total performance income - realized	(23,107		)	(8,805		)
Total performance related compensation - realized	14,869			5,301
Total investment income - realized	(1,936		)	(1,386		)
Fee related earnings	109,679			91,988
Performance related earnings
Economic net income	$	138,388		$	120,272
Less: fee related earnings	(109,679		)	(91,988		)
Performance related earnings	$	28,709		$	28,284

(1)

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CONSOLIDATION (Tables)

3 Months Ended

Mar. 31, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of interest in VIEs

The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of March 31,		As of December 31,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	266,833	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	174,849	$	175,620
Assets of consolidated VIEs	$	6,126,584	$	6,231,245
Liabilities of consolidated VIEs	$	5,417,561	$	5,538,054

	For the Three Months Ended   March 31,
	2018		2017
Net income attributable to non-controlling interests related to consolidated VIEs	$	367	$	15,855

Schedule of consolidating effects of the Consolidated Funds on the Company's financial condition

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of March 31, 2018 and December 31, 2017 and results from operations for the three months ended March 31, 2018 and 2017.  

	As of March 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	115,540		$	—	$	—		$	115,540
Investments ($1,113,435 of accrued carried interest, and $17,575 of pledged collateral)	1,986,678			—		(174,849		)	1,811,829
Due from affiliates	177,601			—		(8,791		)	168,810
Deferred tax asset, net	50,986			—		—			50,986
Other assets	105,187			—		—			105,187
Intangible assets, net	37,178			—		—			37,178
Goodwill	143,968			—		—			143,968
Assets of Consolidated Funds
Cash and cash equivalents	—			532,470		—			532,470
Investments, at fair value	—			5,479,136		—			5,479,136
Due from affiliates	—			17,782		—			17,782
Dividends and interest receivable	—			12,096		—			12,096
Receivable for securities sold	—			83,718		—			83,718
Other assets	—			1,382		—			1,382
Total assets	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082
Liabilities
Accounts payable, accrued expenses and other liabilities	$	78,771		$	—	$	—		$	78,771
Accrued compensation	49,944			—		—			49,944
Due to affiliates	21,018			—		—			21,018
Performance related compensation payable	856,421			—		—			856,421
Debt obligations	590,169			—		—			590,169
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			81,508		—			81,508
Due to affiliates	—			8,791		(8,791		)	—
Payable for securities purchased	—			239,139		—			239,139
CLO loan obligations, at fair value	—			4,947,470		(10,206		)	4,937,264
Fund borrowings	—			140,653		—			140,653
Total liabilities	1,596,323			5,417,561		(18,997		)	6,994,887
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			709,023		(164,643		)	544,380
Non-controlling interest in Ares Operating Group entities	348,820			—		—			348,820
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares issued and outstanding)	377,235			—		—			377,235
Accumulated other comprehensive loss, net of tax	(4,001		)	—		—			(4,001		)
Total controlling interest in Ares Management, L.P.	373,234			—		—			373,234
Total equity	1,020,815			709,023		(164,643		)	1,565,195
Total liabilities and equity	$	2,617,138		$	6,126,584	$	(183,640	)	$	8,560,082

	As of December 31, 2017
	As adjusted
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest, and $0 of pledged collateral)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable, accrued expenses and other liabilities	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	14,642			—		—			14,642
Performance related compensation payable	846,626			—		—			846,626
Debt obligations	616,176			—		—			616,176
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations, at fair value	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Shareholders' equity (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522

Schedule of results from operations

	For the Three Months Ended March 31, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $28,417)	$	196,826		$	—		$	(7,311	)	$	189,515
Carried interest allocation	54,129			—			—			54,129
Incentive fees	5,071			—			—			5,071
Principal investment income	2,708			—			2,201			4,909
Administrative, transaction and other fees	12,465			—			—			12,465
Total revenues	271,199			—			(5,110		)	266,089
Expenses
Compensation and benefits	134,639			—			—			134,639
Performance related compensation	25,878			—			—			25,878
General, administrative and other expense	44,450			—			—			44,450
Expenses of the Consolidated Funds	—			8,629			(7,313		)	1,316
Total expenses	204,967			8,629			(7,313		)	206,283
Other income (expense)
Net realized and unrealized loss on investments	(1,178		)	—			339			(839		)
Interest and dividend income	3,347			—			—			3,347
Interest expense	(6,869		)	—			—			(6,869		)
Other income (expense), net	147			—			(458		)	(311		)
Net realized and unrealized loss on investments of the Consolidated Funds	—			(12,452		)	(633		)	(13,085		)
Interest and other income of the Consolidated Funds	—			64,422			—			64,422
Interest expense of the Consolidated Funds	—			(44,718		)	293			(44,425		)
Total other income (expense)	(4,553		)	7,252			(459		)	2,240
Income (loss) before taxes	61,679			(1,377		)	1,744			62,046
Income tax benefit	(12,375		)	—			—			(12,375		)
Net income (loss)	74,054			(1,377		)	1,744			74,421
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—			(1,377		)	1,744			367
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	33,106			—			—			33,106
Net income attributable to Ares Management, L.P.	40,948			—			—			40,948
Less: Preferred equity dividend paid	5,425			—			—			5,425
Net income attributable to Ares Management, L.P. common shareholders	$	35,523		$	—		$	—		$	35,523

	For the Three Months Ended March 31, 2017
	As adjusted
	Consolidated Company  Entities				Consolidated Funds				Eliminations				Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,257)	$	176,781			$	—			$	(4,736	)		$	172,045
Carried interest allocation	53,015				—				(1,008		)		52,007
Incentive fees	5,027				—				(1,862		)		3,165
Principal investment income	13,169				—				(10,582		)		2,587
Administrative, transaction and other fees	14,440				—				—				14,440
Total revenues	262,432				—				(18,188		)		244,244
Expenses
Compensation and benefits	124,339				—				—				124,339
Performance related compensation	40,702				—				—				40,702
General, administrative and other expense	47,338				—				—				47,338
Transaction support expense	275,177												275,177
Expenses of the Consolidated Funds	—				10,509				(6,598		)		3,911
Total expenses	487,556				10,509				(6,598		)		491,467
Other income (expense)
Net realized and unrealized gain on investments	3,753				—				(2,865		)		888
Interest and dividend income	2,843				—				(919		)		1,924
Interest expense	(4,879		)		—				—				(4,879		)
Other income, net	16,496				—				—				16,496
Net realized and unrealized gain on investments of the Consolidated Funds	—				30,439				1,597				32,036
Interest and other income of the Consolidated Funds	—				41,492				—				41,492
Interest expense of Consolidated Funds	—			—	(33,486		)	—	2,164			—	(31,322		)
Total other income	18,213				38,445				(23		)		56,635
Income (loss) before taxes	(206,911		)		27,936				(11,613		)		(190,588		)
Income tax expense (benefit)	(34,732		)		468				—				(34,264		)
Net income (loss)	(172,179		)		27,468				(11,613		)		(156,324		)
Less: Net income attributable to non-controlling interests in Consolidated Funds	—				27,468				(11,613		)		15,855
Less: Net loss attributable to non-controlling interests in Ares Operating Group entities	(131,045		)		—				—				(131,045		)
Net loss attributable to Ares Management, L.P.	(41,134		)		—				—				(41,134		)
Less: Preferred equity dividend paid	5,425				—				—				5,425
Net loss attributable to Ares Management, L.P. common shareholders	$	(46,559	)		$	—			$	—			$	(46,559	)

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ORGANIZATION (Details)	3 Months Ended
	Mar. 31, 2018 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of investing groups	3

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Financial Condition) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Assets
Investments, at fair value			$ 1,724,571
Other assets			130,341
Total assets	$ 8,560,082		8,563,522
Commitments and contingencies
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235		279,065
Accumulated other comprehensive loss, net of tax	(4,001)		(4,208)
Total controlling interest in Ares Management, L.P.	373,234		274,857
Total equity	1,565,195		1,460,292
Total liabilities and equity	$ 8,560,082		$ 8,563,522
Partners' Capital shares issued (in shares)	97,514,500		82,280,033
Partners' Capital shares outstanding (in shares)	97,514,500		82,280,033
Ares Management L.P
Assets
Investments, at fair value	$ 1,811,829		$ 1,724,571
Deferred tax asset, net	50,986		8,326
Other assets	105,187		130,341
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235		279,065
Accumulated other comprehensive loss, net of tax	(4,001)		(4,208)
Total controlling interest in Ares Management, L.P.	373,234		274,857
Ares Management L.P | Accrued Interest
Assets
Investments, at fair value	1,113,435		1,077,236
Ares Management L.P | Collateral Pledged
Assets
Investments, at fair value	17,575		0
Consolidated Funds
Assets
Investments, at fair value	5,479,136		5,582,842
Other assets	1,382		1,989
Non-controlling interest in Consolidated Funds	544,380		528,488
Non-controlling interest in Ares Operating Group entities	544,380		528,488
AOG
Assets
Non-controlling interest in Ares Operating Group entities	348,820		358,186
ASC 323 | Ares Management L.P
Assets
Investments, at fair value			1,724,571
Performance income receivable			0
Other assets			130,341
ASC 323 | As Previously Reported | Ares Management L.P
Assets
Investments, at fair value			647,335
Performance income receivable			1,099,847
Other assets			107,730
ASC 323 | Adjustments | Ares Management L.P
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of ASU adoption			22,600
Assets
Investments, at fair value			1,077,236
Performance income receivable			(1,099,847)
Other assets			$ 22,611
ASC 606 | Adjustments
Assets
Investments, at fair value		$ 0
Deferred tax asset, net	(250)
Other assets	23,704	(22,611)
Total assets	23,454	(22,611)
Non-controlling interest in Consolidated Funds	(7,052)
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	11,603
Accumulated other comprehensive loss, net of tax	100
Total controlling interest in Ares Management, L.P.	11,703
Total equity	23,454	(22,611)
Total liabilities and equity	23,454	(22,611)
ASC 606 | Balances without adoption of ASC 606
Assets
Investments, at fair value		1,724,571
Other assets		107,730
Total assets	8,583,536	8,540,911
Commitments and contingencies
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	388,838
Accumulated other comprehensive loss, net of tax	(3,901)
Total controlling interest in Ares Management, L.P.	384,937
Total equity	1,588,649	1,437,681
Total liabilities and equity	8,583,536	$ 8,540,911
ASC 606 | Ares Management L.P | Balances without adoption of ASC 606
Assets
Deferred tax asset, net	50,736
Other assets	128,891
ASC 606 | Consolidated Funds | Balances without adoption of ASC 606
Assets
Non-controlling interest in Consolidated Funds	537,328
ASC 606 | AOG | Adjustments
Assets
Non-controlling interest in Ares Operating Group entities	18,803
ASC 606 | AOG | Balances without adoption of ASC 606
Assets
Non-controlling interest in Ares Operating Group entities	$ 367,623

