Apollo Global Management
Annual Report 2014

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Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 Form 10-K (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014 ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-35107 APOLLO GLOBAL MANAGEMENT, LLC(Exact name of Registrant as specified in its charter) Delaware 20-8880053(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)9 West 57th Street, 43rd FloorNew York, New York 10019(Address of principal executive offices) (Zip Code)(212) 515-3200(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredClass A shares representing limited liability company interests New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities. Yes x No ¨Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No xIndicate 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 of1934 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 filingrequirements 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 Filerequired 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 shorterperiod that the registrant was required to submit and post such files). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein andwill not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer T Accelerated filer oNon-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company oIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No TThe aggregate market value of the Class A shares of the Registrant held by non-affiliates as of June 30, 2014 was approximately $4,303.2 million,which includes non-voting Class A shares with a value of approximately $1,246.5 million.As of February 26, 2015 there were 167,899,419 Class A shares and 1 Class B share outstanding. Table of Contents TABLE OF CONTENTS PagePART I ITEM 1.BUSINESS6 ITEM 1A.RISK FACTORS21 ITEM 1B.UNRESOLVED STAFF COMMENTS58 ITEM 2.PROPERTIES58 ITEM 3.LEGAL PROCEEDINGS58 ITEM 4.MINE SAFETY DISCLOSURES63 PART II ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES64 ITEM 6.SELECTED FINANCIAL DATA66 ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS68 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK140 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA144 ITEM 8A.UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION234 ITEM 9.CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE236 ITEM 9A.CONTROLS AND PROCEDURES236 ITEM 9B.OTHER INFORMATION236 PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE237 ITEM 11.EXECUTIVE COMPENSATION243 ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS255 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS258 ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES265 PART IV ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES266 SIGNATURES272- 2- Table of ContentsForward-Looking StatementsThis report may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended (the “SecuritiesAct”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to,discussions related to Apollo’s expectations regarding the performance of its business, liquidity and capital resources and the other non-historical statementsin the discussion and analysis. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and informationcurrently available to, management. When used in this report, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions areintended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements arereasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties andassumptions, including risks relating to our dependence on certain key personnel, our ability to raise new private equity, credit or real estate funds, marketconditions generally, our ability to manage our growth, fund performance, changes in our regulatory environment and tax status, the variability of ourrevenues, net income and cash flow, our use of leverage to finance our businesses and investments by our funds and litigation risks, among others. We believethese factors include but are not limited to those described under the section entitled “Risk Factors” in this report; as such factors may be updated from timeto time in our periodic filings with the United States Securities and Exchange Commission (the "SEC"), which are accessible on the SEC’s website atwww.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are includedin this report and in our other filings. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of newinformation, future developments or otherwise, except as required by applicable law.Terms Used in This ReportIn this report, references to “Apollo,” “we,” “us,” “our” and the “Company” refer collectively to Apollo Global Management, LLC, a Delaware limitedliability company, and its subsidiaries, including the Apollo Operating Group and all of its subsidiaries, or as the context may otherwise require;“AMH” refers to Apollo Management Holdings, L.P., a Delaware limited partnership, that is an indirect subsidiary of Apollo Global Management, LLC;“Apollo funds”, “our funds” and references to the "funds" we manage, refer to the funds, partnerships, accounts, including strategic investment accounts or"SIAs," alternative asset companies and other entities for which subsidiaries of the Apollo Operating Group provide investment management services;“Apollo Operating Group” refers to (i) the limited partnerships through which our Managing Partners currently operate our businesses and (ii) one or morelimited partnerships formed for the purpose of, among other activities, holding certain of our gains or losses on our principal investments in the funds, whichwe refer to as our "principal investments";“Assets Under Management,” or “AUM,” refers to the assets we manage for the funds, partnerships and accounts for which we provide investmentmanagement services, including, without limitation, capital which such funds, partnerships and accounts have the right to call from investors pursuant tocapital commitments. Our AUM equals the sum of:(i)the fair value of the investments of the private equity funds, partnerships and accounts we manage plus the capitalwhich such funds, partnerships and accounts are entitled to call from investors pursuant to capital commitments;(ii)the net asset value, or “NAV,” of the credit funds, partnerships and accounts for which we provide investmentmanagement services, other than certain collateralized loan obligations (“CLOs”) and collateralized debt obligations(“CDOs”), which have a fee generating basis other than the mark-to-market value of the underlying assets, plus usedor available leverage and/or capital which such funds, partnerships and accounts are entitled to call from investorspursuant to capital commitments;(iii)the gross asset value or net asset value of the real estate funds, partnerships and accounts we manage, and thestructured portfolio company investments of the funds, partnerships and accounts we manage, which includes theleverage used by such structured portfolio company investments;(iv)the incremental value associated with the reinsurance investments of the portfolio company assets that we manage;and(v)the fair value of any other assets that we manage for the funds, partnerships and accounts for which we provideinvestment management services, plus unused credit facilities,- 3- Table of Contentsincluding capital commitments to such funds, partnerships and accounts for investments that may require pre-qualification before investment plus any other capital commitments to such funds, partnerships and accountsavailable for investment that are not otherwise included in the clauses above.Our AUM measure includes Assets Under Management for which we charge either no or nominal fees. Our definition of AUM is not based on any definitionof Assets Under Management contained in our operating agreement or in any of our Apollo fund management agreements. We consider multiple factors fordetermining what should be included in our definition of AUM. Such factors include but are not limited to (1) our ability to influence the investmentdecisions for existing and available assets; (2) our ability to generate income from the underlying assets in our funds; and (3) the AUM measures that we useinternally or believe are used by other investment managers. Given the differences in the investment strategies and structures among other alternativeinvestment managers, our calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may notbe directly comparable to similar measures presented by other investment managers;"Fee-Generating AUM" consists of assets we manage for the funds, partnerships and accounts for which we provide investment management services and onwhich we earn management fees or, monitoring fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds,partnerships and accounts we manage. Management fees are normally based on “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted cost ofall unrealized portfolio investments,” “capital commitments,” “adjusted assets,” “stockholders’ equity,” “invested capital” or “capital contributions,” each asdefined in the applicable management agreement. Monitoring fees, also referred to as advisory fees, with respect to investments of the funds, partnerships andaccounts we manage are generally based on the total value of such structured portfolio investments, which normally include leverage, less any portion ofsuch total value that is already considered in Fee-Generating AUM."Non-Fee Generating AUM" consists of assets that do not produce management fees or monitoring fees. These assets generally consist of the following:(i)fair value above invested capital for those funds that earn management fees based on invested capital;(ii)net asset values related to general partner and co-investment ownership;(iii)unused credit facilities;(iv)available commitments on those funds that generate management fees on invested capital;(v)structured portfolio company investments that do not generate monitoring fees; and(vi)the difference between gross asset and net asset value for those funds that earn management fees based on net assetvalue."Carry Eligible AUM" refers to the AUM that may eventually produce carried interest income. All funds for which we areentitled to receive a carried interest income allocation are included in Carry Eligible AUM, which consists of the following:(i)"Carry Generating AUM," which refers to funds' invested capital that is currently above its hurdle rate or preferredreturn, and the funds' profit is allocated to the general partner in accordance with the applicable limited partnershipagreements or other governing agreements;(ii)"AUM Not Currently Generating Carry," which refers to funds' invested capital that is currently below its hurdle rateor preferred return; and(iii)"Uninvested Carry Eligible AUM," which refers to available capital for investment or reinvestment subject to theprovisions of applicable limited partnership agreements or other governing agreements that are not currently part ofthe NAV or fair value of investments that may eventually produce carried interest income, which would be allocatedto the general partner."AUM with Future Management Fee Potential" refers to the committed uninvested capital portion of total AUM notcurrently earning management fees. The amount depends on the specific terms and conditions of each fund.We use Non-Fee Generating AUM combined with Fee-Generating AUM as a performance measure of our funds' investment activities, as well as to monitorfund size in relation to professional resource and infrastructure needs. Non-Fee Generating AUM includes assets on which we could earn carried interestincome;- 4- Table of Contents“carried interest,” “carried interest income,” and “incentive income” refer to interests granted to Apollo by an Apollo fund that entitle Apollo to receiveallocations, distributions or fees which are based on the performance of such fund or its underlying investments;“Contributing Partners” refer to those of our partners and their related parties (other than our Managing Partners) who indirectly beneficially own (throughHoldings) Apollo Operating Group units;“feeder funds” refer to funds that operate by placing substantially all of their assets in, and conducting substantially all of their investment and tradingactivities through, a master fund, which is designed to facilitate collective investment by the participating feeder funds. With respect to certain of our fundsthat are organized in a master-feeder structure, the feeder funds are permitted to make investments outside the master fund when deemed appropriate by thefund’s investment manager;“gross IRR” of a private equity fund represents the cumulative investment-related cash flows in the fund itself (and not the investors in the fund) on the basisof the actual timing of investment inflows and outflows (for unrealized investments assuming disposition on December 31, 2014 or other date specified)aggregated on a gross basis quarterly, and the return is annualized and compounded before management fees, carried interest and certain other fund expenses(including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returnswould, if distributed, be payable to the fund’s investors;“Holdings” means AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership through which our Managing Partners and ContributingPartners indirectly beneficially own their interests in the Apollo Operating Group units;"IRS" refers to the Internal Revenue Service;“Managing Partners” refer to Messrs. Leon Black, Joshua Harris and Marc Rowan collectively and, when used in reference to holdings of interests in Apolloor Holdings, includes certain related parties of such individuals;“net IRR” of a private equity fund means the cumulative investment-related cash flows to the fund itself (and not to the investors in the fund) on the basis ofthe actual timing of cash inflows and outflows aggregated on a quarterly basis, less expenses (management fees, carried interest and certain other fundexpenses). For the calculation of Net IRR the realized and estimated unrealized value is adjusted such that a percentage generally of up to 20.0% of theunrealized gain is allocated to the general partner, thereby reducing the balance attributable to fund investors' carried interest all offset to the extent ofinterest income, and measures returns based on amounts that, if distributed, would be paid to investors of the fund, to the extent that a private equity fundexceeds all requirements detailed within the applicable fund agreement;“net return” represents the calculated return that is based on month-to-month changes in net assets and is calculated using the returns that have beengeometrically linked based on capital contributions, distributions and dividend reinvestments, as applicable;“our manager” means AGM Management, LLC, a Delaware limited liability company that is controlled by our Managing Partners;“permanent capital” means (a) assets that are owned by or related to Athene Holding Ltd. ("Athene Holding") and its subsidiaries (collectively, "Athene") andmanaged by Athene Asset Management, L.P. and (b) assets of publicly traded vehicles managed by Apollo (such as AP Alternative Assets, L.P. ("AAA"),Apollo Investment Corporation ("AINV"), Apollo Commercial Real Estate Finance, Inc. ("ARI"), Apollo Residential Mortgage, Inc. ("AMTG"), ApolloTactical Income Fund Inc. ("AIF"), and Apollo Senior Floating Rate Fund Inc. ("AFT"), in each case that do not have redemption provisions or a requirementto return capital to investors upon exiting the investments made with such capital, except as required by applicable law.“private equity investments” refer to (i) direct or indirect investments in existing and future private equity funds managed or sponsored by Apollo, (ii) director indirect co-investments with existing and future private equity funds managed or sponsored by Apollo, (iii) direct or indirect investments in securitieswhich are not immediately capable of resale in a public market that Apollo identifies but does not pursue through its private equity funds, and(iv) investments of the type described in (i) through (iii) above made by Apollo funds; and“Strategic Investors” refer to the California Public Employees’ Retirement System, or “CalPERS,” and an affiliate of the Abu Dhabi Investment Authority, or“ADIA.”- 5- Table of ContentsPART I.ITEM 1. BUSINESSOverviewFounded in 1990, Apollo is a leading global alternative investment manager. We are a contrarian, value-oriented investment manager in privateequity, credit and real estate, with significant distressed investment expertise. We have a flexible mandate in many of the funds we manage which enables ourfunds to invest opportunistically across a company’s capital structure. We raise, invest and manage funds on behalf of some of the world’s most prominentpension, endowment and sovereign wealth funds, as well as other institutional and individual investors. As of December 31, 2014, we had total AUM of $160billion, including approximately $41 billion in private equity, $108 billion in credit and $10 billion in real estate. We have consistently produced attractivelong-term investment returns in our private equity funds, generating a 39% gross IRR and a 25% net IRR on a compound annual basis from inceptionthrough December 31, 2014.Apollo is led by our Managing Partners, Leon Black, Joshua Harris and Marc Rowan, who have worked together for more than 24 years and lead ateam of 845 employees, including 320 investment professionals, as of December 31, 2014. This team possesses a broad range of transaction, financial,managerial and investment skills. We have offices in New York, Los Angeles, Houston, Bethesda, Chicago, Toronto, London, Singapore, Frankfurt, Mumbai,Hong Kong and Luxembourg. We operate our private equity, credit and real estate investment management businesses in a highly integrated manner, whichwe believe distinguishes us from other alternative investment managers. Our investment professionals frequently collaborate across disciplines. We believethat this collaboration, including market insight, management, banking and consultant contacts, and investment opportunities, enables the funds we manageto more successfully invest across a company’s capital structure. This platform and the depth and experience of our investment team have enabled us todeliver strong long-term investment performance for our funds throughout a range of economic cycles.Our objective is to achieve superior long-term risk-adjusted returns for our fund investors. The majority of the investment funds we manage aredesigned to invest capital over periods of seven or more years from inception, thereby allowing us to generate attractive long-term returns throughouteconomic cycles. Our investment approach is value-oriented, focusing on nine core industries in which we have considerable knowledge and experience, andemphasizing downside protection and the preservation of capital. Our core industry sectors include chemicals, natural resources, consumer and retail,distribution and transportation, financial and business services, manufacturing and industrial, media and cable and leisure, packaging and materials and thesatellite and wireless industries. Our contrarian investment management approach is reflected in a number of ways, including:•our willingness to pursue investments in industries that our competitors typically avoid;•the often complex structures employed in some of the investments of our funds, including our willingness to pursue difficult corporate carve-outtransactions;•our experience investing during periods of uncertainty or distress in the economy or financial markets when many of our competitors simplyreduce their investment activity;•our orientation towards sole sponsored transactions when other firms have opted to partner with others; and•our willingness to undertake transactions that have substantial business, regulatory or legal complexity.We have applied this investment philosophy to identify what we believe are attractive investment opportunities, deploy capital across the balancesheet of industry leading, or “franchise,” businesses and create value throughout economic cycles.We rely on our deep industry, credit and financial structuring experience, coupled with our strengths as a value-oriented, distressed investmentmanager, to deploy significant amounts of new capital within challenging economic environments. Our approach towards investing in distressed situationsoften requires our funds to purchase particular debt securities as prices are declining, since this allows us both to reduce our funds’ average cost andaccumulate sizable positions which may enhance our ability to influence any restructuring plans and maximize the value of our funds’ distressedinvestments. As a result, our investment approach may produce negative short-term unrealized returns in certain of the funds we manage. However, weconcentrate on generating attractive, long-term, risk-adjusted realized returns for our fund investors, and we therefore do not overly depend on short-termresults and quarterly fluctuations in the unrealized fair value of the holdings in our funds.In addition to deploying capital in new investments, we seek to enhance value in the investment portfolios of the funds we manage. We have reliedon our transaction, restructuring and credit experience to work proactively with our private equity funds’ portfolio company management teams to identifyand execute strategic acquisitions, joint ventures, and other transactions, generate cost and working capital savings, reduce capital expenditures, andoptimize capital structures through several means such as debt exchange offers and the purchase of portfolio company debt at discounts to par value.- 6- •••••••••••Table of ContentsWe have grown our total AUM at a 30% compound annual growth rate from December 31, 2004 to December 31, 2014. In addition, we benefit frommandates with long-term capital commitments in our private equity, credit and real estate businesses. Our long-lived capital base allows us to invest ourfunds' assets with a long-term focus, which is an important component in generating attractive returns for our investors. We believe the long-term capital wemanage also leaves us well-positioned during economic downturns, when the fundraising environment for alternative assets has historically been morechallenging than during periods of economic expansion. As of December 31, 2014, approximately 96% of our AUM was in funds with a contractual life atinception of seven years or more, and 45% of our AUM was considered permanent capital.We expect our growth in AUM to continue over time by seeking to create value in our funds’ existing private equity, credit and real estateinvestments, continuing to deploy our funds’ available capital in what we believe are attractive investment opportunities, and raising new funds andinvestment vehicles as market opportunities present themselves. See “Item 1A. Risk Factors—Risks Related to Our Businesses—We may not be successful inraising new funds or in raising more capital for certain of our funds and may face pressure on fee arrangements of our future funds.”Our financial results are highly variable, since carried interest (which generally constitutes a large portion of the income that we receive from thefunds we manage), and the transaction and advisory fees that we receive, can vary significantly from quarter to quarter and year to year. We manage ourbusiness and monitor our performance with a focus on long-term performance, an approach that is generally consistent with the investment horizons of thefunds we manage and is driven by the investment returns of our funds.Available InformationOur Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnishedpursuant to Section 13(a) of the Exchange Act are made available free of charge on or through our website at www.agm.com as soon as reasonably practicableafter such reports are filed with, or furnished to, the SEC. The information on our website is not, and shall not be deemed to be, part of this report orincorporated into any other filings we make with the SEC.Our BusinessesWe have three business segments: private equity, credit and real estate. The diagram below summarizes our current businesses:Apollo Global Management, LLC(1) Private Equity Credit Real Estate Distressed Buyouts, Debt andOther Investments Corporate Carve-outs Opportunistic Buyouts Natural Resources U.S. Performing Credit Structured Credit Opportunistic Credit Non-Performing Loans European Credit• Athene Opportunistic equity investing inreal estate assets, portfolios,companies and platforms Commercial real estate debtinvestments including First Mortgageand Mezzanine Loans andCommercial Mortgage BackedSecurities AUM: $41.1 billion(2) AUM: $108.4 billion(2)(3) AUM: $9.5 billion(2)(3)(4) Strategic Investment Accounts(5)Generally invests in or alongside certain Apollo fundsand other Apollo-sponsored transactions (1)All data is as of December 31, 2014.(2)See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information.- 7- Table of Contents(3)Includes funds that are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.21 as of December 31, 2014.(4)Includes funds that are denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.56 as of December 31, 2014.(5)As of December 31, 2014, there was $0.8 billion that had yet to be deployed to an Apollo fund within our three segments.Private EquityAs a result of our long history of private equity investing across market cycles, we believe we have developed a unique set of skills on which we relyto make new investments and to maximize the value of our existing investments. As an example, through our experience with traditional private equitybuyouts, which we also refer to herein as buyout equity, we apply a highly disciplined approach towards structuring and executing transactions, the keytenets of which include seeking to acquire companies at below industry average purchase price multiples, and establishing flexible capital structures withlong-term debt maturities and few, if any, financial maintenance covenants.We believe we have a demonstrated ability to adapt quickly to changing market environments and capitalize on market dislocations through ourtraditional, distressed and corporate buyout approach. In prior periods of strained financial liquidity and economic recession, our private equity funds havemade attractive investments by buying the debt of quality businesses (which we refer to as “classic” distressed debt), converting that debt to equity, seekingto create value through active participation with management and ultimately monetizing the investment. This combination of traditional and corporatebuyout investing with a “distressed option” has been deployed through prior economic cycles and has allowed our funds to achieve attractive long-term ratesof return in different economic and market environments. In addition, during prior economic downturns we have relied on our restructuring experience andworked closely with our funds’ portfolio companies to seek to maximize the value of our funds’ investments.We seek to focus on investment opportunities where competition is limited or non-existent. We believe we are often sought out early in theinvestment process because of our industry expertise, sizable amounts of available long-term capital, willingness to pursue investments in complicatedsituations and ability to provide value-added advice to portfolio companies regarding operational improvements, acquisitions and strategic direction. Wegenerally prefer sole sponsored transactions and since inception through December 31, 2014, approximately 80% of the investments made by our privateequity funds have been proprietary in nature. We believe that by emphasizing our proprietary sources of deal flow, our private equity funds will be able toacquire businesses at more compelling valuations which will ultimately create a more attractive risk/reward proposition.Distressed Buyouts, Debt and Other InvestmentsDuring periods of market dislocation and volatility, we rely on our credit and capital markets expertise to build positions in distressed debt. Wetarget assets with what we believe are high-quality operating businesses but low-quality balance sheets, consistent with our traditional buyout strategies. Thedistressed securities our funds purchase include bank debt, public high-yield debt and privately held instruments, often with significant downside protectionin the form of a senior position in the capital structure, and in certain situations our funds also provide debtor-in-possession financing to companies inbankruptcy. Our investment professionals generate these distressed buyout and debt investment opportunities based on their many years of experience in thedebt markets, and as such they are generally proprietary in nature.We believe distressed buyouts and debt investments represent a highly attractive risk/reward profile. Our funds’ investments in debt securities havegenerally resulted in two outcomes. The first and preferred potential outcome, which we refer to as a distressed for control investment, is when our funds aresuccessful in taking control of a company through its investment in the distressed debt. By working proactively through the restructuring process, we areoften able to equitize the debt position of our funds to create a well-financed buyout which would then typically be held by the fund for a three-to-five yearperiod, similar to other traditional leveraged buyout transactions. The second potential outcome, which we refer to as a non-control distressed investment iswhen our funds do not gain control of the company. This typically occurs as a result of an increase in the price of the debt investments to levels which arehigher than what we consider to be an attractive acquisition valuation. In these instances, we may forgo seeking control, and instead our funds may seek tosell the debt investments over time, typically generating a higher short-term IRR with a lower multiple of invested capital than in the case of a typicaldistressed for control transaction. We believe that we are a market leader in distressed investing and that this is one of the key areas that differentiates us fromour peers.In addition to our opportunistic, distressed and corporate partner buyout activities, we also maintain the flexibility to deploy capital of our privateequity funds in other types of investments such as the creation of new companies, which allows us to leverage our deep industry and distressed expertise andcollaborate with experienced management teams to seek to capitalize on market opportunities that we have identified, particularly in asset-intensiveindustries that are in distress. In these types of situations, we have the ability to establish new entities that can acquire distressed assets at what we believe areattractive valuations without the burden of managing an existing portfolio of legacy assets. Similar to our corporate partner buyout activities, other- 8- Table of Contentsinvestments, such as the creation of new companies, historically have not represented a large portion of our overall investment activities, although ourprivate equity funds do make these types of investments selectively.Corporate Carve-outsCorporate Carve-outs are less market-dependent than distressed investing, but are equally complicated. In these transactions, Apollo funds seek toextract a business that is highly integrated within a larger corporate parent to create a stand-alone business. These are labor-intensive transactions, which webelieve require deep industry knowledge, patience and creativity, to unlock value that has largely been overlooked or undermanaged. Importantly, becauseof the highly negotiated nature of many of these transactions, Apollo believes it is often difficult for the seller to run a competitive process, which ultimatelyallows Apollo funds to achieve compelling purchase prices.Opportunistic BuyoutsWe have extensive experience completing leveraged buyouts across various market cycles. We take an opportunistic and disciplined approach tothese transactions, generally avoiding highly competitive situations in favor of proprietary transactions where there may be opportunities to purchase acompany at a discount to prevailing market averages. Oftentimes, we will focus on complex situations such as out-of-favor industries or “broken” (ordiscontinued) sales processes where the inherent value may be less obvious to potential acquirers. To further alter the risk/reward profile in our funds’ favor,we often focus on certain types of buyouts such as physical asset acquisitions and investments in non-correlated assets where underlying values tend tochange in a manner that is independent of broader market movements.In the case of physical asset acquisitions, our private equity funds seek to acquire physical assets at discounts to where those assets trade in thefinancial markets, and to lock in that value arbitrage through comprehensive hedging and structural enhancements.We believe buyouts of non-correlated assets or businesses also represent attractive investments since they are generally less correlated to the broadereconomy and provide an element of diversification to our funds' overall portfolio of private equity investments.In the case of more conventional buyouts, we seek investment opportunities where we believe our focus on complexity and sector expertise willprovide us with a significant competitive advantage, whereby we can leverage our knowledge and experience from the nine core industries in which ourinvestment professionals have historically invested private equity capital. We believe such knowledge and experience can result in our ability to findattractive opportunities for our funds to acquire portfolio company investments at lower purchase price multiples.Natural ResourcesIn 2011, Apollo established Apollo Natural Resources Partners, L.P. (together with its alternative investment vehicles, “ANRP”), and has assembleda team of dedicated investment professionals to capitalize on private equity investment opportunities in the natural resources industry, principally in themetals and mining, energy and select other natural resources sectors.AP Alternative Assets, L.P.We also manage AAA, a publicly listed permanent capital vehicle. The sole investment held by AAA is its investment in AAA Investments, L.P.(“AAA Investments”). AAA Investments is the largest equity holder of Athene Holding.AAA is a Guernsey limited partnership whose partners are comprised of (i) AAA Guernsey Limited (“AAA Guernsey”), which holds 100% of thegeneral partner interests in AAA, and (ii) the holders of common units representing limited partner interests in AAA. The common units are non-voting andare listed on NYSE Euronext in Amsterdam under the symbol “AAA”. AAA Guernsey is a Guernsey limited company and is owned 55% by an individual whois not an affiliate of Apollo and 45% by Apollo Principal Holdings III, L.P., an indirect subsidiary of Apollo. AAA Guernsey is responsible for managing thebusiness and affairs of AAA. AAA generally makes all of its investments through AAA Investments, of which AAA is the sole limited partner.Athene Holding is AAA’s only material investment. As of December 31, 2014, the Company, through its consolidation of AAA, had an approximate47.7% economic ownership interest in Athene through its investment in AAA Investments (calculated as if the commitments on the Athene Private Placement(as described in note 4 to the consolidated financial statements) closed through December 31, 2014 were fully drawn down but without giving effect to (i)restricted common shares issued under Athene’s management equity plan, or (ii) common shares to be issued under the Amended Athene Services Agreementor the Amended AAA Services Agreement (each as described in note 17 to the consolidated financial statements) subsequent to December 31, 2014). Apolloowned approximately 2.5% of AAA as of December 31, 2014.- 9- Table of ContentsBuilding Value in Portfolio CompaniesWe are a “hands-on” investor organized around nine core industries where we believe we have significant knowledge and expertise, and we remainactively engaged with the management teams of the portfolio companies of our private equity funds. We have established relationships with operatingexecutives that assist in the diligence review of new opportunities and provide strategic and operational oversight for portfolio investments. We activelywork with the management of each of the portfolio companies of the funds we manage to maximize the underlying value of the business. To achieve this, wetake a holistic approach to value-creation, concentrating on both the asset side and liability side of the balance sheet of a company. On the asset side of thebalance sheet, Apollo works with management of the portfolio companies to enhance the operations of such companies. Our investment professionals assistportfolio companies in rationalizing non-core and underperforming assets, generating cost and working capital savings, and maximizing liquidity. On theliability side of the balance sheet, Apollo relies on its deep credit structuring experience and works with management of the portfolio companies to helpoptimize the capital structure of such companies through proactive restructuring of the balance sheet to address near-term debt maturities. The companies inwhich our private equity funds invest also seek to capture discounts on publicly traded debt securities through exchange offers and potential debt buybacks.In addition, we have established a group purchasing program to help our funds' portfolio companies leverage the combined corporate spending amongApollo and portfolio companies of the funds it manages in order to seek to reduce costs, optimize payment terms and improve service levels for all programparticipants.Exiting InvestmentsThe value of the investments that have been made by our funds are typically realized through either an initial public offering of common stock on anationally recognized exchange or through the private sale of the companies in which our funds have invested. We believe the advantage of having long-lived funds and investment discretion is that we are able to time our funds’ exit to maximize value.Private Equity Fund HoldingsThe following table presents a list of certain significant portfolio companies of our private equity funds as of December 31, 2014: Company Year of InitialInvestment Fund(s) Buyout Type Industry RegionCEC Entertainment 2014 Fund VIII Opportunistic Buyout Media, Cable &Leisure North AmericaCaelus Energy Alaska 2014 Fund VIII / ANRP Corporate Carve-Out Natural Resources North AmericaExpress Energy Services 2014 Fund VIII / ANRP Opportunistic Buyout Natural Resources North AmericaJupiter Resources 2014 Fund VIII / ANRP Corporate Carve-out Natural Resources North AmericaAmerican Gaming Systems 2013 Fund VIII Distressed Buyout Media, Cable &Leisure North AmericaAurum 2013 Fund VII Opportunistic Buyout Consumer & Retail Western EuropeHostess 2013 Fund VII Corporate Carve-out Consumer & Retail North AmericaMcGraw-Hill Education 2013 Fund VII Corporate Carve-out Media, Cable &Leisure North AmericaNine Entertainment 2013 Fund VII Distressed Buyout Media, Cable &Leisure AustraliaEP Energy 2012 Fund VII & ANRP Corporate Carve-out Natural Resources North AmericaGreat Wolf Resorts 2012 Fund VII Opportunistic Buyout Media, Cable &Leisure North AmericaPinnacle 2012 Fund VII & ANRP Opportunistic Buyout Natural Resources North AmericaTalos 2012 Fund VII & ANRP Opportunistic Buyout Natural Resources North America- 10- Table of ContentsBrit Insurance 2011 Fund VII Opportunistic Buyout Financial & BusinessServices Western EuropeEndemol Shine Group 2011 Fund VII Distressed Buyout Media, Cable &Leisure GlobalSprouts Farmers Markets 2011 Fund VI Opportunistic Buyout Consumer & Retail North AmericaWelspun 2011 Fund VII & ANRP Opportunistic Buyout Natural Resources IndiaGala Coral Group 2010 Fund VII & VI Distressed Buyout Media, Cable &Leisure Western EuropeVeritable Maritime 2010 Fund VII Opportunistic Buyout Distribution &Transportation North AmericaDish TV 2009 Fund VII Opportunistic Buyout Media, Cable &Leisure IndiaCaesars Entertainment 2008 Fund VI Opportunistic Buyout Media, Cable &Leisure North AmericaNorwegian Cruise Line 2008 Fund VII / VI Opportunistic Buyout Media, Cable &Leisure North AmericaClaire’s 2007 Fund VI Opportunistic Buyout Consumer & Retail GlobalBerry Plastics(1) 2006 Fund VI & V CorporateCarve-out Packaging &Materials North AmericaCEVA Logistics(2) 2006 Fund VI Corporate Carve-out Distribution &Transportation Western EuropeMomentive PerformanceMaterials 2000/2004/2006 Fund IV, V & VI Corporate Carve-out Chemicals North AmericaDebt Investment Vehicles -Fund VII Various Fund VII Debt Investments Various VariousDebt Investment Vehicles -Fund VI Various Fund VI Debt Investments Various Various Note: Represents portfolio companies of Fund IV, Fund V, Fund VI, Fund VII, Fund VIII and ANRP with a remaining value greater than $100 million,excluding the value associated with any portion of such private equity funds' portfolio company investments held by co-investment vehicles.(1)Prior to merger with Covalence Specialty Material Holdings Corp. Remaining holding is a tax receivable agreement.(2)Includes add-on investment in EGL, Inc.- 11- Table of ContentsCreditSince Apollo’s founding in 1990, we believe our expertise in credit has served as an integral component of our company’s growth and success. Ourcredit-oriented approach to investing commenced in 1990 with the management of a $3.5 billion high-yield bond and leveraged loan portfolio. Since thattime, our credit activities have grown significantly, through both organic growth and strategic acquisitions. As of December 31, 2014, Apollo’s creditsegment had total AUM and Fee-Generating AUM of $108.4 billion and $92.2 billion, respectively, across a diverse range of credit-oriented investments thatutilize the same disciplined, value-oriented investment philosophy that we employ with respect to our private equity funds.Apollo’s broad credit platform, which we believe is adaptable to evolving market conditions and different risk tolerances, has been organized by thefollowing six functional groups:Credit AUM as of December 31, 2014(in billions)(1)Excludes sub-advised AUM.U.S. Performing CreditThe U.S. performing credit group provides investment management services to funds, including SIAs, that primarily focus on income-oriented,senior loan and bond investment strategies. The U.S. performing credit group also includes CLOs that we raise and manage internally. As of December 31,2014, our U.S. performing credit group had total AUM and Fee-Generating AUM of $24.9 billion and $20.0 billion, respectively.Structured CreditThe structured credit group provides investment management services to funds, including SIAs, that primarily focus on structured credit investmentstrategies that target multiple tranches of structured securities with favorable and protective lending terms, predictable payment schedules, well diversifiedportfolios, and low historical defaults, among other characteristics. These strategies include investments in externally managed CLOs, residential mortgage-backed securities, asset-backed securities and other structured instruments, including insurance-linked securities and longevity-based products. Thestructured credit group also serves as substitute investment manager for a number of asset-backed CDOs and other structured vehicles. As of December 31,2014, our structured credit group had total AUM and Fee-Generating AUM of $16.0 billion and $11.0 billion, respectively.Opportunistic CreditThe opportunistic credit group provides investment management services to funds, including SIAs, that primarily focus on credit investmentstrategies that are often less liquid in nature and that utilize a similar value-oriented investment philosophy as our private equity business. The opportunisticcredit funds and SIAs invest in a broad array of primary (including origination)and secondary opportunities encompassing performing, stressed and distressedpublic and private securities primarily within corporate credit, including senior loans (secured and unsecured), high yield, mezzanine, debtor in possessionfinancings, rescue or bridge financings, and other debt investments. Additionally, certain opportunistic credit funds will selectively invest in aircraft,- 12- Table of Contentsshipping assets, energy and structured credit investment opportunities. In certain cases, leverage can be employed in connection with these strategies byhaving fund subsidiaries or special-purpose vehicles incur debt or by entering into credit facilities or other debt transactions to finance the acquisition ofvarious credit investments. Additionally, certain opportunistic credit funds will selectively purchase assets, including aircraft and shipping, as well as investin energy and structured credit investment opportunities. As of December 31, 2014, our opportunistic credit group had total AUM and Fee-Generating AUMof $10.8 billion and $6.6 billion, respectively.Non-Performing LoansThe non-performing loan group provides investment management services to funds, including SIAs, that primarily invest in European commercialand residential real estate performing and non-performing loans (“NPLs”) and unsecured consumer loans and acquiring assets as a result of distressed marketsituations. Certain of the non-performing loan investment vehicles that we manage own captive pan-European loan servicing and property managementplatforms. These loan servicing and property management platforms operate in five European countries, employed approximately 1,200 individuals as ofDecember 31, 2014 and directly service consumer credit receivables and loans secured by commercial and residential properties. The post-investment loanservicing and real estate asset management requirements, combined with the illiquid nature of NPLs, limit participation by traditional long only investors,hedge funds, and private equity funds, resulting in what we believe to be a unique opportunity for our credit business. As of December 31, 2014, our non-performing loan group had total AUM and Fee-Generating AUM of $5.0 billion and $3.7 billion, respectively.European CreditThe European credit group provides investment management services to funds, including SIAs, that focus on investment strategies in a variety ofcredit opportunities in Europe across a company’s capital structure. The European credit group invests in senior loans (secured and unsecured) and notes,mezzanine loans, subordinated notes, distressed and stressed credit and other idiosyncratic credit investments of companies established or operatingprimarily in Europe. Additionally, certain European credit funds will selectively invest in shipping assets and structured credit investment opportunities. TheEuropean credit group also includes CLOs that we raise and manage internally. As of December 31, 2014, our European credit group had total AUM and Fee-Generating AUM of $4.0 billion and $3.1 billion, respectively.AtheneAthene Holding was founded in 2009 to capitalize on favorable market conditions in the dislocated life insurance sector. Athene Holding is theultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding provides insurance products focusedprimarily on the retirement market and its business centers primarily on issuing or reinsuring fixed and equity-indexed annuities.On October 2, 2013, Athene Holding closed its acquisition of the U.S. annuity operations of Aviva plc ("Aviva USA"), which added approximately$44 billion of total and Fee-Generating AUM within Apollo's credit segment and as a result, Athene is currently estimated to be one of the largest fixedannuity companies in the United States.Apollo, through its consolidated subsidiary, Athene Asset Management, L.P. (“Athene Asset Management”), provides asset management services toAthene, including asset allocation and portfolio management strategies, and receives fees from Athene for providing such services. As of December 31, 2014,all of Athene’s assets were managed by Athene Asset Management. Athene Asset Management had $60.3 billion of total AUM as of December 31, 2014 inaccounts owned by or related to Athene (the “Athene Accounts”), of which approximately $12.6 billion, or approximately 20.9%, was either sub-advised byApollo or invested in Apollo funds and investment vehicles. The vast majority of such assets are in sub-advisory managed accounts that manage high gradecredit asset classes, such as CLO debt, commercial mortgage backed securities and insurance-linked securities. We expect this percentage to increase overtime provided that Athene Asset Management continues to perform successfully in providing asset management services to Athene. Athene AssetManagement receives a gross management fee equal to 0.40% per annum on all AUM in the Athene Accounts, with certain limited exceptions for all of theservices which Athene Asset Management provides to Athene. In addition, the Company receives sub-advisory fees with respect to a portion of the assets inthe Athene Accounts.Real EstateOur real estate group has a dedicated team of multi-disciplinary real estate professionals whose investment activities are integrated and coordinatedwith our private equity and credit business segments. We take a broad view of markets and property types in targeting debt and equity investmentopportunities, including the acquisition and recapitalization of real estate portfolios,- 13- Table of Contentsplatforms and operating companies and distressed for control situations. As of December 31, 2014, our real estate group had total and fee generating AUM ofapproximately $9.5 billion and $6.2 billion, respectively, through a combination of investment funds, strategic investment accounts ("SIAs") and ApolloCommercial Real Estate Finance, Inc. ("ARI"), a publicly-traded, commercial mortgage real estate investment trust managed by Apollo.With respect to our real estate funds' equity investments, we take a value-oriented approach and our funds will invest in assets located in primary,secondary and tertiary markets. The funds we manage pursue opportunistic investments in various real estate asset classes, which historically have includedhospitality, office, industrial, retail, healthcare, residential and non-performing loans. Our real estate equity funds under management currently include AGREU.S. Real Estate Fund, L.P. and Apollo U.S. Real Estate Fund II, L.P., our U.S. focused, opportunistic funds, and our legacy Citi Property Investors ("CPI")business, the real estate investment management business we acquired from Citigroup in November 2010.With respect to our real estate debt activities, our real estate funds and accounts offer financing across a broad spectrum of property types and atvarious points within a property’s capital structure, including first mortgage and mezzanine financing and preferred equity. In addition to ARI, we alsomanage strategic accounts focused on investing in commercial mortgage-backed securities and other commercial real estate loans.Strategic Investment AccountsWe manage several SIAs established to facilitate investments by third-party investors directly in Apollo funds and other securities. Institutionalinvestors are expressing increasing levels of interest in SIAs since these accounts can provide investors with greater levels of transparency, liquidity andcontrol over their investments as compared to more traditional investment funds. Based on the trends we are currently witnessing among a select group oflarge institutional investors, we expect our AUM that is managed through SIAs to continue to grow over time. As of December 31, 2014, approximately $15billion of our total AUM was managed through SIAs.Fundraising and Investor RelationsWe believe our performance track record across our funds and our focus on client service have resulted in strong relationships with our fundinvestors. Our fund investors include many of the world’s most prominent pension and sovereign wealth funds, university endowments and financialinstitutions, as well as individuals. We maintain an internal team dedicated to investor relations across our private equity, credit and real estate businesses.In our private equity business, fundraising activities for new funds begin once the investor capital commitments for the current fund are largelyinvested or committed to be invested. The investor base of our private equity funds includes both investors from prior funds and new investors. In manyinstances, investors in our private equity funds have increased their commitments to subsequent funds as our private equity funds have increased in size.During the fundraising effort for Apollo Investment Fund VIII, L.P. ("Fund VIII"), investors representing over 92% of Apollo Investment Fund VII, L.P.'s("Fund VII") capital committed to Fund VIII. In addition, many of our investment professionals commit their own capital to each private equity fund. Thesingle largest unaffiliated investor in Fund VIII represents 5% of Fund VIII's commitments.During the management of a private equity fund, we maintain an active dialogue with the fund's limited partner investors. We host quarterlywebcasts that are led by members of our senior management team and we provide quarterly reports to the limited partner investors detailing recentperformance by investment. We also organize an annual meeting for our private equity funds' investors that consists of detailed presentations by the seniormanagement teams of many of our funds' current investments. From time to time, we also hold meetings for the advisory board members of our private equityfunds.In our credit business, we have raised private capital from prominent institutional investors and have also raised capital from public marketinvestors, as in the case of AINV, AFT, AIF and AMTG. AINV is listed on the NASDAQ Global Select Market and complies with the reporting requirements ofthat exchange. AFT, AIF and AMTG are listed on the NYSE and comply with the reporting requirements of that exchange.In our real estate business, we have raised capital from prominent institutional investors and we have also raised capital from public marketinvestors, as in the case of ARI. ARI is listed on the NYSE and complies with the reporting requirements of that exchange.Investment ProcessWe maintain a rigorous investment process and a comprehensive due diligence approach across all of our funds. We have developed policies andprocedures, the adequacy of which are reviewed annually, that govern the investment practices of our- 14- Table of Contentsfunds. Moreover, each fund is subject to certain investment criteria set forth in its governing documents that generally contain requirements and limitationsfor investments, such as limitations relating to the amount that will be invested in any one company and the geographic regions in which the fund will invest.Our investment professionals are familiar with our investment policies and procedures and the investment criteria applicable to the funds that they manage.Our investment professionals interact frequently across our businesses on a formal and informal basis.We have in place certain procedures to allocate investment opportunities among our funds. These procedures are meant to ensure that each fund istreated fairly and that transactions are allocated in a way that is equitable, fair and in the best interests of each fund, subject to the terms of the governingagreements of such funds.Private Equity Investment ProcessOur private equity investment professionals are responsible for selecting, evaluating, structuring, due diligence, negotiating, executing, monitoringand exiting investments for our traditional private equity funds, as well as pursuing operational improvements in our funds’ portfolio companies throughmanagement consulting arrangements. These investment professionals perform significant research into each prospective investment, including a review ofthe company’s financial statements, comparisons with other public and private companies and relevant industry data. The due diligence effort will alsotypically include:•on-site visits;•interviews with management, employees, customers and vendors of the potential portfolio company;•research relating to the company’s management, industry, markets, products and services, and competitors; and•background checks.After an initial selection, evaluation and diligence process, the relevant team of investment professionals will prepare a detailed analysis of theinvestment opportunity for our private equity investment committee. Our private equity investment committee generally meets weekly to review theinvestment activity and performance of our private equity funds.After discussing the proposed transaction with the deal team, the investment committee will decide whether to give its preliminary approval to thedeal team to continue the selection, evaluation, diligence and negotiation process. The investment committee will typically conduct several meetings toconsider a particular investment before finally approving that investment and its terms. Both at such meetings and in other discussions with the deal team,our Managing Partners and other investment professionals will provide guidance to the deal team on strategy, process and other pertinent considerations.Every private equity investment requires the approval of our Managing Partners.Our private equity investment professionals are responsible for monitoring an investment once it is made and for making recommendations withrespect to exiting an investment. Disposition decisions made on behalf of our private equity funds are subject to review and approval by the private equityinvestment committee, including our Managing Partners.Credit and Real Estate Investment ProcessOur credit and real estate investment professionals are responsible for selecting, evaluating, structuring, due diligence, negotiating, executing,monitoring and exiting investments for our credit funds and real estate funds, respectively. The investment professionals perform significant research into anddue diligence of each prospective investment, and prepare analyses of recommended investments for the investment committee of the relevant fund.Investment decisions are scrutinized by the investment committees where applicable, who review potential transactions, provide input regarding thescope of due diligence and approve recommended investments and dispositions. Close attention is given to how well a proposed investment is aligned withthe distinct investment objectives of the fund in question, which in many cases have specific geographic or other focuses. The investment committee of eachof our credit funds and real estate funds generally is provided with a summary of the investment activity and performance of the relevant funds on at least amonthly basis.Overview of Fund OperationsInvestors in our private equity funds and certain of our credit and real estate funds make commitments to provide capital at the outset of a fund anddeliver capital when called by us as investment opportunities become available. We determine the amount of initial capital commitments for such funds bytaking into account current market opportunities and conditions, as well as investor expectations. The general partner’s capital commitment is determinedthrough negotiation with the fund’s underlying investor base. The commitments are generally available for approximately six years during what we call theinvestment period. We have typically invested the capital committed to such funds over a three to four year period. Generally, as each investment is realized,these funds first return the capital and expenses related to that investment and any previously realized investments to fund investors and then distribute anyprofits. These profits are typically shared 80% to the investors in our private equity funds- 15- Table of Contentsand 20% to us so long as the investors receive at least an 8% compounded annual return on their investment, which we refer to as a “preferred return” or“hurdle.” Allocation of profits between fund investors and us, as well as the amount of the preferred return, among other provisions, varies for our real estateequity and many of our credit funds. Our private equity funds typically terminate ten years after the final closing, subject to the potential for two one-yearextensions. Dissolution of those funds can be accelerated upon a majority vote of investors not affiliated with us and, in any case, all of our funds also may beterminated upon the occurrence of certain other events. Ownership interests in our private equity funds and certain of our credit and real estate funds are not,however, subject to redemption prior to termination of the funds.The processes by which our credit and real estate funds receive and invest capital vary by type of fund. As noted above, certain of our credit and realestate funds have drawdown structures where investors made a commitment to provide capital at the formation of such funds and deliver capital when calledby us as investment opportunities become available. In addition, we have several permanent capital vehicles with unlimited duration. Each of these publiclytraded vehicles raises capital by selling shares in the public markets and these vehicles can also issue debt. We also have several credit funds whichcontinuously offer and sell shares or limited partner interests via private placements through monthly subscriptions, which are payable in full upon a fund’sacceptance of an investor’s subscription. These hedge fund style credit funds have customary redemption rights (in many cases subject to the expiration of aninitial lock-up period), and are generally structured as limited partnerships, the terms of which are determined through negotiation with the funds' underlyinginvestor base. Management fees and incentive fees (whether in the form of carried interest income or incentive allocation) that we earn for management ofthese credit funds and from their performance as well as the terms governing their operation vary across our credit funds.We conduct the management of our private equity, credit and real estate funds primarily through a partnership structure, in which partnershipsorganized by us accept commitments and/or funds for investment from investors. Funds are generally organized as limited partnerships with respect to privateequity funds and other U.S. domiciled vehicles and limited partnership and limited liability (and other similar) companies with respect to non-U.S. domiciledvehicles. Typically, each fund has an investment advisor registered under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”).Responsibility for the day-to-day operations of the funds is typically delegated to the funds’ respective investment managers pursuant to an investmentmanagement (or similar) agreement. Generally, the material terms of our investment management agreements relate to the scope of services to be rendered bythe investment manager to the applicable funds, certain rights of termination in respect of our investment management agreements and, generally, withrespect to certain of our credit and real estate funds (as these matters are covered in the limited partnership agreements of the private equity funds), thecalculation of management fees to be borne by investors in such funds, as well as the calculation of the manner and extent to which other fees received by theinvestment manager from fund portfolio companies serve to offset or reduce the management fees payable by investors in our funds. The funds themselvesgenerally do not register as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”), generally inreliance on Section 3(c)(7) or Section 7(d) thereof or, typically in the case of funds formed prior to 1997, Section 3(c)(1) thereof. Section 3(c)(7) of theInvestment Company Act excepts from its registration requirements funds privately placed in the United States whose securities are owned exclusively bypersons who, at the time of acquisition of such securities, are “qualified purchasers” or “knowledgeable employees” for purposes of the Investment CompanyAct. Section 3(c)(1) of the Investment Company Act exempts from its registration requirements privately placed funds whose securities are beneficiallyowned by not more than 100 persons. In addition, under current interpretations of the SEC, Section 7(d) of the Investment Company Act exempts fromregistration any non-U.S. fund all of whose outstanding securities are beneficially owned either by non-U.S. residents or by U.S. residents that are qualifiedpurchasers.In addition to having an investment manager, each fund that is a limited partnership, or “partnership” fund, also has a general partner that makes allpolicy and investment decisions relating to the conduct of the fund’s business. The general partner is responsible for all decisions concerning the making,monitoring and disposing of investments, but such responsibilities are typically delegated to the fund’s investment manager pursuant to an investmentmanagement (or similar) agreement. The limited partners of the funds take no part in the conduct or control of the business of the funds, have no right orauthority to act for or bind the funds and have no influence over the voting or disposition of the securities or other assets held by the funds. These decisionsare made by the fund’s general partner in its sole discretion, subject to the investment limitations set forth in the agreements governing each fund. Thelimited partners often have the right to remove the general partner or investment manager for cause or cause an early dissolution by a simple majority vote. Inconnection with the private offering transactions that occurred in 2007 pursuant to which we sold shares of Apollo Global Management, LLC to certaininitial purchasers and accredited investors in transactions exempt from the registration requirements of the Securities Act (“Private Offering Transactions”)and the reorganization of the Company’s predecessor business (the “2007 Reorganization”), we deconsolidated certain of our private equity and credit fundsthat have historically been consolidated in our financial statements and amended the governing agreements of those funds to provide that a simple majorityof a fund’s investors have the right to accelerate the dissolution date of the fund.In addition, the governing agreements of our private equity funds and certain of our credit and real estate funds enable the limited partners holding aspecified percentage of the interests entitled to vote, to elect not to continue the limited partners’ capital commitments for new portfolio investments in theevent certain of our Managing Partners do not devote the requisite time- 16- Table of Contentsto managing the fund or in connection with certain triggering events (as defined in the applicable governing agreements). In addition to having a significant,immeasurable negative impact on our revenue, net income and cash flow, the occurrence of such an event with respect to any of our funds would likely resultin significant reputational damage to us. The loss of the services of any of our Managing Partners would have a material adverse effect on us, including ourability to retain and attract investors and raise new funds, and the performance of our funds. We do not carry any “key man” insurance that would provide uswith proceeds in the event of the death or disability of any of our Managing Partners.Fees and Carried InterestOur revenues and other income consist principally of (i) management fees, which may be based upon a percentage of the committed or investedcapital, adjusted assets, gross invested capital, fund net asset value, stockholders' equity or the capital accounts of the limited partners of the funds, and maybe subject to offset as discussed in note 2 to the consolidated financial statements, (ii) advisory and transaction fees, net relating to certain actual andpotential private equity, credit and real estate investments as more fully discussed in note 2 to the consolidated financial statements, (iii) income based on theperformance of our funds, which consists of allocations, distributions or fees from our private equity, credit and real estate funds, and (iv) investment incomefrom our investments as general partner and other direct investments primarily in the form of net gains from investment activities as well as interest anddividend income.The composition of our revenues will vary based on market conditions and the cyclicality of the different businesses in which we operate. Our funds’returns are driven by investment opportunities and general market conditions, including the availability of debt capital on attractive terms and theavailability of distressed debt opportunities. Our funds initially record fund investments at cost and then such investments are subsequently recorded at fairvalue. Fair values are affected by changes in the fundamentals of the underlying portfolio company investments of the funds, the industries in which theportfolio companies operate, the overall economy as well as other market conditions.General Partner and Professionals Investments and Co-InvestmentsGeneral Partner InvestmentsCertain of our management companies, general partners and co-invest vehicles are committed to contribute to our funds and affiliates. As a limitedpartner, general partner and manager of the Apollo funds, Apollo had unfunded capital commitments as of December 31, 2014 of $646.6 million.Apollo has an ongoing obligation, subject to certain stipulations, to acquire additional common units of AAA in an amount equal to 25% of theaggregate after-tax cash distributions, if any, that are made by AAA to Apollo's affiliates pursuant to the carried interest distribution rights that are applicableto investments made through AAA Investments.Managing Partners and Other Professionals InvestmentsTo further align our interests with those of investors in our funds, our Managing Partners and other professionals have invested their own capital inour funds. Our Managing Partners and other professionals will either re-invest their carried interest to fund these investments or use cash on hand or fundsborrowed from third parties. We generally have not historically charged management fees or carried interest on capital invested by our Managing Partnersand other professionals directly in our private equity, credit, and real estate funds.Co-InvestmentsInvestors in many of our funds, as well as certain other investors, may have the opportunity to make co-investments with the funds. Co-investmentsare investments in portfolio companies or other assets generally on the same terms and conditions as those to which the applicable fund is subject.Regulatory and Compliance MattersOur businesses, as well as the financial services industry generally, are subject to extensive regulation in the United States and elsewhere.All of the investment advisors of our funds are registered as investment advisors either directly or as a "relying advisor" with the SEC. Registeredinvestment advisors are subject to the requirements and regulations of the Investment Advisers Act. Such requirements relate to, among other things,fiduciary duties to clients, maintaining an effective compliance program, managing conflicts of interest and general anti-fraud prohibitions.- 17- Table of ContentsEach of AFT and AIF is a registered management investment company under the Investment Company Act. AINV is an investment company that haselected to be treated as a business development company under the Investment Company Act. Each of AFT, AIF and AINV has elected for U.S. Federal taxpurposes to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal RevenueCode”). As such, each of AFT, AIF and AINV is required to distribute during each taxable year at least 90% of its ordinary income and realized, net short-termcapital gains in excess of realized net long-term capital losses, if any, to its shareholders. In addition, in order to avoid excise tax, each needs to distributeduring each calendar year at least 98% of its ordinary income and 98.2% of its capital gains net income for one-year period ended on October 31st of suchcalendar year, plus any shortfalls from any prior year's distribution, which would take into account short-term and long-term capital gains and losses. Inaddition, as a business development company, AINV must not acquire any assets other than “qualifying assets” specified in the Investment Company Actunless, at the time the acquisition is made, at least 70% of AINV’s total assets are qualifying assets (with certain limited exceptions).ARI elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code commencing with its taxable year endedDecember 31, 2009. AMTG also elected to be taxed as a REIT under the Internal Revenue Code, commencing with its fiscal year ended December 31, 2011.To maintain their qualification as REITs, ARI and AMTG must distribute at least 90% of their taxable income to their shareholders and meet, on a continuingbasis, certain other complex requirements under the Internal Revenue Code.In addition, Apollo Global Securities, LLC (“AGS”) is a registered broker dealer with the SEC and is a member of the Financial Industry RegulatoryAuthority, Inc. From time to time, this entity is involved in transactions with affiliates of Apollo, including portfolio companies of the funds we manage,whereby AGS will earn fees for its services.Broker-dealers are subject to regulations that cover all aspects of the securities business. In particular, as a registered broker-dealer and member of aself regulatory organization, we are subject to the SEC’s uniform net capital rule, Rule 15c3-1. Rule 15c3-1 specifies the minimum level of net capital abroker-dealer must maintain and also requires that a significant part of a broker-dealer’s assets be kept in relatively liquid form. The SEC and various self-regulatory organizations impose rules that require notification when net capital falls below certain predefined criteria, limit the ratio of subordinated debt toequity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances.Additionally, the SEC’s uniform net capital rule imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing orwithdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital.As the ultimate parent of the general partner or manager of certain shareholders of Athene Holding, we are subject to insurance holding companysystem laws and regulations in Delaware, Iowa and New York, which are the states in which the insurance company subsidiaries of Athene Holding aredomiciled. These regulations generally require each insurance company subsidiary to register with the insurance department in its state of domicile and tofurnish financial and other information about the operations of companies within its holding company system. These regulations also impose restrictions andlimitations on the ability of an insurance company subsidiary to pay dividends and make other distributions to its parent company. In addition, transactionsbetween an insurance company and other companies within its holding company system, including sales, loans, reinsurance agreements, managementagreements and service agreements, must be on terms that are fair and reasonable and, if material or within a specified category, require prior notice andapproval or non-disapproval by the applicable domiciliary insurance department.The insurance laws of each of Delaware, Iowa and New York prohibit any person from acquiring control of a domestic insurance company or itsparent company unless that person has filed a notification with specified information with that state’s Commissioner or Superintendent of Insurance (the“Commissioner”) and has obtained the Commissioner’s prior approval. Under applicable Delaware, Iowa and New York statutes, the acquisition of 10% ormore of the voting securities of an insurance company or its parent company is presumptively considered an acquisition of control of the insurance company,although such presumption may be rebutted. Accordingly, any person or entity that acquires, directly or indirectly, 10% or more of the voting securities ofApollo without the requisite prior approvals will be in violation of these laws and may be subject to injunctive action requiring the disposition or seizure ofthose securities or prohibiting the voting of those securities, or to other actions that may be taken by the applicable state insurance regulators.In addition, many U.S. state insurance laws require prior notification to state insurance departments of an acquisition of control of a non-domiciliaryinsurance company doing business in that state if the acquisition would result in specified levels of market concentration. While these pre-notificationstatutes do not authorize the state insurance departments to disapprove the acquisition of control, they authorize regulatory action in the affected state,including requiring the insurance company to cease and desist from doing certain types of business in the affected state or denying a license to do business inthe affected state, if particular conditions exist, such as substantially lessening competition in any line of business in such state. Any transactions that wouldconstitute an acquisition of control of Apollo may require prior notification in those states that have adopted pre-acquisition notification laws. These lawsmay discourage potential acquisition proposals and may delay, deter or prevent an acquisition of- 18- Table of Contentscontrol of Apollo (in particular through an unsolicited transaction), even if Apollo might consider such transaction to be desirable for its shareholders.Currently, there are proposals to increase the scope of regulation of insurance holding companies in both the United States and internationally. Inthe United States, the National Association of Insurance Commissioners ("NAIC") has promulgated amendments to its insurance holding company systemmodel law and regulations for consideration by the various states that would provide for more extensive informational reporting regarding parents and otheraffiliates of insurance companies, with the purpose of protecting domestic insurers from enterprise risk, including requiring an annual enterprise risk report bythe ultimate controlling person identifying the material risks within the insurance holding company system that could pose enterprise risk to domesticinsurers. To date, both Iowa and New York have enacted laws to adopt such amendments.Internationally, the International Association of Insurance Supervisors is in the process of adopting a framework for the “group wide” supervision ofinternationally active insurance groups. The NAIC has also promulgated additional amendments to its insurance holding company system model law thataddress “group wide” supervision of internationally active insurance groups. Changes to existing laws or regulations must be adopted by individual states orforeign jurisdictions before they will become effective. We cannot predict with any degree of certainty the additional capital requirements, compliance costsor other burdens these requirements may impose on us and our insurance company affiliates.In addition, state insurance departments also have broad administrative powers over the insurance business of our insurance company affiliates,including insurance company licensing and examination, agent licensing, establishment of reserve requirements and solvency standards, premium rateregulation, admissibility of assets, policy form approval, unfair trade and claims practices and other matters. State regulators regularly review and updatethese and other requirements.Although the federal government does not directly regulate the insurance business, federal legislation and administrative policies in several areas,including pension regulation, age and sex discrimination, financial services regulation, securities regulation and federal taxation, can significantly affect theinsurance business. The Dodd-Frank Wall Street Reform and Consumer Protection Act created the Federal Insurance Office (the “FIO”) within the Departmentof Treasury headed by a Director appointed by the Treasury Secretary. The FIO is designed principally to exercise a monitoring and information gatheringrole, rather than a regulatory role. In that capacity, the FIO has been charged with providing reports to the U.S. Congress on (i) modernization of U.S.insurance regulation and (ii) the U.S. and global reinsurance market. Such reports could ultimately lead to changes in the regulation of insurers and reinsurersin the U.S.We are subject to the jurisdiction of the Federal Energy Regulatory Commission as a result of certain of the funds we manage directly or indirectlyowning, controlling or holding, with power to vote, 10% or more of the voting securities in a “public-utility company” or a “holding company” of a public-utility company (as those terms are defined in the U.S. Public Utility Holding Company Act of 2005). See “Item 1A. Risk Factors-Risks Related to OurBusinesses-We are a holding company subject to the jurisdiction of the Federal Energy Regulatory Commission (the “FERC”). An acquirer of our Class Ashares may be required to obtain prior approval from the FERC and make other filings with the FERC.”Apollo Management International LLP is authorized and regulated by the U.K. Financial Conduct Authority.AAA is regulated under the Authorized Closed-ended Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission(“GFSC”) with effect from December 15, 2008 under The Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended (the “New Rules”). AAA isdeemed to be an authorized closed-ended investment scheme under the New Rules.Apollo Advisors (Mauritius) Ltd (“Apollo Mauritius”), one of our subsidiaries, and AION Capital Management Limited (“AION Manager”), one ofour joint venture investments, are licensed providers of investment management services in the Republic of Mauritius and are subject to applicable Mauritiansecurities laws and the oversight of the Financial Services Commission (Mauritius) (the “FSC”). Each of Apollo Mauritius and AION Manager is subject tolimited regulatory requirements under the Mauritian Securities Act 2005, Mauritian Financial Services Act 2007 and relevant ancillary regulations,including, ongoing reporting and record keeping requirements, anti-money laundering obligations, obligations to ensure that it and its directors, key officersand representatives are fit and proper and requirements to maintain positive shareholders’ equity. The FSC is responsible for administering these requirementsand ensuring the compliance of Apollo Mauritius and AION Manager with them. If Apollo Mauritius or AION Manager contravenes any such requirements,such entities and/or their officers or representatives may be subject to a fine, reprimand, prohibition order or other regulatory sanctions.AGM India Advisors Private Limited is regulated by the Company Law Board (also known as the Ministry of Company Affairs) through theCompanies Act of 1956 in India. Additionally since there are foreign investments in the company, AGM India- 19- Table of ContentsAdvisors Private Limited is also subject to the rules and regulations applicable under the Foreign Exchange Management Act of 1999 which falls within thepurview of Reserve Bank of India.Apollo Management Singapore Pte Ltd. was granted a Capital Markets Service License with the Monetary Authority of Singapore in October 2013.In addition, Apollo Capital Management, L.P. is registered with the Securities and Exchange Board of India as a foreign institutional investor.Certain of our businesses are subject to compliance with laws and regulations of U.S. Federal and state governments, non-U.S. governments, theirrespective agencies and/or various self-regulatory organizations or exchanges relating to, among other things, the privacy of client information, and anyfailure to comply with these regulations could expose us to liability and/or reputational damage. Our businesses have operated for many years within a legalframework that requires our being able to monitor and comply with a broad range of legal and regulatory developments that affect our activities.However, additional legislation, changes in rules promulgated by self-regulatory organizations or changes in the interpretation or enforcement ofexisting laws and rules, either in the United States or elsewhere, may directly affect our mode of operation and profitability. For additional informationconcerning the competitive risks that we face, see “Item 1A. Risk Factors — Risks Related To Our Businesses — The investment management business isintensely competitive, which could have a material adverse impact on us.”Rigorous legal and compliance analysis of our businesses and investments is important to our culture. We strive to maintain a culture of compliancethrough the use of policies and procedures, such as our code of ethics, compliance systems, communication of compliance guidance and employee educationand training. We have a compliance group that monitors our compliance with the regulatory requirements to which we are subject and manages ourcompliance policies and procedures. Our Chief Compliance Officer supervises our compliance group, which is responsible for addressing all regulatory andcompliance matters that affect our activities. Our compliance policies and procedures address a variety of regulatory and compliance risks such as thehandling of material non-public information, personal securities trading, valuation of investments on a fund-specific basis, document retention, potentialconflicts of interest and the allocation of investment opportunities.We generally operate without information barriers between our businesses. In an effort to manage possible risks resulting from our decision not toimplement these barriers, our compliance personnel maintain a list of issuers for which we have access to material, non-public information and for whosesecurities our funds and investment professionals are not permitted to trade. We could in the future decide that it is advisable to establish information barriers,particularly as our business expands and diversifies. In such event our ability to operate as an integrated platform will be restricted. See "Item 1A. RiskFactors — Risks Related to Our Businesses — Possession of material, non-public information could prevent Apollo funds from undertaking advantageoustransactions; our internal controls could fail; we could determine to establish information barriers."CompetitionThe investment management industry is intensely competitive, and we expect it to remain so. We compete globally and on a regional, industry andniche basis.We face competition both in the pursuit of outside investors for our funds and in acquiring investments in attractive portfolio companies andmaking other investments. We compete for outside investors based on a variety of factors, including:•investment performance;•investor perception of investment managers’ drive, focus and alignment of interest;•quality of service provided to and duration of relationship with investors;•business reputation; and•the level of fees and expenses charged for services.Depending on the investment, we expect to face competition in acquisitions primarily from other private equity, credit and real estate funds,specialized funds, hedge fund sponsors, other financial institutions, corporate buyers and other parties. Several of these competitors have significant amountsof capital and many of them have similar investment objectives to us, which may create additional competition for investment opportunities. Some of thesecompetitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages forus with respect to investment opportunities. Competitors may also be subject to different regulatory regimes or rules that may provide them more flexibilityor better access to pursue transactions or raise capital for their investment funds. In addition, some of these competitors may have higher risk tolerances,different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than usfor investments that we want to make. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide themwith a competitive advantage in bidding for an investment. Lastly, the allocation of increasing amounts of capital to alternative investment strategies byinstitutional and- 20- Table of Contentsindividual investors could well lead to a reduction in the size and duration of pricing inefficiencies that many of our funds seek to exploit.Competition is also intense for the attraction and retention of qualified employees. Our ability to continue to compete effectively in our businesseswill depend upon our ability to attract new employees and retain and motivate our existing employees.For additional information concerning the competitive risks that we face, see “Item 1A. Risk Factors—Risks Related to Our Businesses—Theinvestment management business is intensely competitive, which could have a material adverse impact on us.”ITEM 1A. RISK FACTORSRisks Related to Our BusinessesPoor performance of our funds would cause a decline in our revenue and results of operations, may obligate us to repay incentive income previously paidto us and would adversely affect our ability to raise capital for future funds.We derive revenues in part from:•management fees, which are based generally on the amount of capital invested in our funds;•transaction and advisory fees relating to the investments our funds make;•incentive income, based on the performance of our funds; and•investment income from our investments as general partner.If a fund performs poorly, we will receive little or no incentive income with regard to the fund and little income or possibly losses from any principalinvestment in the fund. Furthermore, if, as a result of poor performance of later investments in a fund’s life, the fund does not achieve total investment returnsthat exceed a specified investment return threshold for the life of the fund, we may be obligated to repay the amount by which incentive income that waspreviously distributed to us exceeds amounts to which we are ultimately entitled. Our fund investors and potential fund investors continually assess ourfunds’ performance and our ability to raise capital. Accordingly, poor fund performance may deter future investment in our funds and thereby decrease thecapital invested in our funds and ultimately, our management fee income.We depend on Leon Black, Joshua Harris and Marc Rowan, and the loss of their services would have a material adverse effect on us.The success of our businesses depends on the efforts, judgment and personal reputations of our Managing Partners, Leon Black, Joshua Harris andMarc Rowan. Their reputations, expertise in investing, relationships with our fund investors and relationships with members of the business community onwhom our funds depend for investment opportunities and financing are each critical elements in operating and expanding our businesses. We believe ourperformance is strongly correlated to the performance of these individuals. Accordingly, our retention of our Managing Partners is crucial to our success.Subject to the terms of their employment, non-competition and non-solicitation agreements, our Managing Partners may resign, join our competitors or forma competing firm at any time. If our Managing Partners were to join or form a competitor, some of our investors could choose to invest with that competitor,another competitor or not at all, rather than in our funds. The loss of the services of our Managing Partners may have a material adverse effect on us, includingour ability to retain and attract investors and raise new funds, and the performance of our funds. We do not carry any “key man” insurance that would provideus with proceeds in the event of the death or disability of any of our Managing Partners. In addition, the loss of two or more of our Managing Partners mayresult in the termination of our role as general partner of two or more of our funds and the termination of the commitment periods of certain of our funds. See“—If two or more of our Managing Partners or other investment professionals leave our company, the commitment periods of certain of our funds may beterminated, and we may be in default under our credit agreement.” Although our Managing Partners have entered into employment, non-competition andnon-solicitation agreements, which impose certain restrictions on competition and solicitation of our employees by our Managing Partners if they terminatetheir employment, a court may not enforce these provisions. See “Item 11. Executive Compensation—Narrative Disclosure to the Summary CompensationTable and Grants of Plan-Based Awards Table—Employment, Non-Competition and Non-Solicitation Agreement with Chairman and Chief ExecutiveOfficer” for a more detailed description of the terms of the agreement for one of our Managing Partners.- 21- Table of ContentsChanges in the debt financing markets may negatively impact the ability of our funds and their portfolio companies to obtain attractive financing for theirinvestments and may increase the cost of such financing if it is obtained, which could lead to lower-yielding investments and potentially decreasing our netincome.In the event that our funds are unable to obtain committed debt financing for potential acquisitions or can only obtain debt at an increased interestrate or on unfavorable terms, our funds may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than wouldotherwise be the case, either of which could lead to a decrease in the investment income earned by us. Any failure by lenders to provide previouslycommitted financing can also expose us to potential claims by sellers of businesses which we may have contracted to purchase. Our funds' portfoliocompanies regularly utilize the corporate debt markets in order to obtain financing for their operations. Similarly, certain of our credit funds rely on theavailability of attractive financing for their investments. To the extent that the current credit markets have rendered such financing difficult to obtain or moreexpensive, this may negatively impact the operating performance of such portfolio companies and lead to lower-yielding investments with respect to suchfunds and, therefore, the investment returns on our funds. In addition, to the extent that the current markets make it difficult or impossible to refinance debtthat is maturing in the near term, a relevant portfolio company may face substantial doubt as to its status as a going concern (which may result in an event ofdefault under various agreements) or be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcyprotection.Difficult market conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of theinvestments made by our funds or reducing the ability of our funds to raise or deploy capital, each of which could materially reduce our revenue, netincome and cash flow and adversely affect our financial prospects and condition.Our businesses are materially affected by conditions in the global financial markets and economic conditions throughout the world, such as interestrates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices,currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts or security operations). Thesefactors are outside our control and may affect the level and volatility of securities prices and the liquidity and the value of investments, and we may not beable to or may choose not to manage our exposure to these conditions. Global financial markets have experienced considerable volatility in the valuations ofequity and debt securities, a contraction in the availability of credit and an increase in the cost of financing. Volatility in the financial markets can materiallyhinder the initiation of new, large-sized transactions for our private equity segment and, together with volatility in valuations of equity and debt securities,may adversely impact our operating results. If market conditions deteriorate, our business could be affected in different ways. In addition, these events andgeneral economic trends are likely to impact the performance of portfolio companies in many industries, particularly industries that are more impacted bychanges in consumer demand, such as the packaging, manufacturing, chemical and refining industries, as well as travel and leisure, gaming and real estateindustries. The performance of our funds and our performance may be adversely affected to the extent our fund portfolio companies in these industriesexperience adverse performance or additional pressure due to downward trends. Our profitability may also be adversely affected by our fixed costs and thepossibility that we would be unable to scale back other costs, within a time frame sufficient to match any further decreases in net income or increases in netlosses relating to changes in market and economic conditions.The financial downturn that began in 2007 adversely affected our operating results in a number of ways, and if the economy were to re-enter arecessionary or inflationary period, it may cause our revenue and results of operations to decline by causing:•our AUM to decrease, lowering management fees from our funds;•increases in costs of financial instruments;•adverse conditions for our portfolio companies (e.g., decreased revenues, liquidity pressures, increased difficulty in obtainingaccess to financing and complying with the terms of existing financings as well as increased financing costs);•lower investment returns, reducing incentive income;•higher interest rates, which could increase the cost of the debt capital we use to acquire companies in our private equity business;and•material reductions in the value of our fund investments, affecting our ability to realize carried interest from these investments.Lower investment returns and such material reductions in value may result, among other reasons, because during periods of difficult marketconditions or slowdowns (which may be across one or more industries, sectors or geographies), companies in which we invest may experience decreasedrevenues, financial losses, difficulty in obtaining access to financing and increased funding costs. During such periods, these companies may also havedifficulty in expanding their businesses and operations and be unable to meet their debt service obligations or other expenses as they become due, includingexpenses payable to us. In addition,- 22- Table of Contentsduring periods of adverse economic conditions, our funds and their portfolio companies may have difficulty accessing financial markets, which could make itmore difficult or impossible to obtain funding for additional investments and harm our AUM and operating results. Furthermore, such conditions would alsoincrease the risk of default with respect to investments held by our funds that have significant debt investments, such as our opportunistic and Europeancredit funds and our U.S. performing credit funds. Our funds may be affected by reduced opportunities to exit and realize value from their investments, bylower than expected returns on investments made prior to the deterioration of the credit markets, and by the fact that we may not be able to find suitableinvestments for the funds to effectively deploy capital, which could adversely affect our ability to raise new funds and thus adversely impact our prospects forfuture growth.A decline in the pace of investment in our funds, an increase in the pace of sales of investments in our funds, or an increase in the amount of transactionand advisory fees we share with our fund investors would result in our receiving less revenue from transaction and advisory fees.The transaction and advisory fees that we earn are driven in part by the pace at which our funds make investments. Many factors could cause adecline in the pace of investment, including the inability of our investment professionals to identify attractive investment opportunities, competition forsuch opportunities among other potential acquirers, decreased availability of capital on attractive terms and our failure to consummate identified investmentopportunities because of business, regulatory or legal complexities and adverse developments in the U.S. or global economy or financial markets. Anydecline in the pace at which our funds make investments would reduce our transaction and advisory fees and could make it more difficult for us to raisecapital. Likewise, during attractive selling environments, our funds may capitalize on increased opportunities to exit investments. Any increase in the pace atwhich our funds exit investments would reduce transaction and advisory fees. In addition, some of our fund investors have requested, and we expect tocontinue to receive requests from fund investors, that we share with them a larger portion, or all, of the transaction and advisory fees generated by our funds'investments. To the extent we accommodate such requests, it would result in a decrease in the amount of fee revenue we could earn. For example, in Fund VIIIwe have agreed that 100% of certain transaction and advisory fees will be shared with the investors in the fund through a management fee offset mechanism,whereas the percentage was 68% in Fund VII.If two or more of our Managing Partners or other investment professionals leave our company, the commitment periods of certain of our funds may beterminated, and we may be in default under our credit agreement.The governing agreements of certain of our funds provide that in the event certain “key persons” (such as two or more of Messrs. Black, Harris andRowan and/or certain other of our investment professionals) fail to devote the requisite time to our business, the commitment period will terminate if a certainpercentage in interest of the investors do not vote to continue the commitment period. This is true of Fund VI, Fund VII and Fund VIII, on which our near- tomedium-term performance will heavily depend. Apollo Credit Opportunity Fund III, L.P. ("COF III"), Apollo European Principal Finance Fund II, L.P. ("EPFII"), Financial Credit Investment II, L.P. ("FCI II") and certain other credit funds have similar provisions. In addition to having a significant negative impacton our revenue, net income and cash flow, the occurrence of such an event with respect to any of our funds would likely result in significant reputationaldamage to us.Messrs. Black, Harris and Rowan may terminate their employment with us at any time.We may not be successful in raising new funds or in raising more capital for certain of our funds and may face pressure on fee arrangements of our futurefunds.Our funds may not be successful in consummating their current capital-raising efforts or others that they may undertake, or they may consummatethem at investment levels far lower than those currently anticipated. Any capital raising that our funds do consummate may be on terms that are unfavorableto us or that are otherwise different from the terms that we have been able to obtain in the past. These risks could occur for reasons beyond our control,including general economic or market conditions, regulatory changes or increased competition.Over the last few years, a large number of institutional investors that invest in alternative assets and have historically invested in our fundsexperienced negative pressure across their investment portfolios, which may affect our ability to raise capital from them. As a result of the global economicdownturn during 2008 and 2009, these institutional investors experienced, among other things, a significant decline in the value of their public equity anddebt holdings and a lack of realizations from their existing private equity portfolios. Consequently, many of these investors were left with disproportionatelyoutsized remaining commitments to a number of private equity funds, and were restricted from making new commitments to third-party managed privateequity funds such as those managed by us. To the extent economic conditions remain volatile or these issues reoccur, we may be unable to raise sufficientamounts of capital to support the investment activities of our future funds.- 23- Table of ContentsIn addition, certain institutional investors have publicly criticized certain fund fee and expense structures, including management fees andtransaction and advisory fees. In September 2009, the Institutional Limited Partners Association, or “ILPA,” published a set of Private Equity Principles, orthe “Principles,” which were revised in January 2011. The Principles were developed in order to encourage discussion between limited partners and generalpartners regarding private equity fund partnership terms. Certain of the Principles call for enhanced “alignment of interests” between general partners andlimited partners through modifications of some of the terms of fund arrangements, including proposed guidelines for fees and carried interest structures. Weprovided ILPA our endorsement of the Principles, representing an indication of our general support for the efforts of ILPA. Although we have no obligation tomodify any of our fees with respect to our existing funds, we may experience pressure to do so.The failure of our funds to raise capital in sufficient amounts and on satisfactory terms could result in a decrease in AUM and management fee andtransaction fee revenue or us being unable to achieve an increase in AUM and management fee and transaction fee revenue, and could have a materialadverse effect on our financial condition and results of operations. Similarly, any modification of our existing fee arrangements or the fee structures for newfunds could adversely affect our results of operations.Third-party investors in our funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested byus, which could adversely affect a fund’s operations and performance.Investors in all of our private equity and certain of our credit and real estate funds make capital commitments to those funds that we are entitled tocall from those investors at any time during prescribed periods. We depend on investors fulfilling their commitments when we call capital from them in orderfor those funds to consummate investments and otherwise pay their obligations when due. Any investor that did not fund a capital call would be subject toseveral possible penalties, including having a significant amount of its existing investment forfeited in that fund. However, the impact of the penalty isdirectly correlated to the amount of capital previously invested by the investor in the fund and if an investor has invested little or no capital, for instanceearly in the life of the fund, then the forfeiture penalty may not be as meaningful. If investors were to fail to satisfy a significant amount of capital calls forany particular fund or funds, the operation and performance of those funds could be materially and adversely affected.The historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of anyreturns expected on an investment in our Class A shares.We have presented in this report the returns relating to the historical performance of our private equity, credit and real estate funds. The returns arerelevant to us primarily insofar as they are indicative of incentive income we have earned in the past and may earn in the future, our reputation and our abilityto raise new funds. The returns of the funds we manage are not, however, directly linked to returns on our Class A shares. Therefore, you should not concludethat continued positive performance of the funds we manage will necessarily result in positive returns on an investment in Class A shares. However, poorperformance of the funds we manage will cause a decline in our revenue from such funds, and would therefore have a negative effect on our performance andthe value of our Class A shares. An investment in our Class A shares is not an investment in any of the Apollo funds.Moreover, the historical returns of our funds should not be considered indicative of the future returns of these or from any future funds we may raise,in part because:•market conditions during previous periods may have been significantly more favorable for generating positive performance,particularly in our private equity business, than the market conditions we may experience in the future;•our private equity funds’ rates of returns, which are calculated on the basis of net asset value of the funds’ investments, reflectunrealized gains, which may never be realized;•our funds’ returns have benefited from investment opportunities and general market conditions that may not repeat themselves,including the availability of debt capital on attractive terms and the availability of distressed debt opportunities, and we may notbe able to achieve the same returns or profitable investment opportunities or deploy capital as quickly;•the historical returns that we present in this report derive largely from the performance of our current private equity funds, whereasfuture fund returns will depend increasingly on the performance of our newer funds or funds not yet formed, which may have littleor no realized investment track record;•Fund VI, Fund VII and Fund VIII are larger private equity funds, and this capital may not be deployed as profitably as other funds;- 24- Table of Contents•the attractive returns of certain of our funds have been driven by the rapid return of invested capital, which has not occurred withrespect to all of our funds and we believe is less likely to occur in the future;•our track record with respect to our credit funds and real estate funds is relatively short as compared to our private equity funds;•in recent years, there has been increased competition for private equity investment opportunities resulting from the increasedamount of capital invested in private equity funds and high liquidity in debt markets; and•our newly established funds may generate lower returns during the period that they take to deploy their capital.Finally, our private equity IRRs have historically varied greatly from fund to fund. Accordingly, you should realize that the IRR going forward forany current or future fund may vary considerably from the historical IRR generated by any particular fund, or for our private equity funds as a whole. Futurereturns will also be affected by the risks described elsewhere in this report and risks of the industries and businesses in which a particular fund invests. See“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—The Historical Investment Performance of Our Funds.”Our reported net asset values, rates of return and incentive income from affiliates are based in large part upon estimates of the fair value of ourinvestments, which are based on subjective standards and may prove to be incorrect.A large number of investments in our funds are illiquid and thus have no readily ascertainable market prices. We value these investments based onour estimate of their fair value as of the date of determination. We estimate the fair value of our investments based on third-party models, or modelsdeveloped by us, which include discounted cash flow analyses and other techniques and may be based, at least in part, on independently sourced marketparameters. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness ofdiscount rates used, and, in some cases, the ability to execute, the timing of and the estimated proceeds from expected financings. The actual results related toany particular investment often vary materially as a result of the inaccuracy of these estimates and assumptions. In addition, because many of the illiquidinvestments held by our funds are in industries or sectors which are unstable, in distress, or undergoing some uncertainty, such investments are subject torapid changes in value caused by sudden company-specific or industry-wide developments.We include the fair value of illiquid assets in the calculations of net asset values, returns of our funds and our AUM. Furthermore, we recognizeincentive income from affiliates based in part on these estimated fair values. Because these valuations are inherently uncertain, they may fluctuate greatlyfrom period to period. Also, they may vary greatly from the prices that would be obtained if the assets were to be liquidated on the date of the valuation andoften do vary greatly from the prices we eventually realize.In addition, the values of our investments in publicly traded assets are subject to significant volatility, including due to a number of factors beyondour control. These include actual or anticipated fluctuations in the quarterly and annual results of these companies or other companies in their industries,market perceptions concerning the availability of additional securities for sale, general economic, social or political developments, changes in industryconditions or government regulations, changes in management or capital structure and significant acquisitions and dispositions. Because the market prices ofthese securities can be volatile, the valuation of these assets will change from period to period, and the valuation for any particular period may not be realizedat the time of disposition. In addition, because our private equity funds often hold very large amounts of the securities of their portfolio companies, thedisposition of these securities often takes place over a long period of time, which can further expose us to volatility risk. Even if we hold a quantity of publicsecurities that may be difficult to sell in a single transaction, we do not discount the market price of the security for purposes of our valuations.If we realize value on an investment that is significantly lower than the value at which it was reflected in a fund’s net asset values, we would sufferlosses in the applicable fund. This could in turn lead to a decline in asset management fees and a loss equal to the portion of the incentive income fromaffiliates reported in prior periods that was not realized upon disposition. These effects could become applicable to a large number of our investments if ourestimates and assumptions used in estimating their fair values differ from future valuations due to market developments. See “Item 7. Management’sDiscussion and Analysis of Financial Condition and Results of Operations—Segment Analysis” for information related to fund activity that is no longerconsolidated. If asset values turn out to be materially different than values reflected in fund net asset values, fund investors could lose confidence whichcould, in turn, result in redemptions from our funds that permit redemptions or difficulties in raising additional investments.- 25- Table of ContentsWe have experienced rapid growth, which may be difficult to sustain and which may place significant demands on our administrative, operational andfinancial resources.Our AUM has grown significantly in the past and we are pursuing further growth in the near future. Our rapid growth has caused, and plannedgrowth, if successful, will continue to cause, significant demands on our legal, accounting and operational infrastructure, and increased expenses. Thecomplexity of these demands, and the expense required to address them, is a function not simply of the amount by which our AUM has grown, but of thegrowth in the variety, including the differences in strategy between, and complexity of, our different funds. In addition, we are required to continuouslydevelop our systems and infrastructure in response to the increasing sophistication of the investment management market and legal, accounting, regulatoryand tax developments.Our future growth will depend in part, on our ability to maintain an operating platform and management system sufficient to address our growth andwill require us to incur significant additional expenses and to commit additional senior management and operational resources. As a result, we facesignificant challenges:•in maintaining adequate financial, regulatory and business controls;•implementing new or updated information and financial systems and procedures; and•in training, managing and appropriately sizing our work force and other components of our businesses on a timely and cost-effective basis.We may not be able to manage our expanding operations effectively or be able to continue to grow, and any failure to do so could adversely affectour ability to generate revenue and control our expenses.Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. The possibility of increasedregulatory focus could result in additional burdens on our businesses. Changes in tax or law and other legislative or regulatory changes could adverselyaffect us.Overview of Our Regulatory Environment. We are subject to extensive regulation, including periodic examinations, by governmental and self-regulatory organizations in the jurisdictions in which we operate around the world. Many of these regulators, including U.S. and foreign governmentagencies and self-regulatory organizations, as well as state securities commissions in the United States, are empowered to conduct investigations andadministrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders orthe suspension or expulsion of an investment advisor from registration or memberships. Even if an investigation or proceeding did not result in a sanction orthe sanction imposed against us or our personnel by a regulator were small in monetary amount, the adverse publicity relating to the investigation,proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing investors or fail to gain new investors. The requirementsimposed by our regulators are designed primarily to ensure the integrity of the financial markets and to protect investors in our funds and may not necessarilybe designed to protect our shareholders. Consequently, these regulations often serve to limit our activities. For example, federal bank regulatory agencieshave recently issued leveraged lending guidance covering transactions characterized by a degree of financial leverage. To the extent that such guidancelimits the amount or cost of financing our funds are able to obtain for transactions, the returns on our funds’ investments may suffer.Regulatory changes could adversely affect our business. As a result of highly publicized financial scandals, investors have exhibited concerns overthe integrity of the financial markets and the regulatory environment in which we operate both in the United States and outside the United States isparticularly likely to be subject to further regulation. There have been active debates both nationally and internationally over the appropriate extent ofregulation and oversight in a number of areas which are or may be relevant to us, including private investment funds and their managers and the so-called“shadow banking” sector. Any changes in the regulatory framework applicable to our businesses may impose additional expenses on us, require the attentionof senior management or result in limitations in the manner in which our business is conducted.The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the “Dodd-Frank Act,” continues to impose significant new regulations onalmost every aspect of the U.S. financial services industry, including aspects of our business and the markets in which we operate. Among other things, theDodd-Frank Act includes the following provisions that could have an adverse impact on our ability to continue to operate our businesses.•The Dodd-Frank Act established the Financial Stability Oversight Council (the “FSOC”), which is comprised of representatives of all themajor U.S. financial regulators, to act as the financial system’s systemic risk regulator with the authority to review the activities of non-bankfinancial companies predominantly engaged in financial activities that are designated as “systemically important.” Such designation isapplicable to companies where material financial distress could pose risk to the financial stability of the United States. On April 3, 2012,the- 26- Table of ContentsFSOC issued a final rule and interpretive guidance regarding the process by which it will designate nonbank financial companies assystemically important. The final rule and interpretive guidance detail a three-stage process, with the level of scrutiny increasing at eachstage. Initially, the FSOC will apply a broad set of uniform quantitative metrics to screen out financial companies that do not warrantadditional review. The FSOC will consider whether a company has at least $50 billion in total consolidated assets and whether it meetsother thresholds relating to credit default swaps outstanding, derivative liabilities, total debt outstanding, a minimum leverage ratio of totalconsolidated assets (excluding separate accounts) to total equity of 15 to 1, and a short-term debt ratio of debt (with maturities of less than12 months) to total consolidated assets (excluding separate accounts) of 10%. A company that meets or exceeds both the asset thresholdand one of the other thresholds will be subject to additional review. The review criteria could, and is expected to, evolve over time. Whilewe believe it to be unlikely that we would be designated as systemically important, if such designation were to occur, we would be subjectto significantly increased levels of regulation, which includes, without limitation, a requirement to adopt heightened standards relating tocapital, leverage, liquidity, risk management, credit exposure reporting and concentration limits, restrictions on acquisitions and beingsubject to annual stress tests by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).•The Dodd-Frank Act, under what has become known as the “Volcker Rule,” generally prohibits depository institution holding companies(including certain foreign banks with U.S. branches and insurance companies with U.S. depository institution subsidiaries), insureddepository institutions and subsidiaries and affiliates of such entities (collectively, “banking entities”) from investing in, sponsoring orhaving certain other relationships with private equity funds or hedge funds. The Volcker Rule became effective on July 21, 2012. Thestatute provides banking entities a period of two years to conform their activities and investments to the requirement of the statute, i.e.,until July 21, 2014. However, the Federal Reserve is permitted to extend this conformance period, one year at a time, for a total of no morethan three additional years. Pursuant to this authority on December 18, 2014, the Federal Reserve extended the conformance period for anadditional year, until July 21, 2015. By the expiration of such date, banking entities must have wound down, sold or otherwise conformedtheir activities investments and relationships to the requirements of the Volcker Rule. In addition, the Dodd-Frank Act includes a specialprovision to address the difficulty banking entities may experience in conforming investments in a private equity fund that qualifies as an“illiquid fund,” specifically, a fund that as of May 1, 2010 was principally invested in, or was contractually committed to principally investin, illiquid assets and makes all investments pursuant to, and consistent with, an investment strategy to principally invest in illiquid assets.For such a fund, a banking entity may seek approval for an extended conformance period of up to five years. While there remainssubstantial uncertainty regarding the availability of extensions and transition period relief, as well as general practical implications underthe Volcker Rule, there are likely to be adverse implications on our ability to raise funds from banking organizations as a result of thisprohibition.•The Dodd-Frank Act requires many private equity and hedge fund advisers to register with the SEC under the Investment Advisers Act, tomaintain extensive records and to file reports if deemed necessary for purposes of systemic risk assessment by certain governmental bodies.As described elsewhere in this Form 10-K, all of the investment advisers of our investment funds operated in the U.S. are registered asinvestment advisers with the SEC.•The Dodd-Frank Act authorizes federal regulatory agencies to review and, in certain cases, prohibit compensation arrangements at financialinstitutions that give employees incentives to engage in conduct deemed to encourage inappropriate risk taking by covered financialinstitutions. Such restrictions could limit our ability to recruit and retain investment professionals and senior management executives.•Rules and regulations required under the Dodd-Frank Act have recently begun to become effective and comprehensively regulate the “overthe counter” (“OTC”) derivatives markets for the first time. The Dodd-Frank Act imposes mandatory clearing and will impose exchange orswap execution facility trading and margin requirements on many swaps and derivative transactions (including formerly unregulated over-the-counter derivatives). The Commodity Futures Trading Commission (the “CFTC”) currently requires that certain interest rate and creditdefault index swaps be centrally cleared and the first requirement to execute certain contracts through a swap execution facility is noweffective. Additional standardized swap contracts are expected to be subject to new clearing and execution requirements in the future. OTC trades submitted for clearing will be subject to minimum initial and variation margin requirements set by the relevant clearinghouse,as well as possible margin requirements mandated by the SEC or the CFTC. For swaps that are cleared through a clearinghouse, the fundswill face the clearinghouse as legal counterparty and will be subject to clearinghouse performance and credit risk. Clearinghouse collateralrequirements may differ from and be greater than the- 27- Table of Contentscollateral terms negotiated with derivatives counterparties in the OTC market. This may increase a fund’s cost in entering into theseproducts and impact a fund’s ability to pursue certain investment strategies. OTC derivative dealers are also required to post margin to theclearinghouses through which they clear their customers’ trades instead of using such margin in their operations for cleared derivatives, asis currently permitted. This will increase the OTC derivative dealers’ costs and these increased costs are expected to be passed through toother market participants in the form of higher upfront and mark-to-market margin, less favorable trade pricing, and possible new orincreased fees. OTC trades not cleared through a registered clearinghouse may not be subject to the protections afforded to participants in cleared swaps(for example, centralized counterparty, customer asset segregation and mandatory margin requirements). The regulators have proposedmargin requirements on non-cleared OTC derivatives, but these regulations have not yet been finalized. Although the Dodd-Frank Actincludes limited exemptions from the clearing and margin requirements for so-called “end-users,” our funds and portfolio companies maynot be able to rely on such exemptions. The Dodd-Frank Act also creates new categories of regulated market participants, such as “swap-dealers,” “security-based swap dealers,”“major swap participants” and “major security-based swap participants” who will be subject to significant new capital, registration,recordkeeping, reporting, disclosure, business conduct and other regulatory requirements, which will give rise to new administrative costs.Even if certain new requirements are not directly applicable to us, they may still increase our costs of entering into transactions with theparties to whom the requirements are directly applicable. Moreover, new exchange or swap execution facility trading and trade reportingrequirements may lead to reductions in the liquidity or price transparency of certain swaps and derivative transactions, causing higherpricing or reduced availability of derivatives, or the reduction of arbitrage opportunities for us, which could adversely affect theperformance of certain of our trading strategies.Position limits imposed by various regulators, self-regulatory organizations or trading facilities on derivatives may also limit our ability toaffect desired trades. Position limits are the maximum amounts of net long or net short positions that any one person or entity may own orcontrol in a particular financial instrument. For example, the CFTC, on November 5, 2013, re-proposed rules that would establish specificlimits on positions in 28 physical commodity futures and option contracts as well as swaps that are economically equivalent to suchcontracts. In addition, the Dodd-Frank Act requires the SEC to set position limits on security-based swaps. If such proposed rules areadopted, we may be required to aggregate the positions of our various investment funds and the positions of our funds' portfolio companies.It is possible that trading decisions may have to be modified and that positions held may have to be liquidated in order to avoid exceedingsuch limits. Such modification or liquidation, if required, could adversely affect our operations and profitability.•On October 21, 2014, the final rules implementing the credit risk retention requirements of Section 941 of the Dodd-Frank Act (the "RiskRetention Rules") were issued. Except with respect to asset-backed securities transactions that satisfy certain exemptions, the RiskRetention Rules generally require sponsors of asset-backed securities transactions to retain not less than 5% of the credit risk of the assetscollateralizing asset-backed securities. The Risk Retention Rules will become effective beginning on December 24, 2016 with respect toasset-backed securities collateralized by assets other than residential mortgages (and December 24, 2015 for asset-backed securitiescollateralized by residential mortgages). The new mandatory risk retention requirement for CLOs may result in us having to invest moneyin CLOs that we manage after the effective date of the Risk Retention Rules (including, potentially, in existing CLOs that are refinanced oras to which certain other material events occur after such effective date) that would otherwise be available for other uses. While the impactof the Risk Retention Rules on the loan securitization market and the leveraged loan market generally are uncertain, the Risk RetentionRules may impact our ability or desire to manage CLOs in the future.•The Dodd-Frank Act requires public companies to adopt and disclose policies requiring, in the event the company is required to issue anaccounting restatement, the clawback of related incentive compensation from current and former executive officers.•The Dodd-Frank Act amends the Exchange Act to compensate and protect whistleblowers who voluntarily provide original information tothe SEC and establishes a fund to be used to pay whistleblowers who will be entitled to receive a payment equal to between 10% and 30%of certain monetary sanctions imposed in a successful government action resulting from the information provided by the whistleblower. Weexpect that these provisions will result in a significant increase in whistleblower claims across our industry, and investigating such claims- 28- Table of Contentscould generate significant expenses and take up significant management time, even for frivolous and non-meritorious claims.Many of these provisions are subject to further rulemaking and to the discretion of regulatory bodies, such as the FSOC, the Federal Reserve and theSEC.In June 2010, the SEC adopted a “pay-to-play” rule that restricts politically active investment advisors from managing state pension funds. The ruleprohibits, among other things, a covered investment advisor from receiving compensation for advisory services provided to a government entity (such as astate pension fund) for a two-year period after the advisor, certain covered employees of the advisor or any covered political action committee controlled bythe advisor or its employees makes a political contribution to certain government officials. In addition, a covered investment advisor is prohibited fromengaging in political fundraising activities for certain elected officials or candidates in jurisdictions where such advisor is providing or seekinggovernmental business. This rule complicates and increases the compliance burden for our investment advisors. It will be imperative for a covered investmentadvisor to adopt an effective compliance program in light of the substantial penalties associated with the rule.It is impossible to determine the full extent of the impact on us of the Dodd-Frank Act or any other new laws, regulations or initiatives that may beproposed or whether any of the proposals will become law. Any changes in the regulatory framework applicable to our business, including the changesdescribed above, may impose additional costs on us, require the attention of our senior management or result in limitations on the manner in which weconduct our business. Moreover, as calls for additional regulation have increased, there may be a related increase in regulatory investigations of the tradingand other investment activities of alternative asset management funds, including our funds. Compliance with any new laws or regulations could makecompliance more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability.Exemptions from Certain Laws. We regularly rely on exemptions from various requirements of law or regulation, including the Securities Act, theExchange Act, the Investment Company Act, CFTC regulations, the Commodity Exchange Act of 1936, as amended, and the Employment RetirementIncome Security Act of 1974, as amended in conducting our activities. These exemptions are sometimes highly complex and may in certain circumstancesdepend on compliance by third parties whom we do not control. For example, in raising new funds, we typically rely on private placement exemptions fromregistration under the Securities Act, including Regulation D, which was recently amended to prohibit issuers (including our funds) from relying on certain ofthe exemptions from registration if the fund or any of its "covered persons" (including certain officers and directors, but also including certain third partiesincluding, among others, promoters, placement agents and beneficial owners of 20% of outstanding voting securities of the fund) has been the subject of a"disqualifying event," or constitutes a "bad actor," which can result from a variety of criminal, regulatory and civil matters. If any of the covered personsassociated with our funds is subject to a disqualifying event, one or more of our funds could lose the ability to raise capital in a Rule 506 private offering fora significant period of time, which could significantly impair our ability to raise new funds, and, therefore, could materially adversely affect our business,financial condition and results of operations. In addition, if certain of our employees or any potential significant fund investor has been the subject of adisqualifying event, we could be required to reassign or terminate such an employee or we could be required to refuse the investment of such an investor,which could impair our relationships with investors, harm our reputation, or make it more difficult to raise new funds. If for any reason any of theseexemptions were to become unavailable to us, we could become subject to regulatory action, third-party claims or be required to register under certainregulatory regimes, and our businesses could be materially and adversely affected. See, for example, “—Risks Related to Our Organization and Structure—Ifwe were deemed an investment company under the Investment Company Act, applicable restrictions could make it impractical for us to continue ourbusinesses as contemplated and could have a material adverse effect on our businesses and the price of our Class A shares.”Fund Regulatory Environment. The regulatory environment in which our funds operate may affect our businesses. For example, changes in antitrustlaws or the enforcement of antitrust laws could affect the level of mergers and acquisitions activity, and changes in state laws may limit investment activitiesof state pension plans. See “Item 1. Business—Regulatory and Compliance Matters” for a further discussion of the regulatory environment in which weconduct our businesses.Certain of the funds and accounts we manage that engage in originating, lending and/or servicing loans, may be subject to state and federalregulation, borrower disclosure requirements, limits on fees and interest rates on some loans, state lender licensing requirements and other regulatoryrequirements in the conduct of their business. These funds and accounts may also be subject to consumer disclosures and substantive requirements onconsumer loan terms and other federal regulatory requirements applicable to consumer lending that are administered by the Consumer Financial ProtectionBureau. These state and federal regulatory programs are designed to protect borrowers.- 29- Table of ContentsState and federal regulators and other governmental entities have authority to bring administrative enforcement actions or litigation to enforcecompliance with applicable lending or consumer protection laws, with remedies that can include fines and monetary penalties, restitution of borrowers,injunctions to conform to law, or limitation or revocation of licenses and other remedies and penalties. In addition, lenders and servicers may be subject tolitigation brought by or on behalf of borrowers for violations of laws or unfair or deceptive practices. Failure to conform to applicable regulatory and legalrequirements could be costly and have a detrimental impact on certain of Apollo’s funds and accounts and ultimately on Apollo.Portfolio Company Regulatory Environment. The regulatory environment in which our funds' portfolio companies operate may affect our business.For example, certain of our funds may invest in the natural resources industry where environmental laws, regulations and regulatory initiatives play asignificant role and can have a substantial effect on investments in the industry. See for additional examples "—Insurance Regulation" and "—We are aholding company subject to the jurisdiction of the Federal Energy Regulatory Commission (the "FERC"). An acquirer of our Class A shares may be requiredto obtain prior approval from the FERC and make other filings with FERC." Additionally, we or certain of our investment funds potentially could be heldliable under ERISA for the pension obligations of one or more of our funds' portfolio companies if we or the investment fund were determined to be engagedin a "trade or business" and deemed part of the same "controlled group" as the portfolio company, and the pension obligations of any particular portfoliocompany could be material. In a 2013 decision of a federal appellate court (Sun Capital Partners III LP v. New England Teamsters & Trucking Indus. PensionFund), a private equity fund was held to be engaged in a "trade or business" under ERISA. In addition, regulators may scrutinize, investigate or take actionagainst us as a result of actions or inactions by portfolio companies operating in a regulated industry if such a regulator were to deem, or potentially deem,such portfolio company to be under our control. For example, based on positions taken by European governmental authorities, we or certain of ourinvestment funds potentially could be liable for fines if portfolio companies deemed to be under our control are found to have violated European antitrustlaws. Such potential, or future, liability may materially affect our business.Future Regulation. We may be adversely affected as a result of new or revised legislation or regulations imposed in the U.S. or elsewhere. As callsfor additional regulation have increased, there may be a related increase in regulatory investigations of the trading and other investment activities ofalternative asset management funds, including our funds. Such investigations may impose additional expenses on us, may require the attention of seniormanagement and may result in fines or other sanctions if any of our funds are deemed to have violated any regulations.We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules. New laws or regulations could makecompliance more difficult and expensive and affect the manner in which we conduct business and divert significant management and operational resourcesand attention from our business.Apollo provides investment management services through registered investment advisors. Investment advisors are subject to extensive regulation inthe United States and in the other countries in which our investment activities occur. The SEC oversees our activities as a registered investment advisor underthe Investment Advisers Act. In the United Kingdom, we are subject to regulation by the U.K. Financial Conduct Authority, which replaced the FinancialServices Authority as of April 1, 2013. Our other European operations, and our investment activities around the globe, are subject to a variety of regulatoryregimes that vary country by country. A failure to comply with the obligations imposed by regulatory regimes to which we are subject, including theInvestment Advisers Act, could result in investigations, sanctions and reputational damage.In November 2010, the European Parliament adopted the Directive on Alternative Investment Fund Managers, or the “AIFM,” which was required tobe implemented in the national laws of the European Union (“EU”) member states by July 22, 2013. The AIFM is also likely to be implemented in thecountries which form part of the European Economic Area (the “EEA”). The AIFM imposes significant new regulatory requirements on investment managersoperating within the EEA, including with respect to conduct of business, regulatory capital, valuations, disclosures and marketing, and rules on the structureof remuneration for certain personnel. Alternative investment funds organized outside of the EU in which interests are marketed within the EEA are nowsubject to significant conditions on their operations. In the immediate future, such funds may be marketed only in certain EEA jurisdictions and incompliance with requirements to register the fund for marketing in each relevant jurisdiction and to undertake periodic investor and regulatory reporting. Insome countries, additional obligations are imposed, for example in Germany, marketing of a non-EEA fund now also requires the appointment of one or moredepositaries (with cost implications for the fund). In the longer term (late 2015 at the earliest) non-EEA managers of non-EEA funds may be able to registerunder the AIFM. Where Apollo registers under the AIFM, Apollo will have more freedom to promote relevant funds in the EEA, although this will be subjectto full compliance with all the requirements of the AIFM, which include (among other things) satisfying the competent authority of the robustness of internalarrangements with respect to risk management, in particular liquidity risks and additional operational and counterparty risks associated with short selling; themanagement and disclosure of conflicts of interest; the fair valuation of assets; and the security of depository/custodial arrangements. Additionalrequirements and restrictions apply where funds invest in an EEA portfolio company, including restrictions that may impose limits on certain investment andrealization- 30- Table of Contentsstrategies, such as dividend recapitalizations and reorganizations. Such rules could potentially impose significant additional costs on the operation of ourbusiness or investments in the EEA and could limit our operating flexibility within the relevant jurisdictions.In July 2012, the European Parliament adopted the Regulation on OTC derivatives, central counterparties and trade repositories, known as “EMIR.”EMIR comes into force in stages and implements requirements similar to, but not the same as, those in Title VII of Dodd Frank, in particular requiringreporting of all derivative transactions, risk mitigation (in particular initial and variation margin) for OTC derivative transactions and central clearing ofcertain OTC derivative contracts. EMIR has minimal impact on the Apollo funds at present but is likely to apply more fully as additional implementationstages are reached. Compliance with the requirements is likely to increase the burdens and costs of doing business.In Germany, legislative amendments have been adopted which may limit deductibility of interest and other financing expenses in companies inwhich our funds have invested or may invest in the future. According to the German interest barrier rule, the tax deduction available to a company in respectof a net interest expense (interest expense less interest income) is limited to 30% of its tax earnings before interest, taxes, depreciation and amortization(“EBITDA”). Annual net interest expense that does not exceed the threshold of €3m can be deducted without any limitations for income tax purposes.Interest expense in excess of the interest deduction limitation may be carried forward indefinitely (subject to change in ownership restrictions) and used infuture periods against all profits and gains. In respect of a tax group, interest paid by the German tax group entities to non-tax group parties (e.g. interest onbank debt, capex facility and working capital facility debt) will be restricted to 30% of the tax group’s tax EBITDA. However, the interest barrier rule may notapply where German company’s gearing under International Financial Reporting Standards (“IFRS”) accounting principles is at maximum of 2% higher thanthe overall group’s leverage ratio at the level of the very top level entity which would be subject to IFRS consolidation (the “escape clause test”). This test isfailed where any worldwide company of the entire group pays more than 10% of its net interest expense on debt to substantial (i.e. greater than 25%)shareholders, related parties of such shareholders (that are not members of the group) or secured third parties (although security granted by group membersshould not be harmful). If the group does not apply IFRS accounting principles, EU member countries’ generally accepted accounting principles or generallyaccepted accounting principles in the United States of America (“U.S. GAAP”) may also be accepted for the purpose of the escape clause test. It should benoted that for trade tax purposes, there is principally a 25% add back on all deductible interest paid or accrued by any German entity after the considerationof a tax exempt amount kEUR 100 which is applied to the sum of all add back amounts. For trade tax purposes interest payments within a German tax groupwill not be considered. Our businesses are subject to the risk that similar measures might be introduced in other countries in which they currently haveinvestments or plan to invest in the future, or that other legislative or regulatory measures might be promulgated in any of the countries in which we operatethat adversely affect our businesses. Additionally, the Organization for Economic Co-Operation and Development ("OECD") issued an action plan in July2013 calling for a coordinated multi-jurisdictional approach to "base erosion and profit shifting" by multinational companies. The action plan identified 15actions the OECD determined are needed to address "base erosion and profit shifting" and generally set target dates for completion of each of the itemsbetween 2014 and 2015. Any changes to international tax laws or foreign domestic tax laws, including new definitions of “permanent establishment”, couldimpact the tax treatment of our foreign earnings and adversely impact the investment returns of our funds.Insurance Regulation. State insurance departments have broad administrative powers over the insurance business of our insurance companyaffiliates, including insurance company licensing and examination, agent licensing, establishment of reserve requirements and solvency standards, premiumrate regulation, admissibility of assets, policy form approval, unfair trade and claims practices, payment of dividends and distributions to shareholders, reviewand/or approval of transactions with affiliates and other matters. State regulators regularly review and update these and other requirements.Currently, there are proposals to increase the scope of regulation of insurance holding companies in both the United States and internationally. Inthe United States, the NAIC has promulgated amendments to its insurance holding company system model law and regulations for consideration by thevarious states that would provide for more extensive informational reporting regarding parents and other affiliates of insurance companies, with the purposeof protecting domestic insurers from enterprise risk, including requiring an annual enterprise risk report by the ultimate controlling person identifying thematerial risks within the insurance holding company system that could pose enterprise risk to domestic insurers. To date, both Iowa and New York haveenacted laws to adopt such amendments. Internationally, the International Association of Insurance Supervisors is in the process of adopting a framework forthe “group wide” supervision of internationally active insurance groups. The NAIC has also promulgated additional amendments to its insurance holdingcompany system model law that address “group wide” supervision of internationally active insurance groups. Changes to existing laws or regulations mustbe adopted by individual states or foreign jurisdictions before they will become effective. We cannot predict with any degree of certainty the additionalcapital requirements, compliance costs or other burdens these requirements may impose on us and our insurance company affiliates.