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Revenues
Total revenues	$ 266,089	$ 244,244
Other income (expense)
Total other income	2,240	56,635
Income (loss) before taxes	62,046	(190,588)
Income tax benefit	(12,375)	(34,264)
Net income (loss)	74,421	(156,324)
Net income (loss) attributable to Ares Management, L.P.	40,948	(41,134)
Net income (loss) attributable to Ares Management, L.P. common shareholders	35,523	(46,559)
Ares Management L.P
Revenues
Carried interest allocation	54,129	52,007
Incentive fees	5,071	3,165
Principal investment income	4,909	2,587
Total revenues	266,089	244,244
Other income (expense)
Net realized and unrealized gain (loss) on investments	(839)	888
Interest and dividend income	3,347	1,924
Other income (expense), net	(311)	16,496
Income tax benefit	(12,375)	(34,733)
Consolidated Funds
Other income (expense)
Net realized and unrealized gain (loss) on investments	(13,085)	32,036
Interest and dividend income	64,422	41,492
Income tax benefit	0	$ 469
ASC 323 | Ares Management L.P
Revenues
Performance fees			$ 0
Carried interest allocation			52,007
Incentive fees			3,165
Principal investment income			2,587
Total revenues			244,244
Other income (expense)
Net realized and unrealized gain (loss) on investments			888
Interest and dividend income			1,924
ASC 323 | As Previously Reported | Ares Management L.P
Revenues
Performance fees			55,172
Carried interest allocation			0
Incentive fees			0
Principal investment income			0
Total revenues			241,657
Other income (expense)
Net realized and unrealized gain (loss) on investments			2,655
Interest and dividend income			2,744
ASC 323 | Adjustments | Ares Management L.P
Revenues
Performance fees			(55,172)
Carried interest allocation			52,007
Incentive fees			3,165
Principal investment income			2,587
Total revenues			2,587
Other income (expense)
Net realized and unrealized gain (loss) on investments			(1,767)
Interest and dividend income			$ (820)
ASC 606 | Adjustments
Other income (expense)
Total other income	(12)
Income (loss) before taxes	844
Income tax benefit	250
Net income (loss)	594
Net income (loss) attributable to Ares Management, L.P.	594
Net income (loss) attributable to Ares Management, L.P. common shareholders	594
ASC 606 | Balances without adoption of ASC 606
Other income (expense)
Total other income	2,228
Income (loss) before taxes	62,890
Income tax benefit	(12,125)
Net income (loss)	75,015
Net income (loss) attributable to Ares Management, L.P.	41,542
Net income (loss) attributable to Ares Management, L.P. common shareholders	36,117
ASC 606 | Ares Management L.P | Adjustments
Revenues
Incentive fees	856
Total revenues	856
Other income (expense)
Other income (expense), net	(12)
ASC 606 | Ares Management L.P | Balances without adoption of ASC 606
Revenues
Incentive fees	5,927
Total revenues	266,945
Other income (expense)
Other income (expense), net	$ (323)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Impact of Incentive Fees) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments			$ 1,724,571
Other assets			130,341
Total assets	$ 8,560,082		8,563,522
Total liabilities	6,994,887		7,103,230
Cumulative effect of the adoption of ASC 606			0
Total equity	1,565,195		1,460,292
Total liabilities and equity	8,560,082		8,563,522
ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606			$ (22,611)
Adjustments | ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments		$ 0
Other assets	23,704	(22,611)
Total assets	23,454	(22,611)
Total liabilities		0
Cumulative effect of the adoption of ASC 606		(22,611)
Total equity	23,454	(22,611)
Total liabilities and equity	23,454	(22,611)
Balances without adoption of ASC 606 | ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investments		1,724,571
Other assets		107,730
Total assets	8,583,536	8,540,911
Total liabilities		7,103,230
Cumulative effect of the adoption of ASC 606		(22,611)
Total equity	1,588,649	1,437,681
Total liabilities and equity	$ 8,583,536	$ 8,540,911

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Changes in Equity) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	$ 1,565,195	$ 1,460,292
Cumulative effect of the adoption of ASC 606		0
As adjusted balance at January 1, 2018		1,437,681
Ares Management L.P | Accumulated Other Comprehensive Loss
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	(4,001)	(4,208)
As adjusted balance at January 1, 2018		(4,208)
AOG | Non-Controlling interest
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	348,820	358,186
As adjusted balance at January 1, 2018		341,069
Consolidated Funds | Non-Controlling interest
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	544,380	528,488
As adjusted balance at January 1, 2018		533,821
Partners' Capital | Ares Management L.P
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	377,235	279,065
As adjusted balance at January 1, 2018		268,238
Partners' Capital | Preferred Partner
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total equity	$ 298,761	298,761
As adjusted balance at January 1, 2018		298,761
ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		(22,611)
ASC 606 | Ares Management L.P | Accumulated Other Comprehensive Loss
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		0
ASC 606 | AOG | Non-Controlling interest
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		(17,117)
ASC 606 | Consolidated Funds | Non-Controlling interest
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		5,333
ASC 606 | Partners' Capital | Ares Management L.P
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		(10,827)
ASC 606 | Partners' Capital | Preferred Partner
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of the adoption of ASC 606		$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	$ 74,421	$ (156,324)
Other comprehensive income:
Foreign currency translation adjustments	6,687
Ares Management L.P
Other comprehensive income:
Foreign currency translation adjustments	5,485	3,442
Total comprehensive income (loss)	79,906	(152,882)
Comprehensive income (loss) attributable to Ares Management, L.P.	41,155	(39,933)
Consolidated Funds
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	3,542	15,856
AOG
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	35,209	$ (128,805)
Adjustments | ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	594
Adjustments | Ares Management L.P | ASC 606
Other comprehensive income:
Foreign currency translation adjustments	249
Total comprehensive income (loss)	843
Comprehensive income (loss) attributable to Ares Management, L.P.	876
Adjustments | Consolidated Funds | ASC 606
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	(1,719)
Adjustments | AOG | ASC 606
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	1,686
Balances without adoption of ASC 606 | ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	75,015
Balances without adoption of ASC 606 | Ares Management L.P | ASC 606
Other comprehensive income:
Foreign currency translation adjustments	5,734
Total comprehensive income (loss)	80,749
Comprehensive income (loss) attributable to Ares Management, L.P.	42,031
Balances without adoption of ASC 606 | Consolidated Funds | ASC 606
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	1,823
Balances without adoption of ASC 606 | AOG | ASC 606
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	$ 36,895

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Cash Flows) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income (loss)	$ 74,421	$ (156,324)
Cash flows due to changes in operating assets and liabilities	(37,718)	(135,303)
Consolidated Funds
Cash flows from operating activities:
Cash flows due to changes in operating assets and liabilities	(88,592)	$ 100,086
ASC 606 | Adjustments
Cash flows from operating activities:
Net income (loss)	594
Cash flows due to changes in operating assets and liabilities	(2,313)
ASC 606 | Balances without adoption of ASC 606
Cash flows from operating activities:
Net income (loss)	75,015
Cash flows due to changes in operating assets and liabilities	(40,031)
ASC 606 | Consolidated Funds | Adjustments
Cash flows from operating activities:
Cash flows due to changes in operating assets and liabilities	1,719
ASC 606 | Consolidated Funds | Balances without adoption of ASC 606
Cash flows from operating activities:
Cash flows due to changes in operating assets and liabilities	$ (86,873)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Recent Accounting Pronouncements) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Accounting Policies [Abstract]
Reclassification from accumulated other comprehensive income to shareholders' equity	$ 1.2

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GOODWILL AND INTANGIBLE ASSETS (Carrying Value of Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Finite-lived intangible assets, net
Total intangible assets	$ 84,135		$ 109,106
Less: accumulated amortization	(46,957)		(68,641)
Intangible assets, net	37,178		40,465
Fully-amortized intangibles, amount removed during the period	25,000
General, administrative and other expense
Finite-lived intangible assets, net
Amortization expense	$ 3,300	$ 5,300
Management contracts
Finite-lived intangible assets, net
Weighted average amortization period	2 years 2 months 12 days
Intangible assets	$ 42,335		67,306
Client relationships
Finite-lived intangible assets, net
Weighted average amortization period	10 years 3 months 18 days
Intangible assets	$ 38,600		38,600
Trade name
Finite-lived intangible assets, net
Weighted average amortization period	4 years 3 months 18 days
Intangible assets	$ 3,200		$ 3,200

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GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 143,895,000
Foreign currency translation	73,000
Goodwill, ending balance	143,968,000
Goodwill impairment	0	$ 0
Credit
Goodwill [Roll Forward]
Goodwill, beginning balance	32,196,000
Foreign currency translation	0
Goodwill, ending balance	32,196,000
Private Equity
Goodwill [Roll Forward]
Goodwill, beginning balance	58,600,000
Foreign currency translation	0
Goodwill, ending balance	58,600,000
Real Estate
Goodwill [Roll Forward]
Goodwill, beginning balance	53,099,000
Foreign currency translation	73,000
Goodwill, ending balance	$ 53,172,000

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INVESTMENTS (Fair Value Investments, excluding Equity Method Investments Held at Fair Value) (Details) - Ares Management L.P - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Investments
Fair value investments	$ 1,811,829	$ 1,724,571
Partnership interests
Investments
Fair value investments	$ 1,567,449	$ 1,527,777
Percentage of total investments	86.50%	88.60%
Common Stock
Investments
Fair value investments	$ 1,396	$ 1,636
Percentage of total investments	0.10%	0.10%
Partnership interests
Investments
Fair value investments	$ 347,406	$ 340,354
Percentage of total investments	19.20%	19.70%
Equity method - carried interest
Investments
Fair value investments	$ 1,113,435	$ 1,077,236
Percentage of total investments	61.40%	62.50%
Equity method private investment partnership interests - other
Investments
Fair value investments	$ 69,342	$ 74,439
Percentage of total investments	3.80%	4.30%
Other private investment partnership Interests
Investments
Fair value investments	$ 37,266	$ 35,748
Percentage of total investments	2.10%	2.10%
Collateralized loan obligations
Investments
Fair value investments	$ 242,984	$ 195,158
Percentage of total investments	13.40%	11.30%

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INVESTMENTS (Equity Method Investments) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Investments In And Advances To Affiliates [Abstract]
Equity method investments	$ 3.5	$ 5.8