- 31- Table of ContentsThe Dodd-Frank Act created the Federal Insurance Office (the “FIO”) within the Department of Treasury headed by a Director appointed by theTreasury Secretary. The FIO is designed principally to exercise a monitoring and information gathering role, rather than a regulatory role. In that capacity, theFIO has been charged with providing reports to the U.S. Congress on (i) modernization of U.S. insurance regulation and (ii) the U.S. and global reinsurancemarket. Such reports could ultimately lead to changes in the regulation of insurers and reinsurers in the U.S.We are a holding company subject to the jurisdiction of the Federal Energy Regulatory Commission (the “FERC”). An acquirer of our Class A shares maybe required to obtain prior approval from the FERC and make other filings with the FERC.We are a holding company subject to the jurisdiction of the FERC as a result of certain of the funds we manage directly or indirectly owning,controlling or holding, with power to vote, 10% or more of the voting securities in a “public-utility company” or a “holding company” of a public-utilitycompany (as those terms are defined in the U.S. Public Utility Holding Company Act of 2005, or “PUHCA”). Absent an exemption to or waiver from theFERC’s regulations implementing PUHCA, we and any affiliate, associate company and subsidiary company (as those terms are defined in PUHCA), wouldbe required to maintain and make available to FERC, such books, accounts, memoranda and other records of transactions as the FERC may deem relevant toelectric or natural gas rates subject to the FERC’s jurisdiction. We have submitted a notification of holding company status and a notification of waiver ofthe accounting, record retention and reporting requirements to the FERC. An acquirer of securities representing 10% or more of the total voting power ofApollo Global Management, LLC likewise would be required to submit similar filings to the FERC under PUHCA.We are a holding company with subsidiaries that are the general partner and manager of certain funds that have an investment in entities that are“public utilities” (as defined in the Federal Power Act (the “FPA”)) and, therefore, subject to FERC’s jurisdiction under the FPA. An acquirer of our Class Ashares that (i) is, or is affiliated with, a “holding company” of a public-utility company, or (ii) is itself a public utility under the FPA, may have its ownindependent obligation to obtain prior approval from, or make other filings with, FERC with respect to an acquisition of 10% or more of the total votingpower of Apollo Global Management, LLC.Our revenue, net income and cash flow are all highly variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basisand may cause the price of our Class A shares to decline.Our revenue, net income and cash flow are all highly variable, primarily due to the fact that carried interest from our private equity funds and certainof our credit and real estate funds, which constitutes the largest portion of income from our combined businesses, and the transaction and advisory fees thatwe receive can vary significantly from quarter to quarter and year to year. In addition, the investment returns of most of our funds are volatile. We may alsoexperience fluctuations in our results from quarter to quarter and year to year due to a number of other factors, including changes in the values of our funds’investments, changes in the amount of distributions, dividends or interest paid in respect of investments, changes in our operating expenses, the degree towhich we encounter competition and general economic and market conditions. Our future results will also be significantly dependent on the success of ourlarger funds (e.g., Fund VIII), changes in the value of which may result in fluctuations in our results. In addition, carried interest income from our privateequity funds and certain of our credit and real estate funds is subject to contingent repayment by the general partner if, upon the final distribution, therelevant fund’s general partner has received cumulative carried interest on individual portfolio investments in excess of the amount of carried interest itwould be entitled to from the profits calculated for all portfolio investments in the aggregate. See “—Poor performance of our funds would cause a decline inour revenue and results of operations, may obligate us to repay incentive income previously paid to us and would adversely affect our ability to raise capitalfor future funds.” Such variability may lead to volatility in the trading price of our Class A shares and cause our results for a particular period not to beindicative of our performance in a future period. It may be difficult for us to achieve steady growth in net income and cash flow on a quarterly basis, whichcould in turn lead to large adverse movements in the price of our Class A shares or increased volatility in our Class A share price generally.The timing of carried interest generated by our funds is uncertain and will contribute to the volatility of our results. Carried interest depends on ourfunds’ performance. It takes a substantial period of time to identify attractive investment opportunities, to raise all the funds needed to make an investmentand then to realize the cash value or other proceeds of an investment through a sale, public offering, recapitalization or other exit. Even if an investmentproves to be profitable, it may be several years before any profits can be realized in cash or other proceeds. We cannot predict when, or if, any realization ofinvestments will occur. Generally, with respect to our private equity funds, although we recognize carried interest income on an accrual basis, we receiveprivate equity carried interest payments only upon disposition of an investment by the relevant fund, which contributes to the volatility of our cash flow. Ifwe were to have a realization event in a particular quarter or year, it may have a significant impact on our results for that particular quarter or year that maynot be replicated in subsequent periods. We recognize revenue on investments in our funds based on our allocable share of realized and unrealized gains (orlosses) reported by such funds, and a- 32- Table of Contentsdecline in realized or unrealized gains, or an increase in realized or unrealized losses, would adversely affect our revenue, which could further increase thevolatility of our results. With respect to a number of our credit funds, our incentive income is generally paid annually, semi-annually or quarterly, and thevarying frequency of these payments will contribute to the volatility of our revenues and cash flow. Furthermore, we earn this incentive income only if thenet asset value of a fund has increased or, in the case of certain funds, increased beyond a particular threshold. Certain of our credit funds also have “highwater marks” with respect to the investors in these funds. If the high water mark for a particular investor is not surpassed, we would not earn incentive incomewith respect to such investor during a particular period even though such investor had positive returns in such period as a result of losses in prior periods. Ifsuch an investor experiences losses, we will not be able to earn incentive income from such investor until it surpasses the previous high water mark. Theincentive income we earn is therefore dependent on the net asset value of investors’ investments in the fund, which could lead to significant volatility in ourresults.Because our revenue, net income and cash flow can be highly variable from quarter to quarter and year to year, we plan not to provide any guidanceregarding our expected quarterly and annual operating results. The lack of guidance may affect the expectations of public market analysts and could causeincreased volatility in our Class A share price.The investment management business is intensely competitive, which could have a material adverse impact on us.The investment management business is intensely competitive. We face competition both in the pursuit of outside investors for our funds and inacquiring investments in attractive portfolio companies and making other investments. It is possible that it will become increasingly difficult for our funds toraise capital as funds compete for investments from a limited number of qualified investors. As a result of the global economic downturn during 2008 and2009 and generally poor returns in alternative asset investment businesses during the crisis, institutional investors suffered from decreasing returns, liquiditypressure, increased volatility and difficulty maintaining targeted asset allocations, and a significant number of investors materially decreased or temporarilystopped making new fund investments during this period. As the economy continues to recover, such investors may elect to reduce their overall portfolioallocations to alternative investments such as private equity and hedge funds, resulting in a smaller overall pool of available capital in our industry. Even ifsuch investors continue to invest at historic levels, they may seek to negotiate reduced fee structures or other modifications to fund structures as a conditionto investing.In the event all or part of this analysis proves true, when trying to raise new capital we will be competing for fewer total available assets in anincreasingly competitive environment which could lead to fee reductions and redemptions as well as difficulty in raising new capital. Such changes wouldadversely affect our revenues and profitability.Competition among funds is based on a variety of factors, including:•investment performance;•investor liquidity and willingness to invest;•investor perception of investment managers’ drive, focus and alignment of interest;•quality of service provided to and duration of relationship with investors;•business reputation; and•the level of fees and expenses charged for services.We compete in all aspects of our businesses with a large number of investment management firms, private equity, credit and real estate fund sponsorsand other financial institutions. A number of factors serve to increase our competitive risks:•fund investors may develop concerns that we will allow a business to grow to the detriment of its performance;•investors may reduce their investments in our funds or not make additional investments in our funds based upon current marketconditions, their available capital or their perception of the health of our businesses;•some of our competitors have greater capital, lower targeted returns or greater sector or investment strategy-specific expertise thanwe do, which creates competitive disadvantages with respect to investment opportunities;•some of our competitors may also have a lower cost of capital and access to funding sources that are not available to us, which maycreate competitive disadvantages for us with respect to investment opportunities;•some of our competitors may perceive risk differently than we do, which could allow them either to outbid us for investments inparticular sectors or, generally, to consider a wider variety of investments;•some of our funds may not perform as well as competitors’ funds or other available investment products;- 33- Table of Contents•our competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an investment, which mayprovide them with a competitive advantage in bidding for an investment;•some fund investors may prefer to invest with an investment manager that is not publicly traded;•there are relatively few barriers to entry impeding new private equity and capital markets fund management firms, and thesuccessful efforts of new entrants into our various businesses, including former “star” portfolio managers at large diversifiedfinancial institutions as well as such institutions themselves, will continue to result in increased competition;•there are relatively few barriers to entry to our businesses, implementing an integrated platform similar to ours or the strategies thatwe deploy at our funds, such as distressed investing, which we believe are our competitive strengths, except that our competitorswould need to hire professionals with the investment expertise or grow it internally; and•other industry participants continuously seek to recruit our investment professionals away from us.These and other factors could reduce our earnings and revenues and have a material adverse effect on our businesses. In addition, if we are forced tocompete with other alternative investment managers on the basis of price, we may not be able to maintain our current management fee and incentive incomestructures. We have historically competed primarily on the performance of our funds, and not on the level of our fees or incentive income relative to those ofour competitors. However, there is a risk that fees and incentive income in the alternative investment management industry will decline, without regard to thehistorical performance of a manager. Fee or incentive income reductions on existing or future funds, without corresponding decreases in our cost structure,would adversely affect our revenues and profitability.Our ability to retain our investment professionals is critical to our success and our ability to grow depends on our ability to attract additional keypersonnel.Our success depends on our ability to retain our investment professionals and recruit additional qualified personnel. We anticipate that it will benecessary for us to add investment professionals as we pursue our growth strategy. However, we may not succeed in recruiting additional personnel orretaining current personnel, as the market for qualified investment professionals is extremely competitive. Our investment professionals possess substantialexperience and expertise in investing, are responsible for locating and executing our funds’ investments, have significant relationships with the institutionsthat are the source of many of our funds’ investment opportunities, and in certain cases have key relationships with our fund investors. Therefore, if ourinvestment professionals join competitors or form competing companies it could result in the loss of significant investment opportunities and certain existingfund investors. Legislation has been proposed in the U.S. Congress to treat portions of carried interest as ordinary income rather than as capital gain for U.S.Federal income tax purposes. Because we compensate our investment professionals in large part by giving them an equity interest in our business or a right toreceive carried interest, such legislation could adversely affect our ability to recruit, retain and motivate our current and future investment professionals. See“—Risks Related to Taxation—Our structure involves complex provisions of U.S. Federal income tax law for which no clear precedent or authority may beavailable. Our structure is also subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.”Many of our investment professionals are also entitled to receive carried interest or incentive income, and fluctuations in the distributions generated fromsuch sources could also impair our ability to attract and retain qualified personnel. The loss of even a small number of our investment professionals couldjeopardize the performance of our funds, which would have a material adverse effect on our results of operations. Efforts to retain or attract investmentprofessionals may result in significant additional expenses, which could adversely affect our profitability.We strive to maintain a work environment that promotes our culture of collaboration, motivation and alignment of interests with our fund investorsand shareholders. If we do not continue to develop and implement effective processes and tools to manage growth and reinforce this vision, our ability tocompete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results ofoperations. We may not be successful in expanding into new investment strategies, markets and businesses.We actively consider the opportunistic expansion of our businesses, both geographically and into complementary new investment strategies. Wemay not be successful in any such attempted expansion. Attempts to expand our businesses involve a number of special risks, including some or all of thefollowing:•the diversion of management’s attention from our core businesses;•the disruption of our ongoing businesses;•entry into markets or businesses in which we may have limited or no experience;•increasing demands on our operational systems;•potential increase in investor concentration; and- 34- Table of Contents•the broadening of our geographic footprint, increasing the risks associated with conducting operations in foreign jurisdictions.Additionally, any expansion of our businesses could result in significant increases in our outstanding indebtedness and debt service requirements,which would increase the risks in investing in our Class A shares and may adversely impact our results of operations and financial condition.We also may not be successful in identifying new investment strategies or geographic markets that increase our profitability, or in identifying andacquiring new businesses that increase our profitability. Because we have not yet identified these potential new investment strategies, geographic markets orbusinesses, we cannot identify for you all the risks we may face and the potential adverse consequences on us and your investment that may result from ourattempted expansion. We also do not know how long it may take for us to expand, if we do so at all. We have also entered into strategic partnerships andseparately managed accounts, which lack the scale of our traditional funds and are more costly to administer. The prevalence of these accounts may alsopresent conflicts and introduce complexity in the deployment of capital. We have total discretion, at the direction of our manager, without needing to seekapproval from our board of directors or shareholders, to enter into new investment strategies, geographic markets and businesses, other than expansionsinvolving transactions with affiliates which may require board approval.Many of our funds invest in relatively high-risk, illiquid assets and we may fail to realize any profits from these activities for a considerable period of timeor lose some or all of the principal amount we invest in these activities.Many of our funds invest in securities that are not publicly traded. In many cases, our funds may be prohibited by contract or by applicablesecurities laws from selling such securities for a period of time. Our funds will generally not be able to sell these securities publicly unless their sale isregistered under applicable securities laws, or unless an exemption from such registration requirements is available. Accordingly, our funds may be forced,under certain conditions, to sell securities at a loss. The ability of many of our funds, particularly our private equity funds, to dispose of investments isheavily dependent on the public equity markets, inasmuch as the ability to realize value from an investment may depend upon the ability to complete an IPOof the portfolio company in which such investment is held. Furthermore, large holdings even of publicly traded equity securities can often be disposed ofonly over a substantial period of time, exposing the investment returns to risks of downward movement in market prices during the disposition period.Dependence on significant leverage in investments by our funds could adversely affect our ability to achieve attractive rates of return on those investments.Because certain of our funds’ investments rely heavily on the use of leverage, our ability to achieve attractive rates of return on investments willdepend on our continued ability to access sufficient sources of indebtedness at attractive rates. For example, in many of our private equity investments,indebtedness may constitute 70% or more of a portfolio company’s total debt and equity capitalization, including debt that may be incurred in connectionwith the investment, and a portfolio company’s leverage may increase as a result of recapitalization transactions subsequent to the company’s acquisition bya private equity fund. The absence of available sources of senior debt financing for extended periods of time could therefore materially and adversely affectour funds. An increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness would make it more expensive tofinance those investments. Increases in interest rates could also make it more difficult to locate and consummate private equity investments because otherpotential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher price due to a lower overall cost ofcapital. In addition, a portion of the indebtedness used to finance certain of our fund investments often includes high-yield debt securities. Availability ofcapital from the high-yield debt markets is subject to significant volatility, and there may be times when we might not be able to access those markets atattractive rates, or at all. For example, the dislocation in the credit markets which we believe began in July 2007 and the record backlog of supply in the debtmarkets resulting from such dislocation materially affected the ability and willingness of banks to underwrite new high-yield debt securities until relativelyrecently. The availability of debt facilities may be further limited following guidance issued to banks in March 2013 by the Federal Reserve, Office of theComptroller of the Currency and the Federal Deposit Insurance Corp. relating to loans to highly leveraged companies, and reported recent statements by theFederal Reserve and Office of the Comptroller of the Currency reaffirming their position on such loans.Investments in highly leveraged entities are inherently more sensitive to declines in revenues, increases in expenses and interest rates and adverseeconomic, market and industry developments. The incurrence of a significant amount of indebtedness by an entity could, among other things:•give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit the entity’s ability torespond to changing industry conditions to the extent additional cash is needed- 35- Table of Contentsfor the response, to make unplanned but necessary capital expenditures or to take advantage of growth opportunities;•allow even moderate reductions in operating cash flow to render it unable to service its indebtedness, leading to a bankruptcy or otherreorganization of the entity and a loss of part or all of the equity investment in it;•limit the entity’s ability to adjust to changing market conditions, thereby placing it at a competitive disadvantage compared to itscompetitors who have relatively less debt;•limit the entity’s ability to engage in strategic acquisitions that might be necessary to generate attractive returns or further growth; and•limit the entity’s ability to obtain additional financing or increase the cost of obtaining such financing, including for capitalexpenditures, working capital or general corporate purposes.As a result, the risk of loss associated with a leveraged entity is generally greater than for companies with comparatively less debt. For example,many investments consummated by private equity sponsors during 2005, 2006 and 2007 that utilized significant amounts of leverage subsequentlyexperienced severe economic stress and in certain cases defaulted on their debt obligations due to a decrease in revenues and cash flow precipitated by theeconomic downturn.When certain of our funds’ existing portfolio investments reach the point when debt incurred to finance those investments matures in significantamounts and must be either repaid or refinanced, those investments may materially suffer if they have generated insufficient cash flow to repay maturing debtand there is insufficient capacity and availability in the financing markets to permit them to refinance maturing debt on satisfactory terms, or at all. If alimited availability of financing for such purposes were to persist for an extended period of time, when significant amounts of the debt incurred to financethese funds’ existing portfolio investments came due, these funds could be materially and adversely affected.Our credit funds may choose to use leverage as part of their respective investment programs and regularly borrow a substantial amount of theircapital. The use of leverage poses a significant degree of risk and enhances the possibility of a significant loss in the value of the investment portfolio. Thecredit funds may borrow money from time to time to purchase or carry securities. The interest expense and other costs incurred in connection with suchborrowing may not be recovered by appreciation in the securities purchased or carried, and will be lost-and the timing and magnitude of such losses may beaccelerated or exacerbated-in the event of a decline in the market value of such securities. Gains realized with borrowed funds may cause the fund’s net assetvalue to increase at a faster rate than would be the case without borrowings. However, if investment results fail to cover the cost of borrowings, the fund’s netasset value could also decrease faster than if there had been no borrowings.In addition, as a business development company under the Investment Company Act, AINV is permitted to issue senior securities in amounts suchthat its asset coverage ratio equals at least 200% after each issuance of senior securities. Further, AFT and AIF, as registered investment companies, arepermitted to (i) issue preferred shares in amounts such that their respective asset coverage equals at least 200% after issuance and (ii) to incur indebtedness,including through the issuance of debt securities, so long as immediately thereafter the fund will have an asset coverage of at least 300% after issuance. Theability of each of AFT, AIF and AINV to pay dividends will be restricted if its asset coverage ratio falls below 200% and any amounts that it uses to service itsindebtedness are not available for dividends to its common stockholders. An increase in interest rates could also decrease the value of fixed-rate debtinvestments that our funds make. Any of the foregoing circumstances could have a material adverse effect on our financial condition, results of operationsand cash flow.The potential requirement to convert our financial statements from being prepared in conformity with accounting principles generally accepted in theUnited States of America to International Financial Reporting Standards may strain our resources and increase our annual expenses.As a public entity, the SEC may require in the future that we report our financial results under IFRS, instead of under U.S. GAAP. IFRS is a set ofaccounting principles that has been gaining acceptance on a worldwide basis. These standards are published by the London-based International AccountingStandards Board, or “IASB,” and are more focused on objectives and principles and less reliant on detailed rules than U.S. GAAP. Today, there remainsignificant and material differences in several key areas between U.S. GAAP and IFRS which would affect Apollo. Additionally, U.S. GAAP provides specificguidance in classes of accounting transactions for which equivalent guidance in IFRS does not exist. The adoption of IFRS is highly complex and wouldhave an impact on many aspects and operations of Apollo, including but not limited to financial accounting and reporting systems, internal controls, taxes,borrowing covenants and cash management. It is expected that a significant amount of time, internal and external resources and expenses over a multi-yearperiod would be required for this conversion.- 36- Table of ContentsWe face operational risk from errors made in the execution, confirmation or settlement of transactions and our dependence on our headquarters in NewYork City and third-party providers may have an adverse impact on our ability to continue to operate our businesses without interruption which couldresult in losses to us or limit our growth.We face operational risk from errors made in the execution, confirmation or settlement of transactions. We also face operational risk fromtransactions not being properly recorded, evaluated or accounted for in our funds. In particular, our capital markets oriented credit business is highlydependent on our ability to process and evaluate, on a daily basis, transactions across markets and geographies in a time-sensitive, efficient and accuratemanner. Consequently, we rely heavily on our financial, accounting and other data processing systems. New investment products we may introduce couldcreate a significant risk that our existing systems may not be adequate to identify or control the relevant risks in the investment strategies employed by suchnew investment products. In addition, our information systems and technology might not be able to accommodate our growth, and the cost of maintainingsuch systems might increase from its current level. These risks could cause us to suffer financial loss, a disruption of our businesses, liability to our funds,regulatory intervention and reputational damage.Furthermore, we depend on our headquarters, which is located in New York City, for the operation of many of our businesses. A disaster or adisruption in the infrastructure that supports our businesses, including a disruption involving electronic communications or other services used by us or thirdparties with whom we conduct business, or directly affecting our headquarters, may have an adverse impact on our ability to continue to operate ourbusinesses without interruption which could have a material adverse effect on us. Although we have disaster recovery programs in place, these may not besufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse usfor our losses.Finally, we rely on third-party service providers for certain aspects of our businesses, including for certain information systems, technology andadministration of our funds and compliance matters. Any interruption or deterioration in the performance of these third parties could impair the quality of thefunds’ operations and could impact our reputation, adversely affect our businesses and limit our ability to grow.We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect ourbusiness and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could beharmed.The efficient operation of our business is dependent on computer hardware and software systems. Information systems are vulnerable to securitybreaches by computer hackers and cyber terrorists. We rely on industry accepted security measures and technology to securely maintain confidential andproprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. Inaddition, the unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business andcould result in decreased performance and increased operating costs, causing our business and results of operations to suffer. Any significant interruption orfailure of our information systems or any significant breach of security could adversely affect our business and results of operations.Our funds' portfolio companies also rely on data processing systems and the secure processing, storage and transmission of information, includingpayment and health information. A disruption or compromise of these systems could have a material adverse effect on the value of these businesses.We derive a substantial portion of our revenues from funds managed pursuant to management agreements that may be terminated or fund partnershipagreements that permit fund investors to request liquidation of investments in our funds on short notice.The terms of our funds generally give either the general partner of the fund or the fund’s board of directors the right to terminate our investmentmanagement agreement with the fund. However, insofar as we control the general partner of our funds that are limited partnerships, the risk of termination ofinvestment management agreement for such funds is limited, subject to our fiduciary or contractual duties as general partner. This risk is more significant forcertain of our funds which have independent boards of directors.With respect to our funds that are subject to the Investment Company Act, following the initial two years of operation each fund’s investmentmanagement agreement must be approved annually by such fund’s board of directors or by the vote of a majority of the shareholders and the majority of theindependent members of such fund’s board of directors and, as required by law. Each investment management agreement for such funds can also beterminated by the majority of the shareholders. Termination of these agreements would reduce the fees we earn from the relevant funds, which could have amaterial adverse effect on our- 37- Table of Contentsresults of operations. Currently, AFT and AIF, management investment companies under the Investment Company Act, and AINV, a management investmentcompany that has elected to be treated as a business development company under the Investment Company Act, are subject to these provisions of theInvestment Company Act.The governing documents of certain of our funds provide that a simple majority of a fund’s unaffiliated investors have the right to liquidate thatfund, which would cause management fees and incentive income to terminate. Our ability to realize incentive income from such funds also would beadversely affected if we are required to liquidate fund investments at a time when market conditions result in our obtaining less for investments than could beobtained at later times. We do not know whether, and under what circumstances, the investors in our funds are likely to exercise such right.In addition, the management agreements of our funds would terminate if we were to experience a change of control without obtaining investorconsent. Such a change of control could be deemed to occur in the event our Managing Partners exchange enough of their interests in the Apollo OperatingGroup into our Class A shares such that our Managing Partners no longer own a controlling interest in us. We cannot be certain that consents required for theassignment of our management agreements will be obtained if such a deemed change of control occurs. Termination of these agreements would affect the feeswe earn from the relevant funds and the transaction and advisory fees we earn from the underlying portfolio companies, which could have a material adverseeffect on our results of operations.Our use of leverage to finance our businesses will expose us to substantial risks, which are exacerbated by our funds’ use of leverage to financeinvestments. We have senior notes outstanding and loans outstanding and an undrawn revolving credit facility under the 2013 AMH Credit Facilities describedin note 14 to our consolidated financial statements. We may choose to finance our business operations through further borrowings. Our existing and futureindebtedness exposes us to the typical risks associated with the use of leverage, including those discussed above under “—Dependence on significantleverage in investments by our funds could adversely affect our ability to achieve attractive rates of return on those investments.” These risks are exacerbatedby certain of our funds’ use of leverage to finance investments and, if they were to occur, could cause us to suffer a decline in the credit ratings assigned toour debt by rating agencies, if any, which might result in an increase in our borrowing costs or result in other material adverse effects on our businesses.As these borrowings, notes and other indebtedness mature (or are otherwise repaid prior to their scheduled maturities), we may be required to eitherrefinance them by entering into new facilities or issuing new notes, which could result in higher borrowing costs, or issuing equity, which would diluteexisting shareholders. We could also repay them by using cash on hand or cash from the sale of our assets. We could have difficulty entering into newfacilities, issuing new notes or issuing equity in the future on attractive terms, or at all.We are subject to third-party litigation that could result in significant liabilities and reputational harm, which could have a material adverse effect on ourresults of operations, financial condition and liquidity.In general, we will be exposed to risk of litigation by our investors if our management of any fund is alleged to constitute bad faith, grossnegligence, willful misconduct, fraud, willful or reckless disregard for our duties to the fund or other forms of misconduct. Investors could sue us to recoveramounts lost by our funds due to our alleged misconduct, up to the entire amount of loss. Further, we may be subject to litigation arising from investordissatisfaction with the performance of our funds or from third-party allegations that we (i) improperly exercised control or influence over companies inwhich our funds have large investments or (ii) are liable for actions or inactions taken by portfolio companies that such third parties argue we control. By wayof example, we, our funds and certain of our employees are each exposed to the risks of litigation relating to investment activities in our funds and actionstaken by the officers and directors (some of whom may be Apollo employees) of portfolio companies, such as the risk of shareholder litigation by othershareholders of public companies in which our funds have large investments. As an additional example, we are sometimes listed as a co-defendant in actionsagainst portfolio companies on the theory that we control such portfolio companies. We are also exposed to risks of litigation or investigation relating totransactions that presented conflicts of interest that were not properly addressed. In addition, our rights to indemnification by the funds we manage may notbe upheld if challenged, and our indemnification rights generally do not cover bad faith, gross negligence, willful misconduct, fraud, willful or recklessdisregard for our duties to the fund or other forms of misconduct. If we are required to incur all or a portion of the costs arising out of litigation orinvestigations as a result of inadequate insurance proceeds or failure to obtain indemnification from our funds, our results of operations, financial conditionand liquidity would be materially adversely affected.In addition, with a workforce that includes many very highly paid investment professionals, we face the risk of lawsuits relating to claims forcompensation, which may individually or in the aggregate be significant in amount. Such claims are more likely to occur in the current environment whereindividual employees may experience significant volatility in their year-to-year- 38- Table of Contentscompensation due to trading performance or other issues and in situations where previously highly compensated employees were terminated for performanceor efficiency reasons. The cost of settling such claims could adversely affect our results of operations.If any civil or criminal lawsuits brought against us were to result in a finding of substantial legal liability or culpability, the lawsuit could, inaddition to any financial damage, cause significant reputational harm to us, which could seriously harm our business. We depend to a large extent on ourbusiness relationships and our reputation for integrity and high-caliber professional services to attract and retain investors and qualified professionals and topursue investment opportunities for our funds. As a result, allegations of improper conduct by private litigants or regulators, whether the ultimate outcome isfavorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the private equity industry ingeneral, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses. See “Item 3. LegalProceedings.”Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our businesses.As we have expanded and as we continue to expand the number and scope of our businesses, we increasingly confront potential conflicts of interestrelating to our funds’ investment activities. Certain of our funds may have overlapping investment objectives, including funds that have different feestructures, and potential conflicts may arise with respect to our decisions regarding how to allocate investment opportunities among those funds. Forexample, a decision to acquire material non-public information about a company while pursuing an investment opportunity for a particular fund gives rise toa potential conflict of interest when it results in our having to restrict the ability of other funds to take any action. In addition, fund investors (or holders ofClass A shares) may perceive conflicts of interest regarding investment decisions for funds in which our Managing Partners, who have and may continue tomake significant personal investments in a variety of Apollo funds, are personally invested. Similarly, conflicts of interest may exist in the valuation of ourinvestments and regarding decisions about the allocation of specific investment opportunities among us and our funds and the allocation of fees and costsamong us, our funds and their portfolio companies.Pursuant to the terms of our operating agreement, whenever a potential conflict of interest exists or arises between any of the Managing Partners, oneor more directors or their respective affiliates, on the one hand, and us, any of our subsidiaries or any shareholder other than a Managing Partner, on the other,any resolution or course of action by our board of directors shall be permitted and deemed approved by all shareholders if the resolution or course of action(i) has been specifically approved by a majority of the voting power of our outstanding voting shares (excluding voting shares owned by our manager or itsaffiliates) or by a conflicts committee of the board of directors composed entirely of one or more independent directors, (ii) is on terms no less favorable to usor our shareholders (other than a Managing Partner) than those generally being provided to or available from unrelated third parties or (iii) it is fair andreasonable to us and our shareholders taking into account the totality of the relationships between the parties involved. All conflicts of interest described inthis report will be deemed to have been specifically approved by all shareholders. Notwithstanding the foregoing, it is possible that potential or perceivedconflicts could give rise to investor dissatisfaction or litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complexand difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest.Regulatory scrutiny of, or litigation in connection with, conflicts of interest would have a material adverse effect on our reputation which would materiallyadversely affect our businesses in a number of ways, including as a result of redemptions by our investors from our funds, an inability to raise additionalfunds and a reluctance of counterparties to do business with us.Our organizational documents do not limit our ability to enter into new lines of businesses, and we may expand into new investment strategies, geographicmarkets and businesses, each of which may result in additional risks and uncertainties in our businesses.We intend, to the extent that market conditions warrant, to grow our businesses by increasing AUM in existing businesses and expanding into newinvestment strategies, geographic markets and businesses. Our organizational documents, however, do not limit us to the investment management business.Accordingly, we may pursue growth through acquisitions of other investment management companies, acquisitions of critical business partners or otherstrategic initiatives, which may include entering into new lines of business, such as the insurance, broker-dealer or financial advisory industries. In addition,we expect opportunities will arise to acquire other alternative or traditional asset managers. To the extent we make strategic investments or acquisitions,undertake other strategic initiatives or enter into a new line of business, we will face numerous risks and uncertainties, including risks associated with (i) therequired investment of capital and other resources, (ii) the possibility that we have insufficient expertise to engage in such activities profitably or withoutincurring inappropriate amounts of risk, (iii) combining or integrating operational and management systems and controls and (iv) the broadening of ourgeographic footprint, including the risks associated with conducting operations in foreign jurisdictions. Entry into certain lines of business may subject us tonew laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If anew business generates insufficient revenues or if we are unable to- 39- Table of Contentsefficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures, in whichcase we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relatingto, systems, controls and personnel that are not under our control.Employee misconduct could harm us by impairing our ability to attract and retain investors and by subjecting us to significant legal liability, regulatoryscrutiny and reputational harm. Fraud and other deceptive practices or other misconduct at our portfolio companies could similarly subject us to liabilityand reputational damage and also harm our performance.Our reputation is critical to maintaining and developing relationships with the investors in our funds, potential fund investors and third parties withwhom we do business. In recent years, there have been a number of highly publicized cases involving fraud, conflicts of interest or other misconduct byindividuals in the financial services industry. There is a risk that our employees could engage in misconduct that adversely affects our businesses. Forexample, if an employee were to engage in illegal or suspicious activities, we could be subject to regulatory sanctions and suffer serious harm to ourreputation, financial position, investor relationships and ability to attract future investors. It is not always possible to deter employee misconduct, and theprecautions we take to detect and prevent this activity may not be effective in all cases. Misconduct by our employees, or the employees of our portfoliocompanies, or even unsubstantiated allegations, could result in a material adverse effect on our reputation and our businesses.In recent years, the U.S. Department of Justice and the SEC have devoted greater resources to enforcement of the U.S. Foreign Corrupt Practices Act(“FCPA”). In addition, the United Kingdom has significantly expanded the reach of its anti-bribery laws. While we have developed and implemented policiesand procedures designed to ensure strict compliance by us and our personnel with the FCPA, such policies and procedures may not be effective in allinstances to prevent violations. Any determination that we have violated the FCPA or other applicable anticorruption laws or anti-bribery laws could subjectus to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a generalloss of investor confidence, any one of which could adversely affect our business prospects and/or financial position.In addition, we could also be adversely affected if there is misconduct by individuals associated with portfolio companies in which our funds invest.For example, failures by personnel, or individuals acting on behalf, of our funds’ portfolio companies to comply with anti-bribery, trade sanctions or otherlegal and regulatory requirements could adversely affect our business and reputation. There are a number of grounds upon which such misconduct at aportfolio company could subject us to criminal and/or civil liability, including on the basis of actual knowledge, willful blindness, or control personliability. Such misconduct might also undermine our funds' due diligence efforts with respect to such companies and could negatively affect the valuation ofa fund’s investments.Underwriting activities expose us to risks.Apollo Global Securities, LLC, a subsidiary of ours, may act as an underwriter in securities offerings. We may incur losses and be subject toreputational harm to the extent that, for any reason, we are unable to sell securities or indebtedness we purchased as an underwriter at the anticipated pricelevels. As an underwriter, we also are subject to potential liability for material misstatements or omissions in prospectuses and other offering documentsrelating to offerings we underwrite.AGS primarily provides these services for our funds’ portfolio companies. The relationship between the managers of our funds, their affiliates andAGS may give rise to conflicts of interest between the managers of the funds and the funds with respect to whom AGS provides services or the funds who havean interest in any portfolio companies or investment vehicles to whom AGS provides services.While AGS’s services are primarily provided to our funds, it is possible that in the future, AGS may also provide services (including financing,capital market and advisory services) to third parties, including third parties that are our competitors or one or more of their affiliates or any portfoliocompanies. In the event that AGS provides services to third parties, it may not take into consideration the interests of relevant funds or portfolio companies.The due diligence process that we undertake in connection with investments by our funds may not reveal all facts that may be relevant in connection withan investment.Before making investments in private equity and other fund investments, including real estate investments, we conduct due diligence that we deemreasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, we may be required toevaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants andinvestment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting duediligence and making an- 40- Table of Contentsassessment regarding an investment, we rely on the resources available to us, including information provided by the target of the investment and, in somecircumstances, third-party investigations. The due diligence investigation that we will carry out with respect to any investment opportunity may not reveal orhighlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarilyresult in the investment being successful.Certain of our funds utilize special situation and distressed debt investment strategies that involve significant risks.Our funds often invest in obligors and issuers with weak financial conditions, poor operating results, substantial financial needs, negative net worthand/or special competitive problems. These funds also invest in obligors and issuers that are involved in bankruptcy or reorganization proceedings. In suchsituations, it may be difficult to obtain full information as to the exact financial and operating conditions of these obligors and issuers. Additionally, the fairvalues of such investments are subject to abrupt and erratic market movements and significant price volatility if they are publicly traded securities, and aresubject to significant uncertainty in general if they are not publicly traded securities. Furthermore, some of our funds’ distressed investments may not bewidely traded or may have no recognized market. A fund’s exposure to such investments may be substantial in relation to the market for those investments,and the assets are likely to be illiquid and difficult to sell or transfer. As a result, it may take a number of years for the market value of such investments toultimately reflect their intrinsic value as perceived by us.A central feature of our distressed investment strategy is our ability to successfully predict the occurrence of certain corporate events, such as debtand/or equity offerings, restructurings, reorganizations, mergers, takeover offers and other transactions, that we believe will improve the condition of thebusiness. If the corporate event we predict is delayed, changed or never completed, the market price and value of the applicable fund’s investment coulddecline sharply.In addition, these investments could subject us to certain potential additional liabilities that may exceed the value of our original investment. Undercertain circumstances, payments or distributions on certain investments may be reclaimed if any such payment or distribution is later determined to havebeen a fraudulent conveyance, a preferential payment or similar transaction under applicable bankruptcy and insolvency laws. In addition, under certaincircumstances, a lender that has inappropriately exercised control of the management and policies of a debtor may have its claims subordinated ordisallowed, or may be found liable for damages suffered by parties as a result of such actions. In the case where the investment in securities of troubledcompanies is made in connection with an attempt to influence a restructuring proposal or plan of reorganization in bankruptcy, our funds may becomeinvolved in substantial litigation.We often pursue investment opportunities that involve business, regulatory, legal or other complexities.As an element of our investment style, we often pursue unusually complex investment opportunities. This can often take the form of substantialbusiness, regulatory or legal complexity that would deter other investment managers. Our tolerance for complexity presents risks, as such transactions can bemore difficult, expensive and time-consuming to finance and execute; it can be more difficult to manage or realize value from the assets acquired in suchtransactions; and such transactions sometimes entail a higher level of regulatory scrutiny or a greater risk of contingent liabilities. Any of these risks couldharm the performance of our funds.Our funds make investments in companies that we do not control.Investments by some of our funds will include debt instruments and equity securities of companies that we do not control. Such instruments andsecurities may be acquired by our funds through trading activities or through purchases of securities from the issuer. In addition, in the future, our funds mayseek to acquire minority equity interests more frequently and may also dispose of a portion of their majority equity investments in portfolio companies overtime in a manner that results in the funds retaining a minority investment. Those investments will be subject to the risk that the company in which theinvestment is made may make business, financial or management decisions with which we do not agree or that the majority stakeholders or the managementof the company may take risks or otherwise act in a manner that does not serve our interests. If any of the foregoing were to occur, the values of investmentsby our funds could decrease and our financial condition, results of operations and cash flow could suffer as a result.Our funds may face risks relating to undiversified investments.While diversification is generally an objective of our funds, we cannot give assurance as to the degree of diversification that will actually beachieved in any fund investments. Because a significant portion of a fund’s capital may be invested in a single investment or portfolio company, a loss withrespect to such an investment or portfolio company could have a significant adverse impact on such fund’s capital. Accordingly, a lack of diversification onthe part of a fund could adversely affect a fund’s performance and therefore our financial condition and results of operations.- 41- Table of ContentsSome of our funds invest in foreign countries and securities of issuers located outside of the United States, which may involve foreign exchange, political,social, economic and tax uncertainties and risks.Some of our funds invest all or a portion of their assets in the equity, debt, loans or other securities of issuers located outside the United States,including Germany, China, India, Australia, Russia, and Singapore. In addition to business uncertainties, such investments may be affected by changes inexchange values as well as political, social and economic uncertainty affecting a country or region. Many financial markets are not as developed or asefficient as those in the United States, and as a result, liquidity may be reduced and price volatility may be higher. The legal and regulatory environment mayalso be different, particularly with respect to bankruptcy and reorganization. Financial accounting standards and practices may differ, and there may be lesspublicly available information in respect of such companies.Restrictions imposed or actions taken by foreign governments may adversely impact the value of our fund investments. Such restrictions or actionscould include exchange controls, seizure or nationalization of foreign deposits or other assets and adoption of other governmental restrictions that adverselyaffect the prices of securities or the ability to repatriate profits on investments or the capital invested itself. Income received by our funds from sources insome countries may be reduced by withholding and other taxes. Any such taxes paid by a fund will reduce the net income or return from such investments.Our fund investments could also expose us to risks associated with trade and economic sanctions prohibitions or other restrictions imposed by the UnitedStates or other governments or organizations, including the United Nations, the European Union and its member countries, such as the sanctions againstcertain Russian entities and individuals. While our funds will take these factors into consideration in making investment decisions, including when hedgingpositions, our funds may not be able to fully avoid these risks or generate sufficient risk-adjusted returns.In addition, as a result of the complexity of, and lack of clear precedent or authority with respect to, the application of various income tax laws to ourstructures, the application of rules governing how transactions and structures should be reported is also subject to differing interpretations. For example,certain countries such as Australia, Canada, China, and India, where our funds have made investments, have sought to tax investment gains (including thosefrom real estate) derived by nonresident investors, including private equity funds, from the disposition of the equity in companies operating in thosecountries. In some cases this development is the result of new legislation or changes in the interpretation of existing legislation and local authority assertionsthat investors have a local taxable presence or are holding companies for trading purposes rather than for capital purposes, or are not otherwise entitled totreaty benefits. In addition, the tax authorities in certain countries have sought to deny the benefits of income tax treaties for withholding taxes on interestand dividends of nonresident entities, if the entity is not the beneficial owner of the income but rather a mere conduit company inserted primarily to assesstreaty benefits. With respect to India, in 2012 the Supreme Court of India held in favor of a taxpayer finding that the sale of a foreign company that indirectlyheld Indian assets was not subject to Indian tax. However, the tax laws were amended in 2012 to subject such gains to Indian tax with retroactive effect.Further, a general anti-avoidance rule was also introduced that would provide a basis for the tax authorities to subject other sales and investments throughintermediate holding jurisdictions such as Mauritius to Indian tax. While such rule is effective for tax years beginning on or after April 1, 2015, concernshave been raised with respect to these new rules including their retroactive effect in certain circumstances. Indian taxation of the capital gains of a foreigninvestor, upon a direct or indirect sale of an Indian company, therefore remains uncertain.Third-party investors in our funds will have the right under certain circumstances to terminate commitment periods or to dissolve the funds, and investorsin some of our credit funds may redeem their investments in such funds at any time after an initial holding period. These events would lead to a decrease inour revenues, which could be substantial.The governing agreements of certain of our funds allow the limited partners of those funds to (i) terminate the commitment period of the fund in theevent that certain “key persons” (for example, one or more of our Managing Partners and/or certain other investment professionals) fail to devote the requisitetime to managing the fund, (ii) (depending on the fund) terminate the commitment period, dissolve the fund or remove the general partner if we, as generalpartner or manager, or certain key persons engage in certain forms of misconduct, or (iii) dissolve the fund or terminate the commitment period upon theaffirmative vote of a specified percentage of limited partner interests entitled to vote. Each of Fund VI, Fund VII and Fund VIII, on which our near- tomedium-term performance will heavily depend, include a number of such provisions. COF III, EPF II and certain other credit funds have similar provisions.Also, after undergoing the 2007 Reorganization, subsequent to which we deconsolidated certain funds that had historically been consolidated in ourfinancial statements, we amended the governing documents of those funds to provide that a simple majority of a fund’s unaffiliated investors have the rightto liquidate that fund. In addition to having a significant negative impact on our revenue, net income and cash flow, the occurrence of such an event withrespect to any of our funds would likely result in significant reputational damage to us.Investors in some of our credit funds may also generally redeem their investments on an annual, semiannual or quarterly basis following theexpiration of a specified period of time when capital may not be redeemed (typically between one and five- 42- Table of Contentsyears). Fund investors may decide to move their capital away from us to other investments for any number of reasons in addition to poor investmentperformance. Factors which could result in investors leaving our funds include changes in interest rates that make other investments more attractive, changesin investor perception regarding our focus or alignment of interest, unhappiness with changes in or broadening of a fund’s investment strategy, changes inour reputation and departures or changes in responsibilities of key investment professionals. In a declining market, the pace of redemptions and consequentreduction in our AUM could accelerate. The decrease in revenues that would result from significant redemptions in these funds could have a material adverseeffect on our businesses, revenues, net income and cash flows.In addition, the management agreements of all of our funds would be terminated upon an “assignment,” without the requisite consent, of theseagreements, which may be deemed to occur in the event the investment advisors of our funds were to experience a change of control. We cannot be certainthat consents required to assign our investment management agreements will be obtained if a change of control occurs. In addition, with respect to ourpublicly traded closed-end funds, each fund’s investment management agreement must be approved annually by the independent members of such fund’sboard of directors and, in certain cases, by its stockholders, as required by law. Termination of these agreements would cause us to lose the fees we earn fromsuch funds.Our financial projections for portfolio companies and other fund investments could prove inaccurate.Our funds generally establish the capital structure of portfolio companies and certain other fund investments, including real estate investments, onthe basis of financial projections for such investments. These projected operating results will normally be based primarily on management judgments. In allcases, projections are only estimates of future results that are based upon assumptions made at the time that the projections are developed. General economicconditions, which are not predictable, along with other factors may cause actual performance to fall short of the financial projections we used to establish agiven investment's capital structure. Because of the leverage we typically employ in our investments, this could cause a substantial decrease in the value ofour equity holdings in such investments. The inaccuracy of financial projections could thus cause our funds’ performance to fall short of our expectations.Our private equity funds’ performance, and our performance, may be adversely affected by the financial performance of our portfolio companies and theindustries in which our funds invest.Our performance and the performance of our private equity funds is significantly affected by the value of the companies in which our funds haveinvested. Our funds invest in companies in many different industries, each of which is subject to volatility based upon economic and market factors. Over thelast few years, the credit crisis has caused significant fluctuations in the value of securities held by our funds and the global economic recession had asignificant impact in overall performance activity and the demands for many of the goods and services provided by portfolio companies of the funds wemanage. Although the U.S. economy has improved, there remain many obstacles to continued growth in the economy such as high unemployment, globalgeopolitical events, risks of inflation and high deficit levels for governmental agencies in the U.S. and abroad. These factors and other general economictrends are likely to impact the performance of portfolio companies in many industries and in particular, industries that are more impacted by changes inconsumer demand, such as the packaging, manufacturing, chemical and refining industries, as well as travel and leisure, gaming and real estate industries.The performance of our private equity funds, and our performance, may be adversely affected to the extent our fund portfolio companies in these industriesexperience adverse performance or additional pressure due to downward trends. For example, the performance of certain of our portfolio companies in thepackaging, manufacturing, chemical and refining industries is subject to the cyclical and volatile nature of the supply-demand balance in these industries.These industries historically have experienced alternating periods of capacity shortages leading to tight supply conditions, causing prices and profit marginsto increase, followed by periods when substantial capacity is added, resulting in oversupply, declining capacity utilization rates and declining prices andprofit margins. In addition to changes in the supply and demand for products, the volatility these industries experience occurs as a result of changes in energyprices, costs of raw materials and changes in various other economic conditions around the world.The performance of our investments in the commodities markets is also subject to a high degree of business and market risk, as it is substantiallydependent upon prevailing prices of oil and natural gas. Certain of our funds have investments in businesses involved in oil and gas exploration anddevelopment, which can be a speculative business involving a high degree of risk, including: the volatility of oil and natural gas prices; the use of newtechnologies; reliance on estimates of oil and gas reserves in the evaluation of available geological, geophysical, engineering and economic data; andencountering unexpected formations or pressures, premature declines of reservoirs, blow-outs, equipment failures and other accidents in completing wells andotherwise, cratering, sour gas releases, uncontrollable flows of oil, natural gas or well fluids, adverse weather conditions, pollution, fires, spills and otherenvironmental risks. Prices for oil and natural gas are subject to wide fluctuation in response to relatively minor changes in the supply and demand for oil andnatural gas, market uncertainty and a variety of additional factors that are beyond our control, such as level of consumer product demand, the refiningcapacity of oil purchasers, weather conditions, government regulations,- 43- Table of Contentsthe price and availability of alternative fuels, political conditions, foreign supply of such commodities and overall economic conditions. It is common inmaking investments in the commodities markets to deploy hedging strategies to protect against pricing fluctuations but such strategies may or may notprotect our investments.Similarly, the performance of cruise ship operations is also susceptible to adverse changes in the economic climate, such as higher fuel prices, asincreases in the cost of fuel globally would increase the cost of cruise ship operations. Economic and political conditions in certain parts of the world make itdifficult to predict the price of fuel in the future. In addition, cruise ship operators could experience increases in other operating costs, such as crew, insuranceand security costs, due to market forces and economic or political instability beyond their control.In respect of real estate, even though the U.S. residential real estate market has recently shown some signs of stabilizing from a lengthy and deepdownturn, various factors could halt or limit a recovery in the housing market and have an adverse effect on the performance of certain of our funds’investments, including, but not limited to, continued high unemployment, a low level of consumer confidence in the economy and/or the residential realestate market and rising mortgage interest rates.In addition, our funds’ investments in commercial mortgage loans and other commercial real-estate related loans are subject to risks of delinquencyand foreclosure, and risks of loss that are greater than similar risks associated with mortgage loans made on the security of residential properties. If the netoperating income of the commercial property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of a commercialproperty can be affected by various factors, such as success of tenant businesses, property management decisions, competition from comparable types ofproperties and declines in regional or local real estate values and rental or occupancy rates.Our credit funds are subject to numerous additional risks.Our credit funds are subject to numerous additional risks, including the risks set forth below.•Generally, there are few limitations on the execution of these funds’ investment strategies, which are subject to the sole discretion ofthe management company or the general partner of such funds.•These funds may engage in short-selling, which is subject to a theoretically unlimited risk of loss.•These funds are exposed to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions becauseof a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the fundto suffer a loss.•Credit risk may arise through a default by one of several large institutions that are dependent on one another to meet their liquidity oroperational needs, so that a default by one institution causes a series of defaults by the other institutions.•The efficacy of investment and trading strategies depend largely on the ability to establish and maintain an overall market position in acombination of financial instruments, which can be difficult to execute.•These funds may make investments or hold trading positions in markets that are volatile and which may become illiquid.•These funds’ investments are subject to risks relating to investments in commodities, futures, options and other derivatives, the pricesof which are highly volatile and may be subject to a theoretically unlimited risk of loss in certain circumstances.Fraud and other deceptive practices could harm fund performance.Instances of bribery, fraud and other deceptive practices committed by senior management of portfolio companies in which an Apollo fund investsmay undermine our due diligence efforts with respect to such companies, and if such fraud is discovered, negatively affect the valuation of a fund’sinvestments. Fraud or other deceptive practices by our own employees or advisors could have a similar effect. In addition, when discovered, financial fraudmay contribute to overall market volatility that can negatively impact an Apollo fund’s investment program. As a result, instances of bribery, fraud and otherdeceptive practices could result in fund performance that is poorer than expected.Contingent liabilities could harm fund performance.We may cause our funds to acquire an investment that is subject to contingent liabilities. Such contingent liabilities could be unknown to us at thetime of acquisition or, if they are known to us, we may not accurately assess or protect against the risks that they present. Acquired contingent liabilitiescould thus result in unforeseen losses for our funds. In addition, in connection with the disposition of an investment in a portfolio company, a fund may berequired to make representations about- 44- Table of Contentsthe business and financial affairs of such portfolio company typical of those made in connection with the sale of a business. A fund may also be required toindemnify the purchasers of such investment to the extent that any such representations are inaccurate. These arrangements may result in the incurrence ofcontingent liabilities by a fund, even after the disposition of an investment. Accordingly, the inaccuracy of representations and warranties made by a fundcould harm such fund’s performance.Our funds may be forced to dispose of investments at a disadvantageous time.Our funds may make investments that they do not advantageously dispose of prior to the date the applicable fund is dissolved, either by expirationof such fund’s term or otherwise. Although we generally expect that investments will be disposed of prior to dissolution or be suitable for in-kind distributionat dissolution, and the general partners of the funds have a limited ability to extend the term of the fund with the consent of fund investors or the advisoryboard of the fund, as applicable, our funds may have to sell, distribute or otherwise dispose of investments at a disadvantageous time as a result ofdissolution. This would result in a lower than expected return on the investments and, perhaps, on the fund itself.Possession of material, non-public information could prevent Apollo funds from undertaking advantageous transactions; our internal controls could fail;we could determine to establish information barriers.Our Managing Partners, investment professionals or other employees may acquire confidential or material non-public information and, as a result, berestricted from initiating transactions in certain securities. This risk affects us more than it does many other investment managers, as we generally do not useinformation barriers that many firms implement to separate persons who make investment decisions from others who might possess material, non-publicinformation that could influence such decisions. Our decision not to implement these barriers could prevent our investment professionals from undertakingadvantageous investments or dispositions that would be permissible for them otherwise.In order to manage possible risks resulting from our decision not to implement information barriers, our compliance personnel maintain a list ofrestricted securities as to which we have access to material, non-public information and in which our funds and investment professionals are not permitted totrade. This internal control relating to the management of material non-public information could fail with the result that we, or one of our investmentprofessionals, might trade when at least constructively in possession of material non-public information. Inadvertent trading on material non-publicinformation could have adverse effects on our reputation, result in the imposition of regulatory or financial sanctions and as a consequence, negativelyimpact our financial condition. In addition, we could in the future decide that it is advisable to establish information barriers, particularly as our businessexpands and diversifies. In such event, our ability to operate as an integrated platform would be restricted. The establishment of such information barriersmight also lead to operational disruptions and result in restructuring costs, including costs related to hiring additional personnel as existing investmentprofessionals are allocated to either side of such barriers, which could adversely affect our business.Regulations governing AINV’s operation as a business development company affect its ability to raise, and the way in which it raises, additional capital. As a business development company under the Investment Company Act, AINV may issue debt securities or preferred stock and borrow money frombanks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the Investment CompanyAct. Under the provisions of the Investment Company Act, AINV is permitted to issue senior securities only in amounts such that its asset coverage, asdefined in the Investment Company Act, equals at least 200% after each issuance of senior securities. If the value of its assets declines, it may be unable tosatisfy this test. If that happens, it may be required to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of itsindebtedness at a time when such sales may be disadvantageous.Business development companies may issue and sell common stock at a price below net asset value per share only in limited circumstances, one ofwhich is during the one-year period after stockholder approval. AINV’s stockholders have, in the past, approved a plan so that during the subsequent 12-month period, AINV may, in one or more public or private offerings of its common stock, sell or otherwise issue shares of its common stock at a price belowthe then current net asset value per share, subject to certain conditions including parameters on the level of permissible dilution, approval of the sale by amajority of its independent directors and a requirement that the sale price be not less than approximately the market price of the shares of its common stock atspecified times, less the expenses of the sale. AINV may ask its stockholders for additional approvals from year to year. There is no assurance such approvalswill be obtained.Regulations governing AFT's and AIF’s operation affect their ability to raise, and the way in which they raise, additional capital.- 45- Table of ContentsAs registered investment companies under the Investment Company Act, each of AFT and AIF may issue debt securities or preferred stock andborrow money from banks or other financial institutions, up to the maximum amount permitted by the Investment Company Act. Under the provisions of theInvestment Company Act, each of AFT and AIF is permitted to (i) issue preferred shares in amounts such that their respective asset coverage equals at least200% after issuance and (ii) to incur indebtedness, including through the issuance of debt securities, so long as immediately thereafter the fund will have anasset coverage of at least 300% after issuance. If the value of its assets declines, such fund may be unable to satisfy this test. If that happens, such fund may berequired to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a time when such sales may bedisadvantageous. Further, each of AFT and AIF may raise capital by issuing common shares, however, the offering price per common share must equal orexceed the net asset value per share, exclusive of any underwriting commissions or discounts, of our shares.Risks Related to Our Class A SharesThe market price and trading volume of our Class A shares may be volatile, which could result in rapid and substantial losses for our shareholders.The market price of our Class A shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our ClassA shares may fluctuate and cause significant price variations to occur. If the market price of our Class A shares declines significantly, you may be unable toresell your Class A shares at or above your purchase price, if at all. The market price of our Class A shares may fluctuate or decline significantly in the future.Some of the factors that could negatively affect the price of our Class A shares or result in fluctuations in the price or trading volume of our Class A sharesinclude:•variations in our quarterly operating results or distributions, which variations we expect will be substantial;•our policy of taking a long-term perspective on making investment, operational and strategic decisions, which is expected to result insignificant and unpredictable variations in our quarterly returns;•failure to meet analysts’ earnings estimates;•publication of research reports about us or the investment management industry or the failure of securities analysts to cover our Class Ashares;•additions or departures of our Managing Partners and other key management personnel;•adverse market reaction to any indebtedness we may incur or securities we may issue in the future;•actions by shareholders;•changes in market valuations of similar companies;•speculation in the press or investment community;•changes or proposed changes in laws or regulations or differing interpretations thereof affecting our businesses or enforcement of theselaws and regulations, or announcements relating to these matters;•a lack of liquidity in the trading of our Class A shares;•adverse publicity about the asset management industry generally or individual scandals, specifically; and•general market and economic conditions.In addition, from time to time, management may also declare special quarterly distributions based on investment realizations. Volatility in themarket price of our Class A shares may be heightened at or around times of investment realizations as well as following such realization, as a result ofspeculation as to whether such a distribution may be declared.An investment in Class A shares is not an investment in any of our funds, and the assets and revenues of our funds are not directly available to us.Class A shares are securities of Apollo Global Management, LLC only. While our historical consolidated and combined financial informationincludes financial information, including assets and revenues of certain Apollo funds on a consolidated basis, and our future financial information willcontinue to consolidate certain of these funds, such assets and revenues are available to the fund and not to us except through management fees, incentiveincome, distributions and other proceeds arising from agreements with funds, as discussed in more detail in this report.Our Class A share price may decline due to the large number of shares eligible for future sale and for exchange into Class A shares.The market price of our Class A shares could decline as a result of sales of a large number of our Class A shares or the perception that such salescould occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a timeand price that we deem appropriate. As of December 31, 2014, we had- 46- Table of Contents163,046,554 Class A shares outstanding. The Class A shares reserved under our equity incentive plan are increased on the first day of each fiscal year by(i) the amount (if any) by which (a) 15% of the number of outstanding Class A shares and Apollo Operating Group units (“AOG Units”) exchangeable forClass A shares on a fully converted and diluted basis on the last day of the immediately preceding fiscal year exceeds (b) the number of shares then reservedand available for issuance under the Equity Plan, or (ii) such lesser amount by which the administrator may decide to increase the number of Class A shares.Taking into account grants of restricted share units (“RSUs”) and options made through December 31, 2014, 38,090,824 Class A shares remained availablefor future grant under our equity incentive plan. In addition, Holdings may at any time exchange its AOG Units for up to 222,680,477 Class A shares onbehalf of our Managing Partners and Contributing Partners subject to the Amended and Restated Exchange Agreement. See "Item 13. Certain Relationshipsand Related Party Transactions—Amended and Restated Exchange Agreement." We may also elect to sell additional Class A shares in one or more futureprimary offerings.Our Managing Partners and Contributing Partners, through their partnership interests in Holdings, owned an aggregate of 57.7% of the AOG Units asof December 31, 2014. Subject to certain procedures and restrictions (including any transfer restrictions and lock-up agreements applicable to our ManagingPartners and Contributing Partners), each Managing Partner and Contributing Partner has the right, upon 60 days’ notice prior to a designated quarterly date,to exchange the AOG Units for Class A shares. These Class A shares are eligible for resale from time to time, subject to certain contractual restrictions andSecurities Act limitations.Our Managing Partners and Contributing Partners (through Holdings) have the ability to cause us to register the Class A shares they acquire uponexchange of their AOG Units, as was done in connection with the Company's Secondary Offering in May 2013. See “Item 13. Certain Relationships andRelated Party Transactions—Managing Partner Shareholders Agreement— Registration Rights.”The Strategic Investors have the ability to cause us to register any of their non-voting Class A shares, as was done in connection with the Company'sSecondary Offering in May 2013. See “Item 13. Certain Relationships and Related Party Transactions—Lenders Rights Agreement.”We have on file with the SEC a registration statement on Form S-8 covering the shares issuable under our equity incentive plan. Subject to vestingand contractual lock-up arrangements, such shares will be freely tradable.We cannot assure you that our intended quarterly distributions will be paid each quarter or at all.Our intention is to distribute to our Class A shareholders on a quarterly basis substantially all of our net after-tax cash flow from operations in excessof amounts determined by our manager to be necessary or appropriate to provide for the conduct of our businesses, to make appropriate investments in ourbusinesses and our funds, to comply with applicable laws and regulations, to service our indebtedness or to provide for future distributions to our Class Ashareholders for any ensuing quarter. The declaration, payment and determination of the amount of our quarterly dividend, if any, will be at the solediscretion of our manager, who may change our dividend policy at any time. We cannot assure you that any distributions, whether quarterly or otherwise, willor can be paid. In making decisions regarding our quarterly dividend, our manager considers general economic and business conditions, our strategic plansand prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cashneeds, contractual restrictions and obligations, legal, tax, regulatory and other restrictions that may have implications on the payment of distributions by usto our common shareholders or by our subsidiaries to us, and such other factors as our manager may deem relevant.Our Managing Partners’ beneficial ownership of interests in the Class B share that we have issued to BRH Holdings GP, Ltd. (“BRH”), the controlexercised by our manager and anti-takeover provisions in our charter documents and Delaware law could delay or prevent a change in control.Our Managing Partners, through their ownership of BRH, beneficially own the Class B share that we have issued to BRH. The Managing Partnersinterests in such Class B share represented 65.4% of the total combined voting power of our shares entitled to vote as of December 31, 2014. As a result, theyare able to exercise control over all matters requiring the approval of shareholders and are able to prevent a change in control of our company. In addition,our operating agreement provides that so long as the Apollo control condition (as described in “Item 10. Directors, Executive Officers and CorporateGovernance—Our Manager”) is satisfied, our manager, which is owned and controlled by our Managing Partners, manages all of our operations andactivities. The control of our manager will make it more difficult for a potential acquirer to assume control of our Company. Other provisions in our operatingagreement may also make it more difficult and expensive for a third party to acquire control of us even if a change of control would be beneficial to theinterests of our shareholders. For example, our operating agreement requires advance notice for proposals by shareholders and nominations, places limitationson convening shareholder meetings, and authorizes the issuance of preferred shares that could be issued by our board of directors to thwart a takeoverattempt. In addition, certain provisions of- 47- Table of ContentsDelaware law may delay or prevent a transaction that could cause a change in our control. The market price of our Class A shares could be adversely affectedto the extent that our Managing Partners’ control over our Company, the control exercised by our manager as well as provisions of our operating agreementdiscourage potential takeover attempts that our shareholders may favor.We are a Delaware limited liability company, and there are certain provisions in our operating agreement regarding exculpation and indemnification ofour officers and directors that differ from the Delaware General Corporation Law (DGCL) in a manner that may be less protective of the interests of ourClass A shareholders.Our operating agreement provides that to the fullest extent permitted by applicable law our directors or officers will not be liable to us. However,under the DGCL, a director or officer would be liable to us for (i) breach of duty of loyalty to us or our shareholders, (ii) intentional misconduct or knowingviolations of the law that are not done in good faith, (iii) improper redemption of shares or declaration of dividend, or (iv) a transaction from which thedirector derived an improper personal benefit. In addition, our operating agreement provides that we indemnify our directors and officers for acts or omissionsto the fullest extent provided by law. However, under the DGCL, a corporation can indemnify directors and officers for acts or omissions only if the directoror officer acted in good faith, in a manner he reasonably believed to be in the best interests of the corporation, and, in criminal action, if the officer or directorhad no reasonable cause to believe his conduct was unlawful. Accordingly, our operating agreement may be less protective of the interests of our Class Ashareholders, when compared to the DGCL, insofar as it relates to the exculpation and indemnification of our officers and directors.Awards of our Class A shares may increase shareholder dilution and reduce profitability.We grant Class A restricted share units to our investment professionals, both when hired and as a portion of the discretionary annual compensationthey may receive. In 2014 we also began to require that a portion of the incentive income distributions payable by the general partners of certain of the fundswe manage be used by the recipients of those distributions to purchase restricted Class A shares issued under our equity incentive plan. While this practicepromotes alignment with shareholders and encourages investment professionals to maximize the success of the Company as a whole, these equity awards, iffulfilled by issuances of new shares by us rather than by open market purchases (which do not cause any dilution), personnel-related shareholder dilution mayincrease. In addition, volatility in the price of our Class A shares could adversely affect our ability to attract and retain our investment professionals. Torecruit and retain existing and future investment professionals, we may need to increase the level of compensation that we pay to them, which may cause ahigher percentage of our revenue to be paid out in the form of compensation, which would have an adverse impact on our profit margins.Risks Related to Our Organization and StructureAlthough not enacted, the U.S. Congress has considered legislation that would have: (i) in some cases after a ten-year transition period, precluded us fromqualifying as a partnership or required us to hold carried interest through taxable corporations; and (ii) taxed certain income and gains at increased rates.If similar legislation were to be enacted and apply to us, the value of our Class A shares could be adversely affected.The U.S. Congress, the IRS and the U.S. Treasury Department have over the past several years examined the U.S. Federal income tax treatment ofprivate equity funds, hedge funds and other kinds of investment partnerships. The present U.S. Federal income tax treatment of a holder of Class A sharesand/or our own taxation may be adversely affected by any new legislation, new regulations or revised interpretations of existing tax law that arise as a resultof such examinations. In May 2010, the U.S. House of Representatives passed legislation (the “May 2010 House Bill”) that would have, in general, treatedincome and gains, including gain on sale, attributable to an interest in an investment services partnership interest (“ISPI”) as income subject to a new blendedtax rate that is higher than under current law, except to the extent such ISPI would have been considered under the legislation to be a qualified capitalinterest. The interests of Class A shareholders and our interests in the Apollo Operating Group that are entitled to receive carried interest may be classified asISPIs for purposes of this legislation. The United States Senate considered, but did not pass, similar legislation. On February 14, 2012, Representative Levinintroduced similar legislation (the “2012 Levin Bill”) that would tax carried interest at ordinary income rates (which would be higher than the proposedblended rate in the May 2010 House Bill). It is unclear whether or when the U.S. Congress will pass such legislation or what provisions would be included inany legislation, if enacted.Both the May 2010 House Bill and the 2012 Levin Bill provide that, for taxable years beginning ten years after the date of enactment, incomederived with respect to an ISPI that is not a qualified capital interest and that is treated as ordinary income under the rules discussed above would not meetthe qualifying income requirements under the publicly traded partnership rules. Therefore, if similar legislation were to be enacted, following such ten-yearperiod, we would be precluded from qualifying as a partnership for U.S. Federal income tax purposes or be required to hold all such ISPIs throughcorporations, possibly U.S.- 48- Table of Contentscorporations. If we were taxed as a U.S. corporation or required to hold all ISPIs through corporations, our effective tax rate would increase significantly. Thefederal statutory rate for corporations is currently 35%. In addition, we could be subject to increased state and local taxes. Furthermore, holders of Class Ashares could be subject to tax on our conversion into a corporation or any restructuring required in order for us to hold our ISPIs through a corporation.On September 12, 2011, the Obama administration submitted similar legislation to Congress in the American Jobs Act that would tax income andgain, now treated as capital gains, including gain on disposition of interests attributable to an ISPI, at rates higher than the capital gains rate applicable tosuch income under current law, with an exception for certain qualified capital interests. The proposed legislation would also characterize certain income andgain in respect of ISPIs as non-qualifying income under the publicly traded partnership rules after a ten-year transition period from the effective date, with anexception for certain qualified capital interests. This proposed legislation follows several prior statements by the Obama administration in support ofchanging the taxation of carried interest. In its published revenue proposal for 2015, the Obama administration proposed that the current law regardingtreatment of carried interest be changed to subject such income to ordinary income tax. The Obama administration's published revenue proposals for 2010,2011, 2012, 2013 and 2014 contained similar proposals.States and other jurisdictions have also considered legislation to increase taxes with respect to carried interest. For example, New York hasperiodically considered legislation under which non-residents of New York could be subject to New York state income tax on income in respect of our ClassA shares as a result of certain activities of our affiliates in New York, although it is unclear when or whether such legislation would be enacted.On February 22, 2012, the Obama administration announced its framework of key elements to change the U.S. Federal income tax rules forbusinesses. Few specifics were included, and it is unclear what any actual legislation could provide, when it would be proposed, or its prospects forenactment. Several parts of the framework, if enacted, could adversely affect us. First, the framework could reduce the deductibility of interest for corporationsin some manner not specified. A reduction in interest deductions could increase our tax rate and thereby reduce cash available for distribution to investors orfor other uses by us. Such a reduction could also limit our ability to finance new transactions and increase the effective cost of financing by companies inwhich we invest, which could reduce the value of our carried interest in respect of such companies. The framework also suggests that some entities currentlytreated as partnerships for tax purposes could be subject to an entity-level income tax similar to the corporate income tax. If such a proposal caused us to besubject to additional entity-level taxes, it could reduce cash available for distribution to investors or for other uses by us. The framework reiterates PresidentObama's support for treatment of carried interest as ordinary income, as provided for again in the President's revenue proposal for 2015, but the ultimateconsequences of tax reform legislation, if any, are presently not known.Our shareholders do not elect our manager or vote and have limited ability to influence decisions regarding our businesses.So long as the Apollo control condition is satisfied, our manager, AGM Management, LLC, which is owned and controlled by our ManagingPartners, will manage all of our operations and activities. AGM Management, LLC is managed by BRH, a Cayman entity owned by our Managing Partnersand managed by an executive committee composed of our Managing Partners. Our shareholders do not elect our manager, its manager or its manager’sexecutive committee and, unlike the holders of common stock in a corporation, have only limited voting rights on matters affecting our businesses andtherefore limited ability to influence decisions regarding our businesses. Furthermore, if our shareholders are dissatisfied with the performance of ourmanager, they will have little ability to remove our manager. As discussed below, the Managing Partners collectively had 65.4% of the voting power ofApollo Global Management, LLC as of December 31, 2014. Therefore, they have the ability to control any shareholder vote that occurs, including any voteregarding the removal of our manager.Our board of directors has no authority over our operations other than that which our manager has chosen to delegate to it.For so long as the Apollo control condition is satisfied, our manager, which is owned and controlled by our Managing Partners, manages all of ouroperations and activities, and our board of directors has no authority other than that which our manager chooses to delegate to it. In the event that the Apollocontrol condition is not satisfied, our board of directors will manage all of our operations and activities.For so long as the Apollo control condition is satisfied, our manager (i) nominates and elects all directors to our board of directors, (ii) sets thenumber of directors of our board of directors and (iii) fills any vacancies on our board of directors. After the Apollo control condition is no longer satisfied,each of our directors will be elected by the vote of a plurality of our shares entitled to vote, voting as a single class, to serve until his or her successor is dulyelected or appointed and qualified or until his or her earlier death, retirement, disqualification, resignation or removal.- 49- Table of ContentsControl by our Managing Partners of the combined voting power of our shares and holding their economic interests through the Apollo Operating Groupmay give rise to conflicts of interests.Our Managing Partners controlled 65.4% of the combined voting power of our shares entitled to vote as of December 31, 2014. Accordingly, ourManaging Partners have the ability to control our management and affairs to the extent not controlled by our manager. In addition, they are able to determinethe outcome of all matters requiring shareholder approval (such as a proposed sale of all or substantially of our assets, the approval of a merger orconsolidation involving the company, and an election by our manager to dissolve the company) and are able to cause or prevent a change of control of ourcompany and could preclude any unsolicited acquisition of our company. The control of voting power by our Managing Partners could deprive Class Ashareholders of an opportunity to receive a premium for their Class A shares as part of a sale of our company, and might ultimately affect the market price ofthe Class A shares.In addition, our Managing Partners and Contributing Partners, through their partnership interests in Holdings, are entitled to 57.7% of ApolloOperating Group’s economic returns through the AOG Units owned by Holdings as of December 31, 2014. Because they hold their economic interest in ourbusinesses directly through the Apollo Operating Group, rather than through the issuer of the Class A shares, our Managing Partners and ContributingPartners may have conflicting interests with holders of Class A shares. For example, our Managing Partners and Contributing Partners may have different taxpositions from us, which could influence their decisions regarding whether and when to dispose of assets, and whether and when to incur new or refinanceexisting indebtedness, especially in light of the existence of the tax receivable agreement. For a description of the tax receivable agreement, see “Item 13.Certain Relationships and Related Party Transactions—Amended and Restated Tax Receivable Agreement.” In addition, the structuring of futuretransactions may take into consideration the Managing Partners’ and Contributing Partners’ tax considerations even where no similar benefit would accrue tous.We qualify for, and rely on, exceptions from certain corporate governance and other requirements under the rules of the NYSE.We qualify for exceptions from certain corporate governance and other requirements under the rules of the NYSE. Pursuant to these exceptions, wemay elect not to comply with certain corporate governance requirements of the NYSE, including the requirements (i) that a majority of our board of directorsconsist of independent directors, (ii) that we have a nominating/corporate governance committee that is composed entirely of independent directors and (iii)that we have a compensation committee that is composed entirely of independent directors. In addition, we are not required to hold annual meetings of ourshareholders. Pursuant to the exceptions available to a controlled company under the rules of the NYSE, we have elected not to have a nominating andcorporate governance committee comprised entirely of independent directors, nor a compensation committee comprised entirely of independent directors.Although we currently have a board of directors comprised of a majority of independent directors, we plan to continue to avail ourselves of these exceptions.Accordingly, you will not have the same protections afforded to equity holders of entities that are subject to all of the corporate governance requirements ofthe NYSE.Potential conflicts of interest may arise among our manager, on the one hand, and us and our shareholders on the other hand. Our manager and itsaffiliates have limited fiduciary duties to us and our shareholders, which may permit them to favor their own interests to the detriment of us and ourshareholders.Conflicts of interest may arise among our manager, on the one hand, and us and our shareholders, on the other hand. As a result of these conflicts, ourmanager may favor its own interests and the interests of its affiliates over the interests of us and our shareholders. These conflicts include, among others, theconflicts described below.•Our manager determines the amount and timing of our investments and dispositions, indebtedness, issuances of additional stock andamounts of reserves, each of which can affect the amount of cash that is available for distribution to you.•Our manager is allowed to take into account the interests of parties other than us in resolving conflicts of interest, which has the effectof limiting its duties (including fiduciary duties) to our shareholders; for example, our affiliates that serve as general partners of ourfunds have fiduciary and contractual obligations to our fund investors, and such obligations may cause such affiliates to regularly takeactions that might adversely affect our near-term results of operations or cash flow; our manager has no obligation to intervene in, or tonotify our shareholders of, such actions by such affiliates.•Because our Managing Partners and Contributing Partners hold their AOG Units through entities that are not subject to corporateincome taxation and Apollo Global Management, LLC holds the AOG Units in part through a wholly-owned subsidiary that is subjectto corporate income taxation, conflicts may arise between our Managing Partners and Contributing Partners, on the one hand, andApollo Global Management, LLC, on the other hand, relating to the selection, structuring, and disposition of investments. Forexample, the earlier taxable disposition of assets following an exchange transaction by a Managing Partner or Contributing- 50- Table of ContentsPartner may accelerate payments under the tax receivable agreement and increase the present value of such payments, and the taxabledisposition of assets before an exchange or transaction by a Managing Partner or Contributing Partner may increase the tax liability ofa Managing Partner or Contributing Partner without giving rise to any rights to such Managing Partner or Contributing Partner toreceive payments under the tax receivable agreement.•Other than as set forth in the non-competition, non-solicitation and confidentiality agreements to which our Managing Partners andother professionals are subject, which may not be enforceable, affiliates of our manager and existing and former personnel employed byour manager are not prohibited from engaging in other businesses or activities, including those that might be in direct competitionwith us.•Our manager has limited its liability and reduced or eliminated its duties (including fiduciary duties) under our operating agreement,while also restricting the remedies available to our shareholders for actions that, without these limitations, might constitute breaches ofduty (including fiduciary duty). In addition, we have agreed to indemnify our manager and its affiliates to the fullest extent permittedby law, except with respect to conduct involving bad faith, fraud or willful misconduct. By purchasing our Class A shares, you willhave agreed and consented to the provisions set forth in our operating agreement, including the provisions regarding conflicts ofinterest situations that, in the absence of such provisions, might constitute a breach of fiduciary or other duties under applicable statelaw.•Our operating agreement does not restrict our manager from causing us to pay it or its affiliates for any services rendered, or fromentering into additional contractual arrangements with any of these entities on our behalf, so long as the terms of any such additionalcontractual arrangements are fair and reasonable to us as determined under the operating agreement.•Our manager determines how much debt we incur and that decision may adversely affect our credit ratings.•Our manager determines which costs incurred by it and its affiliates are reimbursable by us.•Our manager controls the enforcement of obligations owed to us by it and its affiliates.Our manager decides whether to retain separate counsel, accountants or others to perform services for us. See “Item 13. Certain Relationships andRelated Party Transactions” for a more detailed discussion of these conflicts.Our operating agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of our manager and limit remedies available toshareholders for actions that might otherwise constitute a breach of duty. It would be difficult for a shareholder to challenge a resolution of a conflict ofinterest by our manager or by its conflicts committee.Our operating agreement contains provisions that waive or consent to conduct by our manager and its affiliates that might otherwise raise issuesabout compliance with fiduciary duties or applicable law. For example, our operating agreement provides that when our manager is acting in its individualcapacity, as opposed to in its capacity as our manager, it may act without any fiduciary obligations to us or our shareholders whatsoever. When our manager,in its capacity as our manager, is permitted to or required to make a decision in its “sole discretion” or “discretion” or that it deems “necessary or appropriate”or “necessary or advisable,” then our manager will be entitled to consider only such interests and factors as it desires, including its own interests, and willhave no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us or any of our shareholders and will notbe subject to any different standards imposed by our operating agreement, the Delaware Limited Liability Company Act or under any other law, rule orregulation or in equity.Whenever a potential conflict of interest exists between us and our manager, our manager may resolve such conflict of interest. If our managerdetermines that its resolution of the conflict of interest is on terms no less favorable to us than those generally being provided to or available from unrelatedthird parties or is fair and reasonable to us, taking into account the totality of the relationships between us and our manager, then it will be presumed that inmaking this determination, our manager acted in good faith. A shareholder seeking to challenge this resolution of the conflict of interest would bear theburden of overcoming such presumption. This is different from the situation with Delaware corporations, where a conflict resolution by an interested partywould be presumed to be unfair and the interested party would have the burden of demonstrating that the resolution was fair.The above modifications of fiduciary duties are expressly permitted by Delaware law. Hence, we and our shareholders would have recourse and beable to seek remedies against our manager only if our manager breaches its obligations pursuant to our operating agreement. Unless our manager breaches itsobligations pursuant to our operating agreement, we and our unitholders would not have any recourse against our manager even if our manager were to act ina manner that was inconsistent with traditional fiduciary duties. Furthermore, even if there has been a breach of the obligations set forth in our operatingagreement, our operating agreement provides that our manager and its officers and directors would not be liable to us or our shareholders for errors ofjudgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction- 51- Table of Contentsdetermining that the manager or its officers and directors acted in bad faith or engaged in fraud or willful misconduct. These provisions are detrimental to theshareholders because they restrict the remedies available to them for actions that without those limitations might constitute breaches of duty, includingfiduciary duties.Also, if our manager obtains the approval of its conflicts committee, the resolution will be conclusively deemed to be fair and reasonable to us andnot a breach by our manager of any duties it may owe to us or our shareholders. This is different from the situation with Delaware corporations, where aconflict resolution by a committee consisting solely of independent directors may, in certain circumstances, merely shift the burden of demonstratingunfairness to the plaintiff. If you purchase a Class A share, you will be treated as having consented to the provisions set forth in the operating agreement,including provisions regarding conflicts of interest situations that, in the absence of such provisions, might be considered a breach of fiduciary or otherduties under applicable state law. As a result, shareholders will, as a practical matter, not be able to successfully challenge an informed decision by theconflicts committee.The control of our manager may be transferred to a third party without shareholder consent.Our manager may transfer its manager interest to a third party in a merger or consolidation or in a transfer of all or substantially all of its assetswithout the consent of our shareholders. Furthermore, at any time, the partners of our manager may sell or transfer all or part of their partnership interests inour manager without the approval of the shareholders, subject to certain restrictions as described elsewhere in this report. A new manager may not be willingor able to form new funds and could form funds that have investment objectives and governing terms that differ materially from those of our current funds. Anew owner could also have a different investment philosophy, employ investment professionals who are less experienced, be unsuccessful in identifyinginvestment opportunities or have a track record that is not as successful as Apollo’s track record. If any of the foregoing were to occur, we could experiencedifficulty in making new investments, and the value of our existing investments, our businesses, our results of operations and our financial condition couldmaterially suffer.Our ability to pay regular distributions may be limited by our holding company structure. We are dependent on distributions from the Apollo OperatingGroup to pay distributions, taxes and other expenses.As a holding company, our ability to pay distributions will be subject to the ability of our subsidiaries to provide cash to us. We intend to makequarterly distributions to our Class A shareholders. Accordingly, we expect to cause the Apollo Operating Group to make distributions to its unitholders(Holdings, which is 100% owned, directly and indirectly, by our Managing Partners and our Contributing Partners, and the three intermediate holdingcompanies, which are 100% owned by us), pro rata in an amount sufficient to enable us to pay such distributions to our Class A shareholders; however, suchdistributions may not be made. In addition, our manager can reduce or eliminate our dividend at any time, in its discretion. The Apollo Operating Group maymake periodic distributions to its unitholders in amounts sufficient to cover hypothetical income tax obligations attributable to allocations of taxableincome resulting from their ownership interest in the various limited partnerships making up the Apollo Operating Group, subject to compliance with anyfinancial covenants or other obligations. By paying that cash distribution rather than investing that cash in our business, we might risk slowing the pace ofour growth or not having a sufficient amount of cash to fund our operations, new investments or unanticipated capital expenditures, should the need arise.There may be circumstances under which we are restricted from paying distributions under applicable law or regulation (for example, due toDelaware limited partnership or limited liability company act limitations on making distributions if liabilities of the entity after the distribution wouldexceed the value of the entity’s assets).Tax consequences to our Managing Partners and Contributing Partners may give rise to conflicts of interests.As a result of unrealized built-in gain attributable to the value of our assets held by the Apollo Operating Group entities at the time of the PrivateOffering Transactions, upon the sale, refinancing or disposition of the assets owned by the Apollo Operating Group entities, our Managing Partners andContributing Partners may incur different and greater tax liabilities as a result of the disproportionately greater allocations of items of taxable income andgain to the Managing Partners and Contributing Partners upon a realization event. As the Managing Partners and Contributing Partners will not receive acorresponding greater distribution of cash proceeds, they may, subject to applicable fiduciary or contractual duties, have different objectives regarding theappropriate pricing, timing and other material terms of any sale, refinancing, or disposition, or whether to sell such assets at all. Decisions made with respectto an acceleration or deferral of income or the sale or disposition of assets with unrealized built-in gains may also influence the timing and amount ofpayments that are received by an exchanging or selling founder or partner under the tax receivable agreement. All other factors being equal, earlierdisposition of assets with unrealized built-in gains following such exchange will tend to accelerate such payments and increase the present value of the taxreceivable agreement, and disposition of assets with unrealized built-in gains before an exchange will increase a Managing Partner’s or ContributingPartner’s tax liability without giving rise to any rights to receive payments under the tax receivable agreement. Decisions made- 52- Table of Contentsregarding a change of control also could have a material influence on the timing and amount of payments received by our Managing Partners andContributing Partners pursuant to the tax receivable agreement.We are required to pay our Managing Partners and Contributing Partners for most of the actual tax benefits we realize as a result of the tax basis step-upwe receive in connection with our acquisitions of units from our Managing Partners and Contributing Partners.Subject to certain restrictions, each Managing Partner and Contributing Partner has the right to exchange the AOG Units that he holds through hispartnership interest in Holdings for our Class A shares in a taxable transaction. These exchanges, as well as our acquisitions of units from our ManagingPartners or Contributing Partners, may result in increases in the tax basis of the intangible assets of the Apollo Operating Group that otherwise would nothave been available. Any such increases may reduce the amount of tax that APO Corp. (“APO Corp.”), a wholly owned subsidiary of Apollo GlobalManagement, LLC, would otherwise be required to pay in the future.We have entered into a tax receivable agreement with our Managing Partners and Contributing Partners that provides for the payment by APO Corp.,to our Managing Partners and Contributing Partners of 85% of the amount of actual tax savings, if any, that APO Corp. realizes (or is deemed to realize in thecase of an early termination payment by APO Corp. or a change of control, as discussed below) as a result of these increases in tax deductions and tax basisand certain other tax benefits, including imputed interest expense, related to entering into the tax receivable agreement. In April 2014 and April 2013, theApollo Operating Group made a distribution of $32.0 million and $30.4 million, respectively, to APO Corp. and APO Corp. made a payment to satisfy theliability under the tax receivable agreement to the Managing Partners and Contributing Partners from a realized tax benefit for the tax years 2012 and 2011.Future payments that APO Corp. may make to our Managing Partners and Contributing Partners could be material in amount. In the event that any other ofour current or future U.S. subsidiaries become taxable as corporations and acquire AOG Units in the future, or if we become taxable as a corporation for U.S.Federal income tax purposes, we expect, and have agreed that, each U.S corporation will become subject to a tax receivable agreement with substantiallysimilar terms.The IRS could challenge our claim to any increase in the tax basis of the assets owned by the Apollo Operating Group that results from theexchanges entered into by the Managing Partners or Contributing Partners. The IRS could also challenge any additional tax depreciation and amortizationdeductions or other tax benefits (including deductions for imputed interest expense associated with payments made under the tax receivable agreement) weclaim as a result of, or in connection with, such increases in the tax basis of such assets. If the IRS were to successfully challenge a tax basis increase or taxbenefits we previously claimed from a tax basis increase, Holdings would not be obligated under the tax receivable agreement to reimburse APO Corp. forany payments previously made to them (although any future payments would be adjusted to reflect the result of such challenge). As a result, in certaincircumstances, payments could be made to our Managing Partners and Contributing Partners under the tax receivable agreement in excess of 85% of theactual aggregate cash tax savings of APO Corp. APO Corp.’s ability to achieve benefits from any tax basis increase and the payments to be made under thisagreement will depend upon a number of factors, including the timing and amount of its future income.In addition, the tax receivable agreement provides that, upon a merger, asset sale or other form of business combination or certain other changes ofcontrol, APO Corp.’s (or its successor’s) obligations with respect to exchanged or acquired units (whether exchanged or acquired before or after such changeof control) would be based on certain assumptions, including that APO Corp. would have sufficient taxable income to fully utilize the deductions arisingfrom the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement. See “Item 13. Certain Relationshipsand Related Party Transactions—Amended and Restated Tax Receivable Agreement.”If we were deemed an investment company under the Investment Company Act, applicable restrictions could make it impractical for us to continue ourbusinesses as contemplated and could have a material adverse effect on our businesses and the price of our Class A shares.We do not believe that we are an “investment company” under the Investment Company Act because the nature of our assets and the income derivedfrom those assets allow us to rely on the exception provided by Rule 3a-1 issued under the Investment Company Act. In addition, we believe we are not aninvestment company under Section 3(b)(1) of the Investment Company Act because we are primarily engaged in non-investment company businesses. Weintend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, wewould be taxed as a corporation and other restrictions imposed by the Investment Company Act, including limitations on our capital structure and our abilityto transact with affiliates that apply to us, could make it impractical for us to continue our businesses as contemplated and would have a material adverseeffect on our businesses and the price of our Class A shares.- 53- Table of ContentsRisks Related to TaxationYou may be subject to U.S. Federal income tax on your share of our taxable income, regardless of whether you receive any cash distributions from us.Under current law, so long as we are not required to register as an investment company under the Investment Company Act and 90% of our grossincome for each taxable year constitutes “qualifying income” within the meaning of the Internal Revenue Code on a continuing basis, we will be treated, forU.S. Federal income tax purposes, as a partnership and not as an association or a publicly traded partnership taxable as a corporation. You may be subject toU.S. Federal, state, local and possibly, in some cases, foreign income taxation on your allocable share of our items of income, gain, loss, deduction and creditfor each of our taxable years ending with or within your taxable year, regardless of whether or not you receive cash distributions from us. Accordingly, youmay be required to make tax payments in connection with your ownership of Class A shares that significantly exceed your cash distributions in any specificyear.If we are treated as a corporation for U.S. Federal income tax purposes, the value of the Class A shares would be adversely affected.The value of your investment will depend in part on our company being treated as a partnership for U.S. Federal income tax purposes, which requiresthat 90% or more of our gross income for every taxable year consist of qualifying income, as defined in Section 7704 of the Internal Revenue Code, and thatwe are not required to register as an investment company under the Investment Company Act and related rules. Although we intend to manage our affairs sothat our partnership will meet the 90% test described above in each taxable year, we may not meet these requirements or, as discussed below, current law maychange so as to cause, in either event, our partnership to be treated as a corporation for U.S. Federal income tax purposes. If we were treated as a corporationfor U.S. Federal income tax purposes, (i) we would become subject to corporate income tax and (ii) distributions to shareholders would be taxable asdividends for U.S. Federal income tax purposes to the extent of our earnings and profits.Current law may change, causing us to be treated as a corporation for U.S. Federal or state income tax purposes or otherwise subjecting us to entitylevel taxation. See "—Risks Related to Our Organization and Structure—Although not enacted, the U.S. Congress has considered legislation that wouldhave: (i) in some cases after a ten-year transition period, precluded us from qualifying as a partnership or required us to hold carried interest through taxablecorporations and (ii) taxed certain income and gains at increased rates. If similar legislation were to be enacted and apply to us, the value of our Class Ashares could be adversely affected." Because of widespread state budget deficits, several states are evaluating ways to subject partnerships to entity leveltaxation through the imposition of state income, franchise or other forms of taxation. If any state were to impose a tax upon us as an entity, our distributionsto you would be reduced.Our structure involves complex provisions of U.S. Federal income tax law for which no clear precedent or authority may be available. Our structure is alsosubject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.The U.S. Federal income tax treatment of holders of Class A shares depends in some instances on determinations of fact and interpretations ofcomplex provisions of U.S. Federal income tax law for which no clear precedent or authority may be available. You should be aware that the U.S. Federalincome tax rules are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, frequently resulting inrevised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. The IRS pays closeattention to the proper application of tax laws to partnerships and entities taxed as partnerships. The present U.S. Federal income tax treatment of aninvestment in our Class A shares may be modified by administrative, legislative or judicial interpretation at any time, and any such action may affectinvestments and commitments previously made. Changes to the U.S. Federal income tax laws and interpretations thereof could make it more difficult orimpossible to meet the exception for us to be treated as a partnership for U.S. Federal income tax purposes that is not taxable as a corporation, affect or causeus to change our investments and commitments, affect the tax considerations of an investment in us, change the character or treatment of portions of ourincome (including, for instance, the treatment of carried interest as ordinary income rather than capital gain) and adversely affect an investment in our Class Ashares. For example, as discussed above under “—Risks Related to Our Organization and Structure—Although not enacted, the U.S. Congress has consideredlegislation that would have: (i) in some cases after a ten-year transition period, precluded us from qualifying as a partnership or required us to hold carriedinterest through taxable corporations; and (ii) taxed certain income and gains at increased rates. If similar legislation were to be enacted and apply to us, thevalue of our Class A shares could be adversely affected,” the U.S. Congress has considered various legislative proposals to treat all or part of the capital gainand dividend income that is recognized by an investment partnership and allocable to a partner affiliated with the sponsor of the partnership (i.e., a portion ofthe carried interest) as ordinary income to such partner for U.S. Federal income tax purposes.- 54- Table of ContentsOur operating agreement permits our manager to modify our operating agreement from time to time, without the consent of the holders of Class Ashares, to address certain changes in U.S. Federal income tax regulations, legislation or interpretation. In some circumstances, such revisions could have amaterial adverse impact on some or all holders of Class A shares. For instance, our manager could elect at some point to treat us as an association taxable as acorporation for U.S. Federal (and applicable state) income tax purposes. If our manager were to do this, the U.S. Federal income tax consequences of owningour Class A shares would be materially different. Moreover, we will apply certain assumptions and conventions in an attempt to comply with applicable rulesand to report income, gain, deduction, loss and credit to holders of Class A shares in a manner that reflects such beneficial ownership of items by holders ofClass A shares, taking into account variation in ownership interests during each taxable year because of trading activity. However, those assumptions andconventions may not be in compliance with all aspects of applicable tax requirements. It is possible that the IRS will assert successfully that the conventionsand assumptions used by us do not satisfy the technical requirements of the Internal Revenue Code and/or Treasury regulations and could require that itemsof income, gain, deductions, loss or credit, including interest deductions, be adjusted, reallocated or disallowed in a manner that adversely affects holders ofClass A shares.Our interests in certain of our businesses are held through entities that are treated as corporations for U.S. Federal income tax purposes; such corporationsmay be liable for significant taxes and may create other adverse tax consequences, which could potentially adversely affect the value of your investment.In light of the publicly traded partnership rules under U.S. Federal income tax law and other requirements, we hold our interests in certain of ourbusinesses through entities that are treated as corporations for U.S. Federal income tax purposes. Each such corporation could be liable for significant U.S.Federal income taxes and applicable state, local and other taxes that would not otherwise be incurred, which could adversely affect the value of yourinvestment. Furthermore, it is possible that the IRS could challenge the manner in which such corporation’s taxable income is computed by us.Changes in U.S. tax law could adversely affect our ability to raise funds from certain foreign investors.Under the Foreign Account Tax Compliance Act, or FATCA, certain U.S. withholding agents, or USWAs, foreign financial institutions, or FFIs, andnon-financial foreign entities, or NFFEs, are required to report information about offshore accounts and investments to the U.S. or their local taxingauthorities annually. In response to this legislation, various foreign governments have entered into Intergovernmental Agreements, or IGAs, with the U.S.Government and some have enacted similar legislation.In order to meet these regulatory obligations, Apollo will be required to register FFIs with the IRS, evaluate internal FATCA procedures, expand thereview of investor Anti-Money Laundering/Know Your Customer and tax forms, evaluate the FATCA offerings by third party administrators and ensure thatApollo is prepared for the new global tax and information reporting requirements created under the U.S. and Non U.S. FATCA regimes.Further, FATCA as well as Chapters 3 and 61 of the Internal Revenue Code, require Apollo to collect new IRS Tax Forms (W-9 and W-8 series),UK/Cayman Self-Certifications and other supporting documentation from their investors. Apollo will undertake efforts to re-paper their existing investors.Failure to meet these regulatory requirements could expose Apollo and/or its investors to a punitive withholding tax of 30% on certain U.S.payments (and beginning in 2017, a 30% withholding tax on gross proceeds from the sale of U.S. stocks and securities), and possibly limit their ability toopen bank accounts and secure funding the global capital markets. The reporting obligations imposed under FATCA require FFIs to comply with agreementswith the IRS to obtain and disclose information about certain investors to the IRS. The administrative and economic costs of compliance with FATCA maydiscourage some foreign investors from investing in U.S. funds, which could adversely affect our ability to raise funds from these investors.Federal tax reform efforts will continue which may involve tax uncertainties and risks.It is anticipated that the U.S. Congress will continue examining proposals that would provide for a comprehensive overhaul of U.S. Federal incometax laws, which could result in sweeping changes to many longstanding tax rules. Reform efforts could result in lower statutory tax rates, but could be offsetby tax changes that would result in significant increases in the taxation of financial institutions and products, some of which could adversely affect ourbusiness. Examples of these tax reform proposals may include changing the tax treatment of executive compensation, including bonuses, consideration oftaxes on derivatives and other financial instruments, and adverse changes to the tax treatment of carried interest. Other changes could eliminate or limitcertain tax benefits currently available to cash value life insurance and deferred annuity products. Enactment of these changes or similar alternatives wouldlikely adversely affect new sales, and possibly funding of existing cash value life insurance and deferred annuity products.- 55- Table of ContentsSimilarly, President Obama’s revenue proposal for 2015 provides for (among other things) (i) increasing the tax rate applicable to long-term capitalgains from 20% to 24%, (ii) imposing a 14% transition tax on accumulated foreign earnings, and (iii) imposing a new 19% minimum tax on foreign earningsin future taxable years. At this time, it is difficult for management to predict what the overall impact of future tax reform efforts will have on our funds and ourbusiness, but there is the potential for significant changes in U.S. federal laws related to the tax treatment of products and services provided by Apollo andinvestments made by our funds. The President’s revenue proposal for 2015 recommends elimination of certain key U.S. federal income tax incentives currently available to oil and naturalgas exploration and production companies, and legislation has been introduced in Congress that would implement many of these proposals. These changesinclude, but are not limited to, (i) the repeal of the percentage depletion allowance for oil and natural gas properties, (ii) the elimination of current deductionsfor intangible drilling and development costs, (iii) the elimination of the deduction for certain domestic production activities, and (iv) an extension of theamortization period for certain geological and geophysical expenditures. It is unclear whether these or similar changes will be enacted and, if enacted, howsoon any such changes could become effective. The passage of this legislation or any other similar changes in U.S. federal income tax laws could eliminate orpostpone certain tax deductions that are currently available with respect to oil and natural gas exploration and development, and any such change couldnegatively affect the performance of our funds and in turn our performance.We may hold or acquire certain investments through an entity classified as a PFIC or CFC for U.S. Federal income tax purposes.Certain of our investments may be in foreign corporations or may be acquired through foreign subsidiaries that would be classified as corporationsfor U.S. Federal income tax purposes. Such entities may be passive foreign investment companies, or “PFICs,” or controlled foreign corporations, or “CFCs,”for U.S. Federal income tax purposes. For example, APO (FC), LLC is considered to be a CFC for U.S. Federal income tax purposes. Class A shareholdersindirectly owning an interest in a PFIC or a CFC may experience adverse U.S. tax consequences, including the recognition of taxable income prior to thereceipt of cash relating to such income. In addition, gain on the sale of a PFIC or CFC may be taxable at ordinary income tax rates.Complying with certain tax-related requirements may cause us to forego otherwise attractive business or investment opportunities or enter intoacquisitions, borrowings, financings or arrangements we may not have otherwise entered into.In order for us to be treated as a partnership for U.S. Federal income tax purposes, and not as an association or publicly traded partnership taxable asa corporation, we must meet the qualifying income exception discussed above on a continuing basis and we must not be required to register as an investmentcompany under the Investment Company Act. In order to effect such treatment we (or our subsidiaries) may be required to invest through foreign or domesticcorporations, forego attractive business or investment opportunities or enter into borrowings or financings we may not have otherwise entered into. This maycause us to incur additional tax liability and/or adversely affect our ability to operate solely to maximize our cash flow. Our structure also may impede ourability to engage in certain corporate acquisitive transactions because we generally intend to hold all of our assets through the Apollo Operating Group. Inaddition, we may be unable to participate in certain corporate reorganization transactions that would be tax free to our holders if we were a corporation. Tothe extent we hold assets other than through the Apollo Operating Group, we will make appropriate adjustments to the Apollo Operating Group agreementsso that distributions to Holdings and us would be the same as if such assets were held at that level. Moreover, we are precluded by a contract with one of theStrategic Investors from acquiring assets in a manner that would cause that Strategic Investor to be engaged in a commercial activity within the meaning ofSection 892 of the Internal Revenue Code.Tax gain or loss on disposition of our Class A shares could be more or less than expected.If you sell your Class A shares, you will recognize a gain or loss equal to the difference between the amount realized and your adjusted tax basisallocated to those Class A shares. Prior distributions to you in excess of the total net taxable income allocated to you will have decreased the tax basis in yourClass A shares. Therefore, such excess distributions will increase your taxable gain, or decrease your taxable loss, when the Class A shares are sold and mayresult in a taxable gain even if the sale price is less than the original cost. A portion of the amount realized, whether or not representing gain, may be ordinaryincome to you.- 56- Table of ContentsWe cannot match transferors and transferees of Class A shares, and we have therefore adopted certain income tax accounting conventions that may notconform with all aspects of applicable tax requirements. The IRS may challenge this treatment, which could adversely affect the value of our Class Ashares.Because we cannot match transferors and transferees of Class A shares, we have adopted depreciation, amortization and other tax accountingpositions that may not conform with all aspects of existing Treasury regulations. A successful IRS challenge to those positions could adversely affect theamount of tax benefits available to holders of Class A shares. It also could affect the timing of these tax benefits or the amount of gain on the sale of Class Ashares and could have a negative impact on the value of Class A shares or result in audits of and adjustments to the tax returns of holders of Class A shares.The sale or exchange of 50% or more of our capital and profit interests will result in the termination of our partnership for U.S. Federal income taxpurposes. We will be considered to have been terminated for U.S. Federal income tax purposes if there is a sale or exchange of 50% or more of the totalinterests in our capital and profits within a twelve-month period. Our termination would, among other things, result in the closing of our taxable year for allholders of Class A shares and could result in a deferral of depreciation deductions allowable in computing our taxable income.Non-U.S. persons face unique U.S. tax issues from owning Class A shares that may result in adverse tax consequences to them.In light of our investment activities, we may be, or may become, engaged in a U.S. trade or business for U.S. Federal income tax purposes, in whichcase some portion of our income would be treated as effectively connected income with respect to non-U.S. holders of our Class A shares, or “ECI.” Moreover,dividends paid by an investment that we make in a real estate investment trust, or “REIT,” that are attributable to gains from the sale of U.S. real propertyinterests and sales of certain investments in interests in U.S. real property, including stock of certain U.S. corporations owning significant U.S. real property,may be treated as ECI with respect to non-U.S. holders of our Class A shares. In addition, certain income of non-U.S. holders from U.S. sources not connectedto any U.S. trade or business conducted by us could be treated as ECI. To the extent our income is treated as ECI, each non-U.S. holder generally would besubject to withholding tax on its allocable share of such income, would be required to file a U.S. Federal income tax return for such year reporting itsallocable share of income effectively connected with such trade or business and any other income treated as ECI, and would be subject to U.S. Federal incometax at regular U.S. tax rates on any such income (state and local income taxes and filings may also apply in that event). Non-U.S. holders that are corporationsmay also be subject to a 30% branch profits tax on their allocable share of such income. In addition, certain income from U.S. sources that is not ECIallocable to non-U.S. holders may be reduced by withholding taxes imposed at the highest effective applicable tax rate.An investment in Class A shares will give rise to UBTI to certain tax-exempt holders.We will not make investments through taxable U.S. corporations solely for the purpose of limiting unrelated business taxable income ("UBTI") from“debt-financed” property and, thus, an investment in Class A shares will give rise to UBTI to tax-exempt holders of Class A shares. For example, APO AssetCo., LLC will hold interests in entities treated as partnerships, or otherwise subject to tax on a flow-through basis, that will incur indebtedness. Moreover, ifthe IRS successfully asserts that we are engaged in a trade or business, then additional amounts of income could be treated as UBTI.We do not intend to make, or cause to be made, an election under Section 754 of the Internal Revenue Code to adjust our asset basis or the asset basis ofcertain of the Apollo Operating Group Partnerships. Thus, a holder of Class A shares could be allocated more taxable income in respect of those Class Ashares prior to disposition than if such an election were made.We did not make and currently do not intend to make, or cause to be made, an election to adjust asset basis under Section 754 of the InternalRevenue Code with respect to Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo PrincipalHoldings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII,L.P., Apollo Principal Holdings IX, L.P. and Apollo Principal Holdings X, L.P. If no such election is made, there will generally be no adjustment for atransferee of Class A shares even if the purchase price of those Class A shares is higher than the Class A shares’ share of the aggregate tax basis of our assetsimmediately prior to the transfer. In that case, on a sale of an asset, gain allocable to a transferee could include built-in gain allocable to the transferor at thetime of the transfer, which built-in gain would otherwise generally be eliminated if a Section 754 election had been made.- 57- Table of ContentsClass A shareholders may be subject to state and local taxes and return filing requirements as a result of investing in our Class A shares.In addition to U.S. Federal income taxes, our Class A shareholders may be subject to other taxes, including state and local taxes, unincorporatedbusiness taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we do business or own property now or in thefuture, even if our Class A shareholders do not reside in any of those jurisdictions. Our Class A shareholders may also be required to file state and localincome tax returns and pay state and local income taxes in some or all of these jurisdictions. Further, Class A shareholders may be subject to penalties forfailure to comply with those requirements. It is the responsibility of each Class A shareholder to file all U.S. Federal, state and local tax returns that may berequired of such Class A shareholder.We may not be able to furnish to each Class A shareholder specific tax information within 90 days after the close of each calendar year, which means thatholders of Class A shares who are U.S. taxpayers should anticipate the need to file annually a request for an extension of the due date of their income taxreturn. In addition, it is possible that Class A shareholders may be required to file amended income tax returns.As a publicly traded partnership, our operating results, including distributions of income, dividends, gains, losses or deductions and adjustments tocarrying basis, will be reported on Schedule K-1 and distributed to each Class A shareholder annually. It may require longer than 90 days after the end of ourfiscal year to obtain the requisite information from all lower-tier entities so that K-1s may be prepared for us. For this reason, Class A shareholders who areU.S. taxpayers should anticipate the need to file annually with the IRS (and certain states) a request for an extension past April 15 or the otherwise applicabledue date of their income tax return for the taxable year.In addition, it is possible that a Class A shareholder will be required to file amended income tax returns as a result of adjustments to items on thecorresponding income tax returns of the partnership. Any obligation for a Class A shareholder to file amended income tax returns for that or any other reason,including any costs incurred in the preparation or filing of such returns, are the responsibility of each Class A shareholder.You may be subject to an additional U.S. Federal income tax on net investment income allocated to you by us and on gain on the sale of the Class A shares.As of 2013, individuals, estates and trusts are subject to an additional 3.8% tax on “net investment income” (or undistributed “net investmentincome,” in the case of estates and trusts) for each taxable year, with such tax applying to the lesser of such income or the excess of such person’s adjustedgross income (with certain adjustments) over a specified amount. Net investment income includes net income from interest, dividends, annuities, royaltiesand rents and net gain attributable to the disposition of investment property. It is anticipated that net income and gain attributable to an investment in us willbe included in a holder of the Class A share's “net investment income” subject to this additional tax.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2.PROPERTIESOur principal executive offices are located in leased office space at 9 West 57th Street, New York, New York 10019. We also lease the space for ouroffices in New York, Los Angeles, Houston, Bethesda, Chicago, Toronto, London, Singapore, Frankfurt, Mumbai, Hong Kong and Luxembourg. We do notown any real property. We consider these facilities to be suitable and adequate for the management and operation of our businesses.ITEM 3.LEGAL PROCEEDINGSLitigation and Contingencies—Apollo is, from time to time, party to various legal actions arising in the ordinary course of business includingclaims and lawsuits, reviews, investigations or proceedings by governmental and self regulatory agencies regarding its business.- 58- Table of ContentsIn March 2012, plaintiffs filed two putative class actions, captioned Kelm v. Chase Bank (No. 12-cv-332) and Miller v. 1-800-Flowers.com, Inc.(No. 12-cv-396), in the District of Connecticut on behalf of a class of consumers alleging online fraud. The defendants included, among others, TrilegiantCorporation, Inc. (“Trilegiant”), its parent company, Affinion Group, LLC (“Affinion”), and Apollo Global Management, LLC ("AGM"), which is affiliatedwith funds that are the beneficial owners of 68% of Affinion’s common stock. In both cases, plaintiffs allege that Trilegiant, aided by its business partners,who include e-merchants and credit card companies, developed a set of business practices intended to create consumer confusion and ultimately defraudconsumers into unknowingly paying fees to clubs for unwanted services. Plaintiffs allege that AGM is a proper defendant because of its indirect stockownership and ability to appoint the majority of Affinion’s board. The complaints assert claims under the Racketeer Influenced Corrupt Organizations Act;the Electronic Communications Privacy Act; the Connecticut Unfair Trade Practices Act; and the California Business and Professional Code, and seek,among other things, restitution or disgorgement, injunctive relief, compensatory, treble and punitive damages, and attorneys’ fees. The allegations in Kelmand Miller are substantially similar to those in Schnabel v. Trilegiant Corp. (No. 3:10-cv-957), a putative class action filed in the District of Connecticut in2010 that names only Trilegiant and Affinion as defendants. The court has consolidated the Kelm, Miller, and Schnabel cases under the caption In re:Trilegiant Corporation, Inc. and ordered that they proceed on the same schedule. On June 18, 2012, the court appointed lead plaintiffs’ counsel, and onSeptember 7, 2012, plaintiffs filed their consolidated amended complaint (“CAC”), which alleges the same causes of action against AGM as did thecomplaints in the Kelm and Miller cases. Defendants filed motions to dismiss on December 7, 2012, plaintiffs filed opposition papers on February 7, 2013,and defendants filed replies on April 5, 2013. On December 5, 2012, plaintiffs filed another putative class action, captioned Frank v. Trilegiant Corp. (No. 12-cv-1721), in the District of Connecticut, naming the same defendants and containing allegations substantially similar to those in the CAC. On January 23,2013, plaintiffs moved to transfer and consolidate Frank into In re: Trilegiant. On July 24, 2013 the Frank court transferred the case to Judge Bryant, who ispresiding over In re: Trilegiant, and on March 28, 2014, Judge Bryant granted the motion to consolidate. On September 25, 2013, the court held oralargument on defendants’ motions to dismiss. On March 28, 2014, the court granted in part and denied in part motions to dismiss filed by Affinion andTrilegiant on behalf of all defendants, and also granted separate motions to dismiss filed by certain defendants, including AGM. On that same day, the courtdirected the clerk to terminate AGM as a defendant in the consolidated action. On April 28, 2014, plaintiffs moved for interlocutory review of certain of thecourt’s motion-to-dismiss rulings, not including its order granting AGM’s separate dismissal motion. Defendants filed a response on May 23, 2014, andplaintiffs replied on June 5, 2014. On November 13, 2014, plaintiffs and the remaining defendants filed a Joint Status Report Regarding Discovery statingthat no discovery has taken place since plaintiffs filed their interlocutory-review motion.Various state attorneys general and federal and state agencies have initiated industry-wide investigations into the use of placement agents inconnection with the solicitation of investments, particularly with respect to investments by public pension funds. Certain affiliates of Apollo have receivedsubpoenas and other requests for information from various government regulatory agencies and investors in Apollo’s funds, seeking information regardingthe use of placement agents. CalPERS, one of our Strategic Investors, announced on October 14, 2009, that it had initiated a special review of placementagents and related issues. The report of the CalPERS Special Review was issued on March 14, 2011. That report does not allege any wrongdoing on the partof Apollo or its affiliates. Apollo is continuing to cooperate with all such investigations and other reviews. In addition, on May 6, 2010, the CaliforniaAttorney General filed a civil complaint against Alfred Villalobos and his company, Arvco Capital Research, LLC (“Arvco”) (a placement agent that Apollohas used) and Federico Buenrostro Jr., the former CEO of CalPERS, alleging conduct in violation of certain California laws in connection with CalPERS’spurchase of securities in various funds managed by Apollo and another asset manager. Apollo is not a party to the civil lawsuit and the lawsuit does notallege any misconduct on the part of Apollo. Likewise, on April 23, 2012, the SEC filed a lawsuit alleging securities fraud on the part of Arvco, as well asMessrs. Buenrostro and Villalobos, in connection with their activities concerning certain CalPERS investments in funds managed by Apollo. This lawsuitalso does not allege wrongdoing on the part of Apollo, and alleges that Apollo was defrauded by Arvco, Villalobos, and Buenrostro. On March 14, 2013, theUnited States Department of Justice unsealed an indictment against Messrs. Villalobos and Buenrostro alleging, among other crimes, fraud in connectionwith those same activities; again, Apollo is not accused of any wrongdoing and in fact is alleged to have been defrauded by the defendants. The criminalaction was set for trial in a San Francisco federal court in July 2014, but was put on hold after Mr. Buenrostro pleaded guilty on July 11, 2014. As part of Mr.Buenrostro’s plea agreement, he admitted to taking cash and other bribes from Mr. Villalobos in exchange for several improprieties, including attempting toinfluence CalPERS’ investing decisions and improperly preparing disclosure letters to satisfy Apollo’s requirements. There is no suggestion that Apollo wasaware that Mr. Buenrostro had signed the letters with a corrupt motive. The government has indicated that they will file new charges against Mr. Villalobosincorporating Mr. Buenrostro’s admissions. On August 7, 2014, the government filed a superseding indictment against Mr. Villalobos asserting additionalcharges. Trial had been scheduled for February 23, 2015, but Mr. Villalobos passed away on January 13, 2015. Additionally, on April 15, 2013, Mr.Villalobos, Arvco and related entities (the “Arvco Debtors”) brought a civil action in the United States Bankruptcy Court for the District of Nevada (the“Bankruptcy Court”) against Apollo. The action is related to the ongoing bankruptcy proceedings of the Arvco Debtors. This action alleges that Arvcoserved as a placement agent for Apollo in connection with several funds associated with Apollo, and seeks to recover purported fees the Arvco Debtors claimApollo has not paid them for a portion of Arvco’s placement agent services. In addition, the Arvco Debtors allege that Apollo has interfered with the ArvcoDebtors’- 59- Table of Contentscommercial relationships with third parties, purportedly causing the Arvco Debtors to lose business and to incur fees and expenses in the defense of variousinvestigations and litigations. The Arvco Debtors also seek compensation from Apollo for these alleged lost profits and fees and expenses. The ArvcoDebtors’ complaint asserts various theories of recovery under the Bankruptcy Code and common law. Apollo denies the merit of all of the Arvco Debtors’claims and will vigorously contest them. The Bankruptcy Court has stayed this action pending the result in the criminal case against Mr. Villalobos. Forthese reasons, no estimate of possible loss, if any, can be made at this time.On June 18, 2014, BOKF N.A. (the “First Lien Trustee”), the successor indenture trustee under the indenture governing the First Lien Notesissued by Momentive Performance Materials, Inc. (“Momentive”), commenced a lawsuit in the Supreme Court for the State of New York, New York Countyagainst AGM and members of an ad hoc group of Second Lien Noteholders (including, but not limited to, Euro VI (BC) S.a.r.l.). The First Lien Trusteeamended its complaint on July 2, 2014 (the “First Lien Intercreditor Action”). In the First Lien Intercreditor Action, the First Lien Trustee seeks, among otherthings, a declaration that the defendants violated an intercreditor agreement entered into between holders of the first lien notes and holders of the second liennotes. On July 16, 2014, the successor indenture trustee under the indenture governing the 1.5 Lien Notes (the “1.5 Lien Trustee,” and, together with the FirstLien Trustee, the “Indenture Trustees”) filed an action in the Supreme Court of the State of New York, New York County that is substantially similar to theFirst Lien Intercreditor Action (the “1.5 Lien Intercreditor Action,” and, together with the First Lien Intercreditor Action, the “Intercreditor Actions”). AGMsubsequently removed the Intercreditor Actions to federal district court, and the Intercreditor Actions were automatically referred to the Bankruptcy Courtadjudicating the Momentive chapter 11 bankruptcy cases. The Indenture Trustees then filed motions with the Bankruptcy Court to remand the IntercreditorActions back to the state court (the “Remand Motions”). On September 9, 2014, the Bankruptcy Court denied the Remand Motions. On August 15, 2014, thedefendants in the Intercreditor Actions (including AGM) filed a motion to dismiss the 1.5 Lien Intercreditor Action and a motion for judgment on thepleadings in the First Lien Intercreditor Action (the “Dismissal Motions”). On September 30, 2014, the Bankruptcy Court granted the Dismissal Motions. Inits order granting the Dismissal Motions, the Bankruptcy Court gave the Indenture Trustees until mid-November 2014 to move to amend some, but not all, ofthe claims alleged in their respective complaints. On November 14, 2014, the Indenture Trustees moved to amend their respective complaints pursuant to theBankruptcy Court’s order (the “Motions to Amend”). On January 9, 2015, the defendants filed their oppositions to the Motions to Amend. On January 16,2015, the Bankruptcy Court denied the Motions to Amend. The Bankruptcy Court gave the Indenture Trustees until March 2, 2015 to seek to amend theirrespective complaints. The Indenture Trustees have not yet indicated whether they intend to file additional motions to amend. Accordingly, we are unable atthis time to assess a potential risk of loss. In addition, we do not believe that AGM is a proper defendant in these actions.On June 13, 2014, plaintiffs Stark Master Fund Ltd and Stark Global Opportunities Master Fund Ltd filed a lawsuit in the United States DistrictCourt for the Eastern District of Wisconsin against AGM and Apollo Management Holdings, L.P. (the “Apollo Defendants”), as well as Credit SuisseSecurities (USA) LLC and Deutsche Bank Securities (USA) LLC (the “Bank Defendants”). The complaint alleges that AGM and the other defendants enteredinto an undisclosed and improper agreement concerning the financing of a potential acquisition by Hexion Specialty Chemicals Inc., and on this basisalleges a variety of common law misrepresentation claims, both intentional and negligent. The Apollo Defendants and Bank Defendants filed motions todismiss the complaint on October 15, 2014. Rather than respond to the motions, plaintiffs filed an Amended Complaint on November 5, 2014. The ApolloDefendants and Bank Defendants filed motions to dismiss the Amended Complaint on December 23, 2014. Plaintiffs filed a motion for leave to conductjurisdictional discovery on February 2, 2015, and pursuant to the parties' stipulation approved by the court the motion shall be fully briefed on or beforeMarch 9, 2015. Plaintiffs must file their opposition to Defendants’ motion to dismiss the Amended Complaint on or before 30 days following either adecision from the Court on Plaintiffs’ motion for jurisdictional discovery or the close of jurisdictional discovery, whichever is later. Because the claimsagainst the Apollo Defendants are in their early stages, no reasonable estimate of possible loss, if any, can be made at this time.There are several pending actions concerning transactions related to Caesars Entertainment Operating Company, Inc.’s (“CEOC”) restructuringefforts. Apollo is not a defendant in these matters.•In re: Caesars Entertainment Operating Company, Inc. bankruptcy proceedings, No. 15-10047 (Del. Bk.) (the “DelawareBankruptcy Action”) and No. 15-01145 (N.D. Ill. Bk.) (the “Illinois Bankruptcy Action”). On January 12, 2015, three holders ofCEOC second lien notes issued filed an involuntary bankruptcy petition against CEOC in the United States Bankruptcy Courtfor the District of Delaware.•On February 2, 2015, the court in the Delaware Bankruptcy Action ordered that all CEOC bankruptcy proceedings should takeplace in the Illinois Bankruptcy Action.