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INVESTMENTS (Investments of the Consolidated Funds) (Details) - Consolidated Funds $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($) issuer	Dec. 31, 2017 USD ($) issuer
Investments
Investments	$ 5,479,136	$ 5,582,842
Number of single issuers above 5% | issuer	0	0
Single issuer or investor threshold, as a percent	5.00%	5.00%
Fixed Income
Investments
Investments	$ 5,007,793	$ 5,115,374
Percentage of total investments	91.50%	91.60%
Equity securities
Investments
Investments	$ 218,643	$ 235,136
Percentage of total investments	3.90%	4.20%
Partnership Interests | Partnership and interests
Investments
Investments	$ 252,700	$ 232,332
Percentage of total investments	4.60%	4.20%
United States | Fixed Income
Investments
Investments	$ 3,388,108	$ 3,447,953
Percentage of total investments	62.10%	61.80%
Investments, at cost	$ 3,393,506	$ 3,459,318
United States | Fixed Income | Consumer discretionary
Investments
Investments	$ 1,303,537	$ 1,295,732
Percentage of total investments	24.10%	23.20%
United States | Fixed Income | Consumer staples
Investments
Investments	$ 56,917	$ 55,073
Percentage of total investments	1.00%	1.00%
United States | Fixed Income | Energy
Investments
Investments	$ 173,698	$ 176,836
Percentage of total investments	3.20%	3.20%
United States | Fixed Income | Financials
Investments
Investments	$ 270,317	$ 270,520
Percentage of total investments	4.90%	4.80%
United States | Fixed Income | Healthcare, education and childcare
Investments
Investments	$ 453,622	$ 449,888
Percentage of total investments	8.30%	8.10%
United States | Fixed Income | Industrials
Investments
Investments	$ 364,479	$ 370,926
Percentage of total investments	6.70%	6.60%
United States | Fixed Income | Information technology
Investments
Investments	$ 146,733	$ 167,089
Percentage of total investments	2.70%	3.00%
United States | Fixed Income | Materials
Investments
Investments	$ 170,309	$ 185,170
Percentage of total investments	3.10%	3.30%
United States | Fixed Income | Telecommunication services
Investments
Investments	$ 385,829	$ 399,617
Percentage of total investments	7.00%	7.20%
United States | Fixed Income | Utilities
Investments
Investments	$ 62,667	$ 77,102
Percentage of total investments	1.10%	1.40%
United States | Equity securities
Investments
Investments	$ 60	$ 126
Percentage of total investments	0.00%	0.00%
Investments, at cost	$ 2,265	$ 2,265
United States | Equity securities | Energy
Investments
Investments	$ 60	$ 126
Percentage of total investments	0.00%	0.00%
United States | Partnership Interests
Investments
Investments	$ 252,700	$ 232,332
Percentage of total investments	4.60%	4.20%
Investments, at cost	$ 200,000	$ 190,000
United States | Partnership Interests | Partnership and interests
Investments
Investments	$ 252,700	$ 232,332
Percentage of total investments	4.60%	4.20%
Europe | Fixed Income
Investments
Investments	$ 1,497,652	$ 1,537,889
Percentage of total investments	27.20%	27.60%
Investments, at cost	$ 1,507,741	$ 1,545,297
Europe | Fixed Income | Consumer discretionary
Investments
Investments	$ 603,516	$ 604,608
Percentage of total investments	11.00%	10.80%
Europe | Fixed Income | Consumer staples
Investments
Investments	$ 72,317	$ 76,361
Percentage of total investments	1.30%	1.40%
Europe | Fixed Income | Energy
Investments
Investments	$ 2,461	$ 2,413
Percentage of total investments	0.00%	0.00%
Europe | Fixed Income | Financials
Investments
Investments	$ 116,836	$ 81,987
Percentage of total investments	2.10%	1.50%
Europe | Fixed Income | Healthcare, education and childcare
Investments
Investments	$ 187,032	$ 209,569
Percentage of total investments	3.40%	3.80%
Europe | Fixed Income | Industrials
Investments
Investments	$ 128,345	$ 145,706
Percentage of total investments	2.30%	2.60%
Europe | Fixed Income | Information technology
Investments
Investments	$ 20,603	$ 21,307
Percentage of total investments	0.40%	0.40%
Europe | Fixed Income | Materials
Investments
Investments	$ 184,625	$ 213,395
Percentage of total investments	3.40%	3.80%
Europe | Fixed Income | Telecommunication services
Investments
Investments	$ 181,917	$ 182,543
Percentage of total investments	3.30%	3.30%
Europe | Equity securities
Investments
Investments	$ 61,065	$ 63,155
Percentage of total investments	1.10%	1.10%
Investments, at cost	$ 67,198	$ 67,198
Europe | Equity securities | Healthcare, education and childcare
Investments
Investments	$ 61,065	$ 63,155
Percentage of total investments	1.10%	1.10%
Asia and other | Fixed Income
Investments
Investments	$ 46,174	$ 36,309
Percentage of total investments	0.80%	0.60%
Investments, at cost	$ 46,287	$ 36,180
Asia and other | Fixed Income | Consumer discretionary
Investments
Investments	$ 2,019	$ 2,008
Percentage of total investments	0.00%	0.00%
Asia and other | Fixed Income | Financials
Investments
Investments	$ 22,476	$ 12,453
Percentage of total investments	0.40%	0.20%
Asia and other | Fixed Income | Telecommunication services
Investments
Investments	$ 21,679	$ 21,848
Percentage of total investments	0.40%	0.40%
Asia and other | Equity securities
Investments
Investments	$ 157,518	$ 165,943
Percentage of total investments	2.80%	3.00%
Investments, at cost	$ 122,418	$ 122,418
Asia and other | Equity securities | Consumer discretionary
Investments
Investments	$ 50,071	$ 59,630
Percentage of total investments	0.90%	1.10%
Asia and other | Equity securities | Consumer staples
Investments
Investments	$ 46,232	$ 45,098
Percentage of total investments	0.80%	0.80%
Asia and other | Equity securities | Healthcare, education and childcare
Investments
Investments	$ 44,637	$ 44,637
Percentage of total investments	0.80%	0.80%
Asia and other | Equity securities | Industrials
Investments
Investments	$ 16,578	$ 16,578
Percentage of total investments	0.30%	0.30%
Canada | Fixed Income
Investments
Investments	$ 65,653	$ 80,797
Percentage of total investments	1.20%	1.40%
Investments, at cost	$ 65,501	$ 80,201
Canada | Fixed Income | Consumer discretionary
Investments
Investments	$ 7,474	$ 6,757
Percentage of total investments	0.10%	0.10%
Canada | Fixed Income | Consumer staples
Investments
Investments	$ 19,364	$ 15,351
Percentage of total investments	0.40%	0.30%
Canada | Fixed Income | Energy
Investments
Investments	$ 14,103	$ 33,715
Percentage of total investments	0.30%	0.60%
Canada | Fixed Income | Industrials
Investments
Investments	$ 18,667	$ 18,785
Percentage of total investments	0.30%	0.30%
Canada | Fixed Income | Telecommunication services
Investments
Investments	$ 6,045	$ 6,189
Percentage of total investments	0.10%	0.10%
Canada | Equity securities
Investments
Investments	$ 0	$ 5,912
Percentage of total investments	0.00%	0.10%
Investments, at cost	$ 0	$ 17,202
Canada | Equity securities | Energy
Investments
Investments	$ 0	$ 5,912
Percentage of total investments	0.00%	0.10%
Australia | Fixed Income
Investments
Investments	$ 10,206	$ 12,426
Percentage of total investments	0.20%	0.20%
Investments, at cost	$ 10,446	$ 12,714
Australia | Fixed Income | Consumer discretionary
Investments
Investments	$ 8,587	$ 10,863
Percentage of total investments	0.20%	0.20%
Australia | Fixed Income | Energy
Investments
Investments	$ 1,619	$ 1,563
Percentage of total investments	0.00%	0.00%

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FAIR VALUE (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets, at fair value
Investments Measured at NAV	$ 37,266	$ 35,998
Ares Management L.P
Assets, at fair value
Investments	326,415	277,561
Investments Measured at NAV	37,266	35,998
Total assets, at fair value	326,645	278,059
Liabilities, at fair value
Derivatives—foreign exchange contracts		(2,639)
Total liabilities, at fair value	(4,229)	(2,639)
Ares Management L.P | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	230	498
Liabilities, at fair value
Derivative liabilities	(4,229)
Ares Management L.P | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	242,984	195,158
Ares Management L.P | Equity securities
Assets, at fair value
Investments	1,396	1,636
Ares Management L.P | Partnership interests
Assets, at fair value
Investments	82,035	80,767
Investments Measured at NAV	37,266	35,998
Ares Management L.P | Level I
Assets, at fair value
Investments	377	520
Total assets, at fair value	377	520
Liabilities, at fair value
Derivatives—foreign exchange contracts		0
Total liabilities, at fair value	0	0
Ares Management L.P | Level I | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Ares Management L.P | Level I | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	0	0
Ares Management L.P | Level I | Equity securities
Assets, at fair value
Investments	377	520
Ares Management L.P | Level I | Partnership interests
Assets, at fair value
Investments	0	0
Ares Management L.P | Level II
Assets, at fair value
Investments	1,019	1,116
Total assets, at fair value	1,249	1,614
Liabilities, at fair value
Derivatives—foreign exchange contracts		(2,639)
Total liabilities, at fair value	(4,229)	(2,639)
Ares Management L.P | Level II | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	230	498
Liabilities, at fair value
Derivative liabilities	(4,229)
Ares Management L.P | Level II | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	0	0
Ares Management L.P | Level II | Equity securities
Assets, at fair value
Investments	1,019	1,116
Ares Management L.P | Level II | Partnership interests
Assets, at fair value
Investments	0	0
Ares Management L.P | Level III
Assets, at fair value
Investments	287,753	239,927
Total assets, at fair value	287,753	239,927
Liabilities, at fair value
Derivatives—foreign exchange contracts		0
Total liabilities, at fair value	0	0
Ares Management L.P | Level III | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Ares Management L.P | Level III | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	242,984	195,158
Ares Management L.P | Level III | Equity securities
Assets, at fair value
Investments	0	0
Ares Management L.P | Level III | Partnership interests
Assets, at fair value
Investments	44,769	44,769
Consolidated Funds
Assets, at fair value
Investments	5,479,136	5,582,842
Total derivative assets, at fair value		1,366
Total assets, at fair value	5,479,970	5,584,208
Liabilities, at fair value
Loan obligations of CLOs	(4,937,264)	(4,963,194)
Total liabilities, at fair value	(4,938,012)	(4,963,656)
Consolidated Funds | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value		0
Consolidated Funds | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	834	1,366
Liabilities, at fair value
Derivative liabilities	(748)	(462)
Consolidated Funds | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	51,054	10,000
Consolidated Funds | Equity securities
Assets, at fair value
Investments	218,643	235,135
Consolidated Funds | Partnership interests
Assets, at fair value
Investments	252,700	232,332
Consolidated Funds | Bonds
Assets, at fair value
Investments	74,311	89,192
Consolidated Funds | Loans
Assets, at fair value
Investments	4,882,428	5,016,183
Consolidated Funds | Fixed Income
Assets, at fair value
Investments	5,007,793	5,115,375
Consolidated Funds | Other
Assets, at fair value
Investments		0
Consolidated Funds | Level I
Assets, at fair value
Investments	58,221	72,558
Total derivative assets, at fair value		0
Total assets, at fair value	58,221	72,558
Liabilities, at fair value
Loan obligations of CLOs	0	0
Total liabilities, at fair value	0	0
Consolidated Funds | Level I | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value		0
Consolidated Funds | Level I | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0	0
Consolidated Funds | Level I | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	0	0
Consolidated Funds | Level I | Equity securities
Assets, at fair value
Investments	58,221	72,558
Consolidated Funds | Level I | Partnership interests
Assets, at fair value
Investments	0	0
Consolidated Funds | Level I | Bonds
Assets, at fair value
Investments	0	0
Consolidated Funds | Level I | Loans
Assets, at fair value
Investments	0	0
Consolidated Funds | Level I | Fixed Income
Assets, at fair value
Investments	0	0
Consolidated Funds | Level I | Other
Assets, at fair value
Investments		0
Consolidated Funds | Level II
Assets, at fair value
Investments	4,767,030	4,847,486
Total derivative assets, at fair value		0
Total assets, at fair value	4,767,030	4,847,486
Liabilities, at fair value
Loan obligations of CLOs	(4,937,264)	(4,963,194)
Total liabilities, at fair value	(4,937,264)	(4,963,194)
Consolidated Funds | Level II | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value		0
Consolidated Funds | Level II | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0	0
Consolidated Funds | Level II | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	51,054	10,000
Consolidated Funds | Level II | Equity securities
Assets, at fair value
Investments	0	0
Consolidated Funds | Level II | Partnership interests
Assets, at fair value
Investments	0	0
Consolidated Funds | Level II | Bonds
Assets, at fair value
Investments	67,741	82,151
Consolidated Funds | Level II | Loans
Assets, at fair value
Investments	4,648,235	4,755,335
Consolidated Funds | Level II | Fixed Income
Assets, at fair value
Investments	4,767,030	4,847,486
Consolidated Funds | Level II | Other
Assets, at fair value
Investments		0
Consolidated Funds | Level III
Assets, at fair value
Investments	653,885	662,798
Total derivative assets, at fair value		1,366
Total assets, at fair value	654,719	664,164
Liabilities, at fair value
Loan obligations of CLOs	0	0
Total liabilities, at fair value	(748)	(462)
Consolidated Funds | Level III | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value		0
Consolidated Funds | Level III | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	834	1,366
Liabilities, at fair value
Derivative liabilities	(748)	(462)
Consolidated Funds | Level III | Fixed income-collateralized loan obligations
Assets, at fair value
Investments	0	0
Consolidated Funds | Level III | Equity securities
Assets, at fair value
Investments	160,422	162,577
Consolidated Funds | Level III | Partnership interests
Assets, at fair value
Investments	252,700	232,332
Consolidated Funds | Level III | Bonds
Assets, at fair value
Investments	6,570	7,041
Consolidated Funds | Level III | Loans
Assets, at fair value
Investments	234,193	260,848
Consolidated Funds | Level III | Fixed Income
Assets, at fair value
Investments	$ 240,763	267,889
Consolidated Funds | Level III | Other
Assets, at fair value
Investments		$ 0