•Wilmington Savings Fund Society, FSB v. Caesars Entertainment Corp. et al., No. 10004-CVG (Del. Ch.) (the “TrusteeAction”). On August 4, 2014, Wilmington Savings Fund Society, FSB- 60- Table of Contents(“WSFS”), as trustee for certain CEOC second-lien notes, sued Caesars Entertainment Corporation (“Caesars Entertainment”),Caesars Entertainment’s subsidiary, CEOC, other Caesars Entertainment-affiliated entities, and certain of CaesarsEntertainment’s directors, including Marc Rowan, Eric Press, David Sambur (each an Apollo Partner) and Jeff Benjamin (anApollo consultant), in the Delaware Chancery Court. WSFS (i) asserts claims (against some or all of the defendants) forfraudulent conveyance, breach of fiduciary duty, breach of contract, corporate waste and aiding and abetting related to certaintransactions between CEOC and other Caesars Entertainment affiliates, and (ii) requests (among other things) that the courtunwind the challenged transactions and award damages. Defendants filed a motion to dismiss or stay the Trustee Action infavor of the Caesars Action, which was argued on December 5, 2014.•Caesars Entertainment Operating Co., et al. v. Appaloosa Investment Ltd. P’ship et al., No. 652392/2014 (N.Y. Sup. Ct.) (the“Caesars Action”). On August 5, 2014, Caesars Entertainment Corporation and Caesars Entertainment’s subsidiary CEOC suedcertain institutional CEOC second-lien noteholders and CEOC first-lien noteholder Elliott Management Corporation (“EMC”).On September 15, 2014, an amended complaint was filed adding WSFS as a defendant. The amended complaint asserts claimsfor (among other things) tortious interference with prospective economic advantage, a declaratory judgment that certaintransactions related to CEOC’s restructuring are valid and appropriate and that there has not been a default under the indenturesgoverning the notes. On October 15, 2014, defendants moved to dismiss the complaint, and the motion was fully briefed onDecember 1, 2014. On January 15, 2015, Caesars Entertainment and CEOC agreed to voluntarily dismiss their claims againstEMC without prejudice, and EMC agreed to withdraw its motion to dismiss without prejudice. The remaining parties in theCaesars Action and the parties in the Trustee action described below have agreed to stay discovery pending decision on therespective motions to dismiss.•Meehancombs Global Credit Opportunities Master Fund, L.P., et al. v. Caesars Entertainment Corp., et al., No. 14-cv-7091(S.D.N.Y.) (the “Meehancombs Action”). On September 3, 2014, institutional investors allegedly holding approximately $137million in CEOC unsecured senior notes sued CEOC and Caesars Entertainment for breach of contract and the impliedcovenant of good faith, Trust Indenture Act violations and a declaratory judgment challenging the August 2014 privatefinancing transaction in which a portion of outstanding senior unsecured notes were purchased by Caesars Entertainment, and amajority of the noteholders agreed to amend the indenture to terminate Caesars Entertainment’s guarantee of the notes andmodify certain restrictions on CEOC’s ability to sell assets. On October 2, 2014, a related putative class action complaint wasfiled on behalf of the holders of these notes captioned Danner v. Caesars Entertainment Corp., et al., No. 14-cv-7973 (S.D.N.Y.)(the “Danner Action”), against Caesars Entertainment alleging similar claims to the Meehancombs Action. CaesarsEntertainment and CEOC filed a motion to dismiss on November 12, 2014. On January 15, 2015, the court granted the motionwith respect to a Trust Indenture Act claim by Meehancombs but otherwise denied the motion. On January 30, 2015, plaintiffsfiled an amended complaint seeking relief against Caesars Entertainment only, which Caesars Entertainment answered onFebruary 12, 2015.•UMB Bank v. Caesars Entertainment Corporation, et al., No. 10393 (Del. Ch.) (the “UMB Action.”). On November 25, 2014,UMB Bank, as trustee for certain CEOC notes, sued Caesars Entertainment, CEOC, other Caesars Entertainment-affiliatedentities, and certain of Caesars Entertainment’s directors, including Marc Rowan, Eric Press, David Sambur (each an ApolloPartner) and Jeffrey Benjamin (an Apollo consultant), in Delaware Chancery Court. The lawsuit alleges claims for actual andconstructive fraudulent conveyance and transfer, insider preferences, illegal dividends, breach of contract, intentionalinterference with contractual relations, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, usurpation ofcorporate opportunities, and unjust enrichment. The UMB Action seeks appointment of a receiver for CEOC, a constructivetrust, and other relief. The UMB Action has been assigned to the same judge overseeing the Trustee Action. Upon filing thecomplaint, UMB Bank moved to expedite is claim seeking a receiver, on which the court held oral argument on December 17,2014. On January 15, 2015, the court entered a stipulated order staying the UMB Action as to all parties due to CEOC’sbankruptcy filing.- 61- Table of Contents•Koskie v. Caesars Acquisition Company, et al., No. A-14-711712-C (Clark Cnty Nev. Dist. Ct.) (the “Koskie Action”). OnDecember 30, 2014, Nicholas Koskie brought a shareholder class action on behalf of shareholders of Caesars AcquisitionCompany (“CAC”) against CAC, Caesars Entertainment, and members of CAC’s Board of Directors, including Marc Rowan andDavid Sambur (each an Apollo partner). The lawsuit challenges CAC and Caesars Entertainment’s plan to merge, alleging thatthe proposed transaction will not give CAC shareholders fair value. Koskie asserts claims for breach of fiduciary duty relatingto the director defendants’ interrelationships with the entities involved the proposed transaction.•Apollo believes that the claims in the Trustee Action, the UMB Action, the Meehancombs Action, the Danner Action, and theKoskie Action are without merit. For this reason, and because the claims are in their early stages, and because of pendingbankruptcy proceedings involving CEOC, no reasonable estimate of possible loss, if any, can be made at this time.Following the January 16, 2014 announcement that CEC Entertainment, Inc. (“CEC”) had entered into a merger agreement with certain entitiesaffiliated with Apollo (the “Merger Agreement”), four putative shareholder class actions were filed in the District Court of Shawnee County, Kansas on behalfof purported stockholders of CEC against, among others, CEC, its directors and Apollo and certain of its affiliates, which include Queso Holdings Inc., QMerger Sub Inc., Apollo Management VIII, L.P., and AP VIII Queso Holdings, L.P. The first purported class action, which is captioned Hilary Coyne v.Richard M. Frank et al., Case No. 14C57, was filed on January 21, 2014 (the “Coyne Action”). The second purported class action, which was captioned JohnSolak v. CEC Entertainment, Inc. et al., Civil Action No. 14C55, was filed on January 22, 2014 (the “Solak Action”). The Solak Action was dismissed for lackof prosecution on October 14, 2014. The third purported class action, which is captioned Irene Dixon v. CEC Entertainment, Inc. et al., Case No. 14C81, wasfiled on January 24, 2014 and additionally names as defendants Apollo Management VIII, L.P. and AP VIII Queso Holdings, L.P. (the “Dixon Action”). Thefourth purported class action, which is captioned Louisiana Municipal Public Employees’ Retirement System v. Frank, et al., Case No. 14C97, was filed onJanuary 31, 2014 (the “LMPERS Action”) (together with the Coyne and Dixon Actions, the “Shareholder Actions”). A fifth purported class action, which wascaptioned McCullough v. Frank, et al., Case No. CC-14-00622-B, was filed in the County Court of Dallas County, Texas on February 7, 2014. This actionwas dismissed for want of prosecution on May 21, 2014. Each of the Shareholder Actions alleges, among other things, that CEC’s directors breached theirfiduciary duties to CEC’s stockholders in connection with their consideration and approval of the Merger Agreement, including by agreeing to an inadequateprice, agreeing to impermissible deal protection devices, and filing materially deficient disclosures regarding the transaction. Each of the ShareholderActions further alleges that Apollo and certain of its affiliates aided and abetted those alleged breaches. As filed, the Shareholder Actions seek, among otherthings, rescission of the various transactions associated with the merger, damages and attorneys’ and experts’ fees and costs. On February 7, 2014 andFebruary 11, 2014, the plaintiffs in the Shareholder Actions pursued a consolidated action for damages after the transaction closed. Thereafter, theShareholder Actions were consolidated under the caption In re CEC Entertainment, Inc. Stockholder Litigation, Case No. 14C57, and the parties haveengaged in limited discovery. No defendant has any obligation to answer or otherwise respond to any of the complaints in the consolidated action until theplaintiffs file or designate an operative complaint. Although Apollo cannot predict the ultimate outcome of the above action, it believes that such action iswithout merit.On June 10, 2014, Magnetar Global Event Driven Fund Ltd., Spectrum Opportunities Master Fund, Ltd., Magnetar Capital Master Fund, Ltd., andBlackwell Partners LLC, as the purported beneficial owners of shares held as of record by the nominal petitioner Cede & Co., (the “Appraisal Petitioners”),filed an action for statutory appraisal under Kansas state law against CEC in the U.S. District Court for the District of Kansas, captioned Magnetar GlobalEvent Driven Master Fund Ltd, et al. v. CEC Entertainment, Inc., 2:14-cv-02279-RDR-KGS. The Appraisal Petitioners seek appraisal of 750,000 shares ofcommon stock. CEC has answered the complaint and filed a verified list of stockholders, as required under Kansas law. On September 3, 2014, the courtentered a scheduling order that contemplated that discovery would commence in the fall of 2014 and would be substantially completed by May 2015. OnJanuary 13, 2015, the court entered a revised scheduling order that contemplated that fact discovery would be completed by March 13, 2015, expertdiscovery would be completed by June 15, 2015, and a pretrial conference would occur on June 29, 2015. Thereafter, the scheduling order contemplatesdispositive motion practice and a trial on the merits of the Appraisal Petitioners’ claims. Although Apollo cannot predict the ultimate outcome of the aboveactions, Apollo believes that such actions are without merit.On September 29, 2014, Athlon Energy Inc. (“Athlon”) and Encana Corporation (“Encana”) jointly announced that they had entered into anAgreement and Plan of Merger, dated as of September 27, 2014 (the “Merger Agreement”), pursuant to which a wholly-owned subsidiary of Encana (“MergerSub”) would commence a tender offer (the “Offer”) to acquire all of the issued and outstanding shares of Athlon common stock. Following completion of theOffer, Merger Sub would be merged with and into Athlon (the “Proposed Transaction”). On October 23, 2014, The City of Cambridge Retirement Systemfiled a putative class action complaint captioned The City of Cambridge Retirement System v. Reeves, et al., C.A. No. 10277-VCG (the “Cambridge- 62- Table of ContentsAction”) in the Delaware Court of Chancery naming Merger Sub, AGM and members of Athlon’s board of directors as defendants. The Cambridge Actionalleges, among other things, that members of Athlon’s board of directors breached their fiduciary duties in connection with their consideration and approvalof the proposed transaction, and that Encana, Merger Sub and AGM aided and abetted those breaches of fiduciary duty. On November 3, 2014, the parties tothe Cambridge Action and several other similar actions filed in Delaware and Texas state court before the Cambridge Action (none of which named AGM as adefendant (collectively, the “Actions”)), entered into a Memorandum of Understanding to settle the Actions. On December 19, 2014, the parties to theActions entered into a formal settlement agreement, and on December 22, 2014, the parties submitted the settlement agreement and accompanying papers tothe court for its approval. Under the terms of the proposed settlement, AGM will not be required to contribute any cash and will be granted full andcustomary releases.Although the ultimate outcome of these matters cannot be ascertained at this time, Apollo is of the opinion, after consultation with counsel, thatthe resolution of any such matters to which it is a party at this time will not have a material adverse effect on the consolidated financial statements. Legalactions material to Apollo could, however, arise in the future.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.- 63- Table of ContentsPART II—OTHER INFORMATION ITEM 5.MARKETS FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESOur Class A shares are traded on the NYSE under the symbol “APO.” Our Class A shares began trading on the NYSE on March 30, 2011.The number of holders of record of our Class A shares as of February 26, 2015 was 20. This does not include the number of shareholders that holdshares in “street name” through banks or broker-dealers. As of February 26, 2015, there was 1 holder of our Class B share.The following table sets forth the high and low intra-day sales prices per unit of our Class A shares, for the periods indicated, as reported by theNYSE: Sales Price2014 High LowFirst Quarter $36.51 $29.91Second Quarter 32.44 24.06Third Quarter 28.18 22.41Fourth Quarter 25.18 20.02 Sales Price2013 High LowFirst Quarter $24.87 $17.72Second Quarter 28.14 20.86Third Quarter 29.98 22.61Fourth Quarter 34.88 28.04 Cash Distribution PolicyWith respect to fiscal year 2014, we paid four cash distributions of $1.08, $0.84, $0.46 and $0.73 per Class A share on February 26, 2014, May 30,2014, August 29, 2014, and November 21, 2014, respectively (aggregating to $3.11 per Class A share), and we have declared an additional cash distributionof $0.86 per Class A share in respect of the fourth quarter of 2014 which will be paid on February 27, 2015 to holders of record of Class A shares at the closeof business on February 17, 2015.With respect to fiscal year 2013, we paid four cash distributions of $1.05, $0.57, $1.32 and $1.01 per Class A share on February 28, 2013,May 30, 2013, August 30, 2013, and November 29, 2013, respectively, aggregating to $3.95 per Class A share."Distributable Earnings", or "DE", as well as "DE After Taxes and Related Payables", are derived from our segment reported results, and aresupplemental measures to assess performance and amounts available for distribution to Class A shareholders, holders of RSUs that participate in distributionsand holders of AOG units. DE represents the amount of net realized earnings without the effects of the consolidation of any of the affiliated funds. DE, whichis a component of Economic Net Income or "ENI", is the sum across all segments of (i) total management fees and advisory and transaction fees, excludingmonitoring fees received from Athene based on its capital and surplus (as defined in Apollo's transaction advisory services agreement with Athene), (ii) otherincome (loss), excluding the gains (losses) arising from the reversal of a portion of the tax receivable agreement liability, (iii) realized carried interest income,and (iv) realized investment income, less (i) compensation expense, excluding the expense related to equity-based awards, (ii) realized profit sharing expense,and (iii) non-compensation expenses, excluding depreciation and amortization expense. DE After Taxes and Related Payables represents DE less estimatedcurrent corporate, local and non-U.S. taxes as well as the payable under Apollo's tax receivable agreement.Our current intention is to distribute to our Class A shareholders on a quarterly basis substantially all of our Distributable Earnings attributable toClass A shareholders, in excess of amounts determined by our manager to be necessary or appropriate to provide for the conduct of our businesses, to makeappropriate investments in our businesses and our funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide forfuture distributions to our Class A shareholders for any ensuing quarter. Because we will not know what our actual available cash flow from operations will befor any year until- 64- Table of Contentssometime after the end of such year, our fourth quarter distribution may be adjusted to take into account actual net after-tax cash flow from operations for thatyear.The declaration, payment and determination of the amount of our quarterly distribution will be at the sole discretion of our manager, which maychange our cash distribution policy at any time. We cannot assure you that any distributions, whether quarterly or otherwise, will or can be paid. In makingdecisions regarding our quarterly distribution, our manager will take into account general economic and business conditions, our strategic plans andprospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cashneeds, contractual restrictions and obligations, legal, tax and regulatory restrictions, restrictions and other implications on the payment of distributions by usto our common shareholders or by our subsidiaries to us and such other factors as our manager may deem relevant.Because we are a holding company that owns intermediate holding companies, the funding of each distribution, if declared, will occur in three steps,as follows.•First, we will cause one or more entities in the Apollo Operating Group to make a distribution to all of its partners, including ourwholly-owned subsidiaries APO Corp., APO Asset Co., LLC, APO (FC), LLC and APO (FC II), LLC (as applicable), and Holdings, on apro rata basis;•Second, we will cause our intermediate holding companies, APO Corp., APO Asset Co., LLC, APO (FC), LLC and APO (FC II), LLC(as applicable), to distribute to us, from their net after-tax proceeds, amounts equal to the aggregate distribution we have declared;and•Third, we will distribute the proceeds received by us to our Class A shareholders on a pro rata basis.Payments that any of our intermediate holding companies make under the tax receivable agreement will reduce amounts that would otherwise beavailable for distribution by us on our Class A shares. See note 17 to our consolidated financial statements.Under Delaware law we are prohibited from making a distribution to the extent that our liabilities, after such distribution, exceed the fair value of ourassets. Our operating agreement does not contain any restrictions on our ability to make distributions, except that we may only distribute Class A shares toholders of Class A shares. The debt arrangements, as described in note 14 to our consolidated financial statements, do not contain restrictions on our or oursubsidiaries' ability to pay distributions; however, instruments governing indebtedness that we or our subsidiaries incur in the future may contain restrictionson our or our subsidiaries' ability to pay distributions or make other cash distributions to equity holders.In addition, the Apollo Operating Group’s cash flow from operations may be insufficient to enable it to make tax distributions to its partners, inwhich case the Apollo Operating Group may have to borrow funds or sell assets, and thus our liquidity and financial condition could be materially adverselyaffected. Furthermore, by paying cash distributions rather than investing that cash in our businesses, we might risk slowing the pace of our growth, or nothaving a sufficient amount of cash to fund our operations, new investments or unanticipated capital expenditures, should the need arise.Our cash distribution policy has certain risks and limitations, particularly with respect to liquidity. Although we expect to pay distributionsaccording to our cash distribution policy, we may not pay distributions according to our policy, or at all, if, among other things, we do not have the cashnecessary to pay the intended distributions.As of December 31, 2014, approximately 22.4 million RSUs granted to Apollo employees (net of forfeited awards) were entitled to distributionequivalents, which are paid in cash.Securities Authorized for Issuance Under Equity Compensation PlansSee the table under “Securities Authorized for Issuance Under Equity Compensation Plans” set forth in “Item 12. Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.”Unregistered Sale of Equity SecuritiesOn October 9, 2014, November 4, 2014 and November 12, 2014, we issued 711,805, 2,319,139 and 2,950 Class A shares, net of taxes, to ApolloManagement Holdings, L.P., respectively, for an aggregate purchase price of $16,912,487, $52,435,733 and $69,178, respectively. The issuances wereexempt from registration under the Securities Act in accordance with Section 4(a)(2) and Rule 506(b) thereof, as transactions by the issuer not involving apublic offering. We determined that the purchaser of Class A shares in the transactions, Apollo Management Holdings, L.P., was an accredited investor.- 65- Table of ContentsClass A Shares Repurchases in the Fourth Quarter of 2014No purchases of our Class A shares were made by us or on our behalf in the fourth quarter of the year ended December 31, 2014.ITEM 6. SELECTED FINANCIAL DATAThe following selected historical consolidated and combined financial and other data of Apollo Global Management, LLC should be read togetherwith “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and relatednotes included in “Item 8. Financial Statements and Supplementary Data.”The selected historical consolidated statements of operations data of Apollo Global Management, LLC for each of the years ended December 31,2014, 2013 and 2012 and the selected historical consolidated statements of financial condition data as of December 31, 2014 and 2013 have been derivedfrom our audited consolidated financial statements which are included in “Item 8. Financial Statements and Supplementary Data.”We derived the selected historical consolidated statements of operations data of Apollo Global Management, LLC for the years ended December 31,2011 and 2010 and the selected consolidated statements of financial condition data as of December 31, 2012, 2011 and 2010 from our audited consolidatedfinancial statements which are not included in this report. - 66- Table of Contents Year Ended December 31, 2014 2013 2012 2011 2010 (in thousands, except per share amounts)Statement of Operations Data Revenues: Advisory and transaction fees from affiliates, net$315,587 $196,562 $149,544 $81,953 $79,782Management fees from affiliates850,441 674,634 580,603 487,559 431,096Carried interest income (loss) from affiliates394,055 2,862,375 2,129,818 (397,880) 1,599,020Total Revenues1,560,083 3,733,571 2,859,965 171,632 2,109,898Expenses: Compensation and benefits: Equity-based compensation126,320 126,227 598,654 1,149,753 1,118,412Salary, bonus and benefits338,049 294,753 274,574 251,095 249,571Profit sharing expense276,190 1,173,255 872,133 (60,070) 575,367Total Compensation and Benefits740,559 1,594,235 1,745,361 1,340,778 1,943,350Interest expense22,393 29,260 37,116 40,850 35,436Professional fees82,030 83,407 64,682 59,277 61,919General, administrative and other97,663 98,202 87,961 75,558 65,107Placement fees15,422 42,424 22,271 3,911 4,258Occupancy40,427 39,946 37,218 35,816 23,067Depreciation and amortization45,069 54,241 53,236 26,260 24,249Total Expenses1,043,563 1,941,715 2,047,845 1,582,450 2,157,386Other Income: Net gains (losses) from investment activities213,243 330,235 288,244 (129,827) 367,871Net gains (losses) from investment activities of consolidatedvariable interest entities22,564 199,742 (71,704) 24,201 48,206Income from equity method investments53,856 107,350 110,173 13,923 69,812Interest income10,392 12,266 9,693 4,731 1,528Other income, net60,592 40,114 1,964,679 205,520 195,032Total Other Income360,647 689,707 2,301,085 118,548 682,449Income (loss) before income tax provision877,167 2,481,563 3,113,205 (1,292,270) 634,961Income tax provision(147,245) (107,569) (65,410) (11,929) (91,737)Net Income (Loss)729,922 2,373,994 3,047,795 (1,304,199) 543,224Net (income) loss attributable to Non-Controlling Interests(1)(2)(561,693) (1,714,603) (2,736,838) 835,373 (448,607)Net Income (Loss) Attributable to Apollo GlobalManagement, LLC$168,229 $659,391 $310,957 $(468,826) $94,617Distributions Declared per Class A Share$3.11 $3.95 $1.35 $0.83 $0.21Net Income (Loss) Available to Class A Share – Basic$0.62 $4.06 $2.06 $(4.18) $0.83Net Income (Loss) Available to Class A Share –Diluted$0.62 $4.03 $2.06 $(4.18) $0.83 As of December 31, 2014 2013 2012 2011 2010 (in thousands)Statement of Financial Condition Data Total assets$23,178,837 $22,477,981 $20,636,858 $7,975,873 $6,552,372Debt (excluding obligations of consolidated variable interest entities)1,034,014 750,000 737,818 738,516 751,525Debt obligations of consolidated variable interest entities14,123,100 12,423,962 11,834,955 3,189,837 1,127,180Total shareholders’ equity5,943,461 6,688,722 5,703,383 2,648,321 3,081,419Total Non-Controlling Interests4,156,979 4,051,453 3,036,565 1,921,920 2,930,517 (1)Reflects Non-Controlling Interests attributable to AAA, consolidated variable interest entities and the remaining interests held by certain individuals who receive anallocation of income from certain of our credit management companies.- 67- Table of Contents(2)Reflects the Non-Controlling Interests in the net (income) loss of the Apollo Operating Group relating to the AOG Units held by our Managing Partners and ContributingPartners which is calculated by applying the ownership percentage of Holdings in the Apollo Operating Group. Holdings' ownership interest in the Apollo OperatingGroup was impacted by the Company’s initial public offering in April 2011, issuances of Class A shares in settlement of vested RSUs in each of the periods presented, andexchanges of certain AOG Units. See “Item 8. Financial Statements and Supplementary Data” for details of the ownership percentage in Holdings.ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion should be read in conjunction with Apollo Global Management, LLC’s consolidated financial statements and the related notes asof December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012. This discussion contains forward-looking statements that aresubject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied insuch forward-looking statements due to a number of factors, including those included in the section of this report entitled "Item 1A. Risk Factors." Thehighlights listed below have had significant effects on many items within our consolidated financial statements and affect the comparison of the currentperiod’s activity with those of prior periods.GeneralOur BusinessesFounded in 1990, Apollo is a leading global alternative investment manager. We are a contrarian, value-oriented investment manager in privateequity, credit and real estate with significant distressed expertise and a flexible mandate in the majority of our funds which enables our funds to investopportunistically across a company’s capital structure. We raise, invest and manage funds on behalf of some of the world’s most prominent pension,endowment and sovereign wealth funds as well as other institutional and individual investors. Apollo is led by our Managing Partners, Leon Black, JoshuaHarris and Marc Rowan, who have worked together for more than 24 years and lead a team of 845 employees, including 320 investment professionals, as ofDecember 31, 2014.Apollo conducts its management and incentive businesses primarily in the United States and substantially all of its revenues are generateddomestically. These businesses are conducted through the following three reportable segments:(i)Private equity—primarily invests in control equity and related debt instruments, convertible securities and distresseddebt instruments;(ii)Credit—primarily invests in non-control corporate and structured debt instruments; and(iii)Real estate—primarily invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios,platforms and operating companies, and real estate debt including first mortgage and mezzanine loans, preferred equityand commercial mortgage backed securities.These business segments are differentiated based on the varying investment strategies. The performance is measured by management on anunconsolidated basis because management makes operating decisions and assesses the performance of each of Apollo’s business segments based on financialand operating metrics and data that exclude the effects of consolidation of any of the managed funds.Our financial results vary since carried interest, which generally constitutes a large portion of the income we receive from the funds that wemanage, as well as the transaction and advisory fees that we receive, can vary significantly from quarter to quarter and year to year. As a result, we emphasizelong-term financial growth and profitability to manage our business.In addition, the growth in our Fee-Generating AUM during the last year has primarily been in our credit segment. The average management feerate for these new credit products is at market rates for such products and in certain cases is below our historical rates. Also, due to the complexity of thesenew product offerings, the Company has incurred and will continue to incur additional costs associated with managing these products. To date, theseadditional costs have been offset by realized economies of scale and ongoing cost management.As of December 31, 2014, approximately 96% of our total AUM was in funds with a contractual life at inception of seven years or more, and 45%of our total AUM was considered permanent capital.As of December 31, 2014, we had total AUM of $159.8 billion across all of our businesses. On December 31, 2013, Fund VIII held a final closingraising a total of $17.5 billion in third-party capital and approximately $880 million of additional- 68- Table of Contentscapital from Apollo and affiliated investors, and as of December 31, 2014, Fund VIII had $16.8 billion of uncalled commitments remaining. Additionally,Fund VII held a final closing in December 2008, raising a total of $14.7 billion, and as of December 31, 2014, Fund VII had $3.2 billion of uncalledcommitments remaining. We have consistently produced attractive long-term investment returns in our traditional private equity funds, generating a 39%gross IRR and a 25% net IRR on a compound annual basis from inception through December 31, 2014. For further detail related to fund performance metricsacross all of our businesses, see “—The Historical Investment Performance of Our Funds.”Holding Company StructureThe diagram below depicts our current organizational structure:Note: The organizational structure chart above depicts a simplified version of the Apollo structure. It does not include all legal entities in the structure. Ownership percentages are asof the date of the filing of this Annual Report on Form 10-K.(1)The Strategic Investors hold 26.79% of the Class A shares outstanding and 11.53% of the economic interests in the Apollo Operating Group. The Class A shares heldby investors other than the Strategic Investors represent 35.59% of the total voting power of our shares entitled to vote and 31.51% of the economic interests in theApollo Operating Group. Class A shares held by the Strategic Investors do not have voting rights. However, such Class A shares will become entitled to vote upontransfers by a Strategic Investor in accordance with the agreements entered into in connection with the investments made by the Strategic Investors.(2)Our Managing Partners own BRH Holdings GP, Ltd., which in turn holds our only outstanding Class B share. The Class B share represents 64.41% of the totalvoting power of our shares entitled to vote but no economic interest in Apollo Global Management, LLC. Our Managing Partners’ economic interests are insteadrepresented by their indirect beneficial ownership, through Holdings, of 50.48% of the limited partner interests in the Apollo Operating Group.(3)Through BRH Holdings, L.P., our Managing Partners indirectly beneficially own through estate planning vehicles, limited partner interests in Holdings.(4)Holdings owns 56.99% of the limited partner interests in each Apollo Operating Group entity ("AOG Units"). The AOG Units held by Holdings are exchangeable forClass A shares. Our Managing Partners, through their interests in BRH and Holdings, beneficially own 50.48% of the AOG Units. Our Contributing Partners,through their ownership interests in Holdings, beneficially own 6.51% of the AOG Units.- 69- Table of Contents(5)BRH Holdings GP, Ltd. is the sole member of AGM Management, LLC, our manager. The management of Apollo Global Management, LLC is vested in our manageras provided in our operating agreement.(6)Represents 43.01% of the limited partner interests in each Apollo Operating Group entity, held through intermediate holding companies. Apollo Global Management,LLC, also indirectly owns 100% of the general partner interests in each Apollo Operating Group entity.Each of the Apollo Operating Group partnerships holds interests in different businesses or entities organized in different jurisdictions.Our structure is designed to accomplish a number of objectives, the most important of which are as follows:•We are a holding company that is qualified as a partnership for U.S. federal income tax purposes. Our intermediateholding companies enable us to maintain our partnership status and to meet the qualifying income exception.•We have historically used multiple management companies to segregate operations for business, financial and otherreasons. Going forward, we may increase or decrease the number of our management companies or partnerships withinthe Apollo Operating Group based on our views regarding the appropriate balance between (a) administrativeconvenience and (b) continued business, financial, tax and other optimization.Business EnvironmentAs a global investment manager, we are affected by numerous factors, including the condition of financial markets and the economy. Pricefluctuations within equity, credit, commodity, foreign exchange markets, as well as interest rates, which may be volatile and mixed across geographies, cansignificantly impact the valuation of our funds' portfolio companies and related income we may recognize. In terms of equity markets, in the U.S., the S&P500 Index rose 4.4% in the fourth quarter of 2014, bringing the full year appreciation to 11.4%. Outside the U.S., global equity markets depreciated in thefourth quarter of 2014. The MSCI All Country World ex USA Index was down 4.2% in the fourth quarter of 2014, bringing the full year depreciation to 6.3%.Importantly, we believe that the generally positive momentum in the U.S. equity markets is conducive for continued equity capital markets activity,including IPOs and secondary offerings of the portfolio companies within our funds.Conditions in the credit markets also have a significant impact on our business. Credit indices declined in the fourth quarter of 2014, with theBofAML HY Master II Index down 1.1% and the S&P/LSTA Leveraged Loan Index down 0.5%. For the full year, however, the BofAML HY Master II Indexwas up 2.5% and the S&P/LSTA Leveraged Loan Index was up 1.6%. Benchmark interest rates continued the year's bearish descent in the fourth quarter. TheU.S. 10-year Treasury yield finished the quarter down 35 basis points and the year down more than 85 basis points from its starting point to 2.2%.Commodities generally saw price declines for the full year after a particularly weak fourth quarter that was driven by depreciation in oil. The price of crudeoil declined approximately 42% during the fourth quarter and 46% for the full year primarily due to oversupply dynamics.In terms of economic conditions in the U.S., the Bureau of Economic Analysis reported that real GDP increased at an annual rate of 2.6% in thefourth quarter of 2014 due to increasing consumer spending, despite decreasing government spending, slowing exports, and slowing business investment. Forthe full year 2014, the BEA reported that real GDP increased at an annual rate of 2.4%. As of January 2015, The International Monetary Fund estimated thatthe U.S. economy will expand by 3.6% in 2015. Additionally, the U.S. unemployment rate continued to decline and stood at 5.6% as of December 31, 2014,compared to 5.9% as of September 30, 2014, making it the lowest level since July 2008.Amid the generally favorable backdrop of elevated asset prices and positive equity market momentum, Apollo continued to generate realizationsfor fund investors. Apollo returned $5.7 billion and $16.4 billion of capital and realized gains to the limited partners of the funds it manages during thefourth quarter of 2014 and full year ended December 31, 2014, respectively. In general, institutional investors continue to allocate capital towards alternativeinvestment managers for more attractive risk-adjusted returns in a low interest rate environment. Apollo reported $1.0 billion and $9.9 billion of new capitalraised during the fourth quarter of 2014 and full year ended December 31, 2014, respectively.Regardless of the market or economic environment at any given time, Apollo relies on its contrarian, value-oriented approach to consistentlyinvest capital on behalf of its fund investors by focusing on opportunities that management believes are often overlooked by other investors. Apollo reported$2.8 billion and $10.0 billion of dollars invested during the fourth quarter of 2014 and full year ended December 31, 2014, respectively. We believe Apollo’sexpertise in credit and its focus on nine core industry sectors, combined with more than 20 years of investment experience, has allowed Apollo to respondquickly to changing environments. Apollo’s core industry sectors include chemicals, natural resources, consumer and retail, distribution and transportation,financial and business services, manufacturing and industrial, media and cable and leisure, packaging and materials and the satellite and wireless industries.Apollo believes that these attributes have contributed to the success of its private equity funds investing in buyouts and credit opportunities during bothexpansionary and recessionary economic periods.Managing Business PerformanceWe believe that the presentation of Economic Net Income (Loss) supplements a reader’s understanding of the economic operating performance ofeach of our segments.Economic Net Income (Loss)Economic Net Income, or ENI, is a key performance measure used by management in evaluating the performance of Apollo’s private equity,credit and real estate segments. Management also believes the components of ENI such as the amount of management fees, advisory and transaction fees andcarried interest income are indicative of Apollo’s performance. Management uses these performance measures in making key operating decisions such as thefollowing: — Decisions related to the allocation of resources such as staffing decisions including hiring and locations for deploymentof the new hires; — Decisions related to capital deployment such as providing capital to facilitate growth for the business and/or to facilitateexpansion into new businesses; and — Decisions related to expenses, such as determining annual discretionary bonuses and equity-based compensation awardsto our employees. With respect to compensation, management seeks to align the interests of certain professionals andselected other individuals with those of the investors in the funds and those of Apollo's shareholders by providing suchindividuals a profit sharing interest in the carried interest income earned in relation to the funds. To achieve thatobjective, a certain amount of compensation is based on Apollo's performance and growth for the year.ENI has certain limitations in that it does not take into account certain items included under U.S. GAAP. ENI represents segment income (loss)attributable to Apollo Global Management, LLC, which excludes the impact of (i) non-cash charges related to restricted share units ("RSUs") granted inconnection with the 2007 private placement and amortization of AOG Units, (ii) income tax expense, (iii) amortization of intangibles associated with the2007 Reorganization as well as acquisitions, (iv) Non-Controlling Interests (excluding the remaining interest held by certain individuals who receive anallocation of income from certain of our credit management companies) and (v) non-cash revenue and expense related to equity awards granted byunconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the funds and VIEsthat are included in the consolidated financial statements as such carried interest income, management fees and other revenues from these consolidatedentities are reflected on an unconsolidated basis. Adjustments relating to income tax expense, intangible asset amortization and Non-Controlling Interests arecommon in the calculation of supplemental measures of performance in our industry. We believe the exclusion of the non-cash charges related to the 2007Reorganization for equity-based compensation provides investors with a meaningful indication of our performance because these charges relate to the equityportion of our capital structure and not our core operating performance.We believe that ENI is helpful for an understanding of our business and that investors should review the same supplemental financial measurethat management uses to analyze our segment performance. This measure supplements and should be considered in addition to and not in lieu of the resultsof operations discussed below in "—Overview of Results of Operations" that have been prepared in accordance with U.S. GAAP.ENI may not be comparable to similarly titled measures used by other companies and is not a measure of performance calculated in accordancewith U.S. GAAP. We use ENI as a measure of operating performance, not as a measure of liquidity. ENI should not be considered in isolation or as a substitutefor operating income, net income, operating cash flows, investing and financing activities, or other income or cash flow statement data prepared inaccordance with U.S. GAAP. The use of ENI without consideration of related U.S. GAAP measures is not adequate due to the adjustments described above.Management compensates for these limitations by using ENI as a supplemental measure to U.S. GAAP results, to provide a more complete understanding ofour performance as management measures it. A reconciliation of ENI to our U.S. GAAP net income (loss) attributable to Apollo Global Management, LLC canbe found in the notes to our consolidated financial statements.- 70- Table of ContentsOperating MetricsWe monitor certain operating metrics that are common to the alternative investment management industry. These operating metrics includeAssets Under Management, private equity dollars invested and uncalled private equity commitments.Assets Under ManagementAssets Under Management, or AUM, refers to the assets we manage for the funds, partnerships and accounts to which we provide investmentmanagement services, including, without limitation, capital that such funds, partnerships and accounts have the right to call from investors pursuant tocapital commitments. Our AUM equals the sum of:(i)the fair value of the investments of the private equity funds, partnerships and accounts we manage plus the capitalwhich such funds, partnerships and accounts are entitled to call from investors pursuant to capital commitments;(ii)the net asset value ("NAV") of the credit funds, partnerships and accounts for which we provide investmentmanagement services, other than certain CLOs and CDOs, which have a fee generating basis other than the mark-to-market value of the underlying assets, plus used or available leverage and/or capital which such funds, partnershipsand accounts are entitled to call from investors pursuant to capital commitments;(iii)the gross asset value or net asset value of the real estate funds, partnerships and accounts we manage, and thestructured portfolio company investments of the funds, partnerships and accounts we manage, which includes theleverage used by such structured portfolio company investments;(iv)the incremental value associated with the reinsurance investments of the portfolio company assets we manage; and(v)the fair value of any other assets that we manage for the funds, partnerships and accounts to which we provideinvestment management services, plus unused credit facilities, including capital commitments to such funds,partnerships and accounts for investments that may require pre-qualification before investment plus any other capitalcommitments to such funds, partnerships and accounts available for investment that are not otherwise included in theclauses above.Our AUM measure includes Assets Under Management for which we charge either no or nominal fees. Our definition of AUM is not based on anydefinition of Assets Under Management contained in our operating agreement or in any of our Apollo fund management agreements. We consider multiplefactors for determining what should be included in our definition of AUM. Such factors include but are not limited to (1) our ability to influence theinvestment decisions for existing and available assets; (2) our ability to generate income from the underlying assets in our funds; and (3) the AUM measuresthat we believe are used by other investment managers. Given the differences in the investment strategies and structures among other alternative investmentmanagers, our calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may not be directlycomparable to similar measures presented by other investment managers.We use AUM as a performance measure of our investment activities, as well as to monitor fund size in relation to professional resource andinfrastructure needs.Assets Under Management—Fee-Generating/Non-Fee GeneratingFee-Generating AUM consists of assets we manage for the funds, partnerships and accounts to which we provide investment management servicesand on which we earn management fees or monitoring fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds,partnerships and accounts we manage. Management fees are normally based on “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted cost ofall unrealized portfolio investments,” “capital commitments,” “adjusted assets,” “stockholders’ equity,” “invested capital” or “capital contributions,” each asdefined in the applicable management agreement. Monitoring fees, also referred to as advisory fees, with respect to the investments of the funds, partnershipsand accounts we manage, are generally based on the total value of such structured portfolio company investments, which normally includes leverage, lessany portion of such total value that is already considered in Fee-Generating AUM.- 71- Table of ContentsNon-Fee Generating AUM consists of assets that do not produce management fees or monitoring fees. These assets generally consist of thefollowing: (a) fair value above invested capital for those funds that earn management fees based on invested capital, (b) net asset values related to generalpartner and co-investment ownership, (c) unused credit facilities, (d) available commitments on those funds that generate management fees on investedcapital, (e) structured portfolio company investments that do not generate monitoring fees and (f) the difference between gross asset and net asset value forthose funds that earn management fees based on net asset value.Carry Eligible AUM refers to the AUM that may eventually produce carried interest income. All funds for which we are entitled to receive acarried interest income allocation are included in Carry Eligible AUM, which consists of the following:(i)Carry Generating AUM, which refers to funds' invested capital that is currently above its hurdle rate or preferredreturn, and the funds' profit is allocated to the general partner in accordance with the applicable limited partnershipagreements or other governing agreements;(ii)AUM Not Currently Generating Carry, which refers to funds' invested capital that is currently below its hurdle rate orpreferred return; and(iii)Uninvested Carry Eligible AUM, which refers to available capital for investment or reinvestment subject to theprovisions of applicable limited partnership agreements or other governing agreements that are not currently part ofthe NAV or fair value of investments that may eventually produce carried interest income, which would be allocatedto the general partner.AUM with Future Management Fee Potential refers to the committed uninvested capital portion of total AUM not currently earning managementfees. The amount depends on the specific terms and conditions of each fund.We use Non-Fee Generating AUM combined with Fee-Generating AUM as a performance measure of our funds' investment activities, as well as tomonitor fund size in relation to professional resource and infrastructure needs. Non-Fee Generating AUM includes assets on which we could earn carriedinterest income.The table below presents Fee-Generating and Non-Fee Generating AUM by segment as of December 31, 2014, 2013 and 2012. Changes in marketconditions and additional funds raised have had significant impacts to Apollo's AUM: As of December 31, 2014 2013 2012 (in millions) Total Assets Under Management$159,797(1) $161,177(1) $113,379(1) Fee-Generating128,714 128,368 81,934 Non-fee generating31,083(1) 32,809(1) 31,445(1) Private Equity41,049 49,908 37,832 Fee-Generating30,285 34,173 27,932 Non-Fee generating10,764 15,735 9,900 Credit108,445 100,886 64,406 Fee-Generating92,192 88,249 49,518 Non-Fee-Generating16,253 12,637 14,888 Real Estate9,538 9,289 8,800(2) Fee-Generating6,237 5,946 4,484(2) Non-Fee-Generating3,301 3,343 4,316(2) (1)As of December 31, 2014, 2013 and 2012, includes $0.8 billion, $1.1 billion and $2.3 billion of commitments, respectively, that have yet to be deployed to an Apollofund within Apollo's three segments.- 72- Table of Contents(2)Includes Fee-Generating and Non-Fee Generating AUM as of September 30, 2012 for certain publicly traded vehicles managed by Apollo.The table below sets forth AUM with Future Management Fee Potential for each of Apollo's three segments, which is a component of Non-FeeGenerating AUM, as of December 31, 2014, 2013 and 2012. As of December 31, 2014 2013 2012 (in millions) Private Equity$1,793 $4,225 $1,158 Credit4,608 3,312 2,916 Real Estate623 640 1,051 Total AUM with Future Management Fee Potential$7,785(1) $9,246(1) $7,465(1) (1)As of December 31, 2014, 2013 and 2012, includes $0.8 billion, $1.1 billion and $2.3 billion of commitments, respectively, that have yet to be deployed to an Apollofund within Apollo's three segments.The following table presents Carry Eligible AUM and Carry Generating AUM for each of Apollo's three segments as of December 31, 2014, 2013and 2012: Carry Eligible AUM Carry Generating AUM As of December 31, As of December 31, 2014 2013 2012 2014 2013 2012 (in millions) Private equity$36,128 $45,050 $36,869 $14,463 $24,791 $28,728Credit38,502 34,580 34,461 16,218 23,539 23,693Real estate2,614 3,041 3,312 828 941 396Total(1)(2)$78,003 $83,729 $76,979 $31,509 $49,271 $52,817 (1)As of December 31, 2014, 2013 and 2012, Carry Eligible AUM includes $0.8 billion, $1.1 billion and $2.3 billion of commitments, respectively, that have yet to bedeployed to an Apollo fund within Apollo's three segments.(2)As of December 31, 2014, 2013 and 2012, Carry Eligible AUM includes $28.8 billion, $28.7 billion and $16.5 billion of Uninvested Carry Eligible AUM, respectively,and $17.7 billion, $5.8 billion and $7.7 billion of AUM Not Currently Generating Carry, respectively.The components of Fee-Generating AUM by segment as of December 31, 2014, 2013 and 2012 are presented below: As of December 31, 2014 PrivateEquity Credit RealEstate Total (in millions)Fee-Generating AUM based on capital commitments$20,080 $6,191 $173 $26,444Fee-Generating AUM based on invested capital9,368 3,100 3,968 16,436Fee-Generating AUM based on gross/adjusted assets513 75,370 1,961 77,844Fee-Generating AUM based on leverage324 215 — 539Fee-Generating AUM based on NAV— 7,316 135 7,451Total Fee-Generating AUM$30,285(1) $92,192 $6,237 $128,714 (1)The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, 2014was 72 months.- 73- Table of Contents As of December 31, 2013 PrivateEquity Credit RealEstate Total (in millions)Fee-Generating AUM based on capital commitments$19,630 $5,834 $156 $25,620Fee-Generating AUM based on invested capital11,923 1,649 3,753 17,325Fee-Generating AUM based on gross/adjusted assets925 72,202 1,769 74,896Fee-Generating AUM based on leverage1,695 1,587 — 3,282Fee-Generating AUM based on NAV— 6,977 268 7,245Total Fee-Generating AUM$34,173(1) $88,249 $5,946 $128,368 (1)The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, 2013was 75 months. As of December 31, 2012 PrivateEquity Credit RealEstate Total (in millions)Fee-Generating AUM based on capital commitments$15,854 $5,156 $194 $21,204Fee-Generating AUM based on invested capital7,613 3,124 1,866 12,603Fee-Generating AUM based on gross/adjusted assets855 31,599 2,134 34,588Fee-Generating AUM based on leverage3,610 3,101 — 6,711Fee-Generating AUM based on NAV— 6,538 290 6,828Total Fee-Generating AUM$27,932(1) $49,518 $4,484 $81,934 (1)The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, 2012was 61 months.- 74- Table of ContentsThe following table presents total AUM and Fee-Generating AUM amounts for our private equity segment by strategy: Total AUM Fee-Generating AUM As of December 31, As of December 31, 2014 2013 2012 2014 2013 2012 (in millions) Traditional Private Equity Funds (1)$35,310 $46,998(2) $35,617(2) $27,181 $31,929(2) $25,706(2) Natural Resources1,348 1,367 1,284 1,295 1,295 1,295 Other (3)4,391 1,543(2) 931(2) 1,809 949(2) 931(2) Total$41,049 $49,908 $37,832 $30,285 $34,173 $27,932 (1)Refers to Fund I, Fund II, MIA, Fund III, Fund IV, Fund V, Fund VI, Fund VII and Fund VIII.(2)Reclassified to conform with current presentation.(3)Includes co-investments contributed to Athene by AAA, through its investment in AAA Investments as discussed in note 17 of the consolidated financial statements.The following table presents total AUM and Fee-Generating AUM amounts for our credit segment by strategy: Total AUM Fee-Generating AUM As of December 31, As of December 31, 2014 2013 2012 2014 2013 2012 (in millions)Athene(1)$47,713 $50,345 $10,970 $47,713 $50,345 $10,845U.S. Performing Credit24,882 22,177 27,509 20,031 17,510 20,567Structured Credit15,999 12,779 11,436 10,966 9,362 7,589Opportunistic Credit10,756 7,068 6,177 6,613 4,763 4,722Non-Performing Loans4,976 5,688 6,404 3,744 4,330 4,527European Credit4,119 2,829 1,910 3,125 1,939 1,268Total$108,445 $100,886 $64,406 $92,192 $88,249 $49,518 (1)Excludes AUM that is either sub-advised by Apollo or invested in Apollo funds and investment vehicles across its private equity, credit and real estate funds.The following table presents total AUM and Fee-Generating AUM amounts for our real estate segment by strategy: Total AUM Fee-Generating AUM As of December 31, As of December 31, 2014 2013 2012 2014 2013 2012 (in millions)Debt$6,420 $5,731 $4,826 $4,785 $3,701 $2,332Equity3,118 3,558 3,974 1,452 2,245 2,152Total$9,538 $9,289 $8,800 $6,237 $5,946 $4,484- 75- Table of ContentsThe following tables summarize changes in total AUM for each of Apollo's three segments for years ended December 31, 2014, 2013 and 2012: For the Year Ended December 31, 2014 2013 2012 Change in Total AUM: Beginning of Period$161,177(1) $113,379(1) $75,222 Income2,473 15,150 12,038 Subscriptions/Capital raised9,862(2) 22,142 9,688 Other inflows/Acquisitions— 43,832 23,629 Distributions(16,382) (22,641) (10,858) Redemptions(718) (1,508) (1,221) Leverage/Other(3)3,385 (9,177) 4,881 End of Period$159,797(1) $161,177(1) $113,379(1) Change in Private Equity AUM: Beginning of Period$49,908 $37,832 $35,384 Income561 10,656 8,108 Subscriptions/Capital raised3,041(2) 17,613 662 Distributions(11,372) (15,620) (6,537) Redemptions(4) — (176) — Net segment transfers(1,216) 2,133 317 Leverage127 (2,530) (102) End of Period$41,049 $49,908 $37,832 Change in Credit AUM: Beginning of Period$100,886 $64,406 $31,867 Income1,747 4,082 3,274 Subscriptions/Capital raised6,128(2) 3,439 5,504 Other inflows/Acquisitions— 43,832 23,629 Distributions(3,457) (5,458) (3,197) Redemptions(583) (1,042) (948) Net segment transfers216 (2,056) (1,023) Leverage/Other(3)3,508 (6,317) 5,300 End of Period$108,445 $100,886 $64,406 Change in Real Estate AUM: Beginning of Period$9,289 $8,800 $7,971 Income244 399 656 Subscriptions/Capital raised693 1,090 475 Distributions(1,553) (1,559) (1,124) Redemptions(4)(135) (290) (273) Net segment transfers1,250 1,179 1,412 Leverage(250) (330) (317) End of Period$9,538 $9,289 $8,800 (1)As of December 31, 2014, 2013 and 2012, includes $0.8 billion, $1.1 billion, and $2.3 billion of commitments, respectively, that have yet to be deployed to an Apollo fundwithin Apollo's three segments.(2)For the year ended December 31, 2014, includes $2.5 billion of AUM from co-investment vehicles that was raised in prior periods.(3)Represents changes in used and available leverage, and includes the changes in NAV on AUM managed by Athene Asset Management that is not sub-advised by Apollo.(4)Represents release of unfunded commitments primarily related to Fund III in our private equity segment and two legacy CPI real estate funds in our real estate segment that werepast their investment periods.- 76- Table of ContentsPrivate EquityDuring the year ended December 31, 2014, total AUM in our private equity segment decreased by $8.9 billion, or 17.8%. This decrease was aresult of distributions of $11.4 billion primarily attributable to Fund VII and Apollo Investment Fund VI, L.P. ("Fund VI") of $6.4 billion and $3.7 billion,respectively. In addition there were transfers out of $1.2 billion. These decreases were offset by $0.6 billion of income that was primarily attributable tounrealized gains in Fund VII of $1.6 billion offset by unrealized losses in Fund VI and co-investment vehicles, of $0.6 billion and $0.6 billion, respectively,and an increase in subscriptions of $3.0 billion primarily attributable to co-investment vehicles that were raised in prior periods.During the year ended December 31, 2013, the AUM in our private equity segment increased by $12.1 billion, or 31.9%. This increase was aresult of subscriptions of $17.5 billion in Fund VIII and $10.7 billion of income from improved unrealized gains, including $5.9 billion from Fund VII and$4.3 billion from Fund VI. Offsetting this increase was $15.6 billion of distributions, including $8.7 billion from Fund VII and $5.8 billion from Fund VI, and$2.5 billion of decreased leverage.During the year ended December 31, 2012, the total AUM in our private equity segment increased by $2.4 billion, or 6.9%. This increase wasprimarily a result of income of $8.1 billion attributable to improved unrealized gains in our private equity funds, including $4.5 billion from Fund VII and$3.1 billion from Fund VI. In addition, contributing to this increase was an additional $0.7 billion in subscriptions from AION and ANRP. Offsetting thisincrease was $6.5 billion in distributions, including $3.7 billion from Fund VII and $2.1 billion from Fund VI.CreditDuring the year ended December 31, 2014, total AUM in our credit segment increased by $7.6 billion, or 7.5%. This increase was a result ofsubscriptions of $6.1 billion, $3.5 billion of leverage, $1.7 billion of income and $0.2 billion in net segment transfers. Included in subscriptions was $2.5billion in COF III, $0.5 billion in FCI II, $0.4 billion in Apollo Structured Credit Recovery Master Fund III, L.P. ("ACRF III") and $0.4 billion from ApolloInvestment Europe III, L.P. (“AIE III”). These increases were offset by $3.5 billion of distributions including $1.1 billion and $0.4 billion from ApolloEuropean Principal Finance Fund, L.P. ("EPF I") and Apollo Credit Opportunity Fund I, L.P. ("COF I"), respectively and $0.6 billion in redemptions.During the year ended December 31, 2013, AUM in our credit segment increased by $36.5 billion, or 56.6%. This increase consisted of $43.8billion in acquisitions related to the acquisition of Aviva USA by Athene Holding, $4.1 billion in unrealized gains, subscriptions of $3.4 billion, including$0.9 billion in FCI II and $0.6 billion in COF III. This increase in AUM was partially offset by a decrease in leverage of $6.3 billion, including $1.0 billion inthe U.S. performing credit strategy from net CLO vehicle wind-downs, $1.3 billion in Apollo Credit Opportunity Fund II, L.P. ("COF II"), and $0.8 billion inAMTG, and $5.5 billion in distributions, including $1.9 billion from COF I, $0.6 billion from EPF I and $1.1 billion from COF II.During the year ended December 31, 2012, total AUM in our credit segment increased by $32.5 billion, or 102.1%. This increase was primarilyattributable to $18.5 billion in acquisitions related to Stone Tower Capital LLC and its related management companies ("Stone Tower"), $5.1 billion in otherinflows related to Athene and $5.3 billion in increased leverage, including $3.4 billion from AMTG. The increase was also a result of $5.5 billion ofadditional subscriptions, including $3.0 billion by EPF II, $0.6 billion by Apollo Centre Street Partnership, L.P. (“ACSP”) and $0.4 billion by AMTG. Thisincrease was partially offset by $3.2 billion of distributions, including $1.5 billion collectively from COF I and COF II and $0.3 billion from EPF I.Real EstateDuring the year ended December 31, 2014, total AUM in our real estate segment increased by $0.2 billion, or 2.7%, this was the result of $1.3billion of net segment transfers in primarily related to the Athene Accounts, $0.7 billion of subscriptions, including $0.4 billion related to AGRE Debt FundI, L.P. and $0.2 billion related to ARI, and $0.2 billion of income. These increases were partially offset by $1.6 billion of distributions, of which $0.4 billionwas attributable to the Athene Accounts, $0.3 billion was attributable to CPI Capital Partners Europe, L.P., and $0.2 billion was attributable to AGRE 2011A-4 Fund, LP ("CMBS II"), and a $0.3 billion decrease in leverage.During the year ended December 31, 2013, AUM in our real estate segment increased by $0.5 billion, or 5.5%. This increase was the result of $1.2billion in net segment transfers in, including $0.6 billion from Athene Accounts related to subordinate commercial real estate loans ("Athene CRE Lending")and $0.5 billion from Athene Accounts related to commercial mortgage backed securities, $1.1 billion in subscriptions, including $0.7 billion in AGRE DebtFund I, L.P. and $0.3 billion in ARI. These increases were partially offset by distributions of $1.6 billion, including $0.4 billion from Athene CRE Lendingand $0.4 billion from CPI Capital Partners Asia Pacific, L.P.- 77- Table of ContentsDuring the year ended December 31, 2012, total AUM in our real estate segment increased by $0.8 billion, or 10.4%. This increase was primarilya result of $1.4 billion in net transfers from other segments and additional subscriptions of $0.5 billion. Also contributing to this increase was income of $0.7billion attributable to improved unrealized gains in our real estate funds, including $0.4 billion from CPI Capital Partners North America L.P., CPI CapitalPartners Europe L.P., CPI Capital Partners Asia Pacific, L.P. (collectively, the "CPI Funds"). Partially offsetting this increase was $1.1 billion in distributions,including $0.8 billion from the CPI Funds.- 78- Table of ContentsThe following tables summarize changes in total Fee-Generating AUM for each of Apollo's three segments for the years ended December 31,2014, 2013, and 2012 : For the Year Ended December 31, 2014 2013 2012 Change in Total Fee-Generating AUM: Beginning of Period$128,368 $81,934 58,121 Income350 2,100 1,390 Subscriptions/Capital raised3,352 21,104 5,873 Other inflows/Acquisitions— 43,832—21,277 Distributions(6,184) (7,517) (3,728) Redemptions(475) (946) (909) Net movements between Fee-Generating and Non-Fee Generating609 (6,215) (564) Leverage/Other(1)2,694 (5,924) 474 End of Period$128,714 $128,368 $81,934 Change in Private Equity Fee-Generating AUM: Beginning of Period$34,173 $27,932 $28,031 Income (Loss)(1) 398 285 Subscriptions/Capital raised455 17,582 644 Distributions(2,457) (3,430) (1,256) Redemptions— (19) — Net segment transfers(1,277) 482 50 Net movements between Fee-Generating and Non-Fee Generating(514) (6,858) 515 Leverage(94) (1,914) (337) End of Period$30,285 $34,173 $27,932 Change in Credit Fee-Generating AUM: Beginning of Period$88,249 $49,518 $26,553 Income377 1,630 988 Subscriptions/Capital raised2,261 2,504 4,953 Other inflows/Acquisitions— 43,832 21,277 Distributions(2,258) (3,118) (2,029) Redemptions(475) (927) (909) Net segment transfers129 (1,611) (1,096) Net movements between Fee-Generating and Non-Fee Generating1,121 431 (1,030) Leverage/Other(1)2,788 (4,010) 811 End of Period$92,192 $88,249 $49,518 Change in Real Estate Fee-Generating AUM: Beginning of Period$5,946 $4,484 $3,537 Income (Loss)(26) 72 117 Subscriptions/Capital raised636 1,018 276 Distributions(1,469) (969) (443) Net segment transfers1,148 1,129 1,045 Net movements between Fee-Generating and Non-Fee Generating2 212 (48) End of Period$6,237 $5,946 $4,484 (1)Represents changes in used and available leverage, and includes the changes in NAV on AUM managed by Athene Asset Management that is not sub-advised by Apollo.- 79- Table of ContentsPrivate EquityDuring the year ended December 31, 2014, Fee-Generating AUM in our private equity segment decreased by $3.9 billion, or 11.4%. Thisdecrease was a result of distributions of $2.5 billion from Fund VII, Fund VI and co-investment vehicles. In addition there were net segment transfers out of$1.3 billion attributable to Fund VI and Fund VII, and $0.5 billion of net transfers from fee generating AUM to Non-Fee Generating AUM from Fund V andFund VII. Offsetting these decreases were subscriptions of $0.5 billion.During the year ended December 31, 2013, Fee-Generating AUM in our private equity segment increased by $6.2 billion, or 22.3%. This increasewas a result of $17.6 billion of subscriptions, primarily from Fund VIII. Offsetting this increase was $6.9 billion of net transfers from Fee-Generating AUM toNon-Fee Generating AUM primarily attributable to Fund VII, $3.4 billion of distributions primarily attributable to Fund VII and Fund VI of $1.0 billion and$2.0 billion, respectively and $1.9 billion decrease in leverage primarily attributable to Fund VII.During the year ended December 31, 2012, Fee-Generating AUM in our private equity segment decreased by $0.1 billion, or 0.4%. This decreasewas a result of $1.3 billion of distributions from Fee-Generating AUM primarily attributable to Fund VI and Fund V of $0.8 billion and $0.3 billion,respectively. Offsetting this decrease was $0.6 billion of subscriptions in ANRP and AION of $0.5 billion and $0.2 billion, respectively and $0.3 billion ofunrealized gains.CreditDuring the year ended December 31, 2014, Fee-Generating AUM in our credit segment increased by $3.9 billion, or 4.5%. This increase was aresult of $2.8 billion of leverage, subscriptions of $2.3 billion attributable to FCI II of $0.5 billion and COF III of $0.4 billion, $1.1 billion of net transfers infrom Non-Fee Generating AUM, including $0.8 billion attributable to COF III and $0.4 billion of income. These increases were offset by $2.3 billion ofdistributions, including $0.4 billion from EPF I and $0.5 billion in redemptions, primarily from Apollo Credit Master Fund Ltd. ("ACF") of $0.3 billion.During the year ended December 31, 2013, Fee-Generating AUM in our credit segment increased by $38.7 billion, or 78.2%. This increaseconsisted of $43.8 billion in acquisitions related to the acquisition of Aviva USA by Athene Holding, a $2.5 billion increase in subscriptions attributable toFCI II and ACF of $0.9 billion and $0.3 billion, respectively, and unrealized gains of $1.6 billion. Offsetting this increase was $3.1 billion of distributions,attributable to COF I and COF II of $0.5 billion and $0.8 billion, respectively, a decrease in leverage of $4.0 billion and $1.6 billion of transfers out to Non-Fee Generating AUM.During the year ended December 31, 2012, Fee-Generating AUM in our credit segment increased by $22.9 billion, or 86.4%. This increase was aresult of $16.2 billion in acquisitions related to Stone Tower, $5.1 billion in other inflows related to Athene, and $5.0 billion of additional subscriptions,including $3.3 billion in EPF II and $0.3 billion in AMTG. Offsetting this increase was $2.0 billion of distributions, including $0.7 billion collectively fromCOF I and COF II and $0.9 billion of redemptions.Real EstateDuring the year ended December 31, 2014, Fee-Generating AUM in our real estate segment increased by $0.3 billion, or 4.9%, which wasprimarily the result of $1.1 billion of segment transfers in attributable to the Athene Accounts and $0.6 billion of subscriptions, including $0.4 billionattributable to AGRE Debt Fund I, L.P.. Offsetting these increases were $1.5 billion of distributions primarily attributable to the Athene Accounts, CPICapital Partners Europe, L.P. and CPI Capital Partners Asia Pacific, L.P. of $0.4 billion, $0.2 billion and $0.2 billion, respectively.During the year ended December 31, 2013, Fee-Generating AUM in our real estate segment increased by $1.5 billion, or 32.6%, which wasprimarily the result of $0.7 billion of capital invested by AGRE Debt Fund I, $0.3 billion of capital raised and invested by ARI, net segment transfers of $1.1billion attributable to the Athene Accounts and $0.2 billion of transfers in from Non-Fee Generating AUM. These increases were partially offset by $1.0billion of distributions of which $0.5 billion were attributable to the Athene Accounts.During the year ended December 31, 2012, Fee-Generating AUM in our real estate segment increased by $0.9 billion, or 26.7%, which wasprimarily the result of transfers of $0.9 billion attributable to the Athene Accounts and $0.3 billion of subscriptions. These increases were partially offset by$0.4 billion of distributions.- 80- Table of ContentsDollars Invested and Uncalled CommitmentsDollars invested is the aggregate amount of capital that has been invested by our multi-year drawdown, commitment-based funds and SIAs thathave a defined maturity date and for funds and SIAs in our real estate debt strategy. Uncalled commitments, by contrast, represents unfunded capitalcommitments that certain of Apollo’s funds and SIAs have received from fund investors to fund future or current investments and expenses.Dollars invested and uncalled commitments are indicative of the pace and magnitude of fund capital that is deployed or will be deployed, andwhich therefore could result in future revenues that include transaction fees and incentive income to the extent fee generating. Dollars invested and uncalledcommitments can also give rise to future costs that are related to the hiring of additional resources to manage and account for the additional capital that isdeployed or will be deployed. Management uses dollars invested and uncalled commitments as key operating metrics since we believe the results measureour investment activities.Dollars InvestedThe following table summarizes by segment the dollars invested for funds and SIAs with a defined maturity date and certain funds and SIAs in Apollo's realestate debt strategy during the specified reporting periods: For the Year Ended December 31, 2014 2013 2012 (in millions) Private equity$2,163 $2,561 $3,191 Credit5,174 2,865 1,835 Real Estate (1)2,686 2,534 1,627 Total dollars invested$10,023 $7,960 $6,653 (1)Included in dollars invested is $2,319.9 million, $2,177.3 million and $1,230.1 million for the years ended December 31, 2014, 2013, and 2012, respectively, for funds inApollo's real estate debt strategy.Uncalled CommitmentsThe following table summarizes the uncalled commitments by segment during the specified reporting periods: As of December 31, 2014 As of December 31, 2013 As of December 31, 2012 (in millions)Private equity$22,383 $23,689 $7,464Credit8,706 7,113 6,171Real Estate997 971 1,438Total uncalled commitments (1)(2)$32,841 $32,852 $17,428(1)As of December 31, 2014, 2013 and 2012, includes $0.8 billion, $1.1 billion and $2.3 billion of commitments, respectively, that have yet to be deployed to an Apollo fundwithin Apollo's three segments.(2)As of December 31, 2014, 2013 and 2012, $29.3 billion, $29.5 billion, and $16.4 billion, respectively, represents the amount of capital available for investment or reinvestmentsubject to the provisions of the applicable limited partnership agreements or other governing agreements.The Historical Investment Performance of Our FundsBelow we present information relating to the historical performance of our funds, including certain legacy Apollo funds that do not have ameaningful amount of unrealized investments, and in respect of which the general partner interest has not been contributed to us.When considering the data presented below, you should note that the historical results of our funds are not indicative of the future results thatyou should expect from such funds, from any future funds we may raise or from your investment in our Class A shares.An investment in our Class A shares is not an investment in any of the Apollo funds, and the assets and revenues of our funds are not directlyavailable to us. The historical and potential future returns of the funds we manage are not directly linked to returns on our Class A shares. Therefore, youshould not conclude that continued positive performance of the funds we manage- 81- Table of Contentswill necessarily result in positive returns on an investment in our Class A shares. However, poor performance of the funds that we manage would cause adecline in our revenue from such funds, and would therefore have a negative effect on our performance and in all likelihood the value of our Class A shares.There can be no assurance that any Apollo fund will continue to achieve the same results in the future.Moreover, the historical returns of our funds should not be considered indicative of the future results you should expect from such funds or fromany future funds we may raise, in part because:•market conditions during previous periods were significantly more favorable for generating positive performance,particularly in our private equity business, than the market conditions we have experienced for the last few years andmay experience in the future;•our private equity funds’ rates of return, which are calculated on the basis of net asset value of the funds’ investments,reflect unrealized gains, which may never be realized;•our funds’ returns have benefited from investment opportunities and general market conditions that may not repeatthemselves, including the availability of debt capital on attractive terms and the availability of distressed debtopportunities, and we may not be able to achieve the same returns or profitable investment opportunities or deploycapital as quickly;•the historical returns that we present are derived largely from the performance of our earlier private equity funds,whereas future fund returns will depend increasingly on the performance of our newer funds, which may have little orno realized investment track record;•Fund VIII, Fund VII and Fund VI are several times larger than our previous private equity funds, and this additionalcapital may not be deployed as profitably as our prior funds;•the attractive returns of certain of our funds have been driven by the rapid return of invested capital, which has notoccurred with respect to all of our funds and we believe is less likely to occur in the future;•our track record with respect to our credit and real estate funds is relatively short as compared to our private equityfunds;•in recent years, there has been increased competition for private equity investment opportunities resulting from theincreased amount of capital invested in private equity funds and periods of high liquidity in debt markets, which mayresult in lower returns for the funds; and•our newly established funds may generate lower returns during the period that they take to deploy their capital;consequently, we do not provide return information for any funds which have not been actively investing capital forat least 24 months prior to the valuation date as we believe this information is not meaningful.Finally, our private equity IRRs have historically varied greatly from fund to fund. For example, Apollo Investment Fund IV, L.P. ("Fund IV") hasgenerated a 12% gross IRR and a 9% net IRR since its inception through December 31, 2014, while Apollo Investment Fund V, L.P. ("Fund V") has generateda 61% gross IRR and a 44% net IRR since its inception through December 31, 2014. Accordingly, the IRR going forward for any current or future fund mayvary considerably from the historical IRR generated by any particular fund, or for our private equity funds as a whole. Future returns will also be affected bythe applicable risks, including risks of the industries and businesses in which a particular fund invests. See “Item 1A. Risk Factors—Risks Related to OurBusinesses—The historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results orof any returns expected on an investment in our Class A shares."- 82- Table of ContentsInvestment RecordThe following table summarizes the investment record by segment of Apollo's multi-year drawdown, commitment based funds and SIAs that have adefined maturity date in which investors make a commitment to provide capital at the formation of such funds and deliver capital when called as investmentopportunities become available. All amounts are as of December 31, 2014, unless otherwise noted: As of December 31, 2014 As of December 31, 2013 As of December 31, 2012 Strategy Vintage Year CommittedCapital Total InvestedCapital Realized Unrealized(1) TotalValue GrossIRR NetIRR GrossIRR NetIRR GrossIRR NetIRR (in millions) Private Equity:(2) Fund VIIITraditional PrivateEquity Funds 2013 $18,377 $1,266 $— $1,456 $1,456 NM(3) NM(3) NM(3) NM(3) N/A N/A Fund VIITraditional PrivateEquity Funds 2008 14,677 15,199 26,006 6,229 32,235 37% 28% 39% 30% 35% 26% Fund VITraditional PrivateEquity Funds 2006 10,136 12,457 16,339 5,116 21,455 13 11 15 12 11 9 Fund VTraditional PrivateEquity Funds 2001 3,742 5,192 12,666 215 12,881 61 44 61 44 61 44 Fund IVTraditional PrivateEquity Funds 1998 3,600 3,481 6,776 25 6,801 12 9 12 9 12 9 Fund IIITraditional PrivateEquity Funds 1995 1,500 1,499 2,695 — 2,695 18 11 18 11 18 11 Fund I, II & MIA(4)Traditional PrivateEquity Funds 1990/1992 2,220 3,773 7,924 — 7,924 47 37 47 37 47 37 Subtotal $54,252 $42,867 $72,406 $13,041 $85,447 39%(5) 25%(5) 39%(5) 26%(5) 39%(5) 25%(5) AIONOther 2013 825 134 9 160 169 NM(3) NM(3) NM(3) NM(3) NM(3) NM(3) ANRPNatural Resources 2012 1,323 692 191 675 866 18% 8% 18% 7%(3) NM(3) NM(3) Total Private Equity $56,400 $43,693 $72,606 $13,876 $86,482 Credit:(6) ACRF III (7)Structured Credit — $488 $254 $57 $213 $270 NM(3) NM(3) N/A N/A N/A N/A COF III (7)Opportunistic Credit — 3,426 1,579 222 1,222 1,444 NM(3) NM(3) NM(3) NM(3) N/A N/A FCI IIStructured Credit 2013 1,555 653 5 802 807 NM(3) NM(3) NM(3) NM(3) NM(3) NM(3) EPF II(8)Non-Performing Loans 2012 3,518 2,520 640 2,381 3,021 24% 11% NM(3) NM(3) NM(3) NM(3) FCIStructured Credit 2012 559 443 190 548 738 14 9 NM(3) NM(3) NM(3) NM(3) AECEuropean Credit 2012 292 625 532 177 709 12 7 19% 12% NM(3) NM(3) AIE II(8)European Credit 2008 250 805 1,206 79 1,285 20 17 20 17 19% 16% COF IU.S. Performing Credit 2008 1,485 1,611 4,285 123 4,408 30 27 30 27 31 28 COF IIU.S. Performing Credit 2008 1,583 2,176 2,989 147 3,136 14 11 14 11 14 12 EPF I(8)Non-Performing Loans 2007 1,567 2,059 2,863 574 3,437 24 17 21 16 19 12 ACLFU.S. Performing Credit 2007 984 1,449 2,448 136 2,584 13 11 13 11 13 11 Total Credit $15,707 $14,174 $15,437 $6,402 $21,839 Real Estate:(6) Apollo U.S. Real Estate Fund II,L.P. (7)Equity — $158 $39 $— $39 $39 NM(3) NM(3) N/A N/A N/A N/A AGRE U.S. Real Estate Fund,L.P(9)Equity 2012 864 615 312 488 800 19% 15% 17% 14% NM(3) NM(3) AGRE Debt Fund I, LPDebt 2011 1,190 1,185 299 1,021 1,320 9 7 13 11 NM(3) NM(3) CPI Capital Partners NorthAmerica(10)Equity 2006 600 453 352 25 377 15 10 17 13 NM(3) NM(3) CPI Capital Partners AsiaPacific(10)Equity 2006 1,292 1,185 1,470 218 1,688 33 29 37 33 NM(3) NM(3) CPI Capital Partners Europe(8)(10)Equity 2006 1,406 928 388 318 706 5 3 2 1 NM(3) NM(3) CPI Other(11)Equity Various 1,959 N/A N/A(11) N/A(11) N/A(11) NM(11) NM(11) NM NM(11) NM(3) NM(3) Total Real Estate $7,469 $4,405 $2,821 $2,109 $4,930 (1)Figures include the market values, estimated fair value of certain unrealized investments and capital committed to investments.(2)Amounts presented are computed based on actual timing of the funds' cash inflows and outflows.(3)Returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.(4)Fund I and Fund II were structured such that investments were made from either fund depending on which fund had available capital. Apollo does not differentiate between Fund I and Fund II investments forpurposes of performance figures because they are not meaningful on a separate basis and do not demonstrate the progression of returns over time. The general partners and managers of Funds I, II and MIA, as well asthe general partner of Fund III were excluded assets in connection with the 2007 Reorganization.- 83- Table of ContentsAs a result, Apollo Global Management, LLC did not receive the economics associated with these entities. The investment performance of these funds is presented to illustrate fund performance associated withApollo's Managing Partners and other investment professionals.(5)Total IRR is calculated based on total cash flows for all funds presented.(6)The investment record table for the credit and real estate funds and SIAs presented is computed based on the actual dates of capital contributions, distributions and ending limited partners’ capital as of thespecified date.(7)COF III, ACRF III and Apollo U.S. Real Estate Fund II were launched prior to December 31, 2014 and have not established their vintage year.(8)Funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to $1.21 as of December 31, 2014.(9)AGRE U.S. Real Estate Fund, L.P., a closed-end private investment fund has $149 million of co-invest commitments raised, which are included in the figures in the table above. A co-invest entity within AGREU.S. Real Estate Fund, L.P. is denominated in GBP and translated into U.S. dollars at an exchange rate of £1.00 to $1.56 as of December 31, 2014.(10)As part of the CPI acquisition, Apollo acquired general partner interests in fully invested funds. The gross and net IRRs are presented in the investment record table above since acquisition on November 12, 2010.The net IRRs from the inception of the respective fund to December 31, 2014 were (7)%, 7% and (7)% for the CPI Capital Partners North America, Asia Pacific and Europe funds, respectively. These net IRRs wereprimarily achieved during a period in which Apollo did not make the initial investment decisions and Apollo only became the general partner or manager of these funds upon completing the acquisition onNovember 12, 2010.(11)CPI Other consists of funds or individual investments of which Apollo is not the general partner or manager and only receives fees pursuant to either a sub-advisory agreement or an investment management andadministrative agreement. CPI Other fund performance is a result of invested capital prior to Apollo’s management of these funds. Return and certain other performance data are therefore not considered meaningfulas Apollo performs primarily an administrative role.The following table summarizes the investment record for distressed investments made in our traditional private equity fund portfolios, since theCompany’s inception. All amounts are as of December 31, 2014: Total InvestedCapital Total Value Gross IRR(1) (in millions) Distressed for Control$6,308 $17,601 29%Non-Control Distressed5,733 8,502 71Total12,041 26,103 49Buyout Equity, Portfolio Company Debt and Other Credit(2)30,826 59,344 22Total$42,867 $85,447 39% (1)IRR information is presented gross and does not give effect to management fees, incentive compensation, certain other expenses and taxes.(2)Other Credit is defined as investments in debt securities of issuers other than portfolio companies that are not considered to be distressed.The following tables provide additional detail on the composition of our Fund VIII, Fund VII, Fund VI and Fund V private equity portfoliosbased on investment strategy. All amounts are as of December 31, 2014:Fund VIII(1) Total InvestedCapital Total Value (in millions)Buyout Equity and Portfolio Company Debt$1,266 $1,456Total$1,266 $1,456Fund VII(1) Total InvestedCapital Total Value (in millions)Buyout Equity and Portfolio Company Debt$10,865 $25,106Other Credit and Classic Distressed(2)4,334 7,129Total$15,199 $32,235- 84- Table of ContentsFund VI Total InvestedCapital Total Value (in millions)Buyout Equity and Portfolio Company Debt$10,312 $17,755Other Credit and Classic Distressed(2)2,145 3,700Total$12,457 $21,455Fund V Total InvestedCapital Total Value (in millions)Buyout Equity$4,412 $11,907Classic Distressed(2)780 974Total$5,192 $12,881 (1)Committed capital less unfunded capital commitments for Fund VIII and Fund VII was $1.6 billion and $13.1 billion, respectively, which represents capitalcommitments from limited partners to invest in such funds less capital that is available for investment or reinvestment subject to the provisions of the applicable limitedpartnership agreement or other governing agreements.(2)Classic Distressed is defined as investments in debt securities of issuers other than portfolio companies that are considered to be distressed.During the recovery and expansionary periods of 1994 through 2000 and late 2003 through the first half of 2007, our private equity fundsinvested or committed to invest approximately $13.6 billion primarily in traditional and corporate partner buyouts. During the recessionary periods of 1990through 1993, 2001 through late 2003 and the recessionary and post recessionary periods beginning the second half of 2007 through December 31, 2014, ourprivate equity funds have invested $31.3 billion, of which $16.8 billion was in distressed buyouts and debt investments when the debt securities of qualitycompanies traded at deep discounts to par value. Our average entry multiple for Fund VIII, VII, VI and V was 5.6x, 6.1x, 7.7x and 6.6x, respectively, as of thedate of the filing of this Annual Report on Form 10-K. The average entry multiple for a private equity fund is the average of the total enterprise value over anapplicable earnings before interest, taxes, depreciation and amortization ("EBITDA"), which we believe captures the true economics of our funds' purchases ofportfolio companies.CreditThe following table summarizes the investment record for certain funds and SIAs within Apollo's credit segment with no maturity date. Allamounts are as of December 31, 2014, unless otherwise noted: Net Return Strategy VintageYear Net Asset Value asof December 31,2014 Since Inception toDecember 31, 2014 For the Year EndedDecember 31, 2014 For the YearEnded December31, 2013 For the YearEnded December31, 2012 (in millions) TRF(1)U.S. Performing Credit 2014 $353 NM(1) NM(1) N/A N/A ACSF(2)Opportunistic Credit 2011 449 23%(2) 1 %(2) NM(2) NM(2) SOMA(3)Opportunistic Credit 2007 832 59 — 9% 15% ACF(2)U.S. Performing Credit 2005 1,977 35(2) 6(2) NM(2) NM(2) Value Funds(4)Opportunistic Credit 2003/2006 217 64 (6) 5 11 Totals $3,828 (1)Apollo Total Return Fund (“TRF”) returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed notmeaningful.- 85- Table of Contents(2)As part of the Stone Tower acquisition, Apollo acquired the manager of Apollo Credit Strategies Master Fund Ltd. (“ACSF”) and ACF. The net returns are presented in the investment record table above sinceacquisition on April 2, 2012. As of December 31, 2014, the net returns from inception for ACSF and ACF were 39% and 9%, respectively. These returns were primarily achieved during a period in which Apollo didnot make the initial investment decisions. Apollo became the manager of these funds upon completing the acquisition on April 2, 2012.(3)Net asset value and returns are for the primary mandate and excludes Apollo Special Opportunities Managed Account, L.P.’s (“SOMA”) investments in other Apollo funds.(4)Value Funds consist of Apollo Strategic Value Master Fund, L.P., together with its feeder funds, and Apollo Value Investment Master Fund, L.P., together with its feeder funds.The following table summarizes the investment record for the publicly traded vehicles that Apollo manages by segment as of December 31,2014: Total Returns(1) Strategy IPO Year (2) RaisedCapital (3) GrossAssets CurrentNAV Since Inceptionto December 31,2014 For the YearEndedDecember 31,2014 For the YearEndedDecember 31,2013 For the YearEndedDecember 31,2012 (in millions) Private Equity: AAA(4)Other 2006 $1,823 $2,144 $2,144 47% 4% 91% 75% Credit: AIF(5)U.S. Performing Credit 2013 276 402 264 NM(6 ) NM(6 ) NM(6) N/A AFT(5)U.S. Performing Credit 2011 295 434 285 8 (1) NM(6) NM(6) AMTGStructured Credit 2011 791 4,348 786 28 18 (17) NM(6) AINVOpportunistic Credit 2004 3,080 3,701 1,997 50 (4) 12 43 Real Estate: ARI(7)Debt 2009 886 1,744 856 33 11 10 36 Totals $7,151 $12,773 $6,332 (1)Total returns are based on the change in closing trading prices during the respective periods presented taking into account dividends and distributions, if any, as if they were reinvested without regard tocommissions.(2)An initial public offering ("IPO") year represents the year in which the vehicle commenced trading on a national securities exchange. Apollo Tactical Income Fund Inc. ("AIF"), Apollo Senior Floating Rate FundInc. ("AFT"), AMTG and ARI are publicly traded vehicles traded on the New York Stock Exchange ("NYSE"). AINV is a public company traded on the National Association of Securities Dealers AutomatedQuotation. AAA is a publicly traded vehicle traded on NYSE Euronext in Amsterdam.(3)Amounts represent raised capital net of offering and issuance costs.(4)AAA is the sole limited partner in AAA Investments. Athene was AAA Investments’ only investment as of December 31, 2014. During the second quarter of 2014, Athene Holding raised $1.2 billion of net equitycommitments primarily from third-party institutional investors, certain existing investors in Athene, and employees of Athene and its affiliates (the “Athene Private Placement”). For the period December 31, 2013through December 31, 2014, AAA Investments' ownership stake in Athene was reduced as a result of the Athene Private Placement, the issuance of shares under the Amended AAA Services Agreement and theissuance of 3.7 million unrestricted common shares of Athene Holding under Athene’s management equity plan and was increased by the conversion to common shares of AAA Investments' note receivable fromAthene, resulting in an approximate 47.7% economic ownership stake (calculated as if the commitments in the Athene Private Placement closed through December 31, 2014 were fully drawn down but withoutgiving effect to (i) restricted common shares issued under Athene’s management equity plan or (ii) common shares to be issued after December 31, 2014 under the Amended AAA Services Agreement or theAmended Athene Services Agreement) and effectively 45% of the voting power of Athene.(5)Gross Assets presented for AFT and AIF represents total managed assets of these closed-end funds.(6)Returns have not been presented as the publicly traded vehicle commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.(7)Refer to www.apolloreit.com for the most recent financial information on ARI. The information contained on ARI’s website is not part of this Annual Report on Form 10-K. All amounts are as of September 30,2014 except for total returns.Athene and SIAsAs of December 31, 2014, Athene Asset Management had $60.3 billion of total AUM in accounts owned by or related to Athene, of whichapproximately $12.6 billion, was either sub-advised by Apollo or invested in Apollo funds and investment vehicles. Of the approximately $12.6 billion ofassets, the vast majority were in sub-advisory managed accounts that manage high grade credit asset classes, such as collateralized loan obligation ("CLO")debt, commercial mortgage backed securities, and insurance-linked securities.Apollo also manages CLOs within Apollo's credit segment, with such CLOs representing a total AUM of approximately $13.5 billion as ofDecember 31, 2014. Such CLO performance information is not included in the above investment record tables.As of December 31, 2014, approximately $15 billion of total AUM was managed through SIAs, which include certain SIAs in the investmentrecord tables above and capital deployed from certain SIAs across Apollo's private equity, credit- 86- Table of Contentsand real estate funds. The above investment record tables exclude certain funds with an aggregate AUM of approximately $5.1 billion as of December 31,2014 because management deemed them to be immaterial.Overview of Results of OperationsRevenuesAdvisory and Transaction Fees from Affiliates, Net. As a result of providing advisory services with respect to actual and potential private equity,credit, and real estate investments, we are entitled to receive fees for transactions related to the acquisition and, in certain instances, disposition of portfoliocompanies as well as fees for ongoing monitoring of portfolio company operations and directors’ fees. We also receive an advisory fee for advisory servicesprovided to certain credit funds. In addition, monitoring fees are generated on certain structured portfolio company investments. Under the terms of thelimited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage ofsuch advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Such amounts are presented as a reduction to advisoryand transaction fees from affiliates, net, in the consolidated statements of operations. See note 2 to our consolidated financial statements for more detail.The Management Fee Offsets are calculated for each fund as follows:•65%-100% for private equity funds, gross advisory, transaction and other special fees;•65%-100% for certain credit funds, gross advisory, transaction and other special fees; and•100% for certain real estate funds, gross advisory, transaction and other special fees.Additionally, during the normal course of business, the Company incurs certain costs related to certain transactions that are not consummated(“broken deal costs"). These costs (e.g. research costs, due diligence costs, professional fees, legal fees and other related items) are determined to be brokendeal costs upon management's decision to no longer pursue the transaction. In accordance with the related fund agreement, in the event the deal is deemedbroken, all of the costs are reimbursed by the funds and then included as a component of the calculation of the Management Fee Offset. If a deal issuccessfully completed, Apollo is reimbursed by the fund or fund’s portfolio company for all costs incurred and no offset is generated.As the Company acts as an agent for the funds it manages, any transaction costs incurred and paid by the Company on behalf of the respectivefunds relating to successful or broken deals are presented net on the Company’s consolidated statements of operations, and any receivable from the respectivefunds is presented in Due from Affiliates on the consolidated statements of financial condition.Management Fees from Affiliates. The significant growth of the assets we manage has had a positive effect on our revenues. Management feesare typically calculated based upon any of “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted costs of all unrealized portfolioinvestments,” “capital commitments,” “invested capital,” “adjusted assets,” “capital contributions,” or “stockholders’ equity,” each as defined in theapplicable limited partnership agreement and/or management agreement of the unconsolidated funds.Carried Interest Income from Affiliates. The general partners of our funds, in general, are entitled to an incentive return that can normallyamount to as much as 20% of the total returns on fund capital, depending upon performance of the underlying funds and subject to preferred returns and highwater marks, as applicable. The carried interest income from affiliates is recognized in accordance with U.S. GAAP guidance applicable to accounting forarrangement fees based on a formula. In applying the U.S. GAAP guidance, the carried interest from affiliates for any period is based upon an assumedliquidation of the funds’ assets at the reporting date, and distribution of the net proceeds in accordance with the funds’ allocation provisions.As of December 31, 2014, approximately 66% of the value of our funds' investments on a gross basis was determined using market-basedvaluation methods (i.e., reliance on broker or listed exchange quotes) and the remaining 34% was determined primarily by comparable company and industrymultiples or discounted cash flow models. For our private equity, credit and real estate segments, the percentage determined using market-based valuationmethods as of December 31, 2014 was 45%, 78% and 48%, respectively. See “Item 1A. Risk Factors—Risks Related to Our Businesses—Our private equityfunds’ performance, and our performance, may be adversely affected by the financial performance of our funds' portfolio companies and the industries inwhich our funds invest” for a discussion regarding certain industry-specific risks that could affect the fair value of our private equity funds’ portfoliocompany investments.Carried interest income fee rates can be as much as 20% for our private equity funds. In our private equity funds, the Company does not earncarried interest income until the investors in the fund have achieved cumulative investment returns on invested capital (including management fees andexpenses) in excess of an 8% hurdle rate. Additionally, certain of our credit and- 87- Table of Contentsreal estate funds have various carried interest rates and hurdle rates. Certain of our credit and real estate funds allocate carried interest to the general partner ina similar manner as the private equity funds. In our private equity, certain credit and real estate funds, so long as the investors achieve their priority returns,there is a catch-up formula whereby the Company earns a priority return for a portion of the return until the Company’s carried interest income equates to itsincentive fee rate for that fund; thereafter, the Company participates in returns from the fund at the carried interest income rate. Carried interest income issubject to reversal to the extent that the carried interest income distributed exceeds the amount due to the general partner based on a fund’s cumulativeinvestment returns. The Company recognizes potential repayment of previously received carried interest income as a general partner obligation representingall amounts previously distributed to the general partner that would need to be repaid to the Apollo funds if these funds were to be liquidated based on thecurrent fair value of the underlying funds’ investments as of the reporting date. This actual general partner obligation, however, would not become payable orrealized until the end of a fund’s life or as otherwise set forth in the respective limited partnership agreement of the fund.The table below presents an analysis of Apollo's (i) carried interest receivable on an unconsolidated basis and (ii) realized and unrealized carriedinterest income (loss) for Apollo's combined segments' Incentive Business as of December 31, 2014 and 2013 and for the years ended December, 31 2014,2013 and 2012: As of December 31, 2014 As of December 31, 2013 For the Year Ended December 31, 2014 For the Year Ended December 31, 2013 For the Year Ended December 31, 2012 Carried InterestReceivable on anUnconsolidated Basis Carried InterestReceivable on anUnconsolidated Basis UnrealizedCarriedInterest Income(Loss) RealizedCarriedInterestIncome TotalCarriedInterestIncome (Loss) UnrealizedCarriedInterest Income(Loss) RealizedCarriedInterestIncome TotalCarriedInterestIncome (Loss) UnrealizedCarriedInterest Income(Loss) RealizedCarriedInterestIncome TotalCarriedInterestIncome (Loss) (in millions)Private Equity Funds: Fund VII$288.2 $890.8 $(602.6) $902.4 $299.8 $(13.6) $1,163.6 $1,150.0 $435.5 $472.1 $907.6Fund VI183.4(1) 697.6 (514.1) 401.4 (112.7) 427.3 760.3 1,187.6(4 ) 345.6(5) 294.0 639.6Fund V3.2 43.0 (39.9) 44.9 5.0 (91.2) 99.1 7.9 9.3 33.4 42.7Fund IV5.6 7.7 (2.1) — (2.1) (3.2) 1.7 (1.5) (7.0) 2.9 (4.1)AAA/Other(2)(3)191.5 228.7 (37.4) 79.4 42.0 135.4(5 ) 37.9 173.3 71.5(5) 10.2 81.7Total PrivateEquity Funds671.9 1,867.8 (1,196.1) 1,428.1 232.0 454.7 2,062.6 2,517.3 854.9 812.6 1,667.5Credit Funds:(6) U.S. PerformingCredit54.1 179.9 (109.3) 119.7 10.4 (164.1) 284.6 120.5 206.3 154.3 360.6OpportunisticCredit26.6 59.8 (8.5) 6.2 (2.3) 20.4(5 ) 36.7 57.1 7.7(5) 41.5 49.2Structured Credit36.1 54.3 (14.7) 5.9 (8.8) 32.7 11.2 43.9 18.5 13.4 31.9European Credit8.4 35.6 (11.2) 14.8 3.6 2.1 27.8 29.9 18.0 8.5 26.5Non-PerformingLoans141.6 154.2 (13.0) 134.4 121.4 52.3 33.0 85.3 50.6 — 50.6Total Credit Funds266.8 483.8 (156.7) 281.0 124.3 (56.6) 393.3 336.7 301.1 217.7 518.8Real Estate Funds: CPI Funds1.5 5.3 (3.8) 0.6 (3.2) (5.2) 0.5 (4.7) 10.4 4.7 15.1AGRE U.S. RealEstate Fund, L.P.11.4 5.6 5.8 2.7 8.5 5.6 — 5.6 — — —Other7.2 4.3 3.0 0.7 3.7 4.3 — 4.3 — — —Total Real EstateFunds20.1 15.2 5.0 4.0 9.0 4.7 0.5 5.2 10.4 4.7 15.1Total$958.8(7) $2,366.8(7 ) $(1,347.8) $1,713.1 $365.3 $402.8 $2,456.4 $2,859.2 $1,166.4 $1,035.0 $2,201.4(1)Fund VI's remaining investments and escrow cash were valued at 104% of the funds unreturned capital, which was below a specified return ratio of 115%. As a result, Fund VIis required to place in escrow current and future carried interest income distributions to the general partner until the specified return ratio of 115% is met (at the time of a futuredistribution) or upon liquidation of Fund VI. As of December 31, 2014, Fund VI carried interest receivable includes $165.6 million of carried interest income in escrow.(2)Includes certain SIAs.(3)Includes $121.5 million of carried interest receivable from AAA Investments which will be paid in common shares of Athene Holding (valued at the then fair market value) ifthere is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the U.S. Securities Exchange Act of 1934, asamended), or paid in cash if AAA sells the shares of Athene Holding.(4)Includes $452.3 million for Fund VI related to the catch-up formula whereby the Company earns a disproportionate return (typically 80%) for a portion of the return until theCompany's carried interest income equates to its 20% of cumulative profits of the funds.(5)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest income due tothe general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate for two of our credit funds. Included in unrealized carriedinterest income (loss) from affiliates for the year ended December 31, 2013 was a reversal of $19.3 million and $0.3 million of the entire general partner obligation to returnpreviously distributed carried interest income with respect to SOMA and APC, respectively. Included in unrealized carried interest income (loss) from affiliates for the yearended December 31, 2012 was a reversal of $75.3 million of the entire general partner obligation to return previously distributed carried interest income with respect to FundVI and reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income of $1.2 million and$0.3 million with respect to SOMA and APC, respectively.- 88- Table of Contents(6)As of December 31, 2014, two of our credit funds had an aggregate $3.4 million general partner obligation to return carried interest income that was previously distributed. Thefair value gain on investments and income at the fund level needed to reverse the general partner obligations for these two credit funds was $7.0 million and $2.2 million,respectively as of December 31, 2014.(7)There was a corresponding profit sharing payable of $434.9 million and $992.2 million as of December 31, 2014 and 2013, respectively, that resulted in a net carried interestreceivable on an unconsolidated basis of $523.9 million and $1,374.6 million as of December 31, 2014 and 2013, respectively. Included within profit sharing payable arecontingent consideration obligations of $96.1 million and $135.5 million as of December 31, 2014 and 2013, respectively, and profit sharing payable related to amounts inescrow.The general partners of the private equity, credit and real estate funds listed in the table above were accruing carried interest income as ofDecember 31, 2014. The investment manager of AINV accrues carried interest in the management business as it is earned. The general partners of certain ofour credit funds accrue carried interest when the fair value of investments exceeds the cost basis of the individual investors’ investments in the fund,including any allocable share of expenses incurred in connection with such investments, which we refer to as "high water marks." These high water marks areapplied on an individual investor basis. Certain of our credit funds have investors with various high water marks, the achievement of which are subject tomarket conditions and investment performance.Carried interest income from our private equity funds and certain credit and real estate funds is subject to contingent repayment by the generalpartner in the event of future losses to the extent that the cumulative carried interest distributed from inception to date exceeds the amount computed as dueto the general partner at the final distribution. These general partner obligations, if applicable, are included in due to affiliates on the consolidated statementsof financial condition. As of December 31, 2014, there was a $3.4 million general partner obligation to return previously distributed carried interest incomerelated to our funds recorded in due to affiliates in the consolidated statement of financial condition. Carried interest receivable is reported on a separate lineitem within the consolidated statements of financial condition.- 89- Table of ContentsThe following table summarizes our carried interest income since inception for our combined segments through December 31, 2014: Carried Interest Income Since Inception (1) Undistributedby Fund andRecognized Distributed byFund andRecognized (2) TotalUndistributedandDistributed byFund andRecognized(3) General PartnerObligation as ofDecember 31,2014(3) Maximum CarriedInterest IncomeSubject toPotential Reversal(4) (in millions)Private Equity Funds: Fund VII$288.2 $2,862.1 $3,150.3 $— $917.7Fund VI183.4 1,580.1 1,763.5 — 1,246.1Fund V3.2 1,455.0 1,458.2 — 33.0Fund IV5.6 597.2 602.8 — 5.6AAA/Other(5)191.5 144.9 336.4 — 194.8Total Private Equity Funds671.9 6,639.3 7,311.2 — 2,397.2Credit Funds: U.S. Performing Credit54.1 756.8 810.9 2.5 149.5Opportunistic Credit(6)16.1 183.7 199.8 0.9 48.4Structured Credit36.1 30.8 66.9 — 38.3European Credit8.4 67.5 75.9 — 67.9Non-Performing Loans141.6 155.1 296.7 — 170.4Total Credit Funds256.3 1,193.9 1,450.2 3.4 474.5Real Estate Funds: CPI Funds1.5 5.8 7.3 — 2.2AGRE U.S. Real Estate Fund, L.P.11.4 2.7 14.1 — 11.1Other7.2 0.6 7.8 — 7.8Total Real Estate Funds20.1 9.1 29.2 — 21.1Total$948.3 $7,842.3 $8,790.6 $3.4 $2,892.8 (1)Certain funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to $1.21 as of December 31, 2014.(2)Amounts in “Distributed by Fund and Recognized” for the CPI, Gulf Stream and Stone Tower funds and SIAs are presented for activity subsequent to the respectiveacquisition dates.(3)Amounts were computed based on the fair value of fund investments on December 31, 2014. Carried interest income has been allocated to and recognized by thegeneral partner. Based on the amount of carried interest income allocated, a portion is subject to potential reversal or, to the extent applicable, has been reduced by thegeneral partner obligation to return previously distributed carried interest income or fees at December 31, 2014. The actual determination and any required payment ofany such general partner obligation would not take place until the final disposition of the fund’s investments based on contractual termination of the fund or asotherwise set forth in the respective limited partnership agreement of the fund.(4)Represents the amount of carried interest income that would be reversed if remaining fund investments became worthless on December 31, 2014. Amounts subject topotential reversal of carried interest income include amounts undistributed by a fund (i.e., the carried interest receivable), as well as a portion of the amounts that havebeen distributed by a fund, net of taxes not subject to a general partner obligation to return previously distributed carried interest income, except for those funds that aregross of taxes as defined in the respective funds' management agreement.(5)Includes $121.5 million of carried interest receivable from AAA Investments which will be paid in common shares of Athene Holding (valued at the then fair marketvalue) if there is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the U.S. Securities Exchange Act of1934, as amended), or paid in cash if AAA sells the shares of Athene Holding.(6)Amounts exclude AINV, as carried interest income from this entity is not subject to contingent repayment.Expenses- 90- Table of ContentsCompensation and Benefits. Our most significant expense is compensation and benefits expense. This consists of fixed salary, discretionary andnon-discretionary bonuses, profit sharing expense associated with the carried interest income earned from private equity, credit and real estate funds andcompensation expense associated with the vesting of non-cash equity-based awards.Our compensation arrangements with certain partners and employees contain a significant performance-based incentive component. Therefore, asour net revenues increase, our compensation costs also rise or can be lower when net revenues decrease. In addition, our compensation costs reflect theincreased investment in people as we expand geographically and create new funds. All payments for services rendered by our Managing Partners prior to the2007 Reorganization have been accounted for as partnership distributions rather than compensation and benefits expense. See note 1 to our consolidatedfinancial statements for further discussion of the 2007 Reorganization. Subsequent to the 2007 Reorganization, our Managing Partners are consideredemployees of Apollo. As such, payments for services made to these individuals, including the expense associated with the AOG Units described below, havebeen recorded as compensation expense. The AOG Units were granted to the Managing Partners and Contributing Partners at the time of the 2007Reorganization, as discussed in note 1 to our consolidated financial statements.In addition, certain professionals and selected other individuals have a profit sharing interest in the carried interest income earned in relation toour private equity, certain credit and real estate funds in order to better align their interests with our own and with those of the investors in these funds. Profitsharing expense is part of our compensation and benefits expense and is generally based upon a fixed percentage of private equity, credit and real estatecarried interest income on a pre-tax and a pre-consolidated basis. Profit sharing expense can reverse during periods when there is a decline in carried interestincome that was previously recognized. Profit sharing amounts are normally distributed to employees after the corresponding investment gains have beenrealized and generally before preferred returns are achieved for the investors. Therefore, changes in our unrealized gains (losses) for investments have thesame effect on our profit sharing expense. Profit sharing expense increases when unrealized gains increase. Realizations only impact profit sharing expense tothe extent that the effects on investments have not been recognized previously. If losses on other investments within a fund are subsequently realized, theprofit sharing amounts previously distributed are normally subject to a general partner obligation to return carried interest income previously distributedback to the funds. This general partner obligation due to the funds would be realized only when the fund is liquidated, which generally occurs at the end ofthe fund’s term. However, indemnification obligations also exist for pre-reorganization realized gains, which, although our Managing Partners andContributing Partners would remain personally liable, may indemnify our Managing Partners and Contributing Partners for 17.5% to 100% of the previouslydistributed profits regardless of the fund’s future performance. See note 17 to our consolidated financial statements for further discussion of indemnification.Each Managing Partner receives $100,000 per year in base salary for services rendered to us. Additionally, our Managing Partners can receiveother forms of compensation. In connection with the 2007 Reorganization, the Managing Partners and Contributing Partners received AOG Units with avesting period of five to six years (all of which have fully vested) and certain employees were granted RSUs with a vesting period of typically six years (all ofwhich have also fully vested). Managing Partners, Contributing Partners and certain employees have also been granted AAA restricted depositary units("RDUs"), or incentive units that provide the right to receive AAA RDUs, which both represent common units of AAA and generally vest over three years foremployees and are fully-vested for Managing Partners and Contributing Partners on the grant date. In addition, AHL Awards (as defined in note 16 to ourconsolidated financial statements) and other equity-based compensation awards have been granted to the Company and certain employees, which amortizeover the respective vesting periods. In addition, the Company grants equity awards to certain employees, including RSUs and options, that generally vest andbecome exercisable in quarterly installments or annual installments depending on the contract terms over a period of three to six years. See note 16 to ourconsolidated financial statements for further discussion of AOG Units and other equity-based compensation.Other Expenses. The balance of our other expenses includes interest, professional fees, placement fees, occupancy, depreciation and amortizationand other general operating expenses. Interest expense consists primarily of interest related to the 2007 AMH Credit Agreement, the 2013 AMH CreditFacilities and the 2024 Senior Notes as discussed in note 14 to our consolidated financial statements. Placement fees are incurred in connection with ourcapital raising activities. Occupancy expense represents charges related to office leases and associated expenses, such as utilities and maintenance fees.Depreciation and amortization of fixed assets is normally calculated using the straight-line method over their estimated useful lives, ranging from two tosixteen years, taking into consideration any residual value. Leasehold improvements are amortized over the shorter of the useful life of the asset or theexpected term of the lease. Intangible assets are amortized based on the future cash flows over the expected useful lives of the assets. Other general operatingexpenses normally include costs related to travel, information technology and administration.Other Income (Loss)Net Gains (Losses) from Investment Activities. The performance of the consolidated Apollo funds has impacted our net gains (losses) frominvestment activities. Net gains (losses) from investment activities include both realized gains and losses- 91- Table of Contentsand the change in unrealized gains and losses in our investment portfolio between the opening reporting date and the closing reporting date. Net unrealizedgains (losses) are a result of changes in the fair value of unrealized investments and reversal of unrealized gains (losses) due to dispositions of investmentsduring the reporting period. For results of AAA, a portion of the net gains (losses) from investment activities are attributable to Non-Controlling Interests inthe consolidated statements of operations. Significant judgment and estimation goes into the assumptions that drive these models and the actual valuesrealized with respect to investments could be materially different from values obtained based on the use of those models. The valuation methodologiesapplied impact the reported value of investment company holdings and their underlying portfolios in our consolidated financial statements.Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities. Changes in the fair value of the consolidated VIEs’assets and liabilities and related interest, dividend and other income and expenses subsequent to consolidation are presented within net gains (losses) frominvestment activities of consolidated variable interest entities and are attributable to Non-Controlling Interests in the consolidated statements of operations.Interest Income. The Company recognizes security transactions on the trade date. Interest income is recognized as earned on an accrual basis.Discounts and premiums on securities purchased are accreted or amortized over the life of the respective securities using the effective interest method. Interestincome also includes payment-in-kind interest (or "PIK" interest) on a convertible note and from one of our credit funds.Other Income (Losses), Net. Other income (losses), net includes the recognition of bargain purchase gains as a result of Apollo acquisitions, gains(losses) arising from the remeasurement of foreign currency denominated assets and liabilities of foreign subsidiaries, reversal of a portion of the taxreceivable agreement liability (see note 17 to our consolidated financial statements), gains (losses) arising from the remeasurement of derivative instrumentsassociated with fees from certain of the Company’s affiliates and other miscellaneous non-operating income and expenses.Income Taxes. The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. As aresult, except as described below, the Apollo Operating Group has not been subject to U.S. income taxes. However, these entities in some cases are subject toNew York City unincorporated business taxes ("NYC UBT"), and non-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition,APO Corp., a wholly-owned subsidiary of the Company, is subject to U.S. federal, state and local corporate income tax, and the Company’s provision forincome taxes is accounted for in accordance with U.S. GAAP.As significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties, we recognizethe tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained upon examination, including resolutions of anyrelated appeals or litigation, based on the technical merits of the position. The tax benefit is measured as the largest amount of benefit that has a greater than50% likelihood of being realized upon ultimate settlement. If a tax position is not considered more likely than not to be sustained, then no benefits of theposition are recognized. The Company’s tax positions are reviewed and evaluated quarterly to determine whether or not we have uncertain tax positions thatrequire financial statement recognition.Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assetsand liabilities and their respective tax basis using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not thatsome portion or all of the deferred tax assets will not be realized.Non-Controlling InterestsFor entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners otherthan Apollo. The aggregate of the income or loss and corresponding equity that is not owned by the Company is included in Non-Controlling Interests in theconsolidated financial statements. The Non-Controlling Interests relating to Apollo Global Management, LLC primarily include the 57.7% and 61.0%ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partners through their limited partner interests inHoldings as of December 31, 2014 and 2013, respectively, and other ownership interests in consolidated entities, which primarily consist of the approximate97.5% and 97.4% ownership interests held by limited partners in AAA as of December 31, 2014 and 2013, respectively. Non-Controlling Interests alsoinclude limited partner interests of Apollo managed funds in certain consolidated VIEs.The authoritative guidance for Non-Controlling Interests in the consolidated financial statements requires reporting entities to present Non-Controlling Interest as equity and provides guidance on the accounting for transactions between an entity and Non-Controlling Interests. According to theguidance, (1) Non-Controlling Interests are presented as a separate component of shareholders’ equity on the Company’s consolidated statements of financialcondition, (2) net income (loss) includes the net- 92- Table of Contentsincome (loss) attributable to the Non-Controlling Interest holders on the Company’s consolidated statements of operations, (3) the primary components ofNon-Controlling Interest are separately presented in the Company’s consolidated statements of changes in shareholders’ equity to clearly distinguish theinterests in the Apollo Operating Group and other ownership interests in the consolidated entities and (4) profits and losses are allocated to Non-ControllingInterests in proportion to their ownership interests regardless of their basis.Results of OperationsBelow is a discussion of our consolidated results of operations for the years ended December 31, 2014, 2013, and 2012. For additional analysis ofthe factors that affected our results at the segment level, see “—Segment Analysis” below: Year Ended December 31, AmountChange PercentageChange Year Ended December 31, AmountChangePercentageChange 2014 2013 2013 2012 (dollars in thousands) (dollars in thousands) Revenues: Advisory and transaction fees from affiliates, net $315,587 $196,562 $119,025 60.6 % $196,562 $149,544 $47,018 31.4 %Management fees from affiliates 850,441 674,634 175,807 26.1 674,634 580,603 94,031 16.2Carried interest income from affiliates 394,055 2,862,375 (2,468,320) (86.2) 2,862,375 2,129,818 732,557 34.4Total Revenues 1,560,083 3,733,571 (2,173,488) (58.2) 3,733,571 2,859,965 873,606 30.5Expenses: Compensation and benefits: Equity-based compensation 126,320 126,227 93 0.1 126,227 598,654 (472,427) (78.9)Salary, bonus and benefits 338,049 294,753 43,296 14.7 294,753 274,574 20,179 7.3Profit sharing expense 276,190 1,173,255 (897,065) (76.5) 1,173,255 872,133 301,122 34.5Total Compensation and Benefits 740,559 1,594,235 (853,676) (53.5) 1,594,235 1,745,361 (151,126) (8.7)Interest expense 22,393 29,260 (6,867) (23.5) 29,260 37,116 (7,856) (21.2)Professional fees 82,030 83,407 (1,377) (1.7) 83,407 64,682 18,725 28.9General, administrative and other 97,663 98,202 (539) (0.5) 98,202 87,961 10,241 11.6Placement fees 15,422 42,424 (27,002) (63.6) 42,424 22,271 20,153 90.5Occupancy 40,427 39,946 481 1.2 39,946 37,218 2,728 7.3Depreciation and amortization 45,069 54,241 (9,172) (16.9) 54,241 53,236 1,005 1.9Total Expenses 1,043,563 1,941,715 (898,152) (46.3) 1,941,715 2,047,845 (106,130) (5.2)Other Income: Net gains from investment activities 213,243330,235 (116,992) (35.4) 330,235 288,244 41,991 14.6Net gains (losses) from investment activities ofconsolidated variable interest entities 22,564199,742 (177,178) (88.7) 199,742 (71,704) 271,446 NMIncome from equity method investments 53,856107,350 (53,494) (49.8) 107,350 110,173 (2,823) (2.6)Interest income 10,39212,266 (1,874) (15.3) 12,266 9,693 2,573 26.5Other income, net 60,59240,114 20,478 51.0 40,114 1,964,679 (1,924,565) (98.0)Total Other Income 360,647689,707 (329,060) (47.7) 689,707 2,301,085 (1,611,378) (70.0)Income before income tax provision 877,1672,481,563 (1,604,396) (64.7) 2,481,563 3,113,205 (631,642) (20.3)Income tax provision (147,245)(107,569) (39,676) 36.9 (107,569) (65,410) (42,159) 64.5Net Income 729,9222,373,994 (1,644,072) (69.3) 2,373,994 3,047,795 (673,801) (22.1)Net income attributable to Non-controllingInterests (561,693)(1,714,603) 1,152,910 (67.2) (1,714,603) (2,736,838) 1,022,235 (37.4)Net Income Attributable to ApolloGlobal Management, LLC $168,229$659,391 $(491,162) (74.5)% $659,391 $310,957 $348,434 112.1 %Note: “NM” denotes not meaningful. Changes from negative to positive amounts and positive to negative amounts are not considered meaningful. Increases or decreases from zeroand changes greater than 500% are also not considered meaningful.- 93- Table of ContentsRevenuesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Our revenues and other income include fixed components that result from measures of capital and asset valuations and variable components thatresult from realized and unrealized investment performance, as well as the value of successfully completed transactions.Advisory and transaction fees from affiliates, net, increased by $119.0 million for the year ended December 31, 2014 as compared to the yearended December 31, 2013. This change was attributable to an increase in the credit segment of $140.5 million offset by a decrease in the private equitysegment of $20.1 million. The increase in the credit segment was primarily attributable to an increase in monitoring fees from Athene of $118.5 million as aresult of Athene's acquisition of Aviva USA. The decrease in the private equity segment was primarily attributable to lower net advisory fees due to therealization of underlying investments, termination fees and waived fees related to debt investment vehicles, Taminco, Realogy and Caesars Entertainmentthat occurred during the year ended December 31, 2013 and lower net transaction fees earned for the year ended December 31, 2014 compared to 2013.Advisory and transaction fees are reported net of Management Fee Offsets as calculated under the terms of the applicable limited partnership agreements. See“—Overview of Results of Operations—Revenues—Advisory and Transaction Fees from Affiliates, Net” for a description of how the Management Fee Offsetsare calculated.Management fees from affiliates increased by $175.8 million for the year ended December 31, 2014 as compared to the year ended December 31,2013. This change was primarily attributable to an increase in management fees earned by our credit and private equity segments of $146.3 million and $30.2million, respectively. The primary driver of the increase in management fees earned from the credit funds was an increase in management fees earned fromAthene of $126.1 million during the year ended December 31, 2014 as compared to the same period in 2013 as a result of Athene's acquisition of Aviva USA.The primary driver of the increase in management fees earned form the private equity funds was an increase in management fees earned from Fund VIII in theamount of $126.4 million during the year ended December 31, 2014, partially offset by decreased management fees earned from Fund VII of $92.9 million asa result of a change in the management fee rate and basis upon which management fees are earned from capital commitments to invested capital, due to thefund coming to the end of the fund's investment period.Carried interest income from affiliates decreased by $2.5 billion for the year ended December 31, 2014 as compared to the year ended December31, 2013. This change was primarily attributable to decreased carried interest income from Fund VI, Fund VII, AAA Investments (Co-Invest VI), L.P. ("AAACo-Invest VI"), COF I, certain sub-advisory arrangements, SOMA, and EPF I of $1.3 billion, $850.1 million, $121.7 million, $46.2 million, $42.3 million,$38.8 million and $25.7 million, respectively.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Advisory and transaction fees from affiliates, net, increased by $47.0 million for the year ended December 31, 2013 as compared to the yearended December 31, 2012. This was attributable to an increase in advisory and transaction fees, net in the credit segment of $87.1 million, offset by adecrease in advisory and transaction fees, net in the private equity segment of $43.4 million. During the year ended December 31, 2013, gross and netadvisory fees, including directors’ fees, were $213.3 million and $140.0 million, respectively, and gross and net transaction fees were $133.5 million and$56.6 million, respectively. During the year ended December 31, 2012, gross and net advisory fees, including directors’ fees, were $152.1 million and$66.3 million, respectively, and gross and net transaction fees were $176.7 million and $88.5 million, respectively. The net transaction and advisory feeswere further offset by $5.2 million and $5.3 million in broken deal costs during the years ended December 31, 2013 and 2012, respectively, primarily relatingto Fund VII.Management fees from affiliates increased by $94.0 million for the year ended December 31, 2013 as compared to the year ended December 31,2012. This change was primarily attributable to an increase in management fees earned by our credit, private equity and real estate segments of $92.8 million,$7.8 million and $7.1 million, respectively, as a result of corresponding increases in the net assets managed and Fee-Generating invested capital with respectto these segments during the period. Part of the increase in management fees earned from the credit funds was attributable to an increase of $13.6 million offees earned from consolidated VIEs which are included in the credit segment results but were eliminated in consolidation.Carried interest income from affiliates increased by $732.6 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily attributable to increased carried interest income driven by increases in the fair value of portfolio investmentsheld by certain funds and certain co-invest vehicles, primarily Fund VI, Fund VII, AAA Co-Invest VI, SOMA and EPF I which had increased carried interestincome of $548.1 million, $242.4 million, $115.7 million, $40.0 million and $34.5 million, respectively. This was offset by COF I, COF II, certain CLOs andFund V, which had decreased carried interest income of $100.1 million, $48.3 million, $44.5 million and $34.8 million, respectively, during the year endedDecember 31, 2013 as compared to the same period in 2012. The remaining change was attributable to an overall increase in the fair value of portfolioinvestments of the other funds, which generated increased carried interest income of $17.5 million- 94- Table of Contentsduring the period. Part of the change in carried interest income from affiliates was attributable to a decrease in carried interest income of $37.9 million earnedfrom consolidated VIEs which are included in the credit segment results but were eliminated in consolidation during the year ended December 31, 2013 ascompared to the same period in 2012.ExpensesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Compensation and benefits decreased by $853.7 million for the year ended December 31, 2014 as compared to the year ended December 31,2013. This change was primarily attributable to a decrease in profit sharing expense of $897.1 million due to lower carried interest income during the yearended December 31, 2014 as compared to the year ended December 31, 2013. In any year the blended profit sharing percentage is impacted by the respectiveprofit sharing ratios of the funds that are generating carried interest in the period. During the year ended December 31, 2014, the fair value of Fund VII’sunderlying fund investments appreciated while Fund VI's underlying fund investments depreciated, which contributed to an increased profit sharingpercentage compared to the year ended December 31, 2013. Included within profit sharing expense was $62.0 million and $62.4 million related to theIncentive Pool (as defined below) for the year ended December 31, 2014 and 2013, respectively. The Incentive Pool is separate from the fund related profitsharing expense and, as described below, may result in greater variability in compensation and have a variable impact on the blended profit sharingpercentage during a particular quarter. The decrease in profit sharing expense was offset by an increase in salary, bonus and benefits of $43.3 million duringthe year ended December 31, 2014.In June 2011, the Company adopted a performance based incentive arrangement (the “Incentive Pool”) whereby certain partners and employeesearned discretionary compensation based on carried interest realizations earned by the Company during the year, which amounts are reflected as profitsharing expense in the Company’s consolidated financial statements. The Company adopted the Incentive Pool to attract and retain, and provide incentiveto, partners and employees of the Company and to more closely align the overall compensation of partners and employees with the overall realizedperformance of the Company. Allocations to the Incentive Pool and to its participants contain both a fixed and a discretionary component and may vary year-to-year depending on the overall realized performance of the Company and the contributions and performance of each participant. There is no assurance thatthe Company will continue to compensate individuals through performance-based incentive arrangements in the future and there may be periods when theexecutive committee of the Company’s manager determines that allocations of realized carried interest income are not sufficient to compensate individuals,which may result in an increase in salary, bonus and benefits.Interest expense decreased by $6.9 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. This changewas primarily attributable to a lower margin rate incurred from the 2013 AMH Credit Facilities as compared to the 2007 AMH Credit Agreement during theyear ended December 31, 2014 as compared to the same period in 2013 (see note 14 to our consolidated financial statements).Placement fees decreased by $27.0 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Placementfees are incurred in connection with the raising of capital for new and existing funds. The fees are normally payable to placement agents, who are third partiesthat assist in identifying potential investors, securing commitments to invest from such potential investors, preparing or revising offering marketingmaterials, developing strategies for attempting to secure investments by potential investors and/or providing feedback and insight regarding issues andconcerns of potential investors. This change was primarily attributable to decreases in placement fees with respect to EPF II and Fund VIII of $14.1 millionand $13.2 million, respectively, during the year ended December 31, 2014 as compared to the same period in 2013.Depreciation and amortization expense decreased by $9.2 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was primarily attributable to lower amortization of intangible assets during the year ended December 31, 2014 as comparedto the year ended December 31, 2013 as certain intangible assets were fully amortized in 2014.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Compensation and benefits decreased by $151.1 million for the year ended December 31, 2013 as compared to the year ended December 31,2012. This change was primarily attributable to a reduction of equity-based compensation by $472.4 million, specifically the amortization of AOG Unitswhich decreased by $450.9 million due to the expiration of the vesting period for the Managing Partners in June 2013. This was partially offset by anincrease in profit sharing expense of $301.1 million as a result of the favorable performance of certain of our private equity and credit funds during theperiod. Included in profit sharing expense was $62.4 million and $62.1 million of expenses related to the Incentive Pool (as defined below) for the year ended- 95- Table of ContentsDecember 31, 2013 and 2012, respectively. In addition, salary, bonus and benefits increased by $20.2 million as a result of an increase in headcount duringthe period as compared to the same period in 2012.Interest expense decreased by $7.9 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. This changewas primarily attributable to decreased interest expense related to expiring of interest rate swaps and a lower margin rate on the 2007 AMH Credit Agreementduring the year ended December 31, 2013 as compared to the same period in 2012.Professional fees increased by $18.7 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was attributable to higher legal and consulting fees incurred during the year ended December 31, 2013, as compared to the same period in 2012 dueto the continued expansion of our global investment platform.General, administrative and other expenses increased by $10.2 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily attributable to an increase in costs associated with the launch of new funds, increased travel, informationtechnology, recruiting and other expenses incurred during the year ended December 31, 2013 as compared to the same period in 2012.Placement fees increased by $20.2 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. This changewas primarily attributable to $15.4 million related to the launch of Fund VIII during the year ended December 31, 2013.Occupancy expense increased by $2.7 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was primarily attributable to additional expenses incurred from the extension of existing leases along with additional office space leased as a result ofthe increase in our headcount to support the expansion of our global investment platform during the year ended December 31, 2013 as compared to the sameperiod in 2012.Other Income (Loss)Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Net gains from investment activities decreased by $117.0 million for the year ended December 31, 2014 as compared to the year ended December31, 2013. This change was primarily attributable to a $137.9 million decrease in net unrealized gains related to changes in the fair value of investments heldby AAA, offset by a decrease in losses on the investment in HFA Holdings Limited ("HFA") of $21.4 million (see note 4 to the consolidated financialstatements).Net gains from investment activities of consolidated VIEs decreased by $177.2 million for the year ended December 31, 2014 as compared to theyear ended December 31, 2013. The decrease was primarily attributable to a $238.5 million net loss from investment activities for the year ended December31, 2014 as compared to a $54.2 million net gain from investment activities for the year ended December 31, 2013. The decrease was also driven by a $7.8million decrease in interest and other income and a $74.6 million increase in other expenses for the year ended December 31, 2014 as compared to the sameperiod in 2013. These changes were offset by a $102.5 million net gain from debt for the year ended December 31, 2014 as compared to a $95.4 million netloss from debt for the year ended December 31, 2013.Income from equity method investments decreased by $53.5 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was primarily driven by lower appreciation in the net asset value of entities in which the Company has a direct interest forthe year ended December 31, 2014 as compared to the year ended December 31, 2013. Fund VI and Fund VII had the most significant impact and togetherhad a reduction of $53.9 million of income from equity method investments during the year ended December 31, 2014 as compared to the same period in2013.Interest income decreased by $1.9 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013 primarily dueto the decrease of payment-in-kind interest income as a result of the sale of the Company's investment in HFA during July 2014 as compared to the sameperiod in 2013 (see note 4 to the consolidated financial statements).Other income, net increased by $20.5 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Thischange was primarily attributable to a gain from the reduction of the tax receivable agreement liability during the year ended December 31, 2014 resultingfrom changes in projected income estimates and in estimated tax rates (see note 17 to our consolidated financial statements) and a gain on extinguishment ofa portion of the contingent consideration obligation related to the acquisition of Stone Tower (see note 18 to our consolidated financial statements) duringthe period. These increases were offset by losses resulting from fluctuations in exchange rates of foreign denominated assets and liabilities of subsidiariesduring the year ended December 31, 2014.- 96- Table of ContentsYear Ended December 31, 2013 Compared to Year Ended December 31, 2012Net gains from investment activities increased by $42.0 million for the year ended December 31, 2013 as compared to the year ended December31, 2012. This change was primarily attributable to a $54.3 million increase in net unrealized gains related to changes in the fair value of AAA Investments’portfolio investments, partially offset by an $11.5 million decrease in unrealized gains related to the change in the fair value of the investment in HFA duringthe year ended December 31, 2013 as compared to the same period in 2012.Net gains (losses) from investment activities of consolidated VIEs increased by $271.4 million during the year ended December 31, 2013 ascompared to the year ended December 31, 2012. This change was primarily attributable to a decrease in net realized and unrealized losses relating to the debtheld by the consolidated VIEs of $402.3 million and higher interest and other income of $92.7 million during the period. This was offset by a decrease in thefair values of investments held by the consolidated VIEs of $191.9 million and an increase in other expenses of $31.7 million during the year endedDecember 31, 2013 as compared to the same period in 2012.Income from equity method investments decreased by $2.8 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily driven by changes in the fair values of certain Apollo funds in which the Company has a direct interest. FundVII, COF I and EPF I had the most significant impact and together generated $81.9 million of income from equity method investments during the year endedDecember 31, 2013 as compared to a $84.2 million of income from equity method investments during the year ended December 31, 2012, resulting in a netdecrease of $2.3 million.Other income, net decreased by $1,924.6 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was primarily attributable to a gain on acquisition of $1,951.1 million recorded on the Stone Tower acquisition during April 2012. See note 3 to ourconsolidated financial statements for further discussion of the Stone Tower acquisition. The remaining offset was primarily attributable to income related tothe reduction of the tax receivable agreement liability due to a change in estimated tax rates, and an unrealized gain on Athene related derivative contracts(see note 17 to our consolidated financial statements) during the year ended December 31, 2012 as compared to the same period in 2011. See note 12 to ourconsolidated financial statements for a complete summary of other income, net, for the years ended December 31, 2013 and 2012.Income Tax ProvisionYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Income tax provision increased by $39.7 million primarily due to an increase in management business income subject to corporate leveltaxation. There was also a reduction of the Company’s blended state tax rate which caused the Company to reduce its deferred tax assets and increasedincome tax expense. The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. Due to our legalstructure, only a portion of the income we earn is subject to corporate-level tax rates in the United States and foreign jurisdictions. The provision for incometaxes includes federal, state and local income taxes in the United States and foreign income taxes at an effective tax rate of 16.8% and 4.3% for the yearsended December 31, 2014 and 2013, respectively. The reconciling items between our statutory tax rate and our effective tax rate were due to the following:(i) income passed through to Non-Controlling Interests; (ii) income passed through to Class A shareholders; (iii) amortization of AOG Units that are non-deductible for income tax purposes which were fully amortized as of June 30, 2013; and (iv) state and local income taxes including NYC UBT.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012The income tax provision increased by $42.2 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012.As discussed in note 13 to our consolidated financial statements, the Company’s income tax provision primarily relates to the earnings generated by APOCorp., a wholly-owned subsidiary of Apollo Global Management, LLC that is subject to U.S. federal, state and local taxes. APO Corp. had taxable income of$209.5 million and $130.8 million for the year ended December 31, 2013 and 2012, respectively, after adjusting for permanent tax differences. The $78.7million change in income before taxes resulted in increased federal, state and local taxes of $42.6 million during the period utilizing a marginal corporate taxrate and adjusting the estimated rate of tax Apollo expects to pay in the future. This was partially offset by a decrease in the income tax provision of $0.5million which primarily resulted from a decrease in the NYC UBT, as well as taxes on foreign subsidiaries.- 97- Table of ContentsNon-Controlling InterestsThe table below presents equity interests in Apollo’s consolidated, but not wholly-owned, subsidiaries and funds.Net income attributable to Non-Controlling Interests consisted of the following: For the Year Ended December 31, 2014 2013 2012 (in thousands)AAA(1)$(196,964) $(331,504) (278,454)Interest in management companies and a co-investment vehicle(2)(13,186) (18,872) (7,307)Other consolidated entities(17,590) 43,357 50,956Net income attributable to Non-Controlling Interests in consolidated entities(227,740) (307,019) (234,805)Net (income) loss attributable to Appropriated Partners’ Capital(3)70,729 (149,934) (1,816,676)Net income attributable to Non-Controlling Interests in the Apollo Operating Group(404,682) (1,257,650) (685,357)Net Income attributable to Non-Controlling Interests$(561,693) $(1,714,603) $(2,736,838)Net income (loss) attributable to Appropriated Partners’ Capital(4)(70,729) 149,934 1,816,676Other Comprehensive (income) loss attributable to Non-Controlling Interests591 (41) (2,010)Comprehensive Income Attributable to Non-Controlling Interests$(631,831) $(1,564,710) $(922,172) (1)Reflects the Non-Controlling Interests in the net (income) loss of AAA and is calculated based on the Non-Controlling Interests' ownership percentage in AAA, whichwas approximately 97.5%, 97.4% and 97.3% as of December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, 2013 and 2012, Apollo ownedapproximately 2.5%, 2.6% and 2.7% of AAA, respectively.(2)Reflects the remaining interest held by certain individuals who receive an allocation of income from certain of our credit funds.(3)Reflects net (income) loss of the consolidated CLOs classified as VIEs.(4)Appropriated Partners’ Capital is included in total Apollo Global Management, LLC shareholders’ equity and is therefore not a component of comprehensive incomeattributable to Non-Controlling Interests on the consolidated statements of comprehensive income.Net income attributable to Non-Controlling Interests in the Apollo Operating Group consisted of the following: For the Year Ended December 31, 2014 2013 2012 (in thousands)Net income $729,922 $2,373,994 $3,047,795Net income attributable to Non-Controlling Interests in consolidated entities (157,011) (456,953) (2,051,481)Net income after Non-Controlling Interests in consolidated entities 572,911 1,917,041 996,314Adjustments: Income tax provision(1) 147,245 107,569 65,410NYC UBT and foreign tax provision(2) (10,995) (10,334) (10,889) Net (income) loss in non-Apollo Operating Group entities (31,150) (11,774) 948Total adjustments 105,100 85,461 55,469Net income after adjustments 678,011 2,002,502 1,051,783Approximate weighted average ownership percentage of Apollo Operating Group 57.8% 61.0% 64.9%Net income attributable to Non-Controlling Interests in Apollo Operating Group $404,682 $1,257,650 $685,357 (1)Reflects all taxes recorded in our consolidated statements of operations. Of this amount, U.S. federal, state, and local corporate income taxes attributable to APO Corp.are added back to income of the Apollo Operating Group before calculating Non-Controlling Interests as the income allocable to the Apollo Operating Group is notsubject to such taxes.(2)Reflects NYC UBT and foreign taxes that are attributable to the Apollo Operating Group and its subsidiaries related to its operations in the U.S. as partnerships and innon-U.S. jurisdictions as corporations. As such, these amounts are considered in the income attributable to the Apollo Operating Group.- 98- Table of ContentsSegment AnalysisDiscussed below are our results of operations for each of our reportable segments. They represent the segment information available and utilizedby our executive management, which consists of our Managing Partners, who operate collectively as our chief operating decision maker, to assessperformance and to allocate resources. Management divides its operations into three reportable segments: private equity, credit and real estate. Thesesegments were established based on the nature of investment activities in each underlying fund, including the specific type of investment made, thefrequency of trading, and the level of control over the investment. Segment results do not consider consolidation of funds, equity-based compensationexpense comprised of AOG Units, income taxes, amortization of intangibles associated with the 2007 Reorganization and acquisitions, Non-ControllingInterests with the exception of allocations of income to certain individuals and non-cash revenue and expense related to equity awards granted byunconsolidated affiliates to employees of the Company.In addition to providing the financial results of our three reportable business segments, we further evaluate our individual reportable segmentsbased on what we refer to as our management and incentive businesses. Our management business is generally characterized by the predictability of itsfinancial metrics, including revenues and expenses. The management business includes management fee revenues, advisory and transaction fee revenues,carried interest income from one of our opportunistic credit funds and expenses, each of which we believe are more stable in nature. The financialperformance of our incentive business is partially dependent upon quarterly mark-to-market unrealized valuations in accordance with U.S. GAAP guidanceapplicable to fair value measurements. The incentive business includes carried interest income, income from equity method investments and profit sharingexpense that are associated with our general partner interests in the Apollo funds, which are generally less predictable and more volatile in nature.Our financial results vary, since carried interest, which generally constitutes a large portion of the income from the funds that we manage, as wellas the transaction and advisory fees that we receive, can vary significantly from quarter to quarter and year to year. As a result, we emphasize long-termfinancial growth and profitability to manage our business.- 99- Table of ContentsPrivate EquityThe following tables set forth our segment statement of operations information and our supplemental performance measure, ENI, for our privateequity segment, further broken out by our "management" and "incentive" businesses, for the years ended December 31, 2014, 2013 and 2012, respectively. For the Year Ended December 31, 2014 For the Year Ended December 31, 2013 For the Year Ended December 31, 2012 Management Incentive Total Management Incentive Total Management Incentive Total (in thousands)Private Equity: Revenues: Advisory and transaction fees fromaffiliates, net$58,241 $— $58,241 $78,371 $— $78,371 $121,744 $— $121,744Management fees from affiliates315,069 — 315,069 284,833 — 284,833 277,048 — 277,048Carried interest income (loss) fromaffiliates: Unrealized gains (losses)(1)— (1,196,093) (1,196,093) — 454,722 454,722 — 854,919 854,919Realized gains— 1,428,076 1,428,076 — 2,062,525 2,062,525 — 812,616 812,616Total Revenues373,310 231,983 605,293 363,204 2,517,247 2,880,451 398,792 1,667,535 2,066,327Expenses: Compensation and Benefits: Equity-based compensation49,526 — 49,526 31,967 — 31,967 31,213 — 31,213Salary, bonus and benefits96,689 — 96,689 109,761 — 109,761 104,068 — 104,068Profit sharing expense— 178,373 178,373 — 1,030,404 1,030,404 — 726,874 726,874Total compensationand benefits146,215 178,373 324,588 141,728 1,030,404 1,172,132 135,281 726,874 862,155Other expenses78,735 — 78,735 112,525 — 112,525 83,311 — 83,311Total Expenses224,950 178,373 403,323 254,253 1,030,404 1,284,657 218,592 726,874 945,466Other Income: Income from equity methodinvestments— 30,418 30,418 — 78,811 78,811 — 74,038 74,038Other income, net12,976 1,617 14,593 13,006 1,695 14,701 4,653 — 4,653Total Other Income12,976 32,035 45,011 13,006 80,506 93,512 4,653 74,038 78,691Economic Net Income$161,336 $85,645 $246,981 $121,957 $1,567,349 $1,689,306 $184,853 $1,014,699 $1,199,552 (1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2012 was a $75.3 million reversal of the entire general partnerobligation to return previously distributed carried interest income with respect to Fund VI. The general partner obligation is recognized based upon a hypotheticalliquidation of the funds' net assets as of the reporting date. The actual determination and any required payment of any such general partner obligation would not takeplace until the final disposition of a fund's investments based on the contractual termination of the fund. - 100- Table of Contents For the Year Ended December 31, For the Year Ended December 31, 2014 2013 AmountChange PercentageChange 2013 2012 AmountChange PercentageChange (dollars in thousands) (dollars in thousands) Private Equity: Revenues: Advisory and transaction fees fromaffiliates, net $58,241 $78,371 $(20,130) (25.7)% $78,371 $121,744 $(43,373) (35.6)%Management fees from affiliates 315,069 284,833 30,236 10.6 284,833 277,048 7,785 2.8Carried interest income (loss) fromaffiliates: Unrealized gains (losses)(1) (1,196,093) 454,722 (1,650,815) NM 454,722 854,919 (400,197) (46.8)Realized gains 1,428,076 2,062,525 (634,449) (30.8) 2,062,525 812,616 1,249,909 153.8Total carried interest incomefrom affiliates 231,983 2,517,247 (2,285,264) (90.8) 2,517,247 1,667,535 849,712 51.0Total Revenues 605,293 2,880,451 (2,275,158) (79.0) 2,880,451 2,066,327 814,124 39.4Expenses: Compensation and benefits: Equity-based compensation 49,526 31,967 17,559 54.9 31,967 31,213 754 2.4Salary, bonus and benefits 96,689 109,761 (13,072) (11.9) 109,761 104,068 5,693 5.5Profit sharing expense 178,373 1,030,404 (852,031) (82.7) 1,030,404 726,874 303,530 41.8Total compensation andbenefits expense 324,588 1,172,132 (847,544) (72.3) 1,172,132 862,155 309,977 36.0Other expenses 78,735 112,525 (33,790) (30.0) 112,525 83,311 29,214 35.1Total Expenses 403,323 1,284,657 (881,334) (68.6) 1,284,657 945,466 339,191 35.9Other Income: Income from equity method investments 30,418 78,811 (48,393) (61.4) 78,811 74,038 4,773 6.4Other income, net 14,593 14,701 (108) (0.7) 14,701 4,653 10,048 215.9Total Other Income 45,011 93,512 (48,501) (51.9) 93,512 78,691 14,821 18.8Economic Net Income $246,981 $1,689,306 $(1,442,325) (85.4)% $1,689,306 $1,199,552 $489,754 40.8 %(1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2012 was a $75.3 million reversal of the entire general partnerobligation to return previously distributed carried interest income with respect to Fund VI. The general partner obligation is recognized based upon a hypotheticalliquidation of the funds' net assets as of the reporting date. The actual determination and any required payment of any such general partner obligation would not takeplace until the final disposition of a fund's investments based on the contractual termination of the fund.RevenuesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Advisory and transaction fees from affiliates, net, decreased by $20.1 million for the year ended December 31, 2014 as compared to the yearended December 31, 2013. This change was primarily attributable to lower net advisory fees driven by the realization of underlying investments, terminationfees and waived fees related to debt investment vehicles, EP Energy, Taminco, Realogy and Caesars Entertainment that occurred during the year endedDecember 31, 2013 and lower net transaction fees for the year ended December 31, 2014 compared to 2013.Management fees from affiliates increased by $30.2 million for the year ended December 31, 2014 as compared to the year ended December 31,2013. This increase was primarily attributable to increased management fees earned from Fund VIII in the amount of $126.4 million during the year endedDecember 31, 2014. This increase was partially offset by decreased management fees earned from Fund VII of $92.9 million as a result of a change in themanagement fee rate and basis upon which management fees are earned from capital commitments to invested capital, due to the fund coming to the end ofthe fund's investment period.- 101- Table of ContentsCarried interest income from affiliates decreased by $2.3 billion for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was primarily attributable to decreases in carried interest income earned from Fund VI and Fund VII of $1.3 billion and$850.1 million, respectively. Realized carried interest income decreased $634.4 million, driven by decreased realized carried interest with respect to Fund VIand Fund VII of $358.9 million and $261.0 million, respectively, primarily due to decreased dispositions of underlying portfolio investments held during theyear as compared to the prior year. Unrealized carried interest income decreased by $1.7 billion during the year ended December 31, 2014, driven bydecreases in unrealized carried interest income with respect to Fund VI and Fund VII of $941.4 million and $589.2 million, respectively. These decreaseswere a result of decreases in the fair value of portfolio investments of Fund VI and Find VII and reversals of unrealized carried interest income to realizedcarried interest income.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 Advisory and transaction fees from affiliates, net, decreased by $43.4 million for the year ended December 31, 2013 as compared to the yearended December 31, 2012. This change was primarily attributable to a decrease of $35.4 million in net transaction and termination fees driven by theportfolio company investments of Fund VI, AAA Investments and Fund VII. The net transaction and termination fees related to Fund VI and AAA Investmentsdecreased by $17.9 million and $8.8 million, respectively, due to termination fees earned in 2012 from Realogy, Rexnord and Smart & Final, compared tozero termination fees earned during the year ended December 31, 2013. For the years ended December 31, 2013 and 2012, the net transaction and terminationfees related to Fund VII were $42.2 million and $50.9 million, respectively, a decrease of $8.7 million. For 2012, the fees related to Fund VII were driven bynet transaction fees earned from EP Energy LLC and Great Wolf Resorts of $42.4 million, whereas during 2013 the fees were driven by net transaction feesearned from McGraw-Hill Education of $14.8 million and net termination fees earned from Taminco and Constellium (formerly Alcan) of $20.6 million. Netadvisory fees also decreased by $8.0 million mainly due to decreased monitoring fees earned from portfolio company investments of Fund VI and AAAInvestments, which include Berry Plastics, CEVA Logistics, Momentive Performance Materials and Caesars Entertainment. Included in advisory andtransaction fees from affiliates is $19.1 million and $0.5 million recognized as a reversal of the Management Fee Offset for Fund V and Fund IV, respectively,and $18.5 million of additional Management Fee Offsets related to director fees, net of director fee income.Management fees from affiliates increased by $7.8 million for year ended December 31, 2013 as compared to the year ended December 31, 2012.This increase was primarily attributable to Fund VIII, which launched in August 2013 and generated $65.0 million in management fees during the year endedDecember 31, 2013. The increase was also attributed to the Contributed Partnerships, which began earning fees in the fourth quarter 2012 as a result of theAAA Transaction and generated $10.3 million of management fees during the year ended December 31, 2013. See notes 4 and 17 to our consolidatedfinancial statements for a complete summary of the AAA Transaction and fee arrangements related to management fees earned from the ContributedPartnerships. This increase was partially offset by decreased management fees earned from Fund VII of $42.4 million as a result of a change in themanagement fee rate and basis from capital commitments to invested capital due to the end of its investment period. Management fees earned from Fund VIalso decreased by $8.3 million due to lower invested capital during the year ended December 31, 2013 as compared to the year ended December 31, 2012.Carried interest income from affiliates increased by $849.7 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily attributable to increases in carried interest income earned from Fund VI of $548.1 million, Fund VII of $242.4million and AAA Co-Invest VI of $115.7 million, partially offset by a decrease of $34.8 million from Fund V. Included in carried interest income fromaffiliates was an increase of $1,249.9 million in realized gains mainly driven by increased dispositions of underlying portfolio investments held during theyear by Fund VII, Fund VI, Fund V and AAA Co-Invest VI of $691.3 million, $466.3 million, $65.7 million and $37.9 million, respectively. The remainingchange was attributable to a decrease in net unrealized carried interest income of $400.2 million mainly driven by Fund VII and Fund V of $449.0 millionand $100.5 million, respectively, resulting from the reversal of unrealized carried interest income to realized carried interest income due to the realization ofunderlying portfolio investments held during the year. Partly offsetting the decrease in net unrealized carried interest income were increases by Fund VI andAAA Co-Invest VI of $81.7 million and $77.7 million, respectively, due to increases in the fair values of the underlying portfolio investments held during theyear.ExpensesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Compensation and benefits expense decreased by $847.5 million for the year ended December 31, 2014 as compared to the year ended December31, 2013. This change was primarily attributable to a decrease in profit sharing expense of $852.0 million, due to lower carried interest income during theyear ended December 31, 2014 as compared to the year ended December 31, 2013. In any year, the blended profit sharing percentage is impacted by therespective profit sharing ratios of the funds generating- 102- Table of Contentscarried interest in the period. During the year ended December 31, 2014, the fair value of Fund VII’s underlying fund investments appreciated while Fund VI'sunderlying fund investments depreciated, which contributed to an increased profit sharing percentage compared to the year ended December 31, 2013. Thisdecrease was partially offset by increased equity-based compensation of $17.6 million, driven by non-cash expense related to equity-based compensation inconnection with the departure of an executive officer during the year ended December 31, 2014. Included in profit sharing expense is $55.5 million and$46.0 million related to the Incentive Pool for the years ended December 31, 2014 and December 31, 2013, respectively.Other expenses decreased by $33.8 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Thischange was primarily attributable to decreased organizational expenses and legal and consulting fees, as well as a reduction in placement fees relating toFund VIII.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Compensation and benefits expense increased by $310.0 million for the year ended December 31, 2013 as compared to the year ended December31, 2012. This change was primarily a result of an increase of $303.5 million in profit sharing expense driven by an increase in carried interest income earnedby certain of our private equity funds during the year. Also, salary, bonus and benefits and equity-based compensation increased by $5.7 million and $0.8million, respectively, due to an increase in headcount during the year ended December 31, 2013 as compared to the year ended December 31, 2012. Includedin profit sharing expense is $46.0 million and $50.3 million related to the Incentive Pool for the years ended December 31, 2013 and 2012, respectively.Other expenses increased by $29.2 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. This changewas primarily attributable to increased placement fees and organizational expenses incurred in connection with the capital raising activities for Fund VIII.Professional fees also increased due to higher external accounting, tax, audit, legal and consulting fees incurred during the year ended December 31, 2013 ascompared to the year ended December 31, 2012.Other Income Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Income from equity method investments decreased by $48.4 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was primarily driven by lower appreciation in the net asset value, primarily from Apollo's ownership interests in Fund VIand Fund VII, in the amounts of $4.6 million and $49.3 million, respectively, for the year ended December 31, 2014 as compared to the year ended December31, 2013, which was offset by an increase in the fair value of Apollo's ownership interest in AION in the amount of $5.8 million.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Income from equity method investments increased by $4.8 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was driven by increases in the fair values of our private equity investments held, primarily from Apollo's ownership interestin Fund VII, Vantium A/B, C and D and AAA Investments which in total contributed to increased income from equity method investments of $5.6 millionduring the year. The increase in income from equity method investments was partially offset by a decrease of $1.2 million from the equity investment held inAION for the year ended December 31, 2013 as compared to the year ended December 31, 2012.Other income, net increased by $10.0 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was primarily attributable to gains resulting from fluctuations in exchange rates of foreign denominated assets and liabilities of subsidiaries andreduction of the tax receivable agreement liability due to a change in estimated tax rates. See note 17 to our consolidated financial statements for moreinformation on the tax receivable agreement. - 103- Table of ContentsCreditThe following tables set forth segment statement of operations information and ENI for our credit segment, further broken out by our"management" and "incentive" businesses, for the years ended December 31, 2014, 2013 and 2012, respectively. For the Year Ended December 31, 2014 For the Year Ended December 31, 2013 For the Year Ended December 31, 2012 Management Incentive Total Management Incentive Total Management Incentive Total (in thousands)Credit: Revenues: Advisory and transaction fees fromaffiliates, net$255,186 $— $255,186 $114,643 $— $114,643 $27,551 $— $27,551Management fees from affiliates538,742 — 538,742 392,433 — 392,433 299,667 — 299,667Carried interest income from affiliates: —Unrealized gains (losses) (1)— (156,644) (156,644) — (56,568) (56,568) — 301,077 301,077Realized gains41,199 281,034 322,233 36,922 393,338 430,260 37,842 179,933 217,775Total Revenues835,127 124,390 959,517 543,998 336,770 880,768 365,060 481,010 846,070Expenses: Compensation and Benefits: Equity-based compensation48,737 — 48,737 24,167 — 24,167 26,988 — 26,988Salary, bonus and benefits210,546 — 210,546 153,056 — 153,056 139,895 — 139,895Profit sharing expense— 95,070 95,070 — 142,728 142,728 — 138,444 138,444Total compensation andbenefits259,283 95,070 354,353 177,223 142,728 319,951 166,883 138,444 305,327Other expenses163,082 — 163,082 162,064 — 162,064 149,051 — 149,051Total Expenses422,365 95,070 517,435 339,287 142,728 482,015 315,934 138,444 454,378Other Income: Net gains (losses) from investmentactivities— 9,062 9,062 — (12,593) (12,593) — (1,142) (1,142)Income from equity method investments— 18,812 18,812 — 30,678 30,678 — 46,100 46,100Other income, net28,538 22,674 51,212 28,540 8,508 37,048 15,008 — 15,008Total Other Income28,538 50,548 79,086 28,540 26,593 55,133 15,008 44,958 59,966Non-Controlling Interests(12,688) — (12,688) (13,985) — (13,985) (8,730) — (8,730)Economic Net Income$428,612 $79,868 $508,480 $219,266 $220,635 $439,901 $55,404 $387,524 $442,928(1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest incomedue to the general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate with respect to two of our credit funds.Included in unrealized carried interest income from affiliates for the year ended December 31, 2013 was a reversal of $19.3 million and $0.3 million of the entiregeneral partner obligation to return previously distributed carried interest income with respect to SOMA and APC, respectively. Included in unrealized carried interestincome (loss) from affiliates for the year ended December 31, 2012 was a reversal of previously realized carried interest income due to the general partner obligation toreturn previously distributed carried interest income with respect to SOMA and APC of $1.2 million and $0.3 million, respectively. The general partner obligation isrecognized based upon a hypothetical liquidation of the funds' net assets as of the reporting date. The actual determination and any required payment of any suchgeneral partner obligation would not take place until the final disposition of a fund’s investments based on the contractual termination of the fund or as otherwise setforth in the respective limited partnership agreement of the fund. - 104- Table of Contents For the Year Ended December 31, For the Year Ended December 31, 2014 2013 AmountChange PercentageChange 2013 2012 AmountChange PercentageChange (dollars in thousands) (dollars in thousands) Credit: Revenues: Advisory and transaction fees from affiliates,net $255,186 $114,643 $140,543 122.6 % $114,643 $27,551 $87,092 316.1 %Management fees from affiliates 538,742 392,433 146,309 37.3 392,433 299,667 92,766 31.0Carried interest income (loss) from affiliates: Unrealized gains (losses) (1) (156,644) (56,568) (100,076) 176.9 (56,568) 301,077 (357,645) NMRealized gains 322,233 430,260 (108,027) (25.1) 430,260 217,775 212,485 97.6Total carried interest income fromaffiliates 165,589 373,692 (208,103) (55.7) 373,692 518,852 (145,160) (28.0)Total Revenues 959,517 880,768 78,749 8.9 880,768 846,070 34,698 4.1Expenses: Compensation and benefits Equity-based compensation 48,737 24,167 24,570 101.7 24,167 26,988 (2,821) (10.5)Salary, bonus and benefits 210,546 153,056 57,490 37.6 153,056 139,895 13,161 9.4Profit sharing expense 95,070 142,728 (47,658) (33.4) 142,728 138,444 4,284 3.1Total compensation and benefits 354,353 319,951 34,402 10.8 319,951 305,327 14,624 4.8Other expenses 163,082 162,064 1,018 0.6 162,064 149,051 13,013 8.7Total Expenses 517,435 482,015 35,420 7.3 482,015 454,378 27,637 6.1Other Income: Net gains (losses) from investment activities 9,062 (12,593) 21,655 NM (12,593) (1,142) (11,451) NMIncome from equity method investments 18,812 30,678 (11,866) (38.7) 30,678 46,100 (15,422) (33.5)Other income, net 51,212 37,048 14,164 38.2 37,048 15,008 22,040 146.9Total Other Income 79,086 55,133 23,953 43.4 55,133 59,966 (4,833) (8.1)Non-Controlling Interests (12,688) (13,985) 1,297 (9.3) (13,985) (8,730) (5,255) 60.2Economic Net Income $508,480 $439,901 $68,579 15.6 % $439,901 $442,928 $(3,027) (0.7)%(1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest incomedue to the general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate with respect to two of our credit funds.Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2013 was a reversal of $19.3 million and $0.3 million of the entiregeneral partner obligation to return previously distributed carried interest income to SOMA and APC, respectively. Included in unrealized carried interest income (loss)from affiliates for the year ended December 31, 2012 was a reversal of previously realized carried interest income due to the general partner obligation to returnpreviously distributed carried interest income with respect to SOMA and APC of $1.2 million and $0.3 million, respectively. The general partner obligation isrecognized based upon a hypothetical liquidation of the funds' net assets as of the reporting date. The actual determination and any required payment of any suchgeneral partner obligation would not take place until the final disposition of a fund’s investments based on the contractual termination of the fund or as otherwise setforth in the respective limited partnership agreement of the fund.RevenuesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Advisory and transaction fees from affiliates, net, increased by $140.5 million during the year ended December 31, 2014 as compared to the yearended December 31, 2013. The increase was primarily driven by an increase in monitoring fees from Athene of $118.5 million as a result of Athene'sacquisition of Aviva USA and an increase in net transaction fees with respect to EPF II and FCI II during the year ended December 31, 2014 compared to thesame period in 2013.Management fees from affiliates increased by $146.3 million for the year ended December 31, 2014 as compared to the year ended December 31,2013. This change was primarily attributable to increases in management fees earned from Athene (as a result of Athene's acquisition of Aviva USA) andAINV of $126.1 million and $8.4 million, respectively, during the year ended December 31, 2014 compared to the same period in 2013.- 105- Table of ContentsCarried interest income from affiliates decreased by $208.1 million during the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was primarily attributable to decreased carried interest income related to COF I of $46.2 million, certain sub-advisoryarrangements of $42.3 million, SOMA of $38.8 million, EPF I of $25.7 million, certain CLOs of $20.6 million, Apollo Offshore Credit Fund of $18.0 million,ACLF of $12.6 million, COF II of $11.4 million and Apollo Investment Europe II, L.P. ("AIE II") of $11.3 million during the year ended December 31, 2014compared to the same period in 2013. These decreases were partially offset by increased carried interest income related to EPF II of $59.4 million. Included incarried interest income from affiliates was realized carried interest income which decreased $108.0 million primarily resulting from lower realizations fromCOF I of $127.4 million, COF II of $29.2 million, SOMA of $15.5 million, AIE II of $14.1 million and Apollo Offshore Credit Fund of $11.6 million, partiallyoffset by increased realized carried interest income from EPF I of $100.1 million. Also included in carried interest income was unrealized carried interestincome which decreased $100.1 million during the year ended December 31, 2014 compared to the same period in 2013, mainly driven by decreases withrespect to EPF I of $125.8 million, certain sub-advisory arrangements of $39.1 million, certain CLOs of $34.7 million, SOMA of $23.2 million, partiallyoffset by a decrease in unrealized carried interest losses with respect to COF I of $81.2 million and an increase in unrealized carried interest income withrespect to EPF II of $59.4 million.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Advisory and transaction fees from affiliates, net, increased by $87.1 million, during the year ended December 31, 2013 as compared to the yearended December 31, 2012. Net advisory fees earned were $108.5 million and $21.5 million during the years ended December 31, 2013 and 2012,respectively, which was mainly driven by an increase in monitoring fees based on Athene capital and surplus fees of $91.1 million. Net transaction feesearned were $6.1 million and $6.0 million during the years ended December 31, 2013 and 2012, respectively. Advisory and transaction fees, includingdirectors’ fees, are reported net of Management Fee Offsets which totaled $28.0 million and $26.6 million for the years ended December 31, 2013 and 2012,respectively, a decrease of $1.4 million.Management fees from affiliates increased by $92.8 million for the year ended December 31, 2013 as compared to the year ended December 31,2012. This change was primarily attributable to increases in management fees earned from Athene, EPF II, certain CLOs, and ACF of $72.5 million, $14.0million, $10.4 million, and $8.7 million, respectively during the year ended December 31, 2013 compared to the same period in 2012. The increase inmanagement fees was partially offset by a $7.8 million decrease in fees generated from COF II and a $7.7 million decrease in fees generated from SVF,compared to the same period in 2012. The remaining change was attributable to other credit funds, collectively, which contributed to an increase of $2.7million in management fees during the year ended December 31, 2013 compared to the same period in 2012.Carried interest income from affiliates decreased by $145.2 million during the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily attributable to lower carried interest income related to COF I of $100.1 million, COF II of $48.3 million,certain CLOs of $44.5 million, offset by higher carried interest income related to SOMA of $40.0 million and EPF I of $34.5 million for the year endedDecember 31, 2013 compared to 2012. Included in carried interest income from affiliates was realized carried interest income which increased by $212.5million, primarily resulting from increased dividends, interest income, and dispositions of portfolio investments held by COF I of $79.0 million, EPF I of$33.0 million, certain CLOs of $29.4 million, SOMA of $17.4 million, and CLF of $17.1 million as compared to 2012. The remaining change wasattributable to other credit funds, which in aggregate contributed to an increase of $36.6 million in realized carried interest income. The increase in realizedcarried interest income was offset by a $357.6 million decrease in net unrealized carried interest loss. This offset primarily resulted from reversals ofunrealized carried interest income to realized carried interest income due to the realization of underlying portfolio investments held during the period byCOF I, certain CLOs, CLF, and COF II.Expenses Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Compensation and benefits expense increased by $34.4 million for the year ended December 31, 2014 as compared to the year ended December31, 2013. This change was primarily due to an increase in salary, bonus and benefits of $57.5 million due to increased headcount and an increase in equity-based compensation of $24.6 million. The increase in equity-based compensation was driven by non-cash expense of $23.2 million related to equity-basedcompensation in connection with the departure of an executive officer during the year ended December 31, 2014 as compared to the same period in 2013.These increases were offset by a decrease in profit sharing expense of $47.7 million during the year ended December 31, 2014 as compared to the same periodin 2013, primarily attributable to a corresponding decrease in carried interest income. Within our credit segment, the Company is seeking to further aligntotal compensation for investment professionals with the profitability of the credit business as a whole rather than on a fund-by-fund basis. As a result, theCompany incurred approximately $22.0 million of additional profit sharing expense at the inception of the compensation plan during 2014. Additionally,included within profit sharing expense is- 106- Table of Contentsthe Incentive Pool, which resulted in additional profit sharing expense of $6.3 million and $16.3 million for the year ended December 31, 2014 and 2013,respectively.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Compensation and benefits expense increased by $14.6 million for the year ended December 31, 2013, as compared to the year ended December31, 2012. The change was primarily due to an increase in salary, bonus, and benefits of $13.2 million during the period, due to increased headcount, and anincrease in profit-sharing expense of $4.3 million during the year ended December 31, 2013 as compared to the same period in 2012. Included in the profitsharing expense is the Incentive Pool, with expenses of $16.3 million and $11.8 million for the years ended December 31, 2013 and 2012, respectively.Other expenses increased by $13.0 million during the year ended December 31, 2013, as compared to the year ended December 31, 2012. Thechange was driven by a $7.1 million increase in placement fees mainly due to AIF, and a $5.0 million increase in professional fees attributable to higher legaland IT consulting fees during the year ended December 31, 2013 as compared to the same period in 2012.Other Income Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Net gains from investment activities of $9.1 million increased by $21.7 million for the year ended December 31, 2014 as compared to the yearended December 31, 2013 as a result of appreciation in the Company's investment in HFA during the year ended December 31, 2014 prior to the sale of theinvestment in HFA (see note 4 to the consolidated financial statements.)Income from equity method investments decreased by $11.9 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was driven by decreases in the fair values of investments held by certain of our credit funds, primarily COF I, EPF I, AIE II,COF III and Apollo Palmetto Strategic Partnership, L.P. which resulted in decreases in income from equity method investments of $6.1 million, $2.2 million,$1.8 million, $1.6 million and $1.1 million, respectively, during the year ended December 31, 2014 as compared to the same period in 2013.Other income increased by $14.2 million during the year ended December 31, 2014, as compared to the year ended December 31, 2013, mainlydue to a gain from the reduction of the tax receivable agreement liability during the year ended December 31, 2014 resulting from changes in projectedincome estimates and estimated tax rates (see note 17 to our consolidated financial statements) and a gain on extinguishment of a portion of the contingentconsideration obligation related to the acquisition of Stone Tower (see note 18 to our consolidated financial statements).Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Net losses from investment activities increased by $11.5 million for the year ended December 31, 2013 as compared to the year ended December31, 2012. This change was related to an increase in unrealized loss resulting from the change in the fair value of the investment in HFA as of December 31,2013 as compared to the same period in 2012.Income from equity method investments decreased by $15.4 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was driven by decreases in the fair values of investments held by certain of our credit funds, primarily COF I and COF II,which resulted in decreases in income from equity method investments of $13.3 million, and $4.0 million, respectively, during the year ended December 31,2013 as compared to the same period in 2012.Other income increased by $22.0 million during the year ended December 31, 2013, as compared to December 31, 2012, primarily due to areduction of the tax receivable agreement liability due to a change in estimated tax rates and a $8.5 million unrealized gain on Athene-related derivativecontracts (see note 17 to our consolidated financial statements).- 107- Table of ContentsReal EstateThe following tables set forth our segment statement of operations information and ENI for our real estate segment, further broken out by our"management" and "incentive" businesses, for the years ended December 31, 2014, 2013 and 2012, respectively. For the Year Ended December 31, 2014 For the Year Ended December 31, 2013 For the Year Ended December 31, 2012 Management Incentive Total Management Incentive Total Management Incentive Total (in thousands)Real Estate: Revenues: Advisory and transaction fees fromaffiliates, net$2,655 $— $2,655 $3,548 $— $3,548 $749 $— $749Management fees from affiliates47,213 — 47,213 53,436 — 53,436 46,326 46,326Carried interest income from affiliates: Unrealized gains— 4,951 4,951 — 4,681 4,681 — 10,401 10,401Realized gains— 3,998 3,998 — 541 541 — 4,673 4,673Total Revenues49,868 8,949 58,817 56,984 5,222 62,206 47,075 15,074 62,149Expenses: Compensation and Benefits: Equity-based compensation8,849 — 8,849 10,207 — 10,207 10,741 — 10,741Salary, bonus and benefits32,611 — 32,611 31,936 — 31,936 30,611 — 30,611Profit sharing expense— 2,747 2,747 — 123 123 — 6,815 6,815Total compensation andbenefits41,460 2,747 44,207 42,143 123 42,266 41,352 6,815 48,167Other expenses23,784 — 23,784 27,620 — 27,620 24,270 — 24,270Total Expenses65,244 2,747 67,991 69,763 123 69,886 65,622 6,815 72,437Other Income: Income from equity method investments— 5,675 5,675 — 3,722 3,722 — 982 982Other income, net3,584 — 3,584 2,402 — 2,402 1,271 — 1,271Total Other Income3,584 5,675 9,259 2,402 3,722 6,124 1,271 982 2,253Economic Net Income (Loss)$(11,792) $11,877 $85 $(10,377) $8,821 $(1,556) $(17,276) $9,241 $(8,035)- 108- Table of Contents For the Year Ended December 31, For the Year Ended December 31, 2014 2013 AmountChange PercentageChange 2013 2012 AmountChange PercentageChange (dollars in thousands) (dollars in thousands) Real Estate: Revenues: Advisory and transaction fees from affiliates,net $2,655 $3,548 $(893) (25.2)% $3,548 $749 $2,799 373.7 %Management fees from affiliates 47,213 53,436 (6,223) (11.6) 53,436 46,326 7,110 15.3Carried interest income from affiliates: Unrealized gains 4,951 4,681 270 5.8 4,681 10,401 (5,720) (55.0)Realized gains 3,998 541 3,457 NM 541 4,673 (4,132) (88.4)Total carried interest income fromaffiliates 8,949 5,222 3,727 71.4 5,222 15,074 (9,852) (65.4)Total Revenues 58,817 62,206 (3,389) (5.4) 62,206 62,149 57 0.1Expenses: Compensation and Benefits: Equity-based compensation 8,849 10,207 (1,358) (13.3) 10,207 10,741 (534) (5.0)Salary, bonus and benefits 32,611 31,936 675 2.1 31,936 30,611 1,325 4.3Profit sharing expense 2,747 123 2,624 NM 123 6,815 (6,692) (98.2)Total compensation and benefits 44,207 42,266 1,941 4.6 42,266 48,167 (5,901) (12.3)Other expenses 23,784 27,620 (3,836) (13.9) 27,620 24,270 3,350 13.8Total Expenses 67,991 69,886 (1,895) (2.7) 69,886 72,437 (2,551) (3.5)Other Income: Income from equity method investments 5,675 3,722 1,953 52.5 3,722 982 2,740 279.0Other income, net 3,584 2,402 1,182 49.2 2,402 1,271 1,131 89.0Total Other Income 9,259 6,124 3,135 51.2 6,124 2,253 3,871 171.8Economic Net Income (Loss) $85 $(1,556) $1,641 NM $(1,556) $(8,035) $6,479 (80.6)%Revenues Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Advisory and transaction fees from affiliates, net, decreased by $0.9 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013. This change was attributable to a decrease in capital raised and invested and the realization of underlying investments for whichtransaction fees and exit fees, respectively, were earned during the year ended December 31, 2013.Management fees decreased by $6.2 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Thedecrease in management fees was primarily due to decreased management fees from the CPI Funds for the year ended December 31, 2014 as compared to theyear ended December 31, 2013.Carried interest income from affiliates increased by $3.7 million for the year ended December 31, 2014 as compared to the year ended December31, 2013. This change was primarily attributable to an increase in carried interest income relating to the AGRE U.S. Real Estate Fund, L.P. in the amount of$2.8 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Advisory and transaction fees from affiliates, net, increased by $2.8 million for the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was attributable to additional capital raised and invested and the realization of underlying investments for whichtransaction fees and exit fees, respectively, were earned during the year.Management fees increased by $7.1 million for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Of thisincrease, $2.4 million was due to management fees earned from certain sub-advisory agreements and $1.2 million due to fees earned from 2012 CMBS-IFund, L.P. and 2012 CMBS-II Fund, L.P., which began generating fees in the- 109- Table of Contentsthird quarter of 2012. Additionally, during 2013, ARI invested additional capital and AGRE Debt Fund I, L.P. raised additional fee generating capital whichresulted in higher management fees earned during the year of $5.6 million. The increase in management fees was partially offset by a decrease in managementfees earned from the CPI Funds of $2.4 million as a result of the realization of underlying investments during the year ended December 31, 2013. Furtheroffsetting the increase was a decrease of $0.5 million in management fees from AGRE U.S. Real Estate Fund, L.P. which generated higher management fees in2012 due to new commitments to the fund for which the management fees were calculated retrospectively back to the initial closing date of the fund.Carried interest income from affiliates decreased by $9.9 million for the year ended December 31, 2013 as compared to the year ended December31, 2012. This change was primarily attributable to a $5.7 million decrease in net unrealized carried interest income driven by a decrease in the fair values ofthe underlying portfolio investments for certain of the CPI Funds, partially offset by increases in the fair values of the underlying investments of AGRE U.S.Real Estate Fund, L.P. Also driving the change was a decrease in realized carried interest of $4.1 million from the CPI Funds during the year ended December31, 2013 as compared to the year ended December 31, 2012.ExpensesYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Compensation and benefits increased by $1.9 million during the year ended December 31, 2014 as compared to the year ended December 31,2013. This change was primarily attributable to an increase of $2.6 million in profit sharing expense, driven by the increase in carried interest income earnedfrom our real estate funds, and a decrease in equity-based compensation of $1.4 million during the year ended December 31, 2014 as compared to the yearended December 31, 2013.Other expenses decreased by $3.8 million during the year ended December 31, 2014 as compared to the year ended December 31, 2013, primarilyattributable to decreased legal fees and organizational expenses, offset by higher consulting fees and technology expenses.Year Ended December 31, 2013 Compared to Year Ended December 31, 2012Compensation and benefits decreased by $5.9 million during the year ended December 31, 2013 as compared to the year ended December 31,2012. This change was primarily attributable to a decrease in profit sharing expense of $6.7 million driven by the decreased carried interest income earnedfrom our real estate funds during the year ended December 31, 2013 as compared to the year ended December 31, 2012. This decrease was partially offset byan increase of $1.3 million in salary, bonus and benefits mainly driven by an increase in headcount during the year ended December 31, 2013 as compared tothe year ended December 31, 2012.Other expenses increased by $3.4 million during the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was primarily attributable to increased professional fees of $3.4 million due to higher external accounting, tax, audit, legal and consulting feesincurred during the year ended December 31, 2013 as compared to the year ended December 31, 2012. Also, general and administrative expenses increasedby $1.8 million due to higher fund-related organizational expenses incurred during the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This increase was partially offset by a decrease in interest expense of $1.5 million due to the expiring of interest rate swaps and due to alower margin rate on the 2007 AMH Credit Agreement during the year ended December 31, 2013 as compared to the year ended December 31, 2012.Other IncomeYear Ended December 31, 2014 Compared to Year Ended December 31, 2013Other income increased by $3.1 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. This changewas driven by an increase in income from equity method investments of $2.0 million due to an increase in the fair values of our real estate investments held,primarily from Apollo's ownership interest in ARI, and an increase in other income, net primarily due to a gain resulting from the reduction of the taxreceivable agreement liability during the year ended December 31, 2014 as a result of a change in projected income estimates and estimated tax rates (seenote 17 to our consolidated financial statements).- 110- Table of ContentsYear Ended December 31, 2013 Compared to Year Ended December 31, 2012Income from equity method investments increased by $2.7 million during the year ended December 31, 2013 as compared to the year endedDecember 31, 2012. This change was primarily driven by an increase of $2.2 million in income from equity method investments in AGRE U.S. Real EstateFund, L.P.Other income, net increased by $1.1 million during the year ended December 31, 2013 as compared to the year ended December 31, 2012. Thischange was primarily attributable to gains resulting from fluctuations in exchange rates of foreign denominated assets and liabilities of subsidiaries andreduction of the tax receivable agreement liability due to a change in estimated tax rates. See note 17 in the consolidated financial statements for additionalinformation on the tax receivable agreement.Summary Combined Segment Results for Management Business and Incentive BusinessThe following tables combine our reportable segments’ statements of operations information and supplemental performance measure, ENI, for ourmanagement and incentive businesses for the years ended December 31, 2014, 2013 and 2012, respectively. ENI represents segment income (loss), excludingthe impact of (i) non-cash charges related to RSUs granted in connection with the 2007 private placement and amortization of AOG Units, (ii) income taxexpense, (iii) amortization of intangibles associated with the 2007 Reorganization as well as acquisitions (iv) Non-Controlling Interests excluding theremaining interest held by certain individuals who receive an allocation of income from certain of our credit management companies and (v) non-cashrevenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes theassets, liabilities and operating results of the funds and VIEs that are included in the consolidated financial statements. In addition, segment data excludes theassets, liabilities and operating results of the Apollo funds and consolidated VIEs that are included in the consolidated financial statements. ENI is not a U.S.GAAP measure.- 111- Table of ContentsIn addition to providing the financial results of our three reportable business segments, we evaluate our reportable segments based on what werefer to as our management and incentive businesses. Our management business is generally characterized by the predictability of its financial metrics,including revenues and expenses. This business includes management fee revenues, advisory and transaction fee revenues, carried interest income from oneof our opportunistic credit funds and expenses, each of which we believe are more stable in nature. For the Year Ended December 31, 2014 2013 2012 (in thousands)Management Business Revenues: Advisory and transaction fees from affiliates, net $316,082 $196,562 $150,044Management fees from affiliates 901,024 730,702 623,041Carried interest income from affiliates 41,199 36,922 37,842Total Revenues 1,258,305 964,186 810,927Expenses: Equity-based compensation 107,112 66,341 68,942Salary, bonus and benefits 339,846 294,753 274,574Interest expense 22,394 29,260 37,116Professional fees(1) 80,607 82,448 63,250General, administrative and other(2) 96,485 97,085 86,550Placement fees 15,422 42,424 22,271Occupancy 40,511 39,946 37,218Depreciation and amortization 10,182 11,046 10,227Total Expenses 712,559 663,303 600,148Other Income: Interest income 9,194 10,763 8,149Other income, net 35,904 33,185 12,783Total Other Income 45,098 43,948 20,932Non-Controlling Interests (12,688) (13,985) (8,730)Economic Net Income $578,156 $330,846 $222,981(1)Excludes professional fees related to the consolidated funds.(2)Excludes general and administrative expenses and interest income related to the consolidated funds.- 112- Table of ContentsThe financial performance of our incentive business, which is dependent upon quarterly mark-to-market unrealized valuations in accordance withU.S. GAAP guidance applicable to fair value measurements, includes carried interest income, income from equity method investments, other income, net andprofit sharing expenses that are associated with our general partner interests in the Apollo funds, which are generally less predictable and more volatile innature. For the Year Ended December 31, 2014 2013 2012 (in thousands)Incentive Business Revenues: Carried interest income (loss) from affiliates: Unrealized gains (losses)(1) $(1,347,786) $402,835 $1,166,397 Realized gains 1,713,108 2,456,404 997,222Total Revenues 365,322 2,859,239 2,163,619Expenses: Compensation and Benefits: Profit sharing expense: Unrealized profit sharing expense(2) (506,026) 195,298 426,098Realized profit sharing expense 782,216 977,957 446,035Total Profit Sharing Expense 276,190 1,173,255 872,133Other Income: Other income, net 24,291 10,203 —Net gains (losses) from investment activities(3) 9,062 (12,593) (1,142) Income from equity method investments 54,905 113,211 121,120Total Other Income 88,258 110,821 119,978Economic Net Income $177,390 $1,796,805 $1,411,464 (1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest incomedue to the general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate with respect to two of our credit funds.Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2013 was a reversal of $19.3 million and $0.3 million of the entiregeneral partner obligation to return previously distributed carried interest income to SOMA and APC, respectively. Included in unrealized carried interest income (loss)from affiliates for the year ended December 31, 2012 was a reversal of $75.3 million of the entire general partner obligation to return previously distributed carriedinterest income with respect to Fund VI and reversal of previously realized carried interest income due to the general partner obligation to return previously distributedcarried interest income of $1.2 million and $0.3 million with respect to SOMA and APC, respectively. The general partner obligation is recognized based upon ahypothetical liquidation of the funds' net assets as of the reporting date. The actual determination and any required payment of any such general partner obligationwould not take place until the final disposition of a fund’s investments based on the contractual termination of the fund or as otherwise set forth in the respective limitedpartnership agreement of the fund.(2)Included in unrealized profit sharing expense for the year ended December 31, 2012 was a reversal of the entire receivable from Contributing Partners and certainemployees of $22.1 million due to the reversal of the general partner obligation to return previously distributed carried interest income with respect to Fund VI.(3)Excludes investment income and net gains from investment activities related to consolidated funds and the consolidated VIEs.- 113- Table of ContentsSummaryBelow is the summary of our total reportable segments, including management and incentive businesses, and a reconciliation of ENI to NetIncome Attributable to Apollo Global Management, LLC reported in our consolidated statements of operations: For the Year Ended December 31, 2014 2013 2012 (in thousands)Revenues $1,623,627 $3,823,425 $2,974,546Expenses 988,749 1,836,558 1,472,281Other income 133,356 154,769 140,910Non-Controlling Interests (12,688) (13,985) (8,730)Economic Net Income 755,546 2,127,651 1,634,445Non-cash charges related to equity-based compensation (502) (59,847) (529,712)Income tax provision (147,245) (107,569) (65,410)Net income attributable to Non-Controlling Interests in ApolloOperating Group (404,682) (1,257,650) (685,357)Amortization of intangible assets (34,888) (43,194) (43,009)Net Income Attributable to Apollo Global Management, LLC $168,229 $659,391 $310,957- 114- Table of ContentsSummary of Distributable Earnings and Economic Net Income "Distributable Earnings," or "DE," as well as "DE After Taxes and Related Payables", are derived from our segment reported results, and aresupplemental measures to assess performance and amounts available for distribution to Class A shareholders, holders of RSUs that participate in distributionsand holders of AOG Units. DE represents the amount of net realized earnings without the effects of the consolidation of any of the affiliated funds. DE, whichis a component of ENI, is the sum across all segments of (i) total management fees and advisory and transaction fees, excluding monitoring fees received fromAthene based on its capital and surplus (as defined in Apollo's transaction advisory services agreement with Athene), (ii) other income (loss), excluding thegains (losses) arising from the reversal of a portion of the tax receivable agreement liability, (iii) realized carried interest income, and (iv) realized investmentincome, less (i) compensation expense, excluding the expense related to equity-based awards, (ii) realized profit sharing expense, and (iii) non-compensationexpenses, excluding depreciation and amortization expense. DE After Taxes and Related Payables represents DE less estimated current corporate, local andnon-U.S. taxes as well as the payable under Apollo's tax receivable agreement.The following table is a summary of DE for the years ended December 31, 2014, 2013 and 2012. For the Year Ended December 31, 2014 2013 2012 (in thousands)Management Business Economic Net Income $578,156 $330,846 $222,981Net realized carried interest income 930,892 1,478,447 551,187Realized investment income(1) 63,951 107,615 66,063Athene capital and surplus fees(2) (228,331) (110,132) —Reversal of tax receivable agreement liability(3)(5) (32,182) (13,038) (3,937)Equity-based compensation 107,112 66,341 68,942Depreciation and amortization 10,182 11,046 10,227Distributable Earnings 1,429,780 1,871,125 915,463Taxes and related payables(4) (73,565) (41,151) (40,800)Distributable Earnings After Taxes and Related Payables $1,356,215 $1,829,974 $874,663Net unrealized carried interest income (loss) (841,760) 207,537 740,299Unrealized investment and other income (loss) 24,307 3,206 53,915Add back: Athene capital and surplus fees(2) 228,331 110,132 —Add back: Reversal of tax receivable agreement liability(3)(5) 32,182 13,038 3,937Add back: Taxes and related payables(4) 73,565 41,151 40,800Less: Equity-based compensation (107,112) (66,341) (68,942)Less: Depreciation and amortization (10,182) (11,046) (10,227)Total Economic Net Income $755,546 $2,127,651 $1,634,445(1)Represents realized gains from our general partner investments in our funds and other balance sheet investments.(2)Represents monitoring fees paid by Athene to Apollo by delivery of common shares of Athene Holding, calculated based on Athene's capital and surplus, as defined inour transaction and advisory services agreement with Athene.(3)Represents gains resulting from reductions of the tax receivable agreement liability due to changes in projected income estimates and estimated tax rates.(4)Represents the estimated current corporate, local and Non-U.S. taxes as well as the payable under Apollo's tax receivable agreement.(5)During the year ended December 31, 2014, the calculation of Distributable Earnings was revised to exclude the gains (losses) arising from the reversal of a portion of thetax receivable agreement liability. The prior period financial data was recast to conform to the revised definition of Distributable Earnings. The difference in DistributableEarnings After Taxes and Related Payables under the revised definition as compared to the previous methodology was $13.0 million and $3.9 million for the year endedDecember 31, 2013 and 2012, respectively.- 115- Table of ContentsThe following table is a reconciliation of Distributable Earnings per share of common and equivalents(1) to net distribution per share of commonand equivalents for the years ended December 31, 2014, 2013 and 2012. For the Year Ended December 31, 2014 2013 2012 Distributable Earnings After Taxes and Related Payables $1,356,215 $1,829,974 $874,663Add back: Tax related payables attributable to common and equivalents 66,429 32,192 40,800Distributable Earnings before certain payables(2) 1,422,644 1,862,166 915,463Percent to common and equivalents 45% 42% 39%Distributable Earnings before other payables attributable to common andequivalents 633,380 784,268 357,725Less: Tax related payables attributable to common and equivalents (66,429) (32,192) (40,800)Distributable Earnings attributable to common and equivalents 566,951 752,076 316,925Distributable Earnings per share of common and equivalent(3) $3.13 $4.49 $2.02Retained capital per share of common and equivalent(3) (0.24) (0.51) (0.08)Net distribution per share of common and equivalent(3) $2.89 $3.98 $1.94(1)Common and equivalents refers to Class A shares and RSUs that participate in distributions.(2)Distributable Earnings before certain payables represents distributable earnings before the deduction for the estimated current corporate taxes and the payable underApollo's tax receivable agreement.(3)Per share calculations are based on total Class A shares outstanding and RSUs that participate in distributions.- 116- Table of ContentsSummary of Fee-Related EBITDA and Fee-Related EBITDA + 100% of Net Realized Carried InterestFee-related EBITDA is a non-GAAP performance measure used to understand the performance of our operations and represents management businessENI (pre-tax), with amounts for equity-based compensation, interest expense and depreciation and amortization added to management business ENI. Fee-related EBITDA plus realized carried interest less realized profit sharing (referred to as “fee-related EBITDA +100% of net realized carried interest”) is a non-GAAP performance measure that combines operating results of the management business and incentive business. These performance measures are used tocompare our current and potential debt service. See note 14 to our consolidated financial statements for more detail on our outstanding debt. The table below sets forth fee-related EBITDA and fee-related EBITDA + 100% of net realized carried interest for the years ended December 31,2014, 2013 and 2012, and a reconciliation of net income attributable to Apollo Global Management, LLC to ENI, fee-related EBITDA and fee-relatedEBITDA + 100% of net realized carried interest. Year Ended December 31, 2014 2013 2012Management Business Economic Net Income$578,156 $330,846 $222,981Equity-based compensation(1)107,112 66,341 68,942Interest expense22,393 29,260 37,116Depreciation and amortization(2)10,182 11,046 10,227Fee-Related EBITDA717,843 437,493 339,266Total realized carried interest1,713,108 2,456,404 997,222Total realized profit sharing expense(782,216) (977,957) (446,035)Net realized carried interest930,892 1,478,447 551,187Fee-Related EBITDA + 100% of Net Realized Carried Interest1,648,735 1,915,940 890,453Net unrealized carried interest (loss) income(841,760) 207,537 740,299Net investment income88,258 110,821 119,978Net interest expense(22,393) (29,260) (37,116)Depreciation and amortization(2)(10,182) (11,046) (10,227)Equity-based compensation(1)(107,112) (66,341) (68,942)Economic Net Income755,546 2,127,651 1,634,445Income tax provision(147,245) (107,569) (65,410)Net (income) attributable to non-controlling interests in Apollo Operating Group(404,682) (1,257,650) (685,357)Charges related to equity-based compensation(3)(502) (59,847) (529,712)Amortization of intangible assets(34,888) (43,194) (43,009)Net income attributable to Apollo Global Management, LLC$168,229 $659,391 $310,957(1)Includes RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options. Excludes equity-based compensation expense comprisingamortization of AOG Units.(2)Includes amortization of leasehold improvements.(3)Includes amortization amounts related to AOG Units.- 117- Table of ContentsLiquidity and Capital ResourcesHistoricalAlthough we have managed our historical liquidity needs by looking at deconsolidated cash flows, our historical consolidated statements of cashflows reflects the cash flows of Apollo, as well as those of the consolidated Apollo funds.The primary cash flow activities of Apollo are:•Generating cash flow from operations;•Making investments in Apollo funds;•Meeting financing needs through credit agreements; and•Distributing cash flow to equity holders and Non-Controlling Interests.Primary cash flow activities of the consolidated Apollo funds and VIEs are:•Raising capital from their investors, which have been reflected historically as Non-Controlling Interests of theconsolidated subsidiaries in our financial statements;•Using capital to make investments;•Generating cash flow from operations through distributions, interest and the realization of investments;•Distributing cash flow to investors; and•Issuing debt to finance investments (CLOs).While primarily met by cash flows generated through fee income and carried interest income received, working capital needs have also been met(to a limited extent) through borrowings as follows: As of December 31, 2014 As of December 31, 2013 OutstandingBalance AnnualizedWeightedAverageInterest Rate OutstandingBalance AnnualizedWeightedAverageInterest Rate 2013 AMH Credit Facilities - Term Facility$500,000 1.36% $750,000 1.37% 2024 Senior Notes(1)499,058 4.00 N/A N/A 2014 AMI Term Facility(2)16,204 2.34 N/A N/A 2014 AMI Term Facility II(3)18,752 1.93 N/A N/A Total Debt$1,034,014 $750,000 (1) Includes impact of any amortization of note discount and interest rate hedge.(2) On July 3, 2014, Apollo Management International LLP (“AMI”), a subsidiary of the Company, entered into a €13.4 million five year credit agreement (the “2014 AMI TermFacility”). Proceeds from the borrowing were used to fund the Company's investment in a CLO.(3) On December 9, 2014, AMI entered into a €15.5 million five year credit agreement (the "2014 AMI Term Facility II"). Proceeds from the borrowing were used to fund theCompany's investment in a CLO.Additionally the 2013 AMH Credit Facilities provide for a $500 million revolving credit facility, which was undrawn as of December 31, 2014.See note 14 of our consolidated financial statements for information regarding the Company's debt arrangements.We determine whether to make capital commitments to our funds in excess of our minimum required amounts based on a variety of factors,including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded, estimates regardingthe amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising, and our general working capitalrequirements.- 118- Table of ContentsCash FlowsSignificant amounts from our consolidated statements of cash flows for the years ended December 31, 2014, 2013 and 2012 are summarized anddiscussed within the table and corresponding commentary below: Year Ended December 31, 2014 2013 2012 (in thousands)Operating Activities$(372,917) $1,134,458 $331,614Investing Activities13,432 2,651 (150,854)Financing Activities485,611 (1,005,023) 21,960Net Increase in Cash and Cash Equivalents$126,126 $132,086 $202,720Operating ActivitiesNet cash used in operating activities was $372.9 million during the year ended December 31, 2014. During this period, there was $729.9 millionin net income, to which $126.3 million of equity-based compensation and $83.7 million cash distributions of earnings from equity method investments wereadded to reconcile net income to net cash provided by operating activities. Additional adjustments to reconcile cash provided by operating activities duringthe year ended December 31, 2014 included $8,509.4 million in proceeds from sales of investments held by consolidated VIEs, $113.4 million in netunrealized losses from investments held by the consolidated funds and VIEs, a $1,375.4 million decrease in carried interest receivable, a $169.8 millionincrease in other liabilities of Apollo funds and a $34.0 million increase in accounts payable and accrued expenses. These favorable cash adjustments wereoffset by $10,330.1 million of purchases of investments held by the consolidated VIEs, a $13.8 million increase in cash held at consolidated VIEs, a $24.9million increase in other assets, a $252.3 million increase in due from affiliates, a $43.5 million increase in other assets of Apollo funds, a $79.9 milliondecrease in deferred revenue, $101.7 million in net realized gains on debt of the consolidated funds and VIEs, a $97.5 million decrease in due to affiliates, a$518.0 million decrease in profit sharing payable, and $53.9 million of income from equity method investments.Net cash provided by operating activities was $1,134.5 million during the year ended December 31, 2013. During this period, there was$2,374.0 million in net income, to which $126.2 million of equity-based compensation and a $60.8 million change in fair value of contingent obligationswere added to reconcile net loss to net cash provided by operating activities. Additional adjustments to reconcile cash provided by operating activitiesduring the year ended December 31, 2013 included $8,422.2 million in proceeds from sales of investments held by the consolidated VIEs, a $27.3 millionchange in deferred revenue, $66.8 million of distributions from investment activities, a $232.5 million increase in net unrealized losses on debt, a$587.5 million change in cash held at consolidated VIEs, a $141.2 million increase in profit sharing payable and $109.1 million relating to cash distributionsof earnings from equity method investments. These favorable cash adjustments were offset by $309.1 million in net unrealized gains from investments heldby the consolidated funds and VIEs, $107.4 million of income from equity method investments, a $44.2 million decrease in due to affiliates, a $130.5 milliondecrease in due from affiliates, $137.1 million of net realized gains on debt, a $64.1 million change in other liabilities of Apollo funds, a $408.8 millionincrease in carried interest receivable and $9,841.8 million of purchases of investments held by the consolidated VIEs.Net cash provided by operating activities was $331.6 million during the year ended December 31, 2012. During this period, there was$3,047.8 million in net income, to which $598.7 million of equity-based compensation and a $1,951.9 million gain on business acquisitions and non-cashexpenses were added to reconcile net loss to net cash provided by operating activities. Additional adjustments to reconcile cash provided by operatingactivities during the year ended December 31, 2012 included $7,182.4 million in proceeds from sales of investments held by the consolidated VIEs, a$497.7 million increase in net unrealized losses on debt, a $361.6 million increase in profit sharing payable and $66.0 million relating to cash distributionsof earnings from equity method investments. These favorable cash adjustments were offset by $458.0 million in net unrealized gains from investments heldby the consolidated funds and VIEs, a $103.8 million decrease in due to affiliates, a $348.1 million change in cash held at consolidated VIEs, a$973.6 million increase in carried interest receivable and $7,525.5 million of purchases of investments held by the consolidated VIEs.Investing ActivitiesNet cash provided by investing activities was $13.4 million for the year ended December 31, 2014, which was primarily comprised of $76.3million of cash distributions received from equity method investments, $50.0 million of proceeds from sales of investments, primarily offset by $109.9million of cash contributions to equity method investments. Additional adjustments to reconcile cash provided by investing activities were $5.9 million ofpurchases of fixed assets. Cash contributions to equity method- 119- Table of Contentsinvestments were primarily related to Fund VIII, EPF II, COF III, AESI, ACSP and AION. Cash distributions from equity method investments were primarilyrelated to Fund VII, Fund VIII, EPF I, EPF II and AION.Net cash provided by investing activities was $2.6 million for the year ended December 31, 2013, which was primarily comprised of $107.2million relating to cash distributions received from equity method investments offset by $98.4 million of cash contributions to equity method investments.Cash contributions to equity method investments were primarily related to Fund VII, Fund VIII, COF III, EPF I, EPF II, AESI, ACSP, AION, AGRE U.S. RealEstate Fund, L.P. and Apollo SPN Investments I, L.P. Cash distributions from equity method investments were primarily related to Fund VI, Fund VII, COF I,COF II, Vantium C, ACLF, AIE II, ACSP and EPF II.Net cash used in investing activities was $150.8 million for the year ended December 31, 2012, which was primarily comprised of $11.3 millionin purchases of fixed assets, $99.2 million relating to the acquisition of Stone Tower (see note 3 to our consolidated financial statements), $126.9 million ofcash contributions to equity method investments, partially offset by $86.6 million of cash distributions from equity method investments. Cash contributionsto equity method investments were primarily related to EPF I, EPF II, ASCP, Fund VII, AINV and AGRE U.S. Real Estate Fund, L.P. Cash distributions fromequity method investments were primarily related to Fund VII, ACLF, AGRE U.S. Real Estate Fund, L.P., COF I, COF II, Artus, EPF I and EPF II.Financing ActivitiesNet cash provided by financing activities was $485.6 million for the year ended December 31, 2014, which was primarily comprised of $4,225.5million related to issuance of debt by consolidated VIEs, $534.0 million of issuance of debt by AMH, and $889.7 million in contributions from Non-Controlling Interests in consolidated VIEs. This amount was offset by $2,371.5 million in repayment of debt held by consolidated VIEs, $32.0 million relatedto satisfaction of tax receivable agreement liabilities, $250 million in principal repayments of debt, $816.4 million of distributions paid to Non-ControllingInterests in the Apollo Operating Group, $506.0 million in distributions, $37.3 million in satisfaction of contingent obligations, $703.0 million indistributions paid to consolidated VIEs and $450.4 million of distributions paid to Non-Controlling Interests in consolidated VIEs.Net cash used in financing activities was $1,005.0 million for the year ended December 31, 2013, which was primarily comprised of $2,747.0million related to issuance of debt by consolidated VIEs, $750.0 million related to debt refinancing and $688.9 million in contributions from Non-Controlling Interests in consolidated variable interest entities. This amount was offset by $2,218.1 million in repayment of term loans by consolidated VIEs,$334.2 million in distributions to consolidated VIEs, $147.4 million of distributions paid to Non-Controlling Interests in consolidated VIEs, $975.5 millionof distributions paid to Non-Controlling Interests in the Apollo Operating Group, $584.5 million in distributions, $85.9 million related to employee taxwithholding payments in connection with deliveries of Class A shares in settlement of RSUs, $12.2 million in distributions to Non-Controlling Interests inconsolidated entities, $737.8 million in principal repayments of debt and repurchases of debt, $30.4 million in satisfaction of tax receivable agreements,$67.5 million in satisfaction of contingent obligations and $62.3 million in purchases of AAA units.Net cash provided by financing activities was $22.0 million for the year ended December 31, 2012, which was primarily comprised of $1,413.3million related to issuance of debt by consolidated VIEs and $4.1 million in contributions from Non-Controlling Interests in consolidated entities. Thisamount was offset by $515.9 million in repayment of term loans by consolidated VIEs, $486.7 million in distributions by consolidated VIEs, $335.0 millionof distributions paid to Non-Controlling Interests in the Apollo Operating Group, $202.4 million in distributions, $26.0 million related to employee taxwithholding payments in connection with deliveries of Class A shares in settlement of RSUs, $8.8 million in distributions to Non-Controlling Interests inconsolidated entities and $102.1 million in purchases of AAA units.DistributionsIn addition to other distributions such as payments pursuant to the tax receivable agreement, the table below presents information regarding thequarterly distributions which were made at the sole discretion of the Company's manager during for the years ended December 31, 2014, 2013 and 2012 (inmillions, except per share amounts):- 120- Table of ContentsDistributionDeclaration Date DistributionperClass A Share DistributionPayment Date DistributiontoClass AShareholders Distribution toNon-ControllingInterest Holdersin the ApolloOperating Group TotalDistributionsfromApollo OperatingGroup DistributionEquivalents onParticipatingSecuritiesFebruary 10, 2012 $0.46 February 29, 2012 $58.1 $110.4 $168.5 $10.3April 13, 2012 — April 13, 2012 — 11.0 11.0 —May 8, 2012 0.25 May 30, 2012 31.6 60.0 91.6 6.2August 2, 2012 0.24 August 31, 2012 31.2 57.6 88.8 5.3November 9, 2012 0.40 November 30, 2012 52.0 96.0 148.0 9.4For the year endedDecember 31, 2012 $1.35 $172.9 $335.0 $507.9 $31.2February 8, 2013 $1.05 February 28, 2013 $138.7 $252.0 $390.7 $25.0April 12, 2013 — April 12, 2013 — 55.2(1) 55.2 —May 6, 2013 0.57 May 30, 2013 80.8 131.8 212.6 14.3August 8, 2013 1.32 August 30, 2013 189.7 305.2 494.9 30.8November 7, 2013 1.01 November 29, 2013 147.7 231.2 378.9 24.1For the year endedDecember 31, 2013 $3.95 $556.9 $975.4 $1,532.3 $94.2February 7, 2014 $1.08 February 26, 2014 $160.9 $247.3 $408.2 $25.5April 3, 2014 — April 3, 2014 — 49.5(1) 49.5 —May 8, 2014 0.84 May 30, 2014 130.0 188.4 318.4 20.9June 16, 2014 — June 16, 2014 — 28.5(1) 28.5 —August 6, 2014 0.46 August 29, 2014 73.6 102.5 176.1 10.2September 11, 2014 — September 11, 2014 — 12.4(1) 12.4 —October 30, 2014 0.73 November 21, 2014 119.0 162.6 281.6 15.5December 15, 2014 — December 15, 2014 — 25.2(1) 25.2 —For the year endedDecember 31, 2014 $3.11 $483.5 $816.4 $1,299.9 $72.1(1)On April 13, 2012, April 12, 2013, April 3, 2014, June 16, 2014, September 11, 2014 and December 15, 2014, the Company made a $0.05, $0.23, $0.22, $0.13,$0.06 and $0.11 distribution per AOG Unit, respectively, to the non-controlling interest holders in the Apollo Operating Group.Future Cash FlowsOur ability to execute our business strategy, particularly our ability to increase our AUM, depends on our ability to establish new funds and toraise additional investor capital within such funds. Our liquidity will depend on a number of factors, such as our ability to project our financial performance,which is highly dependent on our funds and our ability to manage our projected costs, fund performance, having access to credit facilities, being incompliance with existing credit agreements, as well as industry and market trends. Also during economic downturns the funds we manage might experiencecash flow issues or liquidate entirely. In these situations we might be asked to reduce or eliminate the management fee and incentive fees we charge, whichcould adversely impact our cash flow in the future.An increase in the fair value of our funds’ investments, by contrast, could favorably impact our liquidity through higher management fees wherethe management fees are calculated based on the net asset value, gross assets and adjusted assets. Additionally, higher carried interest income not yet realizedwould generally result when investments appreciate over their cost basis which would not have an impact on the Company’s cash flow.As of December 31, 2014, Fund VI's remaining investments and escrow cash were valued at 104% of the funds unreturned capital, which wasbelow a specified return ratio of 115%. As a result, Fund VI is required to place in escrow all current and future carried interest income distributions to thegeneral partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation of Fund VI.- 121- Table of ContentsOn April 20, 2010, the Company announced that it entered into a strategic relationship agreement with CalPERS. The strategic relationshipagreement provides that Apollo will reduce fees charged to CalPERS on funds it manages, or in the future will manage, solely for CalPERS by $125 millionover a five-year period or as close a period as required to provide CalPERS with that benefit. The agreement further provides that Apollo will not use aplacement agent in connection with securing any future capital commitments from CalPERS. As of December 31, 2014, the Company had reduced feescharged to CalPERS on the funds it manages by approximately $95.9 million. Based on the Company's current estimates, the reduction of fees will extenduntil 2017 in order for CalPERS to receive the full benefit of this arrangement.The Company granted approximately 7.0 million RSUs during the year ended December 31, 2014. The average estimated fair value per share onthe grant date was $21.16, per RSU with a total fair value of the grants of $149.1 million at December 31, 2014. This will impact the Company’scompensation expense as these grants are amortized over their vesting term of three to six years. The Company expects to incur annual compensationexpenses on all grants, net of forfeitures, of approximately $62.5 million, $50.0 million, $31.3 million, $15.7 million, $13.0 million and $3.4 million duringthe years ended December 31, 2015, 2016, 2017, 2018, 2019 and thereafter, respectively.Although we expect to pay distributions according to our distribution policy, we may not pay distributions according to our policy, or at all, if,among other things, we do not have the cash necessary to pay the intended distributions. To the extent we do not have cash on hand sufficient to paydistributions, we may have to borrow funds to pay distributions, or we may determine not to pay distributions. The declaration, payment and determination ofthe amount of our quarterly distributions are at the sole discretion of our manager.Carried interest income from our funds can be distributed to us on a current basis, but is subject to repayment by the subsidiaries of the ApolloOperating Group that act as general partner of such funds in the event that certain specified return thresholds are not ultimately achieved. The ManagingPartners, Contributing Partners and certain other investment professionals have personally guaranteed, to the extent of their ownership interest, subject tocertain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limitedto a particular Managing Partner’s or Contributing Partner’s distributions. Pursuant to the shareholders agreement dated July 13, 2007 (the "Managing PartnerShareholders Agreement”), we agreed to indemnify each of our Managing Partners and certain Contributing Partners against all amounts that they paypursuant to any of these personal guarantees in favor of Fund IV, Fund V and Fund VI (including costs and expenses related to investigating the basis for orobjecting to any claims made in respect of the guarantees) for all interests that our Managing Partners and Contributing Partners have contributed or sold tothe Apollo Operating Group. See "Item 13. Certain Relationships and Related Party Transactions-Managing Partner Shareholders Agreement.”Accordingly, in the event that our Managing Partners, Contributing Partners and certain investment professionals are required to pay amounts inconnection with a general partner obligation to return previously distributed carried interest income with respect to Fund IV, Fund V and Fund VI, we will beobligated to reimburse our Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to payeven though we did not receive the distribution to which that general partner obligation related.On January 13, 2015, the Company issued 681,421 Class A shares in settlement of vested RSUs. This issuance caused the Company's ownershipinterest in the Apollo Operating Group to increase from 42.3% to 42.4%.On February 5, 2015 the Company declared a cash distribution of $0.86 per Class A share, which will be paid on February 27, 2015 to holders ofrecord on February 17, 2015.AtheneAthene Holding is the ultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding providesinsurance products focused primarily on the retirement market and its business centers primarily on issuing or reinsuring fixed indexed annuities.Apollo, through its consolidated subsidiary, Athene Asset Management, provides asset management services to Athene, including assetallocation and portfolio management strategies, and receives fees from Athene for providing such services. As of December 31, 2014, all of Athene’s assetswere managed by Athene Asset Management. Athene Asset Management had $60.3 billion of total AUM as of December 31, 2014 in accounts owned by orrelated to Athene (the “Athene Accounts”), of which approximately $12.6 billion, or approximately 20.9%, was either sub-advised by Apollo or invested inApollo funds and investment vehicles. The vast majority of such assets are in sub-advisory managed accounts that manage high grade credit asset classes,such as CLO debt, commercial mortgage backed securities and insurance-linked securities. We expect this percentage to increase over time provided thatAthene Asset Management continues to perform successfully in providing asset management services to Athene.- 122- Table of ContentsAthene Asset Management receives a management fee equal to 0.40% per annum on all assets under management in the Athene Accounts, withcertain limited exceptions. In addition, the Company receives sub-advisory management fees and carried interest income with respect to a portion of theassets in the Athene Accounts. With respect to capital invested in an Apollo fund, Apollo receives management fees directly from the relevant funds underthe investment management agreements with such funds. Athene Asset Management and other Apollo subsidiaries incur all expenses associated with theirprovision of services to Athene, including but not limited to, asset allocation services, direct asset management services, risk management, asset and liabilitymatching management, mergers and acquisitions asset diligence, hedging and other services.Under a transaction advisory services agreement with Athene (the "Athene Services Agreement"), effective February 5, 2013, Apollo earns aquarterly monitoring fee of 0.50% of Athene’s capital and surplus as of the end of the applicable quarter multiplied by 2.5, excluding the shares of AtheneHolding that were newly acquired (and not in satisfaction of prior commitments to buy such shares) by AAA Investments in the contribution of certain assetsby AAA to Athene in October 2012, at the end of each quarter through December 31, 2014, the termination date. This quarterly monitoring fee is notapplicable to the amount of invested capital attributable to the Excluded Athene Shares. The Athene Services Agreement was amended in connection withthe Athene Private Placement described below (the “Amended Athene Services Agreement”). The Amended Athene Services Agreement adjusts thecalculation of Athene Holding’s capital and surplus downward by an amount equal to (x) the equity capital raised in the Athene Private Placement and (y)certain disproportionate increases to the statutory capital and surplus of Athene, as compared to the stockholders’ equity of Athene calculated on a U.S.GAAP basis, as a result of certain future acquisitions by Athene. Prior to the consummation of the Athene Private Placement, all such monitoring fees werepaid pursuant to a derivative contract between Athene and Apollo (the "Athene Services Derivative"). In connection with the Athene Private Placement, theAthene Services Derivative was settled on April 29, 2014 by delivery to Apollo of common shares of Athene Holding, and as a result, such derivative wasterminated. Following settlement of the Athene Services Derivative, future monitoring fees paid to Apollo pursuant to the Amended Athene ServicesAgreement, will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of Athene Holding (unless such payment in shares wouldviolate Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended). Unsettled monitoring fees pursuant to the Amended Athene ServicesAgreement are recorded as due from affiliates in the consolidated statements of financial condition. For the years ended December 31, 2014, 2013 and 2012Apollo earned $226.4 million, $107.9 million and $16.8 million, respectively, related to this monitoring fee. The monitoring fee is recorded in advisory andtransaction fees from affiliates, net, in the consolidated statements of operations. As of December 31, 2014, Apollo had a $58.2 million receivable recorded indue from affiliates on the consolidated statements of financial condition. As of December 31, 2013, Apollo had a $116.4 million receivable, which wasaccounted for as a derivative recorded in due from affiliates on the consolidated statements of financial condition.In accordance with the services agreement among AAA, AAA Investments and the other service recipients party thereto and Apollo (the "AAAServices Agreement"), Apollo receives a management fee for managing the assets of AAA Investments. In connection with each of the contribution of certainassets by AAA to Athene in October 2012, and the initial closing of the Athene Private Placement on April 4, 2014, the AAA Services Agreement wasamended (the "Amended AAA Services Agreement"). Pursuant to the Amended AAA Services Agreement, the parties agreed that there will be no managementfees payable by AAA Investments with respect to the Excluded Athene Shares. AAA Investments agreed to continue to pay Apollo the same management feeon its investment in Athene (other than with respect to the Excluded Athene Shares), except that Apollo agreed that the obligation to pay the existingmanagement fee terminated on December 31, 2014 (although services will continue through December 31, 2020). Prior to the consummation of the AthenePrivate Placement, all such management fees were accrued pursuant to a derivative contract between AAA Investments and Apollo (the “AAA ServicesDerivative”). In connection with the Athene Private Placement, the AAA Services Derivative was settled on April 29, 2014 by delivery to Apollo of commonshares of Athene Holding, and as a result, such derivative was terminated. Following settlement of the AAA Services Derivative, future management fees paidto Apollo pursuant to the Amended AAA Services Agreement will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of AtheneHolding (unless such payment in shares would violate Section 16(b) of the Exchange Act). Unsettled management fees pursuant to the Amended AAAServices Agreement will be recorded as due from affiliates in the consolidated statements of financial condition. As of December 31, 2014, Apollo had a $3.1million receivable recorded in due from affiliates related to this management fee on the consolidated statements of financial condition. As of December 31,2013, Apollo had a $14.3 million receivable related to this management fee, which was accounted for as a derivative recorded in due from affiliates on theconsolidated statements of financial condition. The total management fees earned by Apollo related to the Amended AAA Services Agreement for the yearsended December 31, 2014, 2013 and 2012 were $1.9 million, $2.2 million and $0.6 million, respectively, which are recorded in management fees fromaffiliates in the consolidated statements of operations.Pursuant to the Amended AAA Services Agreement, in the event that AAA (1) makes a tender offer to all of its qualified unitholders in whichAAA offers to purchase all of their equity interests in AAA, pay the consideration for such purchase with equivalent equity interests in a new vehicle, ofwhich Apollo will serve as general partner, and transfer to such new investment vehicle a pro rata portion of the common shares of Athene Holding held byAAA Investments, unburdened by the unwind fee, and- 123- Table of Contents(2) thereafter distributes all or any portion of the common shares of Athene Holding held by AAA (or disposes of such shares and distributes the proceedsthereof) to its unitholders, then AAA shall pay Apollo an unwind fee. The unwind fee is payable in pro rata increments to Apollo only when, as and if AAAdistributes common shares of Athene Holding (or the proceeds thereof) to its unitholders and shall be equal to $20 million multiplied by the percentage of“net common shares” of Athene Holding held by AAA which are so distributed (or disposed of with the proceeds distributed) by AAA in 2015. There is noassurance that a AAA distribution will be made or that the unwind fee will be paid in 2015.Prior to the settlement of the Athene Services Derivative and the AAA Services Derivatives, the Amended Athene Services Agreement and theAmended AAA Services Agreement together with the Athene Services Derivative and the AAA Services Derivative, met the definition of derivatives underU.S. GAAP. The Company had classified these derivatives as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fairvalue require significant judgment and estimation. After the settlement of the Athene Services Derivative and the AAA Services Derivatives the unsettledshares receivable recorded in due from affiliates related to the Amended Athene Services Agreement and the Amended AAA Services Agreement are valued atfair value based on the price of a common share of Athene Holding. The Company had classified the derivative and the shares receivable as Level III assets inthe fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. See note 6 for furtherdiscussion regarding fair value measurements.Prior to the settlement of the Athene Services Derivative and the AAA Services Derivative, the change in unrealized market value of thederivatives was reflected in other income, net in the consolidated statements of operations. For the year ended December 31, 2013, there was $10.2 million ofchanges in market value recognized related to these derivatives.In addition, Apollo, as general partner of AAA Investments, is generally entitled to a carried interest that allocates to it 20% of the realizedreturns (net of related expenses, including borrowing costs) on the investments of AAA Investments, except that Apollo will not be entitled to receive anycarried interest in respect of the Excluded Athene Shares. Carried interest receivable from AAA Investments will be paid in common shares of Athene Holding(valued at the then fair market value) if there is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b)of the Exchange Act) or paid in cash if AAA sells the shares of Athene Holding. For the years ended December 31, 2014, 2013 and 2012, the Companyrecorded carried interest income less the related profit sharing expense of $14.6 million, $27.6 million and $35.3 million, respectively from AAAInvestments, which is recorded in the consolidated statements of operations. As of December 31, 2014 and December 31, 2013, the Company had a $121.5million and a $100.9 million carried interest receivable, respectively, related to AAA Investments. As of December 31, 2014 and December 31, 2013, theCompany had a related profit sharing payable of $34.9 million and $28.8 million, respectively, recorded in profit sharing payable in the consolidatedstatements of financial condition.For the years ended December 31, 2014, 2013 and 2012, Apollo earned revenues in the aggregate totaling $546.5 million, $435.1 million and$164.7 million, respectively, consisting of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering therelated profit sharing expense and changes in the market value of the Athene shares owned directly by Apollo, which is recorded in the consolidatedstatements of operations.On April 4, 2014, Athene Holding completed an initial closing of a private placement offering of common equity in which it raised $1.048billion of primary commitments from third-party institutional and certain existing investors in Athene Holding (the “Athene Private Placement”). Shares inthe Athene Private Placement were offered at a price per common share of Athene Holding of $26. In connection with the Athene Private Placement, Atheneraised an additional $80 million of third party capital at $26 per share, all of which was used to buy back a portion of the shares of one of its existinginvestors at a price of $26 per share in a transaction that was consummated on April 29, 2014. As announced by AAA on June 24, 2014, a second closing ofthe Athene Private Placement occurred in which Athene Holding raised $170 million of commitments primarily from employees of Athene and its affiliates ata price per common share of Athene Holding of $26. The Investment Partnership did not purchase any additional common shares of Athene Holding as part ofthe Athene Private Placement.In connection with the Athene Private Placement, Athene Holding amended its registration rights agreement to provide (i) investors who are partyto such agreement, including AAA Investments, the potential opportunity for liquidity on their shares of Athene Holding through sales in registered publicofferings over a 15 month period beginning on the date of Athene Holding’s initial public offering (the “Athene IPO”) and (ii) Athene Holding the right tocause certain investors who are party to the registration rights agreement to include in such offerings a certain percentage of their common shares of AtheneHolding subject to the terms and conditions set forth in the agreement. However, pursuant to the registration rights agreement, any shares of Athene Holdingheld by Apollo will not be subject to such arrangements and instead will be subject to a lock-up period of two years following the effective date of theregistration statement relating to the Athene IPO, but Athene Holding will not have the right to cause any shares owned by Apollo to be included in theAthene IPO or any follow-on offering.- 124- Table of ContentsAs part of its ongoing financial integration of Aviva USA, Athene identified material weaknesses in its internal controls over financial reportingfor its U.S. GAAP and statutory financials as of December 31, 2013. A material weakness is a control deficiency, or combination of control deficiencies,such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented, or detected andcorrected on a timely basis. If Athene fails to maintain effective internal control over financial reporting, it may not be able to accurately report its financialresults. In October 2014, Athene informed its shareholders, including the Company, that as part of its ongoing financial integration of Aviva USA andtransition towards public company standards for financial controls, it anticipates that delivery of its GAAP financial statements for the quarter ended June 30,2014 and September 30, 2014 will continue to be delayed. This delay will also cause Athene’s year end 2014 and first quarter 2015 GAAP financialstatements to be delayed. As such, the Audit Committee of Athene has approved the extension of the delivery of these GAAP financial statements to June 30,2015. On February 4, 2015, Athene informed its shareholders, including the Company, that Athene’s first quarter 2014 GAAP financial statements can nolonger be relied upon and therefore these financial statements have been removed from the AAA website. Specifically, Athene discovered the need to changeits calculations for reserve balances associated with its indexed products. As a result of this determination, Athene has begun a methodical process ofrestating their first quarter 2014 GAAP financial statements. The aforementioned delay in delivery of Athene’s 2014 GAAP financial statements and theannounced restatement of Athene’s first quarter 2014 GAAP financial statements is not expected to have an impact on the Company’s previously issuedfinancial statements. Athene has continued to meet all regulatory filing deadlines with regard to financial statements prepared in accordance with StatutoryAccounting principles and expects to do so for the quarter ended December 31, 2014. As of December 31, 2014 the Company determined the value of itsinvestment in Athene using an embedded value methodology. In doing so, the Company has given appropriate consideration to the control deficiencies andpotential adjustments related to Athene and any potential impacts to the Company's financial statements. As the embedded value methodology is based onthe projected future cash flows of the business rather than GAAP financials, the delay in the delivery of Athene’s GAAP financial statement will not have animpact on the Company's ability to prepare its financial statements. Based on the facts and circumstances as of the date of this report, the Company is notaware of any revisions to the financial statements as presented, or previously issued financial statements, and there is no impact to our ability to producefuture financial statements.See notes 4 and 17 to the consolidated financial statements for discussion regarding the Company’s ownership interest in AAA, AAA Investmentsand Athene.Distributions to Managing Partners and Contributing PartnersThe three Managing Partners who became employees of Apollo on July 13, 2007 are each entitled to a $100,000 base salary. Additionally, ourManaging Partners can receive other forms of compensation. Any additional consideration will be paid to them in their proportional ownership interest inHoldings. Additionally, 85% of any tax savings APO Corp. recognizes as a result of the tax receivable agreement will be paid to the Managing Partners.Subsequent to the 2007 Reorganization, the Contributing Partners retained ownership interests in subsidiaries of the Apollo Operating Group.Therefore, any distributions that flow up to management or general partner entities in which the Contributing Partners retained ownership interests are sharedpro rata with the Contributing Partners who have a direct interest in such entities prior to flowing up to the Apollo Operating Group. These distributions areconsidered compensation expense after the 2007 Reorganization.The Contributing Partners are entitled to receive the following:•Profit Sharing related to private equity carried interest income, from direct ownership of advisory entities. Anychanges in fair value of the underlying fund investments would result in changes to Apollo Global Management,LLC’s profit sharing payable;•Additional consideration based on their proportional ownership interest in Holdings; and•Additionally, 85% of any tax savings APO Corp. recognizes as a result of the tax receivable agreement will be paid tothe Contributing Partners.Potential Future CostsWe may make grants of RSUs or other equity-based awards to employees and independent directors that we appoint in the future.- 125- Table of ContentsCritical Accounting PoliciesThis Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the consolidated financialstatements, which have been prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP requires the useof estimates and assumptions that could affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and thereported amounts of revenues and expenses. Actual results could differ from these estimates. A summary of our significant accounting policies is presented innote 2 to our consolidated financial statements. The following is a summary of our accounting policies that are affected most by judgments, estimates andassumptions.ConsolidationThe types of entities with which Apollo is involved generally include subsidiaries (i.e., general partners and management companies related tothe funds we manage), entities that have all the attributes of an investment company (e.g., funds) and securitization vehicles (e.g., collateralized loanobligations). Each of these entities is assessed for consolidation on a case by case basis depending on the specific facts and circumstances surrounding thatentity.Pursuant to our consolidation policy, we first consider the appropriate consolidation guidance to apply including consideration of whether theentity qualifies for certain scope exceptions and whether the entity should be evaluated under either the previous rules on consolidation of variable interestentities (“VIEs”) or the amended consolidation rules depending on whether or not the entity qualifies for the deferral as further described below. We thenperform an assessment to determine whether that entity qualifies as a VIE. An entity in which Apollo holds a variable interest is a VIE if any one of thefollowing conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additionalsubordinated financial support, (b) the holders of equity investment at risk (as a group) lack either the direct or indirect ability through voting rights orsimilar rights to make decisions about a legal entity’s activities that have a significant effect on the success of the legal entity or the obligation to absorb theexpected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorbthe expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both and substantially all of the legal entity’sactivities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Entities that do not qualify as VIEs are generallyassessed for consolidation as voting interest entities (“VOEs”) under the voting interest model.Under the voting interest model, Apollo consolidates those entities it controls through a majority voting interest or through other means,including those VOEs in which the general partner is presumed to have control. Apollo does not consolidate those VOEs in which the presumption of controlby the general partner has been overcome through either the granting of substantive rights to the unaffiliated investors to either dissolve the fund or removethe general partner (“kick-out rights”) or the granting of substantive participating rights.As previously indicated, the consolidation assessment, including the determination as to whether an entity qualifies as a VIE depends on thefacts and circumstances surrounding each entity and therefore certain of our funds may qualify as VIEs whereas others may qualify as VOEs. The granting ofsubstantive kick-out rights is a key consideration in determining whether an entity is a VIE and whether or not that entity should be consolidated. Forexample, when the unaffiliated holders of equity investment at risk of a fund with sufficient equity to permit the fund to finance its activities withoutadditional subordinated financial support are not granted substantive kick-out rights and the Company is not part of the group of holders of equityinvestment at risk, the fund is generally determined to be a VIE, as the holders of equity investment at risk as a group lack the direct or indirect abilitythrough voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity. Alternatively, when the unaffiliatedholders of equity investment at risk are granted substantive kick-out rights, the fund is generally determined to be a VOE. However, in certain cases where theCompany holds a substantive equity investment at risk in the fund, the fund may be determined to be a VOE even though substantive kick-out rights werenot granted to the unaffiliated holders of equity investment at risk. In these cases, the Company is part of the group of holders of equity investment at risk andtherefore the holders of equity investment at risk as a group do not lack the direct or indirect ability through voting rights or similar rights to make decisionsthat have a significant effect on the success of the legal entity. If the entity is determined to be a VIE under the conditions above, we then assess whether the entity should be consolidated by applying eitherthe previous consolidation rules or the amended consolidation rules depending on whether the entity qualifies for the deferral of the amended consolidationrules as further described below.VIEs that qualify for the deferral of the amended consolidation rules because certain conditions are met, including if the entities have all thefundamental characteristics (and a number of the typical characteristics) of an investment company and are not securitization or asset-backed financingentities, will continue to apply the previous consolidation rules. VIEs that are- 126- Table of Contentssecuritization or asset-backed financing entities will apply the amended consolidation rules. Under both sets of rules, VIEs for which Apollo is determined tobe the primary beneficiary are consolidated.With respect to VIEs such as our funds that qualify for the deferral of the amended consolidation rules and therefore apply the previousconsolidation rules, Apollo is determined to be the primary beneficiary if its involvement, through holding interests directly or indirectly in the VIE orcontractually through other variable interests (e.g., carried interest and management fees), would be expected to absorb a majority of the VIE’s expectedlosses, receive a majority of the VIE’s expected residual returns, or both. In cases where two or more Apollo related parties hold a variable interest in a VIE,and the aggregate variable interest held by those parties would, if held by a single party, identify that party as the primary beneficiary, then the Company isdetermined to be the primary beneficiary to the extent it is the party within the related party group that is most closely associated with the VIE.For VIEs such as our CLOs that apply the amended consolidation rules, Apollo is determined to be the primary beneficiary if it holds acontrolling financial interest defined as possessing both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economicperformance and (b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.CLOs are generally determined to be VIEs if they are formed solely to issue collateralized notes in the legal form of debt and therefore do not have sufficienttotal equity investment at risk to permit the entity to finance its activities without additional subordinated financial support. With respect to such CLOs, wegenerally possess a controlling financial interest in, and therefore consolidate, such CLOs in accordance with the amended consolidation rules when our roleas collateral manager provides us with the power to direct the activities that most significantly impact the CLO’s economic performance and we have theright to receive certain benefits from the CLO (e.g., incentive fees) that could potentially be significant to the CLO.Under the previous and the amended consolidation rules, Apollo determines whether it is the primary beneficiary of a VIE at the time it becomesinitially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, affiliates of Apollo or thirdparties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primarybeneficiary.The assessment of whether an entity is a VIE and the determination of whether Apollo should consolidate such VIE requires judgments. Underboth sets of rules, those judgments include, but are not limited to: (i) determining whether the total equity investment at risk is sufficient to permit the entityto finance its activities without additional subordinated financial support, (ii) evaluating whether the holders of equity investment at risk, as a group, canmake decisions that have a significant effect on the success of the entity, (iii) determining whether two or more parties’ equity interests should be aggregated,(iv) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive the expected residualreturns from an entity, and (v) evaluating the nature of the relationship and activities of the parties involved in determining which party within a related-partygroup is most closely associated with the VIE. Where the VIEs have qualified for the deferral, judgments are also made in estimating cash flows to evaluatewhich member within the equity group absorbs a majority of the expected losses or residual returns of the VIE. Where the VIEs have not qualified for thedeferral, judgments are also made in determining whether a member in the equity group has a controlling financial interest including power to directactivities that most significantly impact the VIEs' economic performance and rights to receive benefits or obligations to absorb losses that could bepotentially significant to the VIE.Certain of the consolidated VIEs were formed to issue collateralized notes in the legal form of debt backed by financial assets. The differencebetween the fair value of the assets and liabilities of these VIEs is presented within appropriated partners’ capital in the consolidated statements of financialcondition as these VIEs are funded solely with debt. Changes in the fair value of the assets and liabilities of these VIEs and the related interest and otherincome is presented within net gains from investment activities of consolidated variable interest entities and net income attributable to Non-ControllingInterests in the consolidated statements of operations. Such amounts are recorded within appropriated partners’ capital as, in each case, the VIE’s noteholders, not Apollo, will ultimately receive the benefits or absorb the losses associated with the VIE’s assets and liabilities.Assets and liabilities of the consolidated VIEs are shown in separate sections within the consolidated statements of financial condition as ofDecember 31, 2014 and 2013.Revenue RecognitionCarried Interest Income from Affiliates. We earn carried interest income from our funds as a result of such funds achieving specified performancecriteria. Such carried interest income generally is earned based upon a fixed percentage of realized and unrealized gains of various funds after meeting anyapplicable hurdle rate or threshold minimum. Carried interest income from certain of the funds that we manage is subject to contingent repayment and isgenerally paid to us as particular investments made by the funds are realized. If, however, upon liquidation of a fund, the aggregate amount paid to us ascarried interest exceeds- 127- Table of Contentsthe amount actually due to us based upon the aggregate performance of the fund, the excess (in certain cases net of taxes) is required to be returned by us tothat fund. For a majority of our credit funds, once the annual carried interest income has been determined, there generally is no look-back to prior periods fora potential contingent repayment, however, carried interest income on certain other credit funds can be subject to contingent repayment at the end of the lifeof the fund. We have elected to adopt Method 2 from U.S. GAAP guidance applicable to accounting for management fees based on a formula, and under thismethod, we accrue carried interest income quarterly based on fair value of the underlying investments and separately assess if contingent repayment isnecessary. The determination of carried interest income and contingent repayment considers both the terms of the respective partnership agreements and thecurrent fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlyinginvestments within the funds and could vary depending on the valuation methodology that is used. See “Investments, at Fair Value” below for furtherdiscussion related to significant estimates and assumptions used for determining fair value of the underlying investments in our private equity, credit and realestate funds.Management Fees from Affiliates. The management fees related to our private equity funds are generally based on a fixed percentage of thecommitted capital or invested capital. The corresponding fee calculations that consider committed capital or invested capital are both objective in nature andtherefore do not require the use of significant estimates or assumptions. Management fees related to our credit funds, by contrast, can be based on net assetvalue, gross assets, adjusted cost of all unrealized portfolio investments, capital commitments, adjusted assets, capital contributions, or stockholders' equityall as defined in the respective partnership agreements. The credit management fee calculations that consider net asset value, gross assets, adjusted cost of allunrealized portfolio investments and adjusted assets, are normally based on the terms of the respective partnership agreements and the current fair value ofthe underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within thefunds and could vary depending on the valuation methodology that is used. The management fees related to our real estate funds are generally based on aspecific percentage of the funds’ stockholders’ equity or committed or net invested capital or the capital accounts of the limited partners. See “Investments, atFair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments in ourprivate equity, credit and real estate funds.Investments, at Fair ValueThe Company follows U.S. GAAP attributable to fair value measurements, which among other things, requires enhanced disclosures aboutinvestments that are measured and reported at fair value. Investments at fair value represent investments of the consolidated funds, investments of theconsolidated VIEs and certain financial instruments for which the fair value option was elected. The unrealized gains and losses resulting from changes in thefair value are reflected as net gains (losses) from investment activities and net gains (losses) from investment activities of the consolidated variable interestentities, respectively, in the consolidated statements of operations. In accordance with U.S. GAAP, investments measured and reported at fair value areclassified and disclosed in one of the following categories:Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included inLevel I include listed equities and listed derivatives. As required by U.S. GAAP, the Company does not adjust the quoted price for theseinvestments, even in situations where the Company holds a large position and the sale of such position would likely deviate from the quotedprice.Level II—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date,and fair value is determined through the use of models or other valuation methodologies. Investments that are generally included in this categoryinclude corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives where the fair value isbased on observable inputs. These investments exhibit higher levels of liquid market observability as compared to Level III investments. TheCompany subjects broker quotes to various criteria in making the determination as to whether a particular investment would qualify for treatmentas a Level II investment. These criteria include, but are not limited to, the number and quality of broker quotes, the standard deviation ofobtained broker quotes, and the percentage deviation from independent pricing services.Level III—Pricing inputs are unobservable for the investment and includes situations where there is little observable market activity for theinvestment. The inputs into the determination of fair value may require significant management judgment or estimation. Investments that areincluded in this category generally include general and limited partner interests in corporate private equity and real estate funds, opportunisticcredit funds, distressed debt and non-investment grade residual interests in securitizations and CDOs and CLOs where the fair value is based onobservable inputs as well as unobservable inputs. When a security is valued based on broker quotes, the Company subjects those quotes tovarious criteria in making the determination as to whether a particular investment would qualify for treatment as a Level II or Level IIIinvestment. These criteria include, but are not limited to, the number and quality of the broker- 128- Table of Contentsquotes, the standard deviations of the observed broker quotes, and the percentage deviation from independent pricing services.In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s levelwithin the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of thesignificance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment where thefair value is based on unobservable inputs.In cases where an investment or financial instrument measured and reported at fair value is transferred into or out of Level III of the fair valuehierarchy, the Company accounts for the transfer as of the end of the reporting period.Equity Method Investments. For investments in entities over which the Company exercises significant influence but which do not meet therequirements for consolidation, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or lossof such entities. Income (loss) from equity method investments is recognized as part of other income (loss) in the consolidated statements of operations andincome (loss) on available-for-sale securities (from equity method investments) is recognized as part of other comprehensive income (loss), net of tax in theconsolidated statements of comprehensive income (loss). The carrying amounts of equity method investments are reflected in investments in the consolidatedstatements of financial condition. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investmentcompanies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entitiesapproximates fair value.Private Equity Investments. The majority of the illiquid investments within our private equity funds are valued using the market approach,which provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies and transactions in theindustry.Market Approach. The market approach is driven by current market conditions, including actual trading levels of similar companies and, to theextent available, actual transaction data of similar companies. Judgment is required by management when assessing which companies are similar to thesubject company being valued. Consideration may also be given to any of the following factors: (1) the subject company’s historical and projected financialdata; (2) valuations given to comparable companies; (3) the size and scope of the subject company’s operations; (4) the subject company’s individualstrengths and weaknesses; (5) expectations relating to the market’s receptivity to an offering of the subject company’s securities; (6) applicable restrictionson transfer; (7) industry and market information; (8) general economic and market conditions; and (9) other factors deemed relevant. Market approachvaluation models typically employ a multiple that is based on one or more of the factors described above. Sources for gaining additional knowledge relatedto comparable companies include public filings, annual reports, analyst research reports, and press releases. Once a comparable company set is determined,we review certain aspects of the subject company’s performance and determine how its performance compares to the group and to certain individuals in thegroup. We compare certain measurements such as EBITDA margins, revenue growth over certain time periods, leverage ratios, and growth opportunities. Inaddition, we compare our entry multiple and its relation to the comparable set at the time of acquisition to understand its relation to the comparable set oneach measurement date.Income Approach. For investments where the market approach does not provide adequate fair value information, we rely on the incomeapproach. The income approach is also used to value investments or validate the market approach within our private equity funds. The income approachprovides an indication of fair value based on the present value of cash flows that a business or security is expected to generate in the future. The most widelyused methodology for the income approach is a discounted cash flow method. Inherent in the discounted cash flow method are significant assumptionsrelated to the subject company’s expected results and a calculated discount rate, which is normally based on the subject company’s weighted average cost ofcapital, or “WACC.” The WACC represents the required rate of return on total capitalization, which is comprised of a required rate of return on equity, plusthe current tax-effected rate of return on debt, weighted by the relative percentages of equity and debt that are typical in the industry. The most critical step indetermining the appropriate WACC for each subject company is to select companies that are comparable in nature to the subject company and the creditquality of the subject company. Sources for gaining additional knowledge about the comparable companies include public filings, annual reports, analystresearch reports, and press releases. The general formula then used for calculating the WACC considers the after-tax rate of return on debt capital and the rateof return on common equity capital, which further considers the risk-free rate of return, market beta, market risk premium and small stock premium, ifapplicable. The variables used in the WACC formula are inferred from the comparable market data obtained. The Company evaluates the comparablecompanies selected and concludes on WACC inputs based on the most comparable company or analyzes the range of data for the investment.The value of liquid investments, where the primary market is an exchange (whether foreign or domestic) is determined using period end marketprices. Such prices are generally based on the close price on the date of determination.- 129- Table of ContentsOn a quarterly basis, Apollo utilizes a valuation committee consisting of members from senior management, to review and approve the valuationresults related to our funds' private equity investments. Management also retains independent valuation firms to provide third-party valuation consultingservices to Apollo, which consist of certain limited procedures that management identifies and requests them to perform. The limited procedures provided bythe independent valuation firms assist management with validating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, including comparisons between expected and observed outcomes, forecast evaluations andvariance analysis. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would havebeen used had a ready market for the investments existed, and the differences could be material.Credit Investments. The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models. Debtand equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value utilizing recognized pricingservices, market participants or other sources. When market quotations are not available, a model based approach is used to determine fair value. The creditfunds also enter into foreign currency exchange contracts, total return swap contracts, credit default swap contracts, and other derivative contracts, which mayinclude options, caps, collars and floors. Foreign currency exchange contracts are marked-to-market by recognizing the difference between the contractexchange rate and the current market rate as unrealized appreciation or depreciation. If securities are held at the end of this period, the changes in value arerecorded in income as unrealized. Realized gains or losses are recognized when contracts are settled. Total return swap and credit default swap contracts arerecorded at fair value as an asset or liability with changes in fair value recorded as unrealized appreciation or depreciation. Realized gains or losses arerecognized at the termination of the contract based on the difference between the close-out price of the total return or credit default swap contract and theoriginal contract price.Forward contracts are valued based on market rates obtained from counterparties or prices obtained from recognized financial data serviceproviders. When determining fair value pricing when no observable market value exists, the value attributed to an investment is based on the enterprise valueat the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.Valuation approaches used to estimate the fair value of illiquid credit investments also may include the market approach and the income approach, aspreviously described above. The valuation approaches used consider, as applicable, market risks, credit risks, counterparty risks and foreign currency risks.On a quarterly basis, Apollo also utilizes a valuation committee, consisting of members from senior management, to review and approve thevaluation results related to our credit investments. For certain publicly traded vehicles, a review is performed by an independent board of directors. TheCompany also retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited proceduresthat management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management withvalidating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches,including comparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertaintyof valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, andthe differences could be material.Real Estate Investments. For the CMBS portfolio of Apollo’s funds, the estimated fair value of the CMBS portfolio is determined by reference tomarket prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may notnecessarily represent what the funds would receive in an actual trade for the applicable instrument. Additionally, the loans held-for-investment are stated atthe principal amount outstanding, net of deferred loan fees and costs. The Company evaluates its loans for possible impairment on a quarterly basis. ForApollo’s opportunistic and value added real estate funds, valuations of non-marketable underlying investments are determined using methods that include,but are not limited to (i) discounted cash flow estimates or comparable analysis prepared internally, (ii) third party appraisals or valuations by qualified realestate appraisers, and (iii) contractual sales value of investments/properties subject to bona fide purchase contracts. Methods (i) and (ii) also incorporateconsideration of the use of the income, cost, or sales comparison approaches of estimating property values.On a quarterly basis, Apollo also utilizes a valuation committee, consisting of members from senior management, to review and approve thevaluation results related to our real estate investments. For certain publicly traded vehicles, a review is performed by an independent board of directors. TheCompany also retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited proceduresthat management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management withvalidating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches,including comparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertaintyof valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, andthe differences could be material.- 130- Table of ContentsThe fair values of the investments in our private equity, credit and real estate funds can be impacted by changes to the assumptions used in theunderlying valuation models. For further discussion on the impact of changes to valuation assumptions see “Item 7A. Quantitative and QualitativeDisclosures About Market Risk—Sensitivity” in this Annual Report on Form 10-K. There have been no material changes to the underlying valuation modelsduring the periods that our financial results are presented.Fair Value of Financial InstrumentsU.S. GAAP guidance requires the disclosure of the estimated fair value of financial instruments. The fair value of a financial instrument is theprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.Except for the Company’s debt obligations (as described in note 14 to our consolidated financial statements), Apollo’s financial instruments arerecorded at fair value or at amounts whose carrying values approximate fair value. See “Investments, at Fair Value” above. While Apollo’s valuations ofportfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the actual realized gains or losses will dependon, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and thetiming and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were based. Financial instruments’carrying values generally approximate fair value because of the short-term nature of those instruments or variable interest rates related to the borrowings.Valuation of Financial Instruments Held by Consolidated VIEsThe consolidated VIEs hold investments that are traded over-the-counter. Investments in securities that are traded on a securities exchange orcomparable over-the-counter quotation systems are valued based on the last reported sale price at that date. If no sales of such investments are reported onsuch date, and in the case of over-the-counter securities or other investments for which the last sale date is not available, valuations are based on independentmarket quotations obtained from market participants, recognized pricing services or other sources deemed relevant, and the prices are based on the average ofthe “bid” and “ask” prices, or at ascertainable prices at the close of business on such day. Market quotations are generally based on valuation pricing modelsor market transactions for similar securities adjusted for security-specific factors such as relative capital structure priority and interest and yield risks, amongother factors. When market quotations are not available, a model based approach is used to determine fair value.The consolidated VIEs also have debt obligations that are recorded at fair value. The primary valuation methodology used to determine fairvalue for debt obligation is market quotation. Prices are based on the average of the “bid” and “ask” prices. In the event that market quotations are notavailable, a model based approach is used. The valuation approach used to estimate the fair values of debt obligations for which market quotations are notavailable is the discounted cash flow method, which includes consideration of the cash flows of the debt obligation based on projected quarterly interestpayments and quarterly amortization. Debt obligations are discounted based on the appropriate yield curve given the loan’s respective maturity and creditrating. Management uses its discretion and judgment in considering and appraising relevant factors for determining the valuations of its debt obligations.Fair Value Option. Apollo elected the fair value option for the Company's investment in Athene Holding, the convertible notes issued by HFAand for the assets and liabilities of the consolidated VIEs. Such election is irrevocable and is applied to financial instruments on an individual basis at initialrecognition. Apollo applied the fair value option for certain corporate loans, other investments and debt obligations held by these entities that otherwisewould not have been carried at fair value. For the convertible notes issued by HFA, Apollo elected to separately present interest income from other changes inthe fair value of the convertible notes in the consolidated statements of operations. See notes 4, 5 and 6 to our consolidated financial statements for furtherdisclosure on the investments in Athene Holding, HFA and financial instruments of the consolidated VIEs for which the fair value option has been elected.Goodwill and Intangible Assets—Goodwill and indefinite-life intangible assets must be reviewed annually for impairment or more frequently ifcircumstances indicate impairment may have occurred. Identifiable finite-life intangible assets, by contrast, are amortized over their estimated useful lives,which are periodically re-evaluated for impairment or when circumstances indicate an impairment may have occurred. Apollo amortizes its identifiable finite-life intangible assets using a method of amortization reflecting the pattern in which the economic benefits of the finite-life intangible asset are consumed orotherwise used up. If that pattern cannot be reliably determined, Apollo uses the straight-line method of amortization. At June 30, 2014, the Companyperformed its annual impairment testing, and, as the fair value of each of the Company’s reporting units was in excess of its carrying value, there was noimpairment of goodwill. Additionally, there was no impairment of indefinite-life intangible assets as of December 31, 2014.- 131- Table of ContentsCompensation and BenefitsCompensation and benefits include salaries, bonuses and benefits, profit sharing expense and equity-based compensation.Salaries, Bonus and Benefits. Salaries, bonus and benefits include base salaries, discretionary and non-discretionary bonuses, severance andemployee benefits. Bonuses are accrued over the related service period.The Company sponsors a 401(k) Savings Plan whereby U.S.-based employees are entitled to participate in the plan based upon satisfying certaineligibility requirements. The Company may provide discretionary contributions from time to time. No contributions relating to this plan were made by theCompany for the years ended December 31, 2014 and 2013.Profit Sharing Expense. Profit sharing expense is primarily a result of agreements with our Contributing Partners and employees to compensatethem based on the ownership interest they have in the general partners of the Apollo funds. Therefore, changes in the fair value of the underlying investmentsin the funds we manage and advise affect profit sharing expense. The Contributing Partners and employees are allocated approximately 30% to 50% of thetotal carried interest income which is driven primarily by changes in fair value of the underlying fund’s investments and is treated as compensation expense.Additionally, profit sharing expenses paid may be subject to clawback from employees, former employees and Contributing Partners to the extent notindemnified.Changes in the fair value of the contingent obligations that were recognized in connection with certain Apollo acquisitions are reflected in theCompany’s consolidated statements of operations as profit sharing expense.In June 2011, the Company adopted a performance based incentive arrangement for certain Apollo partners and employees designed to moreclosely align compensation on an annual basis with the overall realized performance of the Company. This arrangement, which we refer to herein as theIncentive Pool, enables certain partners and employees to earn discretionary compensation based on carried interest realizations earned by the Company in agiven year, which amounts are reflected in profit sharing expense in the accompanying consolidated financial statements. The Company adopted theIncentive Pool to attract and retain, and provide incentive to, partners and employees of the Company and to more closely align the overall compensation ofpartners and employees with the overall realized performance of the Company. Allocations to the Incentive Pool and to its participants contain both a fixedand a discretionary component and may vary year-to-year depending on the overall realized performance of the Company and the contributions andperformance of each participant. There is no assurance that the Company will continue to compensate individuals through performance-based incentivearrangements in the future and there may be periods when the Executive Committee of the Company’s manager determines that allocations of realized carriedinterest income are not sufficient to compensate individuals, which may result in an increase in salary, bonus and benefits.Equity-Based Compensation. Equity-based compensation is accounted for in accordance with U.S. GAAP, which requires that the cost ofemployee services received in exchange for an award is generally measured based on the grant date fair value of the award. Equity-based awards that do notrequire future service (i.e., vested awards) are expensed immediately. Equity-based employee awards that require future service are recognized over therelevant service period. Further, as required under U.S. GAAP, the Company estimates forfeitures using industry comparables or historical trends for equity-based awards that are not expected to vest. Apollo’s equity-based awards consist of, or provide rights with respect to AOG Units, RSUs, share options, AHLAwards (as defined in note 16 to our consolidated financial statements) and other equity-based compensation awards. For more information regardingApollo’s equity-based compensation awards, see note 16 to our consolidated financial statements. The Company’s assumptions made to determine the fairvalue on grant date and the estimated forfeiture rate are embodied in the calculations of compensation expense.Additionally, the value of the AOG Units have been reduced to reflect the transfer restrictions imposed on units issued to the Managing Partnersand Contributing Partners as well as the lack of rights to participate in future Apollo Global Management, LLC equity offerings. These awards have thefollowing characteristics:•Awards granted to the Managing Partners (i) are not permitted to be sold to any parties outside of the Apollo GlobalManagement, LLC control group and transfer restrictions lapse pro rata during the forfeiture period over 60 or 72months, and (ii) allow the Managing Partners to initiate a change in control; and•Awards granted to the Contributing Partners (i) are not permitted to be sold or transferred to any parties except to theApollo Global Management, LLC control group and (ii) the transfer restriction period lapses over six years (which islonger than the forfeiture period which lapses ratably over 60 months).- 132- Table of ContentsAs noted above, the AOG Units issued to the Managing Partners and Contributing Partners have different restrictions which affect the liquidity ofand the discounts applied to each grant.We utilized the Finnerty Model to calculate a discount on the AOG Units granted to the Contributing Partners. The Finnerty Model provides fora valuation discount reflecting the holding period restriction embedded in a restricted security preventing its sale over a certain period of time. Along withthe Finnerty Model we applied adjustments to account for the existence of liquidity clauses specific to the AOG Units granted to the Contributing Partnersand a minority interest consideration as compared to the units sold in the Strategic Investors Transaction in 2007. The combination of these adjustmentsyielded a fair value estimate of the AOG Units granted to the Contributing Partners.The Finnerty Model proposes to estimate a discount for lack of marketability such as transfer restrictions by using an option pricing theory. Thismodel has gained recognition through its ability to address the magnitude of the discount by considering the volatility of a company’s stock price and thelength of restriction. The concept underpinning the Finnerty Model is that a restricted security cannot be sold over a certain period of time. Furthersimplified, a restricted share of equity in a company can be viewed as having forfeited a put on the average price of the marketable equity over the restrictionperiod (also known as an “Asian Put Option”). If we price an Asian Put Option and compare this value to that of the assumed fully marketable underlyingsecurity, we can effectively estimate the marketability discount.The assumptions utilized in the model were (i) length of holding period, (ii) volatility, (iii) dividend yield and (iv) risk free rate. Our assumptionswere as follows:(i)We assumed a maximum two year holding period.(ii)We concluded based on industry peers, that our volatility annualized would be approximately 40%.(iii)We assumed no distributions.(iv)We assumed a 4.88% risk free rate based on U.S. Treasuries with a two year maturity.For the Contributing Partners’ grants, the Finnerty Model calculation, as detailed above, yielded a marketability discount of 25%. Thismarketability discount, along with adjustments to account for the existence of liquidity clauses and consideration of non-controlling interests as compared tounits sold in the Strategic Investors Transaction in 2007, resulted in an overall discount for these grants of 29%.We determined a 14% discount for the grants to the Managing Partners based on the equity value per share of $24. We determined that the valueof the grants to the Managing Partners was supported by the 2007 sale of an identical security to Credit Suisse Management, LLC at $24 per share. Based onan equity value per share of $24, the implied discount for the grants to the Managing Partners was 14%. The Contributing Partners yielded a larger overalldiscount of 29%, as they are unable to cause a change in control of Apollo. This results in a lower fair value estimate, as their units have fewer beneficialfeatures than those of the Managing Partners.Another significant part of our compensation expense is derived from amortization of RSUs. The fair value of all RSU grants after March 29, 2011is based on the grant date fair value, which considers the public share price of the Company. RSUs are comprised of Plan Grants, which generally do not paydistributions until vested and, for grants made after 2011, the underlying shares are generally issued by March 15th after the year in which they vest, andBonus Grants, which pay distributions on both vested and unvested grants and are generally issued after vesting on an approximate two-month lag. For PlanGrants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions and lack of distributions untilvested. For Bonus Grants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions.We utilized the present value of a growing annuity formula to calculate a discount for the lack of pre-vesting distributions on Plan Grant RSUs.The weighted average for the inputs utilized for the shares granted during the years ended December 31, 2014, 2013 and 2012 are presented in the tablebelow for Plan Grants:- 133- Table of Contents For the Year Ended December 31, 2014 2013 2012Distribution Yield(1) 14.3% 9.5% 8.4%Cost of Equity Capital Rate(2) 12.3% 17.6% 17.6%(1)Calculated based on the historical distributions paid during the last twelve months and the Company's share price as of the measurement date of the grant on a weightedaverage basis.(2)Assumes a discount rate equivalent to a cost of equity capital rate as of the valuation date, based on the Capital Asset Pricing Model ("CAPM"). CAPM is a commonlyused mathematical model for developing expected returns.For Plan Grants that are not eligible for distributions on unvested shares, the discount for the lack of distributions until vested based on thepresent value of a growing annuity calculation had a weighted average of 32.5%, 30.5% and 23.3% for the years ended December 31, 2014, 2013 and 2012,respectively.We utilized the Finnerty Model to calculate a marketability discount on the Plan Grant and Bonus Grant RSUs to account for the lag betweenvesting and issuance. The Finnerty Model provides for a valuation discount reflecting the holding period restriction embedded in a restricted securitypreventing its sale over a certain period of time.The inputs utilized in the Finnerty Model were (i) length of holding period, (ii) volatility, (iii) risk-free rate and (iv) dividend yield. The weightedaverage for the inputs utilized for the shares granted during the years ended December 31, 2014, 2013 and 2012 are presented in the table below for PlanGrants and Bonus Grants: For the Year Ended December 31, 2014 2013 2012Plan Grants Holding Period Restriction (in years)0.6 0.6 0.6Volatility(1)31.4% 30.4% 34.0%Distribution Yield(2)14.3% 8.2% 8.0%Bonus Grants Holding Period Restriction (in years)0.2 0.2 0.2Volatility(1)32.1% 30.0% 30.5%Distribution Yield(2)13.7% 12.2% 7.8%(1)The Company determined the expected volatility based on the volatility of the Company’s share price as of the grant date with consideration to comparable companies.(2)Calculated based on the historical distributions paid during the last twelve months and the Company's share price as of the measurement date of the grant on a weightedaverage basis.For Plan Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation, after considering the discount forlack of pre-vesting distributions, had a weighted average of 5.1%, 6.0% and 5.0% for the years ended December 31, 2014, 2013 and 2012, respectively. ForBonus Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation had a weighted average of 3.2%, 3.2% and 4.9% forthe years ended December 31, 2014, 2013 and 2012, respectively.After the grant date fair value is determined, an estimated forfeiture rate is applied. The estimated fair value was determined and recognized overthe vesting period on a straight-line basis. A 6.0% forfeiture rate is estimated for RSUs, based on the Company’s historical attrition rate as well as industrycomparable rates. If employees are no longer associated with Apollo or if there is no turnover, we will revise our estimated compensation expense to theactual amount of expense based on the units vested at the reporting date in accordance with U.S. GAAP.- 134- Table of Contents Income TaxesThe Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. As a result, except asdescribed below, the Apollo Operating Group has not been subject to U.S. income taxes. However, these entities in some cases are subject to NYC UBT andnon-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition, APO Corp., a wholly-owned subsidiary of the Company, issubject to U.S. federal, state and local corporate income tax, and the Company’s provision for income taxes is accounted for in accordance with U.S. GAAP.Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties. The Companyrecognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained upon examination, includingresolutions of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit is measured as the largest amount ofbenefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If a tax position is not considered more likely than not to besustained, then no benefits of the position are recognized. The Company’s tax positions are reviewed and evaluated quarterly to determine whether or not wehave uncertain tax positions that require financial statement recognition.Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assetsand liabilities and their respective tax basis using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not thatsome portion or all of the deferred tax assets will not be realized.Fair Value MeasurementsSee note 6 to our consolidated financial statements for a discussion of the Company's fair value measurements.Recent Accounting PronouncementsA list of recent accounting pronouncements that are relevant to Apollo and its industry is included in note 2 to our consolidated financialstatements.Off-Balance Sheet ArrangementsIn 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 18 to our consolidated financial statements for a discussion of guarantees andcontingent obligations. Contractual Obligations, Commitments and ContingenciesAs of December 31, 2014, the Company’s material contractual obligations consisted of lease obligations, contractual commitments as part of theongoing operations of the funds and debt obligations. Fixed and determinable payments due in connection with these obligations are as follows: 2015 2016 2017 2018 2019 Thereafter Total (in thousands)Operating lease obligations(1)$38,863 $38,225 $36,114 $31,742 $31,348 $24,214 $200,506Other long-term obligations(2)10,400 4,575 4,470 4,470 2,235 — 26,1502013 AMH Credit Facilities - Term Facility(3)6,838 6,838 6,838 6,838 500,342 — 527,6942013 AMH Credit Facilities - Revolver Facility(4)625 625 625 625 8 — 2,5082024 Senior Notes (5)20,000 20,000 20,000 20,000 20,000 588,333 688,3332014 AMI Term Facility I380 380 380 380 16,395 — 17,9152014 AMI Term Facility II362 362 362 362 19,093 — 20,541Obligations as of December 31, 2014$77,468 $71,005 $68,789 $64,417 $589,421 $612,547 $1,483,647 - 135- Table of Contents(1)The Company has entered into sublease agreements and is expected to contractually receive approximately $6.5 million over the remaining periods of 2014 andthereafter.(2)Includes (i) payments on management service agreements related to certain assets and (ii) payments with respect to certain consulting agreements entered into by theCompany. Note that a significant portion of these costs are reimbursable by funds.(3)$500 million of the outstanding Term Facility matures in January 2019. The interest rate on the $500 million Term Facility as of December 31, 2014 was 1.37%. Seenote 14 of the consolidated financial statements for further discussion of the 2013 AMH Credit Facilities.(4)The commitment fee as of December 31, 2014 on the $500 million undrawn Revolver Facility was 0.125%. See note 14 of the consolidated financial statements forfurther discussion of the 2013 AMH Credit Facilities.(5)$500 million of the 2024 Senior Notes matures in May 2024. The interest rate on the 2024 Senior Notes as of December 31, 2014 was 4.000%. See note 14 of theconsolidated financial statements for further discussion of the 2024 Senior Notes.Note:Due to the fact that the timing of certain amounts to be paid cannot be determined or for other reasons discussed below, the following contractual commitments have notbeen presented in the table above.(i)As noted previously, we have entered into a tax receivable agreement with our Managing Partners and Contributing Partners which requires us to pay to our ManagingPartners and Contributing Partners 85% of any tax savings received by APO Corp. from our step-up in tax basis. The tax savings achieved may not ensure that wehave sufficient cash available to pay this liability and we might be required to incur additional debt to satisfy this liability.(ii)Debt amounts related to the consolidated VIEs are not presented in the table above as the Company is not a guarantor of these non-recourse liabilities.CommitmentsCertain of our management companies and general partners are committed to contribute to the funds and affiliates. While a small percentage ofthese amounts are funded by us, the majority of these amounts have historically been funded by our affiliates, including certain of our employees and certainApollo funds. The table below presents the commitment and remaining commitment amounts of Apollo and its affiliates, the percentage of total commitmentsof Apollo and its affiliates, the commitment and remaining commitment amounts of Apollo only (excluding affiliates), and the percentage of totalcommitments of Apollo only (excluding affiliates) for each private equity, credit and real estate fund and affiliate as of December 31, 2014 as follows ($ inmillions):- 136- Table of ContentsApollo andAffiliatesCommitments % of TotalCommitments Apollo Only(ExcludingAffiliates)Commitments Apollo Only(ExcludingAffiliates)% of TotalCommitments Apollo andAffiliatesRemainingCommitments Apollo Only(ExcludingAffiliates)RemainingCommitments Private Equity: Fund VIII$1,543.58.40% $406.3 2.21% $1,418.8 $376.5 Fund VII467.2 3.18 177.8 1.21 104.0 38.2 Fund VI246.3 2.43 6.1 0.06 9.7 0.2 Fund V100.0 2.67 0.5 0.01 6.3 — Fund IV100.0 2.78 0.2 0.01 0.5 — ANRP426.1 32.21 10.1 0.76 215.1 5.1 AION150.0 18.19 50.0 6.06 120.2 39.7 APC158.4 69.02 0.1 0.04 91.0 0.1 Apollo Rose, L.P.215.7 100.00 — — 85.7 — A.A Mortgage Opportunities, L.P.200.0 98.43 — — 130.2 — Champ, L.P.78.5 100.00 20.1 25.56 15.5 4.0 Apollo Royalties Management, LLC100.0 100.00 — — 47.4 — Credit: EPF I(2)325.020.74 21.4 1.37 54.9 5.0 EPF II(2)412.9 12.25 63.3 1.88 162.3 26.3 COF I450.7 30.35 29.7 2.00 237.4 4.2 COF II30.5 1.93 23.4 1.48 0.8 0.6 COF III358.1 10.45 83.1 2.43 212.3 49.4 ACLF23.9 2.43 23.9 2.43 19.6 19.6 Palmetto18.0 1.19 18.0 1.19 10.9 10.9 AIE II(2)7.9 3.15 4.8 1.94 — — ESDF50.0 100.00 — — — — FCI193.5 34.62 — — 97.9 — FCI II244.6 15.72 — — 165.5 — Franklin Fund9.9 9.09 9.9 9.09 — — Apollo Lincoln Fixed Income Fund2.5 0.99 2.5 0.99 1.1 1.1 Apollo/Palmetto Loan Portfolio, L.P.300.0 100.00 — — 85.0 — Apollo/Palmetto Short-Maturity Loan Portfolio, L.P.200.0 100.00 — — — — AESI(2)3.5 0.99 3.5 0.99 0.6 0.6 AESI II2.8 0.99 2.8 0.99 2.6 2.6 AEC7.3 2.50 3.2 1.08 2.5 1.1 ACSP18.8 2.44 18.8 2.44 8.7 8.7 Apollo SK Strategic Investments, L.P.2.0 0.99 2.0 0.99 0.4 0.4 Stone Tower Structured Credit Recovery Master FundII, Ltd.7.9 7.61 — — — — Apollo Structured Credit Recovery Master Fund III,L.P.137.3 28.12 0.6 0.13 67.7 0.3 Apollo Zeus Strategic Investments, L.P.14.0 3.38 14.0 3.38 7.0 7.0 Apollo Lincoln Private Credit Fund, L.P.2.5 0.99 2.5 0.99 2.3 2.3 AIE III(2)10.9 2.91 10.9 2.91 9.3 9.3 Real Estate: AGRE U.S. Real Estate Fund, L.P.633.8(1) 75.03 16.3 1.81 360.8(1) 4.9 Apollo U.S. Real Estate Fund II, L.P.157.5 100.00 7.5 4.76 157.5 7.5 BEA/AGRE China Real Estate Fund, L.P.0.1 1.03 0.1 1.03 — — AGRE Asia Co-Invest I Limited50.0 100.00 — — 35.7 — CAI Strategic European Real Estate Ltd.19.0 100.00 — — 3.6 — CPI Capital Partners North America7.6 1.27 2.1 0.35 0.6 0.2 CPI Capital Partners Europe(2)6.6 0.47 — — 0.5 — CPI Capital Partners Asia Pacific6.9 0.53 0.5 0.04 0.4 — London Prime Apartments Guernsey HoldingsLimited (Guernsey)(3)27.6 7.80 0.8 0.23 7.6 — 2012 CMBS I Fund, L.P.88.2 100.00 — — — — 2012 CMBS II Fund, L.P.93.5 100.00 — — — — AGRE Cobb West Investor, LP22.1 86.41 0.1 0.39 2.1 — AGRE CMBS Fund, L.P.418.8 100.00 — — — — Other: Apollo SPN Investments I, L.P.25.4 0.84 25.4 0.84 20.8 20.8 Total$8,177.3 $1,062.3 $3,982.8 $646.6 (1)Figures for AGRE U.S. Real Estate Fund, L.P. include base, additional, and co-investment commitments. A co-investment vehicle within AGRE U.S. Real EstateFund, L.P. is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.56 as of December 31, 2014.- 137- Table of Contents(2)Apollo’s commitment in these funds is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.21 as of December 31, 2014.(3)Apollo’s commitment in these investments is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.56 as of December 31,2014.As a limited partner, the general partner and manager of the Apollo private equity, credit and real estate funds, Apollo has unfunded capitalcommitments of $646.6 million at December 31, 2014.Apollo has an ongoing obligation to acquire additional common units of AAA in an amount equal to 25% of the aggregate after-tax cashdistributions, if any, that are made by AAA to Apollo's affiliates pursuant to the carried interest distribution rights that are applicable to investments madethrough AAA Investments.In addition, as of December 31, 2014, Apollo had an unfunded loan commitment of $15.0 million related to an employee's commitment topurchase common shares of Athene Holding.Apollo, through its subsidiary Apollo MidCap Holdings (Cayman), L.P., has entered into a subscription agreement providing for an aggregatecommitment of $50.0 million to subscribe for (i) Class A Variable Funding Subordinated Notes due 2114 (“Class A Notes”) of Midcap Finco Limited(“FinCo”), an Irish company that includes the existing operations and assets of MidCap Financial LLC, a specialty finance company that originatescommercial lending opportunities, and (ii) ordinary shares of Finco’s holding company (“Ordinary Shares”). The subscription agreement has a commitmentperiod of three years (subject to extension under certain circumstances), and $8.0 million of the commitment was drawn on February 3, 2015. Pursuant to aninvestment management agreement, Apollo, through its subsidiary Apollo Capital Management, L.P., is acting as the investment manager of FinCo’s creditbusiness. Certain third parties have also entered into subscription agreements for Class A Notes and Ordinary Shares.The 2013 AMH Credit Facilities and 2024 Senior Notes (as defined below) will have future impacts on the use of our cash. See note 14 of ourconsolidated financial statements for information regarding the Company's debt arrangements.In accordance with the Managing Partner Shareholders Agreement, we have indemnified the Managing Partners and certain Contributing Partners(at varying percentages) for any carried interest income distributed from Fund IV, Fund V and Fund VI that is subject to contingent repayment by the generalpartner. As of December 31, 2014 and December 31, 2013, the Company had not recorded an obligation for any previously made distributions.Contingent Obligations—Carried interest income in private equity and certain credit and real estate funds is subject to reversal in the event offuture losses to the extent of the cumulative carried interest recognized in income to date. If all of the existing investments became worthless, the amount ofcumulative revenues that has been recognized by Apollo through December 31, 2014 and that would be reversed approximates $2.9 billion. Managementviews the possibility of all of the investments becoming worthless as remote. Carried interest income is affected by changes in the fair values of theunderlying investments in the funds that Apollo manages. Valuations, on an unrealized basis, can be significantly affected by a variety of external factorsincluding, but not limited to, bond yields and industry trading multiples. Movements in these items can affect valuations quarter to quarter even if theunderlying business fundamentals remain stable.Additionally, at the end of the life of certain funds that the Company manages, there could be a payment due to a fund by the Company if theCompany as general partner has received more carried interest income than was ultimately earned. This general partner obligation amount, if any, will dependon final realized values of investments at the end of the life of each fund or as otherwise set forth in the respective limited partnership agreement of the fund.Certain funds may not generate carried interest income as a result of unrealized and realized losses that are recognized in the current and priorreporting period. In certain cases, carried interest income will not be generated until additional unrealized and realized gains occur. Any appreciation wouldfirst cover the deductions for invested capital, unreturned organizational expenses, operating expenses, management fees and priority returns based on theterms of the respective fund agreements.AGS, one of the Company’s subsidiaries, provides underwriting commitments in connection with security offerings to the portfolio companies ofthe funds we manage. As of December 31, 2014, there were no underwriting commitments outstanding related to such offerings.Contingent ConsiderationIn connection with the acquisition of Stone Tower in April 2012, the Company agreed to pay the former owners of Stone Tower a specifiedpercentage of any future carried interest income earned from certain of the Stone Tower funds, CLOs, and strategic investment accounts. This contingentconsideration liability had an acquisition date fair value of $117.7 million, which was determined- 138- Table of Contentsbased on the present value of estimated future carried interest payments, and is recorded in profit sharing payable in the consolidated statements of financialcondition. On July 31, 2014, the Company extinguished a portion of this contingent consideration obligation and recognized a gain in the amount of $13.4million, which was recorded in other income, net in the consolidated statements of operations for the year ended December 31, 2014. In exchange for theextinguishment, the Company granted a former owner of Stone Tower and current Apollo employee 350,000 RSUs with rights to receive, subject to a three-year vesting period, distribution equivalents. This grant is accounted for as a grant of equity awards in accordance with U.S. GAAP (see note 16 of theconsolidated financial statements for further information regarding the accounting for RSUs). The fair value of the contingent obligation was $84.5 millionand $121.4 million as of December 31, 2014 and December 31, 2013, respectively.In connection with the Gulf Stream acquisition, the Company agreed to make payments to the former owners of Gulf Stream under a contingentconsideration obligation which required the Company to transfer cash to the former owners of Gulf Stream based on a specified percentage of carried interestincome. The contingent liability had a fair value of $11.6 million and $14.1 million as of December 31, 2014 and December 31, 2013, respectively, whichwas recorded in profit sharing payable in the consolidated statements of financial condition.The contingent consideration obligations will be remeasured to fair value at each reporting period until the obligations are satisfied. The changesin the fair value of the contingent consideration obligations will be reflected in profit sharing expense in the consolidated statements of operations.The Company has determined that the contingent consideration obligations are categorized as a Level III liability in the fair value hierarchy asthe pricing inputs used to determine fair value require significant management judgment and estimation. See note 6 of the consolidated financial statementsfor further disclosure regarding fair value of the contingent consideration obligations.- 139- Table of ContentsITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur predominant exposure to market risk is related to our role as investment manager and general partner for our funds and the sensitivity tomovements in the fair value of their investments and resulting impact on carried interest income and management fee revenues. Our direct investments in thefunds also expose us to market risk whereby movements in the fair values of the underlying investments will increase or decrease both net gains (losses) frominvestment activities and income (loss) from equity method investments. For a discussion of the impact of market risk factors on our financial instruments see“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Investments, at FairValue.”The fair value of our financial assets and liabilities of our funds may fluctuate in response to changes in the value of investments, foreignexchange, commodities and interest rates. The net effect of these fair value changes impacts the gains and losses from investments in our consolidatedstatements of operations. However, the majority of these fair value changes are absorbed by the Non-Controlling Interests.The Company is subject to a concentration risk related to the investors in its funds. Although there are more than approximately 1,000 investors inApollo’s active private equity, credit and real estate funds, no individual investor accounts for more than 10% of the total committed capital to Apollo’sactive funds.Risks are analyzed across funds from the “bottom up” and from the “top down” with a particular focus on asymmetric risk. We gather and analyzedata, monitor investments and markets in detail, and constantly strive to better quantify, qualify and circumscribe relevant risks.Each risk management process is subject to our overall risk tolerance and philosophy and our enterprise-wide risk management framework. Thisframework includes identifying, measuring and managing market, credit and operational risks at each segment, as well as at the fund and Company level.Each segment runs its own investment and risk management process subject to our overall risk tolerance and philosophy:•The investment process of our private equity funds involves a detailed analysis of potential acquisitions, and investmentmanagement teams assigned to monitor the strategic development, financing and capital deployment decisions of eachportfolio investment.