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FAIR VALUE (Changes in Fair Value of Level III Measurements) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Ares Management L.P
Changes in the fair value of the Level III investments
Balance, beginning of period	$ 239,927	$ 122,521
Deconsolidation of fund	78
Purchases	48,731	20,611
Sales	(827)	(1,917)
Realized and unrealized appreciation (depreciation), net	(156)	448
Balance, end of period	287,753	141,663
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(610)	470
Contingent Considerations
Balance, beginning of period		22,156
Purchases		0
Sales/settlement		0
Realized and unrealized depreciation, net		(20,247)
Balance, end of period		1,909
Decrease in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date		30
Ares Management L.P | Fixed Income
Changes in the fair value of the Level III investments
Balance, beginning of period	195,158	89,111
Deconsolidation of fund	78
Purchases	48,731	20,442
Sales	(827)	(1,917)
Realized and unrealized appreciation (depreciation), net	(156)	617
Balance, end of period	242,984	108,253
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(610)	470
Ares Management L.P | Partnership interests
Changes in the fair value of the Level III investments
Balance, beginning of period	44,769	33,410
Deconsolidation of fund	0
Purchases	0	169
Sales	0	0
Realized and unrealized appreciation (depreciation), net	0	(169)
Balance, end of period	44,769	33,410
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	0	0
Consolidated Funds
Changes in the fair value of the Level III investments
Balance, beginning of period	663,702	541,931
Deconsolidation of fund	(233)
Transfer in	73,814	86,197
Transfer out	(102,045)	(73,386)
Purchases	62,984	81,451
Sales	(50,935)	(32,193)
Settlements, net	(177)
Amortized discounts/premiums	103	428
Realized and unrealized appreciation (depreciation), net	6,758	14,294
Balance, end of period	653,971	618,722
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	5,632	(1,661)
Consolidated Funds | Equity securities
Changes in the fair value of the Level III investments
Balance, beginning of period	162,577	130,690
Deconsolidation of fund	0
Transfer in	0	0
Transfer out	0	(6,581)
Purchases	0	6,692
Sales	0	0
Settlements, net	0
Amortized discounts/premiums	0	0
Realized and unrealized appreciation (depreciation), net	(2,155)	11,557
Balance, end of period	160,422	142,358
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(2,156)	(3,488)
Consolidated Funds | Fixed Income
Changes in the fair value of the Level III investments
Balance, beginning of period	267,889	242,253
Deconsolidation of fund	(233)
Transfer in	73,814	86,197
Transfer out	(102,045)	(66,805)
Purchases	52,984	50,069
Sales	(50,935)	(33,297)
Settlements, net	0
Amortized discounts/premiums	96	118
Realized and unrealized appreciation (depreciation), net	(807)	294
Balance, end of period	240,763	278,829
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(1,831)	(42)
Consolidated Funds | Partnership interests
Changes in the fair value of the Level III investments
Balance, beginning of period	232,332	171,696
Deconsolidation of fund	0
Transfer in	0	0
Transfer out	0	0
Purchases	10,000	23,000
Sales	0	0
Settlements, net	0
Amortized discounts/premiums	0	0
Realized and unrealized appreciation (depreciation), net	10,368	1,994
Balance, end of period	252,700	196,690
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	10,368	1,994
Consolidated Funds | Derivatives, Net
Changes in the fair value of the Level III investments
Balance, beginning of period	904	(2,708)
Deconsolidation of fund	0
Transfer in	0	0
Transfer out	0	0
Purchases	0	1,690
Sales	0	1,104
Settlements, net	(177)
Amortized discounts/premiums	7	310
Realized and unrealized appreciation (depreciation), net	(648)	449
Balance, end of period	86	845
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$ (749)	$ (125)

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FAIR VALUE (Valuation Techniques) (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Ares Management L.P
FAIR VALUE
Assets, at fair value	$ 326,645	$ 278,059
Liabilities, at fair value	(4,229)	(2,639)
Ares Management L.P | Level III
FAIR VALUE
Assets, at fair value	287,753	239,927
Liabilities, at fair value	0	0
Ares Management L.P | Level III | Partnership interests | Other Valuation Technique
FAIR VALUE
Assets, at fair value	44,769	44,769
Ares Management L.P | Level III | Fixed income-collateralized loan obligations | Broker quotes and/or 3rd party pricing services
FAIR VALUE
Assets, at fair value	242,984	195,158
Consolidated Funds
FAIR VALUE
Assets, at fair value	5,479,970	5,584,208
Liabilities, at fair value	(4,938,012)	(4,963,656)
Consolidated Funds | Level III
FAIR VALUE
Assets, at fair value	654,719	664,164
Liabilities, at fair value	(748)	(462)
Consolidated Funds | Level III | Derivatives liabilities of Consolidated Funds | Broker quotes and/or 3rd party pricing services
FAIR VALUE
Liabilities, at fair value	748	(462)
Consolidated Funds | Level III | Partnership interests | Discounted cash flow
FAIR VALUE
Assets, at fair value	252,700	$ 232,332
Unobservable Input
Discount rate		19.00%
Consolidated Funds | Level III | Partnership interests | Discounted cash flow | Weighted Average
Unobservable Input
Discount rate		19.00%
Consolidated Funds | Level III | Equity securities | Broker quotes and/or 3rd party pricing services
FAIR VALUE
Assets, at fair value	60	$ 126
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis
FAIR VALUE
Assets, at fair value	$ 61,065	$ 63,155
Unobservable Input
EBITDA multiple	3.0	2.7
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis | Weighted Average
Unobservable Input
EBITDA multiple	2.97	2.7
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies)
FAIR VALUE
Assets, at fair value	$ 61,216	$ 61,215
Unobservable Input
Illiquidity discount (as a percent)	25.00%	25.00%
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Minimum
Unobservable Input
Net income multiple	24.2	27.0
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Maximum
Unobservable Input
Net income multiple	35.8	36.2
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Weighted Average
Unobservable Input
Net income multiple	32.7	33.7
Illiquidity discount (as a percent)	25.00%	25.00%
Consolidated Funds | Level III | Equity securities | Discounted cash flow
Unobservable Input
Discount rate	17.00%
Consolidated Funds | Level III | Equity securities | Discounted cash flow | Weighted Average
Unobservable Input
Discount rate	17.00%
Consolidated Funds | Level III | Equity securities | Transaction price
FAIR VALUE
Assets, at fair value	$ 38,081	$ 38,081
Consolidated Funds | Level III | Fixed Income | Broker quotes and/or 3rd party pricing services
FAIR VALUE
Assets, at fair value	192,660	222,413
Consolidated Funds | Level III | Fixed Income | Market approach (comparable companies)
FAIR VALUE
Assets, at fair value		233
Consolidated Funds | Level III | Fixed Income | Income approach, Yield
FAIR VALUE
Assets, at fair value	$ 48,103	$ 45,243
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Minimum
Unobservable Input
Yield	7.60%	10.80%
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Maximum
Unobservable Input
Yield	14.90%	22.50%
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Weighted Average
Unobservable Input
Yield	11.10%	12.10%
Consolidated Funds | Level III | Fixed Income | Market approach
Unobservable Input
EBITDA multiple		6.5
Consolidated Funds | Level III | Fixed Income | Market approach | Weighted Average
Unobservable Input
EBITDA multiple		6.5
Consolidated Funds | Level III | Derivative Financial Instruments | Broker quotes and/or 3rd party pricing services
FAIR VALUE
Assets, at fair value	$ 834	$ 1,366

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FAIR VALUE (Investments Using NAV per Share) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
FAIR VALUE
Fair Value	$ 37,266	$ 35,998
Unfunded Commitments	16,317	16,492
Non-core investments
FAIR VALUE
Fair Value	37,266	35,998
Unfunded Commitments	$ 16,317	$ 16,492