•Our credit funds continuously monitor a variety of markets for attractive trading opportunities, applying a number oftraditional and customized risk management metrics to analyze risk related to specific assets or portfolios, as well as, fund-wide risks.At the direction of the Company’s manager, the Company has established a risk committee comprised of various members of senior managementincluding the Company's Chief Financial Officer, Chief Legal Officer, and the Company's Chief Risk Officer. The risk committee is tasked with assisting theCompany’s manager in monitoring and managing enterprise-wide risk. The risk committee generally meets on a bi-weekly basis and reports to the executivecommittee of the Company’s manager at such times as the committee deems appropriate and at least on an annual basis.On at least a monthly basis, the Company’s risk department provides a summary analysis of fund level market and credit risk to the portfoliomanagers of the Company’s funds and the heads of the various business segments. On a periodic basis, the Company’s risk department presents aconsolidated summary analysis of fund level market and credit risk to the Company’s risk committee. In addition, the Company’s Chief Risk Officer reviewsspecific investments from the perspective of risk mitigation and discusses such analysis with the Company’s risk committee and/or the executive committeeof the Company’s manager at such times as the Company’s Chief Risk Officer determines such discussions are warranted. On an annual basis, the Company’sChief Risk Officer provides the executive committee of the Company’s manager with a comprehensive overview of risk management along with an update oncurrent and future risk initiatives.Impact on Management Fees—Our management fees are based on one of the following:•capital commitments to an Apollo fund;•capital invested in an Apollo fund;•the gross, net or adjusted asset value of an Apollo fund, as defined; or•as otherwise defined in the respective agreements.Management fees could be impacted by changes in market risk factors and management could consider an investment permanently impaired as aresult of (i) such market risk factors causing changes in invested capital or in market values to below- 140- Table of Contentscost, in the case of our private equity funds and certain credit funds, or (ii) such market risk factors causing changes in gross or net asset value, for the creditfunds. The proportion of our management fees that are based on NAV is dependent on the number and types of our funds in existence and the current stage ofeach fund’s life cycle.Impact on Advisory and Transaction Fees—We earn transaction fees relating to the negotiation of private equity, credit and real estatetransactions and may obtain reimbursement for certain out-of-pocket expenses incurred. Subsequently, on a quarterly or annual basis, ongoing advisory fees,and additional transaction fees in connection with additional purchases, dispositions, or follow-on transactions, may be earned. Management Fee Offsets andany broken deal costs are reflected as a reduction to advisory and transaction fees from affiliates, net. Advisory and transaction fees will be impacted bychanges in market risk factors to the extent that they limit our opportunities to engage in private equity, credit and real estate transactions or impair ourability to consummate such transactions. The impact of changes in market risk factors on advisory and transaction fees is not readily predicted or estimated.Impact on Carried Interest Income—We earn carried interest income from our funds as a result of such funds achieving specified performancecriteria. Our carried interest income will be impacted by changes in market risk factors. However, several major factors will influence the degree of impact:•the performance criteria for each individual fund in relation to how that fund’s results of operations are impacted bychanges in market risk factors;•whether such performance criteria are annual or over the life of the fund;•to the extent applicable, the previous performance of each fund in relation to its performance criteria; and•whether each funds’ carried interest income is subject to contingent repayment.As a result, the impact of changes in market risk factors on carried interest income will vary widely from fund to fund. The impact is heavilydependent on the prior and future performance of each fund, and therefore is not readily predicted or estimated.Market Risk—We are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values ofassets and liabilities or revenues and expenses will be adversely affected by changes in market conditions. Market risk is inherent in each of our investmentsand activities, including equity investments, loans, short-term borrowings, long-term debt, hedging instruments, credit default swaps, and derivatives. Just afew of the market conditions that may shift from time to time, thereby exposing us to market risk, include fluctuations in interest and currency exchange rates,equity prices, changes in the implied volatility of interest rates and price deterioration. For example, subsequent to the second quarter of 2007, debt capitalmarkets around the world began to experience significant dislocation, severely limiting the availability of new credit to facilitate new traditional buyouts,and the markets remain volatile. Volatility in debt and equity markets can impact our pace of capital deployment, the timing of receipt of transaction feerevenues, and the timing of realizations. These market conditions could have an impact on the value of investments and our rates of return. Accordingly,depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on our results from operations and ouroverall financial condition. We monitor our market risk using certain strategies and methodologies which management evaluates periodically forappropriateness. We intend to continue to monitor this risk going forward and continue to monitor our exposure to all market factors.Interest Rate Risk—Interest rate risk represents exposure we have to instruments whose values vary with the change in interest rates. Theseinstruments include, but are not limited to, loans, borrowings and derivative instruments. We may seek to mitigate risks associated with the exposures bytaking offsetting positions in derivative contracts. Hedging instruments allow us to seek to mitigate risks by reducing the effect of movements in the level ofinterest rates, changes in the shape of the yield curve, as well as, changes in interest rate volatility. Hedging instruments used to mitigate these risks mayinclude related derivatives such as options, futures and swaps.Apollo has debt obligations that accrue interest at variable rates. Interest rate changes may therefore affect the amount of our interest payments,future earnings and cash flows. Based on our debt obligations payable as of December 31, 2014 and December 31, 2013, we estimate that interest expensewould increase on an annual basis, in the event interest rates were to increase by one percentage point, by approximately $5.4 million and $7.5 million,respectively.- 141- Table of ContentsCredit Risk—Certain of our funds are subject to certain inherent risks through their investments.Certain of our entities invest substantially all of their excess cash in open-end money market funds and money market demand accounts, which areincluded in cash and cash equivalents. The money market funds invest primarily in government securities and other short-term, highly liquid instrumentswith a low risk of loss. We continually monitor the funds’ performance in order to manage any risk associated with these investments.Certain of our entities hold derivative instruments that contain an element of risk in the event that the counterparties may be unable to meet theterms of such agreements. We seek to minimize our risk exposure by limiting the counterparties with which we enter into contracts to banks and investmentbanks who meet established credit and capital guidelines. We do not expect any counterparty to default on its obligations and therefore do not expect toincur any loss due to counterparty default.Foreign Exchange Risk—Foreign exchange risk represents exposures we have to changes in the values of current holdings and future cash flowsdenominated in other currencies and investments in non-U.S. companies. The types of investments exposed to this risk include investments in foreignsubsidiaries, foreign currency-denominated loans, foreign currency-denominated transactions, and various foreign exchange derivative instruments whosevalues fluctuate with changes in currency exchange rates or foreign interest rates. Instruments used to mitigate this risk are foreign exchange options,currency swaps, futures and forwards. These instruments may be used to help insulate us against losses that may arise due to volatile movements in foreignexchange rates and/or interest rates.We estimate for the year ended December 31, 2014, a 10% decline in the rate of exchange of all foreign currencies against the U.S. dollar wouldresult in a decrease in management fees, carried interest income and income from equity method investments of $4.0 million, $10.5 million and $0.7 million,respectively. For the year ended December 31, 2013, a 10% decline in the rate of exchange of all foreign currencies against the U.S. dollar would result in adecrease in management fees, carried interest income and income from equity method investments of $5.1 million, $9.6 million and $0.8 million,respectively.Non-U.S. Operations—We conduct business throughout the world and are continuing to expand into foreign markets. We currently have officesoutside the U.S. in Toronto, London, Frankfurt, Luxembourg, Mumbai, Hong Kong and Singapore, and have been strategically growing our internationalpresence. Our fund investments and our revenues are primarily derived from our U.S. operations. With respect to our non-U.S. operations, we are subject torisk of loss from currency fluctuations, social instability, changes in governmental policies or policies of central banks, expropriation, nationalization,unfavorable political and diplomatic developments and changes in legislation relating to non-U.S. ownership. Our funds also invest in the securities ofcompanies which are located in non-U.S. jurisdictions. As we continue to expand globally, we will continue to focus on monitoring and managing these riskfactors as they relate to specific non-U.S. investments.SensitivityOur assets and unrealized gains, and our related equity and net income are sensitive to changes in the valuations of our funds’ underlyinginvestments and could vary materially as a result of changes in our valuation assumptions and estimates. See “Item 7. Management’s Discussion and Analysisof Financial Conditions and Results of Operations-Critical Accounting Policies-Investments, at Fair Value” for details related to the valuation methods thatare used and the key assumptions and estimates employed by such methods. We also quantify the Level III investments that are included on our consolidatedstatements of financial condition by valuation methodology in note 6 to the consolidated financial statements. We employ a variety of valuation methods.Furthermore, the investments that we manage but are not on our consolidated statements of financial condition, and therefore impact carried interest, alsoemploy a variety of valuation methods of which no single methodology is used more than any other. Changes in fair value will have the following impactsbefore a reduction of profit sharing expense and Non-Controlling Interests in the Apollo Operating Group and on a pre-tax basis on our results of operationsfor the years ended December 31, 2014 and 2013:•Management fees from the funds in our credit segment are based on the net asset value of the relevant fund, gross assets, capital commitments orinvested capital, each as defined in the respective management agreements. Changes in the fair values of the investments in credit funds that earnmanagement fees based on net asset value or gross assets will have a direct impact on the amount of management fees that are earned. Managementfees earned from our credit segment on a segment basis that were dependent upon estimated fair value during the years ended December 31, 2014and 2013 would decrease by approximately $37.7 million and $21.3 million, respectively, if the fair values of the investments held by such fundswere 10% lower during the same respective periods. By contrast, a 10% increase in fair value would increase management fees for the years endedDecember 31, 2014 and 2013 by approximately $38.5 million and $21.0 million, respectively.•Management fees for our private equity, real estate and certain credit funds, excluding AAA, generally are charged on either (a) a fixed percentage ofcommitted capital over a stated investment period or (b) a fixed percentage of invested- 142- Table of Contentscapital of unrealized portfolio investments. Changes in values of investments could indirectly affect future management fees from private equityfunds by, among other things, reducing the funds’ access to capital or liquidity and their ability to currently pay the management fees or if suchchange resulted in a write-down of investments below their associated invested capital.•Net gains from investment activities related to the Company's investment in Athene Holding would decrease by approximately $32.4 million for theyear ended December 31, 2014 if the fair value of the Company's investment in Athene Holding decreased by 10%. By contrast, a 10% increase infair value of the Company's investment in Athene Holding would increase net gains from investment activities by $32.4 million for the year endedDecember 31, 2014.•Other income, net earned from derivative contracts related to the amended services contract with Athene and Athene Life Re Ltd. and the AmendedAAA Services Agreement would decrease by approximately $8.5 million for the year ended December 31, 2013, if the fair value of the accruednotional shares of Athene Holding decreased by 10% during the same respective period. By contrast, a 10% increase in fair value of the accruednotional shares of Athene Holding would increase other income, net for the year ended December 31, 2013 by approximately $8.5 million.•Carried interest income from most of our credit funds, which is quantified in “Item 7. Management’s Discussion and Analysis of Financial Conditionand Results of Operations—Segment Analysis,” is impacted directly by changes in the fair value of their investments. Carried interest income frommost of our credit funds generally is earned based on achieving specified performance criteria. We anticipate that a 10% decline in the fair values ofinvestments held by all of the credit funds at December 31, 2014 and 2013 would decrease carried interest income on a segment basis for the yearsended December 31, 2014 and 2013 by approximately $160.6 million and $203.7 million, respectively. Additionally, the changes to carried interestincome from most of our credit funds assume there is no loss in the fund for the relevant period. If the fund had a loss for the period, no carriedinterest income would be earned by us. By contrast, a 10% increase in fair value would increase carried interest income on a segment basis for theyears ended December 31, 2014 and 2013 by approximately $334.3 million and $240.1 million, respectively.•Carried interest income from private equity funds generally is earned based on achieving specified performance criteria and is impacted by changesin the fair value of their fund investments. We anticipate that a 10% decline in the fair values of investments held by all of the private equity fundsat December 31, 2014 and 2013 would decrease carried interest income on a segment basis for the years ended December 31, 2014 and 2013 by$301.7 million and $524.8 million, respectively. The effects on private equity fees and income assume that a decrease in value does not cause apermanent write-down of investments below their associated invested capital. By contrast, a 10% increase in fair value would increase carriedinterest income on a segment basis for the years ended December 31, 2014 and 2013 by $323.8 million and $484.5 million, respectively.•Carried interest income from real estate funds generally is earned based on achieving specified performance criteria and is impacted by changes inthe fair value of their fund investments. We anticipate that a 10% decline in the fair values of investments held by all of the real estate funds atDecember 31, 2014 and 2013 would decrease carried interest income on a segment basis for the years ended December 31, 2014 and 2013 by $12.6million and $6.0 million, respectively. The effects on real estate fees and income assume that a decrease in value does not cause a permanent write-down of investments below their associated invested capital. By contrast, a 10% increase in fair value would increase carried interest income on asegment basis for the years ended December 31, 2014 and 2013 by $21.0 million and $16.1 million, respectively.•For select Apollo funds, our share of income from equity method investments as a limited partner in such funds is derived from unrealized gains orlosses on investments in funds included in the consolidated financial statements. For funds in which we have an interest, but are not included in ourconsolidated financial statements, our share of investment income is limited to our direct investments in the funds, which ranges from 0.001% to9.091%. A 10% decline in the fair value of investments at December 31, 2014 and 2013 would result in an approximate $37.8 million and $39.8million decrease in investment income at the consolidated level, respectively. By contrast, a 10% increase in the fair value of investments atDecember 31, 2014 and 2013 would result in an approximate $37.8 million and $39.8 million increase in investment income at the consolidatedlevel, respectively.- 143- Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAIndex to Consolidated Financial Statements PageAudited Consolidated Financial Statements Report of Independent Registered Public Accounting Firm145 Consolidated Statements of Financial Condition as of December 31, 2014 and 2013146 Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013, and 2012147 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013, and 2012148 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2014, 2013, and 2012149 Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013, and 2012150 Notes to Consolidated Financial Statements151- 144- Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Shareholders ofApollo Global Management, LLCNew York, New YorkWe have audited the accompanying consolidated statements of financial condition of Apollo Global Management, LLC and subsidiaries (the“Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, changes in shareholders’equity and cash flows for each of the three years in the period ended December 31, 2014. We also have audited the Company’s internal control over financialreporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission. The Company’s management is responsible for these financial statements, for maintaining effective internalcontrol over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinionon the Company’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement andwhether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considerednecessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive andprincipal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper managementoverride of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation ofthe effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Apollo GlobalManagement, LLC and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years inthe period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, theCompany maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established inInternal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission./s/ Deloitte & Touche LLPNew York, New YorkFebruary 27, 2015- 145- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONDECEMBER 31, 2014 AND DECEMBER 31, 2013(dollars in thousands, except share data) December 31, 2014 2013Assets: Cash and cash equivalents$1,204,052 $1,078,120Cash and cash equivalents held at consolidated funds1,611 1,417Restricted cash6,353 9,199Investments2,880,006 2,393,883Assets of consolidated variable interest entities: Cash and cash equivalents1,088,952 1,095,170Investments, at fair value15,658,653 14,126,362Other assets323,240 280,718Carried interest receivable911,666 2,287,075Due from affiliates268,015 317,247Fixed assets, net35,906 40,251Deferred tax assets606,717 660,199Other assets84,384 44,170Goodwill49,243 49,243Intangible assets, net60,039 94,927Total Assets$23,178,837 $22,477,981Liabilities and Shareholders’ Equity Liabilities: Accounts payable and accrued expenses$44,246 $38,159Accrued compensation and benefits59,278 41,711Deferred revenue199,614 279,479Due to affiliates565,153 595,371Profit sharing payable434,852 992,240Debt1,034,014 750,000Liabilities of consolidated variable interest entities: Debt, at fair value14,123,100 12,423,962Other liabilities728,718 605,063Other liabilities46,401 63,274Total Liabilities17,235,376 15,789,259Commitments and Contingencies (see note 18) Shareholders’ Equity: Apollo Global Management, LLC shareholders’ equity: Class A shares, no par value, unlimited shares authorized, 163,046,554 and 146,280,784 shares issued andoutstanding at December 31, 2014 and December 31, 2013, respectively— —Class B shares, no par value, unlimited shares authorized, 1 share issued and outstanding at December 31,2014 and December 31, 2013— —Additional paid in capital2,254,283 2,624,582Accumulated deficit(1,400,661) (1,568,487)Appropriated partners’ capital933,166 1,581,079Accumulated other comprehensive income (loss)(306) 95Total Apollo Global Management, LLC shareholders’ equity1,786,482 2,637,269Non-Controlling Interests in consolidated entities3,222,195 2,669,730Non-Controlling Interests in Apollo Operating Group934,784 1,381,723Total Shareholders’ Equity5,943,461 6,688,722Total Liabilities and Shareholders’ Equity$23,178,837 $22,477,981See accompanying notes to consolidated financial statements.- 146- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATED STATEMENTS OF OPERATIONSYEARS ENDED DECEMBER 31, 2014, 2013 AND 2012(dollars in thousands, except share data) 2014 2013 2012Revenues: Advisory and transaction fees from affiliates, net$315,587 $196,562 $149,544Management fees from affiliates850,441 674,634 580,603Carried interest income from affiliates394,055 2,862,375 2,129,818Total Revenues1,560,083 3,733,571 2,859,965Expenses: Compensation and benefits: Equity-based compensation126,320 126,227 598,654Salary, bonus and benefits338,049 294,753 274,574Profit sharing expense276,190 1,173,255 872,133Total Compensation and Benefits740,559 1,594,235 1,745,361Interest expense22,393 29,260 37,116Professional fees82,030 83,407 64,682General, administrative and other97,663 98,202 87,961Placement fees15,422 42,424 22,271Occupancy40,427 39,946 37,218Depreciation and amortization45,069 54,241 53,236Total Expenses1,043,563 1,941,715 2,047,845Other Income: Net gains from investment activities213,243 330,235 288,244Net gains (losses) from investment activities of consolidated variable interest entities22,564 199,742 (71,704)Income from equity method investments53,856 107,350 110,173Interest income10,392 12,266 9,693Other income, net60,592 40,114 1,964,679Total Other Income360,647 689,707 2,301,085Income before income tax provision877,167 2,481,563 3,113,205Income tax provision(147,245) (107,569) (65,410)Net Income729,922 2,373,994 3,047,795Net income attributable to Non-controlling Interests(561,693) (1,714,603) (2,736,838)Net Income Attributable to Apollo Global Management, LLC$168,229 $659,391 $310,957Distributions Declared per Class A Share$3.11 $3.95 $1.35Net Income Per Class A Share: Net Income Available to Class A Share – Basic$0.62 $4.06 $2.06Net Income Available to Class A Share – Diluted$0.62 $4.03 $2.06Weighted Average Number of Class A Shares – Basic155,349,017 139,173,386 127,693,489Weighted Average Number of Class A Shares – Diluted155,349,017 142,214,350 129,540,377See accompanying notes to consolidated financial statements.- 147- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOMEYEARS ENDED DECEMBER 31, 2014, 2013 AND 2012(dollars in thousands, except share data) 2014 2013 2012Net Income $729,922 $2,373,994 $3,047,795Other Comprehensive Income (Loss), net of tax: Allocation of currency translation adjustment of consolidated CLO entities 724 — —Net loss from change in fair value of cash flow hedge instruments (990) — —Net unrealized gain on interest rate swaps (net of taxes of $410 for Apollo GlobalManagement, LLC and $0 for Non-Controlling Interests in Apollo OperatingGroup) — — 2,653Net loss on available-for-sale securities (from equity method investment) (2) (8) (11)Total Other Comprehensive Income (Loss), net of tax (268) (8) 2,642Comprehensive Income 729,654 2,373,986 3,050,437Comprehensive Income attributable to Non-Controlling Interests (631,831) (1,564,710) (922,172)Comprehensive Income Attributable to Apollo Global Management, LLC $97,823 $809,276 $2,128,265See accompanying notes to consolidated financial statements.- 148- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATED STATEMENTS OF CHANGESIN SHAREHOLDERS’ EQUITYYEARS ENDED DECEMBER 31, 2014, 2013, AND 2012(dollars in thousands, except share data) Apollo Global Management, LLC Shareholders Class AShares Class BShares AdditionalPaid inCapital AccumulatedDeficit AppropriatedPartners’Capital AccumulatedOtherComprehensiveIncome (Loss) Total ApolloGlobalManagement,LLC TotalShareholders’Equity Non-ControllingInterests inConsolidatedEntities Non-ControllingInterests inApolloOperatingGroup TotalShareholders’EquityBalance at January 1, 2012123,923,042 1 $2,939,492 $(2,426,197) $213,594 $(488) $726,401 $1,444,767 $477,153 $2,648,321Dilution impact of issuance of Class A shares— — 1,589 — — — 1,589 — — 1,589Capital increase related to equity-based compensation— — 282,288 — — — 282,288 313,856 596,144Capital contributions— — — — — — — 551,154 — 551,154Distributions— — (203,997) — (264,910) — (468,907) (495,506) (335,023) (1,299,436)Distributions related to deliveries of Class A shares forRSUs6,130,951 — 9,090 (25,992) — — (16,902) — — (16,902)Purchase of AAA shares— — — — — — — (102,072) — (102,072)Non-cash distributions— — — (788) — — (788) (3,605) — (4,393)Non-cash contribution to Non-Controlling Interests— — — — — — — 2,547 — 2,547Capital increase related to business acquisition (seenote 3)— — 14,001 — — — 14,001 — — 14,001Non-Controlling Interests in consolidated entities atacquisition date— — — — — — — 306,351 — 306,351Deconsolidation— — — — — — — (46,148) — (46,148)Net transfers of AAA ownership interest to (from)Non-Controlling Interests in consolidated entities— — (919) — — — (919) 919 — —Satisfaction of liability related to AAA RDUs— — 1,790 — — — 1,790 — — 1,790Net income— — — 310,957 1,816,676 — 2,127,633 234,805 685,357 3,047,795Net loss on available-for-sale securities (from equitymethod investment)— — — — — (11) (11) — — (11)Net unrealized gain on interest rate swaps (net of taxesof $410 for Apollo Global Management, LLC and $0for Non-Controlling Interests in Apollo OperatingGroup)— — — — — 643 643 — 2,010 2,653Balance at December 31, 2012130,053,993 1 $3,043,334 $(2,142,020) $1,765,360 $144 $2,666,818 $1,893,212 $1,143,353 $5,703,383Dilution impact of issuance of Class A shares— — 4,865 — — — 4,865 — — 4,865Capital increase related to equity-based compensation— — 104,935 — — — 104,935 — 19,163 124,098Capital contributions— — — — — — — 689,172 — 689,172Distributions— — (650,189) — (334,215) — (984,404) (159,573) (975,488) (2,119,465)Distributions related to deliveries of Class A shares forRSUs5,181,389 — 37,263 (85,858) — — (48,595) — — (48,595)Purchase of AAA units— — — — — — — (62,326) — (62,326)Net transfers of AAA ownership interest to (from)Non-Controlling Interests in consolidated entities— — (2,226) — — — (2,226) 2,226 — —Satisfaction of liability related to AAA RDUs— — 1,205 — — — 1,205 — — 1,205Exchange of AOG Units for Class A shares11,045,402 — 85,395 — — — 85,395 — (62,996) 22,399Net income— — — 659,391 149,934 — 809,325 307,019 1,257,650 2,373,994Net gain (loss) on available-for-sale securities (fromequity method investment)— — — — — (49) (49) — 41 (8)Balance at December 31, 2013146,280,784 1 $2,624,582 $(1,568,487) $1,581,079 $95 $2,637,269 $2,669,730 $1,381,723 $6,688,722Dilution impact of issuance of Class A shares— — 5,267 — — — 5,267 — — 5,267Capital increase related to equity-based compensation— — 108,871 — — — 108,871 — — 108,871Capital contributions— — — — 135,356 — 135,356 936,915 — 1,072,271Distributions— — (555,532) — (713,264) — (1,268,796) (615,301) (816,412) (2,700,509)Distributions related to deliveries of Class A shares forRSUs10,491,649 — 27,899 (403) — — 27,496 — — 27,496Purchase of AAA units— — — — — — — (312) — (312)Net transfers of AAA ownership interest to (from)Non-Controlling Interests in consolidated entities— — (3,423) — — — (3,423) 3,423 — —Satisfaction of liability related to AAA RDUs— — 1,183 — — — 1,183 — — 1,183Exchange of AOG Units for Class A shares6,274,121 — 45,436 — — — 45,436 — (34,618) 10,818Net income— — — 168,229 (70,729) — 97,500 227,740 404,682 729,922Allocation of currency translation adjustment ofconsolidated CLO entities— — — — 724 — 724 — — 724Change in cash flow hedge instruments— — — — — (399) (399) — (591) (990)Net loss on available-for-sale securities (from equitymethod investment)— — — — — (2) (2) — — (2)Balance at December 31, 2014163,046,554 1 $2,254,283 $(1,400,661) $933,166 $(306) $1,786,482 $3,222,195 $934,784 $5,943,461 See accompanying notes to consolidated financial statements.- 149- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31, 2014, 2013, AND 2012(dollars in thousands, except share data) 2014 2013 2012Cash Flows from Operating Activities: Net income$729,922 $2,373,994 $3,047,795Adjustments to reconcile net income to net cash provided by operating activities: Equity-based compensation126,320 126,227 598,654Non-cash management fees(16,738) — —Depreciation and amortization10,181 11,047 10,226Amortization of intangible assets34,888 43,194 43,010Amortization of debt issuance costs3,453 765 511Unrealized (gains) losses from investment in other investments(21,726) 12,962 1,316Gain on settlement of contingent obligation(13,395) — —Non-cash interest income(1,725) (3,403) (3,187)Income (Loss) from equity awards received for directors’ fees333 378 (2,536)Cash distributions of earnings from equity method investments83,656 109,076 66,063Realized loss from investment in other investments12,871 — —Income from equity method investments(53,856) (107,350) (110,173)Change in market value on derivatives(14,039) (10,203) —Waived management fees— — (6,161)Non-cash compensation expense related to waived management fees— — 6,161Change in fair value of contingent obligations11,281 60,826 25,787Excess tax benefits from share-based payment arrangements(27,899) (37,263) —Deferred taxes, net80,356 62,701 55,309Net (gain) loss on disposal of fixed assets(2) 963 923Gain on business acquisitions— — (1,951,897)Changes in assets and liabilities: Carried interest receivable1,375,409 (408,819) (973,578)Due from affiliates(252,339) (130,525) 5,779Other assets(24,868) 6,250 (7,901)Accounts payable and accrued expenses33,986 34,034 559Accrued compensation and benefits16,185 (17,244) 8,007Deferred revenue(79,865) 27,322 15,000Due to affiliates(97,521) (44,223) (103,773)Profit sharing payable(518,003) 141,225 361,606Other liabilities6,889 (5,822) (5,052)Apollo Funds related: Net realized gains from investment activities(79,277) (87,881) (77,408)Net unrealized losses from investment activities113,423 (309,138) (458,031)Net realized gains on debt(101,745) (137,098) —Net unrealized (gains) losses on debt(809) 232,510 497,704Distributions from investment activities— 66,796 99,675Change in cash held at consolidated variable interest entities(13,813) 587,526 (348,138)Purchases of investments(10,330,057) (9,841,763) (7,525,473)Proceeds from sale of investments and liquidating distributions8,509,361 8,422,195 7,182,392Change in other assets(43,521) 19,260 (71,921)Change in other liabilities169,767 (64,061) (49,634)Net Cash (Used in) Provided by Operating Activities$(372,917) $1,134,458 $331,614Cash Flows from Investing Activities: Purchases of fixed assets(5,949) (7,577) (11,259)Acquisitions (net of cash assumed) (see note 3)— — (99,190)Proceeds from disposals of fixed assets115 2,282 —Proceeds from sale of investments50,000 — —Cash contributions to equity method investments(109,923) (98,422) (126,917)Cash distributions from equity method investments76,343 107,208 86,582Change in restricted cash2,846 (840) (70) Net Cash Provided by (Used In) Investing Activities$13,432 $2,651 $(150,854)Cash Flows from Financing Activities: Principal repayments of debt$(250,000) $(737,818) $(698)Issuance of debt533,956 750,000 —Issuance costs(5,478) (7,750) —Net loss related to cash flow hedge instruments(1,051) — —Satisfaction of tax receivable agreement(32,032) (30,403) —Satisfaction of contingent obligations(37,271) (67,535) —Distributions related to deliveries of Class A shares for RSUs(403) (85,858) (25,992)Distributions to Non-Controlling Interests in consolidated entities(19,425) (12,171) (8,779)Contributions from Non-Controlling Interests in consolidated entities2,001 273 4,069Distributions paid(506,043) (584,465) (202,430)Distributions paid to Non-Controlling Interests in Apollo Operating Group(816,412) (975,488) (335,023)Excess tax benefits from share-based payment arrangements27,899 37,263 —Apollo Funds related: Issuance of debt4,225,451 2,747,033 1,413,334Principal repayment of debt(2,371,499) (2,218,060) (515,897)Purchase of AAA units(312) (62,326) (102,072)Distributions paid(703,041) (334,215) (264,910)Distributions paid to Non-Controlling Interests in consolidated variable interest entities(450,419) (147,402) (486,727)Contributions from Non-Controlling Interests in consolidated variable interest entities889,690 688,899 547,085Subscriptions received in advance— 35,000 —Net Cash Provided by (Used in) Financing Activities$485,611 $(1,005,023) $21,960Net Increase in Cash and Cash Equivalents126,126 132,086 202,720Cash and Cash Equivalents, Beginning of Period1,079,537 947,451 744,731Cash and Cash Equivalents, End of Period$1,205,663 $1,079,537 $947,451Supplemental Disclosure of Cash Flow Information: Interest paid$22,191 $43,760 49,590Interest paid by consolidated variable interest entities157,812 120,149 116,392Income taxes paid57,276 9,233 7,128Supplemental Disclosure of Non-Cash Investing Activities: Non-cash distributions from equity method investments(6,720) (1,303) (2,807)Transfer of fixed assets held-for-sale— 6,486 —Change in accrual for purchase of fixed assets— — (659)Supplemental Disclosure of Non-Cash Financing Activities: Non-cash distributions$— $— $(788)Declared and unpaid distributions(49,489) (65,724) (1,567)Non-cash contributions to Non-Controlling Interests in consolidated entities fromAppropriated Partners' Capital10,224 — —Non-cash distributions from Non-Controlling interests in consolidated entities toAppropriated Partners' Capital(135,356) — —Non-cash contributions from Non-Controlling Interests in Apollo Operating Group relatedto equity-based compensation— 19,163 313,856Non-cash distributions from Non-Controlling Interests in consolidated entities— — (3,605)Non-cash contributions from Non-Controlling Interests in consolidated entities— — 2,547Unrealized gain on interest rate swaps to Non-Controlling Interests in Apollo OperatingGroup, net of taxes— — 2,010Satisfaction of liability related to AAA RDUs1,183 1,205 1,790Net transfers of AAA ownership interest to Non-Controlling Interests in consolidatedentities3,423 2,226 919Net transfer of AAA ownership interest from Apollo Global Management, LLC(3,423) (2,226) (919)Unrealized gain on interest rate swaps— — 1,053Unrealized loss on available-for-sale securities (from equity method investment)(2) (49) (11)Capital increases related to equity-based compensation108,871 104,935 282,228Dilution impact of issuance of Class A shares5,267 4,865 1,589Deferred tax asset related to interest rate swaps— — (410)Tax benefits related to deliveries of Class A shares for RSUs— — (9,090)Capital increase related to business acquisition— — 14,001 Net Assets Transferred from Consolidated Variable Interest Entity: Cash$— $— $1,161,016Investments— — 8,805,916Other assets— — 169,937Debt— — (7,255,172)Other liabilities— — (560,262)Non-Controlling interest in consolidated entities related to acquisition— — 260,203Adjustments related to exchange of Apollo Operating Group units: Deferred tax assets$58,696 $149,327 $—Due to affiliates(47,878) (126,928) —Additional paid in capital(10,818) (22,399) —Non-Controlling Interest in Apollo Operating Group34,618 62,996 —See accompanying notes to consolidated financial statements.- 150- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)1. ORGANIZATION AND BASIS OF PRESENTATIONApollo Global Management, LLC (together with its consolidated subsidiaries, the “Company” or “Apollo”) is a global alternative investmentmanager whose predecessor was founded in 1990. Its primary business is to raise, invest and manage private equity, credit and real estate funds as well asstrategic investment accounts (“SIAs”), on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors.For these investment management services, Apollo receives management fees generally related to the amount of assets managed, transaction and advisoryfees and carried interest income related to the performance of the respective funds that it manages. Apollo has three primary business segments:•Private equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debtinvestments;•Credit—primarily invests in non-control corporate and structured debt instruments; and•Real estate—primarily invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios,platforms and operating companies, and real estate debt including first mortgage and mezzanine loans, preferred equity andcommercial mortgage backed securities.Basis of PresentationThe accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the UnitedStates of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company, its wholly-owned or majority-ownedsubsidiaries, the consolidated entities which are considered to be variable interest entities (“VIEs”) and for which the Company is considered the primarybeneficiary, and certain entities which are not considered VIEs but which the Company controls through a majority voting interest. Intercompany accountsand transactions have been eliminated upon consolidation.Certain reclassifications, when applicable, have been made to the prior period’s consolidated financial statements and notes to conform to thecurrent period’s presentation and are disclosed accordingly.Organization of the CompanyThe Company was formed as a Delaware limited liability company on July 3, 2007 and completed a reorganization of its predecessor businesseson July 13, 2007 (the “2007 Reorganization”). The Company is managed and operated by its manager, AGM Management, LLC, which in turn is indirectlywholly-owned and controlled by Leon Black, Joshua Harris and Marc Rowan (the “Managing Partners”).As of December 31, 2014, the Company owned, through four intermediate holding companies that include APO Corp., a Delaware corporationthat is a domestic corporation for U.S. federal income tax purposes, APO Asset Co., LLC, a Delaware limited liability company that is a disregarded entity forU.S. federal income tax purposes, APO (FC), LLC, an Anguilla limited liability company that is treated as a corporation for U.S. federal income tax purposesand APO (FC II),LLC, an Anguilla limited liability company that is treated as a corporation for U.S. federal income tax purposes (collectively, the“Intermediate Holding Companies”), 42.3% of the economic interests of, and operated and controlled all of the businesses and affairs of, the ApolloOperating Group through its wholly-owned subsidiaries.AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership (“Holdings”), is the entity through which the Managing Partnersand certain of the Company’s other partners (the “Contributing Partners”) indirectly beneficially own interests in each of the partnerships that comprise theApollo Operating Group (“AOG Units”). As of December 31, 2014, Holdings owned the remaining 57.7% of the economic interests in the Apollo OperatingGroup. The Company consolidates the financial results of the Apollo Operating Group and its consolidated subsidiaries. Holdings’ ownership interest in theApollo Operating Group is reflected as a Non-Controlling Interest in the accompanying consolidated financial statements.Pursuant to an exchange agreement between Apollo and Holdings (as amended, the “Exchange Agreement”), the holders of the AOG Units (andcertain permitted transferees thereof) may, upon notice and subject to the applicable vesting and minimum retained ownership requirements, transferrestrictions and other terms of the Exchange Agreement, exchange their AOG Units for the Company’s Class A shares on a one-for-one basis a limited numberof times each year, subject to customary conversion rate adjustments for splits, distributions and reclassifications. Pursuant to the Exchange Agreement, aholder of AOG Units must- 151- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)simultaneously exchange one partnership unit in each of the Apollo Operating Group partnerships to effectuate an exchange for one Class A share. As aholder exchanges its AOG Units, the Company’s indirect interest in the Apollo Operating Group is correspondingly increased.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of Consolidation—The types of entities with which Apollo is involved generally include subsidiaries (i.e. general partners andmanagement companies related to the funds the Company manages), entities that have all the attributes of an investment company (e.g., funds) andsecuritization vehicles (e.g., collateralized loan obligations). Each of these entities is assessed for consolidation on a case by case basis depending on thespecific facts and circumstances surrounding that entity.Pursuant to its consolidation policy, the Company first considers the appropriate consolidation guidance to apply including consideration ofwhether the entity qualifies for certain scope exceptions and whether the entity should be evaluated under either the previous rules on consolidation ofvariable interest entities (“VIEs”) or the amended consolidation rules depending on whether or not the entity qualifies for the deferral as further describedbelow. The Company then performs an assessment to determine whether that entity qualifies as a VIE. An entity in which Apollo holds a variable interest is aVIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activitieswithout additional subordinated financial support, (b) the holders of equity investment at risk (as a group) lack either the direct or indirect ability throughvoting rights or similar rights to make decisions about a legal entity’s activities that have a significant effect on the success of the legal entity or theobligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate totheir obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both andsubstantially all of the legal entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Entities thatdo not qualify as VIEs are generally assessed for consolidation as voting interest entities (“VOEs”) under the voting interest model.Under the voting interest model, Apollo consolidates those entities it controls through a majority voting interest or through other means,including those VOEs in which the general partner is presumed to have control. Apollo does not consolidate those VOEs in which the presumption of controlby the general partner has been overcome through either the granting of substantive rights to the unaffiliated investors to either dissolve the fund or removethe general partner (“kick-out rights”) or the granting of substantive participating rights.As previously indicated, the consolidation assessment, including the determination as to whether an entity qualifies as a VIE depends on thefacts and circumstances surrounding each entity and therefore certain of Apollo's funds may qualify as VIEs whereas others may qualify as VOEs. Thegranting of substantive kick-out rights is a key consideration in determining whether an entity is a VIE and whether or not that entity should be consolidated.For example, when the unaffiliated holders of equity investment at risk of a fund with sufficient equity to permit the fund to finance its activities withoutadditional subordinated financial support are not granted substantive kick-out rights and the Company is not part of the group of holders of equityinvestment at risk, the fund is generally determined to be a VIE, as the holders of equity investment at risk as a group lack the direct or indirect abilitythrough voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity. Alternatively, when the unaffiliatedholders of equity investment at risk are granted substantive kick-out rights, the fund is generally determined to be a VOE. However, in certain cases where theCompany holds a substantive equity investment at risk in the fund, the fund may be determined to be a VOE even though substantive kick-out rights werenot granted to the unaffiliated holders of equity investment at risk. In these cases, the Company is part of the group of holders of equity investment at risk andtherefore the holders of equity investment at risk as a group do not lack the direct or indirect ability through voting rights or similar rights to make decisionsthat have a significant effect on the success of the legal entity. If the entity is determined to be a VIE under the conditions above, the Company then assesses whether the entity should be consolidated byapplying either the previous consolidation rules or the amended consolidation rules depending on whether the entity qualifies for the deferral of the amendedconsolidation rules as further described below.VIEs that qualify for the deferral of the amended consolidation rules because certain conditions are met, including if the entities have all thefundamental characteristics (and a number of the typical characteristics) of an investment company and are not securitization or asset-backed financingentities, will continue to apply the previous consolidation rules. VIEs that are securitization or asset-backed financing entities will apply the amendedconsolidation rules. Under both sets of rules, VIEs for which Apollo is determined to be the primary beneficiary are consolidated.- 152- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)With respect to VIEs such as Apollo's funds that qualify for the deferral of the amended consolidation rules and therefore apply the previousconsolidation rules, Apollo is determined to be the primary beneficiary if its involvement, through holding interests directly or indirectly in the VIE orcontractually through other variable interests (e.g., carried interest and management fees), would be expected to absorb a majority of the VIE’s expectedlosses, receive a majority of the VIE’s expected residual returns, or both. In cases where two or more Apollo related parties hold a variable interest in a VIE,and the aggregate variable interest held by those parties would, if held by a single party, identify that party as the primary beneficiary, then the Company isdetermined to be the primary beneficiary to the extent it is the party within the related party group that is most closely associated with the VIE.For VIEs such as Apollo's CLOs that apply the amended consolidation rules, the Company is determined to be the primary beneficiary if it holdsa controlling financial interest defined as possessing both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economicperformance and (b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.CLOs are generally determined to be VIEs if they are formed solely to issue collateralized notes in the legal form of debt and therefore do not have sufficienttotal equity investment at risk to permit the entity to finance its activities without additional subordinated financial support. With respect to such CLOs,Apollo generally possesses a controlling financial interest in, and therefore consolidates, such CLOs in accordance with the amended consolidation ruleswhen Apollo's role as collateral manager provides the Company with the power to direct the activities that most significantly impact the CLO’s economicperformance and the Company has the right to receive certain benefits from the CLO (e.g., incentive fees) that could potentially be significant to the CLO.Under the previous and the amended consolidation rules, Apollo determines whether it is the primary beneficiary of a VIE at the time it becomesinitially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, affiliates of Apollo or thirdparties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primarybeneficiary.The assessment of whether an entity is a VIE and the determination of whether Apollo should consolidate such VIE requires judgments. Underboth sets of rules, those judgments include, but are not limited to: (i) determining whether the total equity investment at risk is sufficient to permit the entityto finance its activities without additional subordinated financial support, (ii) evaluating whether the holders of equity investment at risk, as a group, canmake decisions that have a significant effect on the success of the entity, (iii) determining whether two or more parties’ equity interests should be aggregated,(iv) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive the expected residualreturns from an entity, and (v) evaluating the nature of the relationship and activities of the parties involved in determining which party within a related-partygroup is most closely associated with the VIE. Where the VIEs have qualified for the deferral, judgments are also made in estimating cash flows to evaluatewhich member within the equity group absorbs a majority of the expected losses or residual returns of the VIE. Where the VIEs have not qualified for thedeferral, judgments are also made in determining whether a member in the equity group has a controlling financial interest including power to directactivities that most significantly impact the VIEs' economic performance and rights to receive benefits or obligations to absorb losses that could bepotentially significant to the VIE.Certain of the consolidated VIEs were formed to issue collateralized notes in the legal form of debt backed by financial assets. The differencebetween the fair value of the assets and liabilities of these VIEs is presented within appropriated partners’ capital in the consolidated statements of financialcondition as these VIEs are funded solely with debt. Changes in the fair value of the assets and liabilities of these VIEs and the related interest and otherincome is presented within net gains from investment activities of consolidated variable interest entities and net income attributable to Non-ControllingInterests in the consolidated statements of operations. Such amounts are recorded within appropriated partners’ capital as, in each case, the VIEs' note holders,not Apollo, will ultimately receive the benefits or absorb the losses associated with the VIEs' assets and liabilities.Assets and liabilities of the consolidated VIEs are shown in separate sections within the consolidated statements of financial condition as ofDecember 31, 2014 and 2013.For additional disclosures regarding VIEs, see note 5. Intercompany transactions and balances, if any, have been eliminated in consolidation.Equity Method Investments—For investments in entities over which the Company exercises significant influence but which do not meet therequirements for consolidation, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or lossof such entities. Income (loss) from equity method investments is recognized as part of other income (loss) in the consolidated statements of operations. Thecarrying amounts of equity method investments are- 153- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)reflected in investments in the consolidated statements of financial condition. As the underlying entities that the Company manages and invests in are, forU.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equitymethod investments in such entities approximates fair value.Non-Controlling Interests—For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity isallocated to owners other than Apollo. The aggregate of the income or loss and corresponding equity that is not owned by the Company is included in Non-Controlling Interests in the consolidated financial statements. As of December 31, 2014, the Non-Controlling Interests relating to Apollo GlobalManagement, LLC primarily includes the ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partnersthrough their limited partner interests in Holdings and other ownership interests in consolidated entities, which primarily consist of the ownership interestheld by limited partners in AP Alternative Assets, L.P. ("AAA"). Non-Controlling Interests also include limited partner interests of Apollo managed funds incertain consolidated VIEs.Non-Controlling Interests are presented as a separate component of shareholders’ equity on the Company’s consolidated statements of financialcondition. The primary components of Non-Controlling Interests are separately presented in the Company’s consolidated statements of changes inshareholders’ equity to clearly distinguish the interest in the Apollo Operating Group and other ownership interests in the consolidated entities. Net income(loss) includes the net income (loss) attributable to the holders of Non-Controlling Interests on the Company’s consolidated statements of operations. Profitsand losses are allocated to Non-Controlling Interests in proportion to their relative ownership interests regardless of their basis.Cash and Cash Equivalents—Apollo considers all highly liquid short-term investments with original maturities of 90 days or less whenpurchased to be cash equivalents. Substantially all amounts are on deposit in interest-bearing accounts with major financial institutions and exceed insuredlimits.Restricted Cash—Restricted cash represents cash deposited at a bank, which is pledged as collateral in connection with leased premises.Revenues—Revenues are reported in three separate categories that include (i) advisory and transaction fees from affiliates, net, which relate to theinvestments of the funds and may include individual monitoring agreements the Company has with the portfolio companies and debt investment vehicles ofthe private equity funds and credit funds; (ii) management fees from affiliates, which are based on committed capital, invested capital, net asset value, grossassets or as otherwise defined in the respective agreements; and (iii) carried interest income (loss) from affiliates, which is normally based on the performanceof the funds subject to preferred return.Advisory and Transaction Fees from Affiliates, Net—Advisory and transaction fees, including directors’ fees, are recognized when theunderlying services rendered are substantially completed in accordance with the terms of the transaction and advisory agreements. Additionally, during thenormal course of business, the Company incurs certain costs related to certain transactions that are not consummated (“broken deal costs”). These costs (e.g.,research costs, due diligence costs, professional fees, legal fees and other related items) are determined to be broken deal costs upon management’s decisionto no longer pursue the transaction. In accordance with the related fund agreement, in the event the deal is deemed broken, all of the costs are reimbursed bythe funds and then included as a component of the calculation of the Management Fee Offset described below. If a deal is successfully completed, Apollo isreimbursed by the fund or fund’s portfolio company for all costs incurred and no offset is generated. As the Company acts as an agent for the funds itmanages, any transaction costs incurred and paid by the Company on behalf of the respective funds relating to successful or broken deals are presented net onthe Company’s consolidated statements of operations, and any receivable from the respective funds is presented in due from affiliates on the consolidatedstatements of financial condition.Advisory and transaction fees from affiliates, net, also includes underwriting fees. Underwriting fees include gains, losses and fees, net ofsyndicate expenses, arising from securities offerings in which one of the Company’s subsidiaries participates in the underwriter syndicate. Underwriting feesare recognized at the time the underwriting is completed and the income is reasonably assured and are included in the consolidated statements of operations.Underwriting fees recognized but not received are included in other assets on the consolidated statements of financial condition.As a result of providing advisory services to certain private equity and credit portfolio companies, Apollo is generally entitled to receive fees fortransactions related to the acquisition, in certain cases, and disposition of portfolio companies as well as ongoing monitoring of portfolio companyoperations and directors’ fees. The amounts due from portfolio companies are included in due from affiliates, which is discussed further in note 17. Under theterms of the limited partnership agreements for certain- 154- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net ofapplicable broken deal costs (“Management Fee Offset”). Advisory and transaction fees from affiliates are presented net of the Management Fee Offset in theconsolidated statements of operations.Management Fees from Affiliates—Management fees for private equity, credit, and real estate funds are recognized in the period during whichthe related services are performed in accordance with the contractual terms of the related agreement, and are generally based upon (1) a percentage of thecapital committed during the commitment period, and thereafter based on the remaining invested capital of unrealized investments, or (2) net asset value,gross assets or as otherwise defined in the respective agreements.Carried Interest Income from Affiliates—Apollo is entitled to an incentive return that can normally amount to as much as 20% of the totalreturns on a fund's capital, depending upon performance. Performance-based fees are assessed as a percentage of the investment performance of the funds. Thecarried interest income from affiliates for any period is based upon an assumed liquidation of the fund’s net assets on the reporting date, and distribution ofthe net proceeds in accordance with the fund’s income allocation provisions. Carried interest receivable is presented separately in the consolidatedstatements of financial condition. The carried interest income from affiliates may be subject to reversal to the extent that the carried interest income recordedexceeds the amount due to the general partner based on a fund’s cumulative investment returns. When applicable, the accrual for potential repayment ofpreviously received carried interest income, which is a component of due to affiliates, represents all amounts previously distributed to the general partner thatwould need to be repaid to the Apollo funds if these funds were to be liquidated based on the current fair value of the underlying funds’ investments as of thereporting date. The actual general partner obligation, however, would not become payable or realized until the end of a fund’s life.Management Fee Waiver and Notional Investment Program—Under the terms of certain investment fund partnership agreements, Apolloelected to forgo a portion of the management fee revenue that was due from the funds and instead received a right to a proportionate interest in futuredistributions of profits of those funds. Waived fees recognized during the period were included in management fees from affiliates in the consolidatedstatements of operations. This election allowed certain employees of Apollo to waive a portion of their respective share of future income from Apollo andreceive, in lieu of a cash distribution, title and ownership of the profits interests in the respective fund. Apollo immediately assigned the profits interestsreceived to its employees. Such assignments of profits interests were treated as compensation and benefitswhen assigned. The investment period for Apollo Investment Fund VII, L.P. ("Fund VII") and Apollo Natural Resources Partners, L.P. ("ANRP") for themanagement fee waiver plan was terminated as of December 31, 2012.Deferred Revenue—Apollo earns management fees subject to the Management Fee Offset. When advisory and transaction fees are earned by themanagement company, the Management Fee Offset reduces the management fee obligation of the fund. When the management company receives cash foradvisory and transaction fees, a certain percentage of such advisory and/or transaction fees, as applicable, is allocated as a credit to reduce future managementfees, otherwise payable by such fund. Such credit is classified as deferred revenue in the consolidated statements of financial condition. A portion of anyexcess advisory and transaction fees may be required to be returned to the limited partners of certain funds upon such fund's liquidation. As the managementfees earned by the management company are presented on a gross basis, any Management Fee Offsets calculated are presented as a reduction to Advisory andTransaction Fees from Affiliates in the consolidated statements of operations.Additionally, Apollo earns advisory fees pursuant to the terms of the advisory agreements with certain of the portfolio companies that are ownedby the funds. When Apollo receives a payment from a portfolio company that exceeds the advisory fees earned at that point in time, the excess payment isclassified as deferred revenue in the consolidated statements of financial condition. The advisory agreements with the portfolio companies vary in durationand the associated fees are received monthly, quarterly or annually. Deferred revenue is reversed and recognized as revenue over the period that the agreedupon services are performed.Under the terms of the funds’ partnership agreements, Apollo is normally required to bear organizational expenses over a set dollar amount andplacement fees or costs in connection with the offering and sale of interests in the funds to investors. The placement fees are payable to placement agents,who are independent third parties that assist in identifying potential investors, securing commitments to invest from such potential investors, preparing orrevising offering and marketing materials, developing strategies for attempting to secure investments by potential investors and/or providing feedback andinsight regarding issues and concerns of potential investors, when a limited partner either commits or funds a commitment to a fund. In certain instances theplacement fees are paid over a period of time. Based on the management agreements with the funds, Apollo considers placement fees and organizational costspaid in determining if cash has been received in excess of the management fees earned. Placement fees and organizational costs are normally the obligationof Apollo but can be paid for by the funds. When these costs are paid by- 155- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)the fund, the resulting obligations are included within deferred revenue. The deferred revenue balance will also be reduced during future periods whenmanagement fees are earned but not paid.Interest and Other Income—Apollo recognizes security transactions on the trade date. Interest income is recognized as earned on an accrualbasis. Discounts and premiums on securities purchased are accreted or amortized over the life of the respective securities using the effective interest method.Realized gains and losses are recorded based on the specific identification method. Interest income also includes payment-in-kind interest (or "PIK" interest)on a convertible note and from one of our credit funds.Due from/to Affiliates—Apollo considers its existing partners, employees, certain former employees, portfolio companies of the funds andnonconsolidated private equity, credit and real estate funds to be affiliates or related parties.Investments, at Fair Value—The Company follows U.S. GAAP attributable to fair value measurements which, among other things, requiresenhanced disclosures about investments that are measured and reported at fair value. Investments, at fair value, represent investments of the consolidatedfunds, investments of the consolidated VIEs and certain financial instruments for which the fair value option was elected. The unrealized gains and lossesresulting from changes in the fair value are reflected as net gains (losses) from investment activities and net gains (losses) from investment activities of theconsolidated VIEs, respectively, in the consolidated statements of operations. In accordance with U.S. GAAP, investments measured and reported at fair valueare classified and disclosed in one of the following categories:Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investmentsincluded in Level I include listed equities and listed derivatives. As required by U.S. GAAP, the Company does not adjust thequoted price for these investments, even in situations where the Company holds a large position and the sale of such positionwould likely deviate from the quoted price.Level II—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of thereporting date, and fair value is determined through the use of models or other valuation methodologies. Investments that aregenerally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives where the fair value is based on observable inputs. These investments exhibit higher levels of liquidmarket observability as compared to Level III investments. The Company subjects broker quotes to various criteria in making thedetermination as to whether a particular investment would qualify for treatment as a Level II investment. These criteria include, butare not limited to, the number and quality of broker quotes, the standard deviation of obtained broker quotes, and the percentagedeviation from independent pricing services.Level III—Pricing inputs are unobservable for the investment and includes situations where there is little observable marketactivity for the investment. The inputs into the determination of fair value may require significant management judgment orestimation. Investments that are included in this category generally include general and limited partner interests in corporateprivate equity and real estate funds, opportunistic credit funds, distressed debt and non-investment grade residual interests insecuritizations and CDOs and CLOs where the fair value is based on observable inputs as well as unobservable inputs. When asecurity is valued based on broker quotes, the Company subjects those quotes to various criteria in making the determination as towhether a particular investment would qualify for treatment as a Level II or Level III investment. These criteria include, but are notlimited to, the number and quality of the broker quotes, the standard deviations of the observed broker quotes, and the percentagedeviation from independent pricing services.In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s levelwithin the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of thesignificance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment when the fairvalue is based on unobservable inputs.In cases where an investment or financial instrument that is measured and reported at fair value is transferred between levels of the fair valuehierarchy, the Company accounts for the transfer as of the end of the reporting period.- 156- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Private Equity InvestmentsThe value of liquid investments, where the primary market is an exchange (whether foreign or domestic) is determined using period end marketprices. Such prices are generally based on the close price on the date of determination.Valuation approaches used to estimate the fair value of investments that are less liquid include the market approach and the income approach.The market approach provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies andtransactions in the industry. The market approach is driven more by current market conditions, including actual trading levels of similar companies and, tothe extent available, actual transaction data of similar companies. Judgment is required by management when assessing which companies are similar to thesubject company being valued. Consideration may also be given to such factors as the Company’s historical and projected financial data, valuations given tocomparable companies, the size and scope of the Company’s operations, the Company’s strengths, weaknesses, expectations relating to the market’sreceptivity to an offering of the Company’s securities, applicable restrictions on transfer, industry and market information and assumptions, general economicand market conditions and other factors deemed relevant. The income approach provides an indication of fair value based on the present value of cash flowsthat a business or security is expected to generate in the future. The most widely used methodology in the income approach is a discounted cash flow method.Inherent in the discounted cash flow method are assumptions of expected results and a calculated discount rate.On a quarterly basis, Apollo utilizes a valuation committee, consisting of members from senior management, to review and approve the valuationresults related to its funds' private equity investments. The Company also retains independent valuation firms to provide third-party valuation consultingservices to Apollo, which consist of certain limited procedures that management identifies and requests them to perform. The limited procedures provided bythe independent valuation firms assist management with validating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, including comparisons between expected and observed outcomes, forecast evaluations andvariance analyses. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would havebeen used had a ready market for the investments existed, and the differences could be material. Credit InvestmentsThe majority of the investments in Apollo’s credit funds are valued based on quoted market prices and valuation models. Debt and equitysecurities that are not publicly traded or whose market prices are not readily available are valued at fair value utilizing recognized pricing services, marketparticipants or other sources. When market quotations are not available, a model based approach is used to determine fair value. The credit funds also enterinto foreign currency exchange contracts, total return swap contracts, credit default swap contracts, and other derivative contracts, which may includeoptions, caps, collars and floors. Foreign currency exchange contracts are marked-to-market by recognizing the difference between the contract exchange rateand the current market rate as unrealized appreciation or depreciation. If securities are held at the end of this period, the changes in value are recorded inincome as unrealized. Realized gains or losses are recognized when contracts are settled. Total return swap contracts and credit default swap contracts arerecorded at fair value as an asset or liability with changes in fair value recorded as unrealized appreciation or depreciation. Realized gains or losses arerecognized at the termination of the contract based on the difference between the close-out price of the total return or credit default swap contract and theoriginal contract price.Forward contracts are valued based on market rates obtained from counterparties or prices obtained from recognized financial data serviceproviders. When determining fair value pricing when no market value exists, the value attributed to an investment is based on the enterprise value at the pricethat would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuationapproaches used to estimate the fair value of illiquid credit investments also may use the income approach or market approach. The valuation approachesused consider, as applicable, market risks, credit risks, counterparty risks and foreign currency risks.On a quarterly basis, Apollo utilizes a valuation committee consisting of members from senior management, to review and approve the valuationresults related to its funds' credit investments. For certain publicly traded vehicles, a review is performed by an independent board of directors. The Companyalso retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited procedures thatmanagement identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management with validatingtheir valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, includingcomparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertainty ofvaluation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and thedifferences could be material.- 157- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Real Estate InvestmentsThe estimated fair value of commercial mortgage-backed securities (“CMBS”) in Apollo’s funds is determined by reference to market pricesprovided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarilyrepresent what the funds would receive in an actual trade for the applicable instrument. Additionally, the loans held-for-investment are stated at the principalamount outstanding, net of deferred loan fees and costs for certain investments. The Company evaluates its loans for possible impairment on a quarterly basis.For Apollo’s opportunistic and value added real estate funds, valuations of non-marketable underlying investments are determined using methods thatinclude, but are not limited to (i) discounted cash flow estimates or comparable analysis prepared internally, (ii) third party appraisals or valuations byqualified real estate appraisers, and (iii) contractual sales value of investments/properties subject to bona fide purchase contracts. Methods (i) and (ii) alsoincorporate consideration of the use of the income, cost, or sales comparison approaches of estimating property values.On a quarterly basis, Apollo utilizes a valuation committee, consisting of members from senior management, to review and approve the valuationresults related to its funds' real estate investments. For certain publicly traded vehicles, a review is performed by an independent board of directors. TheCompany also retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited proceduresthat management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management withvalidating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches,including comparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertaintyof valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, andthe differences could be material.Fair Value of Financial InstrumentsThe fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.Except for the Company’s debt obligations (as described in note 14 to our consolidated financial statements), Apollo’s financial instruments arerecorded at fair value or at amounts whose carrying values approximate fair value. See “Investments, at Fair Value” above. While Apollo’s valuations ofportfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the actual realized gains or losses will dependon, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and thetiming and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were based. Financial instruments’carrying values generally approximate fair value because of the short-term nature of those instruments or variable interest rates related to the borrowings.Fair Value Option—Apollo has elected the fair value option for the Company's investment in Athene Holding ("Athene Holding" and, togetherwith its subsidiaries, "Athene"), the convertible notes issued by HFA Holdings Limited (“HFA”) and for the assets and liabilities of the consolidated VIEs.Such election is irrevocable and is applied to financial instruments on an individual basis at initial recognition. Apollo has applied the fair value option forcertain corporate loans, other investments and debt obligations held by the consolidated VIEs that otherwise would not have been carried at fair value. Forthe convertible notes issued by HFA, Apollo has elected to separately present interest income from other changes in the fair value of the convertible notes inthe consolidated statements of operations. See notes 4, 5, and 6 for further disclosure on the investments in Athene Holding, HFA and financial instruments ofthe consolidated VIEs for which the fair value option has been elected.Interest Rate Swap Agreements—Apollo recognizes derivatives as either an asset or liability measured at fair value. In order to reduce interestrate risk, Apollo entered into interest rate swap agreements which were formally designated as cash flow hedges. To qualify for cash flow hedge accounting,interest rate swaps must meet certain criteria, including (a) the items to be hedged expose Apollo to interest rate risk and (b) the interest rate swaps are highlyeffective in reducing Apollo’s exposure to interest rate risk. Apollo formally documents at inception its hedge relationships, including identification of thehedging instruments and the hedged items, its risk management objectives, its strategy for undertaking the hedge transaction and Apollo’s evaluation ofeffectiveness. Effectiveness is periodically assessed based upon a comparison of the relative changes in the cash flows of the interest rate swaps and the itemsbeing hedged.For derivatives that have been formally designated as cash flow hedges, the effective portion of changes in the fair value of the derivatives arerecorded in accumulated other comprehensive income (loss) (“OCI”). Amounts in accumulated OCI- 158- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)are reclassified into earnings when interest expense on the underlying borrowings is recognized. If, at any time, the swaps are determined to be ineffective, inwhole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the interest rate swap determined to beineffective will be recognized as a gain or loss in the consolidated statements of operations.Financial Instruments held by Consolidated VIEsThe consolidated VIEs hold investments that could be traded over-the-counter. Investments in securities that are traded on a securities exchangeor comparable over-the-counter quotation systems are valued based on the last reported sale price at that date. If no sales of such investments are reported onsuch date, and in the case of over-the-counter securities or other investments for which the last sale date is not available, valuations are based on independentmarket quotations obtained from market participants, recognized pricing services or other sources deemed relevant, and the prices are based on the average ofthe “bid” and “ask” prices, or at ascertainable prices at the close of business on such day. Market quotations are generally based on valuation pricing modelsor market transactions of similar securities adjusted for security-specific factors such as relative capital structure priority and interest and yield risks, amongother factors. When market quotations are not available, a model based approach is used to determine fair value.The consolidated VIEs also have debt obligations that are recorded at fair value. The primary valuation methodology used to determine fairvalue for debt obligations is market quotation. Prices are based on the average of the “bid” and “ask” prices. In the event that market quotations are notavailable, a model based approach is used. The model based approach used to estimate the fair values of debt obligations for which market quotations are notavailable is the discounted cash flow method, which includes consideration of the cash flows of the debt obligation based on projected quarterly interestpayments and quarterly amortization. Debt obligations are discounted based on the appropriate yield curve given the loan’s respective maturity and creditrating. Management uses its discretion and judgment in considering and appraising relevant factors for determining the valuations of its debt obligations.Pending Deal CostsPending deal costs consist of certain costs incurred (e.g. research costs, due diligence costs, professional fees, legal fees and other related items)related to private equity, credit and real estate fund transactions that the Company is pursuing but which have not yet been consummated. These costs aredeferred until such transactions are broken or successfully completed. A transaction is determined to be broken upon management’s decision to no longerpursue the transaction. In accordance with the related fund agreements, in the event the deal is broken, all of the costs are generally reimbursed by the fundsand considered in the calculation of the Management Fee Offset. These offsets are included in advisory and transaction fees from affiliates, net in theCompany’s consolidated statements of operations. If a deal is successfully completed, Apollo is reimbursed by the fund or a fund’s portfolio company for allcosts incurred.Fixed AssetsFixed Assets consist primarily of leasehold improvements, furniture, fixtures and equipment, computer hardware and software and are recorded atcost, net of accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the assets’ estimateduseful lives and in the case of leasehold improvements the lesser of the useful life or the term of the lease. Aircraft engine overhauls are capitalized anddepreciated until the next expected overhaul. Expenditures for repairs and maintenance are charged to expense when incurred. The Company evaluates long-lived assets for impairment periodically and whenever events or changes in circumstances indicate the carrying amounts of the assets may be impaired.Business CombinationsThe Company accounts for acquisitions using the purchase method of accounting in accordance with U.S. GAAP. Under the purchase method ofaccounting, the purchase price of an acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management asof the acquisition date.- 159- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Goodwill and Intangible AssetsGoodwill and indefinite-life intangible assets must be reviewed annually for impairment or more frequently if circumstances indicate impairmentmay have occurred. Identifiable finite-life intangible assets, by contrast, are amortized over their estimated useful lives, which are periodically re-evaluatedfor impairment or when circumstances indicate an impairment may have occurred. Apollo amortizes its identifiable finite-life intangible assets using amethod of amortization reflecting the pattern in which the economic benefits of the finite-life intangible asset are consumed or otherwise used up. If thatpattern cannot be reliably determined, Apollo uses the straight-line method of amortization. At June 30, 2014, the Company performed its annual impairmenttesting, and, as the fair value of each of the Company’s reporting units was in excess of its carrying value, there was no impairment of goodwill. Additionally,there was no impairment of indefinite-life intangible assets as of December 31, 2014.Profit Sharing PayableProfit sharing payable primarily represents the amounts payable to employees and former employees who are entitled to a proportionate share ofcarried interest income in one or more funds. This portion of the liability is calculated based upon the changes to realized and unrealized carried interest andis therefore not payable until the carried interest itself is realized. Profit sharing payable also includes contingent obligations that were recognized inconnection with certain Apollo acquisitions.Debt Issuance CostsDebt issuance costs consist of costs incurred in obtaining financing and are amortized over the term of the financing using the effective interestmethod. These costs are included in other assets on the consolidated statements of financial condition.Foreign CurrencyThe Company may, from time to time, hold foreign currency denominated assets and liabilities. Such assets and liabilities are translated using theexchange rates prevailing at the end of each reporting period. The functional currency of the Company’s international subsidiaries is the U.S. Dollar, as theiroperations are considered an extension of U.S. parent operations. Non-monetary assets and liabilities of the Company’s international subsidiaries areremeasured into the functional currency using historical exchange rates specific to each asset and liability. The results of the Company’s foreign operationsare normally remeasured using an average exchange rate for the respective reporting period. All currency remeasurement adjustments are included withinother income (loss), net in the consolidated statements of operations. Gains and losses on the settlement of foreign currency transactions are also includedwithin other income (loss), net in the consolidated statements of operations.Compensation and BenefitsEquity-Based Compensation—Equity-based awards granted to employees as compensation are measured based on the grant date fair value of theaward. Equity-based awards that do not require future service (i.e., vested awards) are expensed immediately. Equity-based employee awards that requirefuture service are expensed over the relevant service period. The Company estimates forfeitures for equity-based awards that are not expected to vest. Equity-based awards granted to non-employees for services provided to affiliates are remeasured to fair value at the end of each reporting period and expensed overthe relevant service period.Salaries, Bonus and Benefits—Salaries, bonus and benefits include base salaries, discretionary and non-discretionary bonuses, severance andemployee benefits. Bonuses are generally accrued over the related service period.The Company sponsors a 401(k) savings plan whereby U.S.-based employees are entitled to participate in the plan based upon satisfying certaineligibility requirements. The Company may provide discretionary contributions from time to time. No contributions relating to this plan were made by theCompany for the years ended December 31, 2014, 2013 and 2012.Profit Sharing Expense—Profit sharing expense primarily consists of a portion of carried interest recognized in one or more funds allocated toemployees and former employees. Profit sharing expense is recognized on an accrued basis as the related carried interest income is earned. Profit sharingexpense can be reversed during periods when there is a decline in carried interest income that was previously recognized. Additionally, profit sharingexpenses previously distributed may be subject to clawback from employees, former employees and Contributing Partners.- 160- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Changes in the fair value of the contingent consideration obligations that were recognized in connection with certain Apollo acquisitions arereflected in the Company’s consolidated statements of operations as profit sharing expense.The Company has a performance based incentive arrangement for certain Apollo partners and employees designed to more closely aligncompensation on an annual basis with the overall realized performance of the Company. This arrangement enables certain partners and employees to earndiscretionary compensation based on carried interest realizations earned by the Company in a given year, which amounts are reflected in profit sharingexpense in the accompanying consolidated financial statements.Other Income (Loss)Net Gains (Losses) from Investment Activities—Net gains (losses) from investment activities include both realized gains and losses and thechange in unrealized gains and losses in the Company’s investment portfolio between the opening reporting date and the closing reporting date. Theconsolidated financial statements include the net realized and unrealized gains (losses) of investments, at fair value. For the Company's investments held byAAA (see note 4), a portion of the net gains (losses) from investment activities are attributable to Non-Controlling Interests in the consolidated statements ofoperations.Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities—Changes in the fair value of the consolidated VIEs’assets and liabilities and related interest, dividend and other income and expenses subsequent to consolidation are presented within net gains (losses) frominvestment activities of consolidated variable interest entities and are attributable to Non-Controlling Interests in the consolidated statements of operations.Other Income (Loss), Net—Other income (loss), net includes the recognition of bargain purchase gains as a result of Apollo acquisitions, gains(losses) arising from the remeasurement of foreign currency denominated assets and liabilities of foreign subsidiaries, reversal of a portion of the taxreceivable agreement liability (see note 17), gains (losses) arising from the remeasurement of derivative instruments associated with fees from certain of theCompany’s affiliates, gains arising from extinguishment of contingent consideration obligations and other miscellaneous non-operating income andexpenses.Comprehensive Income (Loss)—U.S. GAAP guidance establishes standards for reporting comprehensive income and its components in afinancial statement that is displayed with the same prominence as other financial statements. U.S. GAAP requires that the Company classify items of OCI bytheir nature in the financial statements and display the accumulated balance of OCI separately in the shareholders’ equity section of the Company’sconsolidated statements of financial condition. Comprehensive income (loss) consists of net income (loss) and OCI. Apollo’s OCI is primarily comprised ofthe effective portion of changes in the fair value of the interest rate swap agreements discussed previously and foreign currency translation adjustmentsassociated with the Company's non-U.S. dollar denominated subsidiaries.Income Taxes—The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. Federal income tax purposes. As aresult, except as described below, the Apollo Operating Group has not been subject to U.S. income taxes. However, these entities in some cases are subject toNew York City unincorporated business taxes (“NYC UBT”) and non-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition,APO Corp., a wholly-owned subsidiary of the Company, is subject to U.S. Federal, state and local corporate income tax, and the Company’s provision forincome taxes is accounted for in accordance with U.S. GAAP.Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties. The Companyrecognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained upon examination, includingresolutions of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit is measured as the largest amount ofbenefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If a tax position is not considered more likely than not to besustained, then no benefits of the position are recognized. The Company’s tax positions are reviewed and evaluated quarterly to determine whether or not theCompany has uncertain tax positions that require financial statement recognition.Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assetsand liabilities and their respective tax basis using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not thatsome portion or all of the deferred tax assets will not be realized.- 161- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Net Income (Loss) Per Class A Share—U.S. GAAP requires use of the two-class method of computing earnings per share for all periods presentedfor each class of common stock and participating security as if all earnings for the period had been distributed. Under the two-class method, during periods ofnet income, the net income is first reduced for distributions declared on all classes of securities to arrive at undistributed earnings. During periods of netlosses, the net loss is reduced for distributions declared on participating securities only if the security has the right to participate in the earnings of the entityand an objectively determinable contractual obligation to share in net losses of the entity.The remaining earnings are allocated to Class A shares and participating securities to the extent that each security shares in earnings as if all ofthe earnings for the period had been distributed. Earnings or losses allocated to each class of security are then divided by the applicable number of shares toarrive at basic earnings per share. For the diluted earnings, the denominator includes all outstanding Class A shares and includes the number of additionalClass A shares that would have been outstanding if the dilutive potential Class A shares had been issued. The numerator is adjusted for any changes inincome or loss that would result from the issuance of these potential Class A shares.Use of Estimates—The preparation of the consolidated financial statements requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities at the date of the consolidated financial statements, the disclosure of contingent assets and liabilities at the dateof the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Apollo’s most significant estimatesinclude goodwill, intangible assets, income taxes, carried interest income from affiliates, contingent consideration obligations related to acquisitions, non-cash compensation, and fair value of investments and debt. Actual results could differ materially from those estimates.Consolidated Statements of Cash Flows— During the second quarter of 2014, the Company identified that return on capital related to cashdistributions from equity method investments had been previously reported as cash flows provided by investing activities. Cash flows received from equitymethod investments should have been separately identified as either return of investment or return on investment. Cash flows from the return of investmentshould be presented in cash flows provided by investing activities and return on investment presented within cash flows provided by operating activities.The Company restated the previously presented cash flows for these cash distributions from equity method investments and, in doing so, for the years endedDecember 31, 2013 and December 31, 2012, the consolidated statements of cash flows were restated to increase net cash flows provided by operatingactivities by $109.1 million and $66.1 million, respectively, with a corresponding decrease in net cash flows provided by investing activities. The Companyhas evaluated the effect of the incorrect presentation both qualitatively and quantitatively, and concluded that it did not have a material impact on, norrequire amendment of, any previously filed annual or quarterly consolidated financial statements.Recent Accounting PronouncementsIn April 2013, the Financial Accounting Standards Board ("FASB") issued guidance that requires an entity to prepare its financial statementsusing the liquidation basis of accounting when liquidation is imminent. The financial statements prepared using the liquidation basis of accounting shouldpresent relevant information about the expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceedsfrom liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects toeither sell in liquidation or use in settling liabilities. Liabilities should be recognized and measured in accordance with U.S. GAAP that otherwise applies tothose liabilities. The guidance requires an entity to accrue and separately present the costs that it expects to incur and the income that it expects to earnduring the expected duration of the liquidation, including any costs associated with the sale or settlement of those assets and liabilities. Additionally, theamended guidance requires disclosures about an entity’s plan for liquidation, the methods and significant assumptions used to measure assets and liabilities,the type and amount of costs and income accrued, and the expected duration of the liquidation process. The guidance is effective for entities that determineliquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply therequirements prospectively from the day that liquidation becomes imminent. The adoption of this guidance did not have a material impact on the Company’sconsolidated financial statements.In June 2013, the FASB issued guidance to change the assessment of whether an entity is an investment company by developing a new two-tiered approach that requires an entity to possess certain fundamental characteristics while allowing judgment in assessing certain typical characteristics. Thefundamental characteristics that an investment company must have include the following: (1) it obtains funds from one or more investors and provides theinvestor(s) with investment management services; (2) it commits to its investor(s) that its business purpose and only substantive activities are investing thefunds solely for returns from capital appreciation, investment income or both; and (3) it does not obtain returns or benefits from an investee or its affiliatesthat- 162- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)are not normally attributable to ownership interests. The typical characteristics of an investment company that an entity should consider before concludingwhether it is an investment company include the following: (1) it has more than one investment; (2) it has more than one investor; (3) it has investors that arenot related parties of the parent or the investment manager; (4) it has ownership interests in the form of equity or partnership interests; and (5) it managessubstantially all of its investments on a fair value basis. The new approach requires an entity to assess all of the characteristics of an investment company andconsider its purpose and design to determine whether it is an investment company. The guidance includes disclosure requirements about an entity’s status asan investment company and financial support provided or contractually required to be provided by an investment company to its investees. The guidance iseffective for interim and annual reporting periods in fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a materialimpact on the Company’s consolidated financial statements.In July 2013, the FASB issued guidance to eliminate the diversity in practice on the financial statement presentation of an unrecognized taxbenefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the new guidance, an unrecognized tax benefit, or aportion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating losscarryforward, a similar tax loss, or a tax credit carry forward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax creditcarryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result fromthe disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, thedeferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statement as a liability and should not be combinedwith deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist atthe reporting date and should be made presuming disallowance of the tax position at the reporting date (e.g. an entity should not evaluate whether thedeferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized taxbenefit being settled). The guidance does not require new recurring disclosures. The guidance applies to all entities that have unrecognized tax benefits whena net operating loss carryforward, similar tax loss, or a tax credit carryforward exists at the reporting date. The guidance is effective for fiscal years, andinterim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefitsthat exist at the effective date, although retrospective application is permitted. The adoption of this guidance did not have a material impact on theCompany’s consolidated financial statements.In April 2014, the FASB issued guidance to improve the definition of discontinued operations and to enhance convergence between the FASB’sand International Accounting Standard Board’s (IASB) reporting requirements for discontinued operations. The new definition of discontinued operationslimits discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on anentity’s operations and financial results. The new guidance affects entities that have either of the following: (1) a component of an entity that either isdisposed of or meets the criteria under current guidance to be classified as held for sale or (2) a business or nonprofit activity that, on acquisition, meets thecriteria under current guidance to be classified as held for sale. The guidance is effective for all disposals (or classifications as held for sale) of components ofan entity and all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or afterDecember 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications has held for sale) that havenot been reported in financial statements previously issued or available for issuance. This guidance is not expected to have a material impact on theCompany's consolidated financial statements.In May 2014, the FASB issued guidance to establish a comprehensive and converged standard on revenue recognition to enable financialstatement users to better understand and consistently analyze an entity’s revenue across industries, transactions, and geographies. The core principle of thenew guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects theconsideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply thefollowing steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4)allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performanceobligation. The new guidance also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. The new guidance requiresimproved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.Qualitative and quantitative information is required to be disclosed about: (1) contracts with customers, (2) significant judgments and changes in judgments,and (3) assets recognized from costs to obtain or fulfill a contract. The new guidance will apply to all entities. The guidance is effective for interim andannual reporting periods in fiscal years beginning after December 15, 2016. Early application is not permitted. The Company is in the process of- 163- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)evaluating the impact that this guidance will have on its consolidated financial statements, including the timing of the recognition of carried interest income.In June 2014, the FASB issued guidance to resolve diversity in practice in the accounting for share-based payments where the terms of an awardprovide that a performance target could be achieved after the requisite service period. The new guidance requires that a performance target that affects vestingand that could be achieved after the requisite service period be treated as a performance condition. Accordingly, the performance target should not bereflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that theperformance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already beenrendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognizedcompensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized duringand after the requisite service period should reflect the number of awards that ultimately vest. The requisite service period ends when the employee can ceaserendering service and still be eligible to vest in the award if the performance target is achieved. The new guidance applies to all reporting entities that granttheir employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after therequisite service period. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Earlyapplication is permitted. The Company is in the process of evaluating the impact that this guidance will have on its consolidated financial statements.In August 2014, the FASB issued guidance to eliminate diversity in practice in the accounting for measurement differences in both the initialconsolidation and subsequent measurement of the financial assets and the financial liabilities of a collateralized financing entity. A reporting entity thatconsolidates a collateralized financing entity within the scope of the new guidance may elect to measure the financial assets and the financial liabilities ofthat collateralized financing entity using either the measurement alternative included in the new guidance or the existing guidance on fair valuemeasurement. When the measurement alternative is not elected for a consolidated collateralized financing entity within the scope of the new guidance, thenew guidance clarifies that (1) the fair value of the financial assets and the fair value of the financial liabilities of the consolidated collateralized financingentity should be measured using the requirements of the existing guidance on fair value measurement and (2) any differences in the fair value of the financialassets and the fair value of the financial liabilities of that consolidated collateralized financing entity should be reflected in earnings and attributed to thereporting entity in the consolidated statement of income (loss). When a reporting entity elects the measurement alternative included in the new guidance for acollateralized financing entity, the reporting entity should measure both the financial assets and the financial liabilities of that collateralized financing entityin its consolidated financial statements using the more observable of the fair value of the financial assets and the fair value of the financial liabilities. Theguidance applies to a reporting entity that is required to consolidate a collateralized financing entity under the existing variable interest entity guidancewhen (1) the reporting entity measures all of the financial assets and the financial liabilities of that consolidated collateralized financing entity at fair valuein the consolidated financial statements based on other guidance and (2) the changes in the fair values of those financial assets and financial liabilities arereflected in earnings. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption ispermitted as of the beginning of an annual period. The Company is in the process of evaluating the impact that this guidance will have on the recognition ofappropriated partners’ capital, although the impact on net income attributable to the Company is not expected to be material.In August 2014, the FASB issued guidance regarding management’s responsibility to evaluate whether there is substantial doubt about anentity’s ability to continue as a going concern and to provide related footnote disclosures. The new guidance requires that management evaluate each annualand interim reporting period whether conditions exist that give rise to substantial doubt about the entity’s ability to continue as a going concern within oneyear from the financial statement issuance date, and if so, provide related disclosures. Disclosures are only required if conditions give rise to substantialdoubt, whether or not the substantial doubt is alleviated by management’s plans. No disclosures are required specific to going concern uncertainties if anassessment of the conditions does not give rise to substantial doubt. Substantial doubt exists when conditions and events, considered in the aggregate,indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the financial statement issuancedate. If substantial doubt is alleviated as a result of the consideration of management’s plans, a company should disclose information that enables users offinancial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes): (1) principal conditions thatinitially give rise to substantial doubt, (2) management’s evaluation of the significance of those conditions in relation to the company’s ability to meet itsobligations, and (3) management’s plans that alleviated substantial doubt. If substantial doubt is not alleviated after considering management’s plans,disclosures should enable investors to understand the underlying conditions, and include the following: (1) a statement indicating that there is substantialdoubt about the company’s ability to continue as a going concern within one year- 164- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)after the issuance date, (2) the principal conditions that give rise to substantial doubt, (3) management’s evaluation of the significance of those conditions inrelation to the company’s ability to meet its obligations, and (4) management plans that are intended to mitigate the adverse conditions. The new guidanceapplies to all companies. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. Early adoptionis permitted. This guidance is not expected to have an impact on the consolidated financial statements of the Company.In November 2014, the FASB issued guidance to clarify how current U.S. GAAP should be interpreted in evaluating the economic characteristicsand risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the new guidance clarifies that an entity shouldconsider all relevant terms and features-including the embedded derivative feature being evaluated for bifurcation when evaluating the nature of the hostcontract. Further, the new guidance clarifies that no single term or feature would necessarily determine the economic characteristics and risks of the hostcontract. Rather, the nature of the host contract depends upon the economic characteristics and risks of the entire hybrid financial instrument. The newguidance applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share. The guidance is effectivefor interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted. The Company is in the process ofevaluating the impact that this guidance will have on its consolidated financial statements.In January 2015, the FASB issued guidance to simplify income statement presentation by eliminating the concept of extraordinary items.Existing guidance requires that an entity separately classify, present, and disclose extraordinary events and transactions. If an event or transaction meets thecriteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the itemseparately in the income statement, net of tax, after income from continuing operations. The entity is also required to disclose applicable income taxes andeither present or disclose earnings-per-share data applicable to the extraordinary item. The new guidance eliminates the requirement for reporting entities toconsider whether an underlying event or transactions is extraordinary. However, the presentation and disclosure requirements under existing guidance foritems that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequentlyoccurring. Under the new guidance, items that are both unusual in nature and infrequently occurring should be presented within income from continuingoperations or disclosed in the notes to the financial statements. The guidance is effective for interim and annual reporting periods in fiscal years beginningafter December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This guidanceis not expected to have an impact on the consolidated financial statements of the Company.In February 2015, the FASB issued new guidance which changes the analysis that a reporting entity must perform to determine whether it shouldconsolidate certain types of legal entities. Existing guidance includes different requirements for performing a consolidation analysis if, among other factors,the entity under evaluation is any one of the following: (1) a legal entity that qualifies for the indefinite deferral under the amended consolidation rules, (2) alegal entity that is within the scope of the amended consolidation rules, or (3) a limited partnership or similar entity that is considered a voting interest entity.Under the new guidance, all reporting entities are within the scope of the new standard, including limited partnerships and similar legal entities, unless ascope exception applies. The presumption that a general partner controls a limited partnership has been eliminated. In addition, fees paid to decision makersthat meet certain conditions (e.g. are both customary and commensurate with the level of effort required for the services provided) no longer cause decisionmakers to consolidate VIEs in certain instances. The new guidance places more emphasis in the consolidation evaluation on variable interests other than thefee arrangements such as principal investment risk (for example, debt or equity interests), guarantees of the value of the assets or liabilities of the VIE, writtenput options on the assets of the VIE, or similar obligations, including some liquidity commitments or agreements (explicit or implicit). Additionally, the newguidance reduces the extent to which related party arrangements cause an entity to be considered a primary beneficiary. The indefinite deferral of theamended consolidation rules for certain investment funds has been eliminated and a scope exception from the new consolidation standard has been added forreporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule2a-7 of the investment Company Act of 1940 for registered money market funds. The guidance is effective for interim and annual reporting periods in fiscalyears beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period, and adjustments should be reflected as of thebeginning of the fiscal year that includes that interim period. A reporting entity may apply the new guidance using either a modified retrospective approachby recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or by applying the amendments retrospectively. TheCompany is in the process of evaluating the impact that this new guidance will have on its consolidated financial statements.- 165- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)3. ACQUISITIONS AND BUSINESS COMBINATIONSBusiness CombinationsStone TowerOn April 2, 2012, the Company completed its previously announced acquisition of the membership interests of Stone Tower Capital LLC and itsrelated management companies (“Stone Tower”), a leading alternative credit manager. The acquisition was consummated by the Company for totalconsideration at fair value of approximately $237.2 million. The transaction added significant scale and several new credit product capabilities and increasedthe assets under management of the credit segment.Consideration exchanged at closing included a payment of approximately $105.5 million, which the Company funded from its existing cashresources, and equity granted to the former owners of Stone Tower with grant date fair value of $14.0 million valued using the closing price of the Company'sClass A shares on April 2, 2012 of $14.40. Additionally, the Company will also make payments to the former owners of Stone Tower under a contingentconsideration obligation which requires the Company to transfer cash to the former owners of Stone Tower based on a specified percentage of carried interestincome. The contingent consideration obligation had an acquisition date fair value of approximately $117.7 million, which was determined based on thepresent value of the estimated future carried interest payments of approximately $139.4 million using a discount rate of 9.5%, and is reflected in profitsharing payable in the consolidated statements of financial condition. See note 18 for additional disclosure regarding the contingent considerationobligation.As a result of the acquisition, the Company incurred $4.6 million in acquisition costs, of which $2.8 million was incurred during the year endedDecember 31, 2012.Tangible assets acquired in the acquisition consisted of management and carried interest receivable and other assets. Intangible assets acquiredconsisted primarily of certain management contracts providing economic rights to management fees, senior fees, subordinate fees, and carried interest fromexisting CLOs, funds and strategic investment accounts.- 166- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The Company performed an analysis and an evaluation of the net assets acquired and liabilities assumed. The estimated fair value of the assetsacquired exceeded the estimated fair value of the liabilities assumed as of the acquisition date resulting in a bargain purchase gain of approximately $1,951.1million for the year ended December 31, 2012. The bargain purchase gain is reflected in other income, net within the consolidated statement of operations forthe year ended December 31, 2012, with corresponding amounts reflected as components of appropriated partners’ capital within the consolidated statementof changes in shareholders’ equity for the year ended December 31, 2012. The estimated fair values for the net assets acquired and liabilities assumed aresummarized in the following table:Tangible Assets: Cash$6,310Carried Interest Receivable36,097Due from Affiliates1,642Other Assets2,492Total assets of consolidated variable interest entities10,136,869Intangible Assets: Management Fees Contracts9,658Senior Fees Contracts568Subordinate Fees Contracts2,023Carried Interest Contracts85,071Non-Compete Covenants200Fair Value of Assets Acquired10,280,930Liabilities Assumed: Accounts payable and accrued expenses3,570Due to Affiliates4,410Other Liabilities8,979Total liabilities of consolidated variable interest entities7,815,434Fair Value of Liabilities Assumed7,832,393Fair Value of Net Assets Acquired2,448,537Less: Net assets attributable to Non-Controlling Interests in consolidated entities260,203Less: Fair Value of Consideration Transferred237,201Gain on Acquisition$1,951,133The bargain purchase gain was recorded in other income, net in the consolidated statements of operations.The acquisition related intangible assets valuation and related amortization are as follows: As of December 31, Weighted Average UsefulLife in Years 2014 2013Management Fees Contracts2.2 $9,658 $9,658Senior Fees Contracts2.4 568 568Subordinate Fees Contracts2.5 2,023 2,023Carried Interest Contracts3.7 85,071 85,071Non-Compete Covenants2.0 200 200Total Intangible Assets 97,520 97,520Less: Accumulated amortization (73,568) (48,586)Net Intangible Assets $23,952 $48,934- 167- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The results of operations of the acquired business since the acquisition date included in the Company’s consolidated statements of operations forthe period from April 2, 2012 to December 31, 2012 were as follows: For the Period from April 2, 2012 toDecember 31, 2012Total Revenues$51,719Net Income Attributable to Non-Controlling Interest$(1,925,053)Net Income Attributable to Apollo Global Management, LLC$12,446Other AcquisitionsOn October 2, 2013, the Company acquired specified assets and liabilities of Aviva Investors North America, Inc., a wholly-owned subsidiary ofAviva plc. The acquisition provides the Company additional asset management allocation and related service capabilities for similar assets that it directlymanages across its investment platform. The transaction was accounted for as a business combination. Identifiable assets having a combined fair value of $0.4million were acquired in exchange for fair value of liabilities assumed of $0.8 million, which resulted in goodwill of $0.4 million as of the acquisition date.There was no consideration transferred relating to this acquisition.Intangible AssetsIntangible assets, net consists of the following: As of December 31, 2014 2013Finite-lived intangible assets/management contracts$240,285 $240,285Accumulated amortization(180,246) (145,358)Intangible assets, net$60,039 $94,927The changes in intangible assets, net consist of the following: For the Year Ended December 31, 2014 2013 2012 Balance, beginning of year$94,927 $137,856 $81,846 Amortization expense(34,888) (43,194) (43,009) Acquisitions— 265 99,019(1) Balance, end of year$60,039 $94,927 $137,856 (1)Includes impact of purchase price adjustments related to the Gulf Stream acquisition.Amortization expense related to intangible assets was $34.9 million, $43.2 million, and $43.0 million for the years ended December 31, 2014,2013, and 2012, respectively.Expected amortization of these intangible assets for each of the next 5 years and thereafter is as follows: 2015 2016 2017 2018 2019 Thereafter TotalAmortization of intangible assets$33,458 $7,917 $4,952 $3,677 $3,677 $6,358 $60,039- 168- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)4. INVESTMENTSThe following table represents Apollo’s investments: As of December 31, 2014 As of December 31, 2013Investments, at fair value$2,499,128 $2,012,027Equity method investments380,878 381,856Total Investments$2,880,006 $2,393,883 Investments, at Fair ValueInvestments, at fair value, consist of financial instruments held by AAA, the Company's investment in Athene Holding, investments held by theApollo Credit Senior Loan Fund, L.P. ("Apollo Senior Loan Fund"), and other investments held by the Company at fair value. Other investments include theCompany's investment in HFA. As of December 31, 2014 and December 31, 2013, the net assets of the consolidated funds (excluding VIEs) were $2,174.1million and $1,971.1 million, respectively. The following investments, except the investment in Athene Holding and other investments, are presented as apercentage of net assets of the consolidated funds: As of December 31, 2014 As of December 31, 2013 Fair Value Fair Value Investments, atFair Value –AffiliatesPrivateEquity Credit Total Cost % of NetAssets ofConsolidatedFunds Private Equity Credit Total Cost % of NetAssets ofConsolidatedFundsAAA$2,144,118 $— $2,144,118 $1,494,358 98.6% $1,942,051 $— $1,942,051 $1,494,358 98.5%Athene Holding25,104 299,410 324,514 324,293 N/A — — — — N/AApollo SeniorLoan Fund— 29,896 29,896 30,100 1.4 — 29,603 29,603 29,226 1.5Other Investments486 114 600 3,318 N/A 839 39,534 40,373 65,377 N/ATotal$2,169,708 $329,420 $2,499,128 $1,852,069 100.0% $1,942,890 $69,137 $2,012,027 $1,588,961 100.0%SecuritiesAs of December 31, 2014 and December 31, 2013, the sole investment held by AAA was its investment in AAA Investments, L.P. (“AAAInvestments”), which is measured based on AAA’s share of net asset value of AAA Investments. The following table represents the sole investment of AAAInvestments, which constitutes more than five percent of the net assets of the funds that the Company consolidates (excluding VIEs) as of the aforementioneddates: As of December 31, 2014 As of December 31, 2013 InstrumentType Fair Value Cost % of NetAssets ofConsolidatedFunds InstrumentType Fair Value Cost % of NetAssets ofConsolidatedFundsAthene HoldingEquity $2,244,192 $1,363,532 103.2% Equity $1,950,010 $1,331,942 98.9%As of December 31, 2014, AAA Investments' portfolio consisted of a single investment in the equity of Athene Holding. Athene Holding is theultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding provides insurance products focusedprimarily on the retirement market and its business centers primarily on issuing or reinsuring fixed indexed annuities.As of December 31, 2014 and December 31, 2013, AAA, through its investment in AAA Investments was the largest equity holder in AtheneHolding with an economic ownership stake of approximately 47.7% (calculated as if the commitments in- 169- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)the Athene Private Placement (as defined below) closed through December 31, 2014 were fully drawn down but without giving effect to (i) restricted commonshares issued under Athene’s management equity plan or (ii) common shares to be issued under the Amended AAA Services Agreement or the AmendedAthene Services Agreement subsequent to December 31, 2013) and 72.5% (without giving effect to (i) restricted common shares issued under Athene'smanagement equity plan, (ii) the common shares to be issued under the Amended AAA Services Agreement or the Amended Athene Services Agreementsubsequent to December 31, 2013 and (iii) conversion of AAA Investments' note receivable), respectively, and effectively held 45% of the voting power ofAthene. AAA Investments’ ownership interest in Athene is held indirectly through its subsidiaries. During 2014, AAA Investments' ownership stake in Athenewas reduced as a result of the Athene Private Placement (as defined below), the issuance of 3.7 million unrestricted common shares of Athene Holding underAthene’s management equity plan) and issuances of shares under the Amended AAA Services Agreement and the Amended Athene Services Agreement, andincreased by the conversion to common shares of AAA Investments’ note receivable from Athene. See note 17 for further information regarding Athene.At December 31, 2014 and December 31, 2013, Athene’s fair value was determined using the embedded value method which was based on thepresent value of the future expected regulatory distributable income generated by the net assets of Athene plus the excess capital (i.e., the capital in excess ofwhat is required to be held against Athene’s liabilities). The net assets of Athene consist of the current and projected assets less the current and projectedliabilities related to in force insurance contracts. For purposes of the excess capital calculation the assets are valued at fair value using our valuationmethodology disclosed in note 2. The approach of using actuarially projected asset and liability income to value an insurance company is widely used bymarket participants in the insurance industry, particularly in private company acquisitions. The embedded value of the in force insurance contractsincorporates actuarial projections of expected income utilizing most recently available policyholder contract and experience data, industry information andassumptions, general economic and market conditions, and other factors deemed relevant, including the cost of capital. In addition, consideration is alsogiven to comparable company multiples in the determination of fair value.Athene HoldingAs further described in note 17, during 2014, Athene Holding raised $1.218 billion of net equity commitments (the “Athene Private Placement”),which was priced at $26 per common share of Athene Holding. In connection with the Athene Private Placement, both the Athene Services Derivative and theAAA Services Derivative (as defined in note 17) were settled on April 29, 2014 by delivery to Apollo of common shares of Athene Holding, and as a result,such derivatives were terminated. Following settlement of these derivatives, future monitoring fees and management fees paid to Apollo pursuant to theAmended Athene Services Agreement and the Amended AAA Services Agreement, respectively, will be paid on a quarterly basis in arrears by delivery toApollo of common shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the Exchange Act).The Company elected the fair value option for its investment in Athene Holding at the time of settlement of the Athene Services Derivative andAAA Services Derivative. The Company has classified this investment as a Level III asset in the fair value hierarchy, as the pricing inputs into thedetermination of fair value require significant judgment and estimation. The investment is valued based on the price of a common share of Athene Holding,which as of December 31, 2014 was determined using the embedded value method. See note 6 for further discussion regarding fair value leveling and note 17for further information regarding Athene. Apollo Senior Loan FundOn December 31, 2011, the Company became the sole investor in the Apollo Senior Loan Fund and therefore consolidated the assets andliabilities of the fund. The fund invests in U.S. denominated senior secured loans, senior secured bonds and other income generating fixed-incomeinvestments. At least 90% of the Apollo Senior Loan Fund’s portfolio of investments must consist of senior secured, floating rate loans or cash or cashequivalents. Up to 10% of the Apollo Senior Loan Fund’s portfolio may consist of non-first lien fixed income investments and other income generating fixedincome investments, including but not limited to senior secured bonds. The Apollo Senior Loan Fund may not purchase assets rated (tranche rating) at B3 orlower by Moody’s, or equivalent rating by another nationally recognized rating agency.The Company has classified the instruments associated with the Apollo Senior Loan Fund investment within the respective level in the fair valuehierarchy. See note 6 for further discussion regarding fair value leveling.HFAOn March 7, 2011, the Company invested $52.1 million (including expenses related to the purchase) in a convertible note with an aggregateprincipal amount of $50.0 million and received 20,833,333 stock options issued by HFA, an Australian based- 170- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)specialist global funds management company. Pursuant to a buy-back agreement with HFA, effective July 2, 2014, HFA repurchased the convertible note atits face value of $50.0 million.The note had a percentage coupon interest of 6% per annum, paid via principal capitalization (payment-in-kind, or "PIK", interest) for the firstfour years, and thereafter either in cash or via principal capitalization at HFA’s discretion. The PIK interest provided for the Company to receive additionalcommon shares of HFA if the note was converted. For the years ended December 31, 2014, 2013, and 2012, the Company recorded $1.7 million, $4.0 millionand $3.1 million, respectively, in PIK interest income included in interest income in the consolidated statements of operations. The Company separatelypresents interest income in the consolidated statements of operations from other changes in the fair value of the convertible note.The Company classified the instruments associated with the HFA investment as Level III investments. See note 6 for further discussion regardingfair value leveling.- 171- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Net Gains (Losses) from Investment ActivitiesNet gains (losses) from investment activities in the consolidated statements of operations include net realized gains (losses) from sales ofinvestments, and the change in net unrealized gains (losses) resulting from changes in fair value or reversal of realization of gains/losses of the consolidatedfunds’ investments and realization of previously unrealized gains/losses. Additionally, net gains from investment activities include changes in the fair valueof the investment in HFA and other investments held at fair value. The following tables present Apollo’s net gains (losses) from investment activities for theyears ended December 31, 2014, 2013 and 2012: For the Year Ended December 31, 2014 Private Equity Credit TotalRealized losses on sales of investments$— $(12,651) $(12,651)Change in net unrealized gains due to changes in fair values204,542 21,352 225,894Net Gains from Investment Activities$204,542 $8,701 $213,243 For the Year Ended December 31, 2013 Private Equity Credit TotalRealized gains on sales of investments$— $409 $409Change in net unrealized gains (losses) due to changes in fair values342,398 (12,572) 329,826Net Gains (Losses) from Investment Activities$342,398 $(12,163) $330,235 For the Year Ended December 31, 2012 Private Equity Credit TotalRealized gains on sales of investments$— $443 $443Change in net unrealized gains (losses) due to changes in fair values288,140 (339) 287,801Net Gains from Investment Activities$288,140 $104 $288,244Equity Method InvestmentsApollo's equity method investments include its investments in Apollo private equity, credit and real estate funds, which are not consolidated, butin which the Company exerts significant influence. Apollo’s share of operating income generated by these investments is recorded within income from equitymethod investments in the consolidated statements of operations. - 172- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Equity method investments as of December 31, 2014 and December 31, 2013 consisted of the following: Equity Held as of December 31, 2014 % ofOwnership December 31, 2013 % ofOwnership Investments: Private Equity Funds: AAA Investments$1,293 0.057% $1,168 0.057% Apollo Investment Fund IV, L.P. ("Fund IV")8 0.022 9 0.019 Apollo Investment Fund V, L.P. ("Fund V")68 0.031 94 0.020 Apollo Investment Fund VI, L.P. ("Fund VI")6,173 0.114 9,964 0.103 Fund VII78,286 1.223 137,960 1.258 Apollo Investment Fund VIII, L.P. ("Fund VIII")33,099 2.241 4,310 3.996 ANRP5,608 0.807 3,735 0.831 AION Capital Partners Limited ("AION")14,707 6.113 6,425 9.970 Apollo Asia Private Credit Fund, L.P. ("APC")47 0.044 49 0.046 VC Holdings, L.P. Series A ("Vantium A/B")12 6.450 15 6.450 VC Holdings, L.P. Series C ("Vantium C")48 2.071 1,233 2.071 VC Holdings, L.P. Series D ("Vantium D")180 6.345 2,190 6.345 Total Private Equity Funds(5)139,529 167,152 Credit Funds: Apollo Special Opportunities Managed Account, L.P. ("SOMA")6,997 0.841 6,833 0.853 Apollo Value Strategic Fund, L.P. ("VIF")146 0.067 151 0.124 Apollo Strategic Value Fund, L.P. ("SVF")10 0.033 17 0.079 Apollo Credit Liquidity Fund, L.P. ("ACLF")4,128 2.771 4,559 3.341 Apollo Credit Opportunity Fund I, L.P. ("COF I")2,298 1.870 10,077 1.850 Apollo Credit Opportunity Fund II, L.P. ("COF II")2,249 1.497 5,015 1.428 Apollo Credit Opportunity Fund III, L.P. ("COF III")13,102 1.061 6,720 2.450 Apollo European Principal Finance Fund, L.P. ("EPF I")7,647 1.449 19,332 1.363 Apollo European Principal Finance Fund II, L.P. ("EPF II")44,523 1.760 23,212 1.994 Apollo Investment Europe II, L.P. ("AIE II")3,203 1.937 4,500 2.772 Apollo Europe Co-Investors III (D) LLC ("AIE III")1,540 2.914 — — Apollo Palmetto Strategic Partnership, L.P. ("Palmetto")14,049 1.186 16,054 1.186 Apollo Senior Floating Rate Fund Inc. ("AFT")86 0.031 95 0.034 Apollo Residential Mortgage, Inc. ("AMTG") (3)4,263(1) 0.593(1) 4,015(2) 0.632(2) Apollo European Credit, L.P. ("AEC")2,443 1.081 2,482 1.230 Apollo European Strategic Investments, L.P. ("AESI")3,834 0.990 3,732 0.956 Apollo European Strategic Investments II, L.P. ("AESI II")123 0.990 — — Apollo Centre Street Partnership, L.P. ("ACSP")11,474 2.439 7,690 2.465 Apollo Investment Corporation ("AINV") (4)64,382(1) 3.057(1) 55,951(2) 2.933(2) Apollo SK Strategic Investments, L.P. ("SK")1,693 0.990 1,714 0.997 Apollo SPN Investments I, L.P.5,500 0.720 4,457 0.828 CION Investment Corporation ("CION")1,000 0.206 1,000 0.716 Apollo Tactical Income Fund Inc. ("AIF")84 0.032 94 0.036 Apollo Franklin Partnership, L.P. ("Franklin Fund")9,647 9.091 10,178 9.107 Apollo Zeus Strategic Investments, L.P. ("Zeus")6,404 3.392 1,678 3.383 Apollo Lincoln Fixed Income Fund, L.P.1,398 0.993 — — Apollo Lincoln Private Credit Fund, L.P.194 0.990 — — Apollo Structured Credit Recovery Master Fund III, L.P.315 0.126 — — Apollo Total Return Fund L.P.163 0.046 — — Apollo Credit Short Opportunities Fund L.P.19 0.027 — — Total Credit Funds(5)212,914 189,556 Real Estate: Apollo Commercial Real Estate Finance, Inc. (“ARI”)(3)13,989(1) 1.495(1) 11,550(2) 1.500(2) AGRE U.S. Real Estate Fund, L.P.10,519 1.845 9,473 1.845 CPI Capital Partners North America, L.P.137 0.408 272 0.416 CPI Capital Partners Europe, L.P.5 0.001 5 0.001 CPI Capital Partners Asia Pacific, L.P.96 0.039 106 0.042 Apollo GSS Holding (Cayman), L.P.3,564 4.750 3,670 3.460 BEA/AGRE China Real Estate Fund, L.P.87 1.031 72 1.031 Other38 4.761 — — Total Real Estate Funds(5)28,435 25,148 Total$380,878 $381,856 (1)Amounts are as of September 30, 2014.(2)Amounts are as of September 30, 2013.- 173- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)(3)Investment value includes the fair value of RSUs granted to the Company as of the grant date. These amounts are not considered in the percentage of ownership until theRSUs are vested and issued to the Company, at which point the RSUs are converted to common stock and delivered to the Company.(4)The value of the Company’s investment in AINV was $53,693 and $57,249 based on the quoted market price as of December 31, 2014 and December 31, 2013,respectively.(5)Certain funds invest across multiple segments. The presentation in the table above is based on the classification of the majority of each fund's investments.The tables below represent summarized aggregated financial information of the funds and other equity method investments in which Apollo has anequity method investment as of December 31, 2014, 2013 and 2012, and for the years ended December 31, 2014, 2013 and 2012: Private Equity Credit Real Estate Aggregate Totals As of December 31, As of December 31, As of December 31, As of December 31,Balance SheetInformation 2014 2013 2014 2013 2014 2013 2014 2013Investments$16,082,723 $23,539,644 $17,888,199 $16,043,142 $2,584,097 $2,260,989 $36,555,019 $41,843,775Assets16,924,291 24,265,145 20,076,656 17,636,723 2,772,857 2,465,780 39,773,804 44,367,648Liabilities128,257 111,285 6,216,702 6,071,182 1,028,203 300,517 7,373,162 6,482,984Equity16,796,034 24,153,860 13,859,954 11,565,541 1,744,654 2,165,263 32,400,642 37,884,664 Private Equity Credit Real Estate Aggregate Totals For the Year EndedDecember 31, For the Year EndedDecember 31, For the Year EndedDecember 31, For the Year EndedDecember 31, Income StatementInformation2014(1) 2013(1) 2012(1) 2014(1) 2013(1) 2012(1) 2014(1) 2013(1) 2012(1) 2014(1) 2013(1) 2012(1)Revenues/InvestmentIncome$340,380 $675,844 $1,686,855 $1,954,270 $1,297,324 $1,326,142 $89,579 $73,429 $54,720 $2,384,229 $2,046,597 $3,067,717Expenses326,126 239,750 280,262 417,967 583,410 694,114 29,022 39,153 32,077 773,115 862,313 1,006,453Net InvestmentIncome14,254 436,094 1,406,593 1,536,303 713,914 632,028 60,557 34,276 22,643 1,611,114 1,184,284 2,061,264Net Realized andUnrealized Gain(Loss)1,300,343 10,411,556 6,856,414 (548,088) 953,227 2,053,100 62,516 214,764 275,659 814,771 11,579,547 9,185,173Net Income$1,314,597 $10,847,650 $8,263,007 $988,215 $1,667,141 $2,685,128 $123,073 $249,040 $298,302 $2,425,885 $12,763,831 $11,246,437(1)Certain private equity, credit and real estate fund amounts are as of and for the years ended September 30, 2014, 2013 and 2012.5. VARIABLE INTEREST ENTITIESAs described in note 2, the Company consolidates entities that are VIEs for which the Company has been designated as the primary beneficiary.The purpose of such VIEs is to provide strategy-specific investment opportunities for investors in exchange for management and performance based fees. Theinvestment strategies of the entities that the Company manages may vary by entity; however, the fundamental risks of such entities have similarcharacteristics, including loss of invested capital and the return of carried interest income previously distributed to the Company by certain private equity,credit, and real estate entities. The nature of the Company’s involvement with VIEs includes direct and indirect investments and fee arrangements. TheCompany does not provide performance guarantees and has no other financial obligations to provide funding to VIEs other than its own capitalcommitments. There is no recourse to the Company for the consolidated VIEs’ liabilities.The assets and liabilities of the consolidated VIEs are comprised primarily of investments and debt, at fair value, and are included within assetsand liabilities of consolidated variable interest entities, respectively, in the consolidated statements of financial condition.Consolidated Variable Interest EntitiesApollo has consolidated VIEs in accordance with the policy described in note 2. The majority of the consolidated VIEs were formed for the solepurpose of issuing collateralized notes to investors. The assets of these VIEs are primarily comprised of senior secured loans and the liabilities are primarilycomprised of debt. Through its role as collateral manager of these VIEs, it was determined that Apollo had the power to direct the activities that mostsignificantly impact the economic performance of these- 174- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)VIEs. Additionally, Apollo determined that the potential fees that it could receive directly and indirectly from these VIEs represent rights to returns thatcould potentially be significant to such VIEs. As a result, Apollo determined that it is the primary beneficiary and therefore should consolidate the VIEs.The assets of these consolidated VIEs are not available to creditors of the Company. In addition, the investors in these consolidated VIEs have norecourse against the assets of the Company. The Company has elected the fair value option for financial instruments held by its consolidated VIEs, whichincludes investments in loans and corporate bonds, as well as debt obligations and contingent obligations held by such consolidated VIEs. Other assetsinclude amounts due from brokers and interest receivables. Other liabilities include payables for securities purchased, which represent open trades within theconsolidated VIEs and primarily relate to corporate loans that are expected to settle within the next 60 days. From time to time, Apollo makes investments incertain consolidated CLOs denominated in foreign currencies. As of December 31, 2014, the Company had investments in consolidated foreign currencydenominated CLOs totaling $47.4 million, which eliminates in consolidation.Pursuant to the terms in certain bank loan agreements, the consolidated VIEs have unfunded contingent liabilities of $67.6 million as ofDecember 31, 2014.Investment in Champ L.P.On September 30, 2014, the Company, through a wholly-owned subsidiary, acquired a 25.6% ownership interest in Champ L.P. following whicha wholly-owned subsidiary of Champ L.P. then acquired a 35% ownership interest in KBC Bank Deutschland AG ("KBC Bank"), the German subsidiary ofBelgian KBC Group NV (the "KBC Transaction"). Following the closing of the transaction, KBC Bank was renamed Bremer Kreditbank AG and the bank willoperate under the name BKB Bank. As of December 31, 2014, the Company had invested $16.9 million in Champ L.P. The Company, together with otheraffiliated investors, in aggregate, own 100% of Champ L.P.The Company, through its aforementioned wholly-owned subsidiary, is the general partner and primary beneficiary of Champ, L.P., which meetsthe definition of a VIE. Accordingly, the Company has consolidated Champ, L.P. in accordance with the policy described in note 2. The Company'sinvestment in Champ, L.P. is eliminated in consolidation.Net Gains (Losses) from Investment Activities of Consolidated Variable Interest EntitiesThe following table presents net gains (losses) from investment activities of the consolidated VIEs for the years ended December 31, 2014, 2013and 2012, respectively: For the Year Ended December 31, 2014 2013 2012Net unrealized gains (losses) gains from investment activities$(317,591) $(33,275) $169,087Net realized gains from investment activities79,057 87,472 76,965Net gains (losses) from investment activities(238,534) 54,197 246,052Net unrealized gains (losses) from debt809 (232,509) (497,704)Net realized gains from debt101,745 137,098 —Net gains (losses) from debt102,554 (95,411) (497,704)Interest and other income666,486 674,324 581,610Interest and other expenses(507,942) (433,368) (401,662)Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities$22,564 $199,742 $(71,704)- 175- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Senior Secured Notes and Subordinated Notes—Included within debt are amounts due to third-party institutions by the consolidated VIEs. Thefollowing table summarizes the principal provisions of the debt of the consolidated VIEs as of December 31, 2014 and December 31, 2013: As of December 31, 2014 As of December 31, 2013 PrincipalOutstanding WeightedAverageInterestRate WeightedAverageRemainingMaturity inYears PrincipalOutstanding WeightedAverageInterestRate WeightedAverageRemainingMaturity inYearsSenior Secured Notes(2)(3)$13,459,387 1.60% 7.8 $11,877,744 1.31% 7.3Subordinated Notes(2)(3)1,183,834 N/A(1) 9.0 963,099 N/A(1) 8.1Total$14,643,221 $12,840,843 (1)The subordinated notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the VIEs.(2)The fair value of Senior Secured Notes and Subordinated Notes as of December 31, 2014 and December 31, 2013 was $14,123.1 million and $12,424.0 million,respectively.(3)The debt at fair value of the consolidated VIEs is collateralized by assets of the consolidated VIEs and assets of one vehicle may not be used to satisfy the liabilities ofanother vehicle. As of December 31, 2014 and December 31, 2013, the fair value of the consolidated VIEs' assets was $17,070.8 million and $15,502.3 million,respectively. This collateral consisted of cash and cash equivalents, investments, at fair value, and other assets.The consolidated VIEs’ debt obligations contain various customary loan covenants as described above. As of December 31, 2014, the Companywas not aware of any instances of non-compliance with any of these covenants.As of December 31, 2014, the table below presents the contractual maturities for debt of the consolidated VIEs: 2015 2016 2017 2018 2019 Thereafter TotalSenior Secured Notes$— $2,175,000 $— $— $200,272 $11,084,115 $13,459,387Subordinated Notes— — — — 23,250 1,160,584 1,183,834Total Obligations as of December 31,2014$— $2,175,000 $— $— $223,522 $12,244,699 $14,643,221- 176- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Variable Interest Entities Which are Not ConsolidatedThe Company holds variable interests in certain VIEs which are not consolidated, as it has been determined that Apollo is not the primarybeneficiary.The following tables present the carrying amounts of the assets and liabilities of the VIEs for which Apollo has concluded that it holds asignificant variable interest, but that it is not the primary beneficiary as of December 31, 2014 and December 31, 2013. In addition, the tables present themaximum exposure to losses relating to those VIEs. As of December 31, 2014 Total Assets Total Liabilities Apollo Exposure Total$11,676,038(1) $(729,515)(2) $30,752(3) (1)Consists of $794.5 million in cash, $10,456.0 million in investments and $425.6 million in receivables.(2)Represents $362.0 million in debt and other payables, $359.4 million in securities sold, not purchased, and $8.2 million in capital withdrawals payable.(3)Represents Apollo’s direct equity method investment in those entities in which Apollo holds a significant variable interest. Additionally, cumulative carried interestincome is subject to reversal in the event of future losses. The maximum amount of future reversal of carried interest income from all of Apollo's funds, including thoseentities in which Apollo holds a significant variable interest, is $2,892.8 million as of December 31, 2014 as discussed in note 18. As of December 31, 2013 Total Assets Total Liabilities Apollo Exposure Total$12,866,498(1) $(1,311,279)(2) $34,665(3) (1)Consists of $354.7 million in cash, $12,034.5 million in investments and $477.3 million in receivables.(2)Represents $1,161.5 million in debt and other payables, $106.5 million in securities sold, not purchased, and $43.2 million in capital withdrawals payable.(3)Represents Apollo’s direct equity method investment in those entities in which Apollo holds a significant variable interest. Additionally, cumulative carried interestincome is subject to reversal in the event of future losses. The maximum amount of future reversal of carried interest income from all of Apollo's funds, including thoseentities in which Apollo holds a significant variable interest, was $4,858.0 million as of December 31, 2013.- 177- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)6. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTSThe following tables summarize the valuation of the Company’s financial assets and liabilities by the fair value hierarchy as of December 31,2014 and December 31, 2013, respectively: As of December 31, 2014 Level I(6) Level II(6) Level III TotalAssets Investment in AAA Investments(1)$— $— $2,144,118 $2,144,118Investments held by Apollo Senior Loan Fund(1)— 25,537 4,359 29,896Investments in Other(1)— — 600 600Investment in Athene Holding(2)— — 324,514 324,514AAA/Athene Receivable(2)— — 61,292 61,292Investments of VIEs, at fair value(4)176 13,135,564 2,522,913 15,658,653Total Assets$176 $13,161,101 $5,057,796 $18,219,073 Liabilities Liabilities of VIEs, at fair value(4)(5)$— $1,793,353 $12,343,021 $14,136,374Contingent Consideration Obligations(3)— — 96,126 96,126Total Liabilities$— $1,793,353 $12,439,147 $14,232,500 As of December 31, 2013 Level I(6) Level II(6) Level III TotalAssets Investment in AAA Investments(1)$— $— $1,942,051 $1,942,051Investments held by Apollo Senior Loan Fund(1)— 28,711 892 29,603Investments in Other(1)— — 40,373 40,373Athene and AAA Services Derivatives(2)— — 130,709 130,709Investments of VIEs, at fair value(4)3,455 12,203,370 1,919,537 14,126,362Total Assets$3,455 $12,232,081 $4,033,562 $16,269,098 Liabilities Liabilities of VIEs, at fair value(4)$— $2,429,815 $9,994,147 $12,423,962Contingent Consideration Obligations(3)— — 135,511 135,511Total Liabilities$— $2,429,815 $10,129,658 $12,559,473(1)See note 4 for further disclosure regarding the investment in AAA Investments, investments held by Apollo Senior Loan Fund, and investments in Other.(2)See note 17 for further disclosure regarding the Athene Services Derivative, the AAA Services Derivative, the investment in Athene Holding and the AAA/AtheneReceivable.(3)See note 18 for further disclosure regarding contingent consideration obligations.(4)See note 5 for further disclosure regarding VIEs.(5)As of December 31, 2014, liabilities of VIEs, at fair value includes debt and other liabilities of $14,123.1 million and $13.3 million, respectively. Other liabilities includecontingent obligations classified as Level III.(6)All Level I and Level II investments and liabilities were valued using third party pricing.- 178- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)There were no transfers of financial assets into Level I for the year ended December 31, 2014 and 2013. The following table summarizes the fairvalue transfers of financial assets between Level I, Level II and Level III for positions that existed as of the years ended December 31, 2014 and 2013,respectively: For the Year Ended December 31, 2014 2013Transfers from Level I into Level II$4,084 $—Transfers from Level III into Level II(1)1,047,951 1,253,090Transfers from Level II into Level III(1)1,415,282 978,194(1)Transfers between Level I, II and III were a result of subjecting the broker quotes on these investments to various criteria which include the number and quality of brokerquotes, the standard deviation of obtained broker quotes and the percentage deviation from independent pricing services.There were no transfers of financial liabilities into or out of Level I for year ended December 31, 2014. In addition, there were no transfers offinancial liabilities between Level I and Level II for the year ended December 31, 2013. The following table summarizes the fair value transfers of financialliabilities between Level II and Level III for positions that existed as of the years ended December 31, 2014 and 2013, respectively: For the Year Ended December 31, 2014 2013Transfers from Level III into Level II(1)$380,660 $2,469,143Transfers from Level II into Level III(1)500,837 —(1)Transfers between Level II and III were a result of subjecting the broker quotes on these financial liabilities to various criteria which include the number and quality of brokerquotes, the standard deviation of obtained broker quotes and the percentage deviation from independent pricing services.- 179- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables summarize the changes in fair value in financial assets, which are measured at fair value and characterized as Level IIIinvestments, for the years ended December 31, 2014 and 2013, respectively: For the Year Ended December 31, 2014 Investment inAAAInvestments Investmentsheld by ApolloSenior LoanFund Investments inOther Athene andAAAServicesDerivatives Investmentin AtheneHolding AAA/AtheneReceivable Investments ofConsolidatedVIEs TotalBalance, Beginning of Period$1,942,051 $892 $40,373 $130,709 $— $— $1,919,537 $4,033,562Elimination of investments attributable toconsolidation of VIEs— — — — — — 19,187 19,187Fees— — — 60,422 — 178,332 — 238,754Purchases— 4,707 1,844 — 2,080 — 1,036,810 1,045,441Sale of investments/Distributions(2,500) (1,543) (51,052) — — — (825,429) (880,524)Net realized gains (losses)— 10 (12,871) 24,242 — — 20,972 32,353Changes in net unrealized gains (losses)204,567 (66) 22,306 (10,203) 224 — (9,302) 207,526Cumulative translation adjustment— — — — — — (5,834) (5,834)Transfer into Level III— 1,594 — — — — 1,413,688 1,415,282Transfer out of Level III— (1,235) — — — — (1,046,716) (1,047,951)Settlement of derivatives/receivable(1)— — — (205,170) 322,210 (117,040) — —Balance, End of Period$2,144,118 $4,359 $600 $— $324,514 $61,292 $2,522,913 $5,057,796Change in net unrealized gains (losses)included in Net Gains (losses) fromInvestment Activities related to investmentsstill held at reporting date$204,567 $(66) $580 $— $224 $— $— $205,305Change in net unrealized gains included inNet Gains (Losses) from InvestmentActivities of Consolidated VIEs related toinvestments still held at reporting date— — — — — — (52,485) (52,485)(1)See note 17 for further disclosure regarding the settlement of the Athene Services Derivative, the AAA Services Derivative and the investment in Athene Holding. For the Year Ended December 31, 2013 Investment in AAAInvestments Investments held byApollo Senior LoanFund Investments inOther Athene and AAAServicesDerivatives Investments ofConsolidatedVIEs TotalBalance, Beginning of Period$1,666,448 $590 $50,311 $2,126 $1,643,465 $3,362,940Elimination of investments attributable toconsolidation of VIEs— — — — (35,410) (35,410)Fees— — — 118,380 — 118,380Purchases— 520 4,901 — 1,326,095 1,331,516Sale of investments/Distributions(66,796) (6) (2,541) — (724,666) (794,009)Net realized losses— — — — (28,717) (28,717)Changes in net unrealized gains (losses)342,399 15 (12,298) 10,203 13,439 353,758Transfer into Level III— 831 — — 977,363 978,194Transfer out of Level III— (1,058) — — (1,252,032) (1,253,090)Balance, End of Period$1,942,051 $892 $40,373 $130,709 $1,919,537 $4,033,562Change in net unrealized gains (losses)included in Net Gains (Losses) fromInvestment Activities related to investments stillheld at reporting date$342,399 $15 $(12,298) $— $— $330,116Change in net unrealized losses included in NetGains from Investment Activities ofConsolidated VIEs related to investments stillheld at reporting date— — — — 9,083 9,083Change in net unrealized gains included inOther Income, net related to assets still held atreporting date— — — 10,203 — 10,203- 180- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables summarize the changes in fair value in financial liabilities, which are measured at fair value and characterized as Level IIIliabilities: For the Year Ended December 31, 2014 2013 Liabilities ofConsolidated VIEs ContingentConsiderationObligations Total Debt of ConsolidatedVIEs ContingentConsiderationObligations TotalBalance, Beginning of Period$9,994,147 $135,511 $10,129,658 $11,834,955 $142,219 $11,977,174Elimination of debt attributable to consolidation of VIEs13,493 — 13,493 3,950 — 3,950Additions3,965,725 — 3,965,725 2,747,033 — 2,747,033Payments/Extinguishment(1)(1,551,533) (50,666) (1,602,199) (2,218,060) (67,534) (2,285,594)Net realized gains(101,745) — (101,745) (137,098) — (137,098)Changes in net unrealized (gains) losses(25,685) 11,281 (14,404) 232,510 60,826 293,336Cumulative translation adjustment(71,558) — (71,558) — — —Transfers into Level III500,837 — 500,837 — — —Transfers out of Level III(380,660) — (380,660) (2,469,143) — (2,469,143)Balance, End of Period$12,343,021 $96,126 $12,439,147 $9,994,147 $135,511 $10,129,658Change in net unrealized gains losses included in Net (Losses)Gains from Investment Activities of consolidated VIEs relatedto liabilities still held at reporting date$(113,874) $— $(113,874) $(18,578) $— $(18,578)Change in net unrealized losses included in Profit SharingExpense related to liabilities still held at reporting date— 11,281 11,281 — 47,523 47,523(1)For the year ended December 31, 2014, includes $13.4 million extinguishment of contingent consideration obligations, which is recorded in other income on the consolidatedstatements of operations.- 181- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables summarize the quantitative inputs and assumptions used for financial assets and liabilities categorized in Level III of thefair value hierarchy as of December 31, 2014 and December 31, 2013: As of December 31, 2014 Fair Value Valuation Techniques Unobservable Inputs Ranges WeightedAverageFinancial Assets Investments of Consolidated Apollo Funds: AAA Investments(1)$2,144,118 Net Asset Value N/A N/A N/AApollo Senior Loan Fund4,359 Third Party Pricing(2) N/A N/A N/AInvestments in Other600 Other N/A N/A N/AInvestment in Athene Holding324,514 Discounted Cash Flow Discount Rate 15.0% 15.0%AAA/Athene Receivable61,292 Discounted Cash Flow Discount Rate 15.0% 15.0%Investments of Consolidated VIEs: Bank Debt Term Loans1,340,296 Third Party Pricing(2) N/A N/A N/A87,314 Discounted Cash Flow Discount Rate 7.1% - 14.0% 8.4%Corporate Loans/Bonds/CLO Notes(5)1,009,873 Third Party Pricing(2) N/A N/A N/AEquity Securities930 Third Party Pricing(2) N/A N/A N/A4,610 Market ComparableCompanies ComparableMultiples 5.8x 5.8x58,923 Transaction Purchase Price N/A N/A20,967 Transaction Implied Multiple 5.2x 5.2xTotal Investments of Consolidated VIEs2,522,913 Total Financial Assets$5,057,796 Financial Liabilities Liabilities of Consolidated VIEs: Subordinated Notes$908,831 Discounted Cash Flow Discount Rate 10.0% - 12.5% 11.5% Default Rate 1.0% - 2.0% 1.7% Recovery Rate 75.0% 75.0%Subordinated Notes106,090 Other N/A N/A N/ASenior Secured Notes9,283,534 Third Party Pricing(2) N/A N/A N/ASenior Secured and Subordinated Notes2,031,292 Discounted Cash Flow Discount Rate 1.6% - 1.8% 1.7%Default Rate 2.0% 2.0%Recovery Rate 15.0% - 75.0% 69.0%Contingent Obligation13,274 Other N/A N/A N/ATotal Liabilities of Consolidated VIEs12,343,021 Contingent Consideration Obligation96,126 Discounted Cash Flow Discount Rate 11.0% - 18.5% 15.7%Total Financial Liabilities$12,439,147 (1)The following table summarizes a look-through of the Company’s Level III investments by valuation methodology of the underlying securities held by AAA Investments: As of December 31, 2014 % ofInvestmentof AAAInvestmentsApproximate values based on net asset value of the underlying funds, which are based onthe funds' underlying investments that are valued using the following: Discounted cash flow$2,244,192(3) 100%Total Investments2,244,192 100%Other net liabilities(4)(100,074) Total Net Assets$2,144,118 (2)These securities are valued primarily using broker quotes.(3)Represents the investment by AAA Investments in Athene, which is valued using the embedded value method which was based on the present value of the future expectedregulatory distributable income generated by the net assets of Athene plus the excess capital (i.e., the capital in excess of what is required to be held against Athene’s liabilities).The unobservable inputs and respective ranges used are the same as noted- 182- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)for the Investment in Athene Holding and the AAA/Athene Receivable in the table above. See note 17 for discussion of the investment in Athene Holding.(4)Balances include other assets, liabilities and general partner interests of AAA Investments. Balance at December 31, 2014 is primarily comprised of $26.7 million in assets,less $4.0 million and $122.8 million in liabilities and net assets allocated to the general partner, respectively. Carrying values approximate fair value for other assets andliabilities.(5)Balance includes investments in an affiliated fund, which primarily invests in corporate loans, bonds, and CLO notes. Balance at December 31, 2014 includes investments inan affiliated fund in the amount of $865.9 million, which were valued based on net asset value ("NAV"). As of December 31, 2013 Fair Value Valuation Techniques UnobservableInputs Ranges WeightedAverageFinancial Assets Investments of Consolidated Apollo Funds: AAA Investments(1)$1,942,051 Net Asset Value N/A N/A N/AApollo Senior Loan Fund892 Third Party Pricing(2) N/A N/A N/AInvestments in HFA and Other40,373 Third Party Pricing(2) N/A N/A Athene and AAA Services Derivatives130,709 Discounted Cash Flow Discount Rate 15.0% 15.0% Implied Multiple 1.1x 1.1xInvestments of Consolidated VIEs: Bank Debt Term Loans18,467 Other N/A N/A N/AEquity Securities7,938 Market ComparableCompanies ComparableMultiples 6.0x - 9.5x 7.9xCorporate Loans/Bonds/CLO Notes(5)1,893,132 Third Party Pricing(2) N/A N/A N/ATotal Investments of Consolidated VIEs1,919,537 Total Financial Assets$4,033,562 Financial Liabilities Liabilities of Consolidated VIEs: Subordinated Notes$835,149 Discounted Cash Flow Discount Rate 10.0% - 12.0% 10.8% Default Rate 1.0% - 1.5% 1.3% Recovery Rate 75.0% 75.0%Senior Secured Notes2,132,576 Discounted Cash Flow Discount Rate 1.9% - 2.2% 2.0% Default Rate 2.0% 2.0% Recovery Rate 30.0% - 70.0% 65.2%Senior Secured and Subordinated Notes7,026,422 Third Party Pricing(2) N/A N/A N/ATotal Liabilities of Consolidated VIEs9,994,147 Contingent Consideration Obligation135,511 Discounted Cash Flow Discount Rate 10.5% - 18.5% 15.3%Total Financial Liabilities$10,129,658 (1)The following table summarizes a look-through of the Company’s Level III investments by valuation methodology of the underlying securities held by AAA Investments: As of December 31, 2013 % ofInvestmentof AAAInvestmentsApproximate values based on net asset value of the underlying funds, which are based onthe funds underlying investments that are valued using the following: Discounted Cash Flow$1,950,010(3) 100%Total Investments1,950,010 100%Other net liabilities(4)(7,959) Total Net Assets$1,942,051 - 183- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)(2)These securities are valued primarily using broker quotes.(3)Represents the investment by AAA Investments in Athene, which is valued using the embedded value method which was based on the present value of the future expectedregulatory distributable income generated by the net assets of Athene plus the excess capital (i.e., the capital in excess of what is required to be held against Athene’s liabilities).The unobservable inputs and respective ranges used in the discounted cash flow model are the same as noted for the Athene and AAA Services Derivatives in the table above.(4)Balances include other assets, liabilities and general partner interests of AAA Investments. Balance at December 31, 2013 is primarily comprised of $110.8 million in assets,less $16.7 million and $102.1 million in liabilities and net assets allocated to the general partner, respectively. Carrying values approximate fair value for other assets andliabilities (except for the note receivable from an affiliate) and, accordingly, extended valuation procedures are not required. The note receivable from an affiliate is a Level IIIasset valued using a discounted cash flow model. The unobservable inputs and respective ranges used in the discounted cash flow model are the same as noted for the Atheneand AAA Services Derivatives in the table above.(5)Balance includes investments in an affiliated fund, which primarily invests in corporate loans, bonds, and CLO notes. Balance at December 31, 2013 includes investments inan affiliated fund in the amount of $645.5 million, which were valued based on NAV.Investment in Athene Holding and AAA/Athene ReceivableAs of December 31, 2014, the significant unobservable input used in the fair value measurement of the investment in Athene Holding is thediscount rate applied in the valuation model. This input in isolation can cause significant increases or decreases in fair value. Specifically, when a discountedcash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projectedcash flows. An increase in the discount rate can significantly lower the fair value of an investment; conversely a decrease in the discount rate cansignificantly increase the fair value of an investment. The discount rate is determined based on the expected required rate of return based on the risk profile ofsimilar cash flows.Consolidated VIEsInvestmentsThe significant unobservable inputs used in the fair value measurement of the bank debt term loans and stocks include the discount rate appliedand the multiples applied in the valuation models. These unobservable inputs in isolation can cause significant increases or decreases in fair value.Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate appliedto present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of an investment; conversely decreases in thediscount rate can significantly increase the fair value of an investment. The discount rate is determined based on the market rates an investor would expect fora similar investment with similar risks. When a comparable multiple model is used to determine fair value, the comparable multiples are generally multipliedby the underlying companies' earnings before interest, taxes, depreciation and amortization ("EBITDA") to establish the total enterprise value of thecompany. The comparable multiple is determined based on the implied trading multiple of public industry peers.LiabilitiesThe significant unobservable inputs used in the fair value measurement of the subordinated and senior secured notes include the discount rateapplied in the valuation models, default and recovery rates applied in the valuation models. These inputs in isolation can cause significant increases ordecreases in fair value. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model isthe discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of subordinated andsenior secured notes; conversely a decrease in the discount rate can significantly increase the fair value of subordinated and senior secured notes. Thediscount rate is determined based on the market rates an investor would expect for similar subordinated and senior secured notes with similar risks.Contingent Consideration ObligationsThe significant unobservable input used in the fair value measurement of the contingent consideration obligations is the discount rate applied inthe valuation models. This input in isolation can cause significant increases or decreases in fair value. Specifically, when a discounted cash flow model isused to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increasesin the discount rate can significantly lower the fair value of the contingent consideration obligations; conversely a decrease in the discount rate cansignificantly increase the fair value of the contingent consideration obligations. The discount rate was based on the weighted average cost of capital for theCompany. See note 18 for further discussion of the contingent consideration obligations.- 184- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)7. CARRIED INTEREST RECEIVABLECarried interest receivable from private equity, credit and real estate funds consisted of the following: As of December 31, 2014 2013Private Equity$672,119 $1,867,771Credit226,430 408,342Real Estate13,117 10,962Total carried interest receivable$911,666 $2,287,075 The table below provides a roll-forward of the carried interest receivable balance for the years ended December 31, 2014 and 2013: Private Equity Credit Real Estate TotalCarried interest receivable, January 1, 2013$1,413,306 $454,155 $10,795 $1,878,256Change in fair value of funds (1)2,516,990 324,859 967 2,842,816Fund cash distributions to the Company(2,062,525) (370,672) (800) (2,433,997)Carried interest receivable, December 31, 2013$1,867,771 $408,342 $10,962 $2,287,075Change in fair value of funds(1)231,983 159,350 6,104 397,437Fund cash distributions to the Company(1,427,635) (341,262) (3,949) (1,772,846)Carried interest receivable, December 31, 2014$672,119 $226,430 $13,117 $911,666(1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest income due tothe general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate with respect to two of our credit funds. Included in change infair value of funds for the year ended December 31, 2013 was a reversal of $19.3 million and $0.3 million of the entire general partner obligation to return previouslydistributed carried interest income with respect to SOMA and APC, respectively. The general partner obligation is recognized based upon a hypothetical liquidation of thefund’s net assets as of the reporting date. The actual determination and any required payment of any such general partner obligation would not take place until the finaldisposition of a fund’s investments based on the contractual termination of the fund or as otherwise set forth in the respective limited partnership agreement of the fund.The timing of the payment of carried interest due to the general partner or investment manager varies depending on the terms of the applicablefund agreements. Generally, carried interest with respect to the private equity funds and certain credit and real estate funds is payable and is distributed tothe fund's general partner upon realization of an investment if the fund's cumulative returns are in excess of the preferred return. For most credit funds, carriedinterest is payable based on realizations after the end of the relevant fund's fiscal year or fiscal quarter, subject to high watermark provisions.8. PROFIT SHARING PAYABLEProfit sharing payable from private equity, credit and real estate funds consisted of the following: As of December 31, 2014 2013Private Equity$240,595 $751,192Credit186,307 234,504Real Estate7,950 6,544Total profit sharing payable$434,852 $992,240- 185- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The table below provides a roll-forward of the profit sharing payable balance for the years ended December 31, 2014 and 2013: Private Equity Credit Real Estate TotalProfit sharing payable, January 1, 2013$596,427 $254,629 $6,668 $857,724Profit sharing expense (1)1,030,404 142,728 123 1,173,255Payments/other(875,639) (162,853) (247) (1,038,739)Profit sharing payable, December 31, 2013$751,192 $234,504 $6,544 $992,240Profit sharing expense (1)178,373 95,070 2,747 276,190Payments/other(688,970) (143,267) (1,341) (833,578)Profit sharing payable, December 31, 2014$240,595 $186,307 $7,950 $434,852(1)Includes both of the following: (i) changes in amounts payable to employees and former employees entitled to a share of carried interest income in Apollo's funds and(ii) changes to the fair value of the contingent consideration obligations (see notes 6 and 18) recognized in connection with certain Apollo acquisitions.9. FIXED ASSETSFixed assets consisted of the following: Useful Life in Years As of December 31, 2014 2013Leasehold improvements8-16 $51,745 $50,478Furniture, fixtures and other equipment4-10 17,798 16,750Computer software and hardware2-4 34,560 31,200OtherN/A 514 509Total fixed assets 104,617 98,937Less - accumulated depreciation and amortization (68,711) (58,686)Fixed Assets, net $35,906 $40,251In December 2013, the Company committed to a plan to sell its ownership interests in certain aircraft. The sale of the ownership interest in oneaircraft was completed in December 2013 while the sale of the remaining ownership interest was completed in the first quarter of 2014. Accordingly, inDecember 2013, the Company recorded the completed sale and reclassified the remaining aircraft interests committed for sale to assets held for sale which isincluded in other assets in the consolidated statement of financial condition. The aircraft reclassified to assets held for sale were recorded at the lower of costor fair value less costs to sell. As a result of both the completed sale and reclassification, the Company recognized a net loss of approximately $1.0 millionwhich is included in other income, net in the consolidated statements of operations for the year ended December 31, 2013.Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $10.2 million, $11.0 million and $10.2 million, respectively.- 186- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)10. OTHER ASSETSOther assets consisted of the following: As of December 31, 2014 2013Prepaid expenses$32,873 $9,867Tax receivables23,286 6,549Interest Receivable11,059 6,420Debt issuance costs, net8,575 6,407Receivable from broker3,229 1,436Rent deposits1,430 1,224Assets held for sale— 6,413Underwriting fee receivable— 2,090Other3,932 3,764Total Other Assets$84,384 $44,17011. OTHER LIABILITIESOther liabilities consisted of the following: As of December 31, 2014 2013Deferred tax liabilities$— $37,272Deferred rent12,202 14,701Deferred compensation24,939 4,285Unsettled trades and redemption payable4,090 2,516Other5,170 4,500Total Other Liabilities$46,401 $63,274- 187- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)12. OTHER INCOME, NETOther income, net consisted of the following: For the Year EndedDecember 31, 2014 2013 2012Tax receivable agreement adjustment$32,182 $13,038 $3,937Gain on derivatives14,039 10,203 —Gain (Loss) on extinguishment of liability/debt13,395 (2,741) —Gain on acquisitions— — 1,951,897Rental income5,566 5,334 4,387Foreign exchange gain (loss)(7,131) 4,142 (790)Loss on assets held for sale— (1,087) —Other2,541 11,225 5,248Total Other Income, Net$60,592 $40,114 $1,964,679 13. INCOME TAXESThe Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal, state and local income taxes. APOCorp., a wholly-owned subsidiary of the Company, is subject to U.S. federal, state and local corporate income taxes. Certain other subsidiaries of theCompany are subject to New York City Unincorporated Business Tax (“NYC UBT”) attributable to the Company’s operations apportioned to New York City.In addition, certain non-U.S. subsidiaries of the Company are subject to income taxes in their local jurisdictions.The Company’s provision for income taxes totaled $147.2 million, $107.6 million and $65.4 million for the years ended December 31, 2014,2013 and 2012, respectively. The Company’s effective tax rate was approximately 16.8%, 4.3%, and 2.1% for the years ended December 31, 2014, 2013 and2012, respectively.- 188- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The provision for income taxes is presented in the following table: For the Year EndedDecember 31, 2014 2013 2012Current: Federal income tax$53,426 $30,422 $—Foreign income tax6,080 4,733 3,411State and local income tax7,369 9,728 7,722Subtotal66,875 44,883 11,133Deferred: Federal income tax28,702 40,955 55,114Foreign income tax(137) 130 (277)State and local income tax51,805 21,601 (560)Subtotal80,370 62,686 54,277Total Income Tax Provision$147,245 $107,569 $65,410The following table reconciles the provision for taxes to the U.S. Federal statutory tax rate: For the Year EndedDecember 31, 2014 2013 2012 U.S. Statutory Tax Rate35.0 % 35.0 % 35.0 %Income Passed Through to Non-Controlling Interests(23.4) (24.1) (30.9)Income passed through to Class A shareholders0.1 (7.9) (4.4)Equity Based Compensation - AOG Units— 0.2 1.8Foreign income tax0.4 0.1 0.1State and Local Income Taxes (net of Federal Benefit)4.7 1.1 0.2Amortization & Other Accrual Adjustments— (0.1) 0.3Effective Income Tax Rate16.8 % 4.3 % 2.1 %Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount inthe consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years.- 189- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The Company’s deferred tax assets and liabilities on the consolidated statements of financial condition consist of the following: As ofDecember 31, 2014 2013 Deferred Tax Assets: Depreciation and amortization$543,288 $553,251Revenue recognition40,250 51,790Net operating loss carryforwards— 776Equity-based compensation - RSUs and AAA RDUs35,678 42,784Foreign tax credit3,457 7,528Other1,437 4,070Total Deferred Tax Assets624,110 660,199Deferred Tax Liabilities: Unrealized gains from investments13,053 36,939Other4,340 333Total Deferred Tax Liabilities$17,393 $37,272As of December 31, 2014, the Company had no remaining net operating loss carryforwards. In addition, the Company’s foreign tax creditcarryforwards will begin to expire in 2021.The Company considered its historical and current year earnings, current utilization of existing deferred tax assets and deferred tax liabilities, the15 year amortization periods of the tax basis of its intangible assets and short and long term business forecasts in evaluating whether it should establish avaluation allowance. Based on this positive evidence, the Company concluded it is more likely than not, that the deferred tax assets will be realized and thatno valuation allowance was needed at December 31, 2014.Under U.S. GAAP, a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will besustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Based uponthe Company’s review of its federal, state, local and foreign income tax returns and tax filing positions, the Company determined that no unrecognized taxbenefits for uncertain tax positions were required to be recorded. In addition, the Company does not believe that it has any tax positions for which it isreasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months.The Company's primary jurisdictions in which it operates are the United States, New York State, New York City, California and the UnitedKingdom. In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax authorities. With a fewexceptions, as of December 31, 2014, the Company's U.S. federal, state, local and foreign income tax returns for the years 2011 through 2014 are open underthe general statute of limitations provisions and therefore subject to examination. Currently, the Internal Revenue Service is examining the tax returns ofApollo Global Management, LLC and various subsidiaries for tax years 2010 to 2012. The City of New York is examining certain subsidiaries' tax returns fortax years 2011 and 2012, and the City of Los Angeles is examining certain subsidiaries' tax returns for tax years 2011 to 2013.The Company has recorded a deferred tax asset for the future amortization of tax basis intangibles as a result of the 2007 Reorganization. TheCompany recognized an additional step-up in tax basis of intangibles as a result of subsequent exchanges of AOG Units for Class A shares in 2013 and 2014.As a result of these exchanges of AOG Units for Class A shares, there were increases in the deferred tax asset established from the 2007 Reorganization whichwas recorded in deferred tax assets in the consolidated statements of financial condition for the expected tax benefit associated with these increases. A relatedtax receivable agreement liability was recorded in due to affiliates in the consolidated statements of financial condition for the expected payments under thetax receivable agreement entered into by and among APO Corp., the Managing Partners, the Contributing Partners, and other parties thereto (as amended, the"tax receivable agreement") (see note 17). The increases in the deferred tax asset less the related liability resulted in increases to additional paid-in capitalwhich was recorded in the consolidated statements of changes in- 190- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)shareholders’ equity for the years ended December 31, 2014 and 2013. The amortization period for these tax basis intangibles is 15 years. Accordingly, therelated deferred tax assets will reverse over the same period.The tables below present the transactions during the years ended December 31, 2013 and 2014 related to the exchange of AOG Units for Class Ashares and the resulting impact to the deferred tax asset, tax receivable agreement liability and additional paid-in capital. For the Year Ended December 31, 2013Date of Exchange of AOG Unitsfor Class A shares Increase in DeferredTax Asset Increase in TaxReceivableAgreement Liability Increase to AdditionalPaid In CapitalFor the Year Ended December 31, 2013 $149,327 $126,928 $22,399 For the Year Ended December 31, 2014Date of Exchange of AOG Unitsfor Class A shares Increase in DeferredTax Asset Increase in TaxReceivableAgreement Liability Increase to AdditionalPaid In CapitalFor the Year Ended December 31, 2014 $58,696 $47,878 $10,818During the years ended December 31, 2014 and 2013, the Company adjusted the estimated rate of tax it expects to pay in the future and therebyreduced its net deferred tax assets, and increased its income tax provision, by $36.2 million and $16.9 million, respectively (see note 17 for details regardingthe impact on the tax receivable agreement liability).14. DEBTDebt consisted of the following: As of December 31, 2014 As of December 31, 2013 OutstandingBalance AnnualizedWeightedAverageInterest Rate OutstandingBalance AnnualizedWeightedAverageInterest Rate 2013 AMH Credit Facilities - Term Facility$500,000 1.36% $750,000 1.37% 2024 Senior Notes(1)499,058 4.00% N/A N/A 2014 AMI Term Facility I(2)16,204 2.34% N/A N/A 2014 AMI Term Facility II(3)18,752 1.93% N/A N/A Total Debt$1,034,014 $750,000 (1)Includes impact of any amortization of note discount and interest rate hedge.(2)On July 3, 2014, Apollo Management International LLP (“AMI”), a subsidiary of the Company, entered into a €13.4 million five year credit agreement (the “2014AMI Term Facility I”). Proceeds from the borrowing were used to fund the Company's investment in a European CLO it manages.(3)On December 9, 2014, AMI entered into a €15.5 million five year credit agreement (the "2014 AMI Term Facility II"). Proceeds from the borrowing were used to fundthe Company's investment in a European CLO it manages.2007 AMH Credit Agreement—On April 20, 2007, Apollo Management Holdings, L.P. (“AMH”), a subsidiary of the Company which is aDelaware limited partnership, entered into a $1.0 billion seven year credit agreement (the “2007 AMH Credit Agreement”). Interest payable under the 2007AMH Credit Agreement was based on Eurodollar LIBOR or Alternate Base Rate- 191- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)("ABR") as determined by the borrower. On December 20, 2010, Apollo amended the 2007 AMH Credit Agreement to extend the maturity date of $995.0million (including the $90.9 million of fair value debt repurchased by the Company) of the term loan from April 20, 2014 to January 3, 2017 and modifiedcertain other terms of the 2007 AMH Credit Agreement. On December 20, 2010, an affiliate of AMH that was a guarantor under the 2007 AMH CreditAgreement repurchased approximately $180.8 million of the term loan in connection with the extension of the maturity date of such loan and thus the 2007AMH Credit Agreement (excluding the portions held by AMH affiliates) had a remaining balance of $728.3 million. Interest expense incurred by theCompany related to the 2007 AMH Credit Agreement was $28.3 million and $36.0 million for the years ended December 31, 2013 and 2012, respectively.Amortization expense related to the 2007 AMH Credit Agreement was $0.7 million and $0.5 million for the years ended December 31, 2013 and 2012,respectively.The outstanding loans under the 2007 AMH Credit Agreement were refinanced on December 18, 2013 with the net proceeds from the 2013 AMHCredit Facilities (as defined below). Additionally, the net proceeds were used to pay fees and expenses associated with the 2013 AMH Credit Facilities. The2007 AMH Credit Agreement and all related loan documents and security with respect thereto were terminated in connection with the refinancing.2013 AMH Credit Facilities—On December 18, 2013, AMH and its subsidiaries and certain other subsidiaries of the Company (collectively, the"Borrowers") entered into new credit facilities (the "2013 AMH Credit Facilities") with JPMorgan Chase Bank, N.A. The 2013 AMH Credit Facilities providefor (i) a term loan facility to AMH (the “Term Facility”) that includes $750 million of the term loan from third-party lenders and $271.7 million of the termloan held by a subsidiary of the Company and (ii) a $500 million revolving credit facility (the “Revolver Facility”), in each case, with a final maturity date ofJanuary 18, 2019.Interest on the borrowings is based on an adjusted LIBOR rate or alternate base rate, in each case plus an applicable margin, and undrawnrevolving commitments bear a commitment fee. Under the terms of the 2013 AMH Credit Facilities, the applicable margin ranges from 1.125% to 1.75% forLIBOR loans and 0.125% to 0.75% for alternate base rate loans, and the undrawn revolving commitment fee ranges from 0.125% to 0.25%, in each casedepending on the Company’s corporate rating assigned by Standard & Poor’s Ratings Group, Inc. The 2013 AMH Credit Facilities do not require anyscheduled amortization payments or other mandatory prepayments (except with respect to overadvances on the Revolver Facility) prior to the final maturitydate, and the Borrowers may prepay the loans and/or terminate or reduce the revolving commitments under the 2013 AMH Credit Facilities at any timewithout penalty. In connection with the issuance of the 2024 Senior Notes (as defined below), $250 million of the proceeds were used to repay a portion ofthe Term Facility outstanding with third party lenders at par. The interest rate on the $500 million Term Facility as of December 31, 2014 was 1.37% and thecommitment fee as of December 31, 2014 on the $500 million undrawn Revolver Facility was 0.125%. Interest expense incurred by the Company related tothe 2013 AMH Credit Facilities was $9.0 million and $0.4 million for the years ended December 31, 2014 and 2013, respectively.As of December 31, 2014 and December 31, 2013, $500 million and $750 million of the Term Facility was outstanding with third-party lenders,respectively, and there was approximately $271.7 million of the Term Facility that was held by a subsidiary of the Company. As of December 31, 2014 andDecember 31, 2013, the Revolver Facility was undrawn. The estimated fair value of the Company’s long-term debt obligation related to the 2013 AMHCredit Facilities is approximately $501.3 million based on obtained broker quotes as of December 31, 2014. The $500.0 million carrying value of debt that isrecorded on the consolidated statements of financial condition at December 31, 2014 is the amount for which the Company expects to settle the 2013 AMHCredit Facilities. The Company has determined that the long-term debt obligation related to the 2013 AMH Credit Facilities would be categorized as a LevelIII liability in the fair value hierarchy based on the Company's number of broker quotes obtained, the quality of the broker quotes, the standard deviations ofthe observed broker quotes and the corroboration of the broker quotes to independent pricing services.In accordance with U.S. GAAP, the Company determined that the refinancing of the outstanding loans under the 2007 AMH Credit Agreementresulted in a debt extinguishment. As a result, the Company recorded a loss on extinguishment of $2.7 million, of which $1.6 million related to previouslycapitalized costs incurred in relation to the 2007 AMH Credit Agreement and $1.1 million related to expenses incurred in relation to the 2013 AMH CreditFacilities, in other income, net in the consolidated statement of operations for the year ended December 31, 2013. In addition, the Company capitalized debtissuance costs of $6.6 million incurred in relation to the 2013 AMH Credit Facilities, which was recorded in other assets in the consolidated statements offinancial condition as of December 31, 2013 to be amortized over the life of the term loan and line of credit. In connection with the repayment of the TermFacility, $1.9 million of unamortized debt issuance costs were recognized by the Company as loss on extinguishment recorded in other income, net in theconsolidated statements of operations for the year ended December 31, 2014. Debt issuance cost amortization expense related to the 2013 AMH CreditFacilities was $1.0 million for the year ended December 31, 2014.- 192- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)As of December 31, 2014, the 2013 AMH Credit Facilities were guaranteed and collateralized by AMH and its subsidiaries, Apollo Management,L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., AAA Holdings, L.P., Apollo Principal Holdings I, L.P., Apollo PrincipalHoldings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI,L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX L.P., ST Holdings GP, LLC and ST ManagementHoldings, LLC. The 2013 AMH Credit Facilities contain affirmative and negative covenants which limit the ability of the Borrowers, the guarantors andcertain of their subsidiaries to, among other things, incur indebtedness and create liens. Additionally, the 2013 AMH Credit Facilities contain financialcovenants which require the Borrowers and their subsidiaries to maintain (1) at least $40 billion of Fee-Generating Assets Under Management and (2) amaximum total net leverage ratio of not more than 4.00 to 1.00 (subject to customary equity cure rights). The 2013 AMH Credit Facilities also containcustomary events of default, including events of default arising from non-payment, material misrepresentations, breaches of covenants, cross default tomaterial indebtedness, bankruptcy and changes in control of the Company.Borrowings under the Revolver Facility may be used for working capital and general corporate purposes, including, without limitation, permittedacquisitions. In addition, the Borrowers may incur incremental facilities in respect of the Revolver Facility and the Term Facility in an aggregate amount notto exceed $500 million plus additional amounts so long as the Borrowers are in compliance with a net leverage ratio not to exceed 3.75 to 1.00.2024 Senior Notes—On May 30, 2014, AMH issued $500 million in aggregate principal amount of its 4.000% Senior Notes due 2024 (the "2024Senior Notes"), at an issue price of 99.722% of par. Interest on the 2024 Senior Notes is payable semi-annually in arrears on May 30 and November 30 of eachyear. The 2024 Senior Notes will mature on May 30, 2024. The discount will be amortized into interest expense on the consolidated statements of operationsover the term of the 2024 Senior Notes. Interest expense incurred by the Company related to the 2024 Senior Notes was $11.7 million for the year endedDecember 31, 2014.The Company capitalized debt issuance costs of $5.5 million incurred in connection with the issuance of the 2024 Senior Notes, which wasrecorded in other assets in the consolidated statements of financial condition as of December 31, 2014 to be amortized over the term of the notes. Debtissuance cost amortization expense related to the issuance of the 2024 Senior Notes was $0.3 million for the year ended December 31, 2014.As of December 31, 2014, the 2024 Senior Notes were guaranteed by Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., ApolloPrincipal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo PrincipalHoldings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., AMH Holdings (Cayman), L.P. and any other entity that isrequired to become a guarantor of the notes under the terms of the indenture governing the 2024 Senior Notes (the "2024 Senior Notes Indenture"). The 2024Senior Notes Indenture includes covenants that restrict the ability of AMH and, as applicable, the guarantors to incur indebtedness secured by liens on votingstock or profit participating equity interests of their respective subsidiaries or merge, consolidate or sell, transfer or lease assets. The 2024 Senior NotesIndenture also provides for customary events of default.The estimated fair value of the Company's long-term debt obligation related to the 2024 Senior Notes is approximately $506.2 million based onobtained broker quotes as of December 31, 2014. The face amount of $500.0 million related to the 2024 Senior Notes is the amount the Company isobligated to settle the 2024 Senior Notes. The Company has determined that the long-term debt obligation related to the 2024 Senior Notes would becategorized as a Level II liability in the fair value hierarchy based on the number of broker quotes obtained, the quality of the broker quotes, the standarddeviations of the observed broker quotes and the corroboration of the broker quotes to independent pricing services.- 193- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)As of December 31, 2014, the table below presents the contractual maturities for the Company's debt arrangements: 2015 2016 2017 2018 2019 Thereafter Total2013 AMH Credit Facilities - Term Facility$— $— $— $— $500,000 $— $500,0002024 Senior Notes— — — — — 500,000 500,0002014 AMI Term Facility I— — — — 16,204 — 16,2042014 AMI Term Facility II— — — — 18,752 — 18,752Total Obligations as of December 31, 2014$— $— $— $— $534,956 $500,000 $1,034,95615. NET INCOME (LOSS) PER CLASS A SHAREU.S. GAAP requires use of the two-class method of computing earnings per share for all periods presented for each class of common stock andparticipating security as if all earnings for the period had been distributed. Under the two-class method, during periods of net income, the net income is firstreduced for distributions declared on all classes of securities to arrive at undistributed earnings. During periods of net losses, the net loss is reduced fordistributions declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinablecontractual obligation to share in net losses of the entity.The remaining earnings are allocated to Class A shares and participating securities to the extent that each security shares in earnings as if all ofthe earnings for the period had been distributed. Earnings or losses allocated to each class of security are then divided by the applicable number of shares toarrive at basic earnings per share. For the diluted earnings, the denominator includes all outstanding Class A shares and includes the number of additionalClass A shares that would have been outstanding if the dilutive potential Class A shares had been issued. The numerator is adjusted for any changes inincome or loss that would result from the issuance of these potential Class A shares.- 194- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The table below presents basic and diluted net income (loss) per Class A share using the two-class method for the years ended December 31,2014, 2013 and 2012: For the Year Ended December 31, 2014 2013 2012 Numerator: Net income attributable to Apollo Global Management, LLC$168,229 $659,391 $310,957 Distributions declared on Class A shares(483,458)(1) (556,954)(2) (172,887)(3) Distributions on participating securities(72,074) (93,235) (31,175) Earnings allocable to participating securities—(4) (1,394) (16,855) Undistributed income (loss) attributable to Class A shareholders: Basic(387,303) 7,808 90,040 Dilution effect on undistributed income attributable to Class A shareholders— 9,106 3,425 Dilution effect on distributable income attributable to participating securities— (1,329) (85) Undistributed income (loss) attributable to Class A shareholders: Diluted$(387,303) $15,585 $93,380 Denominator: Weighted average number of Class A shares outstanding: Basic155,349,017 139,173,386 127,693,489 Dilution effect of share options and unvested RSUs— 3,040,964 1,846,888 Weighted average number of Class A shares outstanding: Diluted155,349,017 142,214,350 129,540,377 Net Income per Class A share: Basic Distributed Income$3.11 $4.00 $1.35 Undistributed Income (Loss)(2.49) 0.06 0.71 Net Income per Class A Share: Basic$0.62 $4.06 $2.06 Net Income per Class A Share: Diluted(5) Distributed Income$3.11 $3.92 $1.34 Undistributed Income (Loss)(2.49) 0.11 0.72 Net Income per Class A Share: Diluted$0.62 $4.03 $2.06 (1)The Company declared a $1.08, $0.84, $0.46 and $0.73 distribution on Class A shares on February 7, 2014, May 8, 2014, August 6, 2014 and October 30, 2014,respectively.(2)The Company declared a $1.05, $0.57, $1.32 and $1.01 distribution on Class A shares on February 8, 2013, May 6, 2013, August 8, 2013 and November 7, 2013,respectively.(3)The Company declared a $0.46, $0.25, $0.24 and $0.40 distribution on Class A shares on February 10, 2012, May 8, 2012, August 12, 2012 and November 9, 2012,respectively.(4)No allocation of losses was made to the participating securities as the holders do not have a contractual obligation to share in the losses of the Company with Class Ashareholders.(5)For the year ended December 31, 2014, the Company had an undistributed loss attributable to Class A shareholders and none of the classes of securities resulted indilution. For the year ended December 31, 2014, AOG Units, restricted share units ("RSUs"), share options and participating securities were anti-dilutive and wereaccordingly excluded from the diluted earnings per share calculation. For the years ended December 31, 2013 and December 31, 2012, share options and unvestedRSUs were determined to be dilutive, and were accordingly included in the diluted earnings per share calculation. For the year ended December 31, 2013 and 2012, theAOG Units and participating securities were determined to be anti-dilutive and were accordingly excluded from the diluted earnings per share calculation.On October 24, 2007, the Company commenced the granting of RSUs that provide the right to receive, subject to vesting, Class A shares ofApollo Global Management, LLC, pursuant to the Company’s 2007 Omnibus Equity Incentive Plan. Certain RSU grants to employees provide the right toreceive distribution equivalents on vested RSUs on an equal basis any time a distribution is declared. The Company refers to these RSU grants as “PlanGrants.” For certain Plan Grants, distribution equivalents are paid in January of the calendar year next following the calendar year in which a distribution onClass A shares was declared. In addition, certain RSU grants to employees provide that both vested and unvested RSUs participate in distribution equivalentson an equal basis with the Class A shareholders any time a distribution is declared. The Company refers to these as “Bonus Grants.” For the years endedDecember 31, 2014, 2013 and 2012, the weighted average vested RSUs were 19.5 million, 20.7 million and- 195- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)18.5 million, respectively. For the years ended December 31, 2014, 2013 and 2012, the weighted average unvested RSUs were 9.6 million, 10.8 million and16.7 million, respectively.Any distribution equivalent paid to an employee will not be returned to the Company upon forfeiture of the award by the employee. Vested andunvested RSUs that are entitled to non-forfeitable distribution equivalents qualify as participating securities and are included in the Company’s basic anddiluted earnings per share computations using the two-class method. The holder of an RSU participating security would have a contractual obligation toshare in the losses of the entity if the holder is obligated to fund the losses of the issuing entity or if the contractual principal or mandatory redemptionamount of the participating security is reduced as a result of losses incurred by the issuing entity. Because the RSU participating securities do not have amandatory redemption amount and the holders of the participating securities are not obligated to fund losses, neither the vested RSUs nor the unvested RSUsare subject to any contractual obligation to share in losses of the Company.In addition, certain share options were granted to employees under the Company's 2007 Omnibus Equity Incentive Plan. For the years endedDecember 31, 2014, 2013 and 2012, weighted average unexercised options were 0.5 million, 3.7 million and 5.1 million, respectively.Holders of AOG Units are subject to the vesting requirements and transfer restrictions set forth in the agreements with the respective holders, andmay a limited number of times each year, upon notice (subject to the terms of the Exchange Agreement), exchange their AOG Units for Class A shares on aone-for-one basis. A limited partner must exchange one partnership unit in each of the Apollo Operating Group partnerships to effectuate an exchange for oneClass A share.At December 31, 2014 and 2013, if all of the outstanding AOG Units were exchanged for Class A shares, the result would be an additional222,680,477 and 228,954,598 Class A shares added to the basic earnings per share calculation. For the years ended December 31, 2014, 2013 and 2012, theweighted average AOG units outstanding were 225.0 million, 234.1 million and 240.0 million, respectively.Apollo Global Management, LLC has one Class B share outstanding, which is held by BRH Holdings GP, Ltd. ("BRH"). The voting power of theClass B share is reduced on a one vote per one AOG Unit basis in the event of an exchange of AOG Units for Class A shares, as discussed above. The Class Bshare has no net income (loss) per share as it does not participate in Apollo’s earnings (losses) or distributions. The Class B share has no distribution orliquidation rights. The Class B share has voting rights on a pari passu basis with the Class A shares. The Class B share represented 65.4% and 69.3% of thetotal voting power of the Company’s shares entitled to vote as of December 31, 2014 and December 31, 2013, respectively.- 196- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The table below presents transactions in Class A shares during each quarter during the years ended December 31, 2014, 2013 and 2012 and theresulting impact on the Company’s and Holdings’ ownership interests in the Apollo Operating Group: Date Type of Class ASharesTransaction Number of Shares Issued inClass A SharesTransaction(in thousands) Apollo GlobalManagement,LLCownership%in ApolloOperatingGroup beforeClass ASharesTransaction Apollo GlobalManagement,LLCownership%in ApolloOperatingGroup afterClass ASharesTransaction Holdingsownership%in ApolloOperatingGroup beforeClass ASharesTransaction Holdingsownership%in ApolloOperatingGroup afterClass ASharesTransaction Quarter Ended March 31, 2012 Issuance 2,388 34.1% 34.5% 65.9% 65.5% Quarter Ended June 30, 2012 Issuance 150 34.5% 34.5% 65.5% 65.5% Quarter EndedSeptember 30, 2012 Issuance 3,414 34.5% 35.1% 65.5% 64.9% Quarter EndedDecember 31, 2012 Issuance 180 35.1% 35.1% 64.9% 64.9% Quarter Ended March31, 2013 Issuance 2,091 35.1% 35.5% 64.9% 64.5% Quarter Ended June 30, 2013 Issuance/Offering 9,577(1) 35.5% 38.0% 64.5% 62.0% Quarter EndedSeptember 30, 2013 Issuance 1,977 38.0% 38.3% 62.0% 61.7% Quarter EndedDecember 31, 2013 Issuance/Exchange 2,581(1) 38.3% 39.0% 61.7% 61.0% Quarter Ended March31, 2014 Issuance 2,672 39.0% 39.4% 61.0% 60.6% Quarter Ended June 30, 2014 Issuance/Exchange 7,344(1) 39.4% 41.2% 60.6% 58.8% Quarter EndedSeptember 30, 2014 Issuance 3,660 41.2% 41.8% 58.8% 58.2% Quarter EndedDecember 31, 2014 Issuance/Exchange 3,090(1) 41.8% 42.3% 58.2% 57.7% (1)In May 2013, November 2013, May 2014 and October 2014, certain holders of AOG Units exchanged their AOG Units for Class A shares and approximately 8.8million, 2.3 million, 6.2 million and 0.1 million Class A shares were issued by the Company in the exchanges, respectively.16. EQUITY-BASED COMPENSATIONAOG UnitsThe fair value of the AOG Units of approximately $5.6 billion was charged to compensation expense on a straight-line basis over the five or sixyear service period, as applicable. For the years ended December 31, 2013 and 2012, $30.0 million and $480.9 million of compensation expense wasrecognized, respectively. The AOG Units were fully vested and amortized as of June 30, 2013.- 197- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table summarizes the activity of the AOG Units for the years ended December 31, 2013 and 2012: AOG Units Weighted AverageGrant DateFair ValueBalance at January 1, 201222,593,210 22.64Granted199,050 17.36Forfeited(199,050) 20.00Vested(21,092,844) 22.80Balance at December 31, 20121,500,366 20.00Vested(1,500,366) 20.00Balance at December 31, 2013— $—RSUsOn October 24, 2007, the Company commenced the granting of RSUs under the Company’s 2007 Omnibus Equity Incentive Plan. These grantsare accounted for as a grant of equity awards in accordance with U.S. GAAP. The fair value of all grants after March 29, 2011 is based on the grant date fairvalue, which considers the public share price of the Company. For Plan Grants, the fair value is based on grant date fair value, and is discounted primarily fortransfer restrictions and lack of distributions until vested. For Bonus Grants, the fair value is discounted primarily for transfer restrictions and in certain casestiming of distributions. For Plan Grants that are not eligible for distributions on unvested shares, the discount for the lack of distributions until vested basedon the present value of a growing annuity calculation had a weighted average of 32.5%, 30.5% and 23.3% for the years ended December 31, 2014, 2013 and2012, respectively. Additionally, for Plan Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation, afterconsidering the discount for lack of pre-vesting distributions, had a weighted average of 5.1%, 6.0% and 5.0% for the years ended December 31, 2014, 2013and 2012, respectively. For Bonus Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation had a weighted averageof 3.2%, 3.2% and 4.9% for the years ended December 31, 2014, 2013 and 2012, respectively. The estimated total fair value is charged to compensationexpense on a straight-line basis over the vesting period, which for Plan Grants is generally up to six years, with the first installment vesting one year aftergrant and quarterly vesting thereafter, and for Bonus Grants is annual vesting over three years.The fair value of grants made in 2014, 2013 and 2012 is $149.1 million, $56.6 million and $73.5 million, respectively. Of the awards granted in2012, 972,266 RSUs relate to awards granted as part of the Stone Tower acquisition. The fair value of these awards was not charged to compensation expense,but charged to additional paid in capital in the consolidated statements of changes in shareholder's equity. See note 3 for further discussion of the StoneTower acquisition. The actual forfeiture rate was 6.7%, 5.3% and 3.9% for the years ended December 31, 2014, 2013 and 2012, respectively. For the yearsended December 31, 2014, 2013 and 2012, $80.7 million, $87.7 million and $110.2 million of compensation expense was recognized, respectively.In addition, during 2014, the Company entered into an agreement with an executive officer providing for the grant of RSUs when certain metricshave been achieved. In accordance with U.S. GAAP, equity-based compensation expense is recognized only when certain metrics are met or deemedprobable. Accordingly, for the year ended December 31, 2014, no equity-based compensation expense was recognized relating to these RSUs.- 198- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table summarizes RSU activity for the years ended December 31, 2014, 2013 and 2012: Unvested Weighted AverageGrant Date FairValue Vested Total Number ofRSUsOutstanding Balance at January 1, 201220,480,773 $11.38 20,240,008 40,720,781(1) Granted5,377,562 13.68 — 5,377,562 Forfeited(966,725) 11.02 — (966,725) Delivered— 11.69 (7,894,214) (7,894,214) Vested(10,167,136) 12.28 10,167,136 — Balance at December 31, 201214,724,474 11.62 22,512,930 37,237,404(1) Granted2,101,277 26.95 — 2,101,277 Forfeited(888,594) 13.30 — (888,594) Delivered— 12.30 (6,879,050) (6,879,050) Vested(7,159,871) 12.60 7,159,871 — Balance at December 31, 20138,777,286 14.32 22,793,751 31,571,037(1) Granted7,046,490 21.16 — 7,046,490 Forfeited(2)(1,055,639) 12.19 — (1,055,639) Delivered— 12.96 (9,490,011) (9,490,011) Vested(2)(4,050,502) 16.75 4,050,502 — Balance at December 31, 201410,717,635 $18.11 17,354,242 28,071,877(1) (1)Amount excludes RSUs which have vested and have been issued in the form of Class A shares.(2)In connection with the departure of an employee from the Company, such employee vested in 625,000 RSUs that were previously granted to himand forfeited 625,000 RSUs that were previously granted to him. As a result of the additional vesting, the Company recorded an incrementalcompensation expense of $17.5 million related to the relevant RSU award for the year ended December 31, 2014.Units Expected to Vest—As of December 31, 2014, approximately 10,100,000 RSUs were expected to vest over the next 3.8 years.- 199- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Share OptionsThe following options have been granted under the Company's 2007 Omnibus Equity Incentive Plan: Date of Grant Options Granted Vesting TermsDecember 2, 2010 (1) 5,000,000 Vested and became exercisable with respect to 4/24 of the option shares on December 31, 2011 andthe remainder vest in equal installments over each of the remaining 20 quarters with full vesting onDecember 31, 2016; 1,250,000 of these options vested in connection with the optionee'semployment termination and an equal number of options were forfeited during the quarter endedMarch 31, 2014.January 22, 2011 555,556 Half of such options that vested and became exercisable on December 31, 2011 were exercised onMarch 5, 2012 and the other half that were due to become exercisable on December 31, 2012 wereforfeited during the quarter ended March 31, 2012.April 9, 2011 25,000 Vested and became exercisable with respect to half of the option shares on December 31, 2011 andthe other half vested in four equal quarterly installments starting on March 31, 2012 and ending onDecember 31, 2012 and are fully vested as of the date of this report.July 9, 2012 50,000 Will vest and become exercisable with respect to 4/24 of the option shares on June 30, 2013 and theremainder will vest in equal installments over each of the remaining 20 quarters with full vesting onJune 30, 2018.December 28, 2012 200,000 Will vest and become exercisable with respect to 4/24 of the option shares on June 30, 2013 and theremainder will vest in equal installments over each of the remaining 20 quarters with full vesting onJune 30, 2018.(1)In connection with the departure of an employee from the Company, such employee vested in 1,250,000 share options that were previouslygranted to him and forfeited 1,250,000 share options that were previously granted to him. As a result of the additional vesting, the Companyrecorded an incremental compensation expense of $28.1 million related to the relevant option award agreement for the year ended December 31,2014.For the years ended December 31, 2014, 2013 and 2012, $28.2 million, $4.7 million and $4.8 million of compensation expense was recognizedas a result of these grants, respectively.There were no share options granted during the year ended December 31, 2014. Apollo measures the fair value of each option award on the dateof grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for options granted during 2012 and 2011: - 200- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Assumptions: 2012 2011Risk-free interest rate 1.11% 2.79%Weighted average expected dividend yield 8.13% 2.25%Expected volatility factor(1) 45.00% 40.22%Expected life in years 6.66 5.72Fair value of options per share $3.01 $8.44 (1)The Company determined the expected volatility based on comparable companies using daily stock prices and the volatility of the Company’s share price.The following table summarizes the share option activity for the years ended December 31, 2014, 2013 and 2012: OptionsOutstanding WeightedAverageExercisePrice AggregateFairValue WeightedAverageRemainingContractualTermBalance at January 1, 20125,580,556 $8.14 $32,996 8.93Granted250,000 16.26 752 9.90Exercised(277,778) 9.00 (2,364) —Forfeited(277,778) 9.00 (2,364) —Balance at December 31, 20125,275,000 8.44 29,020 8.01Granted— — — —Exercised(2,324,997) 8.12 (12,896) —Forfeited— — — —Balance at December 31, 20132,950,003 8.69 16,124 7.08Exercised(1,468,750) 8.03 (8,217) —Forfeited(1,250,000) 8.00 (7,025) —Balance at December 31, 2014231,253 16.60 882 7.93Exercisable at December 31, 201485,417 $17.11 $276 7.99Options Expected to Vest—As of December 31, 2014, approximately 137,000 options were expected to vest.The expected life of the options granted represents the period of time that options are expected to be outstanding and is based on the contractualterm of the option. Unamortized compensation cost related to unvested share options at December 31, 2014 was $0.4 million and is expected to berecognized over a weighted average period of 3.5 years. The intrinsic value of options exercised was $26.6 million, $42.9 million and $1.4 million for theyears ended December 31, 2014, 2013 and 2012, respectively.Delivery of Class A Shares - RSUs and Share OptionsDuring the years ended December 31, 2014, 2013 and 2012, the Company delivered Class A shares in settlement of vested RSUs and exercisedshare options. The Company has generally allowed holders of vested RSUs and exercised share options to settle their tax liabilities by reducing the numberof Class A shares delivered to them, which the Company refers to as "net share settlement." Additionally, the Company has generally allowed holders of shareoptions to settle their exercise price by reducing the number of Class A Shares delivered to them at the time of exercise by an amount sufficient to cover theexercise price. The net share settlement results in a tax liability for the Company and a corresponding accumulated deficit adjustment. This adjustment for theyears ended December 31, 2014, 2013 and 2012 was $0.4 million, $85.9 million and $26.0 million, respectively, which is recorded as accumulated deficit inthe consolidated statements of changes in shareholders’ equity. During the year ended December 31, 2014, the Company changed its methodology from netshare settlement to a “sell-to-cover” methodology. Under this- 201- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)methodology, holders of vested RSUs and exercised share options settle their tax liability through a broker-assisted sale of shares equal to their tax liability. The proceeds from such sale are remitted back to the Company.The delivery of Class A shares in settlement of vested RSUs and exercised share options does not cause a transfer of amounts in the consolidatedstatements of changes in shareholders’ equity to the Class A shareholders. The delivery of Class A shares in settlement of vested RSUs and exercised shareoptions causes the income allocated to the Non-Controlling Interests to shift to the Class A shareholders from the date of delivery forward. During the yearsended December 31, 2014, 2013 and 2012, the Company delivered 10,491,649, 5,181,389 and 6,130,951 Class A shares in settlement of vested RSUs andexercised share options, which caused the Company’s ownership interest in the Apollo Operating Group to increase to 40.6% from 39.0%. The gross value ofthe settlement of these shares was $289.0 million, $212.9 million and $110.1 million, respectively based on Apollo's share price at the time of the delivery.AAA RDUsIncentive units that provide the right to receive AAA restricted depositary units (“RDUs”) following vesting are granted periodically toemployees of Apollo. These grants are accounted for as equity awards in accordance with U.S. GAAP. The incentive units granted to employees generallyvest over three years. In contrast, the Company’s Managing Partners and Contributing Partners have received distributions of fully-vested AAA RDUs. Thefair value at the date of the grants is recognized on a straight-line basis over the vesting period (or upon grant in the case of fully vested AAA RDUs). Thegrant date fair value is based on the public share price of AAA. Vested AAA RDUs can be converted into ordinary common units of AAA subject toapplicable securities law restrictions. During the years ended December 31, 2014, 2013 and 2012, the actual forfeiture rate was 1.1%, 0.0% and 0.0%,respectively. For the years ended December 31, 2014, 2013 and 2012, $0.4 million, $1.2 million and $1.0 million of compensation expense was recognized,respectively.During the years ended December 31, 2014, 2013 and 2012 the Company delivered 120,354, 114,896 and 60,702 RDUs, respectively. Thedeliveries in 2014, 2013 and 2012 resulted in a satisfaction of liability of $1.2 million, $1.2 million and $1.8 million, respectively, and the recognition of anet decrease of additional paid in capital in 2014, 2013 and 2012 of $2.2 million $1.0 million and $2.5 million, respectively. These amounts are presented inthe consolidated statements of changes in shareholders’ equity. There was $1.2 million and $1.2 million of liability for undelivered RDUs included inaccrued compensation and benefits in the consolidated statements of financial condition as of December 31, 2014 and December 31, 2013, respectively. Thefollowing table summarizes RDU activity for the years ended December 31, 2014, 2013, and 2012, respectively: Unvested WeightedAverageGrant DateFair Value Vested Total Numberof RDUsOutstandingBalance at January 1, 2012196,653 $8.17 60,702 257,355Granted256,673 9.45 — 256,673Delivered— 8.69 (60,702) (60,702)Vested(114,896) 9.02 114,896 —Balance at December 31, 2012338,430 8.85 114,896 453,326Granted27,286 26.90 — 27,286Delivered— 9.02 (114,896) (114,896)Vested(120,354) 9.83 120,354 —Balance at December 31, 2013245,362 10.38 120,354 365,716Granted18,426 33.05 — 18,426Forfeited(2,861) 8.36 — (2,861)Delivered— 9.02 (120,354) (120,354)Vested(96,267) 11.17 96,267 —Balance at December 31, 2014164,660 $12.49 96,267 260,927- 202- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Units Expected to Vest—As of December 31, 2014, approximately 155,000 RDUs were expected to vest over the next 1.9 years.The following table summarizes the activity of RDUs available for future grants: RDUs AvailableFor FutureGrants Balance at January 1, 20121,947,837 Purchases187,261 Granted/Issued(449,753)(1 ) Forfeited— Balance at December 31, 20121,685,345 Purchases6,236 Granted/Issued(39,272)(1 ) Forfeited— Balance at December 31, 20131,652,309 Purchases9,719 Granted/Issued(18,426) Forfeited2,861 Balance at December 31, 20141,646,463 (1)During 2013 and 2012, the Company delivered 11,986 and 193,080 to certain employees as part of AAA's carry reinvestment program, respectively. This resulted in adecrease in profit sharing payable of $0.2 million and $1.2 million in 2013 and 2012, respectively in the consolidated statements of financial condition.Restricted Stock and Restricted Stock Unit Awards— Apollo Commercial Real Estate Finance, Inc.ARI restricted stock awards and ARI restricted stock unit awards ("ARI RSUs") granted to the Company and certain of the Company’s employeesgenerally vest over three years, either quarterly or annually. The awards granted to the Company are accounted for as investments and deferred revenue in theconsolidated statements of financial condition. As these awards vest, the deferred revenue is recognized as management fees. The investment is accounted forusing the equity method of accounting for awards granted to the Company and as a deferred compensation asset for the awards granted to employees.Compensation expense is recognized on a straight line-basis over the vesting period for the awards granted to the employees. The Company recorded an assetand a liability upon receiving the awards on behalf of the Company’s employees. The fair value of the awards to employees is based on the grant date fairvalue, which utilizes the public share price of ARI, less discounts for transfer restrictions. The awards granted to the Company’s employees are remeasuredeach period to reflect the fair value of the asset and other liabilities and any changes in these values are recorded in the consolidated statements of operations.For the years ended December 31, 2014, 2013, and 2012, $1.3 million, $2.8 million and $2.3 million of management fees and $1.3 million, $2.0 million and$1.5 million of compensation expense were recognized in the consolidated statements of operations, respectively. The actual forfeiture rate for unvested ARIrestricted stock awards and ARI RSUs was 0%, 1.6% and 1.0% for the years ended December 31, 2014, 2013 and 2012, respectively.- 203- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table summarizes activity for the ARI restricted stock awards and ARI RSUs that were granted to both the Company and certain ofits employees for the years ended December 31, 2014, 2013, and 2012: ARIRestrictedStockUnvested ARI RSUsUnvested WeightedAverageGrant DateFair Value ARI RSUsVested TotalNumber ofARI RSUsOutstandingBalance at January 1, 201232,502 374,754 $15.12 73,542 448,296Granted to employees of the Company— 20,000 15.17 — 20,000Granted to the Company— — — — —Forfeited by employees of the Company— (5,522) 14.09 — (5,522)Vested awards for employees of the Company— (99,690) 15.43 99,690 —Vested awards of the Company(32,502) (52,000) 16.25 52,000 —Balance at December 31, 2012— 237,542 14.62 225,232 462,774Granted to employees of the Company— 205,000 16.58 — 205,000Granted to the Company— 40,000 17.59 — 40,000Forfeited by employees of the Company— (5,000) 16.66 — (5,000)Vested awards of the employees of the Company— (137,807) 15.48 137,807 —Vested awards of the Company— (65,333) 15.41 65,333 —Balance at December 31, 2013— 274,402 15.86 428,372 702,774Granted to employees of the Company— 400,254 16.59 — 400,254Vested awards of the employees of the Company— (129,148) 15.55 129,148 —Vested awards of the Company— (65,333) 15.41 65,333 —Balance at December 31, 2014— 480,175 $16.61 622,853 1,103,028Units Expected to Vest—As of December 31, 2014, approximately 452,000 ARI RSUs were expected to vest over the next 2.7 years.Restricted Stock Unit Awards—Apollo Residential Mortgage, Inc.AMTG restricted stock units (“AMTG RSUs”) granted to the Company and certain of the Company’s employees generally vest over three years,either quarterly or annually. The awards granted to the Company are accounted for as investments and deferred revenue in the consolidated statements offinancial condition. As these awards vest, the deferred revenue is recognized as management fees. The investment is accounted for using the equity method ofaccounting for awards granted to the Company and as a deferred compensation asset for the awards granted to employees. Compensation expense isrecognized on a straight line-basis over the vesting period for the awards granted to the employees. The Company recorded an asset and a liability uponreceiving the awards on behalf of the Company’s employees. The awards granted to the Company’s employees are remeasured each period to reflect the fairvalue of the asset and other liabilities and any changes in these values are recorded in the consolidated statements of operations.The fair value of the awards to employees is based on the grant date fair value, which utilizes the public share price of AMTG less discounts fortransfer restrictions and timing of distributions. For the years ended December 31, 2014, 2013 and 2012, $0.9 million, $0.9 million and $0.2 million ofmanagement fees were recognized in the consolidated statements of operations, respectively. For the years ended December 31, 2014, 2013 and 2012, $0.8million, $0.8 million and $0.1 million of compensation expense was recognized in the consolidated statements of operations, respectively. The actualforfeiture rate for AMTG RSUs was 2.5%, 1.3% and 0% for the years ended December 31, 2014, 2013 and 2012, respectively.- 204- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table summarizes activity for the AMTG RSUs that were granted to both the Company and certain of its employees for the yearsended December 31, 2014, 2013, and 2012: AMTG RSUsUnvested WeightedAverageGrant DateFair Value AMTG RSUsVested TotalNumber ofAMTG RSUsOutstandingBalance at January 1, 201228,305 $17.56 2,570 30,875Granted to employees of the Company143,244 20.62 — 143,244Vested awards of the employees of the Company(4,042) 16.57 4,042 —Vested awards of the Company(6,250) 18.20 6,250 —Balance at December 31, 2012161,257 20.28 12,862 174,119Granted to employees of the Company25,848 14.73 — 25,848Forfeited by employees of the Company(2,359) 18.74 — (2,359)Vested awards of the employees of the Company(51,259) 20.30 51,259 —Vested awards of the Company(6,250) 18.20 6,250 —Balance at December 31, 2013127,237 19.28 70,371 197,608Granted to employees of the Company130,124 16.01 — 130,124Forfeited by employees of the Company(4,855) 21.22 — (4,855)Vested awards of the employees of the Company(57,982) 19.56 57,982 —Vested awards of the Company(4,688) 18.20 4,688 —Balance at December 31, 2014189,836 $16.93 133,041 322,877Units Expected to Vest—As of December 31, 2014, approximately 178,000 AMTG RSUs were expected to vest over the next 2.4 years.Restricted Share Awards—Athene HoldingAthene Holding has granted restricted share awards ("AHL Awards") to certain employees of Apollo. Certain of the awards granted are subject totime-based vesting conditions that generally vest over five years and certain of the awards vest once certain metrics have been achieved. During 2014, thevesting terms of some of the AHL Awards were modified such that the portion of AHL Awards related to services provided from the date of grant were deemedvested.The AHL Awards granted to employees of Athene Asset Management, L.P. ("Athene Asset Management"), a consolidated subsidiary of Apollo,are accounted for as a prepaid compensation asset within other assets and deferred revenue in the consolidated statements of financial condition. From thedate of grant, the deferred revenue is recognized as management fees and the prepaid compensation asset is recognized as compensation expense over thevesting period. The fair value of the awards to employees is based on the grant date fair value, which utilizes the share price of Athene Holding, less discountsfor transfer restrictions. Shares granted as part of the AHL Awards were valued using a multiple-scenario model, which considers the price volatility of theunderlying stock price of Athene Holding, time to expiration and the risk-free rate. The awards granted are recognized as liability awards remeasured eachperiod to reflect the fair value of the prepaid compensation asset and deferred revenue. Any changes in fair value are recorded in management fees and equity-based compensation expense in the consolidated statements of operations.For the year ended December 31, 2014, $16.7 million of management fees and equity-based compensation expense was recognized in theconsolidated statements of operations relating to these AHL Awards.The following table summarizes activity for the AHL Awards that were granted to certain of its employees for the year ended December 31, 2014:- 205- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted) AHL AwardsUnvested WeightedAverageGrant DateFair Value AHL AwardsVested TotalNumber ofAHL AwardsOutstandingBalance at January 1, 20141,717,568 $1.23 — 1,717,568Granted to employees of the Company850,000 9.31 — 850,000Vested awards of the employees of the Company(849,495) 3.69 849,495 —Balance at December 31, 20141,718,073 $4.00 849,495 2,567,568Units Expected to Vest—As of December 31, 2014, approximately 476,107 AHL Awards were expected to vest over the next 2.2 years and1,241,966 AHL Awards may vest if certain metrics are achieved.Equity-Based Compensation AllocationEquity-based compensation is allocated based on ownership interests. Therefore, the amortization of the AOG Units is allocated to shareholders’equity attributable to Apollo Global Management, LLC and the Non-Controlling Interests, which results in a difference in the amounts charged to equity-based compensation expense and the amounts credited to shareholders’ equity attributable to Apollo Global Management, LLC in the Company’sconsolidated financial statements.Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the year ended December 31,2014: TotalAmount Non-ControllingInterest % inApolloOperatingGroup Allocated toNon-ControllingInterest inApolloOperatingGroup(1) Allocated toApolloGlobalManagement,LLCRSUs and Share Options$107,017 —% $— $107,017AHL Awards16,738 57.7 9,938 6,800Other equity-based compensation awards2,565 57.7 1,517 1,048Total Equity-Based Compensation$126,320 11,455 114,865Less other equity-based compensation awards (2) (11,455) (5,994)Capital Increase Related to Equity-Based Compensation $— $108,871 (1)Calculated based on average ownership percentage for the period considering Class A share issuances during the period.(2)Includes equity-based compensation reimbursable by certain funds.Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the year ended December 31,2013: TotalAmount Non-ControllingInterest % inApolloOperatingGroup Allocated toNon-ControllingInterest inApolloOperatingGroup(1) Allocated toApolloGlobalManagement,LLCAOG Units$30,007 61.0% $19,163 $10,844RSUs and Share Options92,185 — — 92,185Other equity-based compensation awards4,035 61.0 2,494 1,541Total Equity-Based Compensation$126,227 21,657 104,570Less other equity-based compensation awards(2) (2,494) 365Capital Increase Related to Equity-Based Compensation $19,163 $104,935- 206- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)(1)Calculated based on average ownership percentage for the period considering Class A share issuances during the period.(2)Includes equity-based compensation reimbursable by certain funds.Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the year ended December 31,2012: TotalAmount Non-ControllingInterest % inApolloOperatingGroup Allocated toNon-ControllingInterest inApolloOperatingGroup(1) Allocated toApolloGlobalManagement,LLCAOG Units$480,931 64.9% $313,856 $167,075RSUs and Share Options115,013 — — 115,013Other equity-based compensation awards2,710 64.9 1,769 941Total Equity-Based Compensation$598,654 315,625 283,029Less other equity-based compensation awards(2) (1,769) (741)Capital Increase Related to Equity-Based Compensation $313,856 $282,288(1)Calculated based on average ownership percentage for the period considering Class A share issuances during the period.(2)Includes equity-based compensation reimbursable by certain funds.17. RELATED PARTY TRANSACTIONS AND INTERESTS IN CONSOLIDATED ENTITIESThe Company typically facilitates the initial payment of certain operating costs incurred by the funds that it manages as well as their affiliates.These costs are normally reimbursed by such funds and are included in due from affiliates.Due from affiliates and due to affiliates are comprised of the following: As of December 31, 2014 2013Due from Affiliates: Due from private equity funds$30,091 $57,582Due from portfolio companies41,844 23,484Due from credit funds(1)174,165 216,750Due from Contributing Partners, employees and former employees1,721 2,659Due from real estate funds20,162 12,119Other32 4,653Total Due from Affiliates$268,015 $317,247Due to Affiliates: Due to Managing Partners and Contributing Partners in connection with the tax receivable agreement$509,149 $525,483Due to private equity funds1,158 825Due to credit funds5,343 1,773Distributions payable to employees49,503 67,290Total Due to Affiliates$565,153 $595,371(1)As of December 31, 2014 includes unsettled AAA and Athene management fee receivable as discussed in "Athene" below. As of December 31, 2013, includes AtheneServices Derivative as discussed in "Athene" below.- 207- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Tax Receivable Agreement and OtherSubject to certain restrictions, each of the Managing Partners and Contributing Partners has the right to exchange their vested AOG Units for theCompany’s Class A shares. Certain Apollo Operating Group entities have made an election under Section 754 of the U.S. Internal Revenue Code of 1986, asamended (the "Internal Revenue Code"), which will result in an adjustment to the tax basis of the assets owned by the Apollo Operating Group at the time ofthe exchange. These exchanges will result in increases in tax deductions that will reduce the amount of tax that APO Corp. will otherwise be required to payin the future.The tax receivable agreement provides for the payment to the Managing Partners and Contributing Partners of 85% of the amount of cashsavings, if any, in U.S. federal, state, local and foreign income taxes that APO Corp. would realize as a result of the increases in tax basis of assets that resultedfrom the 2007 Reorganization and exchanges of AOG Units for Class A shares. If the Company does not make the required annual payment on a timely basisas outlined in the tax receivable agreement, interest is accrued on the balance until the payment date. These payments are expected to occur approximatelyover the next 20 years. In connection with the amendment of the AMH partnership agreement in April 2010, the tax receivable agreement was revised toreflect the Managing Partners’ agreement to defer 25%, or $12.1 million, of the required payments pursuant to the tax receivable agreement that areattributable to the 2010 fiscal year for a period of four years until 2015.In April 2013, Apollo made a $30.4 million cash payment pursuant to the tax receivable agreement resulting from the realized tax benefit for the2012 tax year. Included in the payment was approximately $7.6 million and approximately $0.3 million of interest paid to the Managing Partners andContributing Partners, respectively.During the years ended December 31, 2014, 2013 and 2012, the Company reduced the tax receivable agreement liability and recorded $32.2million, $13.0 million and $3.9 million, respectively, in other income, net in the consolidated statement of operations due to changes in projected incomeestimates and in estimated tax rates.In April 2014, Apollo made a $32.0 million cash payment pursuant to the tax receivable agreement resulting from the realized tax benefit for the2013 tax year. Included in the payment was approximately $8.3 million and approximately $0.5 million of interest paid to the Managing Partners andContributing Partners, respectively.During the years ended December 31, 2014 and 2013, the Intermediate Holding Companies acquired approximately 6.3 million and 11.1 millionClass A shares of Apollo Global Management, LLC, respectively, which were used to acquire an equal number of AOG Units from certain Managing Partnersand Contributing Partners in connection with exchanges of AOG Units for Class A shares. These exchanges were taxable for U.S. federal income tax purposes,and resulted in APO Corp. recording a U.S. federal income tax basis adjustment of approximately $97.6 million and $243.1 million in the intangible assets ofcertain Apollo Operating Group entities during the years ended December 31, 2014 and 2013, respectively.Pursuant to the tax receivable agreement, the Managing Partners and Contributing Partners who exchanged AOG Units for Class A shares willreceive payment from APO Corp. of 85% of the amount of the actual cash tax savings, if any, in U.S. Federal, state, local and foreign income tax that APOCorp. realizes as a result of these increases in tax deductions and tax basis, and certain other tax benefits, including imputed interest expense. APO Corp.retains the benefit from the remaining 15% of actual cash tax savings. As a result of the May 2013, November 2013, and May 2014 exchanges, a $174.8million liability was recorded to estimate the amount of these future expected payments to be made by APO Corp. to the Managing Partners and ContributingPartners pursuant to the tax receivable agreement.Due from Contributing Partners, Employees and Former EmployeesAs of December 31, 2014 and December 31, 2013, due from Contributing Partners, Employees and Former Employee balances include variousamounts due to the Company including director fee receivables.- 208- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)DistributionsIn addition to other distributions such as payments pursuant to the tax receivable agreement, the table below presents information regarding thequarterly distributions which were made at the sole discretion of the manager of the Company during 2014, 2013 and 2012 (in millions, except per sharedata):DistributionDeclaration Date DistributionperClass A Share DistributionPayment Date DistributiontoClass AShareholders Distribution toNon-ControllingInterest Holdersin the ApolloOperating Group TotalDistributionsfromApollo OperatingGroup DistributionEquivalents onParticipatingSecuritiesFebruary 10, 2012 $0.46 February 29, 2012 $58.1 $110.4 $168.5 $10.3April 13, 2012 — April 13, 2012 — 11.0(1) 11.0 —May 8, 2012 0.25 May 30, 2012 31.6 60.0 91.6 6.2August 2, 2012 0.24 August 31, 2012 31.2 57.6 88.8 5.3November 9, 2012 0.40 November 30, 2012 52.0 96.0 148.0 9.4For the year endedDecember 31, 2012 $1.35 $172.9 $335.0 $507.9 $31.2February 8, 2013 $1.05 February 28, 2013 $138.7 $252.0 $390.7 $25.0April 12, 2013 — April 12, 2013 — 55.2(1) 55.2 —May 6, 2013 0.57 May 30, 2013 80.8 131.8 212.6 14.3August 8, 2013 1.32 August 30, 2013 189.7 305.2 494.9 30.8November 7, 2013 1.01 November 29, 2013 147.7 231.2 378.9 24.1For the year endedDecember 31, 2013 $3.95 $556.9 $975.4 $1,532.3 $94.2February 7, 2014 $1.08 February 26, 2014 $160.9 $247.3 $408.2 $25.5April 3, 2014 — April 3, 2014 — 49.5(1) 49.5 —May 8, 2014 0.84 May 30, 2014 130.0 188.4 318.4 20.9June 16, 2014 — June 16, 2014 — 28.5(1) 28.5 —August 6, 2014 0.46 August 29, 2014 73.6 102.5 176.1 10.2September 11, 2014 — September 11, 2014 — 12.4(1) 12.4 —October 30, 2014 0.73 November 21, 2014 119.0 162.6 281.6 15.5December 15, 2014 — December 15, 2014 — 25.2(1) 25.2 —For the year endedDecember 31, 2014 $3.11 $483.5 $816.4 $1,299.9 $72.1(1)On April 13, 2012, April 12, 2013, April 3, 2014, June 16, 2014, September 11, 2014 and December 15, 2014, the Company made a $0.05, $0.23, $0.22, $0.13,$0.06 and $0.11 distribution per AOG Unit, respectively, to the non-controlling interest holders in the Apollo Operating Group.- 209- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)IndemnityCarried interest income from certain funds that the Company manages can be distributed to the Company on a current basis, but is subject torepayment by the subsidiary of the Apollo Operating Group that acts as general partner of the fund in the event that certain specified return thresholds are notultimately achieved. The Managing Partners, Contributing Partners and certain other investment professionals have personally guaranteed, subject to certainlimitations, the obligation of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to aparticular Managing Partner’s or Contributing Partner’s distributions. An existing shareholders agreement includes clauses that indemnify each of theCompany’s Managing Partners and certain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor ofcertain funds that the Company manages (including costs and expenses related to investigating the basis for or objecting to any claims made in respect of theguarantees) for all interests that the Company’s Managing Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.Accordingly, in the event that the Company’s Managing Partners, Contributing Partners and certain investment professionals are required to payamounts in connection with a general partner obligation for the return of previously made distributions, the Company will be obligated to reimburse theCompany’s Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to pay even though theCompany did not receive the certain distribution to which that general partner obligation related. There was no indemnification liability recorded as ofDecember 31, 2014 and December 31, 2013.Due to Credit FundsBased upon a hypothetical liquidation of two of our credit funds, as of December 31, 2014, the Company has recorded a general partnerobligation to return previously distributed carried interest income, which represents amounts due to these funds. The actual determination and any requiredpayment of a general partner obligation would not take place until the final disposition of the fund’s investments based on contractual termination of thefund or as otherwise set forth in the respective limited partnership agreement of the fund. As such, there was a general partner obligation to return previouslydistributed carried interest income of $3.4 million accrued as of December 31, 2014.AtheneAthene Holding is the ultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding providesinsurance products focused primarily on the retirement market and its business centers primarily on issuing or reinsuring fixed indexed annuities.Athene Asset Management receives a management fee equal to 0.40% per annum on all assets under management in accounts owned by orrelated to Athene (the "Athene Accounts"), with certain limited exceptions. In addition, the Company receives sub-advisory management fees and carriedinterest income with respect to a portion of the assets in the Athene Accounts. With respect to capital invested in an Apollo fund, Apollo receivesmanagement fees directly from the relevant funds under the investment management agreements with such funds. Athene Asset Management and otherApollo subsidiaries incur all expenses associated with their provision of services to Athene, including but not limited to, asset allocation services, direct assetmanagement services, risk management, asset and liability matching management, mergers and acquisitions asset diligence, hedging and other services.Under a transaction advisory services agreement with Athene (the "Athene Services Agreement"), effective February 5, 2013, Apollo earns aquarterly monitoring fee of 0.50% of Athene’s capital and surplus as of the end of the applicable quarter multiplied by 2.5, excluding the shares of AtheneHolding that were newly acquired (and not in satisfaction of prior commitments to buy such shares) by AAA Investments in the contribution of certain assetsby AAA to Athene in October 2012, at the end of each quarter through December 31, 2014, the termination date. This quarterly monitoring fee is notapplicable to the amount of invested capital attributable to the Excluded Athene Shares. The Athene Services Agreement was amended in connection withthe Athene Private Placement described below (the “Amended Athene Services Agreement”). The Amended Athene Services Agreement adjusts thecalculation of Athene Holding’s capital and surplus downward by an amount equal to (x) the equity capital raised in the Athene Private Placement and (y)certain disproportionate increases to the statutory capital and surplus of Athene, as compared to the stockholders’ equity of Athene calculated on a U.S.GAAP basis, as a result of certain future acquisitions by Athene. Prior to the consummation of the Athene Private Placement, all such monitoring fees werepaid pursuant to a derivative contract between Athene and Apollo (the "Athene Services Derivative"). In connection with the Athene Private Placement, theAthene Services Derivative was settled on April 29, 2014 by delivery to Apollo of common shares of Athene Holding, and as a result, such derivative wasterminated. Following settlement of the Athene Services Derivative, future monitoring fees paid to- 210- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Apollo pursuant to the Amended Athene Services Agreement, will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of AtheneHolding (unless such payment in shares would violate Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended). Unsettled monitoring feespursuant to the Amended Athene Services Agreement are recorded as due from affiliates in the consolidated statements of financial condition. For the yearsended December 31, 2014, 2013 and 2012, Apollo earned $226.4 million, $107.9 million and $16.8 million, respectively, related to this monitoring fee. Themonitoring fee is recorded in advisory and transaction fees from affiliates, net, in the consolidated statements of operations. As of December 31, 2014, Apollohad a $58.2 million receivable recorded in due from affiliates on the consolidated statements of financial condition. As of December 31, 2013, Apollo had a$116.4 million receivable, which was accounted for as a derivative recorded in due from affiliates on the consolidated statements of financial condition.In accordance with the services agreement among AAA, AAA Investments and the other service recipients party thereto and Apollo (the "AAAServices Agreement"), Apollo receives a management fee for managing the assets of AAA Investments. In connection with each of the contribution of certainassets by AAA to Athene in October 2012, and the initial closing of the Athene Private Placement on April 4, 2014, the AAA Services Agreement wasamended (the "Amended AAA Services Agreement"). Pursuant to the Amended AAA Services Agreement, the parties agreed that there will be no managementfees payable by AAA Investments with respect to the excluded Athene Shares. AAA Investments agreed to continue to pay Apollo the same management feeon its investment in Athene (other than with respect to the excluded Athene Shares), except that Apollo agreed that the obligation to pay the existingmanagement fee terminated on December 31, 2014 (although services will continue through December 31, 2020). Prior to the consummation of the AthenePrivate Placement, all such management fees were accrued pursuant to a derivative contract between AAA Investments and Apollo (the “AAA ServicesDerivative”). In connection with the Athene Private Placement, the AAA Services Derivative was settled on April 29, 2014 by delivery to Apollo of commonshares of Athene Holding, and as a result, such derivative was terminated. Following settlement of the AAA Services Derivative, future management fees paidto Apollo pursuant to the Amended AAA Services Agreement will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of AtheneHolding (unless such payment in shares would violate Section 16(b) of the Exchange Act). Unsettled management fees pursuant to the Amended AAAServices Agreement will be recorded as due from affiliates in the consolidated statements of financial condition. As of December 31, 2014, Apollo had a $3.1million receivable recorded in due from affiliates related to this management fee on the consolidated statements of financial condition. As of December 31,2013, Apollo had a $14.3 million receivable related to this management fee, which was accounted for as a derivative recorded in due from affiliates on theconsolidated statements of financial condition. The total management fees earned by Apollo related to the Amended AAA Services Agreement for the yearsended December 31, 2014, 2013 and 2012 were $1.9 million, $2.2 million and $0.6 million, respectively, which are recorded in management fees fromaffiliates in the consolidated statements of operations.Prior to the settlement of the Athene Services Derivative and the AAA Services Derivative, the Amended Athene Services Agreement and theAmended AAA Services Agreement together with the Athene Services Derivative and the AAA Services Derivative, met the definition of derivatives underU.S. GAAP. The Company had classified these derivatives as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fairvalue require significant judgment and estimation. After the settlement of the Athene Services Derivative and the AAA Services Derivatives the unsettledshares receivable recorded in due from affiliates related to the Amended Athene Services Agreement and the Amended AAA Services Agreement are valued atfair value based on the price of a common share of Athene Holding. The Company had classified the derivative and the shares receivable as Level III assets inthe fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. See note 6 for furtherdiscussion regarding fair value measurements.Prior to the settlement of the Athene Services Derivative and the AAA Services Derivative, the change in unrealized market value of thederivatives was reflected in other income, net in the consolidated statements of operations. For the year ended December 31, 2013 there was $10.2 million ofchanges in market value recognized related to these derivatives.In addition, Apollo, as general partner of AAA Investments, is generally entitled to a carried interest that allocates to it 20% of the realizedreturns (net of related expenses, including borrowing costs) on the investments of AAA Investments, except that Apollo will not be entitled to receive anycarried interest in respect of the Excluded Athene Shares. Carried interest receivable from AAA Investments will be paid in common shares of Athene Holding(valued at the then fair market value) if there is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b)of the Exchange Act) or paid in cash if AAA sells the shares of Athene Holding. For the years ended December 31, 2014, 2013, and 2012 the Companyrecorded carried interest income less the related profit sharing expense of $14.6 million, $27.6 million and $35.3 million, respectively, from AAAInvestments, which is recorded in the consolidated statements of operations. As of December 31, 2014 and December 31, 2013, the Company had a $121.5million and a $100.9 million carried interest receivable, respectively, related- 211- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)to AAA Investments. As of December 31, 2014 and December 31, 2013, the Company had a related profit sharing payable of $34.9 million and $28.8 million,respectively, recorded in profit sharing payable in the consolidated statements of financial condition.For the years ended December 31, 2014, 2013 and 2012, Apollo earned revenues in the aggregate totaling $546.5 million, $435.1 million and$164.7 million, respectively, consisting of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering therelated profit sharing expense and changes in the market value of the Athene shares owned directly by Apollo, which is recorded in the consolidatedstatements of operations.On April 4, 2014, Athene Holding completed an initial closing of a private placement offering of common equity in which it raised $1.048billion of primary commitments from third-party institutional and certain existing investors in Athene Holding (the “Athene Private Placement”). Shares inthe Athene Private Placement were offered at a price per common share of Athene Holding of $26. In connection with the Athene Private Placement, Atheneraised an additional $80 million of third party capital at $26 per share, all of which was used to buy back a portion of the shares of one of its existinginvestors at a price of $26 per share in a transaction that was consummated on April 29, 2014. As announced by AAA on June 24, 2014, a second closing ofthe Athene Private Placement occurred in which Athene Holding raised $170 million of commitments primarily from employees of Athene and its affiliates ata price per common share of Athene Holding of $26. The Investment Partnership did not purchase any additional common shares of Athene Holding as part ofthe Athene Private Placement.As of December 31, 2014, the Company, through its consolidation of AAA, had an approximate 47.7% economic ownership interest in Athenethrough its investment in AAA Investments (calculated as if the commitments on the Athene Private Placement closed through December 31, 2014 were fullydrawn but without giving effect to (i) restricted common shares issued under Athene’s management equity plan, or (ii) common shares to be issued under theAmended Athene Services Agreement or the Amended AAA Services Agreement subsequent to December 31, 2014).The Company had an approximate 8.1% economic ownership interest in Athene Holding as of December 31, 2014, which comprises Apollo’sdirect ownership of 6.9% of the economic equity of Athene Holding plus an additional 1.2% economic ownership interest, which is calculated as theCompany’s approximate 2.5% economic ownership interest in AAA plus the Company’s approximate 0.06% economic ownership interest in AAAInvestments multiplied by AAA Investments’ approximate 47.7% economic ownership interest in Athene as of December 31, 2014. The remaining ownershipinterest in AAA is recognized in the Company’s consolidated statements of operations as non-controlling interest in consolidated entities.As of December 31, 2013, the Company through its consolidation of AAA, had an approximate 68% fully-diluted interest in Athene (after givingeffect to restricted common shares issued under Athene's management equity plan and conversion of AAA Investments' note receivable but without givingeffect to common shares to be issued under the Amended Athene Services Agreement or the Amended AAA Services Agreement subsequent to December 31,2013) through its investment in AAA Investments.The Company had an approximate 1.9% economic ownership interest in Athene Holding as of December 31, 2013, which is calculated as theCompany’s approximate 2.6% economic ownership interest in AAA plus the Company’s approximate 0.06% economic ownership interest in AAAInvestments multiplied by AAA Investments’ approximate 68% fully diluted interest in Athene as of December 31, 2013. The remaining ownership interest inAAA is recognized in the Company’s consolidated statements of operations as non-controlling interest in consolidated entities.For the year ended December 31, 2014, the Company accounted for a $7.5 million reduction in management fees from affiliates and salary, bonusand benefits related to Athene.Regulated EntitiesApollo Global Securities, LLC (“AGS”) is a registered broker dealer with the SEC and is a member of the Financial Industry RegulatoryAuthority, subject to the minimum net capital requirements of the SEC. AGS was in compliance with these requirements at December 31, 2014. From time totime, this entity is involved in transactions with affiliates of Apollo, including portfolio companies of the funds Apollo manages, whereby AGS earnsunderwriting and transaction fees for its services.Apollo Management International LLP, is authorized and regulated by the U.K. Financial Conduct Authority and as such is subject to the capitalrequirements of the U.K. Financial Conduct Authority. This entity has continuously operated in excess of these regulatory capital requirements.- 212- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Certain other of the Company's U.S. and non-U.S. subsidiaries are subject to various regulations, including a number of U.S. entities that areregistered as investment advisors with the SEC. To the extent applicable, these entities have continuously operated in excess of any minimum regulatorycapital requirements.Interests in Consolidated EntitiesThe table below presents equity interests in Apollo’s consolidated, but not wholly-owned, subsidiaries and funds. Net income attributable toNon-Controlling Interests consisted of the following: For the Year Ended December 31, 2014 2013 2012AAA(1) $(196,964) $(331,504) $(278,454)Interest in management companies and a co-investment vehicle(2) (13,186) (18,872) (7,307)Other consolidated entities (17,590) 43,357 50,956Net income attributable to Non-Controlling Interests in consolidated entities (227,740) (307,019) (234,805)Net (income) loss attributable to Appropriated Partners’ Capital(3) 70,729 (149,934) (1,816,676)Net income attributable to Non-Controlling Interests in the Apollo Operating Group (404,682) (1,257,650) (685,357)Net Income attributable to Non-Controlling Interests $(561,693) $(1,714,603) $(2,736,838)Net income (loss) attributable to Appropriated Partners’ Capital(4) (70,729) 149,934 1,816,676Other Comprehensive (income) loss attributable to Non-Controlling Interests 591 (41) (2,010)Comprehensive Income Attributable to Non-Controlling Interests $(631,831) $(1,564,710) $(922,172) (1)Reflects the Non-Controlling Interests in the net (income) loss of AAA and is calculated based on the Non-Controlling Interests ownership percentage in AAA, whichwas approximately 97.5%, 97.4% and 97.3% as of December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, 2013 and 2012, Apollo ownedapproximately 2.5%, 2.6% and 2.7% of AAA, respectively.(2)Reflects the remaining interest held by certain individuals who receive an allocation of income from certain of our credit funds.(3)Reflects net income of the consolidated CLOs classified as VIEs.(4)Appropriated Partners’ Capital is included in total Apollo Global Management, LLC shareholders’ equity and is therefore not a component of comprehensive incomeattributable to Non-Controlling Interests on the consolidated statements of comprehensive income.18. COMMITMENTS AND CONTINGENCIESFinancial Guarantees—Apollo has provided financial guarantees on behalf of certain employees for the benefit of unrelated third-party lendersin connection with their capital commitments to certain funds managed by the Company. As of December 31, 2014, the maximum exposure relating to thesefinancial guarantees approximated $0.2 million. Apollo has historically not incurred any liabilities as a result of these agreements and does not expect to inthe future. Accordingly, no liability has been recorded in the accompanying consolidated financial statements.Investment Commitments—As a limited partner, general partner and manager of the Apollo private equity, credit and real estate funds, Apollohas unfunded capital commitments as of December 31, 2014, and December 31, 2013 of $646.6 million and $843.7 million, respectively.Apollo has an ongoing obligation to acquire additional common units of AAA in an amount equal to 25% of the aggregate after-tax cashdistributions, if any, that are made by AAA to Apollo's affiliates pursuant to the carried interest distribution rights that are applicable to investments madethrough AAA Investments.In addition, as of December 31, 2014, Apollo had an unfunded loan commitment of $15.0 million related to an employee's commitment topurchase common shares of Athene Holding.Debt Covenants—Apollo’s debt obligations contain various customary loan covenants. As of December 31, 2014, the Company was not aware ofany instances of non-compliance with its financial covenants.- 213- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Litigation and Contingencies—Apollo is, from time to time, party to various legal actions arising in the ordinary course of business includingclaims and lawsuits, reviews, investigations or proceedings by governmental and self regulatory agencies regarding its business.In March 2012, plaintiffs filed two putative class actions, captioned Kelm v. Chase Bank (No. 12-cv-332) and Miller v. 1-800-Flowers.com, Inc.(No. 12-cv-396), in the District of Connecticut on behalf of a class of consumers alleging online fraud. The defendants included, among others, TrilegiantCorporation, Inc. (“Trilegiant”), its parent company, Affinion Group, LLC (“Affinion”), and Apollo Global Management, LLC ("AGM"), which is affiliatedwith funds that are the beneficial owners of 68% of Affinion’s common stock. In both cases, plaintiffs allege that Trilegiant, aided by its business partners,who include e-merchants and credit card companies, developed a set of business practices intended to create consumer confusion and ultimately defraudconsumers into unknowingly paying fees to clubs for unwanted services. Plaintiffs allege that AGM is a proper defendant because of its indirect stockownership and ability to appoint the majority of Affinion’s board. The complaints assert claims under the Racketeer Influenced Corrupt Organizations Act;the Electronic Communications Privacy Act; the Connecticut Unfair Trade Practices Act; and the California Business and Professional Code, and seek,among other things, restitution or disgorgement, injunctive relief, compensatory, treble and punitive damages, and attorneys’ fees. The allegations in Kelmand Miller are substantially similar to those in Schnabel v. Trilegiant Corp. (No. 3:10-cv-957), a putative class action filed in the District of Connecticut in2010 that names only Trilegiant and Affinion as defendants. The court has consolidated the Kelm, Miller, and Schnabel cases under the caption In re:Trilegiant Corporation, Inc. and ordered that they proceed on the same schedule. On June 18, 2012, the court appointed lead plaintiffs’ counsel, and onSeptember 7, 2012, plaintiffs filed their consolidated amended complaint (“CAC”), which alleges the same causes of action against AGM as did thecomplaints in the Kelm and Miller cases. Defendants filed motions to dismiss on December 7, 2012, plaintiffs filed opposition papers on February 7, 2013,and defendants filed replies on April 5, 2013. On December 5, 2012, plaintiffs filed another putative class action, captioned Frank v. Trilegiant Corp. (No. 12-cv-1721), in the District of Connecticut, naming the same defendants and containing allegations substantially similar to those in the CAC. On January 23,2013, plaintiffs moved to transfer and consolidate Frank into In re: Trilegiant. On July 24, 2013 the Frank court transferred the case to Judge Bryant, who ispresiding over In re: Trilegiant, and on March 28, 2014, Judge Bryant granted the motion to consolidate. On September 25, 2013, the court held oralargument on defendants’ motions to dismiss. On March 28, 2014, the court granted in part and denied in part motions to dismiss filed by Affinion andTrilegiant on behalf of all defendants, and also granted separate motions to dismiss filed by certain defendants, including AGM. On that same day, the courtdirected the clerk to terminate AGM as a defendant in the consolidated action. On April 28, 2014, plaintiffs moved for interlocutory review of certain of thecourt’s motion-to-dismiss rulings, not including its order granting AGM’s separate dismissal motion. Defendants filed a response on May 23, 2014, andplaintiffs replied on June 5, 2014. On November 13, 2014, plaintiffs and the remaining defendants filed a Joint Status Report Regarding Discovery statingthat no discovery has taken place since plaintiffs filed their interlocutory-review motion.Various state attorneys general and federal and state agencies have initiated industry-wide investigations into the use of placement agents inconnection with the solicitation of investments, particularly with respect to investments by public pension funds. Certain affiliates of Apollo have receivedsubpoenas and other requests for information from various government regulatory agencies and investors in Apollo’s funds, seeking information regardingthe use of placement agents. CalPERS, one of our Strategic Investors, announced on October 14, 2009, that it had initiated a special review of placementagents and related issues. The report of the CalPERS Special Review was issued on March 14, 2011. That report does not allege any wrongdoing on the partof Apollo or its affiliates. Apollo is continuing to cooperate with all such investigations and other reviews. In addition, on May 6, 2010, the CaliforniaAttorney General filed a civil complaint against Alfred Villalobos and his company, Arvco Capital Research, LLC (“Arvco”) (a placement agent that Apollohas used) and Federico Buenrostro Jr., the former CEO of CalPERS, alleging conduct in violation of certain California laws in connection with CalPERS’spurchase of securities in various funds managed by Apollo and another asset manager. Apollo is not a party to the civil lawsuit and the lawsuit does notallege any misconduct on the part of Apollo. Likewise, on April 23, 2012, the SEC filed a lawsuit alleging securities fraud on the part of Arvco, as well asMessrs. Buenrostro and Villalobos, in connection with their activities concerning certain CalPERS investments in funds managed by Apollo. This lawsuitalso does not allege wrongdoing on the part of Apollo, and alleges that Apollo was defrauded by Arvco, Villalobos, and Buenrostro. On March 14, 2013, theUnited States Department of Justice unsealed an indictment against Messrs. Villalobos and Buenrostro alleging, among other crimes, fraud in connectionwith those same activities; again, Apollo is not accused of any wrongdoing and in fact is alleged to have been defrauded by the defendants. The criminalaction was set for trial in a San Francisco federal court in July 2014, but was put on hold after Mr. Buenrostro pleaded guilty on July 11, 2014. As part of Mr.Buenrostro’s plea agreement, he admitted to taking cash and other bribes from Mr. Villalobos in exchange for several improprieties, including attempting toinfluence CalPERS’ investing decisions and improperly preparing disclosure letters to satisfy Apollo’s requirements. There is no suggestion that Apollo wasaware that Mr. Buenrostro had signed the letters with a corrupt motive. The government has indicated that they will file new charges against Mr. Villalobosincorporating Mr. Buenrostro’s admissions. On August 7, 2014,- 214- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)the government filed a superseding indictment against Mr. Villalobos asserting additional charges. Trial had been scheduled for February 23, 2015, but Mr.Villalobos passed away on January 13, 2015. Additionally, on April 15, 2013, Mr. Villalobos, Arvco and related entities (the “Arvco Debtors”) brought acivil action in the United States Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”) against Apollo. The action is related to the ongoingbankruptcy proceedings of the Arvco Debtors. This action alleges that Arvco served as a placement agent for Apollo in connection with several fundsassociated with Apollo, and seeks to recover purported fees the Arvco Debtors claim Apollo has not paid them for a portion of Arvco’s placement agentservices. In addition, the Arvco Debtors allege that Apollo has interfered with the Arvco Debtors’ commercial relationships with third parties, purportedlycausing the Arvco Debtors to lose business and to incur fees and expenses in the defense of various investigations and litigations. The Arvco Debtors alsoseek compensation from Apollo for these alleged lost profits and fees and expenses. The Arvco Debtors’ complaint asserts various theories of recovery underthe Bankruptcy Code and common law. Apollo denies the merit of all of the Arvco Debtors’ claims and will vigorously contest them. The Bankruptcy Courthas stayed this action pending the result in the criminal case against Mr. Villalobos. For these reasons, no estimate of possible loss, if any, can be made at thistime.On June 18, 2014, BOKF N.A. (the “First Lien Trustee”), the successor indenture trustee under the indenture governing the First Lien Notesissued by Momentive Performance Materials, Inc. (“Momentive”), commenced a lawsuit in the Supreme Court for the State of New York, New York Countyagainst AGM and members of an ad hoc group of Second Lien Noteholders (including, but not limited to, Euro VI (BC) S.a.r.l.). The First Lien Trusteeamended its complaint on July 2, 2014 (the “First Lien Intercreditor Action”). In the First Lien Intercreditor Action, the First Lien Trustee seeks, among otherthings, a declaration that the defendants violated an intercreditor agreement entered into between holders of the first lien notes and holders of the second liennotes. On July 16, 2014, the successor indenture trustee under the indenture governing the 1.5 Lien Notes (the “1.5 Lien Trustee,” and, together with the FirstLien Trustee, the “Indenture Trustees”) filed an action in the Supreme Court of the State of New York, New York County that is substantially similar to theFirst Lien Intercreditor Action (the “1.5 Lien Intercreditor Action,” and, together with the First Lien Intercreditor Action, the “Intercreditor Actions”). AGMsubsequently removed the Intercreditor Actions to federal district court, and the Intercreditor Actions were automatically referred to the Bankruptcy Courtadjudicating the Momentive chapter 11 bankruptcy cases. The Indenture Trustees then filed motions with the Bankruptcy Court to remand the IntercreditorActions back to the state court (the “Remand Motions”). On September 9, 2014, the Bankruptcy Court denied the Remand Motions. On August 15, 2014, thedefendants in the Intercreditor Actions (including AGM) filed a motion to dismiss the 1.5 Lien Intercreditor Action and a motion for judgment on thepleadings in the First Lien Intercreditor Action (the “Dismissal Motions”). On September 30, 2014, the Bankruptcy Court granted the Dismissal Motions. Inits order granting the Dismissal Motions, the Bankruptcy Court gave the Indenture Trustees until mid-November 2014 to move to amend some, but not all, ofthe claims alleged in their respective complaints. On November 14, 2014, the Indenture Trustees moved to amend their respective complaints pursuant to theBankruptcy Court’s order (the “Motions to Amend”). On January 9, 2015, the defendants filed their oppositions to the Motions to Amend. On January 16,2015, the Bankruptcy Court denied the Motions to Amend. The Bankruptcy Court gave the Indenture Trustees until March 2, 2015 to seek to amend theirrespective complaints. The Indenture Trustees have not yet indicated whether they intend to file additional motions to amend. Accordingly, we are unable atthis time to assess a potential risk of loss. In addition, we do not believe that AGM is a proper defendant in these actions.On June 13, 2014, plaintiffs Stark Master Fund Ltd and Stark Global Opportunities Master Fund Ltd filed a lawsuit in the United States DistrictCourt for the Eastern District of Wisconsin against AGM and Apollo Management Holdings, L.P. (the “Apollo Defendants”), as well as Credit SuisseSecurities (USA) LLC and Deutsche Bank Securities (USA) LLC (the “Bank Defendants”). The complaint alleges that AGM and the other defendants enteredinto an undisclosed and improper agreement concerning the financing of a potential acquisition by Hexion Specialty Chemicals Inc., and on this basisalleges a variety of common law misrepresentation claims, both intentional and negligent. The Apollo Defendants and Bank Defendants filed motions todismiss the complaint on October 15, 2014. Rather than respond to the motions, plaintiffs filed an Amended Complaint on November 5, 2014. The ApolloDefendants and Bank Defendants filed motions to dismiss the Amended Complaint on December 23, 2014. Plaintiffs filed a motion for leave to conductjurisdictional discovery on February 2, 2015, and pursuant to the parties' stipulation approved by the court the motion shall be fully briefed on or beforeMarch 9, 2015. Plaintiffs must file their opposition to Defendants’ motion to dismiss the Amended Complaint on or before 30 days following either adecision from the Court on Plaintiffs’ motion for jurisdictional discovery or the close of jurisdictional discovery, whichever is later. Because the claimsagainst the Apollo Defendants are in their early stages, no reasonable estimate of possible loss, if any, can be made at this time.There are several pending actions concerning transactions related to Caesars Entertainment Operating Company, Inc.’s (“CEOC”) restructuringefforts. Apollo is not a defendant in these matters.•In re: Caesars Entertainment Operating Company, Inc. bankruptcy proceedings, No. 15-10047 (Del. Bk.) (the “DelawareBankruptcy Action”) and No. 15-01145 (N.D. Ill. Bk.) (the “Illinois Bankruptcy- 215- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Action”). On January 12, 2015, three holders of CEOC second lien notes issued filed an involuntary bankruptcy petitionagainst CEOC in the United States Bankruptcy Court for the District of Delaware.•On February 2, 2015, the court in the Delaware Bankruptcy Action ordered that all CEOC bankruptcy proceedings should takeplace in the Illinois Bankruptcy Action.•Wilmington Savings Fund Society, FSB v. Caesars Entertainment Corp. et al., No. 10004-CVG (Del. Ch.) (the “TrusteeAction”). On August 4, 2014, Wilmington Savings Fund Society, FSB (“WSFS”), as trustee for certain CEOC second-lien notes,sued Caesars Entertainment Corporation (“Caesars Entertainment”), Caesars Entertainment’s subsidiary, CEOC, other CaesarsEntertainment-affiliated entities, and certain of Caesars Entertainment’s directors, including Marc Rowan, Eric Press, DavidSambur (each an Apollo Partner) and Jeff Benjamin (an Apollo consultant), in the Delaware Chancery Court. WSFS (i) assertsclaims (against some or all of the defendants) for fraudulent conveyance, breach of fiduciary duty, breach of contract, corporatewaste and aiding and abetting related to certain transactions between CEOC and other Caesars Entertainment affiliates, and (ii)requests (among other things) that the court unwind the challenged transactions and award damages. Defendants filed a motionto dismiss or stay the Trustee Action in favor of the Caesars Action, which was argued on December 5, 2014.•Caesars Entertainment Operating Co., et al. v. Appaloosa Investment Ltd. P’ship et al., No. 652392/2014 (N.Y. Sup. Ct.) (the“Caesars Action”). On August 5, 2014, Caesars Entertainment Corporation and Caesars Entertainment’s subsidiary CEOC suedcertain institutional CEOC second-lien noteholders and CEOC first-lien noteholder Elliott Management Corporation (“EMC”).On September 15, 2014, an amended complaint was filed adding WSFS as a defendant. The amended complaint asserts claimsfor (among other things) tortious interference with prospective economic advantage, a declaratory judgment that certaintransactions related to CEOC’s restructuring are valid and appropriate and that there has not been a default under the indenturesgoverning the notes. On October 15, 2014, defendants moved to dismiss the complaint, and the motion was fully briefed onDecember 1, 2014. On January 15, 2015, Caesars Entertainment and CEOC agreed to voluntarily dismiss their claims againstEMC without prejudice, and EMC agreed to withdraw its motion to dismiss without prejudice. The remaining parties in theCaesars Action and the parties in the Trustee action described below have agreed to stay discovery pending decision on therespective motions to dismiss.•Meehancombs Global Credit Opportunities Master Fund, L.P., et al. v. Caesars Entertainment Corp., et al., No. 14-cv-7091(S.D.N.Y.) (the “Meehancombs Action”). On September 3, 2014, institutional investors allegedly holding approximately $137million in CEOC unsecured senior notes sued CEOC and Caesars Entertainment for breach of contract and the impliedcovenant of good faith, Trust Indenture Act violations and a declaratory judgment challenging the August 2014 privatefinancing transaction in which a portion of outstanding senior unsecured notes were purchased by Caesars Entertainment, and amajority of the noteholders agreed to amend the indenture to terminate Caesars Entertainment’s guarantee of the notes andmodify certain restrictions on CEOC’s ability to sell assets. On October 2, 2014, a related putative class action complaint wasfiled on behalf of the holders of these notes captioned Danner v. Caesars Entertainment Corp., et al., No. 14-cv-7973 (S.D.N.Y.)(the “Danner Action”), against Caesars Entertainment alleging similar claims to the Meehancombs Action. CaesarsEntertainment and CEOC filed a motion to dismiss on November 12, 2014. On January 15, 2015, the court granted the motionwith respect to a Trust Indenture Act claim by Meehancombs but otherwise denied the motion. On January 30, 2015, plaintiffsfiled an amended complaint seeking relief against Caesars Entertainment only, which Caesars Entertainment answered onFebruary 12, 2015.•UMB Bank v. Caesars Entertainment Corporation, et al., No. 10393 (Del. Ch.) (the “UMB Action.”). On November 25, 2014,UMB Bank, as trustee for certain CEOC notes, sued Caesars Entertainment, CEOC, other Caesars Entertainment-affiliatedentities, and certain of Caesars- 216- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Entertainment’s directors, including Marc Rowan, Eric Press, David Sambur (each an Apollo Partner) and Jeffrey Benjamin (anApollo consultant), in Delaware Chancery Court. The lawsuit alleges claims for actual and constructive fraudulent conveyanceand transfer, insider preferences, illegal dividends, breach of contract, intentional interference with contractual relations, breachof fiduciary duty, aiding and abetting breach of fiduciary duty, usurpation of corporate opportunities, and unjust enrichment.The UMB Action seeks appointment of a receiver for CEOC, a constructive trust, and other relief. The UMB Action has beenassigned to the same judge overseeing the Trustee Action. Upon filing the complaint, UMB Bank moved to expedite is claimseeking a receiver, on which the court held oral argument on December 17, 2014. On January 15, 2015, the court entered astipulated order staying the UMB Action as to all parties due to CEOC’s bankruptcy filing.•Koskie v. Caesars Acquisition Company, et al., No. A-14-711712-C (Clark Cnty Nev. Dist. Ct.) (the “Koskie Action”). OnDecember 30, 2014, Nicholas Koskie brought a shareholder class action on behalf of shareholders of Caesars AcquisitionCompany (“CAC”) against CAC, Caesars Entertainment, and members of CAC’s Board of Directors, including Marc Rowan andDavid Sambur (each an Apollo partner). The lawsuit challenges CAC and Caesars Entertainment’s plan to merge, alleging thatthe proposed transaction will not give CAC shareholders fair value. Koskie asserts claims for breach of fiduciary duty relatingto the director defendants’ interrelationships with the entities involved the proposed transaction.•Apollo believes that the claims in the Trustee Action, the UMB Action, the Meehancombs Action, the Danner Action, and theKoskie Action are without merit. For this reason, and because the claims are in their early stages, and because of pendingbankruptcy proceedings involving CEOC, no reasonable estimate of possible loss, if any, can be made at this time.Following the January 16, 2014 announcement that CEC Entertainment, Inc. (“CEC”) had entered into a merger agreement with certain entitiesaffiliated with Apollo (the “Merger Agreement”), four putative shareholder class actions were filed in the District Court of Shawnee County, Kansas on behalfof purported stockholders of CEC against, among others, CEC, its directors and Apollo and certain of its affiliates, which include Queso Holdings Inc., QMerger Sub Inc., Apollo Management VIII, L.P., and AP VIII Queso Holdings, L.P. The first purported class action, which is captioned Hilary Coyne v.Richard M. Frank et al., Case No. 14C57, was filed on January 21, 2014 (the “Coyne Action”). The second purported class action, which was captioned JohnSolak v. CEC Entertainment, Inc. et al., Civil Action No. 14C55, was filed on January 22, 2014 (the “Solak Action”). The Solak Action was dismissed for lackof prosecution on October 14, 2014. The third purported class action, which is captioned Irene Dixon v. CEC Entertainment, Inc. et al., Case No. 14C81, wasfiled on January 24, 2014 and additionally names as defendants Apollo Management VIII, L.P. and AP VIII Queso Holdings, L.P. (the “Dixon Action”). Thefourth purported class action, which is captioned Louisiana Municipal Public Employees’ Retirement System v. Frank, et al., Case No. 14C97, was filed onJanuary 31, 2014 (the “LMPERS Action”) (together with the Coyne and Dixon Actions, the “Shareholder Actions”). A fifth purported class action, which wascaptioned McCullough v. Frank, et al., Case No. CC-14-00622-B, was filed in the County Court of Dallas County, Texas on February 7, 2014. This actionwas dismissed for want of prosecution on May 21, 2014. Each of the Shareholder Actions alleges, among other things, that CEC’s directors breached theirfiduciary duties to CEC’s stockholders in connection with their consideration and approval of the Merger Agreement, including by agreeing to an inadequateprice, agreeing to impermissible deal protection devices, and filing materially deficient disclosures regarding the transaction. Each of the ShareholderActions further alleges that Apollo and certain of its affiliates aided and abetted those alleged breaches. As filed, the Shareholder Actions seek, among otherthings, rescission of the various transactions associated with the merger, damages and attorneys’ and experts’ fees and costs. On February 7, 2014 andFebruary 11, 2014, the plaintiffs in the Shareholder Actions pursued a consolidated action for damages after the transaction closed. Thereafter, theShareholder Actions were consolidated under the caption In re CEC Entertainment, Inc. Stockholder Litigation, Case No. 14C57, and the parties haveengaged in limited discovery. No defendant has any obligation to answer or otherwise respond to any of the complaints in the consolidated action until theplaintiffs file or designate an operative complaint. Although Apollo cannot predict the ultimate outcome of the above action, it believes that such action iswithout merit.On June 10, 2014, Magnetar Global Event Driven Fund Ltd., Spectrum Opportunities Master Fund, Ltd., Magnetar Capital Master Fund, Ltd., andBlackwell Partners LLC, as the purported beneficial owners of shares held as of record by the nominal petitioner Cede & Co., (the “Appraisal Petitioners”),filed an action for statutory appraisal under Kansas state law against CEC in the U.S. District Court for the District of Kansas, captioned Magnetar GlobalEvent Driven Master Fund Ltd, et al. v. CEC- 217- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Entertainment, Inc., 2:14-cv-02279-RDR-KGS. The Appraisal Petitioners seek appraisal of 750,000 shares of common stock. CEC has answered the complaintand filed a verified list of stockholders, as required under Kansas law. On September 3, 2014, the court entered a scheduling order that contemplated thatdiscovery would commence in the fall of 2014 and would be substantially completed by May 2015. On January 13, 2015, the court entered a revisedscheduling order that contemplated that fact discovery would be completed by March 13, 2015, expert discovery would be completed by June 15, 2015, anda pretrial conference would occur on June 29, 2015. Thereafter, the scheduling order contemplates dispositive motion practice and a trial on the merits of theAppraisal Petitioners’ claims. Although Apollo cannot predict the ultimate outcome of the above actions, Apollo believes that such actions are without merit.On September 29, 2014, Athlon Energy Inc. (“Athlon”) and Encana Corporation (“Encana”) jointly announced that they had entered into anAgreement and Plan of Merger, dated as of September 27, 2014 (the “Merger Agreement”), pursuant to which a wholly-owned subsidiary of Encana (“MergerSub”) would commence a tender offer (the “Offer”) to acquire all of the issued and outstanding shares of Athlon common stock. Following completion of theOffer, Merger Sub would be merged with and into Athlon (the “Proposed Transaction”). On October 23, 2014, The City of Cambridge Retirement Systemfiled a putative class action complaint captioned The City of Cambridge Retirement System v. Reeves, et al., C.A. No. 10277-VCG (the “Cambridge Action”)in the Delaware Court of Chancery naming Merger Sub, AGM and members of Athlon’s board of directors as defendants. The Cambridge Action alleges,among other things, that members of Athlon’s board of directors breached their fiduciary duties in connection with their consideration and approval of theproposed transaction, and that Encana, Merger Sub and AGM aided and abetted those breaches of fiduciary duty. On November 3, 2014, the parties to theCambridge Action and several other similar actions filed in Delaware and Texas state court before the Cambridge Action (none of which named AGM as adefendant (collectively, the “Actions”)), entered into a Memorandum of Understanding to settle the Actions. On December 19, 2014, the parties to theActions entered into a formal settlement agreement, and on December 22, 2014, the parties submitted the settlement agreement and accompanying papers tothe court for its approval. Under the terms of the proposed settlement, AGM will not be required to contribute any cash and will be granted full andcustomary releases.Although the ultimate outcome of these matters cannot be ascertained at this time, Apollo is of the opinion, after consultation with counsel, thatthe resolution of any such matters to which it is a party at this time will not have a material adverse effect on the consolidated financial statements. Legalactions material to Apollo could, however, arise in the future.Commitments—Apollo leases office space and certain office equipment under various lease and sublease arrangements, which expire on variousdates through 2024. As these leases expire, it can be expected that in the normal course of business, they will be renewed or replaced. Certain leaseagreements contain renewal options, rent escalation provisions based on certain costs incurred by the landlord or other inducements provided by thelandlord. Rent expense is accrued to recognize lease escalation provisions and inducements provided by the landlord, if any, on a straight-line basis over thelease term and renewal periods where applicable. Apollo has entered into various operating lease service agreements in respect of certain assets.As of December 31, 2014, the approximate aggregate minimum future payments required for operating leases were as follows: 2015 2016 2017 2018 2019 Thereafter TotalAggregate minimum futurepayments$38,863 $38,225 $36,114 $31,742 $31,348 $24,214 $200,506Expenses related to non-cancellable contractual obligations for premises, equipment, auto and other assets were $42.5 million, $42.0 million and$41.2 million for the years ended December 31, 2014, 2013 and 2012, respectively.Other Long-term Obligations—These obligations relate to payments with respect to certain consulting agreements entered into by ApolloInvestment Consulting LLC, a subsidiary of Apollo. A significant portion of these costs are reimbursable by funds or portfolio companies. As ofDecember 31, 2014, fixed and determinable payments due in connection with these obligations were as follows: 2015 2016 2017 2018 2019 Thereafter TotalOther long-term obligations$10,400 $4,575 $4,470 $4,470 $2,235 $— $26,150 - 218- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)Contingent Obligations—Carried interest income with respect to private equity funds and certain credit and real estate funds is subject to reversalin the event of future losses to the extent of the cumulative carried interest recognized in income to date. If all of the existing investments became worthless,the amount of cumulative revenues that have been recognized by Apollo through December 31, 2014 and that would be reversed approximates $2.9 billion.Management views the possibility of all of the investments becoming worthless as remote. Carried interest income is affected by changes in the fair values ofthe underlying investments in the funds that Apollo manages. Valuations, on an unrealized basis, can be significantly affected by a variety of external factorsincluding, but not limited to, bond yields and industry trading multiples. Movements in these items can affect valuations quarter to quarter even if theunderlying business fundamentals remain stable.Additionally, at the end of the life of certain funds that the Company manages, there could be a payment due to a fund by the Company if theCompany, as general partner, has received more carried interest income than was ultimately earned. The general partner obligation amount, if any, willdepend on final realized values of investments at the end of the life of each fund or as otherwise set forth in the respective limited partnership agreement ofthe fund. As of December 31, 2014, the Company has recorded a general partner obligation to return previously distributed carried interest income of $3.4million relating to the Company's credit funds (see note 17 for further for further information).Certain funds may not generate carried interest income as a result of unrealized and realized losses that are recognized in the current and priorreporting period. In certain cases, carried interest income will not be generated until additional unrealized and realized gains occur. Any appreciation wouldfirst cover the deductions for invested capital, unreturned organizational expenses, operating expenses, management fees and priority returns based on theterms of the respective fund agreements.One of the Company’s subsidiaries, AGS, provides underwriting commitments in connection with securities offerings to the portfolio companiesof the funds Apollo manages. As of December 31, 2014, there were no underwriting commitments outstanding related to such offerings.Contingent ConsiderationIn connection with the acquisition of Stone Tower in April 2012, the Company agreed to pay the former owners of Stone Tower a specifiedpercentage of any future carried interest income earned from certain of the Stone Tower funds, CLOs, and strategic investment accounts. This contingentconsideration liability had an acquisition date fair value of $117.7 million, which was determined based on the present value of estimated future carriedinterest payments, and is recorded in profit sharing payable in the consolidated statements of financial condition. On July 31, 2014, the Companyextinguished a portion of this contingent consideration obligation and recognized a gain in the amount of $13.4 million, which was recorded in otherincome, net in the consolidated statements of operations for the year ended December 31, 2014. In exchange for the extinguishment, the Company granted aformer owner of Stone Tower and current Apollo employee 350,000 RSUs with rights to receive, subject to a three-year vesting period, distributionequivalents. (see note 16 for further information regarding the accounting for RSUs). The fair value of the remaining contingent obligation was $84.5 millionand $121.4 million as of December 31, 2014 and December 31, 2013, respectively.In connection with the Gulf Stream acquisition, the Company agreed to make payments to the former owners of Gulf Stream under a contingentconsideration obligation which required the Company to transfer cash to the former owners of Gulf Stream based on a specified percentage of carried interestincome. The contingent liability had a fair value of $11.6 million and $14.1 million as of December 31, 2014 and December 31, 2013, respectively, whichwas recorded in profit sharing payable in the consolidated statements of financial condition.The contingent consideration obligations will be remeasured to fair value at each reporting period until the obligations are satisfied. The changesin the fair value of the contingent consideration obligations will be reflected in profit sharing expense in the consolidated statements of operations.The contingent consideration obligations are measured at fair value and are characterized as Level III liabilities. See note 6 for furtherinformation regarding fair value measurements.19. MARKET AND CREDIT RISKIn the normal course of business, Apollo encounters market and credit risk concentrations. Market risk reflects changes in the value ofinvestments due to changes in interest rates, credit spreads or other market factors. Credit risk includes the risk of default on Apollo’s investments, where thecounterparty is unable or unwilling to make required or expected payments.- 219- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The Company is subject to a concentration risk related to the investors in its funds. As of December 31, 2014, there were more than 1,000investors in Apollo’s active private equity, credit and real estate funds, and no individual investor accounted for more than 10% of the total committedcapital to Apollo’s active funds.Apollo’s derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of theagreements. Apollo seeks to minimize this risk by limiting its counterparties to highly rated major financial institutions with good credit ratings.Management does not expect any material losses as a result of default by other parties.Substantially all amounts on deposit with major financial institutions that exceed insured limits are invested in interest-bearing accounts withU.S. money center banks.Apollo is exposed to economic risk concentrations insofar as Apollo is dependent on the ability of the funds that it manages to compensate it forthe services it provides to these funds. Further, the incentive income component of this compensation is based on the ability of such funds to generate returnsabove certain specified thresholds.Additionally, Apollo is exposed to interest rate risk. Apollo has debt obligations that have variable rates. Interest rate changes may thereforeaffect the amount of interest payments, future earnings and cash flows. At December 31, 2014 and December 31, 2013, $535.0 million and $750.0 million ofApollo’s debt balance (excluding debt of the consolidated VIEs) had a variable interest rate, respectively.- 220- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)20. SEGMENT REPORTINGApollo conducts its management and incentive businesses primarily in the United States and substantially all of its revenues are generateddomestically. These businesses are conducted through the following three reportable segments:•Private Equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debtinvestments;•Credit—primarily invests in non-control corporate and structured debt instruments; and•Real Estate—primarily invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios,platforms and operating companies, and real estate debt including first mortgage and mezzanine loans, preferred equity andcommercial mortgage backed securities.These business segments are differentiated based on the varying investment strategies. The performance is measured by management on anunconsolidated basis because management makes operating decisions and assesses the performance of each of Apollo’s business segments based on financialand operating metrics and data that exclude the effects of consolidation of any of the affiliated funds.The Company’s financial results vary since carried interest, which generally constitutes a large portion of the income from the funds that Apollomanages, as well as the transaction and advisory fees that the Company receives, can vary significantly from quarter to quarter and year to year. As a result,the Company emphasizes long-term financial growth and profitability to manage its business.The tables below present the financial data for Apollo’s reportable segments further separated between the management business and incentivebusiness as of December 31, 2014, 2013 and 2012, and for the years ended December 31, 2014, 2013 and 2012, respectively, which management believes isuseful to the reader. The Company’s management business has fairly stable revenues and expenses except for transaction fees, while its incentive business ismore volatile and can have significant fluctuations as it is affected by changes in the fair value of investments due to market performance. The financialresults of the management entities, as reflected in the “management” business section of the segment tables that follow, generally include management feerevenues, advisory and transaction fees and expenses exclusive of profit sharing expense. The financial results of the advisory entities, as reflected in the“incentive” business sections of the segment tables that follow, generally include carried interest income, investment income and profit sharing expense. Economic Net Income (Loss)ENI is a key performance measure used by management in evaluating the performance of Apollo’s private equity, credit and real estate segments.Management believes the components of ENI, such as the amount of management fees, advisory and transaction fees and carried interest income, areindicative of the Company’s performance. Management also uses ENI in making key operating decisions such as the following:•Decisions related to the allocation of resources such as staffing decisions including hiring and locations for deployment of thenew hires;•Decisions related to capital deployment such as providing capital to facilitate growth for the business and/or to facilitateexpansion into new businesses; and•Decisions relating to expenses, such as determining annual discretionary bonuses and equity-based compensation awards to itsemployees. With respect to compensation, management seeks to align the interests of certain professionals and selected otherindividuals with those of the investors in such funds and those of the Company’s shareholders by providing such individuals aprofit sharing interest in the carried interest income earned in relation to the funds. To achieve that objective, a certain amountof compensation is based on the Company’s performance and growth for the year.ENI is a measure of profitability and has certain limitations in that it does not take into account certain items included under U.S. GAAP. ENIrepresents segment income (loss) attributable to Apollo Global Management, LLC, which excludes the impact of (i) non-cash charges related to RSUsgranted in connection with the 2007 private placement and amortization of AOG Units, (ii) income tax expense, (iii) amortization of intangibles associatedwith the 2007 Reorganization as well as acquisitions,- 221- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)(iv) Non-Controlling Interests excluding the remaining interest held by certain individuals who receive an allocation of income from certain of our creditmanagement companies and (v) non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company.In addition, segment data excludes the assets, liabilities and operating results of the funds and VIEs that are included in the consolidated financialstatements as such carried interest income, management fees and other revenues from these consolidated entities are reflected on an unconsolidated basis.The following table presents financial data for Apollo’s reportable segments as of and for the year ended December 31, 2014: As of and for the Year Ended December 31, 2014 PrivateEquitySegment CreditSegment RealEstateSegment TotalReportableSegmentsRevenues: Advisory and transaction fees from affiliates, net$58,241 $255,186 $2,655 $316,082Management fees from affiliates315,069 538,742 47,213 901,024Carried interest income from affiliates231,983 165,589 8,949 406,521Total Revenues605,293 959,517 58,817 1,623,627Expenses403,323 517,435 67,991 988,749Other Income45,011 79,086 9,259 133,356Non-Controlling Interests— (12,688) — (12,688)Economic Net Income$246,981$508,480 $85 $755,546Total Assets$1,835,453 $2,139,441 $202,977 $4,177,871- 222- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table reconciles the total segments to Apollo Global Management, LLC’s consolidated financial statements as of and for the yearended December 31, 2014: As of and for the Year Ended December 31, 2014 TotalReportableSegments ConsolidationAdjustmentsand Other ConsolidatedRevenues$1,623,627 $(63,544)(1) $1,560,083Expenses988,749 54,814(2) 1,043,563Other income133,356 227,291(3) 360,647Non-Controlling Interests(12,688) (549,005) (561,693)Economic Net Income$755,546(5) N/A N/ATotal Assets$4,177,871 $19,000,966(6) $23,178,837 (1)Represents advisory fees, management fees and carried interest income earned from consolidated VIEs which are eliminated in consolidation. Includes non-cashrevenues related to equity awards granted by unconsolidated affiliates to employees of the Company.(2)Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 privateplacement. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.(3)Results from the following: For the Year Ended December 31, 2014Net gains from investment activities$204,181Net gains from investment activities of consolidated variable interest entities22,564Loss from equity method investments(4)(1,049)Other Income, net1,595Total Consolidation Adjustments$227,291 (4)Includes $498 reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.(5)The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the consolidated statements of operationsconsists of the following: For the Year Ended December 31, 2014Economic Net Income$755,546Income tax provision(147,245)Net income attributable to Non-Controlling Interests in Apollo Operating Group(404,682)Non-cash charges related to equity-based compensation(7)(502)Amortization of intangible assets(34,888)Net Income Attributable to Apollo Global Management, LLC$168,229 (6)Represents the addition of assets of consolidated funds and the consolidated VIEs.(7)Includes the impact of non-cash charges related to amortization of RSUs granted in connection with the 2007 private placement as discussed in note 16 to ourconsolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.- 223- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables present additional financial data for Apollo’s reportable segments for the year ended December 31, 2014: For the Year Ended December 31, 2014 Private Equity Credit Management Incentive Total Management Incentive TotalRevenues: Advisory and transaction fees from affiliates,net$58,241 $— $58,241 $255,186 $— $255,186Management fees from affiliates315,069 — 315,069 538,742 — 538,742Carried interest income (loss) from affiliates: Unrealized losses(1)— (1,196,093) (1,196,093) — (156,644) (156,644)Realized gains— 1,428,076 1,428,076 41,199 281,034 322,233Total Revenues373,310 231,983 605,293 835,127 124,390 959,517Compensation and benefits(2)146,215 178,373 324,588 259,283 95,070 354,353Other expenses(3)78,735 — 78,735 163,082 — 163,082Total Expenses224,950 178,373 403,323 422,365 95,070 517,435Other Income12,976 32,035 45,011 28,538 50,548 79,086Non-Controlling Interests— — — (12,688) — (12,688)Economic Net Income$161,336 $85,645 $246,981 $428,612 $79,868 $508,480 (1)Included in unrealized carried interest income (loss) from affiliates for the year ended December 31, 2014 was a reversal of previously realized carried interest incomedue to the general partner obligation to return previously distributed carried interest income of $3.4 million in aggregate with respect to two of our credit funds. Theactual determination and any required payment of any such general partner obligation would not take place until the final disposition of a fund’s investments based onthe contractual termination of the fund or as otherwise set forth in the respective limited partnership agreement of the fund.(2)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.(3)Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions. For the Year Ended December 31, 2014 Real Estate Management Incentive TotalRevenues: Advisory and transaction fees from affiliates, net$2,655 $— $2,655Management fees from affiliates47,213 — 47,213Carried interest income from affiliates: Unrealized gains— 4,951 4,951Realized gains— 3,998 3,998Total Revenues49,868 8,949 58,817Compensation and benefits(1)41,460 2,747 44,207Other expenses(2)23,784 — 23,784Total Expenses65,244 2,747 67,991Other Income3,584 5,675 9,259Economic Net Income (Loss)$(11,792) $11,877 $85 (1)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.- 224- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)(2)Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.The following table presents the financial data for Apollo’s reportable segments as of and for the year ended December 31, 2013: As of and for the Year Ended December 31, 2013 PrivateEquitySegment CreditSegment RealEstateSegment TotalReportableSegmentsRevenues: Advisory and transaction fees from affiliates, net$78,371 $114,643 $3,548 $196,562Management fees from affiliates284,833 392,433 53,436 730,702Carried interest income from affiliates2,517,247 373,692 5,222 2,896,161Total Revenues2,880,451 880,768 62,206 3,823,425Expenses1,284,657 482,015 69,886 1,836,558Other Income93,512 55,133 6,124 154,769Non-Controlling Interests— (13,985) — (13,985)Economic Net Income (Loss)$1,689,306 $439,901 $(1,556) $2,127,651Total Assets$3,148,975 $1,918,565 $145,996 $5,213,536 - 225- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table reconciles the total reportable segments to Apollo Global Management, LLC’s financial statements as of and for the yearended December 31, 2013: As of and for the Year Ended December 31, 2013 TotalReportableSegments ConsolidationAdjustmentsand Other ConsolidatedRevenues$3,823,425 $(89,854)(1) $3,733,571Expenses1,836,558 105,157(2) 1,941,715Other income154,769 534,938(3) 689,707Non-Controlling Interests(13,985) (1,700,618) (1,714,603)Economic Net Income$2,127,651(5) N/A N/ATotal Assets$5,213,536 $17,264,445(6) $22,477,981 (1)Represents advisory fees, management fees and carried interest income earned from consolidated VIEs which are eliminated in consolidation. Includes non-cashrevenues related to equity awards granted by unconsolidated affiliates to employees of the Company.(2)Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 privateplacement and equity-based compensation expense comprising amortization of AOG Units and amortization of intangible assets. Includes non-cash expenses related toequity awards granted by unconsolidated affiliates to employees of the Company.(3)Results from the following: For the Year Ended December 31, 2013Net gains from investment activities$342,828Net gains from investment activities of consolidated variable interest entities199,742Gain from equity method investments(4)(5,860)Interest income(1,772)Total Consolidation Adjustments$534,938 (4)Includes $(4,888) reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.(5)The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the consolidated statements of operationsconsists of the following: For the Year Ended December 31, 2013Economic Net Income$2,127,651Income tax provision(107,569)Net income attributable to Non-Controlling Interests in Apollo Operating Group(1,257,650)Non-cash charges related to equity-based compensation(7)(59,847)Amortization of intangible assets(43,194)Net Income Attributable to Apollo Global Management, LLC$659,391(6)Represents the addition of assets of consolidated funds and the consolidated VIEs.(7)Includes the impact of non-cash charges related to amortization of AOG Units and RSUs granted in connection with the 2007 private placement as discussed in note 16to our consolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of theCompany. - 226- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables present additional financial data for Apollo’s reportable segments for the year ended December 31, 2013: For the Year Ended December 31, 2013 Private Equity Credit Management Incentive Total Management Incentive TotalRevenues: Advisory and transaction fees from affiliates, net$78,371 $— $78,371 $114,643 $— $114,643Management fees from affiliates284,833 — 284,833 392,433 — 392,433Carried interest income from affiliates: Unrealized gains (losses)(1)— 454,722 454,722 — (56,568) (56,568)Realized gains— 2,062,525 2,062,525 36,922 393,338 430,260Total Revenues363,204 2,517,247 2,880,451 543,998 336,770 880,768Compensation and benefits(2)141,728 1,030,404 1,172,132 177,223 142,728 319,951Other expenses(3)112,525 — 112,525 162,064 — 162,064Total Expenses254,253 1,030,404 1,284,657 339,287 142,728 482,015Other Income13,006 80,506 93,512 28,540 26,593 55,133Non-Controlling Interests— — — (13,985) — (13,985)Economic Net Income$121,957 $1,567,349 $1,689,306 $219,266 $220,635 $439,901 (1)Included in unrealized carried interest income from affiliates for the year ended December 31, 2013 was reversal of $19.3 million and $0.3 million of the entire generalpartner obligation to return previously distributed carried interest income with respect to SOMA and APC, respectively. The general partner obligation is recognizedbased upon a hypothetical liquidation of the fund’s net assets as of the reporting date. The actual determination and any required payment of a general partner obligationwould not take place until the final disposition of a fund’s investments based on the contractual termination of the fund.(2)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.(3)Other expenses excludes amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.- 227- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted) For the Year Ended December 31, 2013 Real Estate Management Incentive TotalRevenues: Advisory and transaction fees from affiliates, net$3,548 $— $3,548Management fees from affiliates53,436 — 53,436Carried interest income from affiliates: Unrealized gains— 4,681 4,681Realized gains— 541 541Total Revenues56,984 5,222 62,206Compensation and benefits(1)42,143 123 42,266Other expenses(2)27,620 — 27,620Total Expenses69,763 123 69,886Other Income2,402 3,722 6,124Economic Net (Loss) Income$(10,377) $8,821 $(1,556) (1)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.(2)Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.- 228- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following table presents financial data for Apollo’s reportable segments as of and for the year ended December 31, 2012: As of and for the Year Ended December 31, 2012 PrivateEquitySegment CreditSegment RealEstateSegment TotalReportableSegmentsRevenues: Advisory and transaction fees from affiliates, net$121,744 $27,551 $749 $150,044Management fees from affiliates277,048 299,667 46,326 623,041Carried interest income from affiliates1,667,535 518,852 15,074 2,201,461Total Revenues2,066,327 846,070 62,149 2,974,546Expenses945,466 454,378 72,437 1,472,281Other Income78,691 59,966 2,253 140,910Non-Controlling Interests— (8,730) — (8,730)Economic Net Income (Loss)$1,199,552 $442,928 $(8,035) $1,634,445Total Assets$2,583,373 $1,798,086 $76,851 $4,458,310The following table reconciles the total segments to Apollo Global Management, LLC’s consolidated financial statements as of and for the yearended December 31, 2012: As of and for the Year Ended December 31, 2012 TotalReportableSegments ConsolidationAdjustmentsand Other ConsolidatedRevenues$2,974,546 $(114,581)(1) $2,859,965Expenses1,472,281 575,564(2) 2,047,845Other income140,910 2,160,175(3) 2,301,085Non-Controlling Interests(8,730) (2,728,108) (2,736,838)Economic Net Income$1,634,445(5) N/A N/ATotal Assets$4,458,310 $16,178,548(6) $20,636,858 (1)Represents advisory fees, management fees and carried interest income earned from consolidated VIEs which are eliminated in consolidation. Includes non-cashrevenues related to equity awards granted by unconsolidated affiliates to employees of the Company.(2)Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 privateplacement. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.(3)Results from the following: For the Year Ended December 31,2012Net gains from investment activities$289,386Net losses from investment activities of consolidated variable interest entities(71,704)Loss from equity method investments(4)(10,947)Other Income, net1,543Gain on acquisition$1,951,897Total Consolidation Adjustments$2,160,175- 229- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted) (4)Includes $1,423 reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.(5)The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the consolidated statements of operationsconsists of the following: For the Year Ended December 31,2012Economic Net Income$1,634,445Income tax provision(65,410)Net income attributable to Non-Controlling Interests in Apollo Operating Group(685,357)Non-cash charges related to equity-based compensation(7)(529,712)Amortization of intangible assets(43,009)Net Income Attributable to Apollo Global Management, LLC$310,957 (6)Represents the addition of assets of consolidated funds and the consolidated VIEs.(7)Includes the impact of non-cash charges related to amortization of RSUs granted in connection with the 2007 private placement as discussed in note 16 to ourconsolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.- 230- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)The following tables present additional financial data for Apollo’s reportable segments for the year ended December 31, 2012: For the Year Ended December 31, 2012 Private Equity Credit Management Incentive Total Management Incentive TotalRevenues: Advisory and transaction fees from affiliates,net$121,744 $— $121,744 $27,551 $— $27,551Management fees from affiliates277,048 — 277,048 299,667 — 299,667Carried interest income from affiliates: Unrealized losses(1)— 854,919 854,919 — 301,077 301,077Realized gains— 812,616 812,616 37,842 179,933 217,775Total Revenues398,792 1,667,535 2,066,327 365,060 481,010 846,070Compensation and benefits(2)135,281 726,874 862,155 166,883 138,444 305,327Other expenses(3)83,311 — 83,311 149,051 — 149,051Total Expenses218,592 726,874 945,466 315,934 138,444 454,378Other Income4,653 74,038 78,691 15,008 44,958 59,966Non-Controlling Interests— — — (8,730) — (8,730)Economic Net Income$184,853 $1,014,699 $1,199,552 $55,404 $387,524 $442,928 (1)Included in unrealized carried interest income from affiliates for December 31, 2012 was a reversal of $75.3 million of the entire general partner obligation to returnpreviously distributed carried interest income with respect to Fund VI and reversal of previously recognized realized carried interest income due to the general partnerobligation to return previously distributed carried interest income of $1.2 million and $0.3 million with respect to SOMA and APC, respectively. The general partnerobligation is recognized based upon a hypothetical liquidation of the funds' net assets as of December 31, 2012. The actual determination and any required payment of ageneral partner obligation would not take place until the final disposition of a fund's investments based on the contractual termination of the fund.