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Liabilities
Derivative asset, amount not offset	$ 200	$ 200
Derivative liability, amount not offset	500	500
Ares Management L.P
Assets
Notional amount, Assets	4,724	13,724
Fair Value, Assets	230	498
Liabilities
Notional amount, Liabilities	49,668	51,026
Fair Value, Liabilities	4,229	2,639
Ares Management L.P | Foreign exchange contracts
Assets
Notional amount, Assets	4,724	13,724
Fair Value, Assets	230	498
Liabilities
Notional amount, Liabilities	49,668	51,026
Fair Value, Liabilities	4,229	2,639
Consolidated Funds
Assets
Notional amount, Assets	4,843	5,363
Fair Value, Assets	834	1,366
Liabilities
Notional amount, Liabilities	1,750	1,840
Fair Value, Liabilities	748	462
Derivative asset, amount offset	400	400
Derivative liability, amount offset	400	400
Consolidated Funds | Asset swap - other
Assets
Notional amount, Assets	4,843	5,363
Fair Value, Assets	834	1,366
Liabilities
Notional amount, Liabilities	1,750	1,840
Fair Value, Liabilities	$ 748	$ 462

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DEBT (Debt Obligations) (Details) - Ares Management L.P - USD ($)	1 Months Ended	3 Months Ended
	Oct. 31, 2014	Mar. 31, 2018	Dec. 31, 2017
DEBT
Carrying Value		$ 590,169,000	$ 616,176,000
Credit Facility
DEBT
Carrying Value		$ 140,000,000	$ 210,000,000
Interest Rate		3.38%	3.09%
Maximum borrowing capacity		$ 1,065,000,000.000
Unused commitment fees		0.20%
Interest rate		0.00%
Credit Facility | Base rate
DEBT
Interest rate spread		0.50%
Credit Facility | LIBOR
DEBT
Interest rate spread		1.50%
Senior Notes
DEBT
Original Borrowing Amount		$ 250,000,000
Carrying Value		$ 245,469,000	$ 245,308,000
Interest Rate		4.21%	4.21%
Term Loan 2015
DEBT
Original Borrowing Amount		$ 35,205,000
Carrying Value		$ 35,042,000	$ 35,037,000
Interest Rate		3.24%	2.86%
Commitment fee percentage		0.025%
Term Loan 2016
DEBT
Original Borrowing Amount		$ 26,376,000
Carrying Value		$ 25,959,000	$ 25,948,000
Interest Rate		3.44%	3.08%
Term Loan 2016 | Minimum
DEBT
Commitment fee percentage		0.03%
Term Loan 2016 | Maximum
DEBT
Commitment fee percentage		0.04%
Term Loan 2017 | Minimum
DEBT
Commitment fee percentage		0.03%
Term Loan 2017 | Maximum
DEBT
Commitment fee percentage		0.04%
Term Loan 2017 Due January 2028
DEBT
Original Borrowing Amount		$ 17,600,000
Carrying Value		$ 17,413,000	$ 17,407,000
Interest Rate		3.26%	2.90%
Term Loan 2017 Due October 2029
DEBT
Original Borrowing Amount		$ 35,198,000
Carrying Value		$ 35,066,000	$ 35,062,000
Interest Rate		3.26%	2.90%
Term Loan 2017 Due July 2029
DEBT
Original Borrowing Amount		$ 17,155,000
Carrying Value		$ 17,025,000	$ 17,078,000
Interest Rate		3.26%	2.88%
Term Loan 2017 Due October 2030
DEBT
Original Borrowing Amount		$ 30,450,000
Carrying Value		$ 30,339,000	$ 30,336,000
Interest Rate		3.07%	2.77%
Term Loan 2018 | Minimum
DEBT
Commitment fee percentage		0.03%
Term Loan 2018 | Maximum
DEBT
Commitment fee percentage		0.04%
Term Loan 2018 Due January 2030
DEBT
Original Borrowing Amount		$ 26,475,000
Carrying Value		$ 26,456,000
Interest Rate		2.97%
Repurchase Agreement Loan
DEBT
Original Borrowing Amount		$ 17,575,000
Carrying Value		$ 17,400,000
Interest Rate		1.68%
AFC Notes
DEBT
Debt issuance percentage	98.268%

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DEBT (Debt Issuance Costs) (Details) - Ares Management L.P $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Credit Facility
Debt Issuance Costs [Roll Forward]
Unamortized debt issuance costs as of December 31, 2017	$ 6,543
Debt issuance costs incurred	0
Amortization of debt issuance costs	(393)
Unamortized debt issuance costs as of March 31, 2018	6,150
Senior Notes
Debt Issuance Costs [Roll Forward]
Unamortized debt issuance costs as of December 31, 2017	1,571
Debt issuance costs incurred	0
Amortization of debt issuance costs	(63)
Unamortized debt issuance costs as of March 31, 2018	1,508
Term Loans
Debt Issuance Costs [Roll Forward]
Unamortized debt issuance costs as of December 31, 2017	1,171
Debt issuance costs incurred	19
Amortization of debt issuance costs	(32)
Unamortized debt issuance costs as of March 31, 2018	1,158
Repurchase Agreement Loan
Debt Issuance Costs [Roll Forward]
Unamortized debt issuance costs as of December 31, 2017	0
Debt issuance costs incurred	176
Amortization of debt issuance costs	(1)
Unamortized debt issuance costs as of March 31, 2018	$ 175

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DEBT (Repurchase Agreement) (Details) - Ares Management L.P - Repurchase Agreement Loan $ in Thousands	Mar. 31, 2018 USD ($)
DEBT
Securities transferred at carrying value	$ 17,575
Estimated fair value of securities transferred	17,575
Cash collateral received from counterparty	$ 17,575

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DEBT (Cash Collateral Liability by Security) (Details) - Repurchase Agreement Loan - Ares Management L.P $ in Thousands	Mar. 31, 2018 USD ($)
DEBT
Collateralized loan obligations	$ 17,575
Collateralized loan obligations
DEBT
Collateralized loan obligations	17,575
Less than 1 year | Collateralized loan obligations
DEBT
Collateralized loan obligations	0
1 - 3 years | Collateralized loan obligations
DEBT
Collateralized loan obligations	0
4 - 5 years | Collateralized loan obligations
DEBT
Collateralized loan obligations	0
Thereafter | Collateralized loan obligations
DEBT
Collateralized loan obligations	$ 17,575

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DEBT (Loan Obligations of the Consolidated CLOs) (Details) - Consolidated Funds - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
DEBT
Fair Value of Loan Obligations	$ 4,937,264,000	$ 4,963,194,000
Fixed income-collateralized loan obligations
DEBT
Loan Obligations	5,043,296,000	5,077,751,000
Fair Value of Loan Obligations	4,937,264,000	4,963,194,000
Senior secured notes | Fixed income-collateralized loan obligations
DEBT
Loan Obligations	4,765,180,000	4,801,582,000
Fair Value of Loan Obligations	$ 4,758,121,000	$ 4,776,883,000
Weighted Average Remaining Maturity In Years	10 years 4 months 20 days	10 years 6 months 25 days
Debt instrument face amount	$ 4,800,000,000.0
Weighted average interest rate (as a percent)	5.02%
Subordinated notes / preferred shares | Fixed income-collateralized loan obligations
DEBT
Loan Obligations	$ 278,116,000	$ 276,169,000
Fair Value of Loan Obligations	$ 179,143,000	$ 186,311,000
Weighted Average Remaining Maturity In Years	11 years 14 days	11 years 3 months
Debt instrument face amount	$ 278,100,000.0

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DEBT (Credit Facilities of the Consolidated Funds) (Details) - Consolidated Funds - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
DEBT
Total borrowings	$ 140,653	$ 138,198
Credit facility with maturity 1/1/2023
DEBT
Total Capacity	18,000
Outstanding Loan	$ 12,942	$ 12,942
Effective Rate	3.56%	2.88%
Credit facility with maturity 06/30/2018
DEBT
Total Capacity	$ 49,194
Outstanding Loan	$ 49,194	$ 48,042
Effective Rate	1.55%	1.55%
Interest rate	0.00%	0.00%
Credit facility with maturity 03/07/2018
DEBT
Total Capacity	$ 71,500
Outstanding Loan	$ 71,500	$ 71,500
Effective Rate	3.10%	2.88%
Revolving Term Loan
DEBT
Total Capacity	$ 1,900
Outstanding Loan	$ 1,303	$ 0
Effective Rate	7.89%	0.00%
Credit facility with maturity 08/19/2019
DEBT
Total Capacity	$ 11,429
Outstanding Loan	$ 5,714	$ 5,714
Effective Rate	8.91%	5.86%

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Jun. 30, 2017	Dec. 31, 2017
COMMITMENTS AND CONTINGENCIES
Unfunded capital commitments	$ 291,300,000		$ 285,700,000
Performance Income
Performance Income
Performance income subject to potential clawback provision	479,400,000		476,100,000
Performance income subject to potential claw back provision that are reimbursable by professionals	372,400,000		370,000,000
Kayne Anderson Capital Advisors L.P.
COMMITMENTS AND CONTINGENCIES
Unfunded capital commitments	$ 16,300,000		16,500,000
American Capital Ltd | ARCC
COMMITMENTS AND CONTINGENCIES
Maximum fees waived		$ 10,000,000
Term of fee waiver		30 months
Maximum amount shortfall that will not carryover		$ 10,000,000
Remaining term	18 months
Remaining fees waived			$ 60,000,000

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Ares Management L.P
Due from affiliates:
Due from affiliates	$ 168,810	$ 165,750
Due to affiliates:
Due to affiliates	21,018	14,642
Ares Management L.P | Affiliated entity
Due from affiliates:
Management fees receivable from non-consolidated funds	130,346	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	38,464	39,244
Due to affiliates:
Management fee rebate payable to non-consolidated funds	2,560	5,213
Management fees received in advance	2,866	1,729
Tax receivable agreement liability	12,925	3,503
Payments made by non-consolidated funds on behalf of and payable by the Company	2,667	4,197
Consolidated Funds
Due from affiliates:
Due from affiliates	17,782	15,884
Due to affiliates:
Due to affiliates	0	0
Consolidated Funds | Affiliated entity
Due from affiliates:
Due from affiliates	$ 17,782	$ 15,884

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INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income tax benefit	$ (12,375)	$ (34,264)

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INCOME TAXES (Provision for Income Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Provision for income taxes
Income tax expense (benefit)	$ (12,375)	$ (34,264)
Pro Forma
Provision for income taxes
Income tax expense (benefit)		(27,875)
Ares Management L.P
Provision for income taxes
Income tax expense (benefit)	(12,375)	(34,733)
Ares Management L.P | Pro Forma
Provision for income taxes
Income tax expense (benefit)		(28,344)
Consolidated Funds
Provision for income taxes
Income tax expense (benefit)	$ 0	469
Consolidated Funds | Pro Forma
Provision for income taxes
Income tax expense (benefit)		$ 469

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EARNINGS PER COMMON SHARE (Antidilutive) (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
AOG
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	0	130,403,174
Options
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	17,411,780,000	21,334,689
Restricted units
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	16,352,546,000	15,070,871

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EARNINGS PER COMMON SHARE (Computation of Basic and Diluted Earnings Per Common Unit) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Basic
Net income (loss) attributable to Ares Management, L.P. common shareholders	$ 35,523	$ (46,559)
Earnings distributed to participating securities (restricted units)	(1,899)	(825)
Net income (loss) available to common shareholders	$ 33,624	$ (47,384)
Basic weighted-average common shares (in shares)	85,617,932	81,106,734
Earnings per common share, basic (in dollars per share)	$ 0.39	$ (0.58)
Diluted
Earnings distributed to participating securities (restricted units)	$ (1,899)	$ (825)
Incremental net income from assumed exchange of AOG Units	26,606	0
Net income (loss) available to common shareholders	$ 60,230	$ (47,384)
Effect of dilutive shares:
Diluted weighted-average common shares (in shares)	213,852,928	81,106,734
Diluted earnings (loss) per common share (in dollars per share)	$ 0.28	$ (0.58)
AOG
Effect of dilutive shares:
AOG units (in shares)	128,234,996	0

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EQUITY COMPENSATION (Equity Incentive Plan) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jan. 01, 2018
Equity compensation
Equity compensation expenses	$ 21,087	$ 15,089
Restricted units
Equity compensation
Equity compensation expenses	18,030	11,219
Options
Equity compensation
Equity compensation expenses	2,664	3,482
Phantom units
Equity compensation
Equity compensation expenses	$ 393	$ 388
Ares Management L.P
Equity compensation
Total number of units available for grant under the Equity Incentive Plan (in units)	28,637,981		31,853,504

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EQUITY COMPENSATION (Restricted Units) (Details) - Restricted units $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares
Equity compensation
Distribution equivalents made to holders | $	$ 6.6
Units
Balance at the beginning of the period (in units) | shares	13,751,888
Granted (in units) | shares	3,635,419
Vested (in units) | shares	(835,124)
Forfeited (in units) | shares	(199,637)
Balance at the end of the period (in units) | shares	16,352,546
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share) | $ / shares	$ 17.58
Granted (in dollars per share) | $ / shares	23.61
Vested (in dollars per share) | $ / shares	15.33
Forfeited (in dollars per share) | $ / shares	19.83
Balance at the end of the period (in dollars per share) | $ / shares	$ 18.98
Unrecognized compensation expenses | $	$ 233.3
Weighted average period of compensation expense expected to be recognized	3 years 8 months 12 days
Third Anniversary of Grant Date
Equity compensation
Annual award vesting percentage	33.33%
First Anniversary of Grant Date
Equity compensation
Annual award vesting percentage	25.00%

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EQUITY COMPENSATION (Options) (Details) - Stock Options - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Options
Balance at the beginning of the period (in units)	20,495,025
Granted (in units)	0
Exercised (in units)	0
Expired (in units)	(219,034)
Forfeited (in units)	(444,203)
Balance at the end of the period (in units)	19,831,788	20,495,025
Exercisable at the end of the period (in units)	7,235,214
Weighted Average Exercise Price
Balance at the beginning of the period (in dollars per unit)	$ 18.99
Granted (in dollars per unit)	0.00
Exercised (in dollars per unit)	0
Expired (in dollars per unit)	19.00
Forfeited (in dollars per unit)	19.00
Balance at the end of the period (in dollars per unit)	18.99	$ 18.99
Exercisable at the end of the period (in dollars per unit)	$ 18.99
Weighted Average Remaining Life
Weighted average remaining life		6 years 1 month 2 days
Expected to vest at the end of the period	5 years 10 months 2 days
Exercisable at the end of the period	5 years 4 months 17 days
Aggregate Intrinsic Value
Balance (in dollars)	$ 47,762	$ 20,611
Exercisable at end of the period (in dollars)	17,420
Unrecognized compensation expenses	$ 16,600,000
Weighted average period of compensation expense expected to be recognized	1 year 1 month 9 days

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EQUITY COMPENSATION (Phantom Units) (Details) - Phantom Shares	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares
Units
Balance at the beginning of the period (in units) | shares	156,153
Vested (in units) | shares	0
Forfeited (in units) | shares	(9,362)
Balance at the end of the period (in units) | shares	146,791
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 19.00
Vested (in dollars per share)
Forfeited (in dollars per share)	19.00
Balance at the end of the period (in dollars per share)	19.00
Share price (USD per share)	$ 21.4
Unrecognized compensation expenses | $	$ 1,700,000
Weighted average period of compensation expense expected to be recognized	1 year 1 month 2 days
Cash used to settle awards | $	$ 0

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EQUITY (Details) - USD ($)		3 Months Ended
	Mar. 12, 2018	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
AOG Units (in units)		217,841,163		212,356,696
Direct Ownership Interest		100.00%		100.00%
Dividend rate, percentage		7.00%
Redemption price (dollars per unit)		$ 25.00
Preferred Equity
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Issuance of common shares (in shares)		12,400,000		12,400,000
Ares Management, L.P.
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
AOG Units (in units)		97,514,500		82,280,033
Direct Ownership Interest		44.76%		38.75%
Daily Average Ownership		40.04%	38.35%
Ares Management, L.P. | Affiliate of Alleghany Corporation
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Shares converted (in shares)		9,750,000
Ares Owners Holding L.P.
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
AOG Units (in units)		117,576,663		117,576,663
Direct Ownership Interest		53.98%		55.36%
Daily Average Ownership		54.98%	55.74%
Affiliate of Alleghany Corporation
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
AOG Units (in units)		2,750,000		12,500,000
Direct Ownership Interest		1.26%		5.89%
Daily Average Ownership		4.98%	5.91%
Ares Management L.P | Affiliate of Alleghany Corporation
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Shares issued (in shares)		9,750,000
Secondary Offering
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Number of units sold (in units)	15,000,000
Fees related to secondary offering	$ 500,000
Secondary Offering | ADIA
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Number of units sold (in units)	10,000,000
Proceeds from sale of equity	$ 0
Secondary Offering | Ares Management L.P
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL
Number of units sold (in units)	5,000,000
Proceeds from sale of equity	$ 105,900,000

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SEGMENT REPORTING (Narrative) (Details) $ in Billions	3 Months Ended
	Mar. 31, 2018 USD ($) segment group fund
Segment reporting
Number operating segments | segment	3
Ares Management L.P | Credit Group
Segment reporting
Assets under management | $	$ 77.3
Number of funds managed	145
Ares Management L.P | Private Equity
Segment reporting
Assets under management | $	$ 24.3
Number of private equity commingled funds focus North America and Europe	5
Number of funds focused on U.S. energy and power assets	5
Number of co-investment vehicles focused on U.S. energy and power assets	6
Number of special situation funds	3
Ares Management L.P | Real Estate
Segment reporting
Assets under management | $	$ 10.9
Number of funds managed	41
Ares Management L.P | OMG
Segment reporting
Number of independent shared resource groups to support entity's operating segments | group	5
Greater China | Ares Management L.P | Private Equity
Segment reporting
Number of commingled funds	3

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SEGMENT REPORTING (Operating Segments) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment reporting
Other fees	$ 0	$ 0
Operating segment
Segment reporting
Fee related earnings	109,679	91,988
Performance income—realized	23,107	8,805
Performance income—unrealized	35,118	49,261
Total performance related compensation - realized	(14,869)	(5,301)
Investment income (loss)—unrealized	(5,574)	9,534
Net investment income (loss)	1,936	1,386
Performance related earnings	28,709	28,284
Economic net income	138,388	120,272
Realized income	119,853	96,878
OMG
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	0	0
Other fees	0	0
Compensation and benefits	(30,606)	(25,953)
General, administrative and other expenses	(18,616)	(19,313)
Fee related earnings	(49,222)	(45,266)
Performance income—realized	0	0
Performance income—unrealized	0	0
Total performance related compensation - realized	0	0
Performance related compensation—unrealized	0	0
Net performance income	0	0
Investment income (loss)—realized	838	1,859
Investment income (loss)—unrealized	1,231	(1,407)
Interest and other investment income (expense)	1,247	874
Interest expense	(548)	(476)
Net investment income (loss)	2,768	850
Performance related earnings	2,768	850
Economic net income	(46,454)	(44,416)
Realized income	(47,780)	(43,205)
Total
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	196,826	176,781
Other fees	6,073	4,834
Compensation and benefits	(107,724)	(100,610)
General, administrative and other expenses	(34,718)	(34,283)
Fee related earnings	60,457	46,722
Performance income—realized	23,107	8,805
Performance income—unrealized	35,118	49,261
Total performance related compensation - realized	(14,869)	(5,301)
Performance related compensation—unrealized	(11,009)	(35,401)
Net performance income	32,347	17,364
Investment income (loss)—realized	5,630	4,539
Investment income (loss)—unrealized	(4,420)	11,284
Interest and other investment income (expense)	4,789	826
Interest expense	(6,869)	(4,879)
Net investment income (loss)	(870)	11,770
Performance related earnings	31,477	29,134
Economic net income	91,934	75,856
Realized income	72,073	53,673
Ares Management L.P
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	189,515	172,045
Other fees	12,465	14,440
Compensation and benefits	(134,639)	(124,339)
General, administrative and other expenses	(44,450)	(47,338)
Interest and other investment income (expense)	54,129	52,007
Ares Management L.P | Affiliated entity | ARCC
Segment reporting
Management fees, part I fees	28,417	33,257
Ares Management L.P | Operating segment
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	196,826	176,781
Other fees	6,073	4,834
Compensation and benefits	(77,118)	(74,657)
General, administrative and other expenses	(16,102)	(14,970)
Fee related earnings	109,679	91,988
Performance income—realized	23,107	8,805
Performance income—unrealized	35,118	49,261
Total performance related compensation - realized	(14,869)	(5,301)
Performance related compensation—unrealized	(11,009)	(35,401)
Net performance income	32,347	17,364
Investment income (loss)—realized	4,792	2,680
Investment income (loss)—unrealized	(5,651)	12,691
Interest and other investment income (expense)	3,542	(48)
Interest expense	(6,321)	(4,403)
Net investment income (loss)	(3,638)	10,920
Performance related earnings	28,709	28,284
Economic net income	138,388	120,272
Realized income	119,853	96,878
Ares Management L.P | Operating segment | Credit Group
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	131,766	121,347
Other fees	5,730	4,503
Compensation and benefits	(50,280)	(51,703)
General, administrative and other expenses	(9,629)	(8,041)
Fee related earnings	77,587	66,106
Performance income—realized	5,071	8,778
Performance income—unrealized	16,092	2,936
Total performance related compensation - realized	(3,088)	(5,285)
Performance related compensation—unrealized	7,176	(1,458)
Net performance income	25,251	4,971
Investment income (loss)—realized	771	318
Investment income (loss)—unrealized	(269)	4,589
Interest and other investment income (expense)	2,196	(19)
Interest expense	(4,673)	(2,458)
Net investment income (loss)	(1,975)	2,430
Performance related earnings	23,276	7,401
Economic net income	100,863	73,507
Realized income	78,857	69,945
Ares Management L.P | Operating segment | Private Equity
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	49,887	39,819
Other fees	340	340
Compensation and benefits	(19,199)	(13,218)
General, administrative and other expenses	(4,041)	(4,198)
Fee related earnings	26,987	22,743
Performance income—realized	4,398	0
Performance income—unrealized	21,066	32,237
Total performance related compensation - realized	(3,560)	0
Performance related compensation—unrealized	(18,694)	(25,505)
Net performance income	3,210	6,732
Investment income (loss)—realized	671	579
Investment income (loss)—unrealized	(4,150)	8,546
Interest and other investment income (expense)	329	152
Interest expense	(1,228)	(1,513)
Net investment income (loss)	(4,378)	7,764
Performance related earnings	(1,168)	14,496
Economic net income	25,819	37,239
Realized income	27,327	22,345
Ares Management L.P | Operating segment | Real Estate
Segment reporting
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	15,173	15,615
Other fees	3	(9)
Compensation and benefits	(7,639)	(9,736)
General, administrative and other expenses	(2,432)	(2,731)
Fee related earnings	5,105	3,139
Performance income—realized	13,638	27
Performance income—unrealized	(2,040)	14,088
Total performance related compensation - realized	(8,221)	(16)
Performance related compensation—unrealized	509	(8,438)
Net performance income	3,886	5,661
Investment income (loss)—realized	3,350	1,783
Investment income (loss)—unrealized	(1,232)	(444)
Interest and other investment income (expense)	1,017	(181)
Interest expense	(420)	(432)
Net investment income (loss)	2,715	726
Performance related earnings	6,601	6,387
Economic net income	11,706	9,526
Realized income	$ 13,669	$ 4,588