(2)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.(3)Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.- 231- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted) For the Year Ended December 31, 2012 Real Estate Management Incentive TotalRevenues: Advisory and transaction fees from affiliates, net$749 $— $749Management fees from affiliates46,326 — 46,326Carried interest income from affiliates: Unrealized losses— 10,401 10,401Realized gains— 4,673 4,673Total Revenues47,075 15,074 62,149Compensation and benefits(1)41,352 6,815 48,167Other expenses(2)24,270 — 24,270Total Expenses65,622 6,815 72,437Other Income1,271 982 2,253Economic Net (Loss) Income$(17,276) $9,241 $(8,035) (1)Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the2007 private placement) and share options.(2)Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.21. SUBSEQUENT EVENTSOn January 13, 2015, the Company issued 681,421 Class A shares in settlement of vested RSUs. This issuance caused the Company's ownershipinterest in the Apollo Operating Group to increase from 42.3% to 42.4%.On February 5, 2015, the Company declared a cash distribution of $0.86 per Class A share, which will be paid on February 27, 2015 to holders ofrecord on February 17, 2015.On February 6, 2015, the Company issued 225,000 Class A shares in exchange for AOG Units. This issuance did not cause a material change tothe Company's ownership interest in the Apollo Operating Group.On February 10, 2015, the Company issued 3,946,444 Class A shares in settlement of vested RSUs. This issuance caused the Company'sownership interest in the Apollo Operating Group to increase from 42.4% to 43.0%.Apollo, through its subsidiary Apollo MidCap Holdings (Cayman), L.P., has entered into a subscription agreement providing for an aggregatecommitment of $50.0 million to subscribe for (i) Class A Variable Funding Subordinated Notes due 2114 (“Class A Notes”) of Midcap Finco Limited(“FinCo”), an Irish company that includes the existing operations and assets of MidCap Financial LLC, a specialty finance company that originatescommercial lending opportunities, and (ii) ordinary shares of Finco’s holding company (“Ordinary Shares”). The subscription agreement has a commitmentperiod of three years (subject to extension under certain circumstances), and $8.0 million of the commitment was drawn on February 3, 2015. Pursuant to aninvestment management agreement, Apollo, through its subsidiary Apollo Capital Management, L.P., is acting as the investment manager of FinCo’s creditbusiness. Certain third parties have also entered into subscription agreements for Class A Notes and Ordinary Shares.- 232- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(dollars in thousands, except share data, except where noted)22. QUARTERLY FINANCIAL DATA (UNAUDITED) For the Three Months Ended March 31,2014 June 30,2014 September 30,2014 December 31, 2014Revenues$491,400 $572,152 $221,135 $275,396Expenses314,119 354,369 177,388 197,687Other Income (Loss)314,912 69,556 (82,135) 58,314Income (Loss) Before Provision for Taxes$492,193 $287,339 $(38,388) $136,023Net Income (Loss)$459,644 $252,302 $(67,764) $85,740Net income attributable to Apollo Global Management, LLC$72,169 $71,668 $2,210 $22,182Net Income per Class A Share - Basic$0.32 $0.33 $(0.05) $0.04Net Income per Class A Share - Diluted$0.32 $0.33 $(0.05) $0.04 For the Three Months Ended March 31,2013 June 30,2013 September 30,2013 December 31, 2013Revenues$1,309,073 $497,261 $1,132,089 $795,148Expenses622,602 322,787 600,115 396,211Other Income (Loss)132,173 (8,165) 210,820 354,879Income Before Provision for Taxes$818,644 $166,309 $742,794 $753,816Net Income$800,065 $148,170 $695,590 $730,169Net income attributable to Apollo Global Management, LLC$248,978 $58,737 $192,516 $159,160Net Income per Class A Share - Basic$1.60 $0.32 $1.13 $0.94Net Income per Class A Share - Diluted$1.59 $0.32 $1.13 $0.93 For the Three Months Ended March 31,2012 June 30,2012 September 30,2012 December 31, 2012Revenues$776,743 $211,628 $712,373 $1,159,221Expenses523,230 316,962 520,008 687,645Other Income192,188 1,950,461 27,348 131,088Income Before Provision for Taxes$445,701 $1,845,127 $219,713 $602,664Net Income$431,141 $1,834,477 $197,796 $584,381Net income (Loss) attributable to Apollo Global Management, LLC$98,043 $(41,386) $82,791 $171,509Net Income (Loss) per Class A Share-Basic$0.66 $(0.38) $0.55 $1.12Net Income (Loss) per Class A Share - Diluted$0.66 $(0.38) $0.55 $1.12- 233- Table of ContentsITEM 8A. UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTSOF FINANCIAL CONDITIONAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)(dollars in thousands, except share data) December 31, 2014 Apollo Global Management,LLC and ConsolidatedSubsidiaries ConsolidatedFunds and VIE's Eliminations ConsolidatedAssets: Cash and cash equivalents$1,204,052 $— $— $1,204,052Cash and cash equivalents held at consolidated funds— 1,611 — 1,611Restricted cash6,353 — — 6,353Investments857,391 2,173,989 (151,374) 2,880,006Assets of consolidated variable interest entities Cash and cash equivalents— 1,088,952 — 1,088,952Investments, at fair value— 15,658,948 (295) 15,658,653Other assets— 323,932 (692) 323,240Carried interest receivable958,846 — (47,180) 911,666Due from affiliates278,632 — (10,617) 268,015Fixed assets, net35,906 — — 35,906Deferred tax assets606,717 — — 606,717Other assets81,083 3,578 (277) 84,384Goodwill88,852 — (39,609) 49,243Intangible assets, net60,039 — — 60,039Total Assets$4,177,871 $19,251,010 $(250,044) $23,178,837Liabilities and Shareholders' Equity Liabilities: Accounts payable and accrued expenses43,772 474 — 44,246Accrued compensation and benefits59,278 — — 59,278Deferred revenue199,614 — — 199,614Due to affiliates564,799 354 — 565,153Profit sharing payable434,852 — — 434,852Debt1,034,014 — — 1,034,014Liabilities of consolidated variable interest entities: Debt, at fair value— 14,170,474 (47,374) 14,123,100Other liabilities— 728,957 (239) 728,718Due to affiliates— 58,526 (58,526) —Other liabilities42,183 4,218 — 46,401Total Liabilities$2,378,512 $14,963,003 $(106,139) $17,235,376 Shareholders' Equity: Apollo Global Management, LLC shareholders' equity: Additional paid in capital2,256,054 — (1,771) 2,254,283Accumulated deficit(1,433,759) 2,175,406 (2,142,308) (1,400,661)Appropriated partners' capital— 972,774 (39,608) 933,166Accumulated other comprehensive income (loss)33,052 — (33,358) (306)Total Apollo Global Management, LLC shareholders' equity855,347 3,148,180 (2,217,045) 1,786,482Non-Controlling Interests in consolidated entities9,228 1,139,827 2,073,140 3,222,195Non-Controlling Interests in Apollo Operating Group934,784 — — 934,784Total Shareholders' Equity1,799,359 4,288,007 (143,905) 5,943,461Total Liabilities and Shareholders' Equity$4,177,871 $19,251,010 $(250,044) $23,178,837 - 234- Table of ContentsAPOLLO GLOBAL MANAGEMENT, LLCCONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)(dollars in thousands, except share data) December 31, 2013 Apollo Global Management,LLC and ConsolidatedSubsidiaries ConsolidatedFunds and VIE's Eliminations ConsolidatedAssets: Cash and cash equivalents$1,078,120 $— $— $1,078,120Cash and cash equivalents held at consolidated funds— 1,417 — 1,417Restricted cash9,199 — — 9,199Investments509,712 1,971,654 (87,483) 2,393,883Assets of consolidated variable interest entities Cash and cash equivalents— 1,095,170 — 1,095,170Investments, at fair value— 14,127,480 (1,118) 14,126,362Other assets— 280,718 — 280,718Carried interest receivable2,366,766 — (79,691) 2,287,075Due from affiliates323,177 — (5,930) 317,247Fixed assets, net40,251 — — 40,251Deferred tax assets660,199 — — 660,199Other assets42,333 1,837 — 44,170Goodwill88,852 — (39,609) 49,243Intangible assets, net94,927 — — 94,927Total Assets$5,213,536 $17,478,276 $(213,831) $22,477,981Liabilities and Shareholders' Equity Liabilities: Accounts payable and accrued expenses37,880 279 — 38,159Accrued compensation and benefits41,711 — — 41,711Deferred revenue279,479 — — 279,479Due to affiliates594,518 853 — 595,371Profit sharing payable992,240 — — 992,240Debt750,000 — — 750,000Liabilities of consolidated variable interest entities: Debt, at fair value— 12,424,839 (877) 12,423,962Other liabilities— 609,413 (4,350) 605,063Due to affiliates— 81,272 (81,272) —Other liabilities60,647 2,627 — 63,274Total Liabilities$2,756,475 $13,119,283 $(86,499) $15,789,259 Shareholders' Equity: Apollo Global Management, LLC shareholders' equity: Additional paid in capital2,624,113 — 469 2,624,582Accumulated deficit(1,587,536) 1,971,682 (1,952,633) (1,568,487)Appropriated partners' capital— 1,620,928 (39,849) 1,581,079Accumulated other comprehensive income (loss)33,774 — (33,679) 95Total Apollo Global Management, LLC shareholders' equity1,070,351 3,592,610 (2,025,692) 2,637,269Non-Controlling Interests in consolidated entities4,987 766,383 1,898,360 2,669,730Non-Controlling Interests in Apollo Operating Group1,381,723 — — 1,381,723Total Shareholders' Equity2,457,061 4,358,993 (127,332) 6,688,722Total Liabilities and Shareholders' Equity$5,213,536 $17,478,276 $(213,831) $22,477,981- 235- Table of ContentsITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESNone.ITEM 9A.CONTROLS AND PROCEDURESWe maintain “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that aredesigned to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed,summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information isaccumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based inpart upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goalsunder all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance ofachieving the desired objectives.Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls andprocedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report based on the criteria set forth by the Committeeof Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 framework). Based on that evaluation, ourChief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls andprocedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuringthat information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported withinthe time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Theeffectiveness of our internal control over financial reporting as of December 31, 2014 has been audited by Deloitte & Touche LLP, an independent registeredpublic accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K. ITEM 9B.OTHER INFORMATIONNone.- 236- Table of ContentsPART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEDirectors and Executive OfficersThe following table presents certain information concerning our board of directors and executive officers:Name Age Position(s)Leon Black 63 Chairman, Chief Executive Officer and DirectorJoshua Harris 50 Senior Managing Director and DirectorMarc Rowan 52 Senior Managing Director and DirectorMartin Kelly 47 Chief Financial OfficerJohn Suydam 55 Chief Legal Officer and Chief Compliance OfficerJames Zelter 52 Managing Director-CreditChristopher Weidler 39 Chief Accounting Officer and ControllerMichael Ducey 66 DirectorPaul Fribourg 61 DirectorRobert Kraft 73 DirectorA.B. Krongard 78 DirectorPauline Richards 66 DirectorLeon Black. Mr. Black is the Chairman of the board of directors and Chief Executive Officer of Apollo and a Managing Partner of ApolloManagement, L.P. In 1990, Mr. Black founded Apollo Management, L.P. and Lion Advisors, L.P. to manage investment capital on behalf of a group ofinstitutional investors, focusing on corporate restructuring, leveraged buyouts and taking minority positions in growth-oriented companies. From 1977 to1990, Mr. Black worked at Drexel Burnham Lambert Incorporated, where he served as a Managing Director, head of the Mergers & Acquisitions Group, andco-head of the Corporate Finance Department. Mr. Black also serves on the board of directors of the general partner of AAA and previously served on theboard of directors of Sirius XM Radio Inc. Mr. Black is a trustee of The Museum of Modern Art, The Mount Sinai Medical Center, The Metropolitan Museumof Art, and The Asia Society. He is also a member of The Council on Foreign Relations and The Partnership for New York City. He is also a member of theboards of directors of FasterCures and the Port Authority Task Force. Mr. Black graduated summa cum laude from Dartmouth College in 1973 with a major inPhilosophy and History and received an MBA from Harvard Business School in 1975. Mr. Black has significant experience making and managing privateequity investments on behalf of Apollo and has over 35 years’ experience financing, analyzing and investing in public and private companies. In his priorpositions with Drexel and in his positions at Apollo, Mr. Black is responsible for leading and overseeing teams of professionals. His extensive experienceallows Mr. Black to provide insight into various aspects of Apollo’s business and is of significant value to the board of directors.Joshua Harris. Mr. Harris is a Senior Managing Director and a member of the board of directors of Apollo and a Managing Partner of ApolloManagement, L.P., which he co-founded in 1990. Prior to 1990, Mr. Harris was a member of the Mergers and Acquisitions group of Drexel Burnham LambertIncorporated. Mr. Harris has previously served on the board of directors of Berry Plastics Group Inc., EP Energy Corporation, EPE Acquisition, LLC, CEVALogistics, Momentive Performance Materials Holdings LLC, Constellium N.V., LyondellBasell Industries B.V., Momentive Specialty Chemicals Inc. andMomentive Specialty Chemicals Holdings LLC. Mr. Harris is a member of the Federal Reserve Bank of New York’s Investor Advisory Committee, theCouncil of Foreign Relations, and is on the Board of Trustees of Mount Sinai Medical Center. He participates on the University of Pennsylvania’s WhartonSchool’s Board of Overseers, the Board of Dean’s Advisors at the Harvard Business School and certain other charitable and educational boards. Mr. Harris isthe Managing Partner of the Philadelphia 76ers and the Managing Member of the New Jersey Devils. Mr. Harris graduated summa cum laude and BetaGamma Sigma from the University of Pennsylvania’s Wharton School of Business with a B.S. in Economics and received his M.B.A. from the HarvardBusiness School, where he graduated as a Baker and Loeb Scholar. Mr. Harris has significant experience in making and managing private equity investmentson behalf of Apollo and has over 25 years’ experience in financing, analyzing and investing in public and private companies. Mr. Harris’s extensiveknowledge of Apollo’s business and experience in a variety of senior leadership roles enhance the breadth of experience of the board of directors.- 237- Table of ContentsMarc Rowan. Mr. Rowan is a Senior Managing Director and member of the board of directors of Apollo and a Managing Partner of ApolloManagement, L.P., which he co-founded in 1990. Prior to 1990, Mr. Rowan was a member of the Mergers & Acquisitions Group of Drexel Burnham LambertIncorporated, with responsibilities in high yield financing, transaction idea generation and merger structure negotiation. Mr. Rowan currently serves on theboards of directors of Athene Holding Ltd, Caesars Entertainment Corporation, Caesars Acquisition Co. and Caesars Entertainment Operating Co. He haspreviously served on the boards of directors of the general partner of AAA, AMC Entertainment, Inc., Cablecom GmbH, Culligan Water Technologies, Inc.,Countrywide Holdings Limited, Furniture Brands International Inc., Mobile Satellite Ventures, LLC, National Cinemedia, Inc., National Financial Partners,Inc., New World Communications, Inc., Norwegian Cruise Lines, Quality Distribution, Inc., Samsonite Corporation, SkyTerra Communications Inc., UnityMedia SCA, Vail Resorts, Inc. and Wyndham International, Inc. Mr. Rowan is also active in charitable activities. He is a founding member and Chairman ofthe Youth Renewal Fund and is a member of the Board of Overseers of the University of Pennsylvania’s Wharton School of Business and serves on the boardsof directors of Jerusalem Online and the New York City Police Foundation. Mr. Rowan graduated summa cum laude from the University of Pennsylvania’sWharton School of Business with a B.S. and an M.B.A. in Finance. Mr. Rowan has significant experience making and managing private equity investmentson behalf of Apollo and has over 26 years’ experience financing, analyzing and investing in public and private companies. Mr. Rowan’s extensive financialbackground and expertise in private equity investments enhance the breadth of experience of the board of directors.Martin Kelly. Mr. Kelly joined Apollo in 2012 as Chief Financial Officer. Mr. Kelly also oversees the Firm's IT, Risk, Operations and Audit groups. From 2008 to 2012, Mr. Kelly was with Barclays Capital and, from 2000 to 2008, Mr. Kelly was with Lehman Brothers Holdings Inc. Prior to departingBarclays Capital, Mr. Kelly served as Managing Director, CFO of the Americas, and Global Head of Financial Control for their Corporate and InvestmentBank. Prior to joining Lehman Brothers in 2000, Mr. Kelly spent 13 years with PricewaterhouseCoopers LLP, including serving in the Financial ServicesGroup in New York from 1994 to 2000. Mr. Kelly was appointed a Partner of the firm in 1999. Mr. Kelly received a degree in Commerce, majoring in Financeand Accounting, from the University of New South Wales in 1989.John Suydam. Mr. Suydam joined Apollo in 2006 and serves as Apollo’s Chief Legal Officer. From 2002 to 2006, Mr. Suydam was a partner atO’Melveny & Myers LLP where he served as head of Mergers and Acquisitions and co-head of the Corporate Department. Prior to that time, Mr. Suydamserved as Chairman of the law firm O’Sullivan, LLP which specialized in representing private equity investors. Mr. Suydam serves on the boards of The LegalAction Center, Environmental Solutions Worldwide, Inc. and New York University School of Law, and is a member of the Department of Medicine AdvisoryBoard of the Mount Sinai Medical Center. Mr. Suydam received his J.D. from New York University and graduated magna cum laude with a B.A. in Historyfrom the State University of New York at Albany.James Zelter. Mr. Zelter joined Apollo in 2006. Mr. Zelter is the Managing Director of Apollo’s credit business, Chief Executive Officer and directorof AINV. Prior to joining Apollo, Mr. Zelter was with Citigroup Inc. and its predecessor companies from 1994 to 2006. From 2003 to 2005, Mr. Zelter wasChief Investment Officer of Citigroup Alternative Investments, and prior to that he was responsible for the firm’s Global High Yield franchise. Prior to joiningCitigroup in 1994, Mr. Zelter was a High Yield Trader at Goldman, Sachs & Co. Mr. Zelter has significant experience in global credit markets and hasoverseen the broad expansion of Apollo’s credit platform. Mr. Zelter is a board member of DUMAC, the investment management company that oversees theDuke Endowment and Duke Foundation, and is on the board of the Dalton School. Mr. Zelter has a B.A. in Economics from Duke University.Christopher Weidler. Mr. Weidler joined Apollo in 2013. Prior to joining Apollo, Mr. Weidler was with Barclays, where he most recently served as aManaging Director and the Financial Controller of the Americas. Since February 2005, Mr. Weidler served in a variety of leadership roles at Barclays thatincluded Global Head of U.S. GAAP Technical Accounting and Global Head of Financial Reporting and Legal Entity Control for the Investment Bank. Priorto joining Barclays, Mr. Weidler spent eight years with PricewaterhouseCoopers LLP in the firm's New York Audit and Assurance practice and in London inthe firm’s Global Capital Markets Group. Mr. Weidler received a B.S. in Accounting from Villanova University in 1997.Michael Ducey. Mr. Ducey has served as an independent director of Apollo and a member of the audit committee and as Chairman of the conflictscommittee of our board of directors since 2011. Most recently, Mr. Ducey was with Compass Minerals International, Inc., from March 2002 to May 2006,where he served in a variety of roles, including as President, Chief Executive Officer and Director prior to his retirement in May 2006. Prior to joiningCompass Minerals International, Inc., Mr. Ducey worked for nearly 30 years at Borden Chemical, Inc., in various management, sales, marketing, planning andcommercial development positions, and ultimately as President, Chief Executive Officer and Director. Mr. Ducey is currently a director of and serves as theChairman of the audit committee of Verso Paper Holdings, Inc. He is also the Chairman of the compliance and governance committee and the nominationscommittee of the board of directors of HaloSource, Inc. From September 2009 to December 2012, Mr. Ducey was the non-executive Chairman of TPC Group,Inc. and served on the audit committee and the environmental health and safety committee. From June 2006 to May 2008, Mr. Ducey served on the board ofdirectors of and as a member of the governance and compensation committee of the board of directors of UAP Holdings Corporation. Also, from July 2010 toMay- 238- Table of Contents2011, Mr. Ducey was a member of the board of directors and served on the audit committee of Smurfit-Stone Container Corporation. Mr. Ducey graduatedfrom Otterbein University with a degree in Economics and an M.B.A. in finance from the University of Dayton. Mr. Ducey’s comprehensive corporatebackground and his experience serving on various boards and committees add significant value to the board of directors.Paul Fribourg. Mr. Fribourg has served as an independent director of Apollo and as a member of the conflicts committee of our board of directorssince 2011. From 1997 to the present, Mr. Fribourg has served as Chairman and Chief Executive Officer of Continental Grain Company. Prior to 1997, Mr.Fribourg served in a variety of other roles at Continental Grain Company, including Merchandiser, Product Line Manager, Group President and ChiefOperating Officer. Mr. Fribourg serves on the boards of directors of Restaurant Brands International Inc., Loews Corporation, Castleton CommoditiesInternational LLC and The Estee Lauder Companies, Inc. He also serves as a board member of the Rabobank International North American AgribusinessAdvisory Board, the New York University Mitchell Jacobson Leadership Program in Law and Business Advisory Board and Endeavor Global Inc. Mr.Fribourg is also a member of the Council on Foreign Relations, the Brown University Advisory Council on China and the International Business LeadersAdvisory Council for The Mayor of Shanghai. Mr. Fribourg graduated magna cum laude from Amherst College and completed the Advanced ManagementProgram at Harvard Business School. Mr. Fribourg’s extensive corporate experience enhances the breadth of experience and independence of the board ofdirectors.Robert Kraft. Mr. Kraft has served as an independent director of Apollo and as a member of the conflicts committee of our board of directors since2014. Mr. Kraft is Chairman and Chief Executive Officer of The Kraft Group, which includes the New England Patriots, New England Revolution, GilletteStadium, Rand-Whitney Group and International Forest Products Corporation. Mr. Kraft serves on a number of NFL Committees, including the ExecutiveCommittee, Finance Committee and Broadcast Committee (Chairman). Since 2006, Mr. Kraft has been a member of the board of directors of Viacom Inc. Healso serves as Chairman for both the New England Patriots Charitable Foundation and the Robert and Myra Kraft Family Foundation, and is a director of theDana Farber Cancer Institute. Mr. Kraft’s corporate strategic and operational experience combined with his strong relationships in the business communitymake him a valuable member of the board of directors.A.B. Krongard. Mr. Krongard has served as an independent director of Apollo and as a member of the audit committee of our board of directors since2011. From 2001 to 2004, Mr. Krongard served as Executive Director of the Central Intelligence Agency. From 1998 to 2001, Mr. Krongard served asCounselor to the Director of Central Intelligence. Prior to 1998, Mr. Krongard served in various capacities at Alex Brown, Incorporated, including serving asChief Executive Officer beginning in 1991 and assuming additional duties as Chairman of the board of directors in 1994. Upon the merger of Alex Brown,Incorporated with Bankers Trust Corporation in 1997, Mr. Krongard served as Vice-Chairman of the Board of Bankers Trust Corporation and served in suchcapacity until joining the Central Intelligence Agency. Mr. Krongard serves as the Lead Director and audit committee Chairman of Under Armour, Inc. andalso serves as a board member of Iridium Communications Inc., Seventy-Seven Energy Inc. and In-Q-Tel, Inc. Mr. Krongard graduated with honors fromPrinceton University and received a J.D. from the University of Maryland School of Law, where he also graduated with honors. Mr. Krongard also serves asthe Vice Chairman of the Johns Hopkins Health System. Mr. Krongard’s comprehensive corporate background contributes to the range of experience of theboard of directors.Pauline Richards. Ms. Richards has served as an independent director of Apollo and as Chairman of the audit committee of our board of directorssince 2011. Ms. Richards currently serves as Chief Operating Officer of Armour Group Holdings Limited, a position she has held since 2008. Ms. Richardsalso serves as a member of the Audit and Compensation Committees of the board of directors of Wyndham Worldwide, a position she has held since 2006; isa director of Hamilton Insurance Group, serving on the audit and investment committees, a position she has held since 2013; and is the Treasurer of the boardof directors of PRIDE Bermuda, a drug prevention organization of which she has been a member for over 20 years. Prior to 2008, Ms. Richards served asDirector of Development of Saltus Grammar School from 2003 to 2008, as Chief Financial Officer of Lombard Odier Darier Hentsch (Bermuda) Limited from2001 to 2003, and as Treasurer of Gulf Stream Financial Limited from 1999 to 2000. Ms. Richards also served as a member of the Audit Committee and chairof the Corporate Governance Committee of the board of directors of Butterfield Bank from 2006 to 2013. Ms. Richards graduated from Queen’s University,Ontario, Canada, with a BA in psychology and has obtained certification as a CPA, CMA. Ms. Richards’ extensive finance experience and her service on theboards of other public companies add significant value to the board of directors.Our ManagerOur operating agreement provides that so long as the Apollo Group beneficially owns at least 10% of the aggregate number of votes that may be castby holders of outstanding voting shares, our manager, which is owned and controlled by our Managing Partners, will manage all of our operations andactivities and will have discretion over significant corporate actions, such as the issuance of securities, payment of distributions, sales of assets, makingcertain amendments to our operating agreement and other matters, and our board of directors will have no authority other than that which our managerchooses to delegate to it. We refer to the Apollo Group’s beneficial ownership of at least 10% of such voting power as the “Apollo control condition.” For- 239- Table of Contentspurposes of our operating agreement, the “Apollo Group” means (i) our manager and its affiliates, including their respective general partners, members andlimited partners, (ii) Holdings and its affiliates, including their respective general partners, members and limited partners, (iii) with respect to each ManagingPartner, such Managing Partner and such Managing Partner’s “group” (as defined in Section 13(d) of the Exchange Act), (iv) any former or current investmentprofessional of or other employee of an “Apollo employer” (as defined below) or the Apollo Operating Group (or such other entity controlled by a member ofthe Apollo Operating Group), (v) any former or current executive officer of an Apollo employer or the Apollo Operating Group (or such other entitycontrolled by a member of the Apollo Operating Group); and (vi) any former or current director of an Apollo employer or the Apollo Operating Group (orsuch other entity controlled by a member of the Apollo Operating Group). With respect to any person, “Apollo employer” means Apollo Global Management,LLC or such other entity controlled by Apollo Global Management, LLC or its successor as may be such person’s employer but does not include anyportfolio companies.Decisions by our manager are made by its executive committee, which is composed of our three Managing Partners. Each Managing Partner willremain on the executive committee for so long as he is employed by us, provided that Mr. Black, upon his retirement, may at his option remain on theexecutive committee until his death or disability or any commission of an act that would constitute cause if Mr. Black had still been employed by us. Otherthan those actions that require unanimous consent, actions by the executive committee are determined by majority vote of its voting members, except as tothe following matters, as to which Mr. Black will have the right of veto: (i) the designations of directors to our board, or (ii) a sale or other disposition of theApollo Operating Group and/or its subsidiaries or any portion thereof, through a merger, recapitalization, stock sale, asset sale or otherwise, to an unaffiliatedthird party (other than through an exchange of Apollo Operating Group units, transfers by a founder or a permitted transferee to another permitted transferee,or the issuance of bona fide equity incentives to any of our non-founder employees) that constitutes (x) a direct or indirect sale of a ratable interest (orsubstantially ratable interest) in each entity that constitutes the Apollo Operating Group or (y) a sale of all or substantially all of the assets of Apollo (thisclause (ii), an “LB Approval Event”). Exchanges of Apollo Operating Group units for Class A shares that are not pro rata among our Managing Partners or inwhich each Managing Partner has the option not to participate are not subject to Mr. Black’s right of veto.Subject to limited exceptions described in our operating agreement, our manager may not sell, exchange or otherwise dispose of all or substantiallyall of our assets and those of our subsidiaries, taken as a whole, in a single transaction or a series of related transactions without the approval of holders of amajority of the aggregate number of voting shares outstanding; provided, however, that this does not preclude or limit our manager’s ability, in its solediscretion, to mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets and those of our subsidiaries (including for thebenefit of persons other than us or our subsidiaries, including affiliates of our manager) and does not apply to any forced sale of any or all of our assetspursuant to the foreclosure of, or other realization upon, any such encumbrance.We will reimburse our manager and its affiliates for all costs incurred in managing and operating us, and our operating agreement provides that ourmanager will determine the expenses that are allocable to us. The agreement does not limit the amount of expenses for which we will reimburse our managerand its affiliates.Board Composition and Limited Powers of Our Board of DirectorsFor so long as the Apollo control condition is satisfied, our manager shall (i) nominate and elect all directors to our board of directors, (ii) set thenumber of directors of our board of directors and (iii) fill any vacancies on our board of directors. After the Apollo control condition is no longer satisfied,each of our directors will be elected by the vote of a plurality of our shares entitled to vote, voting as a single class, to serve until his or her successor is dulyelected or appointed and qualified or until his or her earlier death, retirement, disqualification, resignation or removal. Our board currently consists of eightmembers. For so long as the Apollo control condition is satisfied, our manager may remove any director, with or without cause, at anytime. After suchcondition is no longer satisfied, a director or the entire board of directors may be removed by the affirmative vote of holders of 50% or more of the totalvoting power of our shares.As noted, so long as the Apollo control condition is satisfied, our manager will manage all of our operations and activities, and our board of directorswill have no authority other than that which our manager chooses to delegate to it. In the event that the Apollo control condition is not satisfied, our board ofdirectors will manage all of our operations and activities.Pursuant to a delegation of authority from our manager, which may be revoked, our board of directors has established and at all times will maintainaudit and conflicts committees of the board of directors that have the responsibilities described below under “-Committees of the Board of Directors-AuditCommittee” and “-Committees of the Board of Directors-Conflicts Committee.”Where action is required or permitted to be taken by our board of directors or a committee thereof, a majority of the directors or committee memberspresent at any meeting of our board of directors or any committee thereof at which there is a quorum shall be the act of our board or such committee, as thecase may be. Our board of directors or any committee thereof may also act by unanimous written consent.- 240- Table of ContentsUnder the Agreement Among Managing Partners (as described under “Item 13. Certain Relationships and Related Transactions-Lenders RightsAgreement-Amendments to Managing Partner Transfer Restrictions”), the vote of a majority of the independent members of our board of directors will decidethe following: (i) in the event that a vacancy exists on the executive committee of our manager and the remaining members of the executive committeecannot agree on a replacement (other than a replacement for Mr. Black nominated by Mr. Black or his representative, which requires the approval of only onemember of the executive committee), the independent members of our board of directors shall select one of the two nominees to the executive committee ofour manager presented to them by the remaining members of such executive committee to fill the vacancy on such executive committee and (ii) in the eventthat Mr. Black wishes to exercise his ability to cause an LB Approval Event, the affirmative vote of the majority of the independent members of our board ofdirectors shall be required to approve such a transaction. We are not a party to the Agreement Among Managing Partners, and neither we nor our shareholders(other than our Strategic Investors, as described under “Item 13. Certain Relationships and Related Transactions-Lenders Rights Agreement-Amendments toManaging Partner Transfer Restrictions”) have any right to enforce the provisions described above. Such provisions can be amended or waived uponagreement of our Managing Partners at any time.Committees of the Board of DirectorsWe have established an audit committee as well as a conflicts committee. Our audit committee has adopted a charter that complies with current SECand NYSE rules relating to corporate governance matters. Our board of directors may from time to time establish other committees of our board of directors.Audit CommitteeThe primary purpose of our audit committee is to assist our manager in overseeing and monitoring (i) the quality and integrity of our financialstatements, (ii) our compliance with legal and regulatory requirements, (iii) our independent registered public accounting firm’s qualifications andindependence and (iv) the performance of our independent registered public accounting firm.The current members of our audit committee are Messrs. Ducey and Krongard and Ms. Richards. Ms. Richards currently serves as Chairperson of thecommittee. Each of the members of our audit committee meets the independence standards and financial literacy requirements for service on an auditcommittee of a board of directors pursuant to the Exchange Act and NYSE rules applicable to audit committees and corporate governance. Furthermore, ourmanager has determined that Ms. Richards is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. Our auditcommittee has a charter which is available on our website at www.agm.com under the “Investor Relations” section.Conflicts CommitteeThe current members of our conflicts committee are Messrs. Ducey, Fribourg and Kraft. Mr. Ducey currently serves as Chairman of the committee.The purpose of the conflicts committee is to review specific matters that our manager believes may involve conflicts of interest. The conflicts committee willdetermine whether the resolution of any conflict of interest submitted to it is fair and reasonable to us. Any matters approved by the conflicts committee willbe conclusively deemed to be fair and reasonable to us and not a breach by us of any duties that we may owe to our shareholders. In addition, the conflictscommittee may review and approve any related person transactions, other than those that are approved pursuant to our related person policy, as describedunder “Item 13. Certain Relationships and Related Party Transactions-Statement of Policy Regarding Transactions with Related Persons,” and may establishguidelines or rules to cover specific categories of transactions.Code of Business Conduct and EthicsWe have a Code of Business Conduct and Ethics, which applies to, among others, our principal executive officer, principal financial officer andprincipal accounting officer. A copy of our Code of Business Conduct and Ethics is available on our website at www.agm.com under the “Investor Relations”section. We intend to disclose any amendment to or waiver of the Code of Business Conduct and Ethics on behalf of an executive officer or director either onour website or in an 8-K filing.Corporate Governance GuidelinesWe have Corporate Governance Guidelines that address significant issues of corporate governance and set forth procedures by which our managerand board of directors carry out their respective responsibilities. The guidelines are available for viewing on our website at www.agm.com under the “InvestorRelations” section. We will also provide the guidelines, free of charge, to shareholders who request them. Requests should be directed to our Secretary atApollo Global Management, LLC, 9 West 57th Street, 43rd Floor, New York, New York 10019.Communications with the Board of Directors- 241- Table of ContentsA shareholder or other interested party who wishes to communicate with our directors, a committee of our board of directors, our independentdirectors as a group or our board of directors generally may do so in writing. Any such communications may be sent to our board of directors by U.S. mail orovernight delivery and should be directed to our Secretary at Apollo Global Management, LLC, 9 West 57th Street, 43rd Floor, New York, New York 10019,who will forward them to the intended recipient(s). Any such communications may be made anonymously. Unsolicited advertisements, invitations toconferences or promotional materials, in the discretion of our Secretary, are not required, however, to be forwarded to the directors.Executive Sessions of Independent DirectorsThe independent directors serving on our board of directors meet periodically in executive sessions during the year at regularly scheduled meetingsof our board of directors. These executive sessions will be presided over by one of the independent directors serving on our board of directors selected on anad-hoc basis.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of a registered class ofthe Company’s equity securities to file initial reports of ownership and reports of changes in ownership with the SEC and furnish us with copies of all Section16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us or written representations from such personsthat they were not required to file a Form 5 to report previously unreported ownership or changes in ownership, we believe that, with respect to the fiscal yearended December 31, 2014, such persons complied with all such filing requirements.- 242- Table of ContentsITEM 11. EXECUTIVE COMPENSATIONCompensation Discussion and AnalysisOverview of Compensation PhilosophyAlignment of Interests with Investors and Shareholders. Our principal compensation philosophy is to align the interests of our Managing Partners,Contributing Partners, and other senior professionals with those of our Class A shareholders and fund investors. This alignment, which we believe is a keydriver of our success, has been achieved principally by our Managing Partners’, Contributing Partners’, and other investment professionals’ direct beneficialownership of equity in our business in the form of AOG Units and Class A shares, their ownership of rights to receive a portion of the incentive income earnedfrom our funds, the direct investment by our investment professionals in our funds, and our practice of paying annual incentive compensation partly in theform of equity-based grants that are subject to vesting. As a result of this alignment, the compensation of our professionals is closely tied to the performanceof our businesses.Significant Personal Investment. Our investment professionals generally make significant personal investments in our funds (as more fullydescribed under “Item 13. Certain Relationships and Related Party Transactions”), directly or indirectly, and our professionals who receive carried interests inour funds are generally required to invest their own capital in the funds they work on in amounts that are generally proportionate to the size of theirparticipation in incentive income. We believe that these investments help to ensure that our professionals have capital at risk and reinforce the linkagebetween the success of the funds we manage, the success of the Company and the compensation paid to our professionals.Long-Term Performance and Commitment. Most of our professionals have been issued RSUs, which provide rights to receive Class A shares anddistributions on those shares. The vesting requirements and minimum retained ownership requirements for these awards contribute to our professionals’ focuson long-term performance while enhancing retention of these professionals.Discouragement of Excessive Risk-Taking. Although investments in alternative assets can pose risks, we believe that our compensation programincludes significant elements that discourage excessive risk-taking while aligning the compensation of our professionals with our long-term performance. Forexample, notwithstanding that we accrue compensation for our carried interest programs (described below) as increases in the value of the portfolioinvestments are recorded in the related funds, we generally make payments in respect of carried interest allocations to our employees only after profitableinvestments have actually been realized. This helps to ensure that our professionals take a long-term view that is consistent with the interests of theCompany, our shareholders and the investors in our funds. Moreover, if a fund fails to achieve specified investment returns due to diminished performance oflater investments, our carried interest program relating to that fund generally permits, for the benefit of the limited partner investors in that fund, the return ofcarried interest payments (generally net of tax) previously made to us, our Contributing Partners or our other employees. These provisions discourageexcessive risk-taking and promote a long-term view that is consistent with the interests of our investors and shareholders. Our general requirement that ourprofessionals invest in the funds we manage further aligns the interests of our professionals, fund investors and Class A shareholders. Finally, the minimumretained ownership requirements of our RSUs, options and AOG Units, as well as a requirement that certain investment professionals use a portion of theirdistributions of carried interest income and incentive fees to purchase Class A restricted shares, discourage excessive risk-taking because the value of theseinterests is tied directly to the long-term performance of our Class A shares.Compensation Elements for Named Executive OfficersConsistent with our emphasis on alignment of interests with our fund investors and Class A shareholders, compensation elements tied to theprofitability of our different businesses and that of the funds that we manage are the primary means of compensating our six executive officers listed in thetables below, or the “named executive officers.” The key elements of the compensation of our named executive officers during fiscal year 2014 are describedbelow. We distinguish among the compensation components applicable to our named executive officers as appropriate in the below summary. Mr. Black is amember of the group referred to elsewhere in this report as the “Managing Partners,” and Mr. Zelter is a member of the group referred to elsewhere in thisreport as the “Contributing Partners.”Annual Salary. Each of our named executive officers receives an annual salary. The base salaries of our named executive officers are set forth in theSummary Compensation Table below, and those base salaries were set by our Managing Partners in their judgment after considering the historiccompensation levels of the officer, competitive market dynamics, and each officer’s level of responsibility and anticipated contributions to our overallsuccess.RSUs. In 2014, a portion of our named executive officers’ compensation (other than for Messrs. Black and Spilker) was paid in the form of RSUs. Werefer to our annual grants of RSUs as Bonus Grants. The RSUs are subject to multi-year vesting and minimum retained ownership requirements. In 2014, allnamed executive officers were required to retain at least 85% of any Class A shares issued to them pursuant to RSU awards, net of the number of gross sharessold or netted to pay applicable income or employment taxes. The named executive officer Plan Grants and Bonus Grants are described below under “—Narrative- 243- Table of ContentsDisclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table—Awards of Restricted Share Units Under the Equity Plan.”Carried Interest and Incentive Fees. Carried interests and incentive fee entitlements with respect to our funds confer rights to receive distributions ifa distribution is made to investors following the realization of an investment or receipt of operating profit from an investment by the fund. These rightsprovide their holders with substantial incentives to attain strong returns in a manner that does not subject their capital investment in the Company toexcessive risk. Distributions of carried interest generally are subject to contingent repayment (generally net of tax) if the fund fails to achieve specifiedinvestment returns due to diminished performance of later investments, while distributions in respect of incentive fees are not subject to contingentrepayment. The actual gross amount of carried interest allocations or incentive fees available are a function of the performance of the applicable fund. Forthese reasons, we believe that participation in carried interest and incentive fees generated by our funds aligns the interests of our professionals with those ofour Class A shareholders and fund investors.We currently have two principal types of carried interest programs, which we refer to as dedicated and incentive pool. Messrs. Zelter and Suydamhave been awarded rights to participate in a dedicated percentage of the carried interest or incentive fee income earned by the general partners of certain ofour funds. Participation in dedicated carried interest in our private equity funds is typically subject to vesting, which rewards long-term commitment to thefirm and thereby enhances the alignment of participants’ interests with the Company. As with our distributions in respect of incentive fees, our financialstatements characterize the carried interest income allocated to participating professionals in respect of their dedicated carried interests as compensation.Actual distributions in respect of dedicated carried interests and incentive fees are included in the “All Other Compensation” column of the summarycompensation table.Our performance based incentive arrangement referred to as the incentive pool further aligns the overall compensation of our professionals to therealized performance of our business. The incentive pool provides for compensation based on carried interest realizations earned by us during the year andenhances our capacity to offer competitive compensation opportunities to our professionals. “Carried interest realizations earned” means carried interestearned by the general partners of our funds under the applicable fund limited partnership agreements based upon transactions that have closed or other rightsto cash that have become fixed in the applicable calendar year period. Under this arrangement, Messrs. Kelly, Zelter, Suydam and Weidler, among other ofour professionals, were awarded incentive pool compensation based on carried interest realizations we earned during 2014. Allocations to participants in theincentive pool contain both a fixed component and a discretionary component, both of which may vary year-to-year, including as a result of our overallrealized performance and the contributions and performance of each participant. The managing partners determine the amount of the carried interestrealizations to place into the incentive pool in their discretion after considering various factors, including Company profitability, management company cashrequirements and anticipated future costs, provided that the incentive pool consists of an amount equal to at least one percent (1%) of the carried interestrealizations attributable to profits generated after creation of the incentive pool program that were taxable in the applicable year and not allocable todedicated carried interests. Each participant in the incentive pool is entitled to receive, as a fixed component of participation in the incentive pool, his or herpro rata allocation of this 1% amount each year, provided the participant remains employed by us at the time of allocation. Our financial statementscharacterize the carried interest income allocated to participating professionals in respect of incentive pool interests as compensation. The “All OtherCompensation” column of the summary compensation table includes actual distributions paid from the incentive pool.Restricted Shares. In 2014, we began to require that a portion of the carried interest and incentive fee distributions in respect of certain of theinvestment funds we manage be used by our employees who receive those distributions to purchase restricted Class A shares issued under our 2007 OmnibusEquity Incentive Plan. This practice further promotes alignment with our shareholders and encourages investment professionals to maximize the success ofthe Company as a whole. Like our RSUs, the restricted shares are subject to multi-year vesting, which fosters retention. The first purchases pursuant to thisrequirement were made in 2015. As a result of this requirement, Mr. Zelter purchased 58,817 restricted Class A shares on February 6, 2015 in respect ofrealizations for which he received the cash portion of the distributions in 2014. In accordance with SEC rules, these shares will be included in next year’sSummary Compensation Table and Grants of Plan-Based Awards Table if Mr. Zelter is one of our named executive officers for 2015. These shares are subjectto vesting on June 16th of 2015, 2016 and 2017.Bonus. One of our named executive officers, Mr. Zelter, received a cash bonus in 2014. The inclusion of discretionary annual bonuses as part of ouroverall compensation rewards superior performance and enables us to attract and retain talented professionals by enhancing our capacity to offer competitivecompensation opportunities while retaining our flexibility to adjust or eliminate these payments from year to year.Determination of Compensation of Named Executive OfficersOur Managing Partners make all final determinations regarding named executive officer compensation. Decisions about the variable elements of anamed executive officer’s compensation, including participation in our carried interest and incentive- 244- Table of Contentsfee programs and grants of equity-based awards, are based primarily on our Managing Partners’ assessment of such named executive officer’s individualperformance, operational performance for the department or division in which the officer (other than a Managing Partner) serves, and the officer’s impact onour overall operating performance and potential to contribute to long-term shareholder value. In evaluating these factors, our Managing Partners do notutilize quantitative performance targets but rather rely upon their judgment about each named executive officer’s performance to determine an appropriatereward for the current year’s performance. The determinations by our Managing Partners are ultimately subjective, are not tied to specified annual, qualitativeor individual objectives or performance factors, and reflect discussions among the Managing Partners. Factors that our Managing Partners typically considerin making such determinations include the named executive officer’s type, scope and level of responsibilities and the named executive officer’s overallcontributions to our success. Our Managing Partners also consider each named executive officer’s prior-year compensation, the appropriate balance betweenincentives for long-term and short-term performance, competitive market dynamics, compensation provided to the named executive officer by other entities,and the compensation paid to the named executive officer’s peers within the Company.Note on Distributions on Apollo Operating Group UnitsWe note that all of our Managing Partners and Contributing Partners, including Messrs. Black and Zelter, beneficially own AOG Units. In particular,as of December 31, 2014, the Managing Partners beneficially owned, through their interest in Holdings, approximately 51% of the total limited partnerinterests in the Apollo Operating Group. When made, distributions on these units (which are made on both vested and unvested units) are in the same amountper unit as distributions made to us in respect of the AOG Units we hold. Accordingly, although distributions on AOG Units are distributions on equity ratherthan compensation, they play a central role in aligning our Managing Partners’ and Contributing Partners’ interests with those of our Class A shareholders,which is consistent with our compensation philosophy. In 2014, the Managing Partners, including Mr. Black, were required to retain 85% of their AOG Units.The same requirement applied to our Contributing Partners, including Mr. Zelter.Compensation Committee Interlocks and Insider ParticipationOur board of directors does not have a compensation committee. Our Managing Partners make all such compensation determinations, as discussedabove under “—Determination of Compensation of Named Executive Officers.” For a description of certain transactions between us and the managingpartners, see “Item 13. Certain Relationships and Related Party Transactions.”Compensation Committee ReportAs noted above, our board of directors does not have a compensation committee. The executive committee of our manager identified below hasreviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, has determinedthat the Compensation Discussion and Analysis should be included in this Annual Report on Form 10-K.Leon BlackJoshua HarrisMarc RowanSummary Compensation TableThe following summary compensation table sets forth information concerning the compensation earned by, awarded to or paid to our principalexecutive officer, our principal financial officer, and our three other most highly compensated executive officers for the fiscal year ended December 31, 2014.In accordance with SEC rules, the table also describes the compensation of our former president, Mr. Spilker. Although he ceased to be one of our executiveofficers on March 19, 2014, Mr. Spilker’s compensation for 2014 placed him among the three most highly paid individuals (other than our principalexecutive officer and our principal financial officer) who served as an executive officer for a portion of 2014. Managing Partners Messrs. Harris and Rowanare not included in the table because their compensation, as tabulated in accordance with applicable rules, does not result in either of them being among thethree most highly compensated executive officers after our principal executive officer and principal financial officer. Our Managing Partners’ earnings derivepredominantly from distributions they receive as a result of their indirect beneficial ownership of AOG Units and their rights under the tax receivableagreement (described elsewhere in this report, including above under “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters andIssuer Purchases of Equity Securities—Cash Distribution Policy”), rather than from compensation, and accordingly are not included in the below tables. Theexecutive officers named in the table are referred to as the named executive officers.- 245- Table of ContentsName and Principal Position Year Salary($) Bonus($)(1) StockAwards($)(2) OptionAwards($)(3) Non-EquityIncentivePlan($) AllOtherCompensation($)(4) Total($)Leon Black,Chairman, Chief Executive Officerand Director 2014 100,000 — — — — 173,980 273,980 2013 100,000 — — — — 173,053 273,053 2012 100,000 — — — — 187,368 287,368Martin Kelly,Chief Financial Officer 2014 1,000,000 — 698,444 — — 1,300,000 2,998,444 2013 1,000,000 — 541,246 — — 950,000 2,491,246 2012 300,000 200,000 4,687,530 — — 1,433,411 6,620,941James Zelter,Managing Director, Credit 2014 1,200,000 1,049,219 478,927 — — 28,009,206 30,737,352 2013 — 3,749,788 3,065,771 — — 32,599,739 39,415,298 2012 — — 2,606,310 — 5,099,193 14,959,920 22,665,423John Suydam,Chief Legal Officer 2014 3,000,000 — 511,370 — — 5,420,540 8,931,910 2013 3,000,000 949,788 504,345 — — 7,148,168 11,602,301 2012 3,000,000 — 496,715 — — 3,405,953 6,902,668Christopher Weidler,Chief Accounting Officer andController 2014 400,000 — 199,549 — — 600,000 1,199,549Marc Spilker,Ceased serving as President onMarch 19, 2014 2014 765,151 — 12,337,500 21,025,000 — 950,000 35,077,651 2013 2,000,000 — — — — — 2,000,000(1)Amount shown for 2014 represents a cash bonus earned in 2014.(2)For Messrs. Kelly, Zelter, Suydam and Weidler, represents the aggregate grant date fair value of stock awards granted, as applicable, computed in accordance with FASB ASCTopic 718. For Mr. Spilker, represents the incremental fair value of an RSU award granted on December 2, 2010 and modified on March 26, 2014 in connection with hisemployment termination, computed in accordance with FASB ASC Topic 718. The amounts shown do not reflect compensation actually received by the named executiveofficers, but instead represent the aggregate grant date fair value (in the case of Mr. Spilker, the modification date incremental fair value) of the awards. See note 16 to ourconsolidated financial statements for further information concerning the assumptions made in valuing our RSU awards. Mr. Zelter’s employment agreement entered into onJune 20, 2014 provides that if he resigns for good reason, is terminated without cause, or terminates employment due to death or disability in the last six months of 2016 andapplicable performance measures are attained, he will be entitled to a grant of 500,000 RSUs in early 2017. Consequently, for accounting purposes the compensation expensefor these RSUs, which will not be granted to Mr. Zelter under our equity incentive plan earlier than 2017 (if at all), is treated as established on the date shown, and theassociated grant date fair value under FASB ASC Topic 718 is reported as zero in the table because as of June 20, 2014 the accounting recognition requirements for theseRSUs had not been met. If all applicable performance measures are attained, the grant date fair value of these RSUs would be $13,555,000.(3)Represents the modification date incremental fair value of an option award granted on December 2, 2010 to Mr. Spilker and modified on March 26, 2014 in connection withhis employment termination, computed in accordance with FASB ASC Topic 718. The amount shown does not reflect compensation actually received by Mr. Spilker, butinstead represents the incremental fair value of the award on the date modified.(4)Amounts included for 2014 represent, in part, actual cash distributions in respect of dedicated carried interest allocations for Messrs. Zelter and Suydam of $25,892,649 and$4,884,786, respectively. Of such amount distributed to Mr. Zelter, $4,645,709 was paid in euros and converted to dollars based on the conversion rate on the date of payment.Also included for Mr. Zelter are cash distributions of $2,065,776 received in 2014 in respect of dedicated incentive fees. The 2014 amounts also include actual incentive poolcash distributions of $1,300,000 for Mr. Kelly, $600,000 for Mr. Weidler, $500,000 for Mr. Suydam and $50,781 for Mr. Zelter. The amount shown for Mr. Spilkerrepresents his one-time lump sum payment received in connection with his employment termination under his transition agreement. The “All Other Compensation” column for2014 also includes costs relating to Company-provided cars and drivers for the business and personal use of Messrs. Black and Suydam. We provide this benefit because webelieve that its cost is outweighed by the convenience, increased efficiency and added security and confidentiality that it offers. The personal use cost was approximately$165,730 for Mr. Black and $34,254 for Mr. Suydam. For Mr. Black, this amount includes both fixed and variable costs, including lease costs, driver compensation, drivermeals, fuel, parking, tolls, repairs, maintenance and insurance. For Mr. Suydam, this amount includes the costs to the Company associated with his use of a car service. Exceptas discussed in this paragraph, no 2014 perquisites or personal benefits individually exceeded the greater of $25,000 or 10% of the total amount of all perquisites and otherpersonal benefits reported for the named executive officer. The cost of excess liability insurance provided to our named executive officers falls below this threshold. None ofMessrs. Kelly, Zelter, Spilker or Weidler received perquisites or personal benefits in 2014, except for incidental benefits having an aggregate value of less than $10,000 perindividual. Our named executive officers also receive occasional secretarial support with respect to personal matters. We incur no incremental cost for the provision of suchadditional benefits. Accordingly, no such amount is included in the Summary Compensation Table.- 246- Table of ContentsNarrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards TableEmployment, Non-Competition and Non-Solicitation Agreement with Chairman and Chief Executive OfficerIn July 2012, we entered into an employment, non-competition and non-solicitation agreement with Leon Black, our chairman and chief executiveofficer and a member of our manager’s executive committee, which agreement superseded and is substantially similar to the agreement we entered into withMr. Black dated July 13, 2007. The term of the agreement concludes on July 19, 2015. Mr. Black is entitled during his employment to an annual salary of$100,000 and to participate in our employee benefit plans, as in effect from time to time.Employment, Non-Competition and Non-Solicitation Agreement with Chief Financial OfficerOn July 2, 2012, we entered into an employment, non-competition and non-solicitation agreement with Martin Kelly, our chief financial officer. Hisannual base salary is $1,000,000. As provided in his employment agreement, Mr. Kelly received a Plan Grant of 375,000 RSUs in connection with hiscommencement of employment. He is eligible for an annual bonus in an amount to be determined by us in our discretion. Mr. Kelly participates in theincentive pool and is eligible to receive distributions thereunder.Employment, Non-Competition and Non-Solicitation Agreement with Managing Director-CreditWe entered into an amended and restated employment agreement with our Managing Director-Credit, James Zelter, on June 20, 2014. The agreementprovides that Mr. Zelter is entitled to base pay of $1,200,000 per year and to distributions of carried interest (including incentive pool) income and a bonusequaling an additional $1,800,000 per year. A portion of any such bonus shall be payable in the form of Bonus Grant RSUs. Under the agreement, Mr. Zelterwill be eligible to receive a grant of one million RSUs in early 2017 and another one million RSUs in early 2019, in each case if approved by the committeethat administers our 2007 Omnibus Equity Incentive Plan and if applicable performance measures regarding profitability of our credit business are attained.We do not currently believe that the performance measures are likely to be attained. Because Mr. Zelter would be entitled to 500,000 of the 2017 RSUs ifboth (i) the performance measures are attained as of December 31, 2016 and (ii) during the last six months of 2016 Mr. Zelter’s employment terminates forgood reason, without cause or due to death or disability, we treat the compensation expense for these RSUs, which will not be granted under our equityincentive plan earlier than 2017 (if at all), as established on June 20, 2014 and, in accordance with SEC rules, include these RSUs in the tables as if they hadbeen granted on that date. Pursuant to his employment agreement, Mr. Zelter holds dedicated carried interests and incentive fee rights in respect of certain ofthe investment funds we manage. His carried interests are subject to vesting or to the right to retain such interests for a limited period following hisemployment termination. Mr. Zelter receives a portion of his total annual compensation in the form of a Bonus Grant, as discussed below under the sectionentitled, “Awards of Restricted Share Units Under the Equity Plan.” As required by his employment agreement, Mr. Zelter has made investments of his owncapital in various of our funds.Employment, Non-Competition and Non-Solicitation Agreement with Chief Accounting Officer and ControllerOn June 4, 2013, we entered into a letter agreement with Christopher Weidler, our Chief Accounting Officer and Controller. The letter agreementprovides for a base salary of $400,000 per year. Mr. Weidler is eligible for discretionary annual bonuses, and a portion of any such bonus is payable in theform of Bonus Grant RSUs. In connection with his commencement of employment, Mr. Weidler received a Plan Grant of 35,001 RSUs. Mr. Weidlerparticipates in the incentive pool and is eligible to receive distributions thereunder.Employment Terms of Chief Legal OfficerJohn Suydam, our chief legal officer, does not have an employment agreement with us.Transition Agreement with PresidentOn March 19, 2014, we entered into a transition agreement with Marc Spilker, who stepped down from his service as our president and a non-votingmember of our executive committee on March 19, 2014. For the remainder of 2014, Mr. Spilker served as a senior advisor to the Company, assisting theCompany with transitioning his duties, and did not receive a base salary. Pursuant to the agreement, he received a one-time lump sum payment of $950,000in connection with the transition. The transition agreement provided that he forfeited one half of his unvested RSUs and one half of his unvested options topurchase Class A shares on March 19, 2014. Mr. Spilker’s employment agreement dated November 24, 2010 had provided for vesting in one half of hisunvested options and RSUs in connection with certain employment terminations, and under the transition agreement Mr. Spilker vested in his remaining625,000 RSUs and 1,250,000 options on March 26, 2014.- 247- Table of ContentsAwards of Restricted Share Units Under the Equity PlanOn October 23, 2007, we adopted our 2007 Omnibus Equity Incentive Plan. Grants of RSUs under the plan have been made to certain of our namedexecutive officers primarily pursuant to two programs, which we call the “Plan Grants” and the “Bonus Grants.” Following the 2007 Reorganization, PlanGrants were made to Mr. Suydam and a broad range of our other employees. Plan Grants have also been made to subsequent hires, including Messrs. Kelly,Weidler and Spilker. The Plan Grants generally vest over six years, with the first installment becoming vested approximately one year after grant and thebalance vesting thereafter in equal quarterly installments. Holders of Plan Grant RSUs become entitled to distribution equivalents on their vested RSUs if wepay ordinary distributions on our outstanding Class A shares. The administrator of the 2007 Omnibus Equity Incentive Plan determines when shares issuedpursuant to the RSU Awards may be disposed of, except that a participant will generally be permitted to sell shares if necessary to cover taxes. Under ourretained ownership requirements, in 2014, all executive officers were required to retain at least 85% of any Class A shares issued to them pursuant to RSUawards (net of the number of gross shares sold or netted to pay applicable income or employment taxes).The RSUs advance several goals of our compensation program. The Plan Grants align employee interests with those of our shareholders by makingour employees, upon delivery of the underlying Class A shares, shareholders themselves. Because they vest over time, the Plan Grants reward employees forsustained contributions to the Company and foster retention. The size of the Plan Grants is determined by the Plan administrator based on the grantee’s levelof responsibility and contributions to the Company. The restrictive covenants contained in the RSU agreements reinforce our culture of fiduciary protectionof our investors by requiring RSU holders to abide by the provisions regarding non-competition, confidentiality and other limitations on behavior describedin the immediately preceding paragraph.The Bonus Grants are also grants of RSUs under the 2007 Omnibus Equity Incentive Plan. However, the Bonus Grants constitute payment of aportion of the annual compensation earned by certain of our professionals, including Messrs. Kelly, Zelter, Suydam and Weidler, subject to the employee’scontinued service through the vesting dates. Our named executive officers’ Bonus Grants generally differ from their Plan Grants in the following principalways:•The RSU Shares underlying Bonus Grants are scheduled to vest in three equal annual installments.•Distribution equivalents are earned on Bonus Grant RSUs (whether or not vested) when ordinary distributions are made on Class A shares afterthe grant date, but distribution equivalents are earned on Plan Grant RSUs only after they have vested.In determining how many RSUs to grant to Mr. Zelter for services performed in 2014, the committee that administers our 2007 Omnibus EquityIncentive Plan took into account that the independent compensation committees of two publicly traded REITs that we manage, ARI and AMTG, consistentwith recommendations they received from us, had authorized grants to Mr. Zelter of 7,500 restricted share units (having a grant date fair value of $124,425)and 6,226 restricted share units (having a grant date fair value of $99,678), respectively, in respect of ARI’s and AMTG’s publicly traded shares for servicesprovided during the same period. Grants of Plan-Based AwardsThe following table presents information regarding RSUs granted to Messrs. Kelly, Zelter, Suydam and Weidler under our 2007 Omnibus EquityIncentive Plan in 2014 and a modification made to Mr. Spilker’s outstanding RSUs in 2014. No options were granted to a named executive officer in 2014,but Mr. Spilker’s outstanding options were modified in 2014 in connection with his employment termination.- 248- Table of ContentsName Grant Date EstimatedFuturePayoutsunder EquityIncentivePlan AwardsTarget (#) Stock Awards:Number ofShares ofStock or Units(#)(2) OptionAwards:Number ofSharesUnderlyingOptions(#) Grant Date Fair Value orModification DateIncremental FairValue ofStock and Option Awards($)(3)Leon Black — — — — —Martin Kelly December 29, 2014 — 30,850 — 698,444James Zelter June 20, 2014 500,000(1) — — —December 29, 2014 — 21,154 — 478,927John Suydam December 29, 2014 — 22,587 — 511,370Christopher Weidler December 29, 2014 — 8,814 — 199,549Marc Spilker December 2, 2010 (modifiedMarch 26, 2014) — 625,000 — 12,337,500 December 2, 2010 (modifiedMarch 26, 2014) — — 1,250,000 21,025,000(1)Mr. Zelter’s employment agreement entered into on the date shown provides that if he resigns for good reason, is terminated without cause, or terminates employment due todeath or disability in the last six months of 2016 and applicable performance measures regarding profitability of our credit business are attained, he will be entitled to a grant of500,000 RSUs in early 2017. Consequently, in accordance with applicable accounting rules we treat the compensation expense for these RSUs, which will not be grantedunder our equity incentive plan earlier than 2017 (if at all), as established on the date shown and, in accordance with SEC rules, include the award in the above table as if it hadbeen granted on that date. These RSUs have no “threshold” or “maximum” values separate from the above “target” number of shares. The grant date fair value of these RSUsas of June 20, 2014 is considered to be zero because as of that date the accounting recognition requirements for these RSUs had not been met.(2)Represents the aggregate number of RSUs covering our Class A shares (none of the Bonus Grants awarded in 2014 vested in 2014). For a discussion of these grants, pleasesee the discussion above under “—Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table—Awards of Restricted Share UnitsUnder the Equity Plan.”(3)For Messrs. Kelly, Zelter, Suydam and Weidler, represents the aggregate grant date fair value of the RSUs granted in 2014, computed in accordance with FASB ASC Topic718. For Mr. Spilker, represents the incremental fair value of options and RSUs granted on December 2, 2010 computed in accordance with FASB ASC Topic 718 as of thedate such awards were modified on March 26, 2014 in connection with Mr. Spilker’s termination of employment. The amounts shown do not reflect compensation actuallyreceived, but instead represent the aggregate grant date fair value (in the case of Mr. Spilker, the modification date incremental fair value) of the award.- 249- Table of ContentsOutstanding Equity Awards at Fiscal Year-EndThe following table presents information regarding unvested RSU awards made by us to our named executive officers under our 2007 OmnibusEquity Incentive Plan that were outstanding at December 31, 2014. Our named executive officers did not hold any options at fiscal year-end. Stock AwardsName Number ofUnearnedShares, Units orOther RightsThatHave Not Vested(#) Market orPayout Value of UnearnedShares, Units orOther RightsThat Have Not Vested($) (7)Equity Incentive PlanAwards: Number ofUnearned Shares,Units or Other Rightsthat Have Not Vested(#) (8) Equity Incentive PlanAwards: Market orPayout Value ofUnearned Shares,Units or Other Rightsthat Have not Vested($) (9)Leon Black — — —— —Martin Kelly December 29, 2014 30,850(1) 727,443— —December 26, 2013 12,076(2) 284,752— —December 28, 2012 9,011(3) 212,479— —September 30, 2012 234,375(4) 5,526,563— —James Zelter December 29, 2014 21,154(1) 498,811— — June 20, 2014 — —500,000 11,790,000 December 26, 2013 31,838(2) 750,740— — May 9, 2013 22,480(3) 530,078— — December 28, 2012 98,677(5) 2,326,804— —John Suydam December 29, 2014 22,587(1) 532,601— —December 26, 2013 11,253(2) 265,346— —December 28, 2012 10,115(3) 238,512— —Christopher Weidler December 29, 2014 8,814(1) 207,834— — September 30, 2013 27,710(6) 653,402— —Marc Spilker December 2, 2010 — —— —(1)Bonus Grant RSUs that vest in substantially equal annual installments on December 31 of each of 2015, 2016 and 2017.(2)Bonus Grant RSUs that vest in substantially equal annual installments on December 31 of each of 2015 and 2016.(3)Bonus Grant RSUs that vest on December 31, 2015.(4)Plan Grant RSUs that vest in substantially equal installments over the 15 calendar quarters beginning March 31, 2015.(5)Plan Grant RSUs that vest in substantially equal installments over the 16 calendar quarters beginning March 31, 2015.(6)Plan Grant RSUs that vest in substantially equal installments over the 19 calendar quarters beginning March 31, 2015.(7) Amounts calculated by multiplying the number of unvested RSUs held by the named executive officer by the closing price of $23.58 per Class A share on December 31, 2014.(8)Bonus RSUs that vest in substantially equal annual installments on December 31 of each of 2017, 2018 and 2019 but that have not yet been granted (except for accountingpurposes). Mr. Zelter’s employment agreement entered into on the date shown provides that if he resigns for good reason, is terminated without cause, or terminatesemployment due to death or disability in the last six months of 2016 and applicable performance measures regarding profitability of our credit business are attained, he will beentitled to a grant of 500,000 RSUs in early 2017. Consequently, for accounting purposes we treat the compensation expense for these RSUs, which will not be granted underour equity plan earlier than 2017 (if at all), as established on the date shown, and, in accordance with SEC rules, include the award in the table as if it were outstanding.(9)Amount calculated by multiplying the 500,000 RSUs described in the immediately preceding footnote by the closing price of $23.58 per Class A share on December 31, 2014.- 250- Table of ContentsOption Exercises and Stock VestedThe following table presents information regarding the number of outstanding initially unvested RSUs held by our named executive officers thatvested during 2014 and the number of options exercised by our named executive officers in 2014. With respect to the RSUs, the amounts shown below do notreflect compensation actually received by the named executive officers, but instead are calculations of the number of RSUs that vested during 2014 based onthe closing price of our Class A shares on the date of vesting. Shares received by our named executive officers are subject to our retained ownershiprequirements. Option Awards Stock Awards Name Type of Award Number of SharesAcquired onExercise(#) Value Realized onExercise($) Number of SharesAcquired on Vesting(#) Value Realized onVesting($) Leon Black — — — — — Martin Kelly RSUs — — 77,549 2,025,793(2) James Zelter RSUs — — 81,370 1,996,540(2) John Suydam RSUs — — 29,595 697,850(2) Christopher Weidler RSUs — — 7,291 173,438 Marc Spilker Options 1,458,334 26,421,925(1) — — RSUs — — 625,000 19,025,000(2) (1)Amounts calculated based on the difference between the exercise price of the options and the price of the underlying Class A shares on the applicable exercise date.(2)Amounts calculated by multiplying the number of RSUs held by the named executive officer that vested on each applicable vesting date in 2014 by the closing price per ClassA share on that date. Class A shares underlying these vested RSUs are issued to the named executive officer in accordance with the schedules described above under“—Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table—Awards of Restricted Share Units Under the Equity Plan.”Potential Payments upon Termination or Change in ControlNone of the named executive officers is entitled to payment or other benefits in connection with a change in control.Mr. Black’s employment agreement does not provide for severance or other payments or benefits in connection with an employment termination.We may not terminate Mr. Black except for cause or by reason of disability (as such terms are defined in his employment agreement). Under his employmentagreement, Mr. Black is required to protect the confidential information of Apollo both during and after employment. In addition, until one year after hisemployment terminates, Mr. Black is required to refrain from soliciting employees under specified circumstances or interfering with our relationships withinvestors and to refrain from competing with us in a business that involves primarily (i.e., more than 50%) third-party capital, whether or not the terminationoccurs during the term of the agreement or thereafter. These post-termination covenants survive any termination or expiration of the Agreement AmongManaging Partners (described elsewhere in this report under “Item 13. Certain Relationships and Related Party Transactions—Agreement Among ManagingPartners”). If Mr. Black becomes subject to a potential termination for cause or by reason of disability, our manager may appoint an investment professionalto perform his functional responsibilities and duties until cause or disability definitively results in his termination or is determined not to have occurred, butthe manager may so appoint an investment professional only if Mr. Black is unable to perform his responsibilities and duties or, as a matter of fiduciary duty,should be prohibited from doing so. During any such period, Mr. Black shall continue to serve on the executive committee of our manager unless otherwiseprohibited from doing so pursuant to the Agreement Among Managing Partners.If Mr. Kelly’s employment is terminated by us without cause or he resigns for good reason, Mr. Kelly will be entitled to severance of six months’base pay and reimbursement of health insurance premiums paid in the six months following his employment termination. If Mr. Kelly’s employment isterminated by us without cause or he resigns for good reason, he will vest in 50% of any unvested portion of his Plan Grant RSUs. If his employment isterminated by reason of death or disability, he will vest in 50% of any unvested portion of his Plan Grant and Bonus Grant RSUs. We may terminate Mr.Kelly’s employment with or without cause, and we will provide 90 days’ notice (or payment in lieu of such period of notice) prior to a termination withoutcause. Mr. Kelly is required to give us 90 days’ notice prior to a resignation for any reason. He is required to protect the confidential information of Apolloboth during and after employment. In addition, during employment and for 12 months after employment, Mr. Kelly is also obligated to refrain from solicitingour employees, interfering with our relationships with investors or other business relations, and competing with us in a business that manages or invests inassets substantially similar to those managed or invested in by Apollo or its affiliates.- 251- Table of ContentsWe may terminate Mr. Zelter’s employment with or without cause, and we will provide 90 days’ notice (or payment in lieu of such period of notice)prior to a termination without cause. Mr. Zelter is required to provide 90 days’ notice prior to a resignation for any reason. Upon his termination ofemployment by reason of death or disability, Mr. Zelter will vest in 50% of his then unvested RSUs and restricted shares. Subject to his execution of a releaseof claims in favor of the Company, upon his termination by the Company other than for cause, Mr. Zelter will vest in 50% of his then unvested restrictedshares. Upon his termination of employment other than for cause, his annual cash bonus will be prorated through the last day of his employment termination.If Mr. Zelter’s employment is terminated for good reason, without cause or by reason of disability or death, subject to his continued compliance with therestrictive covenants to which he is subject and to his execution of a release of claims in favor of the Company, he will vest in 50% of his then unvestedperformance award RSUs and, if the employment termination occurs in the last six months of 2016, or if he terminates his employment or service due to thefailure of the committee that administers the 2007 Omnibus Equity Incentive Plan to approve the 2016 performance award, then he will vest in 50% of theRSUs covered by that award. Similarly, if that type of employment termination occurs in the last six months of 2018, or if Mr. Zelter terminates hisemployment or service due to the failure of the committee that administers the 2007 Omnibus Equity Incentive Plan to approve the 2018 performance award,then he will vest in 50% of the RSUs covered by that award. If Mr. Zelter’s employment is terminated without cause, or he resigns for good reason, he willretain his dedicated carried interest rights that are not otherwise subject to vesting in respect of certain investment funds we manage in declining percentagesfor up to three years following his employment termination (100% for the first year, 50% for the second year, and 25% for the third year followingemployment termination) and the Class A shares that he is required to purchase with a portion of those amounts following his employment termination shallbe fully vested shares. He will also be entitled to retain his dedicated carried interests that are subject to vesting to the extent then vested. Mr. Zelter isrequired to give us 90 days’ notice prior to a resignation for any reason. During his employment and for 12 months thereafter, he is also obligated to refrainfrom soliciting our employees, interfering with our relationships with investors or other business relations, and competing with us in a business that managesor invests in assets substantially similar to those invested in or managed by Apollo or its affiliates.If Mr. Suydam’s employment is terminated by reason of death or disability, he will vest in 50% of his then unvested RSUs. Mr. Suydam is required toprotect our confidential information at all times. During his employment and for 12 months thereafter, Mr. Suydam is also obligated to refrain from solicitingour employees, interfering with our relationships with investors or other business relations, and competing with us in a business that manages or invests inassets substantially similar to those invested in or managed by Apollo or its affiliates. Mr. Suydam is required to provide 90 days’ notice prior to a resignationfor any reason.Pursuant to Mr. Spilker’s transition agreement, he received a lump sum payment of $950,000 in July 2014 in connection with stepping down onMarch 19, 2014 as our president and as a non-voting member of our executive committee. In connection with his cessation of employment on May 19, 2014,Mr. Spilker also vested in 50% of his then unvested Plan Grant RSUs and options. Under the transition agreement, as in his employment agreement, Mr.Spilker is required to protect the confidential information of Apollo both during and after employment, and, for 12 months after the date of the transitionagreement, to refrain from soliciting our employees, interfering with our relationships with investors and other business relations, and competing with us in abusiness that manages or invests in assets substantially similar to those of Apollo or its affiliates.If Mr. Weidler’s employment is terminated by reason of death or disability, he will vest in 50% of any unvested portion of his RSUs. We mayterminate Mr. Weidler’s employment with or without cause, and we will provide 90 days’ notice (or payment in lieu of such period of notice) prior to atermination without cause. Mr. Weidler is required to provide 90 days’ notice prior to a resignation for any reason. Mr. Weidler is required to protect theconfidential information of Apollo both during and after employment. In addition, pursuant to his 2014 Bonus Grant, during and for 12 months after hisemployment with us, he is obligated to refrain from soliciting our employees and interfering with our relationships with investors or other business relations.In addition, during and for three months after his employment with us, he may not compete with us in a business that manages or invests in assetssubstantially similar to those managed or invested in by Apollo or its affiliates.The named executive officers’ obligations during and after employment were considered by the Managing Partners in determining appropriate post-employment payments and benefits for the named executive officers.The following table lists the estimated amounts that would have been payable to each of our named executive officers in connection with atermination that occurred on the last day of our last completed fiscal year and the value of any additional equity that would vest upon such termination,except that for Mr. Spilker the table shows the amounts received by him in connection with his actual employment termination on May 19, 2014. Whenlisting the potential payments to named executive officers under the plans and agreements described above, we have assumed that the applicable triggeringevent occurred on December 31, 2014 and that the price per share of our Class A shares was $23.58, which is equal to the closing price on such date. Forpurposes of this table, RSU and option acceleration values are based on the $23.58 closing price.- 252- Table of ContentsName Reason for Employment Termination Estimated Valueof CashPayments($) Estimated Valueof EquityAcceleration($) Leon Black Cause — — Death, disability — — Martin Kelly Without cause; by executive for good reason 517,592 (1) 2,763,281(4) Death, disability — 3,375,618(4) James Zelter Without cause; by executive for good reason 11,861,478 (2) 11,790,000(4) Death, disability — 13,843,217(4) John Suydam Without cause; by executive for good reason — — Death; disability — 518,229(4) Christopher Weidler Without cause; by executive for good reason — — Death, disability — 430,618(4) Marc Spilker Actual termination effective May 19, 2014 950,000 (3) 40,342,767(5) (1)This amount would have been payable to the named executive officer had his employment been terminated by the Company without cause (and other than by reason of death ordisability) or for good reason on December 31, 2014.(2)Pursuant to Mr. Zelter’s employment agreement, had his employment terminated on December 31, 2014, he would have been treated as if he had remained employed, forpurposes of receiving carried interest distributions in respect of certain specified funds that remained in existence, for up to 36 additional months (100% in the first year, 50%in the second year, and 25% in the third year). For purposes of the above illustration, we have assumed that these percentages were applied in each of 2015, 2016 and 2017 tothe amount of the distributions that he received in 2014 (including the portion of such distributions he was required to use to purchase Class A shares in 2015), and we haveincluded in the amount shown the portion of his projected 2015, 2016 and 2017 distributions that would be required to be used to purchase Class A shares of the Company. (3)This amount represents the cash payment actually made to Mr. Spilker in connection with his termination of employment on May 19, 2014.(4)This amount represents the additional equity vesting that the named executive officer would have received had his employment terminated in the circumstances described in thecolumn, “Reason for Employment Termination,” on December 31, 2014, based on the closing price of a Class A share on such date. Please see our “Outstanding EquityAwards at Fiscal Year-End” table above for information regarding the named executive officer’s unvested equity as of December 31, 2014. (5)This amount represents the value received by Mr. Spilker from the additional vesting he received on March 26, 2014 in connection with entering into his transition agreement.The portion of this total that relates to options is calculated by multiplying the spread between the option exercise price and the closing price of a Class A share on the date heexercised the options (May 12, 2014) that vested in connection with entering into his transition agreement. The portion of this total that relates to RSUs is calculated bymultiplying the number of RSUs that so vested by the closing price on the vesting date (March 26, 2014). Director CompensationWe do not pay additional remuneration to our employees, including Messrs. Black, Harris and Rowan, for their service on our board of directors. The2014 compensation of Mr. Black is set forth above on the Summary Compensation Table.During 2014, each independent director received (1) a base annual director fee of $125,000, (2) an additional annual director fee of $25,000 if he orshe a member of the audit committee, (3) an additional annual director fee of $10,000 if he or she was a member of the conflicts committee, (4) an additionalannual director fee of $25,000 (incremental to the fee described in (2)) if he or she served as the chairperson of the audit committee, and (5) an additionalannual director fee of $15,000 (incremental to the fee described in (3)) if he or she served as the chairperson of the conflicts committee. In addition,independent directors were reimbursed for reasonable expenses incurred in attending board meetings.Currently, upon initial election to the board of directors, an independent director receives a grant of RSUs with a value of $300,000 that vests inequal annual installments on June 30 of each of the first, second and third years following the year that the grant is made. Mr. Kraft received this type ofaward on July 14, 2014 in connection with his appointment to the board of directors. Incumbent independent directors receive an annual RSU award with avalue of $100,000 that vests on June 30 of the year following the year that the grant is made, and the directors listed on the below table (other than Mr. Kraft)received that award on July 14, 2014.- 253- Table of ContentsThe following table provides the compensation for our independent directors during the year ended December 31, 2014.Name Fees Earned orPaid in Cash Stock Awards(#)(1) TotalMichael Ducey $175,000 85,540 $260,540Paul Fribourg $135,000 85,540 $220,540Robert Kraft $101,250 214,919 $316,169A. B. Krongard $150,000 85,540 $235,540Pauline Richards $175,000 85,540 $260,540(1)Represents the aggregate grant date fair value of stock awards granted, as applicable, computed in accordance with FASB ASC Topic 718. See note 16 to our consolidatedfinancial statements for further information concerning the assumptions made in valuing our RSU Plan Grants. The amounts shown do not reflect compensation actuallyreceived by the independent directors, but instead represent the aggregate grant date fair value of the awards. Unvested director RSUs are not entitled to distributions ordistribution equivalents. As of December 31, 2014, all 10,860 RSUs covered by Mr. Kraft’s 2014 award were unvested and outstanding, and for each of Ms. Richards andMessrs. Ducey Fribourg and Krongard, all 3,620 RSUs covered by his or her 2014 award were unvested and outstanding. - 254- Table of ContentsITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe following table sets forth information regarding the beneficial ownership of our Class A shares as of February 26, 2015 by (i) each personknown to us to beneficially own more than 5% of the voting Class A shares of Apollo Global Management, LLC, (ii) each of our directors, (iii) each personwho is a named executive officer for 2014 and (iv) all directors and executive officers as a group.Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge, each person named in the table below has solevoting and investment power with respect to all of the Class A shares and interests in our Class B share shown as beneficially owned by such person, exceptas otherwise set forth in the notes to the table and pursuant to applicable community property laws. Unless otherwise indicated, the address of each personnamed in the table is c/o Apollo Global Management, LLC, 9 West 57th Street, New York, NY 10019.In respect of our Class A shares, the table set forth below assumes the exchange by Holdings of all AOG Units for our Class A shares with respectto which the person listed below has the right to direct such exchange pursuant to the exchange agreement described under “Item 13. Certain Relationshipsand Related Party Transactions—Exchange Agreement,” and the distribution of such shares to such person as a limited partner of Holdings. Class A Shares Beneficially Owned Class B Share Beneficially Owned Number ofShares Percent(1) TotalPercentageof VotingPower(2) Number ofShares Percent Total Percentageof VotingPower(2)Directors and Executive Officers: Leon Black(3)(4) 92,727,166 35.6% 63.8% 1 100% 63.8%Joshua Harris(3)(4) 54,382,643 24.5% 63.8% 1 100% 63.8%Marc Rowan(3)(4) 50,157,022 23.0% 63.8% 1 100% 63.8%Pauline Richards 21,443 * * — — —Alvin Bernard Krongard(5) 270,043 * * — — —Michael Ducey(6) 27,496 * * — — —Robert Kraft(7) 40,000 * * — — —Paul Fribourg 25,443 * * — — —Marc Spilker(8) 1,554,321 * * — — —Martin Kelly(9) 100,685 * * — — —John Suydam(10) 765,749 * * — — —James Zelter(11) 2,609,313 1.5% * — — —Christopher Weidler(12) 5,924 * * — — —All directors and executive officers as a group(twelve persons)(13) 201,132,927 54.7% 57.7% 1 100% 63.8%BRH(4) — — — 1 100% 63.8%AP Professional Holdings, L.P.(14) 222,455,477 57.0% 63.8% — — —5% Stockholders: TimesSquare Capital Management,LLC(15) 8,998,700 5.4% 2.6% — — — *Represents less than 1%.(1)The percentage of beneficial ownership of our Class A shares is based on voting and non-voting Class A shares outstanding.(2)The total percentage of voting power is based on voting Class A shares and the Class B share.(3)The number of Class A shares presented are held by estate planning vehicles, for which this individual disclaims beneficial ownership except to the extent of his pecuniaryinterest therein. The number of Class A shares presented do not include any Class A shares owned by Holdings with respect to which this individual, as one of the threeowners of all of the interests in BRH, the general partner of Holdings, or as a party to the Agreement Among Managing Partners described under “Item 13. CertainRelationships and Related Party Transactions—Agreement Among Managing Partners” or the Managing Partner Shareholders Agreement described under “Item 13. CertainRelationships and Related Party Transactions—Managing Partner Shareholders Agreement,” may be deemed to have shared voting or dispositive power. Each of theseindividuals disclaims any beneficial ownership of these shares, except to the extent of his pecuniary interest therein.(4)BRH, the holder of the Class B share, is one third owned by Mr. Black, one third owned by Mr. Harris and one third owned by Mr. Rowan. Pursuant to the AgreementAmong Managing Partners, the Class B share is to be voted and disposed of by BRH based on the determination of at least two of the three Managing Partners; as such, theyshare voting and dispositive power with respect to the Class B share.(5)Includes 250,000 Class A shares held by a trust for the benefit of Mr. Krongard’s children, for which Mr. Krongard’s children are the trustees. Mr. Krongard disclaimsbeneficial ownership with respect to such shares, except to the extent of his pecuniary interest therein.- 255- Table of Contents(6)Includes 1,500 Class A shares held by two trusts for the benefit of Mr. Ducey’s grandchildren, for which Mr. Ducey and several of Mr. Ducey’s immediate family membersare trustees and have shared investment power. Mr. Ducey disclaims beneficial ownership of the Class A shares held in the trusts, except to the extent of his pecuniary interesttherein.(7) Includes 40,000 Class A shares held by an entity, which is under the sole control of Mr. Kraft, and may be deemed to be beneficially owned by Mr. Kraft.(8)Information is as of March 19, 2014, the date Mr. Spilker ceased to be an executive officer. Includes 26,350 Class A shares held by a trust for the benefit of Mr. Spilker’schildren, for which one of Mr. Spilker’s immediate family members is a trustee and has investment power. The amount also includes 26,350 Class A shares held by a not-for-profit tax exempt foundation for which Mr. Spilker and his spouse are trustees with investment power. Mr. Spilker disclaims beneficial ownership with respect to such shares,except to the extent of his pecuniary interest therein.(9)Includes 15,625 RSUs covering Class A shares which have vested or with respect to which Mr. Kelly has the right to acquire beneficial ownership within 60 days ofFebruary 26, 2015.(10)Includes 114,584 RSUs covering Class A shares which have vested or with respect to which Mr. Suydam has the right to acquire beneficial ownership within 60 days ofFebruary 26, 2015. Does not include 343,751 Class A shares that will be delivered to Mr. Suydam, more than 60 days after February 26, 2015 in settlement of vested RSUs.Includes 120,488 Class A shares held by a trust for the benefit of Mr. Suydam’s spouse and children, for which Mr. Suydam’s spouse is the trustee. Mr. Suydam disclaimsbeneficial ownership with respect to such shares, except to the extent of his pecuniary interest therein.(11)Includes 6,167 RSUs covering Class A shares which have vested or with respect to which Mr. Zelter has the right to acquire beneficial ownership within 60 days of February26, 2015. Includes 300,698 Class A shares held by vehicles, over which Mr. Zelter exercises voting and investment control.(12)Includes 1,459 RSUs covering Class A shares which have vested or with respect to which Mr. Weidler has the right to acquire beneficial ownership within 60 days ofFebruary 26, 2015.(13)Refers to shares beneficially owned by the individuals who were directors and executive officers as of February 26, 2015. The shares beneficially owned by the directors andexecutive officers reflected above do not include 343,751 Class A shares that will be delivered to Mr. Suydam more than 60 days after February 26, 2015 in settlement ofvested RSUs.(14)Assumes that no Class A shares are distributed to the limited partners of Holdings. The general partner of Holdings, is BRH, which is one third owned by Mr. Black, onethird owned by Mr. Harris and one third owned by Mr. Rowan. BRH is also the general partner of BRH Holdings, L.P., the limited partnership through which Messrs. Black,Harris and Rowan indirectly beneficially own (through estate planning vehicles) their limited partner interests in Holdings. These individuals disclaim any beneficial ownershipof these Class A shares, except to the extent of their pecuniary interest therein.(15) Based on a Schedule 13G filed on February 11, 2015, by TimesSquare Capital Management, LLC (“TimesSquare”). All of the shares reported on this Schedule 13G areowned by investment advisory clients of TimesSquare and in its role as investment advisor, TimesSquare has voting and dispositive power with respect to these shares. Theaddress of TimesSquare Capital Management, LLC is 7 Times Square, 42nd floor, New York, New York 10036.Securities Authorized for Issuance under Equity Incentive PlansThe following table sets forth information concerning the awards that may be issued under the Company’s Omnibus Equity Incentive Plan as ofDecember 31, 2014.Plan Category Number of Securities to be IssuedUpon Exercise of OutstandingOptions, Warrants and Rights(1) Weighted-Average ExercisePrice of Outstanding Options,Warrants and Rights Number of SecuritiesRemaining Available for FutureIssuance Under EquityCompensation Plans (excludingsecurities reflected in column(a)(2) (a)(b) (c)Equity Compensation Plans Approved bySecurity Holders 28,306,686 $16.60 38,090,824Equity Compensation Plans Not Approved bySecurity Holders —— —Total 28,306,686$16.60 38,090,824(1)Reflects the aggregate number of outstanding options and RSUs granted under the Company’s 2007 Omnibus Equity Incentive Plan (the “Equity Plan”) as of December 31,2014.(2)The Class A shares reserved under the Equity Plan are increased on the first day of each fiscal year by (i) the amount (if any) by which (a) 15% of the number of outstandingClass A shares and AOG Units exchangeable for Class A shares on a fully converted and diluted basis on the last day of the immediately- 256- Table of Contentspreceding fiscal year exceeds (b) the number of shares then reserved and available for issuance under the Equity Plan, or (ii) such lesser amount by which the administrator maydecide to increase the number of Class A shares. The number of shares reserved under the Equity Plan is also subject to adjustment in the event of a share split, share dividend, orother change in our capitalization. Generally, employee shares that are forfeited, canceled, surrendered or exchanged from awards under the Equity Plan will be available forfuture awards. We have filed a registration statement and intend to file additional registration statements on Form S-8 under the Securities Act to register Class A shares under theEquity Plan (including pursuant to automatic annual increases). Any such Form S-8 registration statement will automatically become effective upon filing. Accordingly, Class Ashares registered under such registration statement will be available for sale in the open market.- 257- Table of ContentsITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONSAgreement Among Managing PartnersOur Managing Partners have entered into the Agreement Among Managing Partners. The Managing Partners own Holdings in accordance with theirrespective sharing percentages, or “Sharing Percentages,” as set forth in the Agreement Among Managing Partners. For the purposes of the Agreement AmongManaging Partners, “Pecuniary Interest” means, with respect to each Managing Partner, the number of AOG Units that would be distributable to suchManaging Partner assuming that Holdings was liquidated and its assets distributed in accordance with its governing agreements.Pursuant to the Agreement Among Managing Partners, each of Messrs. Harris and Rowan vested in his interest in the AOG Units in 60 equal monthlyinstallments, and Mr. Black vested in his interest in the AOG Units in 72 equal monthly installments. For the purposes of the vesting provisions of theAgreement Among Managing Partners, our Managing Partners were credited for their employment with us since January 1, 2007. Each is now vested in full.We may not terminate a Managing Partner except for cause or by reason of disability.The transfer by a Managing Partner of any portion of his Pecuniary Interest to a permitted transferee will in no way affect any of his obligationsunder the Agreement Among Managing Partners; provided, that all permitted transferees are required to sign a joinder to the Agreement Among ManagingPartners.The Managing Partners’ respective Pecuniary Interests in certain funds, or the “Heritage Funds,” within the Apollo Operating Group are not held inaccordance with the Managing Partners’ respective Sharing Percentages. Instead, each Managing Partner’s Pecuniary Interest in such Heritage Funds is heldin accordance with the historic ownership arrangements among the Managing Partners, and the Managing Partners continue to share the operating income insuch Heritage Funds in accordance with their historic ownership arrangement with respect to such Heritage Funds.The Agreement Among Managing Partners may be amended and the terms and conditions of the Agreement Among Managing Partners may bechanged or modified upon the unanimous approval of the Managing Partners. We, our shareholders (other than the Strategic Investors, as set forth under “-Lenders Rights Agreement-Amendments to Managing Partner Transfer Restrictions”) and the Apollo Operating Group have no ability to enforce anyprovision thereof or to prevent the Managing Partners from amending the Agreement Among Managing Partners.Managing Partner Shareholders AgreementWe have entered into the Managing Partner Shareholders Agreement with our Managing Partners. The Managing Partner Shareholders Agreementprovides the Managing Partners with certain rights with respect to the approval of certain matters and the designation of nominees to serve on our board ofdirectors, as well as registration rights for our securities that they own.Board RepresentationThe Managing Partner Shareholders Agreement requires our board of directors, so long as the Apollo control condition is satisfied, to nominateindividuals designated by our manager such that our manager will have a majority of the designees on our board.Transfer RestrictionsThe Managing Partner Shareholders Agreement provides that no Managing Partner may, nor shall any of such Managing Partner’s permittedtransferees, directly or indirectly, voluntarily effect cumulative transfers of Pecuniary Interests (as defined in the Managing Partner Shareholders Agreement),representing more than: (i) 15% of his Pecuniary Interests at any time on or after the third anniversary and prior to the fourth anniversary of our IPO; (ii)22.5% of his Pecuniary Interests at any time on or after the fourth anniversary and prior to the fifth anniversary of our IPO; (iii) 30% of his Pecuniary Interestsat any time on or after the fifth anniversary and prior to the sixth anniversary of our IPO; and (iv) 100% of his Pecuniary Interests at any time on or after thesixth anniversary of our IPO, other than, in each case, with respect to transfers (a) from one founder to another founder, (b) to a permitted transferee of suchManaging Partner, or (c) in connection with a sale by one or more of our Managing Partners in one or a related series of transactions resulting in theManaging Partners owning or controlling, directly or indirectly, less than 50.1% of the economic or voting interests in us or the Apollo Operating Group, orany other person exercising control over us or the Apollo Operating Group by contract, which would include a transfer of control of our manager.- 258- Table of ContentsThe percentages referenced in the preceding paragraph will apply to the aggregate amount of Equity Interests held by each Managing Partner (andhis permitted transferees) as of July 13, 2007. After six years, each Managing Partner and his permitted transferees may transfer all of the Equity Interests ofsuch Managing Partner to any person or entity in accordance with Rule 144, in a registered public offering or in a transaction exempt from the registrationrequirements of the Securities Act. The above transfer restrictions will lapse with respect to a Managing Partner if such Managing Partner dies or becomesdisabled.A “permitted transferee” means, with respect to each Managing Partner and his permitted transferees, (i) such Managing Partner’s spouse, (ii) a linealdescendant of such Managing Partner’s parents (or any such descendant’s spouse), (iii) a charitable institution controlled by such Managing Partner, (iv) atrustee of a trust (whether inter vivos or testamentary), the current beneficiaries and presumptive remaindermen of which are one or more of such ManagingPartner and persons described in clauses (i) through (iii) above, (v) a corporation, limited liability company or partnership, of which all of the outstandingshares of capital stock or interests therein are owned by one or more of such Managing Partner and persons described in clauses (i) through (iv) above, (vi) anindividual mandated under a qualified domestic relations order, (vii) a legal or personal representative of such Managing Partner in the event of his death ordisability, (viii) any other Managing Partner with respect to transactions contemplated by the Managing Partner Shareholders Agreement, and (ix) any otherManaging Partner who is then employed by Apollo or any of its affiliates or any permitted transferee of such Managing Partner in respect of any transactionnot contemplated by the Managing Partner Shareholders Agreement, in each case that agrees in writing to be bound by these transfer restrictions.Any waiver of the above transfer restrictions may only occur with our consent. As our Managing Partners control the management of our company,however, they have discretion to cause us to grant one or more such waivers. Accordingly, the above transfer restrictions might not be effective in preventingour Managing Partners from selling or transferring their Equity Interests.IndemnityCarried interest income from our funds can be distributed to us on a current basis, but is subject to repayment by the subsidiaries of the ApolloOperating Group that act as general partners of the funds in the event that certain specified return thresholds are not ultimately achieved. The ManagingPartners, Contributing Partners and certain other investment professionals have personally guaranteed, subject to certain limitations, the obligations of thesesubsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to a particular Managing Partner’s orContributing Partner’s distributions. Pursuant to the Managing Partner Shareholders Agreement, we agreed to indemnify each of our Managing Partners andcertain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor of Fund IV, Fund V and Fund VI(including costs and expenses related to investigating the basis for or objecting to any claims made in respect of the guarantees) for all interests that ourManaging Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.Accordingly, in the event that our Managing Partners, Contributing Partners and certain other investment professionals are required to pay amountsin connection with a general partner obligation for the return of previously made distributions with respect to Fund IV, Fund V and Fund VI, we will beobligated to reimburse our Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to payeven though we did not receive the distribution to which that general partner obligation related.Registration RightsPursuant to the Managing Partner Shareholders Agreement, we have granted Holdings, an entity through which our Managing Partners andContributing Partners own their AOG units, and its permitted transferees the right, under certain circumstances and subject to certain restrictions, to require usto register under the Securities Act our Class A shares held or acquired by them. Under the Managing Partner Shareholders Agreement, the registration rightsholders (i) have “demand” registration rights that require us to register under the Securities Act the Class A shares that they hold or acquire, (ii) may require usto make available registration statements permitting sales of Class A shares they hold or acquire in the market from time to time over an extended period and(iii) have the ability to exercise certain piggyback registration rights in connection with registered offerings requested by other registration rights holders orinitiated by us. We have agreed to indemnify each registration rights holder and certain related parties against any losses or damages resulting from anyuntrue statement or omission of material fact in any registration statement or prospectus pursuant to which they sell our shares, unless such liability arosefrom such holder’s misstatement or omission, and each registration rights holder has agreed to indemnify us against all losses caused by his misstatements oromissions. We have filed a shelf registration statement in connection with the rights described above.- 259- Table of ContentsRoll-Up AgreementsPursuant to the Roll-Up Agreements, the Contributing Partners received interests in Holdings, which we refer to as AOG Units, in exchange for theircontribution of assets to the Apollo Operating Group. The AOG Units received by our Contributing Partners and any units into which they are exchangedgenerally vested over six years in equal monthly installments and were fully vested on June 30, 2013. AOG Units were subject to a lock-up until two yearsafter our IPO. Thereafter, 7.5% of the AOG Units became, or will become, tradable on each of the second, third, fourth and fifth anniversaries of our IPO, withthe remaining AOG Units becoming tradable on the sixth anniversary of our IPO or upon subsequent vesting. An AOG Unit that is forfeited will revert to theManaging Partners. Our Contributing Partners have the ability to direct Holdings to exercise Holdings’ registration rights described above under “-ManagingPartner Shareholders Agreement-Registration Rights.”Under their Roll-Up Agreements, each of our Contributing Partners is subject to a noncompetition provision until the first anniversary of the date oftermination of his service as a partner to us. During that period, our Contributing Partners are prohibited from (i) engaging in any business activity that weoperate in, (ii) rendering any services to any alternative asset management business (other than that of us or our affiliates) that involves primarily (i.e., morethan 50%) third-party capital or (iii) acquiring a financial interest in, or becoming actively involved with, any competitive business (other than as a passiveholding of a specified percentage of publicly traded companies). In addition, our Contributing Partners are subject to nonsolicitation, nonhire andnoninterference covenants during employment and for two years thereafter. Our Contributing Partners are also bound to a nondisparagement covenant withrespect to us and our Contributing Partners and to confidentiality restrictions. Resignation by any of our Contributing Partners shall require ninety days’notice. Any restricted period applicable to a Contributing Partner will commence after the ninety day notice of termination period.Amended and Restated Exchange AgreementWe have entered into an exchange agreement with Holdings under which, subject to certain procedures and restrictions (including any applicabletransfer restrictions and lock-up agreements described above) upon 60 days’ written notice prior to a designated quarterly date, each Managing Partner andContributing Partner (or certain transferees thereof) has the right to cause Holdings to exchange the AOG Units that he owns through Holdings for our Class Ashares and to sell such Class A shares at the prevailing market price (or at a lower price that such Managing Partner or Contributing Partner is willing toaccept). To effect the exchange, Holdings distributes the AOG Units to be exchanged to the applicable Managing Partner or Contributing Partner. Under theexchange agreement, the Managing Partner or Contributing Partner must then simultaneously exchange one AOG Unit (being an equal limited partnerinterest in each Apollo Operating Group entity) for each Class A share received from our intermediate holding companies. As a Managing Partner orContributing Partner exchanges his AOG Units, our interest in the AOG Units will be correspondingly increased and the voting power of the Class B sharewill be correspondingly decreased.The exchange agreement was amended and restated on May 6, 2013 and further amended and restated on March 5, 2014. The amendments to theoriginal exchange agreement (i) permit exchanging holders certain rights to revoke exchanges of their AOG Units in whole, but not in part, in certaincircumstances; (ii) permit transfers of a holder’s exchanged shares to a qualifying entity that can sell them under a Rule 10b5-1 trading plan; (iii) require theCompany to use its commercially reasonable efforts to file and keep effective a shelf registration statement relating to the exchange of Class A sharesreceived upon an exchange of AOG Units; (iv) modify the exchange mechanics to address certain tax considerations of an exchange for exchanging holders;and (v) require exchanging holders to reimburse APO Corp. for any incremental U.S. federal income tax incurred by APO Corp. as a result of the modificationof the exchange mechanics.Amended and Restated Tax Receivable AgreementAs a result of each of AMH Holdings (Cayman), L.P. and the Apollo Operating Group entities controlled by it or Apollo Management Holdings, L.P.having made an election under Section 754 of the Internal Revenue Code, any exchanges by a Managing Partner or Contributing Partner of AOG Units(together with the corresponding interest in our Class B share), that he owns through Holdings, for our Class A shares in a taxable transaction may result in anadjustment to the tax basis of a portion of the assets owned by the Apollo Operating Group at the time of the exchange. The taxable exchanges may result inincreases in the tax depreciation and amortization deductions from depreciable and amortizable assets, as well as an increase in the tax basis of other assets, ofthe Apollo Operating Group that otherwise would not have been available. A portion of these increases in tax depreciation and amortization deductions, aswell as the increase in the tax basis of such other assets, will reduce the amount of tax that APO Corp. would otherwise be required to pay in the future.Additionally, our acquisition of AOG Units from the Managing Partners or Contributing Partners, such as our acquisition of AOG Units from the ManagingPartners in the Strategic Investors Transaction, have and may continue to result in increases in tax deductions and tax basis that reduces the amount of taxthat APO Corp. would otherwise be required to pay in the future.- 260- Table of ContentsAPO Corp. has entered into a tax receivable agreement with our Managing Partners and Contributing Partners that provides for the payment by APOCorp. to an exchanging or selling Managing Partner or Contributing Partner of 85% of the amount of actual cash savings, if any, in U.S. Federal, state, localand foreign income tax that APO Corp. realizes (or is deemed to realize in the case of an early termination payment by APO Corp. or a change of control, asdiscussed below) as a result of these increases in tax deductions and tax basis, and certain other tax benefits, including imputed interest expense, related topayments pursuant to the tax receivable agreement. APO Corp. expects to benefit from the remaining 15% of actual cash savings, if any, in income tax that itrealizes. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to theamount of such taxes that APO Corp. would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of theapplicable Apollo Operating Group entity as a result of the transaction and had APO Corp. not entered into the tax receivable agreement. The tax savingsachieved may not ensure that we have sufficient cash available to pay our tax liability or generate additional distributions to our investors. Also, we mayneed to incur additional debt to repay the tax receivable agreement if our cash flow needs are not met. The term of the tax receivable agreement will continueuntil all such tax benefits have been utilized or expired, unless APO Corp. exercises the right to terminate the tax receivable agreement by paying an amountbased on the present value of payments remaining to be made under the agreement with respect to units that have been exchanged or sold and units whichhave not yet been exchanged or sold. Such present value will be determined based on certain assumptions, including that APO Corp. would have sufficienttaxable income to fully utilize the deductions that would have arisen from the increased tax deductions and tax basis and other benefits related to the taxreceivable agreement. In the event that other of our current or future U.S. subsidiaries become taxable as corporations and acquire AOG Units in the future, orif we become taxable as a corporation for U.S. Federal income tax purposes, each U.S. corporation will become subject to a tax receivable agreement withsubstantially similar terms. In connection with an amendment of the AMH partnership agreement in April 2010, the tax receivable agreement was revised toreflect the Managing Partners’ agreement to defer 25% of required payments pursuant to the tax receivable agreement that are attributable to the 2010 fiscalyear until 2015.The IRS could challenge our claim to any increase in the tax basis of the assets owned by the Apollo Operating Group that results from theexchanges entered into by the Managing Partners or Contributing Partners. The IRS could also challenge any additional tax depreciation and amortizationdeductions or other tax benefits we claim as a result of such increase in the tax basis of such assets. If the IRS were to successfully challenge a tax basisincrease or tax benefits we previously claimed from a tax basis increase, our Managing Partners and Contributing Partners would not be obligated under thetax receivable agreement to reimburse APO Corp. for any payments previously made to it (although future payments would be adjusted to reflect the result ofsuch challenge). As a result, in certain circumstances, payments could be made to our Managing Partners and Contributing Partners under the tax receivableagreement in excess of 85% of APO Corp.’s actual cash tax savings. In general, estimating the amount of payments that may be made to our ManagingPartners and Contributing Partners under the tax receivable agreement is by its nature, imprecise, in the absence of an actual transaction, insofar as thecalculation of amounts payable depends on a variety of factors. The actual increase in tax basis and the amount and timing of any payments under the taxreceivable agreement will vary depending upon a number of factors, including:•the timing of the transactions-for instance, the increase in any tax deductions will vary depending on the fair market value, which mayfluctuate over time, of the depreciable or amortizable assets of the Apollo Operating Group entities at the time of the transaction;•the price of our Class A shares at the time of the transaction-the increase in any tax deductions, as well as tax basis increase in otherassets, of the Apollo Operating Group entities, is directly proportional to the price of the Class A shares at the time of the transaction;•the taxability of exchanges - to the extent if an exchange is not taxable for any reason, increased deductions will not be available; and•the amount and timing of our income-APO Corp. will be required to pay 85% of the tax savings as and when realized, if any. If APOCorp. does not have taxable income, it is not required to make payments under the tax receivable agreement for that taxable yearbecause no tax savings were actually realized.In addition, the tax receivable agreement provides that, upon a merger, asset sale or other form of business combination or certain other changes ofcontrol, APO Corp.’s (or its successor’s) obligations with respect to exchanged or acquired units (whether exchanged or acquired before or after such changeof control) would be based on certain assumptions, including that APO Corp. would have sufficient taxable income to fully utilize the deductions arisingfrom the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement. As noted above, no payments will bemade if a Managing Partner or Contributing Partner elects to exchange his or her AOG Units in a tax-free transaction.In connection with the first amendment and restatement of the exchange agreement, the tax receivable agreement was amended and restated on May6, 2013 to conform the agreement to the amended and restated exchange agreement, particularly to address the modified exchange mechanics, and to makenon-substantive updates to recognize certain additional Apollo Operating Group entities that have been formed since the original tax receivable agreementwas entered into in 2007.- 261- Table of ContentsStrategic Investors TransactionOn July 13, 2007, we sold securities to the Strategic Investors in return for a total investment of $1.2 billion. Through our intermediate holdingcompanies, we used all of the proceeds from the issuance of such securities to the Strategic Investors to purchase from our Managing Partners 17.4% of theirAOG Units for an aggregate purchase price of $1,068 million, and to purchase from our Contributing Partners a portion of their points for an aggregatepurchase price of $156 million. The Strategic Investors hold non-voting Class A shares, which represented 27.6% of our issued and outstanding Class Ashares and 11.7% of the economic interest in the Apollo Operating Group, in each case as of December 31, 2014.As all of their holdings in us are non-voting, neither of the Strategic Investors has any means for exerting control over our company.Strategic Relationship AgreementOn April 20, 2010, we announced a new strategic relationship agreement with CalPERS, whereby we agreed to reduce management fees and otherfees charged to CalPERS on funds we manage, or in the future will manage, solely for CalPERS by $125 million over a five-year period or as close a period asrequired to provide CalPERS with that benefit. The agreement further provides that we will not use a placement agent in connection with securing any futurecapital commitments from CalPERS. Through December 31, 2014, the Company has reduced fees charged to CalPERS on the funds it manages byapproximately $95.9 million.Lenders Rights AgreementIn connection with the Strategic Investors Transaction, we entered into a shareholders agreement, or the “Lenders Rights Agreement,” with theStrategic Investors.Transfer RestrictionsFollowing the registration effectiveness date, each Strategic Investor may transfer its non-voting Class A shares up to the percentages set forth belowduring the relevant periods identified:PeriodMaximumCumulativeAmountRegistration Effectiveness Date-2nd anniversary of our IPO0%2nd-3rd anniversary of our IPO25%3rd-4th anniversary of our IPO50%4th-5th anniversary of our IPO75%5th anniversary of our IPO (and thereafter)100%Notwithstanding the foregoing, at no time following the registration effectiveness date may a Strategic Investor make a transfer representing 2% ormore of our total Class A shares to any one person or group of related persons.Registration RightsPursuant to the Lenders Rights Agreement, each Strategic Investor is afforded four demand registrations with respect to non-voting Class A shares,covering offerings of at least 2.5% of our total equity ownership and customary piggyback registration rights. All cutbacks between the Strategic Investorsand Holdings (or its members) in any such demand registration shall be pro rata based upon the number of shares available for sale at such time (regardless ofwhich party exercises a demand).Amendments to Managing Partner Transfer RestrictionsEach Strategic Investor has a consent right with respect to any amendment or waiver of any transfer restrictions that apply to our Managing Partners.- 262- Table of ContentsApollo Operating Group Limited Partnership AgreementsPursuant to the partnership agreements of the Apollo Operating Group partnerships, the indirect wholly-owned subsidiaries of Apollo GlobalManagement, LLC that are the general partners of those partnerships have the right to determine when distributions will be made to the partners of the ApolloOperating Group and the amount of any such distributions. If a distribution is authorized, such distribution will be made to the partners of the ApolloOperating Group pro rata in accordance with their respective partnership interests.The partnership agreements of the Apollo Operating Group partnerships also provide that substantially all of our expenses, including substantiallyall expenses solely incurred by or attributable to Apollo Global Management, LLC (such as expenses incurred in connection with the Private OfferingTransactions), will be borne by the Apollo Operating Group; provided that obligations incurred under the tax receivable agreement by Apollo GlobalManagement, LLC and its wholly-owned subsidiaries (which currently consist of our three intermediate holding companies, APO Corp., APO (FC), LLC andAPO Asset Co., LLC), income tax expenses of Apollo Global Management, LLC and its wholly-owned subsidiaries and indebtedness incurred by ApolloGlobal Management, LLC and its wholly-owned subsidiaries shall be borne solely by Apollo Global Management, LLC and its wholly-owned subsidiaries.Employment ArrangementsPlease see the section entitled “Item 11. Executive Compensation-Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table” and “-Potential Payments upon Termination or Change in Control” for a description of the employment agreements of our namedexecutive officers who have employment agreements.In addition, Joshua Black and Benjamin Black, sons of Leon Black, are each employed by the Company as an Associate in the Company’s privateequity business. They are each entitled to receive a base salary, incentive compensation and other employee benefits that are offered to similarly situatedemployees of the Company. Each is also eligible to receive an annual performance-based bonus in an amount determined by the Company in its discretion.ReimbursementsIn the normal course of business, our personnel have made use of aircraft owned as personal assets by Messrs. Black, Rowan and Harris. Messrs.Black, Rowan and Harris paid for their purchases of the aircraft and bear all operating, personnel and maintenance costs associated with their operation forpersonal use. Payment by us for the business use of these aircraft by Messrs. Black, Rowan and Harris and other of our personnel totaled $608,894, $928,572and $1,601,325 for 2014 to Mr. Black, Mr. Rowan and Mr. Harris, respectively (which amounts are determined based on the lower of the actual costs ofoperating the aircraft or a specified hourly market rate).Investments In Apollo FundsOur directors and executive officers are generally permitted to invest their own capital (or capital of estate planning vehicles that they control)directly in our funds. In general, such investments are not subject to management fees, and in certain instances, may not be subject to carried interest. Theopportunity to invest in our funds is available to all of the senior Apollo professionals and to those of our employees whom we have determined to have astatus that reasonably permits us to offer them these types of investments in compliance with applicable laws. From our inception through December 31,2014, our professionals have committed or invested approximately $1.2 billion of their own capital to our funds.The amount invested in our investment funds by our directors and executive officers (and their estate planning vehicles) during 2014 was$21,594,185, $17,611,226, $10,047,553, $3,117,160, $3,487,560, $107,144, and $93,369 for Messrs Black, Harris, Rowan, Zelter, Suydam, Kelly, andWeidler respectively. The amount of distributions, including profits and return of capital to our directors and executive officers (and their estate planningvehicles) during 2014 was $62,371,465, $24,873,467, $20,342,373, $7,535,306, $4,208,409, $15,421, and $12,737 for Messrs. Black, Harris, Rowan, Zelter,Suydam, Kelly, and Weidler, respectively.Sub-Advisory Arrangements and Strategic Investment AccountsFrom time to time, we may enter into sub-advisory arrangements with, or establish strategic investment accounts for, our directors and executiveofficers or vehicles they manage. Such arrangements would be approved in advance in accordance with our policy regarding transactions with relatedpersons. In addition, any such sub-advisory arrangement or strategic investment account would be entered into with, or advised by, an Apollo entity servingas investment advisor registered under the Investment Advisers Act, and any fee arrangements, if applicable would be on an arms-length basis.- 263- Table of ContentsIndemnification of Directors, Officers and OthersUnder our operating agreement, in most circumstances we will indemnify the following persons, to the fullest extent permitted by law, from andagainst all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlementsor other amounts: our manager; any departing manager; any person who is or was an affiliate of our manager or any departing manager; any person who is orwas a member, partner, tax matters partner, officer, director, employee, agent, fiduciary or trustee of us or our subsidiaries, our manager or any departingmanager or any affiliate of us or our subsidiaries, our manager or any departing manager; any person who is or was serving at the request of our manager orany departing manager or any affiliate of our manager or any departing manager as an officer, director, employee, member, partner, agent, fiduciary or trusteeof another person; or any person designated by our manager. We have agreed to provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. Wehave also agreed to provide this indemnification for criminal proceedings. Any indemnification under these provisions will only be out of our assets. We maypurchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power toindemnify the person against liabilities under our operating agreement.We have entered into indemnification agreements with each of our directors, executive officers and certain of our employees which set forth theobligations described above.We have also agreed to indemnify each of our Managing Partners and certain Contributing Partners against certain amounts that they are required topay in connection with a general partner obligation for the return of previously made carried interest distributions in respect of Fund IV, Fund V and Fund VI.See the above description of the indemnity provisions of the Managing Partner Shareholders Agreement.Statement of Policy Regarding Transactions with Related PersonsOur board of directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related personpolicy.” Our related person policy requires that a “related person” (as defined in paragraph (a) of Item 404 of Regulation S-K) must promptly disclose to ourChief Legal Officer any “related person transaction” (defined as any transaction that is reportable by us under Item 404(a) of Regulation S-K in which wewere or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect materialinterest) and all material facts with respect thereto. Our Chief Legal Officer will then promptly communicate that information to our manager. No relatedperson transaction will be consummated without the approval or ratification of the executive committee of our manager or any committee of our board ofdirectors consisting exclusively of disinterested directors. It is our policy that persons interested in a related person transaction will recuse themselves fromany vote of a related person transaction in which they have an interest.Director IndependenceBecause more than fifty percent of our voting power is controlled by BRH, we are considered a “controlled company” as defined in the listingstandards of the NYSE and we are exempt from the NYSE rules that require that:•our board of directors be comprised of a majority of independent directors;•we establish a compensation committee composed solely of independent directors; and•we establish a nominating and corporate governance committee composed solely of independent directors.While our board of directors is currently comprised of a majority of independent directors, we plan on availing ourselves of the controlled companyexceptions. We have elected not to have a nominating and corporate governance committee comprised entirely of independent directors, nor a compensationcommittee comprised entirely of independent directors. Our board of directors has determined that five of our eight directors meet the independencestandards under the NYSE and the SEC. These directors are Messrs. Ducey, Fribourg, Krongard and Kraft and Ms. Richards.At such time that we are no longer deemed a controlled company, our board of directors will take all action necessary to comply with all applicablerules within the applicable time period under the NYSE listing standards.- 264- Table of ContentsITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe following table summarizes the aggregate fees for professional services provided by Deloitte & Touche LLP, the member firms of DeloitteTouche Tohmatsu, and their respective affiliates (collectively, the "Deloitte Entities") for the years ended December 31, 2014 and 2013: Year Ended December 31, 2014 2013 (in thousands) Audit fees$12,810(1) $13,465(1) Audit fees for Apollo fund entities20,413(2) 19,505(2) Audit-related fees7,360(3)(4) 2,340(3)(4) Tax fees3,275(5) 3,580(5) Tax fees for Apollo fund entities16,857(2) 13,835(2) (1)Audit fees consisted of fees for (a) the audits of our consolidated financial statements in our Annual Report on Form 10-K and services attendant to,or required by, statute or regulation; (b) reviews of the interim condensed consolidated financial statements included in our quarterly reports onForm 10-Q.(2)Audit and Tax fees for Apollo fund entities consisted of services to investment funds managed by Apollo in its capacity as the general partner and/ormanager of such entities.(3)Audit-related fees consisted of comfort letters, consents and other services related to SEC and other regulatory filings.(4)Includes audit-related fees for Apollo fund entities of $0.3 million and $0.5 million for the year ended December 31, 2014 and 2013, respectively.(5)Tax fees consisted of fees for services rendered for tax compliance and tax planning and advisory services.Our audit committee charter requires the audit committee of our board of directors to approve in advance all audit and non-audit related services to beprovided by our independent registered public accounting firm. All services reported in the Audit, Audit-related, Tax and Other categories above wereapproved by the committee.- 265- Table of ContentsPART IVITEM 15. EXHIBITS ExhibitNumber Exhibit Description 3.1 Certificate of Formation of Apollo Global Management, LLC (incorporated by reference to Exhibit 3.1 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-150141)). 3.2 Amended and Restated Limited Liability Company Agreement of Apollo Global Management, LLC (incorporated byreference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 4.1 Specimen Certificate evidencing the Registrant’s Class A shares (incorporated by reference to Exhibit 4.1 to theRegistrant’s Registration Statement on Form S-1 (File No. 333-150141)). 4.2 Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors party thereto and WellsFargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filedwith the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)). 4.3 First Supplemental Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors partythereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to theRegistrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)). 4.4 Form of 4.000% Senior Note due 2024 (included in Exhibit 4.2 to the Registrant’s Form 8-K filed with the Securities andExchange Commission on May 30, 2014 (File No. 001-35107), which is incorporated by reference). *4.5 Second Supplemental Indenture dated as of January 30, 2015, among Apollo Management Holdings, L.P., the Guarantorsparty thereto, Apollo Principal Holdings X, L.P. and Wells Fargo Bank, National Association, as trustee. 10.1 Amended and Restated Limited Liability Company Operating Agreement of AGM Management, LLC dated as of July 10,2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.2 Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings I, L.P. dated as of April 14,2010 (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.3 Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings II, L.P. dated as of April 14,2010 (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.4 Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings III, L.P. dated as ofApril 14, 2010 (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 (File No.333-150141)). 10.5 Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IV, L.P. dated as ofApril 14, 2010 (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No.333-150141)).- 266- Table of Contents +10.6 Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as amended and restated (incorporated byreference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.7 Agreement Among Principals, dated as of July 13, 2007, by and among Leon D. Black, Marc J. Rowan, Joshua J. Harris,Black Family Partners, L.P., MJR Foundation LLC, AP Professional Holdings, L.P. and BRH Holdings, L.P. (incorporatedby reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.8 Shareholders Agreement, dated as of July 13, 2007, by and among Apollo Global Management, LLC, AP ProfessionalHoldings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowanand Joshua J. Harris (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1(File No. 333-150141)). 10.9 Second Amended and Restated Exchange Agreement, dated as of March 5, 2014, by and among Apollo GlobalManagement, LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III,L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., ApolloPrincipal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., AMH Holdings(Cayman), L.P. and the Apollo Principal Holders (as defined therein) from time to time party thereto (incorporated byreference to Exhibit 10.11 to the Registrant’s Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)). 10.10 Amended and Restated Tax Receivable Agreement, dated as of May 6, 2013, by and among APO Corp., Apollo PrincipalHoldings II, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings VI, Apollo Principal Holdings VIII, L.P.,AMH Holdings (Cayman), L.P. and each Holder defined therein (incorporated by reference to Exhibit 10.2 to theRegistrant's Form 8-K filed with the Securities and Exchange Commission on May 7, 2013 (File No. 001-35107)). +10.11 Employment Agreement with Leon D. Black (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-Q forthe period ended June 30, 2012 (File No. 001-35107)). +10.12 Employment Agreement with Marc J. Rowan (incorporated by reference to Exhibit 10.44 to the Registrant’s Form 10-Qfor the period ended June 30, 2012 (File No. 001-35107)). +10.13 Employment Agreement with Joshua J. Harris (incorporated by reference to Exhibit 10.45 to the Registrant’s Form 10-Qfor the period ended June 30, 2012 (File No. 001-35107)). 10.14 Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings V, L.P. dated as of April 14,2010 (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.15 Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VI, L.P. dated as of April 14,2010 (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.16 Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings VII, L.P. dated asof April 14, 2010 (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 (FileNo. 333-150141)). 10.17 Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VIII, L.P. dated as of April14, 2010 (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1 (File No.333-150141)). - 267- Table of Contents10.18 Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IX, L.P. dated asof April 14, 2010 (incorporated by reference to Exhibit 10.24 to the Registrant’s Registration Statement on Form S-1 (FileNo. 333-150141)). 10.19 Fourth Amended and Restated Limited Partnership Agreement of Apollo Management Holdings, L.P. dated as of October30, 2012 (incorporated by reference to Exhibit 10.25 to the Registrant's Form 10-Q for the Registration Statement on FormS-1 (File No. 333-150141)). 10.20 Settlement Agreement, dated December 14, 2008, by and among Huntsman Corporation, Jon M. Huntsman, Peter R.Huntsman, Hexion Specialty Chemicals, Inc., Hexion LLC, Nimbus Merger Sub, Inc., Craig O. Morrison, Leon Black,Joshua J. Harris and Apollo Global Management, LLC and certain of its affiliates (incorporated by reference to Exhibit10.26 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.21 First Amendment and Joinder, dated as of August 18, 2009, to the Shareholders Agreement, dated as of July 13, 2007, byand among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners,L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowan and Joshua J. Harris (incorporated by reference to Exhibit10.27 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)). 10.22 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.28 to the Registrant’s RegistrationStatement on Form S-1 (File No. 333-150141)). +10.23 Amended and Restated Employment Agreement with James Zelter dated as of June 20, 2014 (incorporated by reference toExhibit 10.27 to the Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)). +10.24 Roll-Up Agreement with James Zelter (incorporated by reference to Exhibit 10.30 to the Registrant’s RegistrationStatement on Form S-1 (File No. 333-150141)). +10.25 Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus EquityIncentive Plan (for Plan Grants) (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement onForm S-1 (File No. 333-150141)). +10.26 Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus EquityIncentive Plan (for Bonus Grants) (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statementon Form S-1 (File No. 333-150141)). +10.27 Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus EquityIncentive Plan (for new independent directors) (incorporated by reference to Exhibit 10.31 to the Form 10-Q for the periodended June 30, 2014 (File No. 001-35107)). +10.28 Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus EquityIncentive Plan (for continuing independent directors) (incorporated by reference to Exhibit 10.32 to the Form 10-Q for theperiod ended June 30, 2014 (File No. 001-35107)). +10.29 Form of Restricted Share Award Grant Notice and Restricted Share Award Agreement under the Apollo GlobalManagement, LLC 2007 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.33 to the Form 10-Q forthe period ended June 30, 2014 (File No. 001-35107)). +10.30 Form of Share Award Grant Notice and Share Award Agreement under the Apollo Global Management, LLC 2007Omnibus Equity Incentive Plan (for Retired Partners) (incorporated by reference to Exhibit 10.34 to the Form 10-Q for theperiod ended June 30, 2014 (File No. 001-35107)).- 268- Table of Contents +10.31 Apollo Management Companies AAA Unit Plan (incorporated by reference to Exhibit 10.34 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-150141)). +10.32 Employment Agreement with Marc Spilker (incorporated by reference to Exhibit 10.35 to the Registrant’s RegistrationStatement on Form S-1 (File No. 333-150141)). *+10.33 Employment Agreement with Christopher Weidler, dated June 4, 2013. +10.34 Non-Qualified Share Option Agreement pursuant to the Apollo Global Management, LLC 2007 Omnibus EquityIncentive Plan with Marc Spilker dated December 2, 2010 (incorporated by reference to Exhibit 10.40 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-150141)). 10.35 Amended Form of Independent Director Engagement Letter (incorporated by reference to Exhibit 10.38 to theRegistrant’s Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)). +10.36 Employment Agreement with Martin Kelly, dated July 2, 2012 (incorporated by reference to Exhibit 10.42 to theRegistrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)). 10.37 Amended and Restated Exempted Limited Partnership Agreement of AMH Holdings, L.P., dated October 30, 2012(incorporated by reference to Exhibit 10.46 to the Registrant’s Form 10-Q for the period ended September 30, 2012 (FileNo. 001-35107)). +10.38 Amended and Restated Limited Partnership Agreement of Apollo Advisors VI, L.P., dated as of April 14, 2005 andamended as of August 26, 2005 (incorporated by reference to Exhibit 10.41 to the Registrant's Form 10-K for the periodended December 31, 2013 (File No. 001-35107)). +10.39 Third Amended and Restated Limited Partnership Agreement of Apollo Advisors VII, L.P. dated as of July 1, 2008 andeffective as of August 30, 2007 (incorporated by reference to Exhibit 10.42 to the Registrant's Form 10-K for the periodended December 31, 2013 (File No. 001-35107)). +10.40 Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors I, L.P., dated January12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.43 to the Registrant's Form 10-Kfor the period ended December 31, 2013 (File No. 001-35107)). +10.41 Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors II, L.P., datedJanuary 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.44 to the Registrant'sForm 10-K for the period ended December 31, 2013 (File No. 001-35107)). +10.42 Third Amended and Restated Limited Partnership Agreement of Apollo Credit Liquidity Advisors, L.P., dated January 12,2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.45 to the Registrant's Form 10-K forthe period ended December 31, 2013 (File No. 001-35107)). +10.43 Second Amended and Restated Limited Partnership Agreement of Apollo Credit Liquidity CM Executive Carry, L.P.,dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.46 to theRegistrant's Form 10-K for the period ended December 31, 2013 (File No. 001-35107)). - 269- Table of Contents+10.44 Second Amended and Restated Limited Partnership Agreement Apollo Credit Opportunity CM Executive Carry I, L.P.dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.47 to theRegistrant's Form 10-K for the period ended December 31, 2013 (File No. 001-35107)). +10.45 Second Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity CM Executive Carry II, L.P.dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.48 to theRegistrant's Form 10-K for the period ended December 31, 2013 (File No. 001-35107)). +10.46 Second Amended and Restated Exempted Limited Partnership Agreement of AGM Incentive Pool, L.P., dated June 29,2012 (incorporated by reference to Exhibit 10.49 to the Registrant's Form 10-K for the period ended December 31, 2013(File No. 001-35107)). 10.47 Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term FacilityBorrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the other guarantorsparty thereto from time to time, the lenders party thereto from time to time, the issuing banks party thereto from time totime and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.50 to theRegistrant's Form 10-K for the period ended December 31, 2013 (File No. 001-35107)). *10.48 Guarantor Joinder Agreement, dated as of January 30, 2015, by Apollo Principal Holdings X, L.P. to the CreditAgreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term FacilityBorrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the existingguarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time andJPMorgan Chase Bank, N.A., as administrative agent. 10.49 Transition Agreement, dated as of March 19, 2014, by and among Marc A. Spilker, Apollo Management Holdings, L.P.and Apollo Global Management, LLC (incorporated by reference to Exhibit 10.51 to the Registrant's Form 10-Q for theperiod ended March 31, 2014 (File No. 001-35107)). +10.50 Form of Letter Agreement under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P.effective as of January 1, 2014 (incorporated by reference to Exhibit 10.56 to the Form 10-Q for the period ended June 30,2014 (File No. 001-35107)). +10.51 Form of Award Letter under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P.effective as of January 1, 2014 (incorporated by reference to Exhibit 10.57 to the Form 10-Q for the period ended June 30,2014 (File No. 001-35107)). *+10.52 Amended and Restated Limited Partnership Agreement of Apollo EPF Advisors, L.P., dated as of February 3, 2011. *+10.53 First Amended and Restated Exempted Limited Partnership Agreement of Apollo EPF Advisors II, L.P. dated as of April 9,2012. *+10.54 Amended and Restated Agreement of Exempted Limited Partnership of Apollo CIP Partner Pool, L.P., dated as ofDecember 18, 2014. *+10.55 Form of Award Letter under the Amended and Restated Agreement of Exempted Limited Partnership Agreement of ApolloCIP Partner Pool, L.P. *+10.56 Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III (APO FC),L.P., dated as of December 18, 2014.- 270- Table of Contents *+10.57 Form of Award Letter under Second Amended and Restated Agreement of Limited Partnership of Apollo CreditOpportunity Advisors III (APO FC), L.P. *21.1 Subsidiaries of Apollo Global Management, LLC. *23.1 Consent of Deloitte & Touche LLP. *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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (furnished herewith). *32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (furnished herewith). *101.INS XBRL Instance Document *101.SCH XBRL Taxonomy Extension Scheme 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.