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SEGMENT REPORTING (Revenue, Expenses and Other Income (Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment revenues
Other fees	$ 0	$ 0
Total revenues	266,089	244,244
Segment expenses
Total expenses	206,283	491,467
Segment other income
Total other income	2,240	56,635
Operating segment
Segment revenues
Performance income—realized	23,107	8,805
Performance income—unrealized	35,118	49,261
Segment expenses
Total performance related compensation - realized	14,869	5,301
Segment other income
Investment income (loss)—unrealized	(5,574)	9,534
Ares Management L.P
Segment revenues
Management fees	189,515	172,045
Other fees	12,465	14,440
Total revenues	266,089	244,244
Segment expenses
Compensation and benefits	134,639	124,339
General, administrative and other expenses	44,450	47,338
Segment other income
Interest and other investment income (expense)	54,129	52,007
Ares Management L.P | Operating segment
Segment revenues
Management fees	196,826	176,781
Other fees	6,073	4,834
Performance income—realized	23,107	8,805
Performance income—unrealized	35,118	49,261
Total revenues	261,124	239,681
Segment expenses
Compensation and benefits	77,118	74,657
General, administrative and other expenses	16,102	14,970
Total performance related compensation - realized	14,869	5,301
Total performance fee compensation - unrealized	11,009	35,401
Total expenses	119,098	130,329
Segment other income
Investment income (loss)—realized	4,792	2,680
Investment income (loss)—unrealized	(5,651)	12,691
Interest and other investment income (expense)	3,542	(48)
Interest expense	(6,321)	(4,403)
Total other income	$ (3,638)	$ 10,920

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SEGMENT REPORTING (Revenue Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue adjustment
Revenues	$ 266,089	$ 244,244
Administrative, transaction and other fees	0	0
Reconciling items
Revenue adjustment
Revenues	4,965	4,563
Administrative, transaction and other fees	6,412	9,606
Principal investment income	2,708	13,169
Reconciling items | Non-Controlling interest | Subsidiaries
Revenue adjustment
Revenues	(20)	0
Reconciling items | Equity method private investment partnership interests(1)
Revenue adjustment
Performance fee reclass	975	(24)
Ares Management L.P
Revenue adjustment
Revenues	266,089	244,244
Administrative, transaction and other fees	12,465	14,440
Principal investment income	4,909	2,587
Ares Management L.P | Operating segment
Revenue adjustment
Revenues	261,124	239,681
Administrative, transaction and other fees	6,073	4,834
Consolidated Funds | Reconciling items
Revenue adjustment
Revenues	$ (5,110)	$ (18,188)

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SEGMENT REPORTING (Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	$ 206,283	$ 491,467
Equity compensation expenses	21,087	15,089
Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Acquisition and merger-related expenses	0	275,177
Operating segment
Segment Reporting, Other Significant Reconciling Item [Line Items]
Acquisition and merger-related expenses	(319)	255,088
Equity compensation expenses	21,087	15,089
Placement fees and underwriting costs	1,664	3,439
Amortization of intangibles	3,287	5,275
Depreciation expense	3,889	3,216
Operating segment | Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	119,098	130,329
Reconciling items
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	87,185	361,138
Administrative fees	6,412	9,606
Acquisition and merger-related expenses	(319)	275,336
Equity compensation expenses	21,087	15,089
Placement fees and underwriting costs	1,664	3,439
Amortization of intangibles	3,287	5,275
Depreciation expense	3,889	3,216
Reconciling items | Non-Controlling interest | Subsidiaries
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	627	0
Reconciling items | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	8,629	10,509
Eliminations
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	(7,313)	(6,598)
Eliminations | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	(7,313)	(6,598)
OMG
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	$ 49,222	$ 45,266

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SEGMENT REPORTING (Other Income (Expense)) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	$ 2,240	$ 56,635
Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Principal investment income	(4,909)	(2,587)
Operating segment
Segment Reporting, Other Significant Reconciling Item [Line Items]
Other non-cash expense	(7)	0
Offering costs	0	(660)
Operating segment | Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	(3,638)	10,920
Reconciling items
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	5,878	45,715
Principal investment income	(2,708)	(13,169)
Changes in value of contingent consideration	0	20,248
Other non-cash expense	(7)	0
Offering costs	0	(660)
Reconciling items | Subsidiaries | Non-Controlling interest
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	7	0
Reconciling items | Equity method private investment partnership interests(1)
Segment Reporting, Other Significant Reconciling Item [Line Items]
Performance fee reclass	(975)	24
Reconciling items | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	7,252	38,445
Eliminations
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	(459)	(23)
Principal investment income	(2,201)	10,582
Eliminations | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	(459)	(23)
OMG
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total consolidated other income	$ 2,768	$ 850

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SEGMENT REPORTING (Reconciliation of Income Before Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Economic net income
Income (loss) before taxes	$ 62,046	$ (190,588)
Adjustments:
Equity compensation expenses	21,087	15,089
Operating segment
Economic net income
Income (loss) before taxes	62,046	(190,588)
Adjustments:
Amortization of intangibles	3,287	5,275
Depreciation expense	3,889	3,216
Equity compensation expenses	21,087	15,089
Acquisition and merger-related expenses	(319)	255,088
Placement fees and underwriting costs	1,664	3,439
Offering costs	0	660
Other non-cash expense	7	0
Economic net income	138,388	120,272
Total performance income - unrealized	(35,118)	(49,261)
Total performance related compensation - unrealized	11,009	35,401
Total investment (income) loss - unrealized	5,574	(9,534)
Realized income	119,853	96,878
Total performance income - realized	(23,107)	(8,805)
Total performance related compensation - realized	14,869	5,301
Total investment income - realized	(1,936)	(1,386)
Fee related earnings	109,679	91,988
Economic net income	138,388	120,272
Performance related earnings	28,709	28,284
Operating segment | Subsidiaries
Adjustments:
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	640	0
Reconciling items
Adjustments:
Amortization of intangibles	3,287	5,275
Depreciation expense	3,889	3,216
Equity compensation expenses	21,087	15,089
Acquisition and merger-related expenses	(319)	275,336
Placement fees and underwriting costs	1,664	3,439
Offering costs	0	660
Other non-cash expense	7	0
Total consolidation adjustments and reconciling items	76,342	310,860
OMG
Adjustments:
OMG expenses, net	46,454	44,416
Economic net income	(46,454)	(44,416)
Total performance income - unrealized	0	0
Total investment (income) loss - unrealized	(1,231)	1,407
Realized income	(47,780)	(43,205)
Total performance income - realized	0	0
Total performance related compensation - realized	0	0
Total investment income - realized	(2,768)	(850)
Fee related earnings	(49,222)	(45,266)
Economic net income	(46,454)	(44,416)
Performance related earnings	2,768	850
Consolidated Funds
Adjustments:
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	367	15,855
Total investment income - realized	(64,422)	(41,492)
Consolidated Funds | Operating segment
Adjustments:
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	$ (367)	$ (16,323)

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CONSOLIDATION (Variable Interest Entities) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Variable Interest Entity [Line Items]
Assets of consolidated VIEs	$ 8,560,082		$ 8,563,522
Liabilities of consolidated VIEs	6,994,887		7,103,230
Consolidated Funds
Variable Interest Entity [Line Items]
Net income attributable to non-controlling interests related to consolidated VIEs	367	$ 15,855
Non-Consolidated Variable Interest Entities
Variable Interest Entity [Line Items]
Maximum exposure to loss attributable to the Company's investment in VIEs	266,833		251,376
Consolidated VIEs
Variable Interest Entity [Line Items]
Maximum exposure to loss attributable to the Company's investment in VIEs	174,849		175,620
Consolidated VIEs | Consolidated Funds
Variable Interest Entity [Line Items]
Assets of consolidated VIEs	6,126,584		6,231,245
Liabilities of consolidated VIEs	$ 5,417,561		$ 5,538,054

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CONSOLIDATION (Balance Sheet) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Assets
Investments, at fair value		$ 1,724,571
Other assets		130,341
Goodwill	$ 143,968	143,895
Total assets	8,560,082	8,563,522
Liabilities
Total liabilities	6,994,887	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding at March 31, 2018 and December 31, 2017)	298,761	298,761
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235	279,065
Accumulated other comprehensive loss, net of tax	(4,001)	(4,208)
Total controlling interest in Ares Management, L.P.	373,234	274,857
Total equity	1,565,195	1,460,292
Total liabilities and equity	$ 8,560,082	$ 8,563,522
Preferred equity, shares issued (in shares)	12,400,000	12,400,000
Preferred equity, shares outstanding (in shares)	12,400,000	12,400,000
Partners' Capital shares issued (in shares)	97,514,500	82,280,033
Partners' Capital shares outstanding (in shares)	97,514,500	82,280,033
Reportable legal entity
Liabilities
Preferred equity (12,400,000 shares issued and outstanding at March 31, 2018 and December 31, 2017)	$ 298,761	$ 298,761
Eliminations
Assets
Total assets	(183,640)	(186,904)
Liabilities
Total liabilities	(18,997)	(22,201)
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding at March 31, 2018 and December 31, 2017)	0	0
Controlling interest in Ares Management, L.P.:
Total equity	(164,643)	(164,703)
Total liabilities and equity	(183,640)	(186,904)
Ares Management L.P
Assets
Cash and cash equivalents	115,540	118,929	$ 103,989	$ 342,861
Investments, at fair value	1,811,829	1,724,571
Due from affiliates	168,810	165,750
Deferred tax asset, net	50,986	8,326
Other assets	105,187	130,341
Intangible assets, net	37,178	40,465
Goodwill	143,968	143,895
Liabilities
Accounts payable, accrued expenses and other liabilities	78,771	81,955
Accrued compensation	49,944	27,978
Due to affiliates	21,018	14,642
Performance related compensation payable	856,421	846,626
Debt obligations	590,169	616,176
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235	279,065
Accumulated other comprehensive loss, net of tax	(4,001)	(4,208)
Total controlling interest in Ares Management, L.P.	373,234	274,857
Investments	326,415	277,561
Ares Management L.P | Reportable legal entity
Assets
Cash and cash equivalents	115,540	118,929
Investments, at fair value	1,986,678	1,900,191
Due from affiliates	177,601	171,701
Deferred tax asset, net	50,986	8,326
Other assets	105,187	135,674
Intangible assets, net	37,178	40,465
Goodwill	143,968	143,895
Total assets	2,617,138	2,519,181
Liabilities
Accounts payable, accrued expenses and other liabilities	78,771	81,955
Accrued compensation	49,944	27,978
Due to affiliates	21,018	14,642
Performance related compensation payable	856,421	846,626
Debt obligations	590,169	616,176
Total liabilities	1,596,323	1,587,377
Commitments and contingencies
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	377,235	279,065
Accumulated other comprehensive loss, net of tax	(4,001)	(4,208)
Total controlling interest in Ares Management, L.P.	373,234	274,857
Total equity	1,020,815	931,804
Total liabilities and equity	2,617,138	2,519,181
Ares Management L.P | Eliminations
Assets
Cash and cash equivalents	0
Investments, at fair value	(174,849)	(175,620)
Due from affiliates	(8,791)	(5,951)
Deferred tax asset, net	0	0
Other assets	0	(5,333)
Intangible assets, net	0
Goodwill	0
Liabilities
Accounts payable, accrued expenses and other liabilities	0
Accrued compensation	0
Due to affiliates	0
Performance related compensation payable	0
Debt obligations	0
Controlling interest in Ares Management, L.P.:
Shareholders' equity (97,514,500 shares and 82,280,033 shares issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)	0
Accumulated other comprehensive loss, net of tax	0
Total controlling interest in Ares Management, L.P.	0	0
Consolidated Funds
Assets
Cash and cash equivalents	532,470	556,500
Investments, at fair value	5,479,136	5,582,842
Due from affiliates	17,782	15,884
Other assets	1,382	1,989
Dividends and interest receivable	12,096	12,568
Receivable for securities sold	83,718	61,462
Liabilities
Accounts payable, accrued expenses and other liabilities	81,508	64,316
Due to affiliates	0	0
Payable for securities purchased	239,139	350,145
CLO loan obligations, at fair value	4,937,264	4,963,194
Fund borrowings	140,653	138,198
Non-controlling interest in Ares Operating Group entities	544,380	528,488
Controlling interest in Ares Management, L.P.:
Investments	5,479,136	5,582,842
Consolidated Funds | Reportable legal entity
Assets
Cash and cash equivalents	532,470	556,500
Investments, at fair value	5,479,136	5,582,842
Due from affiliates	17,782	15,884
Other assets	1,382	1,989
Dividends and interest receivable	12,096	12,568
Receivable for securities sold	83,718	61,462
Total assets	6,126,584	6,231,245
Liabilities
Accounts payable, accrued expenses and other liabilities	81,508	64,316
Due to affiliates	8,791	11,285
Payable for securities purchased	239,139	350,145
CLO loan obligations, at fair value	4,947,470	4,974,110
Fund borrowings	140,653	138,198
Total liabilities	5,417,561	5,538,054
Commitments and contingencies
Non-controlling interest in Ares Operating Group entities	709,023	693,191
Controlling interest in Ares Management, L.P.:
Total equity	709,023	693,191
Total liabilities and equity	6,126,584	6,231,245
Consolidated Funds | Eliminations
Assets
Cash and cash equivalents	0
Investments, at fair value	0
Due from affiliates	0
Other assets	0
Dividends and interest receivable	0
Receivable for securities sold	0
Liabilities
Accounts payable, accrued expenses and other liabilities	0
Due to affiliates	(8,791)	(11,285)
Payable for securities purchased	0	0
CLO loan obligations, at fair value	(10,206)	(10,916)
Fund borrowings	0	0
Non-controlling interest in Ares Operating Group entities	(164,643)	(164,703)
AOG
Liabilities
Non-controlling interest in Ares Operating Group entities	348,820	358,186
AOG | Reportable legal entity
Liabilities
Non-controlling interest in Ares Operating Group entities	348,820	358,186
Accrued Interest | Ares Management L.P
Assets
Investments, at fair value	1,113,435	1,077,236
Collateral Pledged | Ares Management L.P
Assets
Investments, at fair value	$ 17,575	$ 0

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CONSOLIDATION (Income Statement) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues
Administrative, transaction and other fees	$ 0	$ 0
Total revenues	266,089	244,244
Expenses
Total expenses	206,283	491,467
Other income (expense)
Total other income	2,240	56,635
Income (loss) before taxes	62,046	(190,588)
Income tax expense (benefit)	(12,375)	(34,264)
Net income (loss)	74,421	(156,324)
Net income (loss) attributable to Ares Management, L.P.	40,948	(41,134)
Less: Preferred equity dividend paid	5,425	5,425
Net income (loss) attributable to Ares Management, L.P. common shareholders	35,523	(46,559)
Eliminations
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	(7,311)	(4,736)
Carried interest allocation	0	(1,008)
Incentive fees		(1,862)
Principal investment income	2,201	(10,582)
Administrative, transaction and other fees	0	0
Total revenues	(5,110)	(18,188)
Expenses
Compensation and benefits	0
Performance related compensation	0
General, administrative and other expenses	0
Total expenses	(7,313)	(6,598)
Other income (expense)
Net realized and unrealized gain (loss) on investments	339	(2,865)
Interest and dividend income	0	(919)
Interest expense		0
Other income (expense), net	(458)
Total other income	(459)	(23)
Income (loss) before taxes	1,744	(11,613)
Income tax expense (benefit)	0
Net income (loss)	1,744	(11,613)
Less: Preferred equity dividend paid	0	0
Net income (loss) attributable to Ares Management, L.P. common shareholders	0	0
Ares Management L.P
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	189,515	172,045
Carried interest allocation	54,129	52,007
Incentive fees	5,071	3,165
Principal investment income	4,909	2,587
Administrative, transaction and other fees	12,465	14,440
Total revenues	266,089	244,244
Expenses
Compensation and benefits	134,639	124,339
Performance related compensation	25,878	40,702
General, administrative and other expenses	44,450	47,338
Transaction support expense	0	275,177
Other income (expense)
Net realized and unrealized gain (loss) on investments	(839)	888
Interest and dividend income	3,347	1,924
Interest expense	(6,869)	(4,879)
Other income (expense), net	(311)	16,496
Income tax expense (benefit)	(12,375)	(34,733)
Ares Management L.P | Affiliated entity | ARCC
Statements of Operations
Management fees, part I fees	28,417	33,257
Ares Management L.P | Reportable legal entity
Revenues
Management fees (includes ARCC Part I Fees of $28,417 and $33,257 for the three months ended March 31, 2018 and 2017, respectively)	196,826	176,781
Carried interest allocation	54,129	53,015
Incentive fees	5,071	5,027
Principal investment income	2,708	13,169
Administrative, transaction and other fees	12,465	14,440
Total revenues	271,199	262,432
Expenses
Compensation and benefits	134,639	124,339
Performance related compensation	25,878	40,702
General, administrative and other expenses	44,450	47,338
Transaction support expense		275,177
Total expenses	204,967	487,556
Other income (expense)
Net realized and unrealized gain (loss) on investments	(1,178)	3,753
Interest and dividend income	3,347	2,843
Interest expense	(6,869)	(4,879)
Other income (expense), net	147	16,496
Total other income	(4,553)	18,213
Income (loss) before taxes	61,679	(206,911)
Income tax expense (benefit)	(12,375)	(34,732)
Net income (loss)	74,054	(172,179)
Net income (loss) attributable to Ares Management, L.P.	40,948	(41,134)
Less: Preferred equity dividend paid	5,425	5,425
Net income (loss) attributable to Ares Management, L.P. common shareholders	35,523	(46,559)
Consolidated Funds
Expenses
Expenses of Consolidated Funds	1,316	3,911
Other income (expense)
Net realized and unrealized gain (loss) on investments	(13,085)	32,036
Interest and dividend income	64,422	41,492
Interest expense	(44,425)	(31,322)
Investment income and net interest income (expense)	64,422	41,492
Income tax expense (benefit)	0	469
Net income attributable to non-controlling interests related to consolidated VIEs	367	15,855
Consolidated Funds | Reportable legal entity
Expenses
Expenses of Consolidated Funds	8,629	10,509
Total expenses	8,629	10,509
Other income (expense)
Net realized and unrealized gain (loss) on investments	(12,452)	30,439
Interest expense	(44,718)	(33,486)
Investment income and net interest income (expense)	64,422	41,492
Total other income	7,252	38,445
Income (loss) before taxes	(1,377)	27,936
Income tax expense (benefit)	0	468
Net income (loss)	(1,377)	27,468
Net income attributable to non-controlling interests related to consolidated VIEs	(1,377)	27,468
Net income (loss) attributable to Ares Management, L.P.		0
Net income (loss) attributable to Ares Management, L.P. common shareholders		0
Consolidated Funds | Eliminations
Expenses
Expenses of Consolidated Funds	(7,313)	(6,598)
Total expenses	(7,313)	(6,598)
Other income (expense)
Net realized and unrealized gain (loss) on investments	(633)	1,597
Interest expense	293	2,164
Investment income and net interest income (expense)	0	0
Total other income	(459)	(23)
Net income attributable to non-controlling interests related to consolidated VIEs	1,744	(11,613)
AOG
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	33,106	(131,045)
AOG | Reportable legal entity
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	33,106	$ (131,045)
AOG | Eliminations
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	$ 0

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SUBSEQUENT EVENTS (Details) - Subsequent event	1 Months Ended
	Apr. 30, 2018 $ / shares shares
Subsequent events
Quarterly distribution declared (in dollars per unit)	$ 0.28
Preferred equity quarterly distribution (in dollars per unit)	$ 0.4375
Underwriting | Ares Management L.P
Subsequent events
Number of units sold (in units) | shares	1,130,000