+Management contract or compensatory plan or arrangement.The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other thanwith respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, anyrepresentations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement ordocument and may not describe the actual state of affairs as of the date they were made or at any other time.- 271- Table of ContentsSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. Apollo Global Management, LLC (Registrant) Date: February 27, 2015By:/s/ Martin Kelly Name:Martin Kelly Title:Chief Financial Officer(principal financial officer andauthorized signatory)- 272- Table of ContentsPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated: Name Title Date /s/ Leon Black Chairman and Chief Executive Officer and Director(principal executive officer) February 27, 2015Leon Black /s/ Martin Kelly Chief Financial Officer(principal financial officer) February 27, 2015Martin Kelly /s/ Chris Weidler Chief Accounting Officer February 27, 2015Chris Weidler (principal accounting officer) /s/ Joshua Harris Senior Managing Director and Director February 27, 2015Joshua Harris /s/ Marc Rowan Senior Managing Director and Director February 27, 2015Marc Rowan /s/ Michael Ducey Director February 27, 2015Michael Ducey /s/ Paul Fribourg Director February 27, 2015Paul Fribourg /s/ Robert Kraft Director February 27, 2015Robert Kraft /s/ AB Krongard Director February 27, 2015AB Krongard /s/ Pauline Richards Director February 27, 2015Pauline Richards - 273- This Second Supplemental Indenture, dated as of January 30, 2015 (the “Second Supplemental Indenture”), amongApollo Management Holdings, L.P., a limited partnership duly organized and existing under the laws of the State of Delaware (the“Company”), the Existing Guarantors (as hereinafter defined), Apollo Principal Holdings X, L.P., a limited partnership duly formedand existing under the laws of the Cayman Islands (the “New Guarantor”), and Wells Fargo Bank, National Association, a nationalbanking association, as Trustee under the Indenture (as hereinafter defined) and hereunder (the “Trustee”), supplements that certainIndenture, dated as of May 30, 2014, among the Company, the Guarantors named therein (the “Existing Guarantors”) and the Trustee(the “Base Indenture”), as supplemented by the first supplemental indenture, dated as of May 30, 2014, among the Company theExisting Guarantors and the Trustee (together with the Base Indenture, the “Indenture”). Capitalized terms used herein withoutdefinitions shall have the meaning assigned to them in the Indenture.RECITALS OF THE COMPANYThe Company and the Existing Guarantors have heretofore executed and delivered to the Trustee the Base Indentureproviding for the issuance from time to time of one or more series of the Company’s senior unsecured debt securities.The Company and the Existing Guarantors have heretofore executed and delivered to the Trustee the FirstSupplemental Indenture providing for the issuance and the terms of a series of Securities designated as the Company’s “4.000% SeniorNotes due 2024”.Section 1402 of the Indenture provides that the Company and each Existing Guarantor shall cause each New ApolloOperating Group Entity (other than a Non-Guarantor Entity) to become a Guarantor pursuant to the Indenture and provide a Guaranteein respect of the Notes.The New Guarantor is a New Apollo Operating Group Entity and is not a Non-Guarantor Entity under the terms andconditions set forth under the Indenture.Pursuant to Section 901 of the Indenture, the Company, the Existing Guarantors and the Trustee may, without theconsent of any Holders, enter into this Second Supplemental Indenture for the purpose of adding the New Guarantor as a Guarantorunder the Indenture.Pursuant to Sections 901 and 1413 of the Indenture, the Trustee is authorized to execute and deliver this SecondSupplemental Indenture.This Second Supplemental Indenture shall not result in a material modification of the Notes for purposes of the ForeignAccount Tax Compliance Act.Section 1.1 Agreement to be Bound. The New Guarantor hereby agrees to become a party to the Indenture as a Guarantorand as such will have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture.Section 1.2 Guarantee. The New Guarantor agrees, on a joint and several basis, with the Existing Guarantors, to fully andunconditionally Guarantee to each Holder of the Notes and the Trustee the obligations of the Company pursuant to and as set forth inArticle XIV of the Base Indenture.Section 1.3 Notices. All notices or other communications to the New Guarantor shall be given as provided in Section 105 ofthe Base Indenture.Section 1.4 Execution as Supplemental Indenture. This Second Supplemental Indenture is executed and shall be construed asan indenture supplemental to the Base Indenture and the First Supplemental Indenture, and, as provided in the Base Indenture, formspart thereof.Section 1.5 Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of the Company, theExisting Guarantors and the New Guarantor, as the case may be, and the Trustee assumes no responsibility for their correctness. TheTrustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture or of the Guarantees.Section 1.6 Separability Clause. In case any provision in this Second Supplemental Indenture shall be invalid, illegal orunenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.Section 1.7 Successors and Assigns. All covenants and agreements in this Second Supplemental Indenture by the Companyand the Guarantors shall bind their respective successors and assigns, whether so expressed or not. All agreements of the Trustee in thisSecond Supplemental Indenture shall bind its successors and assigns, whether so expressed or not. Section 1.8 Execution and Counterparts. This Second Supplemental Indenture may be executed in any number ofcounterparts, each of which so executed shall be deemed to be an original, and all such counterparts shall together constitute but oneand the same instrument. This exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDFtransmission shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may beused in lieu of the original Second Supplemental Indenture and signature pages for all purposes.Section 1.9 Governing Law. This Second Supplemental Indenture shall be governed by, and construed in accordance with,the law of the State of New York, without regard to principles of conflicts of law.[Signature page to follow.]IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed allas of the day and year first above written.Apollo Management Holdings, L.P., as IssuerBy:Apollo Management Holdings GP, LLC, its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings I, L.P., as GuarantorBy:Apollo Principal Holdings I GP, LLC, its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings II, L.P., as GuarantorBy:Apollo Principal Holdings II GP, LLC, its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings III, L.P., as GuarantorBy:Apollo Principal Holdings III GP, Ltd., its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings IV, L.P., as GuarantorBy:Apollo Principal Holdings IV GP, Ltd., its general partner By:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings V, L.P., as GuarantorBy:Apollo Principal Holdings V GP, LLC, its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings VI, L.P., as GuarantorBy:Apollo Principal Holdings VI GP, LLC, its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings VII, L.P., as GuarantorBy:Apollo Principal Holdings VII GP, Ltd., its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings VIII, L.P., as GuarantorBy:Apollo Principal Holdings VIII GP, Ltd., its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings IX, L.P., as GuarantorBy:Apollo Principal Holdings IX GP, Ltd., its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentAMH Holdings (Cayman), L.P., as GuarantorBy:AMH Holdings GP, Ltd., its general partnerBy:Apollo Management Holdings GP, LLC, its sole director By:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentApollo Principal Holdings X, L.P., as GuarantorBy:Apollo Principal Holdings X GP, Ltd., its general partnerBy:/s/ Jessica L. Lomm_______ Name: Jessica L. Lomm Title: Vice PresidentWells Fargo Bank, National Association, as TrusteeBy:/s/ Raymond Delli Colli Name: Raymond Delli Colli Title: Vice President- 1 – Apollo Global Management, LLC 9 West 57th Street New York, NY 10019June 4, 2013Personal and ConfidentialChristopher Weidler124 Barchester WayWestfield, NJ 07090Dear Chris:We are pleased to confirm the following terms in connection with your employment at Apollo Management Holdings, L.P. (together with itsaffiliated investment management companies, the "Company"), effective upon your Start Date (detailed below). Unless otherwise defined herein,capitalized terms shall have the meaning set forth at the end of this letter.•Position & Reporting. You will be employed by the Company as Controller and Chief Accounting Officer of Apollo Global Management(“AGM”). You will report to the Chief Financial Officer, Martin Kelly, or his successor.•Start Date and Assurances. Your employment with the Company shall begin on September 3, 2013 (or such earlier date on which youcommence employment with the Company) (such actual date of employment commencement, the “Start Date”). You represent that (i) youare not a party to any agreement that would prohibit you from entering into employment with the Company; (ii) no trade secret orproprietary information belonging to your previous employer will be disclosed by you at the Company and no such information, whether inthe form of documents (electronic or otherwise), memoranda, software, etc., will be retained by you or brought with you to the Company;and (iii) you have brought to the Company’s attention and provided it with a copy of any agreement that may impact your futureemployment with the Company or performing the services contemplated, including but not limited to any non-disclosure, non-competition,non-solicitation or invention assignment agreements containing future work restrictions. You represent that prior to the Start Date you willnot take any actions on behalf of the Company or engage in any discussions or communications on behalf of the Company, including,without limitation, with any prospective Company employees or other service providers. You further represent to the Company that youpossess any licenses or certifications necessary for you to perform such services.•Annual Base Salary. You will be entitled to an annual base salary at the rate of $400,000 (the “Base Salary”), which base salary shall bepaid in installments not less frequently than monthly. This is an exempt position, therefore no overtime will be granted.•Annual Bonus. You may be eligible to receive an annual bonus (the “Bonus”) in addition to your Base Salary and in an amount to bedetermined by the Company in its discretion. For services performed in 2013, your guaranteed Bonus will be $700,000, less applicablewithholdings (the “2013 Guaranteed Bonus”). The 2013 Guaranteed Bonus will be paid to you in cash, and will be paid when bonuses aregenerally paid to other similarly situated employees, provided that you have not been terminated for Cause nor provided notice of yourresignation prior to the Bonus payment date. All future Bonuses are not guaranteed and any Bonus payable to you is dependent upon yourperformance and the performance of the Company. All future Bonuses will be paid in accordancewith the Company’s Incentive Program (as defined below) and shall be paid when bonuses are generally paid to other similarly situatedemployees, provided that you are employed on the payment date and you have not provided notice of your resignation prior to the Bonuspayment date.•Plan Grant. Subject to approval by the Committee that administers the Plan, on the last day of the calendar quarter that includes the StartDate, you shall be granted (the “Plan Grant”) restricted share units (“RSUs”) under the Apollo Global Management, LLC 2007 OmnibusEquity Incentive Plan (the “Plan”) having an aggregate value equal to $1,000,000 based on the average closing price of an Apollo GlobalManagement, LLC Class A share on the New York Stock Exchange for the ten trading days preceding the grant date (rounded down to thenearest whole share). Each RSU shall be granted pursuant to the Plan and subject to such other terms and conditions as generally apply toPlan participants, including your continued employment through each vesting date. The RSUs will vest over a period of six (6) years, asfollows: (i) 4/24 of the grant will vest on the first anniversary of the grant date; and (ii) the remaining balance will vest in 20 substantiallyequal quarterly installments thereafter.•Incentive Program. For any year that your actual compensation exceeds $250,000, a portion of your total compensation for servicesperformed in that year will be deferred and payable pursuant to the Company’s incentive compensation program (the “Incentive Program”)as in effect for such year to the same extent as applicable to similarly situated employees of the Company generally, as determined by theCompany prior to the start of such year (for purposes of clarity, your Base Salary shall not be subject to deferral under the IncentiveProgram but shall be included in the calculation of your total compensation). Presently, it is anticipated that the percentage of your cashcompensation that will be deferred under the Incentive Program is as follows:10% of compensation to $500,000;20% of compensation from $500,001 to $1,000,000;25% of compensation from $1,000,001 to $2,000,000; and30% of compensation in excess of $2,000,001.The Company reserves the right to change the foregoing schedule at any time to the extent permitted under Section 409A of the U.S. Tax Code. Currently, any amounts payable under the Incentive Program will be subject to payment in the form of equity of Apollo GlobalManagement, LLC or an Affiliate and shall vest in 3 equal annual installments commencing on the last day of the year following the year inwhich the services were performed, which vesting shall be contingent on your continued service as an employee on each vesting date. Allamounts that vest shall be paid within the short-term deferral period provided under U.S. Treas. Reg. §1.409A-1(b)(4).•AGM Incentive Pool. You may be awarded a contingent profits interest in the Company’s Affiliate, AGM Incentive Pool, L.P. (the“Incentive Pool”), pursuant to the AGM Incentive Participation Plan (as in effect from time to time, the “AGM Incentive Plan”). TheIncentive Pool may make discretionary distributions to you on an annual basis subject to the terms and conditions of the AGM IncentivePlan. To the extent that the Incentive Pool makes any such distributions to you in recognition of the services you perform during the 2013calendar year, then the amount of the 2013 Guaranteed Bonus, respectively, shall be reduced by an equivalent amount.•Benefit Plans. You will be eligible to participate in the various group health, disability and life insurance plans and other employeeprograms, including sick and vacation time, as generally are offered by the Company to similarly situated employees from time to time.Specifically, with respect to vacation, you will be entitled to 4 weeks of vacation per year subject to applicable Company- 2 -policies. No more than five days of accrued but unused vacation shall be carried forward past the end of any calendar year.•Indemnification. You shall be entitled to coverage under a director and officer liability insurance policy on terms and conditions no lessfavorable than those that apply to similarly situated executives.•Notice Entitlement. The Company may terminate your employment with or without Cause. The period of notice that we will give you toterminate your employment without Cause is 90 days. The Company may terminate your employment for Cause without notice. You agree togive the Company 90 days notice should you decide to leave the Company for any reason. We reserve the right to require you not to be inthe Company’s offices and/or not to undertake all or any of your duties and/or not to contact Company clients, colleagues or advisors (unlessotherwise instructed) during all or part of any period of notice of your termination of service. During any such period, you remain a serviceprovider to the Company with all duties of fidelity and confidentiality to the Company and subject to all terms and conditions of youremployment and should not be employed or engaged in any other business.•Payment in lieu of notice. Subject to the “Employment in Good Standing; Compliance” section below, we reserve the right to pay you inlieu of notice on a termination without Cause.•Political Contributions. Except as otherwise disclosed to the Company in writing, in the past two years neither you nor your spouse: (i) hasdonated to a state or local political campaign in any of the fifty states or Washington D.C.; or (ii) has donated to a candidate for any federaloffice if such candidate held any state or local political office at the time of the contribution.•Confidentiality. You will not disclose or use at any time, either prior to your termination of employment or service with the Company andits Affiliates or thereafter, any Confidential Information of which you are or become aware, whether or not such information is authored ordeveloped by you, except to the extent that (i) such disclosure or use is directly related to and required by your good faith performance ofduties to the Company or any of its Affiliates, or (ii) such disclosure is required to be made by law or any court or legislative body withjurisdiction over you; provided, that you shall provide ten (10) days’ prior written notice to the Company of such disclosure so that theCompany may seek a protective order or similar remedy; and provided, further, that, in either case set forth above, you inform the recipientsthat such information or communication is confidential in nature. Except to the extent publicly disclosed, you acknowledge and agree thatthis letter agreement and its provisions constitute Confidential Information of the Company and its Affiliates and that any documents,information or reports received by you from the Company and its Affiliates shall be treated as confidential and proprietary information ofthe Company and its Affiliates. Nothing contained herein shall preclude you from disclosing Confidential Information to your personal legaland financial advisor(s), provided that you inform such advisor(s) that the information is confidential in nature and receive assurances thatthe advisor(s) shall not disclose such information except as required by law.•No Solicitation or Competition. In consideration of the above, during your employment with or provision of services to the Company andfor 6 months thereafter, you shall not directly or indirectly (including through another person) (a) induce or attempt to induce: (i) anyemployee of the Company or any of its Affiliates to leave the employment of the Company or such Affiliate or (ii) any person who was anemployee of the Company or its Affiliates within the previous 12 months, to take up employment or engagement in a similar capacity with aCompetitive Business, or in any way interfere with or modify the relationship between the Company or any such Affiliate, on the one hand,and any employee thereof, on the other hand, (b) on behalf of a Competitive Business employ or engage any- 3 -person who was an employee of the Company or any Affiliate of the Company within the preceding 12 months, or (c) solicit any customer,supplier, investor or other business relation of the Company or any Affiliate of the Company with whom you have dealt during the 12months prior to your employment termination or in respect of whom you were, on termination of employment, in possession of, ConfidentialInformation, to reduce or cease doing business with the Company or such Affiliate. You further agree that, during your employment with orprovision of services to the Company and, for 3 months thereafter, you will not, directly or indirectly (including through another person) (a)engage in any Competitive Business for your own account, (b) enter the employ of, or render any services to, any person engaged in anyCompetitive Business, or (c) acquire a material financial interest in any Competitive Business. Nothing herein shall, however, prohibit youfrom being a passive owner of not more than 2% of the outstanding stock of any class of a company or corporation that is publicly quoted orlisted, so long as you have no active participation in the business of such company or corporation. As used in this letter agreement: (i)“person” means an individual, a corporation, limited liability company, partnership, association, trust or any other entity; and (ii) activityundertaken “directly or indirectly” includes any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner or a stockholder, member, partner, joint venturer or otherwise, and includes any direct or indirect participation in such enterprise as anemployee, consultant, director, officer, licensor of technology or otherwise.•Nondisparagement. You agree that you will not, whether during your employment or thereafter, directly or indirectly, make or ratify anystatement, public or private, oral or written, to any person that disparages, either professionally or personally, the Company or any of itsAffiliates, past and present, and each of them, as well as its and their trustees, directors, officers, members, managers, partners, agents,attorneys, insurers, employees, stockholders, representatives, assigns, and successors, past and present, and each of them.•Remedies; Severability. Because your services are unique and you have had and will have access during the course of your employment toConfidential Information, money damages would be an inadequate remedy for any breach of the restrictive covenants contained in this letteragreement (including, without limitation, those regarding confidentiality, nonsolicitation, noncompetition and nondisparagement) (the“Protective Covenants”). Therefore, in the event of a breach or threatened breach of any provision of a Protective Covenant, the Companyor its successors or assigns may, in addition to other rights and remedies existing in their favor at law or in equity, (a) apply to any court ofcompetent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, theprovisions hereof (without posting a bond or other security) and/or (b) cease any continuation of payments or benefits to you otherwisecalled for by this letter agreement. If any provision of this letter agreement shall be held invalid, illegal or unenforceable in any jurisdictionfor any reason, including, without limitation, the duration of such provision, its geographical scope or the extent of the activities prohibitedor required by it, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect in suchjurisdiction and shall be liberally construed in order to carry out the intent of the parties hereto as nearly as may be possible, (b) suchinvalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision hereof, and (c) anycourt or arbitrator having jurisdiction thereover shall have the power to reform such provision to the extent necessary for such provision tobe enforceable under applicable law. You hereby acknowledge and agree with the Company that (x) each of the Protective Covenants is anentirely separate, severable and independent covenant and restriction on you; (y) the duration, extent and application of each of the ProtectiveCovenants is no greater than is necessary for the protection of the goodwill and trade connections of the business of the Company; and (z) inthe event that any restriction on you contained in the Protective Covenants shall be found void but would be valid if some part thereof weredeleted, such restrictions shall apply with any such deletion as may be necessary to make it valid and effective.- 4 -•Subsequent Engagement. Notwithstanding anything to the contrary contained herein, while you are employed by the Company, prior toaccepting (or entering into a written understanding that provides for your) employment or consulting engagement with any person or entityunrelated to the Company, you will provide (i) written notice to the Company of such offer, it being understood that your acceptance of anysuch offer before seven (7) days have elapsed following such notice shall be treated as a termination by the Company for Cause, and (ii) acopy of the paragraph entitled “No Solicitation or Competition” herein to any such prospective employer or service recipient, with a copyprovided simultaneously to the Company. You shall promptly notify the Company of your acceptance of employment with, or agreement toprovide substantial services to, any entity unrelated to the Company for 6 months from and after your employment termination date.•Employment in Good Standing; Compliance. As you are aware, the firm is subject to and has various compliance procedures in place.Accordingly, you understand that your continued association with the Company and corresponding payment of the foregoing amounts will besubject to your continued employment in good standing, which will include, among other things, your adherence to the Company’s policiesand procedures and other applicable compliance manuals (including, without limitation, obligations with regard to confidential information),copies of which will be made available to you. You agree to execute any customary forms and agreements in connection therewith.•Choice of Law; Arbitration; Waiver of Jury Trial. This letter agreement shall be governed by and construed in accordance with the lawsof the State of New York (without regard to any conflicts of laws principles thereof that would give effect to the laws of anotherjurisdiction), and any dispute or controversy arising out of or relating to this letter agreement or your employment, other than injunctiverelief as provided in this letter agreement, will be settled exclusively by arbitration, conducted before a single arbitrator in New York, NewYork (applying New York law) in accordance with, and pursuant to, the National Rules for the Resolution of Employment Disputes of theAmerican Arbitration Association (the “Association”). The decision of the arbitrator will be final and binding upon the parties hereto. Anyarbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in courtto obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by theFederal Arbitration Act or the New York Arbitration Act. The Company and you will share the Association administrative fees, thearbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees. IF THIS AGREEMENT TO ARBITRATE ISHELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THATCANNOT BE WAIVED, YOU AND WE HEREBY WAIVE AND COVENANT THAT YOU AND WE WILL NOT ASSERT(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISINGIN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTERS CONTEMPLATEDHEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OROTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR YOU MAY FILE A COPY OFTHIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND YOU, ON THE OTHERHAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEENSUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDING PROPERLYHEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENTJURISDICTION BY A JUDGE SITTING WITHOUT A JURY.- 5 - •Miscellaneous. This letter agreement may not be modified or amended unless in writing signed by the undersigned parties. Any noticerequired hereunder shall be made in writing, as applicable, to the Company in care of the Global Head of Human Resources at her principaloffice location or to you at your home address most recently on file with the Company. Except for an assignment by the Company of thisletter agreement to an Affiliate, this letter agreement may not be assigned by the parties other than as expressly provided herein. This letteragreement may be executed through the use of separate signature pages or in any number of counterparts, with the same effect as if theparties executing such counterparts had executed one counterpart.[Continues on next page]- 6 -The effectiveness of these terms is subject to your execution and return of this letter agreement on or before June 11, 2013 andis subject to customary background and reference checks. This letter agreement constitutes the entire agreement between the parties inrelation to its subject matter and supersedes any previous agreement or understanding between the parties relating thereto (except thatany obligations contained in any such agreement in favor of the Company or any of its Affiliates requiring you to maintainconfidentiality or honor other restrictive covenants shall survive in accordance with their terms), and you confirm that in signing thisletter agreement you have not relied on any warranty, representation, assurance or promise of any kind whatsoever other than as areexpressly set out in this letter agreement or in the plans or documents referenced herein.Sincerely,/s/ Lisa Barse BernsteinLisa Barse BernsteinGlobal Head of Human Resources Agreed and accepted:/s/ Christopher WeidlerChristopher Weidler6/19/2013____________Date“Affiliate” of the Company means any other person that directly or indirectly through one or more intermediaries controls, is controlledby or is under common control with the Company and shall include, without limitation, Apollo-affiliated management companies,funds, and managed accounts.“Cause” means a termination of your employment, based upon a finding by the Company, acting in good faith, after the occurrence ofany of the following: (a) you are convicted or charged with a criminal offense; (b) your violation of law in connection with anytransaction involving the purchase, sale, loan or other disposition of, or the rendering of investment advice with respect to, any security,futures or forward contract, insurance contract, debt instrument, financial instrument or currency; (c) your dishonesty, bad faith, grossnegligence, willful misconduct, fraud or willful or reckless disregard of duties in connection with the performance of any services onbehalf of the Company or any of its Affiliates or your engagement in conduct which is injurious to the Company, monetarily orotherwise; (d) your intentional failure to comply with any reasonable directive by a supervisor in connection with the performance ofany services on behalf of the Company; (e) your intentional breach of any material provision of this document or any other agreementsof the Company or any of its Affiliates; (f) your material violation of any written policies adopted by the Company or its Affiliatesgoverning the conduct of persons performing services on behalf of the Company or such Affiliate or your non-adherence to theCompany’s policies and procedures or other applicable Company compliance manuals; (g) the taking of or omission to take any actionthat has caused or substantially contributed to a material deterioration in the business or reputation of the Company or any of itsAffiliates, or that was otherwise materially disruptive of their business or affairs; provided, however, that the term Cause shall notinclude for this purpose any mistake of judgment made in good faith with respect to any transaction respecting a portfolio investmentfor an account managed by the Company; (h) the failure by you to devote a significant portion of time to performing services as anagent of the Company without the prior written consent of the Company, other than by reason of death or Disability; (i) the obtainingby you of any material improper personal benefit as a result of a breach by you of any covenant or agreement (including, withoutlimitation, a breach by you of the Company's code of ethics or a material breach by you of other written policies furnished to yourelating to personal investment transactions or of any covenant, agreement, representation or warranty contained in any limitedpartnership agreement); or (j) your suspension or other disciplinary action against you by an applicable regulatory authority; provided,however, that if a failure, breach, violation or action or omission described in any of clauses (d) to (g) is capable of being cured, youhave failed to do so after being given notice and a reasonable opportunity to cure. As used in this definition, “material” means “morethan de minimis.”“Competitive Business” means (i) any alternative asset management business (other than the business of the Company, its successorsor assigns or Affiliates) in which more than 25% of the total capital committed is third party capital, that advises, manages or invests theassets of and/or makes investments in private equity funds, hedge funds, collateralized debt obligation funds, commercial mortgages,commercial real estate related investments, residential mortgages, residential real estate related investments, business developmentcorporations, special purpose acquisition companies, life settlement investments, life insurance company asset investment vehicles,credit-based asset management vehicles, leveraged loans or other alternative asset investment vehicles, (ii) Persons who manage, adviseor own such investment vehicles, (iii) any proprietary investing desk of an investment bank or commercial bank, or (iv) Persons whoprovide material banking, advisory or other professional services to any Person described in clauses (i),(ii) or (iii).“Confidential Information” means information that is not generally known to the public and that is or was used, developed or obtainedby the Company and its Affiliates, including but not limited to, (i) information, observations, procedures and data obtained by youwhile employed by or providing services- 8 -to the Company or any of its Affiliates, (ii) products or services, (iii) costs and pricing structures, (iv) analyses, (v) performance data,(vi) computer software, including operating systems, applications and program listings, (vii) flow charts, manuals and documentation,(viii) data bases, (ix) accounting and business methods, (x) inventions, devices, new developments, methods and processes, whetherpatentable or unpatentable and whether or not reduced to practice, (xi) investors, customers, vendors, suppliers and investor, customer,vendor and supplier lists, (xii) other copyrightable works, (xiii) all production methods, processes, technology and trade secrets, (xiv)this letter agreement and nonpublic agreements of the Company and its Affiliates, (xv) investment memoranda and investmentdocumentation concerning any potential, actual or aborted investments, (xvi) compensation terms, levels, and arrangements of employees and other service providers of the Company and its Affiliates, and (xvii) all similar and related information in whateverform. Confidential Information will not include any information that is generally available to the public prior to the date you propose todisclose or use such information.. For this purpose, Confidential Information will be deemed generally available to the public only if allmaterial features comprising such information have been published in combination.“Disability” means (i) you are not able to engage in any substantial gainful activity by reason of any medically determinable physicalor mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve(12) months, or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death orcan be expected to last for a continuous period of not less than twelve (12) months, you are receiving income replacement benefits for aperiod of not less than three (3) months under an accident or health plan covering employees of the Company. The determination ofwhether or not a Disability exists for purposes of this letter agreement shall be made by a physician selected by the Company andreasonably acceptable to you and who is qualified to give such professional medical assessment.- 9 - This Partnership is the general partner of Apollo European Principal Finance Fund, L.P., its parallel funds and Apollo EuropeanPrincipal Finance Fund (Feeder), L.P. and earns the “carried interest” on EPF Fund profits.Dated February 3, 2011APOLLO EPF ADVISORS, L.P. AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT TABLE OF CONTENTSPage1.DEFINITIONS AND INTERPRETATION 22.FORMATION AND ORGANIZATION 93.CAPITAL 114.DISTRIBUTIONS 165.MANAGEMENT 186.ADMISSIONS, TRANSFERS AND WITHDRAWALS 247.POINTS 278.DISSOLUTION AND LIQUIDATION 299.POINTS COMMITTEE 3010. GENERAL PROVISIONS 31i AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF APOLLO EPF ADVISORS, L.P.This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the “Agreement”) of Apollo EPF Advisors,L.P., a Cayman Islands exempted limited partnership (the “Partnership”), is made February 3, 2011 by and among:(1)APOLLO EPF CAPITAL MANAGEMENT, LIMITED, a Cayman Islands exempted company, as the sole generalpartner (the “General Partner”);(2)APOLLO PRINCIPAL HOLDINGS IV, L.P., a Cayman Islands exempted limited partnership, as the initial limited partner;and(3)the parties whose names and business addresses are listed from time to time as limited partners on the Schedule of Partners (asdefined herein), as limited partners (the “Limited Partners”).WHEREAS:(A)the Partnership was formed pursuant to an Initial Exempted Limited Partnership Agreement on 4 May 2007 (the “OriginalAgreement”) between the General Partner and APH (as defined below);(B)the parties desire to continue the Partnership as an Exempted Limited Partnership and to amend and restate the OriginalAgreement in its entirety in connection with the operation of the Fund (as defined below).IT IS AGREED as follows:ii 1.DEFINITIONS AND INTERPRETATION1.1In this Agreement (except as stated otherwise):“Act”means the Exempted Limited Partnership Law (as amended) of the Cayman Islands,as in effect on the date hereof and as amended from time to time, or any successorlaw;“Affiliate”means with respect to any Person any other Person directly or indirectly controlling,controlled by or under common control with such Person;“Agreement”means this Amended and Restated Limited Partnership Agreement, as amended orsupplemented from time to time;“APH’’means Apollo Principal Holdings IV, L.P. (or its assignees or transferees);“Capital Account”means with respect to each Partner the capital account established and maintained onbehalf of such Partner as described in Section 3.3;“Cause”shall have the meaning set out in the EPF Co-Investors Agreement;“Clawback Amount”means the amount of any payments required to be made by the Partnership to theFund General Partner to allow EPF Advisors to pay any Fund pursuant to Section10.3 of the Fund LP Agreement of such Fund;“Clawback Share”means, with respect to any Partner (or former Partner) and any Clawback Amount, aportion of such Clawback Amount equal to (i) the cumulative amount distributed tosuch Partner (or former Partner) prior to the time of determination of Operating Profitattributable to the Fund, divided by (ii) the cumulative amount so distributed to allPartners (and former Partners) with respect to such Operating Profit attributable to theFund;“Code”means the United States Internal Revenue Code of 1986, as amended and as hereafteramended, or any successor law;iii “Confidential Information”means information that has not been made publicly available by or with thepermission of the General Partner and that is obtained or learned by a Limited Partneras a result of or in connection with such Partner’s association with the Partnership orany of its Affiliates concerning the business, affairs or activities of the Partnership,any of its Affiliates or any of the Portfolio Investments, including, without limitation,models, codes, client information (including client identity and contacts, client lists,client financial or personal information), financial data, know-how, computersoftware and related documentation, trade secrets, and other forms of sensitive orvaluable non-public information obtained or learned by the Limited Partner as a resultof such Limited Partner’s participation in the Partnership. For the avoidance of doubt,Confidential Information does not include information concerning non-proprietarybusiness or investment practices, methods or relationships customarily employed orentered into by comparable business enterprises;“Covered Person”has the meaning ascribed to that term in Section 5.7;“Disability”means, with respect to a Limited Partner, any physical or mental illness, disability orincapacity that prevents the Limited Partner from performing substantially all of hisduties as an employee, partner, member or other analogous position;“EPF Co-Investors”means Apollo EPF Co-Investors (A), L.P., a Cayman Islands exempted limitedpartnership;“EPF Co-Investors Agreement”means the limited partnership agreement of EPF Co-Investors, as amended from timeto time;“FC Loss”means, with respect to any Fiscal Year, the portion of any Losses and any PortfolioInvestment Loss allocable to the Partnership, but only to the extent such allocation ismade by the Fund to the Partnership in proportion to the Partnership’s capitalcontribution to the Fund, as determined pursuant to the Fund LP Agreement;“FC Profit”means, with respect to any Fiscal Year, the portion of any Profit and any PortfolioInvestment Gain allocable to the Partnership, but only to the extent such allocation ismade by the Fund to the Partnership in proportion to the Partnership’s capitalcontribution to the Fund, as determined pursuant to the Fund LP Agreement;“FC Share”means a share of the FC Profit or FC Loss with respect to the Fund. The aggregatenumber of FC Shares shall be equal to the Euro amount of the Partnership’s capitalcommitment to the Fund;iv “Final Adjudication”has the meaning ascribed to that term in Section 5.7;“Fiscal Year”means, with respect to a year, the period commencing on January 1 of such year andending on December 31 of such year (or on the date of a final distribution pursuant toSection 8.1(a)), unless the General Partner shall elect another fiscal year for thePartnership which is a permissible taxable year under the Code;“Fund”means each of Apollo European Principal Finance Fund, L.P., a Cayman Islandsexempted limited partnership, Apollo European Principal Finance Fund (Feeder),L.P., a Cayman Islands exempted limited partnership and each other entity that is a“Parallel Fund” or “Feeder Fund” within the meaning of the Fund LP Agreement ofthe Funds (provided that such “Parallel Fund” or “Feeder Fund” has appointed thePartnership as its general partner). Such term also includes each alternativeinvestment vehicle created by any such Parallel Fund, to the extent the context sorequires;“Fund General Partner”means the Partnership in its capacity as general partner of any of the Funds pursuantto the Fund LP Agreements;“Fund LP Agreement”means the limited partnership agreement of any of the Funds, as amended from timeto time;“General Partner”means Apollo EPF Capital Management, Limited, a Cayman Islands exemptedcompany, in its capacity as general partner of the Partnership or any successor to thebusiness of the General Partner in its capacity as general partner of the Partnership;“Limited Partner”means any Person admitted as a limited partner to the Partnership in accordance withthis Agreement, until such Person withdraws entirely as a limited partner of thePartnership, in its capacity as a limited partner of the Partnership;“Losses”has the meaning ascribed to that term m the Fund LP Agreement;“Management Company”has the meaning ascribed to that term in each of the Fund LP Agreements;v “Operating Loss”means, with respect to any Fiscal Year, any net loss of the Partnership, adjusted toexclude (i) any FC Profit or FC Loss and (ii) the effect of any reorganization,restructuring or other capital transaction proceeds derived by the Partnership. To theextent derived from the Fund, any items of income, gain, loss, deduction and creditshall be determined in accordance with the same accounting policies, principles andprocedures applicable to the determination by the Fund, and any items not derivedfrom the Fund shall be determined in accordance with the accounting policies,principles and procedures used by the Partnership for United States federal incometax purposes;“Operating Profit”means, with respect to any Fiscal Year, any net income of the Partnership, adjusted toexclude (i) any FC Profit or FC Loss and (ii) the effect of any reorganization,restructuring or other capital transaction proceeds derived by the Partnership. To theextent derived from the Fund, any items of income, gain, loss, deduction and creditshall be determined in accordance with the same accounting policies, principles andprocedures applicable to the determination by the Fund, and any items not derivedfrom the Fund shall be determined in accordance with the accounting policies,principles and procedures used by the Partnership for United States federal incometax purposes;“Partner”means the General Partner and any of the Limited Partners and “Partners” means theGeneral Partner and all of the Limited Partners;“Permanent Disability”means a Disability that continues for (a) periods aggregating at least 24 monthsduring any period of 48 consecutive months or (b) such shorter period as the GeneralPartner may determine;“Partnership”means the exempted limited partnership continued pursuant to this Agreement;“Person”means any individual, partnership, corporation, limited liability company, jointventure, joint stock company, unincorporated organization or association, trust(including the trustees thereof, in their capacity as such), government, governmentalagency, political subdivision of any government, or other entity;“Point”has the meaning ascribed to that term in Section 7.l(a);“Portfolio Investment”has the meaning ascribed to that term in each of the Fund LP Agreements;vi “Portfolio Investment Gain”has the meaning ascribed to that term in each of the Fund LP Agreements;“Portfolio Investment Loss”has the meaning ascribed to that term in each of the Fund LP Agreements;“Profit”means, with respect to any Fiscal Year, any net income of the Partnership. To theextent derived from the Fund General Partner, any items of income, gain, loss,deduction and credit shall be determined in accordance with the same accountingpolicies, principles and procedures applicable to the determination by the FundGeneral Partner, and any items not derived from the Fund General Partner shall bedetermined in accordance with the accounting policies, principles and proceduresused by the Partnership for United States federal income tax purposes;“Related Party”means, with respect to any Limited Partner:(a) any spouse, child, parent or other lineal descendant of such Limited Partner orsuch Limited Partner’s parent, or any natural Person who occupies the sameprincipal residence as the Limited Partner;(b) any trust or estate in which the Limited Partner and any Related Party or RelatedParties (other than such trust or estate) collectively have more than 80 percentof the beneficial interests (excluding contingent and charitable interests);(c) any entity of which the Limited Partner and any Related Party or Related Parties(other than such entity) collectively are beneficial owners of more than 80percent of the equity interest; and(d) any Person with respect to whom such Limited Partner is a Related Party.“Retired Partner”means any Limited Partner who has become a retired partner in accordance with orpursuant to Section 7.2.“Schedule of Partners”means a schedule to be maintained by the General Partner showing the followinginformation with respect to each Partner: name, address, date of admission andwithdrawal, required capital contribution (if any), and FC Share (if any);“Transfer”means any direct or indirect sale, exchange, transfer, assignment or other dispositionby a Partner of any or all of such Partner’s interest in the Partnership (whetherrespecting, for example, economic rights only or all the rights associated with theinterest) to another Person, whether voluntary or involuntary;vii “Treasury Regulations”means the regulations promulgated under the Code;“Unvested Points”means, with respect to any Limited Partner as of the commencement of any VestingPeriod, any amount by which (a) the total Points assigned to such Limited Partner asof such date, excluding, unless otherwise determined by the General Partner, anyPoints assigned to such Limited Partner pursuant to Section 7.3(b), exceed (b) suchLimited Partner’s Vested Points, if any, as of such time. Any reduction of suchLimited Partner’s Points in connection with the admission of a new Partner or theincrease of the Points of any existing Limited Partner pursuant to Section 6.1 shallfirst reduce such Limited Partner’s Unvested Points to the extent thereof, and thebalance of any such reduction shall be applied to such Limited Partner’s VestedPoints;“Vested Points”means, with respect to any Limited Partner at any time, the sum of:(a) with respect to the first Vesting Period, the product of (i) such Limited Partner’sPoints as of the commencement of the first Vesting Period multiplied by (ii)such Limited Partner’s Vesting Percentage with respect to the first VestingPeriod, plus(b) with respect to each Vesting Period after the first Vesting Period and withoutduplication (i) such Limited Partner’s Vested Points, if any, as of the close ofthe immediately preceding Vesting Period, plus (ii) the product of (A) suchLimited Partner’s Unvested Points as of the commencement of such VestingPeriod multiplied by (B) such Limited Partner’s Vesting Percentage withrespect to such Vesting Period;“Vesting Date”means, with respect to any Limited Partner, the last day of the calendar monthcoinciding with or immediately preceding any of the following:(a) the date on which such Limited Partner becomes a Retired Partner; or(b) the date of an increase in such Limited Partner’s Points pursuant to Section 6.l(a),or the date of a reduction in such Limited Partner’s Points in connection withthe admission of an additional Limited Partner or an increase in anotherLimited Partner’s Points pursuant to Section 6.1;viii “Vesting Percentage”means, with respect to any Vesting Period of any Limited Partner..., provided that theGeneral Partner may in its sole and absolute discretion agree a different definition ofVesting Percentage in relation to any Limited Partner by separate agreement withsuch Limited Partner in which case, such amended definition shall be deemed toapply to such Limited Partner for all purposes of this Agreement or otherwise; and“Vesting Period”means, with respect to any Limited Partner, an initial period that commences as of thelater of January 1, 2010 or the effective date of such Limited Partner’s admission tothe Partnership and ends on the first Vesting Date thereafter, and each subsequentperiod that commences on the next day following the immediately preceding VestingDate and ends on the next succeeding Vesting Date.2.FORMATION AND ORGANIZATION2.1FormationThe Partnership was formed as an exempted limited partnership under and pursuant to the Act on 4 May 2007 and is herebycontinued. The General Partner shall execute, acknowledge and file any instruments, documents and certificates which, in theopinion of the Partnership’s legal counsel, may from time to time be required by the laws of the Cayman Islands or any otherjurisdiction in which the Partnership shall determine to do business, or any political subdivision or agency thereof, or whichsuch legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid and subsisting existenceand business of the Partnership.2.2NameThe name of the Partnership is “Apollo EPF Advisors, L.P.” or such other name as the General Partner may hereafter adoptupon causing an appropriate amendment to be made to this Agreement. Promptly thereafter, the General Partner shall sendnotice thereof to each Limited Partner.2.3Offices(a)The Partnership shall maintain its principal office, and may maintain one or more additional offices, at such place or placesas the General Partner may from time to time determine.(b)The General Partner shall arrange for the Partnership to have and maintain in the Cayman Islands, at the expense of thePartnership, a registered office and registered agent for service of process on the Partnership as required by the Act.The name and address of the Partnership’s registered office in the Cayman Islands is c/o Walkers Corporate ServicesLimited, Walker House, Mary Street, Georgetown, Grand Cayman, KY1-9005, Cayman Islands. The name andaddress of the Partnership’s registered agent for service of process in the Cayman Islands is Walkers CorporateServices Limited, Walker House, Mary Street, Georgetown, Grand Cayman, KY1-9005, Cayman Islands. TheGeneral Partner may change such registered office and/or agent and amend this Agreement without the consent ofany Limited Partner to reflect such change. The General Partner shall notify the Limited Partners of any suchchange.2.4Term of the Partnership(a)The term of the Partnership shall continue until the first to occur of any of the following:(i)any date on which the General Partner shall elect to wind up and dissolve the Partnership; or(ii)the entry of a decree of judicial dissolution under the Act. (b)The parties agree that irreparable damage would be done to the goodwill and reputation of the Partners if any LimitedPartner should bring an action to wind up and dissolve the Partnership. Care has been taken in this Agreement toprovide for fair and just payment in liquidation of the interests of all Partners. Accordingly, to the fullest extentpermitted by law, each Limited Partner hereby waives and renounces its right to seek to obtain an order to wind upand/or dissolve the Partnership or to seek the appointment of a liquidator for the Partnership, except as providedherein.2.5Purpose of the PartnershipThe principal purpose of the Partnership is to act as the general partner of the Funds pursuant to the Fund LP Agreements andto undertake such related and incidental activities and execute and deliver such related documents necessary or incidentalthereto. The purpose of the Partnership shall be limited to serving as a general partner of direct investment funds, including anyof their Affiliates, and the provision of investment management and advisory services.2.6Actions by the PartnershipThe Partnership may execute, deliver and perform, and the General Partner may execute and deliver, all contracts, agreementsand other undertakings, and engage in all activities and transactions as may in the opinion of the General Partner be necessaryor advisable to carry out the objects and purposes of the Partnership, without the approval of any Limited Partner.2.7Admission of Limited PartnersOn the date hereof, the Persons whose names are set forth in the Schedule of Partners under the caption “Limited Partners”shall be admitted to the Partnership or shall continue, as the case may be, as limited partners of the Partnership upon theirexecution of this Agreement or such other instrument evidencing, to the satisfaction of the General Partner, such LimitedPartner’s intent to become a Partner and to become bound by the terms of this Agreement.3.CAPITAL3.1Contributions to Capital(a)Any required contribution of a Limited Partner to the capital of the Partnership shall be as set forth in the Schedule ofPartners. Contributions to the capital of the Partnership shall be made as of the date of admission of such LimitedPartner as a limited partner of the Partnership and as of each such other date as may be specified by the GeneralPartner. Except as otherwise permitted by the General Partner, all contributions to the capital of the Partnership byeach Limited Partner shall be payable exclusively in cash.(b)The General Partner shall make capital contributions from time to time to the extent necessary to ensure that the Partnershipmeets its obligations to make contributions of capital to the Fund.(c)No Partner shall be obligated, nor shall any Partner have any right, to make any contribution to the capital of the Partnershipother than as specified in this Section 3.1 or Section 4.2(a). No Limited Partner shall be obligated to restore anydeficit balance in its Capital Account.(d)To the extent, if any, that it is determined that the Partnership, as the Fund General Partner, is required to pay a ClawbackAmount to the Fund, each Partner, and each former Partner, shall be required to participate in such payment andcontribute to the Partnership an amount equal to such Partner’s (or former Partner’s) Clawback Share of anyClawback Amount, but not in any event in excess of the cumulative amount theretofore distributed to such Partner,or former Partner, with respect to the Operating Profit attributable to the Fund. To the extent, if any, that it isdetermined that the Partnership is required pursuant to Section 10.3 of any Fund LP Agreement, or otherwise, to payto the Fund any amount representing distributions of the Fund each Partner having an FC Share shall be required toparticipate in such payment and contribute to the Partnership an amount equal to such Partner’s pro rata share of anysuch amount, but not in any event in excess of the cumulative amount theretofore distributed to such Partner withrespect to the Profit attributable to the Fund.3.2Rights of Partners in Capital(c)No Partner shall be entitled to interest on its capital contributions to the Partnership. (d)No Partner shall have the right to distributions or the return of any contribution to the capital of the Partnership except (i) fordistributions in accordance with Section 4.1, or (ii) upon dissolution of the Partnership. The entitlement to any suchreturn at such time shall be limited to the value of the Capital Account of the Partner. The General Partner shall notbe liable for the return of any such amounts.3.3Capital Accounts(c)The Partnership shall maintain for each Partner a separate Capital Account.(d)Each Partner’s Capital Account shall have an initial balance equal to the amount of any cash and the net value of anysecurities or other property constituting such Partner’s initial contribution to the capital of the Partnership.(e)Each Partner’s Capital Account shall be increased by the sum of:(i)the amount of cash and the net value of any securities or other property constituting additional contributions bysuch Partner to the capital of the Partnership permitted pursuant to Section 3.1, plus(ii)the portion of any FC Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iii)the portion of any Operating Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iv)such Partner’s allocable share of any decreases in any reserves recorded by the Partnership pursuant to Section3.6, to the extent the General Partner determines that, pursuant to any provision of this Agreement, such item isto be credited to such Partner’s Capital Account on a basis which is not in accordance with the currentrespective Points of all Partners.(f)Each Partner’s Capital Account shall be reduced by the sum of (without duplication):(i)the portion of any FC Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(ii)the portion of any Operating Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iii)the amount of any cash and the net value of any property distributed to such Partner pursuant to Section 4.1, orSection 8.1 including any amount deducted pursuant to Section 4.2 or Section 5.4 from any such amountdistributed, plus(iv)any withholding taxes or other items payable by the Partnership and allocated to such Partner pursuant toSection 5.4(b), any increases in any reserves recorded by the Partnership pursuant to Section 3.6, to the extentthe General Partner determines that, pursuant to any provision of this Agreement, such item is to be charged tosuch Partner’s Capital Account on a basis which is not in accordance with the current respective Points of allPartners.3.4Allocation of Profit and Loss(a)Allocations of Profit. FC Profit and Operating Profit for any Fiscal Year shall be allocated to the Partners:(i)first, to Partners to which FC Loss and Operating Loss previously have been allocated pursuant to Section3.4(b), to the extent of and in proportion to the amount of such losses;(ii)next, to the extent that the cumulative amount of distributions pursuant to Section 4 (other than distributionsrepresenting a return of such Partners’ capital contributions) exceeds the cumulative amount of FC Profit andOperating Profit previously allocated to such Partners pursuant to Section 3.4(a), in the order that suchdistributions occurred; and(iii)thereafter, any remaining such FC Profit and Operating Profit shall be allocated among the Partners so as toproduce Capital Accounts (computed after taking into account any other FC Profit and Operating Profit or FCLoss and Operating Loss for the Fiscal Year in which such event occurred and all distributions pursuant toSection 4 with respect to such Fiscal Year and after adding back each Partner’s share, if any, of PartnerNonrecourse Debt Minimum Gain, as defined in Treasury Regulations sections 1.704 - 2(b)(2) and 1.704 - 2(i),or Partnership Minimum Gain, as defined in Treasury Regulations sections 1.704 - 2(b)(2) and 1.704 - 2(d)) forthe Partners such that a distribution of an amount of cash equal to such Capital Account balances in accordancewith such Capital Account balances would be in the amounts, sequence and priority set forth in Section 4. (b)Allocations of Losses. Subject to the limitation of Section 3.4(c), FC Loss for any Fiscal Year shall be allocated among thePartners in proportion to their respective FC Shares as of the close of such Fiscal Year, and Operating Loss for anyFiscal Year shall be allocated among the Partners in proportion to their respective Points as of the close of suchFiscal Year.(c)To the extent that the allocations of FC Loss or Operating Loss contemplated by Section 3.4(b) would cause the CapitalAccount of any Limited Partner to be less than zero, such FC Loss or Operating Loss shall to that extent instead beallocated to and debited against the Capital Account of the General Partner. Following any such adjustment pursuantto Section 3.4(c) with respect to any Limited Partner, any FC Profit or Operating Profit for any subsequent FiscalYear which would otherwise be credited to the Capital Account of such Limited Partner pursuant to Section 3.4(a)shall instead be credited to the Capital Account of the General Partner until the cumulative amounts so credited to theCapital Account of the General Partner with respect to such Limited Partner pursuant to Section 3.4(c) is equal to thecumulative amount debited against the Capital Account of the General Partner with respect to such Limited Partnerpursuant to Section 3.4(c).(d)Special Allocations(v)Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments, allocations, ordistributions described in Treasury Regulations section 1.704-l(b)(2)(ii)(d)(4), (5), or (6), items of Partnershipincome and gain shall be specially allocated to each such Limited Partner in an amount and manner sufficient toeliminate, to the extent required by the Treasury Regulations, the deficit balance in the Capital Account of suchPartner as quickly as possible; provided that an allocation pursuant to this Section 3.4(d)(i) may be made only ifand to the extent that such Partner would have a deficit balance in its Capital Account after all other allocationsprovided for in this Section 3 have been tentatively made as if this Section 3.4(d)(i) were not in this Agreement.This Section 3.4(d)(i) is intended to constitute a “qualified income offset” within the meaning of TreasuryRegulations section 1.704-1(b)(2)(ii), and shall be interpreted consistently therewith.(vi)Gross Income Allocation. In the event any Partner has a deficit Capital Account at the end of any Fiscal Yearthat is in excess of the sum of (1) the amount such Partner is obligated to restore pursuant to any provision ofthis Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimatesentences of Treasury Regulations sections 1.704-2(g)(l) and 1.704-2(i)(5), each such Partner shall be speciallyallocated items of Partnership income and gain in the amount of such excess as quickly as possible; providedthat an allocation pursuant to this Section 3.4(d)(ii) may be made only if and to the extent that such Partnerwould have a deficit Capital Account in excess of such sum after all other allocations provided for in thisSection 3 have been made as if Section 3.4(d)(i) and this Section 3.4(d)(ii) were not in this Agreement.(vii)Other Special Allocations. Special allocations shall be made in accordance with the requirements set forth in theTreasury Regulations sections 1.704-2(f), (g) and (j) (minimum gain chargeback), 1.704-2(i)(4) (partnerminimum gain chargeback), 1.704-2(i)(2) (nonrecourse deductions), and, to the extent that an election undersection 754 of the Code is in effect, 1.704- l(b)(2)(iv)(m) (section 754 adjustments).(e)Each Limited Partner’s rights and entitlements as a Limited Partner are limited to the rights to receive allocations anddistributions of FC Profit and Operating Profit expressly conferred by this Agreement and any side letter or similaragreement entered into pursuant to Section 10.1(b) and the other rights expressly conferred by this Agreement andany such side letter or similar agreement or required by the Act, and a Limited Partner shall not be entitled to anyother allocations, distributions or payments in respect of its interest, or to have or exercise any other rights, privilegesor powers.3.5Tax Allocations(a)For United States federal, state and local income tax purposes, Partnership income, gain, loss, deduction or credit (or anyitem thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations ofFC Profit, FC Loss, Operating Profit and Operating Loss pursuant to Section 3.4 for such Fiscal Year, taking intoaccount any variation between the adjusted tax basis and book value of Partnership property in accordance with theprinciples of section 704(c) of the Code. (b)If any Partner or Partners are treated for United States federal income tax purposes as realizing ordinary income because ofreceiving an interest in the Partnership (whether under section 83 of the Code or under any similar provision of anylaw, rule or regulation) and the Partnership is entitled to any offsetting deduction (net of any income realized by thePartnership as a result of such receipt), the Partnership’s net deduction shall be allocated to and among the Partners insuch manner as to offset, as nearly as possible, the ordinary income realized by such Partner or Partners.3.6Reserves; Adjustments for Certain Future Events(a)Appropriate reserves may be created, accrued and charged against the Operating Profit or Operating Loss for contingentliabilities, if any, as of the date any such contingent liability becomes known to the General Partner or as of eachother date as the General Partner deems appropriate, such reserves to be in the amounts which the General Partnerdeems necessary or appropriate, including for the avoidance of doubt, in respect of any potential Clawback Amount.The General Partner may increase or reduce any such reserve from time to time by such amounts as the GeneralPartner deems necessary or appropriate. The amount of any such reserve, or any increase or decrease therein, shall beproportionately charged or credited, as appropriate, to the Capital Accounts of those parties who are Partners at thetime when such reserve is created, increased or decreased, as the case may be, in proportion to their respective Pointsat such time.(b)If any amount is required by Section 3.6(a) to be credited to a Person who is no longer a Partner, such amount shall be paidto such Person in cash. Any amount required to be charged pursuant to Section 3.6(a) shall be debited against thecurrent balance in the Capital Account of the affected Partners. To the extent that the aggregate current CapitalAccount balances of such affected Partners are insufficient to cover the full amount of the required charge, thedeficiency shall be debited against the Capital Accounts of the other Partners in proportion to their respective CapitalAccount balances at such time; provided that each such other Partner shall be entitled to a preferential allocation, inproportion to and to the extent of such other Partner’s share of any such deficiency of any Operating Profit thatwould otherwise have been allocable after the date of such charge to the Capital Accounts of the affected Partnerswhose Capital Accounts were insufficient to cover the full amount of the required charge.3.7Finality and Binding Effect of General Partner’s DeterminationsAll matters concerning the determination, valuation and allocation among the Partners with respect to any profit or loss of thePartnership and any associated items of income, gain, deduction, loss and credit, pursuant to any provision of this Section 3,including any accounting procedures applicable thereto, shall be determined by the General Partner, and such determinationsand allocations shall be final and binding on all the Partners.4.DISTRIBUTIONS4.1Distributions(e)Any amount of cash or property received as a distribution from the Fund by the Partnership in its capacity as a partner, to theextent such amount is determined by reference to the capital commitment of the Partnership in, or the capitalcontributions of the Partnership to, the Fund, shall be promptly distributed by the Partnership to the Partners inproportion to their respective FC Shares determined:(i)in the case of any distributions received from the Fund which are comprised of proceeds from the disposition ofa Portfolio Investment by the Fund, as of the date of such disposition by the Fund; and(ii)in the case of any other distribution, as of the end of the relevant Fiscal Year in respect of which suchdistribution is made by the Fund.(f)The General Partner shall use reasonable efforts to cause the Partnership to distribute, as promptly as practicable after receiptby the Partnership, any available revenues attributable to items included in the determination of Operating Profit,subject to (i) the provisions of section 10.3 of the Fund LP Agreement, and (ii) the retention of such reserves as theGeneral Partner considers appropriate or necessary for purposes of the prudent and efficient financial operation of thePartnership’s business including in accordance with Section 3.6 hereof and for purposes of satisfying thePartnership’s anticipated obligations under section 10.3 of the Fund LP Agreement. Any such distributions shall bemade to Partners in proportion to their respective Points, determined:(A)in the case of any amount of revenue received from the Fund that is attributable to the disposition of a PortfolioInvestment by the Fund, as of the date of such disposition by the Fund; and (B)in any other case, as of the date of receipt of such revenue by the Partnership.(g)Any other distributions or payments in respect of the interests of Partners shall be made at such time, in such manner and tosuch Partners as the General Partner shall determine.(h)The General Partner may cause the Partnership to pay distributions to the Partners at any time in addition to thosecontemplated by Section 4.1(a), (b) or (c), in cash or in kind. Distributions of any such amounts shall be made to thePartners in proportion to their respective Points, determined immediately prior to giving effect to such distribution.4.2Withholding of Certain Amounts(g)If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnership income allocable toany Partner, then the General Partner, without limitation of any other rights of the Partnership, may cause the amountof such obligation to be debited against the Capital Account of such Partner when the Partnership pays suchobligation, and any amounts then or thereafter distributable to such Partner shall be reduced by the amount of suchtaxes. If the amount of such taxes is greater than any such then distributable amounts, then such Partner and anysuccessor to such Partner’s interest shall indemnify and hold harmless the Partnership and the General Partneragainst, and shall pay to the Partnership as a contribution to the capital of the Partnership, upon demand of theGeneral Partner, the amount of such excess.(h)The General Partner may withhold from any distribution or other payment to any Limited Partner pursuant to thisAgreement or otherwise any other amounts due from such Limited Partner to the Partnership or the General Partnerpursuant to this Agreement to the extent not otherwise paid. Any amounts so withheld shall be applied by theGeneral Partner to discharge the obligation in respect of which such amounts were withheld.4.3Limitation on DistributionsNotwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner on behalfof the Partnership, shall not make a distribution to any Partner on account of such Partner’s interest in the Partnership if suchdistribution would violate the Act or other applicable law.5.MANAGEMENT5.1Rights and Powers of the General Partner(i)Subject to the terms and conditions of this Agreement, the General Partner shall have complete and exclusive responsibility(i) for all management decisions to be made on behalf of the Partnership, and (ii) for the conduct of the business andaffairs of the Partnership, including all such decisions and all such business and affairs to be made or conducted bythe Partnership in its capacity as Fund General Partner.(j)Without limiting the generality of the foregoing, the General Partner shall have full power and authority to execute, deliverand perform such contracts, agreements and other undertakings, and to engage in all activities and transactions, as itmay deem necessary or advisable for, or as may be incidental to, the conduct of the business contemplated by thisSection 5.1, including, without in any manner limiting the generality of the foregoing, contracts, agreements,undertakings and transactions with any Partner or with any other Person having any business, financial or otherrelationship with any Partner or Partners. The Partnership, and the General Partner on behalf of the Partnership, mayenter into and perform the Fund LP Agreement and any documents contemplated thereby or related thereto and anyamendments thereto, without any further act, vote or approval of any Person, including any Partner, notwithstandingany other provision of this Agreement. The General Partner is hereby authorized to enter into the documentsdescribed in the preceding sentence on behalf of the Partnership, but such authorization shall not be deemed arestriction on the power of the General Partner to enter into other documents on behalf of the Partnership. Except asotherwise expressly provided herein or as required by law, all powers and authority vested in the General Partner byor pursuant to this Agreement or the Act shall be construed as being exercisable by the General Partner in its sole andabsolute discretion.(k)The General Partner shall be the “tax matters partner” for purposes of section 6231(a)(7) of the Code. Each Partner agreesnot to treat, on such Partner’s United States federal income tax return or in any claim for a refund, any item ofincome, gain, loss, deduction or credit in a manner inconsistent with the treatment of such item by the Partnership.The General Partner shall have the exclusive authority to make any elections required or permitted to be made by thePartnership under any provisions of the Code or any other revenue laws. 5.2Delegation of Duties(f)Subject to Section 5.1 and Section 5.2(d), the General Partner may delegate to any Person or Persons any of the duties,powers and authority vested in it hereunder on such terms and conditions as it may consider appropriate.(g)Without limiting the generality of Section 5.2(a), but subject to the limitations contained in Section 5.2(d), the GeneralPartner shall have the power and authority to appoint any Person, including any Person who is a Limited Partner, toprovide services to and act as an employee or agent of the General Partner or an employee or officer with such titlesand duties as may be specified by the General Partner, including the following:(i)a chief financial officer, who will have authority to disburse funds for the account of the Partnership and theFund for any proper purpose, to establish deposit accounts with banks or other financial institutions, to makepermitted investments of Partnership assets, and to take any other permitted actions pertaining to the finances ofthe Partnership and the Fund;(ii)a chief accounting officer, who will have authority to prepare and maintain financial and accounting books,records and statements of the Partnership and the Fund; and(iii)one or more vice presidents, treasurers and controllers, who will have authority to execute any of its decisionsand to take any other permitted actions on behalf of the Partnership (including in its capacity as Fund GeneralPartner) subject to the supervision of the chief executive officer, the chief financial officer or the chiefaccounting officer.Any Person appointed by the General Partner to serve as an officer, employee or agent of the General Partner in its capacity asgeneral partner of the Partnership shall be subject to removal at any time by the General Partner; and shall report to and consultwith the General Partner at such times and in such manner as the General Partner may direct.(h)Any Person who is a Limited Partner and who acts for and on behalf of the General Partner pursuant to this Section 5.2 orany other provision of this Agreement shall be subject to the same standard of care, and shall be entitled to the samerights of indemnification and exoneration, applicable to the General Partner under and pursuant to Section 5.7, unlesssuch Person and the General Partner mutually agree to a different standard of care or right to indemnification andexoneration to which such Person shall be subject.(i)The General Partner shall be permitted to designate one or more committees of the Partnership which committees mayinclude Limited Partners as members. Any such committees shall have such powers and authority granted by theGeneral Partner. Any Limited Partner who has agreed to serve on a committee shall not be deemed to have the powerto bind or act for or on behalf of the Partnership in any manner and in no event shall a member of a committee beconsidered a general partner of the Partnership by agreement, estoppel or otherwise or be deemed to participate in thecontrol of the business of the Partnership as a result of the performance of his duties hereunder or otherwise.(j)The General Partner shall cause the Partnership to enter into an arrangement with the Management Company whicharrangement shall require the Management Company to pay all costs and expenses of the Partnership.5.3Transactions with AffiliatesTo the fullest extent permitted by applicable law, the General Partner (or any Affiliate of the General Partner), when acting onbehalf of the Partnership, is hereby authorized to (a) purchase property from, sell property to, lend money to or otherwise dealwith any Affiliates, any Partner, the Partnership, the Fund or any Affiliate of any of the foregoing Persons, and (b) obtainservices from any Affiliates, any Partner, the Partnership, the Fund or any Affiliate of the foregoing Persons.5.4Expenses(c)Subject to the arrangement contemplated by Section 5.2(e), the Partnership will pay, or will reimburse the General Partnerfor, all costs and expenses arising in connection with the organization and operations of the Partnership.(d)Any withholding taxes payable by the Partnership, to the extent determined by the General Partner to have been paid orwithheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of thePartners, shall be allocated among and debited against the Capital Accounts of only those Partners on whose behalfsuch payments are made or whose particular circumstances gave rise to such payments in accordance with Section4.2. 5.5Rights of Limited Partners(a)Limited Partners shall have no right to take part in the management or control of the Partnership’s business, nor shall theyhave any right or authority to act for the Partnership or to vote on matters other than as set forth in this Agreement oras required by applicable law.(b)Without limiting the generality of the foregoing, the General Partner shall have the full and exclusive authority, without theconsent of any Limited Partner, to compromise the obligation of any Limited Partner to make a capital contributionor to return money or other property paid or distributed to such Limited Partner in violation of the Act.(c)Nothing in this Agreement shall entitle any Partner to any compensation for services rendered to or on behalf of thePartnership as an agent or in any other capacity, except for any amounts payable in accordance with this Agreement.5.6Other Activities of Partners(a)Subject to the Fund LP Agreements (including, without limitation, Sections 5.1(d) and 6.8 thereof) and to full compliancewith the code of ethics of Apollo Global Management, LLC and its Affiliates and other written policies relating topersonal investment transactions, membership in the Partnership shall not prohibit a Limited Partner from purchasingor selling as a passive investor any interest in any asset.(b)Nothing in this Agreement shall prohibit the General Partner from engaging in any activity other than acting as GeneralPartner hereunder.5.7Duty of Care; Indemnification(a)To the fullest extent permitted by law, the General Partner and its Affiliates and their respective partners, members,managers, shareholders, officers, directors, employees and associates and, with the approval of the General Partner,any agent of any of the foregoing (including their respective executors, heirs, assigns, successors or other legalrepresentatives) (each, a “Covered Person” and collectively, the “Covered Persons”), shall not be liable to thePartnership or to any of the other Partners for any loss, claim, damage or liability occasioned by any acts oromissions in the performance of its services hereunder, except to the extent that it shall ultimately be determined byfinal judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such loss, claim,damage or liability is due to an act or omission of a Covered Person is due to an act or omission of such a CoveredPerson that constituted a bad faith violation of the implied contractual covenant of good faith and fair dealing. (b)A Covered Person shall be indemnified to the fullest extent permitted by law by the Partnership against any losses, claims,damages, liabilities and expenses (including attorneys’ fees, judgments, fines, penalties and amounts paid insettlement) incurred by or imposed upon it by reason of or in connection with any action taken or omitted by suchCovered Person arising out of the Covered Person’s status as a Partner or its activities on behalf of the Partnership,including in connection with any action, suit, investigation or proceeding before any judicial, administrative,regulatory or legislative body or agency to which it may be made a party or otherwise involved or with which it shallbe threatened by reason of being or having been a Partner or by reason of serving or having served, at the request ofthe Partnership in its capacity as Fund General Partner, as a director, officer, consultant, advisor, manager, memberor partner of any enterprise in which the Fund has or had a financial interest, including issuers of PortfolioInvestments; provided that the Partnership may, but shall not be required to, indemnify a Covered Person withrespect to any matter as to which there has been a Final Adjudication that such Covered Person’s acts or its failure toact (i) constituted a bad faith violation of the implied contractual covenant of good faith and fair dealing, or (ii) wereof a nature that makes indemnification by the Fund unavailable. The right to indemnification granted by this Section5.7 shall be in addition to any rights to which a Covered Person may otherwise be entitled and shall inure to thebenefit of the successors by operation of law or valid assigns of such Covered Person. The Partnership shall pay theexpenses incurred by a Covered Person in defending a civil or criminal action, suit, investigation or proceeding inadvance of the final disposition of such action, suit, investigation or proceeding, upon receipt of an undertaking bythe Covered Person to repay such payment if there shall be a Final Adjudication that it is not entitled toindemnification as provided herein. In any suit brought by the Covered Person to enforce a right to indemnificationhereunder it shall be a defense that the Covered Person has not met the applicable standard of conduct set forth inthis Section 5.7, and in any suit in the name of the Partnership to recover expenses advanced pursuant to the terms ofan undertaking the Partnership shall be entitled to recover such expenses upon Final Adjudication that the CoveredPerson has not met the applicable standard of conduct set forth in this Section 5.7. In any such suit brought toenforce 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 is not entitled to be indemnified, or to an advancement of expenses,shall be on the Partnership (or any Limited Partner acting derivatively or otherwise on behalf of the Partnership orthe Limited Partners). The General Partner may not satisfy any right of indemnity or reimbursement granted in thisSection 5.7 or to which it may be otherwise entitled except out of the assets of the Partnership (including, withoutlimitation, insurance proceeds and rights pursuant to indemnification agreements), and no Partner shall be personallyliable with respect to any such claim for indemnity or reimbursement. The General Partner may enter into appropriateindemnification agreements and/or arrangements reflective of the provisions of this Section 5 and obtain appropriateinsurance coverage on behalf and at the expense of the Partnership to secure the Partnership’s indemnificationobligations hereunder and may enter into appropriate indemnification agreements and/or arrangements reflective ofthe provisions of this Section 5. Each Covered Person shall be deemed a third party beneficiary (to the extent not adirect party hereto) to this Agreement and, in particular, the provisions of this Section 5, and shall be entitled to thebenefit of the indemnity granted to the Partnership by the Fund pursuant to the terms of the Fund LP Agreement.(c)To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating theretoto the Partnership or the Partners, the Covered Person shall not be liable to the Partnership or to any Partner for itsgood faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that theyrestrict or eliminate the duties and liabilities of a Covered Person otherwise existing at law or in equity to thePartnership or the Partners, are agreed by the parties hereto to replace such other duties and liabilities of suchCovered Person. Notwithstanding anything to the contrary contained in this Agreement or otherwise applicableprovision of law or equity, to the maximum extent permitted by the Act, a Covered Person shall owe no duties(including fiduciary duties) to the Partnership or the Partners other than those specifically set forth herein; providedthat a Covered Person shall have the duty to act in accordance with the implied contractual covenant of good faithand fair dealing.(d)Each of the Covered Persons may consult with legal counsel, accountants and other experts selected by it and any act oromission suffered or taken by it on behalf of the Partnership or in furtherance of the interests of the Partnership or theFund in good faith in reliance upon and in accordance with the advice of such counsel, accountants or other expertsshall create a rebuttable presumption of the good faith and due care of such Covered Person with respect to such actor omission.6.ADMISSIONS, TRANSFERS AND WITHDRAWALS6.1Admission of Additional Limited Partners; Effect on PointsThe General Partner may, in its absolute discretion and at any time admit as an additional Limited Partner any Person who has agreed to be bound by this Agreement, and the Points Committee may, subject to clause 7.1(b), (i) assign Points and issue FCShares to such Person and/or (ii) increase or decrease the Points of any existing Partner. Each additional Limited Partner shallexecute either a deed of adherence to this Agreement or a separate instrument evidencing, to the satisfaction of the GeneralPartner, such Limited Partner’s intent to become a Limited Partner and be bound by this Agreement and shall be admitted as aLimited Partner upon such execution. In connection with such admission or increase in Points of any Partner, the Points of theother Partners shall be reduced in an amount and proportion determined by the Points Committee in its sole and absolutediscretion but subject always to the provisions of Section 7.3(c).6.2Admission of Additional General Partner and Transfer(c)The General Partner may admit one or more additional general partners at any time without the consent of any LimitedPartner. No reduction in the Points of any Limited Partner shall be made as a result of the admission of an additionalgeneral partner. Any additional general partner shall be admitted as a general partner upon its execution of acounterpart signature page or other document adhering to this Agreement.(d)The General Partner may Transfer its general partner interest in the Partnership to any other Person, without the consent ofany Limited Partner.6.3Transfer of Interests of Limited Partners(e)No Transfer of any Limited Partner’s interest in the Partnership, whether voluntary or involuntary, shall be valid or effective,and no transferee shall become a substituted Limited Partner, unless the prior written consent of the General Partnerhas been obtained, which consent may be given or withheld by the General Partner in its discretion. In the event ofany Transfer, all of the conditions of the remainder of this Section 6.3 must also be satisfied.(f)A Limited Partner requesting approval of a Transfer, or such Partner’s legal representative, shall give the General Partnerreasonable notice before the proposed effective date of any requested Transfer, and shall provide sufficientinformation to allow legal counsel acting for the Partnership to make the determination that the proposed Transferwill not:(i)require registration of the Partnership or any interest therein under any securities or commodities laws of anyjurisdiction;(ii)result in a termination of the Partnership under section 708(b)(l)(B) of the Code or jeopardize the status of thePartnership as a partnership for United States federal income tax purposes; or(iii)violate, or cause the Partnership, the Fund, the General Partner or any Limited Partner to violate, any applicablelaw, rule or regulation of any jurisdiction.Such notice must be supported by proof of legal authority and a valid instrument of assignment acceptable to the GeneralPartner.(g)A permitted transferee shall be entitled to the allocations and distributions attributable to the interest in the Partnershiptransferred to such transferee and to Transfer such interest in accordance with the terms of this Agreement; providedthat such transferee shall not be entitled to the other rights of a Limited Partner as a result of such transfer until itbecomes a substituted Limited Partner. No transferee may become a substituted Limited Partner except with the priorwritten consent of the General Partner (which consent may be given or withheld by the General Partner in itsdiscretion). Such transferee shall be admitted to the Partnership as a substituted Limited Partner upon execution of acounterpart of this Agreement or such other instrument evidencing, to the satisfaction of the General Partner, suchLimited Partner’s intent to become a Limited Partner. Notwithstanding the above, the Partnership and the GeneralPartner shall incur no liability for allocations and distributions made in good faith to the transferring Limited Partneruntil a written instrument of Transfer has been received and accepted by the General Partner and recorded on thebooks of the Partnership and the effective date of the Transfer has passed.(h)Any other provision of this Agreement to the contrary notwithstanding, to the fullest extent permitted by law, any successoror transferee of any Limited Partner’s interest in the Partnership shall be bound by the provisions hereof. Prior torecognizing any Transfer in accordance with this Section 6.3, the General Partner may require the transferee to makecertain representations and warranties to the Partnership and the Partners and to accept, adopt and approve in writingall of the terms and provisions of this Agreement. (i)In the event of a Transfer or in the event of a distribution of assets of the Partnership to any Partner, the Partnership, at thedirection of the General Partner, may, but shall not be required to, file an election under section 754 of the Code andin accordance with the applicable Treasury Regulations, to cause the basis of the Partnership’s assets to be adjusted asprovided by section 734 or section 743 of the Code.(j)The Partnership shall maintain books for the purpose of registering the transfer of interests in the Partnership. No transfer ofan interest in the Partnership shall be effective until the transfer of such interest is registered upon books maintainedfor that purpose by or on behalf of the Partnership.6.4Withdrawal of PartnersA Partner in the Partnership may not withdraw from the Partnership prior to its dissolution. For the avoidance of doubt, anyLimited Partner who transfers to a Related Party such Limited Partner’s entire remaining entitlement to allocations anddistributions shall remain a Limited Partner, notwithstanding the admission of the transferee Related Party as a Limited Partner,for as long as the transferee Related Party remains a Limited Partner.6.5Pledges(c)A Limited Partner shall not pledge or grant a security interest in such Limited Partner’s interest in the Partnership unless theprior written consent of the General Partner has been obtained (which consent may be given or withheld by theGeneral Partner).(d)Any limited partner interest in the Partnership may be confirmed by a certificate of limited partnership interest issued by thePartnership in such form as the General Partner may approve. Every certificate representing a limited partner interestin the Partnership shall bear a legend substantially in the following form:“THE TRANSFER OR PLEDGE OF THE PARTNERSHIP INTERESTS REFERENCED IN THIS CERTIFICATE MAYONLY OCCUR IN ACCORDANCE WITH AND GOVERNED BY THE AMENDED AND RESTATED LIMITEDPARTNERSHIP AGREEMENT, DATED 2010, AS THE SAME MAY BE AMENDED OR RESTATED FROM TIME TOTIME AND AS MAY BE PRESCRIBED UNDER THE EXEMPTED LIMITED PARTNERSHIP LAW (AS AMENDED).”(e)The Partnership shall maintain books for the purpose of registering the Transfer of limited partner interests in the Partnership.In connection with a Transfer in accordance with this Agreement of any limited partner interests in the Partnership,the endorsed certificate(s) evidencing such interest shall be delivered to the Partnership for cancellation, and thePartnership shall thereupon issue a new certificate to the transferee evidencing the interest that was transferred and, ifapplicable, the Partnership shall issue a new certificate to the transferor evidencing any interest registered in the nameof the transferor that was not transferred.ix 7.POINTS7.1Allocation of Points(e)A “Point” means a 1/x share of Operating Profit or Operating Loss, where x equals the aggregate number of Points assignedor available for assignment at the relevant time. The aggregate number of Points assigned or available for assignmentto all Partners shall be 2,000.(f)Except as otherwise provided herein, the Points Committee shall be responsible for the allocation of Points from time to timeto the Limited Partners, provided that the Points Committee shall not, at any time, be permitted to allocate more than… Points. At each such time of allocation, all Points available for allocation shall be so allocated to the LimitedPartners by the Points Committee; provided that the allocation of Points to any Limited Partner who is invited tobecome a limited partner of EPF Co-Investors after the date hereof shall not become effective until the effective dateof the acceptance by EPF Co-Investors of a capital commitment from such Limited Partner (or his Related Party, asapplicable) in a mutually agreed amount. Points allocated to Limited Partners may not be reduced except as set forthin Section 6.1 and Section 7.3. Any Points not specifically allocated to Limited Partners shall be for the benefit ofAPH.(g)The General Partner shall maintain on the books and records of the Partnership a record of the number of Points allocated toeach Limited Partner and shall give notice to each Limited Partner of the number of such Limited Partner’s Pointsupon admission to the Partnership of such Limited Partner and as soon as reasonably practicable upon any change insuch Limited Partner’s Points.7.2Retirement of Partners(k)A Limited Partner shall become a Retired Partner upon:(i)delivery to such Limited Partner of a notice by the General Partner declaring such Limited Partner to be aRetired Partner;(ii)a date specified in a notice delivered by such Limited Partner to the General Partner stating that such LimitedPartner elects to become a Retired Partner, which date shall not be less than 60 days after the General Partner’sreceipt of such notice; or(iii)the death of the Limited Partner, whereupon the estate of the deceased Limited Partner shall be treated as aRetired Partner in the place of the deceased Limited Partner, or the Permanent Disability of the Limited Partner.x (l)The notice declaring any Limited Partner to be a Retired Partner shall specify whether such Limited Partner is being declareda Retired Partner for Cause or a Retired Partner other than for Cause. Retirement by reason of death or PermanentDisability shall constitute retirement other than for Cause. A written notice of retirement given by a Limited Partnershall be deemed to constitute a declaration that such Limited Partner is a Retired Partner for Cause.(m)Nothing in this Agreement shall obligate the General Partner to treat Retired Partners alike, and the exercise of any poweror discretion by the General Partner in the case of any one such Retired Partner shall not create any obligation on thepart of the General Partner to take any similar action in the case of any other such Retired Partner, it beingunderstood that any power or discretion conferred upon the General Partner shall be treated as having been soconferred as to each such Retired Partner separately.7.3Effect of Retirement on Points(d)The Points of any Limited Partner who becomes a Retired Partner for Cause shall be reduced automatically to zero and thepoints of any Limited Partner who becomes a Retired Partner other than for Cause shall be reduced automatically toan amount equal to such Limited Partner’s Vested Points as of the date such Limited Partner became a RetiredPartner. Any such reduction shall be effective as of the date such Limited Partner became a Retired Partner or suchsubsequent date as may be determined by the Points Committee; provided that the Points Committee may agree to alesser reduction (or to no reduction) of the Points of any such Limited Partner who becomes a Retired Partner.(e)The Points Committee shall determine the manner of apportioning any Points that become available for reallocation pursuantto Section 7.3(a) as a result of any Partner becoming a Retired Partner.(f)Except as set out in Section 7.3(a), the Points of any Limited Partner who becomes a Retired Partner shall not be reducedwithout the consent of such Limited Partner.7.4Points as Profits Interests(f)Except to the extent not permitted by law, the Partnership and each Limited Partner agree to treat Points as “profits interests”within the meaning of U.S. Internal Revenue Service Revenue Procedure (“Rev. Proc”). 93-27, 1993-2 C.B. 343.Except to the extent not permitted by law, in accordance with Rev. Proc. 2001-43, 2001-2 C.B. 191, the Partnershipshall treat each Limited Partner as the holder of Points from the issue date of such Points, and shall file its Partnershiptax return, and issue appropriate Schedules K-1 to suchxi Limited Partner, allocating to such Limited Partner its distributive share of all items of income, gain, loss, deduction andcredit associated with such Points and each such Limited Partner agrees to take into account such distributive share incomputing such Limited Partner’s U.S. federal income tax liability for the entire period during which such LimitedPartner holds such Points. Except as required pursuant to a “Determination” as defined in section 1313(a) of the Code,the Partnership and each Limited Partner agree not to claim a deduction (as wages, compensation or otherwise) for thefair market value of any Points issued to a Limited Partner at the time of issuance of the Points. The undertakingscontained in this Section 7.4(a) shall be construed in accordance with section 4 of Rev. Proc. 2001-43. Except to theextent not permitted by law, the provisions of this Section 7.4(a) shall apply regardless of whether the Limited Partnerfiles an election pursuant to section 83(b) of the Code.(g)Notwithstanding the provisions of this Agreement, the General Partner shall have the discretion to vary the allocations ofProfit and Loss and the distributions pursuant to this Agreement to the extent necessary to ensure that the issuance ofPoints to a Limited Partner does not result, in the General Partner’s discretion, in a taxable capital shift (unless theGeneral Partner otherwise intends) to such Limited Partner, including by treating as additional Profit or Loss for thetaxable period and by allocating such Profit and Loss to the Limited Partners other than the Limited Partner receivingthe Points, any unrealized appreciation or deprecation in the Partnership’s assets as of the time the Points are issued.8.DISSOLUTION AND LIQUIDATION8.1Dissolution and Liquidation of Partnership(n)Upon commencement of the winding up of the Partnership pursuant to section 2.4 of this Agreement (if applicable), theGeneral Partner shall liquidate the business and administrative affairs of the Partnership pursuant to section 15(1) ofthe Act (as applicable), except that, if the General Partner is unable to perform this function, a liquidator may beelected by a majority in interest (determined by Points) of Limited Partners and upon such election such liquidatorshall liquidate the Partnership pursuant to this Agreement and the Act and section 15(2) of the Act shall not apply tothis Agreement. FC Profit and FC Loss, Operating Profit and Operating Loss during the Fiscal Years that include theperiod of liquidation shall be allocated pursuant to Section 3.4. The proceeds from liquidation shall be distributed inthe following manner:(i)first, the debts, liabilities and obligations of the Partnership including the expenses of liquidation (including legaland accounting expenses incurred in connection therewith), up to and including the date that distribution of thePartnership’s assets to the Partners has been completed, shall be satisfied (whether by payment or by makingreasonable provision for payment thereof); and(ii)thereafter, the Partners shall be paid amounts pro rata in accordance with and up to the positive balances of theirrespective Capital Accounts, as adjusted pursuant to Section 3.(o)Anything in this Section 8.1 to the contrary notwithstanding, the General Partner or liquidator may distribute ratably in kindrather than in cash, upon winding up, any assets of the Partnership in accordance with the priorities set forth inSection 8.l(a); provided that if any in kind distribution is to be made, the assets distributed in kind shall be valued asof the actual date of their distribution and charged as so valued and distributed against amounts to be paid underSection 8.l(a).The Partnership shall be dissolved upon the filing of a statement with the Registrar of Exempted Limited Partnerships pursuantto section 15(3) of the Act.xii 9.POINTS COMMITTEE9.1Points Committee(g)The General Partner shall constitute a sub-committee known as the “Points Committee” for the purposes set out in thisAgreement. The members of the Points Committee shall be James Zelter and…. The members of the PointsCommittee shall be entitled to appoint additional persons as members of the Points Committee, to remove anymember of the Points Committee and to fill any vacancy in their number at any time.(h)Any action or decision of the Points Committee shall be valid if approved either at a meeting of its members or by writtenconsent of a majority of the members for the time being. In the event that the members of the Points Committee areunable to agree a majority decision in respect of any decision to be made by the Points Committee, then any suchdecision may then be taken by the General Partner in its sole and absolute discretion. All members shall be entitled toreasonable notice of any proposed action or decision and any member shall be entitled to convene a meeting bygiving reasonable notice to the other members.(i)Any two members attending in person or by telephone conference facility shall constitute a quorum of the Points Committeeand, at a meeting attended by such a quorum, any action or decision shall be valid if approved by a majority of themembers there present.(j)Reference in this Agreement to the Points Committee taking an action as a result of a Limited Partner becoming a RetiredPartner shall not oblige the Points Committee to take such action immediately once such person becomes a RetiredPartner and, unless otherwise expressly stated herein, the Points Committee may exercise any discretion it has underthis Agreement any time after such discretion becomes available to it.10.GENERAL PROVISIONS10.1Amendment of this Agreement(h)The General Partner may amend this Agreement at any time, in whole or in part, without the consent of any other Partner;provided that any amendment which would increase the obligation of any Partner to make any contribution to thecapital of the Partnership or adversely affect such Partner’s right to withdraw voluntarily from the Partnership shallnot be made unless such Partner has, at the General Partner’s election, (i) consented thereto, or (ii) been providedwith an opportunity to withdraw from the Partnership as of a date determined by the General Partner that is prior tothe effective date of the amendment. Without limiting the foregoing, the General Partner mayxiii amend this Agreement at any time, in whole or in part, without the consent of any other Partner, to enable thePartnership to comply with the requirements of the “Safe Harbor” Election within the meaning of the ProposedRevenue Procedure of Notice 2005-43, 2005-24 IRB 1, Proposed Treasury Regulation section 1.83-3(e)(l) or ProposedTreasury Regulation section 1.704-1(b)(4)(xii) at such time as such proposed Procedure and Regulations are effectiveand to make any such other related changes as may be required by pronouncements or Treasury Regulations issued bythe Internal Revenue Service or Treasury Department after the date of this Agreement. An adjustment of Points shallnot be considered an amendment to the extent effected in compliance with the provisions of Section 6.1 or Section 7 asin effect on the date hereof or as hereafter amended in compliance with the requirements of this Section 10.1(a).(i)Notwithstanding the provisions of this Agreement, including Section 10.1(a), it is hereby acknowledged and agreed that theGeneral Partner on its own behalf or on behalf of the Partnership without the approval of any Limited Partner or anyother Person may enter into one or more side letters or similar agreements with one or more Limited Partners whichhave the effect of establishing rights under, or altering or supplementing the terms of this Agreement. The partieshereto agree that any terms contained in a side letter or similar agreement with one or more Partners shall govern withrespect to such Partner or Partners notwithstanding the provisions of this Agreement. Any such side letters or similaragreements shall be binding upon the Partnership or the General Partner, as applicable, and the signatories thereto asif the terms were contained in this Agreement.10.2Special Power-of-Attorney(e)Each Partner hereby irrevocably makes, constitutes and appoints the General Partner with full power of substitution, the trueand lawful representative and attorney-in-fact, and in the name, place and stead of such Partner, with the power fromtime to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:(i)any amendment to this Agreement which complies with the provisions of this Agreement (including theprovisions of Section 10.1);(ii)all such other instruments, documents and certificates which, in the opinion of legal counsel to the Partnership,may from time to time be required by the laws of the Cayman Islands or any other jurisdiction, or any politicalsubdivision or agency thereof, or which such legal counsel may deem necessary or appropriate to effectuate,implement and continue the valid and subsisting existence and business of the Partnership as a limitedpartnership;xiv (iii)all such instruments, certificates, agreements and other documents relating to the conduct of the investmentprogram of the Fund which, in the opinion of such attorney-in-fact and the legal counsel to the Fund, arereasonably necessary to accomplish the legal, regulatory and fiscal objectives of the Fund in connection with itsor their acquisition, ownership and disposition of investments, including, without limitation:(A) the governing documents of any management entity formed as a part of the tax planning for the Fund andany amendments thereto; and(B) documents relating to any restructuring transaction with respect to any of the Fund’s investments;(iv)any written notice or letter of resignation from any board seat or office of any Person (other than a company thathas a class of equity securities registered under the Securities Exchange Act of 1934, as amended, or that isregistered under the Investment Company Act of 1940, as amended), which board seat or office was occupiedor held at the request of the Partnership or any of its Affiliates; and(v)all such proxies, consents, assignments and other documents as the General Partner determines to be necessaryor advisable in connection with any merger or other reorganization, restructuring or other similar transactionentered into in accordance with this Agreement (including the provisions of Section 10.5(c)).(f)Each Limited Partner is aware that the terms of this Agreement permit certain amendments to this Agreement to be effectedand certain other actions to be taken or omitted by or with respect to the Partnership without such Partner’s consent.If an amendment of this Agreement or any action by or with respect to the Partnership is taken by the General Partnerin the manner contemplated by this Agreement, each Limited Partner agrees that, notwithstanding any objectionwhich such Limited Partner may assert with respect to such action, the General Partner is authorized and empowered,with full power of substitution, to exercise the authority granted above in any manner which may be necessary orappropriate to permit such amendment to be made or action lawfully taken or omitted. Each Partner is fully awarethat each other Partner will rely on the effectiveness of this special power-of-attorney with a view to the orderlyadministration of the affairs of the Partnership. This power-of-attorney is a special power-of-attorney and is coupledwith an interest in favor of the General Partner and is intended to secure an interest in property and secures theobligations of each Limited Partner under this Agreement and as such:xv (i)shall be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity ofany party granting this power-ofattorney, regardless of whether the Partnership or the General Partner shall havehad notice thereof; and(ii)shall survive any Transfer by a Limited Partner of the whole or any portion of its interest in the Partnership,except that, where the transferee thereof has been approved by the General Partner for admission to thePartnership as a substituted Limited Partner, this power of attorney given by the transferor shall survive suchTransfer for the sole purpose of enabling the General Partner to execute, acknowledge and file any instrumentnecessary to effect such substitution.10.3NoticesAny notice required or permitted to be given under this Agreement shall be in writing. A notice to the General Partner shall bedirected to the attention of John Suydam with a copy to the general counsel of the Partnership. A notice to a Limited Partnershall be directed to such Limited Partner’s last known residence as set forth in the books and records of the Partnership or itsAffiliates (a Limited Partner’s “Home Address”). A notice shall be considered given when delivered to the addressee either byhand at such Partner’s Partnership office or electronically to the primary e-mail account supplied by the Partnership forPartnership business communications, except that a notice to a former Partner shall be considered given when delivered byhand by a recognized overnight courier together with mailing by regular mail to such former Partner’s Home Address.10.4Agreement Binding Upon Successors and AssignsThis Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors by operationof law, but the rights and obligations of the Limited Partners hereunder shall not be assignable, transferable or delegable exceptas expressly provided herein, and any attempted assignment, transfer or delegation thereof that is not made in accordance withsuch express provisions shall be void and unenforceable.10.5Merger, Consolidation, etc.(a)Subject to Sections 10.5(b) and 10.5(c) and to the extent permitted by law, the Partnership may merge or consolidate with orinto one or more limited partnerships formed under the Act or other business entities (as defined in section 17-211 ofthe Act) pursuant to an agreement of merger or consolidation which has been approved by the General Partner.xvi (b)Subject to Section 10.1(a) but notwithstanding any other provision to the contrary contained elsewhere in this Agreement, anagreement of merger or consolidation approved in accordance with Section 10.5(a) may, to the extent permitted bythe Act and Section 10.5(a), (i) effect any amendment to this Agreement, (ii) effect the adoption of a new limitedpartnership agreement for the Partnership if it is the surviving or resulting limited partnership in the merger orconsolidation, or (iii) provide that the limited partnership agreement of any other constituent limited partnership to themerger or consolidation (including a limited partnership formed for the purpose of consummating the merger orconsolidation) shall be the limited partnership agreement of the surviving or resulting limited partnership.(c)The General Partner may require one or more of the Limited Partners to sell, exchange, transfer or otherwise dispose of theirinterests in the Partnership in connection with any such transaction, and each Limited Partner shall take such actionas may be directed by the General Partner to effect any such transaction.10.6Governing LawThis Agreement, and the rights of each and all of the Partners hereunder, shall be governed by and construed in accordancewith the laws of the Cayman Islands, without regard to conflict of laws rules thereof. The parties hereby consent to the non-exclusive jurisdiction and venue for any action arising out of or relating to this Agreement in the Courts of the Cayman Islands.In addition to any other means available at law for service of process, each Limited Partner hereby agrees to the fullest extentpermitted by law that service of process will be duly effectuated when delivered to a Limited Partner’s Home Address by handor by a recognized overnight carrier, together with mailing by regular mail.10.7Termination of Right of ActionEvery right of action arising out of or in connection with this Agreement by or on behalf of any past, present or future Partneror the Partnership against any past, present or future Partner shall, to the fullest extent permitted by applicable law, irrespectiveof the place where the action may be brought and irrespective of the residence of any such Partner, cease and be barred by theexpiration of three years from the date of the act or omission in respect of which such right of action arises.10.8Confidentiality(a)Each Limited Partner acknowledges and agrees that the information contained in the books and records of the Partnershipconcerning the Points assigned with respect to any other Limited Partner is confidential, and, to the fullest extentpermitted by applicable law, each Limited Partner waives, and covenants not to assert, any claim or entitlementwhatsoever to gainxvii access to any such information. The Limited Partners agree that the restrictions set forth in this Section 10.8(a) shallconstitute reasonable standards under the Act regarding access to information.(b)Each Limited Partner acknowledges and agrees not to, at any time, either during the term of such Limited Partner’sparticipation in the Partnership or thereafter, disclose, use, publish or in any manner reveal, directly or indirectly, toany Person (other than on a confidential basis to such Limited Partner’s legal and tax advisors who have a need toknow such information) the contents of this Agreement or any Confidential Information, except (i) with the priorwritten consent of the General Partner, (ii) to the extent that any such information is in the public domain other thanas a result of the Limited Partner’s breach of any of his obligations, or (iii) where required to be disclosed by courtorder, subpoena or other government process; provided that, to the fullest extent permitted by law, the LimitedPartner shall promptly notify the General Partner upon becoming aware of any such disclosure requirement and shallcooperate with any effort by the General Partner to prevent or limit such disclosure.(c)Notwithstanding any of the provisions of this Section 10.8, each Limited Partner may disclose to any and all Persons,without limitation of any kind, the tax treatment and tax structure of an investment in the Partnership and all materialsof any kind (including tax opinions or other tax analyses) that are provided to the Limited Partner relating to such taxtreatment. For this purpose, “tax treatment” is the purported or claimed United States federal income tax treatment ofa transaction and “tax structure” is limited to any fact that may be relevant to understanding the purported or claimedUnited States federal income tax treatment of a transaction. For this purpose, the names of the Partnership, thePartners, their affiliates, the names of their partners, members or equity holders and the representatives, agents andtax advisors of any of the foregoing are not items of tax structure.10.9Not for Benefit of CreditorsThe provisions of this Agreement are intended only for the regulation of relations among Partners and between Partners andformer or prospective Partners and the Partnership. Subject to the rights of Covered Persons provided by Section 5.7, thisAgreement is not intended for the benefit of any Person who is not a Partner, and no rights are intended to be granted to anyother Person who is not a Partner under this Agreement.10.10ConsentsAny and all consents, agreements or approvals provided for or permitted by this Agreement shall be in writing and a signedcopy thereof shall be filed and kept with the books of the Partnership.xviii 10.11ReportsAs soon as practicable after the end of each taxable year, the General Partner shall furnish to each Limited Partner (a) suchinformation as may be required to enable each Limited Partner to properly report for United States federal and state income taxpurposes such Partner’s distributive share of each Partnership item of income, gain, loss, deduction or credit for such year, and(b) a statement of the total amount of Operating Profit or Operating Loss for such year and a reconciliation of any differencebetween (i) such Operating Profit or Operating Loss and (ii) the aggregate net profits or net losses allocated by the Fund to thePartnership for such year (other than any difference attributable to the aggregate FC Profit or FC Loss allocated by the Fund tothe Partnership for such year).10.12FilingsThe Partners hereby agree to take any measures necessary (or, if applicable, refrain from any action) to ensure that thePartnership is treated as a partnership for United States federal, state and local income tax purposes.10.13Miscellaneous(a)The captions and titles preceding the text of each Section hereof shall be disregarded in the construction of this Agreement.(b)As used herein, masculine pronouns shall include the feminine and neuter, and the singular shall be deemed to include theplural.(c)This Agreement may be executed in counterparts, each of which shall be deemed to be an original hereof.Signature Page FollowsIN WITNESS WHEREOF, the parties hereto have executed this Agreement as a Deed the day and year first abovewritten.General Partner:APOLLO EPF CAPITAL MANAGEMENT, LIMITEDxix By: /s/ David Bree Name: David Bree Title: Director/s/ Antonia Harris Signature of WitnessAntonia Harris (Please Type Name)Initial Limited Partner:APOLLO PRINCIPAL HOLDINGS IV, L.P.By: Apollo Principal Holdings IV GP, Ltdits General PartnerBy: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice President/s/ Kimberly Wooten Signature of WitnessKimberly Wooten (Please Type Name)xx CONFIDENTIAL & PROPRIETARYEXECUTION VERSIONThis exempted limited partnership is the general partner of the Fund (as defined herein) and its parallel funds andearns the “carried interest” on the Fund’s profits. APOLLO EPF ADVISORS II, L.P.FIRST AMENDED AND RESTATED EXEMPTED LIMITED PARTNERSHIP AGREEMENTDated April 9, 2012and agreed as amongst the parties hereto to be of effect from March 1, 2012 THE TRANSFER OF THE LIMITED PARTNERSHIP INTERESTSCONSTITUTED BY THIS AGREEMENTIS RESTRICTED AS DESCRIBED HEREIN.TABLE OF CONTENTSPageARTICLE 1 DEFINITIONS 1ARTICLE 2 FORMATION AND ORGANIZATION 7Section 2.1 Continuation 7Section 2.2 Name 7Section 2.3 Organizational Certificates and Other Filings 7Section 2.4 Offices 7Section 2.5 Term of Partnership 8Section 2.6 Purpose of the Partnership 8Section 2.7 Actions by Partnership 9 Section 2.8 Continuation and/or Admission of Partners 9ARTICLE 3 CAPITAL 9Section 3.1 Contributions to Capital 9Section 3.2 Rights of Partners in Capital 10Section 3.3 Capital Accounts 10Section 3.4 Allocation of Profit and Loss 11Section 3.5 Tax Allocations 12Section 3.6 Reserves; Adjustments for Certain Future Events 12Section 3.7 Finality and Binding Effect of General Partner’s Determinations 13Section 3.8 Alternative GP Vehicles 13ARTICLE 4 DISTRIBUTIONS 14Section 4.1 Distributions 14Section 4.2 Withholding of Certain Amounts 15Section 4.3 Limitation on Distributions 15ARTICLE 5 MANAGEMENT 15Section 5.1 Rights and Powers of the General Partner 15Section 5.2 Delegation of Duties 16Section 5.3 Transactions with Affiliates 18Section 5.4 Expenses 18Section 5.5 Rights of Limited Partners 18Section 5.6 Other Activities of Partners 18Section 5.7 Duty of Care; Indemnification 19ARTICLE 6 ADMISSIONS, TRANSFERS AND WITHDRAWALS 21Section 6.1 Admission of Additional Limited Partners; Effect on Points 21Section 6.2 Admission of Additional General Partner 22Section 6.3 Transfer of Interests of Limited Partners 22Section 6.4 Withdrawal of Partners 23Section 6.5 Pledges 24ARTICLE 7 ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERS 24Section 7.1 Allocation of Points 24Section 7.2 Retirement of Partner 25Section 7.3 Effect of Retirement on Points 25ARTICLE 8 DISSOLUTION AND LIQUIDATION 26Section 8.1 Liquidation and Dissolution of Partnership 26ARTICLE 9 GENERAL PROVISIONS 27Section 9.1 Amendment of Partnership Agreement 27Section 9.2 Special Power-of-Attorney 28Section 9.3 Notices 30Section 9.4 Agreement Binding Upon Successors and Assigns 30Section 9.5 Merger, Consolidation, etc. 30Section 9.6 Governing Law 31Section 9.7 Termination of Right of Action 31Section 9.8 Confidentiality 31Section 9.9 Not for Benefit of Creditors 32Section 9.10 Reports 32Section 9.11 Filings 32Section 9.12 Headings, Gender, Etc. 32FIRST AMENDED AND RESTATED EXEMPTED LIMITED PARTNERSHIP AGREEMENTOFAPOLLO EPF ADVISORS II, L.P.This First Amended and Restated Agreement of Exempted Limited Partnership (this “Agreement”) of Apollo EPF Advisors II, L.P., aCayman Islands exempted limited partnership (the “Partnership”), is dated April 9, 2012 and agreed as amongst the parties hereto to beof effect from March 1, 2012, and entered into by and among Apollo EPF Capital Management, Limited, a Cayman Islands exemptedcompany, as the sole general partner of the Partnership (the “General Partner”), APH (as defined herein), the Carry Plan Entities (asdefined herein) and those Persons (as defined herein) party hereto or who are subsequently admitted pursuant to the terms hereof andwhose names and business addresses are listed from time to time as limited partners on the Register of Partnership Interests (as definedherein) as limited partners (together, the “Limited Partners”).W I T N E S S E T H :WHEREAS, the Partnership was formed pursuant to an Initial Exempted Limited Partnership Agreement of the Partnership,dated May 10, 2011 (the “Original Agreement”), entered into between the General Partner and Apollo Principal Holdings IV, L.P. andregistered as an exempted limited partnership under the Partnership Law (as defined herein) on May 11, 2011;WHEREAS, with effect from August 2, 2011, Apollo Principal Holdings IV, L.P. transferred its entire interest as a LimitedPartner to APH Holdings (DC), L.P.; andWHEREAS, the parties wish to amend and restate the Original Agreement in its entirety in connection with the admission ofthe Carry Plan Entities as additional Limited Partners.NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally boundhereby, the parties hereto hereby agree to amend and restate the Original Agreement in its entirety to read as follows:ARTICLE 1 DEFINITIONS“Affiliate” means with respect to any Person any other Person directly or indirectly controlling, controlled by or under commoncontrol with such Person.“AGM” means, with reference to any individual Limited Partner, Apollo Global Management LLC, a Delaware limitedliability company, and any Affiliate that employs such individual to perform services relating to the Fund.“Agreement” means this First Amended and Restated Exempted Limited Partnership Agreement of the Partnership, asamended or supplemented from time to time.“Alternative GP Vehicle” has the meaning ascribed to that term in Section 3.8.“APH” means APH Holdings (DC), L.P., a Cayman Islands exempted limited partnership, in its capacity as a Limited Partner.“Capital Account” means with respect to each Partner the capital account established and maintained on behalf of such Partneras described in Section 3.3.“Capital Loss” means, for each Fund with respect to any Fiscal Year, the portion of any Net Loss and any Portfolio InvestmentLoss allocable to the Partnership, but only to the extent such allocation is made by such Fund to the Partnership in proportion to thePartnership’s capital contribution to such Fund, as determined pursuant to the Fund LP Agreement.“Capital Profit” means, for each Fund with respect to any Fiscal Year, the portion of any Net Income and any PortfolioInvestment Gain allocable to the Partnership, but only to the extent such allocation is made by such Fund to the Partnership inproportion to the Partnership’s capital contribution to such Fund, as determined pursuant to the Fund LP Agreement.“Carry Plan Entity” means each of EPF II Team Carry Plan, L.P., a Marshall Islands limited partnership, and Lapithus EPF IITeam Carry Plan, L.P., a Marshall Islands limited partnership.“Carry Plan Entity Point” means, with respect to each Carry Plan Entity, a “Point” (as defined in the Carry Plan Entity LPAgreement of each Carry Plan Entity) issued by the Carry Plan Entity to a limited partner thereof. “Carry Plan Entity LP Agreement” of the limited partnership agreement of each Carry Plan Entity.“Clawback Payment” means any payment required to be made by the Partnership to any Fund pursuant to Section 10.3 of theFund LP Agreement of such Fund.“Clawback Share” means, with respect to any Limited Partner and any Clawback Payment, a portion of such ClawbackPayment equal to (a) the cumulative amount distributed to such Limited Partner prior to the time of determination of Operating Profitattributable to the Fund to which the Clawback Payment is required to be made, divided by (b) the cumulative amount so distributed toall Partners with respect to such Operating Profit attributable to such Fund.“Co-Investors (A)” means Apollo EPF Co-Investors II (A), L.P., a Cayman Islands exempted limited partnership.“Code” means the United States Internal Revenue Code of 1986, as amended and as hereafter amended, or any successor law.“Confidential Information” means information that has not been made publicly available by or with the permission of theGeneral Partner and that is obtained or learned by a Limited Partner as a result of or in connection with his association with thePartnership or any of its Affiliates concerning the business, affairs or activities of the Partnership, any of its Affiliates or any of thePortfolio Investments, including, without limitation, models, codes, client information (including client identity and contacts, client lists,client financial or personal information), financial data, know-how, computer software and related documentation, trade secrets, andother forms of sensitive or valuable non-public information obtained or learned by the Limited Partner as a result of such LimitedPartner’s participation in the Partnership. For the avoidance of doubt, Confidential Information does not include informationconcerning non-proprietary business or investment practices, methods or relationships customarily employed or entered into bycomparable business enterprises“Covered Person” has the meaning ascribed to that term in Section 5.7.“Disability” has the meaning ascribed to that term in the Apollo Global Management LLC 2007 Omnibus Equity IncentivePlan.“EPF II” means Apollo European Principal Finance Fund II (Dollar A), L.P., a Cayman Islands exempted limited partnership,and any successor thereto, to the extent the context so requires.“Final Adjudication” has the meaning ascribed to that term in Section 5.7.“Fiscal Year” means, with respect to a year, the period commencing on January 1 of such year and ending on December 31 ofsuch year (or on the date of a final distribution pursuant to Section 8.1(a)), unless the General Partner shall elect another fiscal year forthe Partnership which is a permissible taxable year under the Code.“Fund” means each of EPF II, each “Parallel Fund” within the meaning of the Fund LP Agreement of EPF II and any “master”partnership or similar vehicle in which any such entity is the sole or principal investor. Such term also includes each alternativeinvestment vehicle created by EPF II and/or any such Parallel Fund or master , to the extent the context so requires. As of the datehereof, the Funds are EPF II, Apollo European Principal Finance Fund II (Euro A), L.P., a Cayman Islands exempted limitedpartnership, Apollo European Principal Finance Fund II (Dollar B), L.P., a Cayman Islands exempted limited partnership, ApolloEuropean Principal Finance Fund II (Master Dollar B), L.P., a Cayman Islands exempted limited partnership, Apollo EuropeanPrincipal Finance Fund II (Euro B), L.P., a Cayman Islands exempted limited partnership, and Apollo European Principal FinanceFund II (Master Euro B), L.P., a Cayman Islands exempted limited partnership.“Fund General Partner” means the Partnership in its capacity as a general partner of any of the Funds pursuant to the Fund LPAgreements.“Fund LP Agreement” means the limited partnership agreement of any of the Funds, as amended from time to time, and, to theextent the context so requires, the corresponding constituent agreement, certificate or other document governing each such Fund.“General Partner” means EPF Capital Management, Limited, a Cayman Islands exempted company, in its capacity as generalpartner of the Partnership or any successor to the business of the General Partner in its capacity as general partner of the Partnership.“Investment Committee” means the committee constituted pursuant to the limited partnership agreement of the ManagementCompany, as amended from time to time.“Limited Partner” means any Person admitted as a limited partner to the Partnership in accordance with this Agreement,including any Retired Partner, until such Person is withdrawn entirely as a limited partner of the Partnership in accordance with theterms hereof, in his capacity as a limited partner of the Partnership. All references herein to a Limited Partner shall be construed as referring collectively to such Limited Partner and to each Related Party of such Limited Partner (and to each Person of which suchLimited Partner is a Related Party) that also is or that previously was a Limited Partner, except to the extent that the General Partnerdetermines that the context does not require such interpretation as between such Limited Partner and his Related Parties. For purposesof the Partnership Law, all Limited Partners shall be considered a single class or group and only those Persons who are recorded, fromtime to time, on the Register of Partnership Interests shall be deemed to be a limited partner of the Partnership.“Management Company” has the meaning ascribed to that term in each of the Fund LP Agreements.“Net Income” has the meaning ascribed to that term in each of the Fund LP Agreements.“Net Loss” has the meaning ascribed to that term in each of the Fund LP Agreements.“Operating Loss” means, with respect to any Fiscal Year, any net loss of the Partnership, adjusted to exclude (a) any CapitalProfit or Capital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by thePartnership. To the extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined inaccordance with the same accounting policies, principles and procedures applicable to the determination by the relevant Fund, and anyitems not derived from a Fund shall be determined in accordance with the accounting policies, principles and procedures used by thePartnership for United States federal income tax purposes.“Operating Profit” means, with respect to any Fiscal Year, any net income of the Partnership, adjusted to exclude (a) anyCapital Profit or Capital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by thePartnership. To the extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined inaccordance with the same accounting policies, principles and procedures applicable to the determination by the relevant Fund, and anyitems not derived from a Fund shall be determined in accordance with the accounting policies, principles and procedures used by thePartnership for United States federal income tax purposes.“Partner” means the General Partner or any of the Limited Partners, and “Partners” means the General Partner and all of theLimited Partners.“Partnership” means the exempted limited partnership continued pursuant to this Agreement.“Partnership Law” means the Exempted Limited Partnership Law (as amended) of the Cayman Islands, as amended from timeto time and any successor law thereto.“Permanent Disability” means a Disability that continues for (a) periods aggregating at least 24 months during any period of 48consecutive months or (b) such shorter period as the General Partner may determine.“Person” means any individual, partnership (whether or not having separate legal personality), corporation, limited liabilitycompany, joint venture, joint stock company, unincorporated organization or association, trust (including the trustees thereof, in theircapacity as such), government, governmental agency, political subdivision of any government, or other entity.“Point” means a share of Operating Profit or Operating Loss. The aggregate number of Points available for assignment to allPartners initially shall be 2,000 and shall be subject to adjustment from time to time as provided herein.“Points Percentage” with respect to any Partner or group of Partners means the percentage determined by dividing the numberof Points held by such Partner or group of Partners by the total number of outstanding Points.“Portfolio Investment” has the meaning ascribed to that term in each of the Fund LP Agreements.“Portfolio Investment Gain” has the meaning ascribed to that term in each of the Fund LP Agreements.“Portfolio Investment Loss” has the meaning ascribed to that term in each of the Fund LP Agreements.“Reference Rate” means the interest rate described in Section 3.1(c) (or the corresponding provision) of each of the Fund LPAgreements.“Register of Partnership Interests” means the register of partnership interests for the Partnership, recording, as the PartnershipLaw may require from time to time, the names of each of the Partners, their Capital Commitments, the date and amount of their CapitalContributions including the return of any amounts, and their business addresses, maintained by the General Partner (or its designee) inthe books and records of the Partnership.“Registrar” means the Cayman Islands Registrar of Exempted Limited Partnerships appointed pursuant to Section 8 of the Partnership Law.“Related Party” means, with respect to any Limited Partner:(a) any spouse, child, parent or other lineal descendant of such Limited Partner or such Limited Partner’s parent, or anynatural Person who occupies the same principal residence as the Limited Partner;(b) any trust or estate in which the Limited Partner and any Related Party or Related Parties (other than such trust or estate)collectively have more than 80 percent of the beneficial interests (excluding contingent and charitable interests);(c) any entity of which the Limited Partner and any Related Party or Related Parties (other than such entity) collectively arebeneficial owners of more than 80 percent of the equity interest; and(d) any Person with respect to whom such Limited Partner is a Related Party.“Required Voting Partners” means, at any time, APH and EPF II Team Carry Plan, L.P. acting with the consent of its“Required Voting Partners” as defined in its Cary Plan Entity LP Agreement.“Retired Partner” means any Limited Partner who has become a retired partner in accordance with or pursuant to Section 7.2.“Retirement Date” means, with respect to any Limited Partner, the date as of which such Person becomes a Retired Partner.“Team Member” has the meaning ascribed to that term in Section 6.1(c).“Transfer” means any direct or indirect sale, exchange, transfer, assignment or other disposition by a Partner of any or all of hisinterest in the Partnership (whether respecting, for example, economic rights only or all the rights associated with the interest) toanother Person, whether voluntary or involuntary.“United States” or “U.S.” means the United States of America.“Vested Points” means, with respect to any Retired Partner, the product of such Retired Partner’s Points as of such RetiredPartner’s Retirement Date multiplied by such Retired Partner’s Vesting Percentage at such time.“Vesting Percentage” means, with respect to any Retired Partner: …(a) “Winding-Up Event” has the meaning given to that term in Section 2.5 of this Agreement.ARTICLE 2 FORMATION AND ORGANIZATIONSection 2.1 ContinuationThe parties hereto agree to continue the Partnership as an exempted limited partnership pursuant to the Partnership Law on theterms of this Agreement.Section 2.2 NameThe name of the Partnership continued hereby shall be “Apollo EPF Advisors II, L.P.”. The General Partner is authorized tomake any variations in the Partnership’s name which the General Partner may deem necessary or advisable to comply with the laws ofany jurisdiction in which the Partnership may operate (other than any variation which references the name of any Limited Partnerwithout the prior consent of such Limited Partner); provided that such name shall contain the words “Limited Partnership”, theabbreviation “L.P.” or the designation “LP” as required by the Partnership Law. The General Partner shall file a statement inaccordance with Section 10 of the Partnership Law with the Registrar and provide written notice to each Limited Partner of anychange in the name of the Partnership.Section 2.3 Organizational Certificates and Other FilingsIf requested by the General Partner, the Limited Partners shall immediately execute all certificates and other documents, andany amendments or renewals of such certificates and other documents as thereafter required, consistent with the terms of thisAgreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the continuation and operation of the Partnership as an exempted limited partnership under thelaws of the Cayman Islands, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, orpartnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) allother filings required to be made by the Partnership.Section 2.4 Offices(a) The Partnership shall maintain its principal office, and may maintain one or more additional offices, at such place or placesas the General Partner may from time to time determine.(b) The General Partner shall arrange for the Partnership to have and maintain in the Cayman Islands, at the expense of thePartnership, a registered office and registered agent for service of process on the Partnership as required by the Partnership Law.Section 2.5 Term of PartnershipThe term of the Partnership commenced at the time of its registration as an exempted limited partnership under the PartnershipLaw and shall continue until the first to occur of any of the following events (each a “Winding-Up Event”):(i) the dissolution (without continuation) of all of the Funds; or(ii) at any time there are no Limited Partners; or(iii) upon any event that results in the General Partner ceasing to be a general partner of the Partnership pursuant toSection 15(5)(a), (b) or (c) of the Partnership Law, provided that the Partnership shall not be dissolved and required to be wound up inconnection with any such event if (A) at the time of the occurrence of such event there is at least one remaining qualifying generalpartner of the Partnership who is hereby authorized to and does carry on the business of the Partnership, or (B) within 90 days afternotice of the occurrence of such event, a majority of the Limited Partners agree in writing or vote to continue the business of thePartnership and to the appointment, effective from the date of such event, if required, of one or more additional general partners of thePartnership; or(iv) an order of any court of the Cayman Islands, pursuant to the Partnership Law, for the winding up and dissolutionof the Partnership.(b) The parties agree that irreparable damage would be done to the goodwill and reputation of the Partners if any LimitedPartner should bring an action for the winding up of the Partnership. Care has been taken in this Agreement to provide for fair and justpayment in liquidation of the interests of all Partners. Accordingly, to the fullest extent permitted by law, each Limited Partner herebyundertakes and agrees and further waives and renounces its right to seek the appointment of a liquidator for the Partnership, except asexpressly provided herein. Further the provisions of Section 15(2), 15(6) and 15(7) of the Partnership Law shall not apply to thePartnership.Section 2.6 Purpose of the PartnershipThe principal purpose of the Partnership is to act as the sole general partner or as the managing general partner (as the case maybe) of each of the Funds pursuant to their respective Fund LP Agreements and to undertake such related and incidental activities andexecute and deliver such related documents necessary or incidental thereto. The purpose of the Partnership shall be limited to servingas a general partner of direct investment funds, including any of their Affiliates, and the provision of investment management andadvisory services.Section 2.7 Actions by PartnershipThe Partnership may execute, deliver and perform, and the General Partner may execute and deliver, all contracts, agreementsand other undertakings, and engage in all activities and transactions as may in the opinion of the General Partner be necessary oradvisable to carry out the objects and purposes of the Partnership, without the approval or vote of any Limited Partner.Section 2.8 Continuation and/or Admission of PartnersOn the date hereof, the Persons whose names are set forth on the Register of Partnership Interests as “Limited Partners” shall beadmitted to the Partnership or shall continue, as the case may be, as limited partners of the Partnership upon their execution of thisAgreement, or of a deed of adherence to this Agreement, or such other instrument evidencing, to the satisfaction of the GeneralPartner, such Limited Partner’s intent to become a Limited Partner of the Partnership and to adhere to and be bound by the provisionsof this Agreement. The General Partner agrees to continue as the General Partner of the Partnership upon its execution of this Agreement.ARTICLE 3 CAPITALSection 3.1 Contributions to Capital(a) Any required contribution of a Limited Partner to the capital of the Partnership shall be as set forth on the Register ofPartnership Interests. Contributions to the capital of the Partnership shall be made on the date of admission of such Limited Partner as alimited partner of the Partnership and on each such other date as may be specified by the General Partner. Except as otherwisepermitted by the General Partner, all contributions to the capital of the Partnership by each Limited Partner shall be payable exclusivelyin cash.(b) APH shall make capital contributions from time to time to the extent necessary to ensure that the Partnership meets itsobligations to make contributions of capital to each of the Funds.(c) No Partner shall be obligated, nor shall any Partner have any right, to make any contribution to the capital of thePartnership other than as specified in this Section 3.1. No Limited Partner shall be obligated to restore any deficit balance in his CapitalAccount.(d) To the extent, if any, that at the time of the Final Distribution (as defined in each of the Fund LP Agreements), it isdetermined that the Partnership, as a general partner of each of the Funds, is required to make any Clawback Payment with respect toany of the Funds, each Limited Partner shall be required to participate in such payment and contribute to the Partnership for ultimatedistribution to the limited partners of the relevant Fund an amount equal to such Limited Partner’s Clawback Share of any ClawbackPayment, but not in any event in excess of the cumulative amount theretofore distributed to such Limited Partner with respect to theOperating Profit attributable to such Fund.Section 3.2 Rights of Partners in Capital(a) No Partner shall be entitled to interest on his capital contributions to the Partnership.(b) No Partner shall have the right to distributions or the return of any contribution to the capital of the Partnership except (i)for distributions in accordance with Section 4.1 or (ii) upon dissolution of the Partnership. The entitlement to any such return at suchtime shall be limited to the value of the Capital Account of the Partner. The General Partner shall not be liable for the return of anysuch amounts.Section 3.3 Capital Accounts(c) The Partnership shall maintain for each Partner a separate Capital Account.(d) Each Partner’s Capital Account shall have an initial balance equal to the amount of cash and the net value of any securitiesor other property constituting such Partner’s initial contribution to the capital of the Partnership.(e) Each Partner’s Capital Account shall be increased by the sum of:(i) the amount of cash and the net value of any securities or other property constituting additional contributions by suchPartner to the capital of the Partnership permitted pursuant to Section 3.1, plus(ii) in the case of APH, any Capital Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iii) the portion of any Operating Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iv) such Partner’s allocable share of any decreases in any reserves recorded by the Partnership pursuant to Section 3.6and any receipts determined to be applicable to a prior period pursuant to Section 3.6(b), to the extent the General Partner determinesthat, pursuant to any provision of this Agreement, such item is to be credited to such Partner’s Capital Account on a basis which is notin accordance with the current respective Points of all Partners.(f) Each Partner’s Capital Account shall be reduced by the sum of (without duplication):(i) in the case of APH, any Capital Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus (ii) the portion of any Operating Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus(iii) the amount of any cash and the net value of any property distributed to such Partner pursuant to Section 4.1 or 8.1including any amount deducted pursuant to Section 4.2 or 5.4 from any such amount distributed, plus(iv) any withholding taxes or other items payable by the Partnership and allocated to such Partner pursuant to Section5.4(b), any increases in any reserves recorded by the Partnership pursuant to Section 3.6 and any payments determined to be applicableto a prior period pursuant to Section 3.6(b), to the extent the General Partner determines that, pursuant to any provision of thisAgreement, such item is to be charged to such Partner’s Capital Account on a basis which is not in accordance with the currentrespective Points of all Partners.Section 3.4 Allocation of Profit and Loss(c) Allocations of Profit. Capital Profit and Operating Profit for any Fiscal Year shall be allocated to the Partners:(i) first, to Partners to which Capital Loss and Operating Loss previously have been allocated pursuant to Section3.4(b), to the extent of and in proportion to the amount of such losses;(ii) next, to the extent that the cumulative amount of distributions pursuant to Article 4 (other than distributionsrepresenting a return of such Partners’ capital contributions) exceeds the cumulative amount of Capital Profit and Operating Profitpreviously allocated to such Partners pursuant to Section 3.4(a), in the order that such distributions occurred; and(iii) thereafter, any remaining such Capital Profit and Operating Profit shall be allocated among the Partners so as toproduce Capital Accounts (computed after taking into account any other Capital Profit and Operating Profit or Capital Loss andOperating Loss for the Fiscal Year in which such event occurred and all distributions pursuant to Article 4 with respect to such FiscalYear and after adding back each Partner’s share, if any, of Partner Nonrecourse Debt Minimum Gain, as defined in TreasuryRegulations Sections 1.704 - 2(b)(2) and 1.704 - 2(i), or Partnership Minimum Gain, as defined in Treasury Regulations Sections1.704 - 2(b)(2) and 1.704 - 2(d)) for the Partners such that a distribution of an amount of cash equal to such Capital Account balancesin accordance with such Capital Account balances would be in the amounts, sequence and priority set forth in Article 4.(d) Allocations of Losses. Subject to the limitation of Section 3.4(c), Capital Loss for any Fiscal Year shall be allocated toAPH, and Operating Loss for any Fiscal Year shall be allocated among the Partners in proportion to their respective Points as of theclose of such Fiscal Year.(e) To the extent that the allocations of Capital Loss or Operating Loss contemplated by Section 3.4(b) would cause theCapital Account of any Limited Partner to be less than zero, such Capital Loss or Operating Loss shall to that extent instead beallocated to and debited against the Capital Account of the General Partner (or, at the direction of the General Partner, to those LimitedPartners who are members of the General Partner in proportion to their limited liability company interests in the General Partner).Following any such adjustment pursuant to Section 3.4(c) with respect to any Limited Partner, any Capital Profit or Operating Profitfor any subsequent Fiscal Year which would otherwise be credited to the Capital Account of such Limited Partner pursuant to Section3.4(a) shall instead be credited to the Capital Account of the General Partner (or relevant Limited Partners) until the cumulativeamounts so credited to the Capital Account of the General Partner (or relevant Limited Partners) with respect to such Limited Partnerpursuant to Section 3.4(c) is equal to the cumulative amount debited against the Capital Account of the General Partner (or relevantLimited Partners) with respect to such Limited Partner pursuant to Section 3.4(c).(f) Each Limited Partner’s rights and entitlements as a Limited Partner are limited to the rights to receive allocations anddistributions of Capital Profit and Operating Profit expressly conferred by this Agreement and any side letter or similar agreemententered into pursuant to Section 9.1(b) and the other rights expressly conferred by this Agreement and any such side letter or similaragreement to the extent permitted, and save as otherwise expressly prohibited or required, by the Partnership Law, and a LimitedPartner shall not be entitled to any other allocations, distributions or payments in respect of his interest, or to have or exercise any otherrights, privileges or powers.Section 3.5 Tax Allocations(a) For United States federal, state and local income tax purposes, Partnership income, gain, loss, deduction or credit (or anyitem thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations of Capital Profit,Capital Loss, Operating Profit and Operating Loss pursuant to the provisions of Section 3.4 for such Fiscal Year, taking into accountany variation between the adjusted tax basis and book value of Partnership property in accordance with the principles of Section 704(c)of the Code.(b) If any Partner or Partners are treated for United States federal income tax purposes as realizing ordinary income because of receiving interests in the Partnership (whether under Section 83 of the Code or under any similar provision of any law, rule orregulation) and the Partnership is entitled to any offsetting deduction (net of any income realized by the Partnership as a result of suchreceipt), the Partnership’s net deduction shall be allocated to and among the Partners in such manner as to offset, as nearly as possible,the ordinary income realized by such Partner or Partners.Section 3.6 Reserves; Adjustments for Certain Future Events(a) Appropriate reserves may be created, accrued and charged against the Operating Profit or Operating Loss for contingentliabilities, if any, as of the date any such contingent liability becomes known to the General Partner or as of each other date as theGeneral Partner deems appropriate, such reserves to be in the amounts which the General Partner deems necessary or appropriate. TheGeneral Partner may increase or reduce any such reserve from time to time by such amounts as the General Partner deems necessary orappropriate. The amount of any such reserve, or any increase or decrease therein, shall be proportionately charged or credited, asappropriate, to the Capital Accounts of those parties who are Partners at the time when such reserve is created, increased or decreased,as the case may be, in proportion to their respective Points at such time; provided that, if any individual reserve item, as adjusted by anyincrease therein, exceeds the lesser of $500,000 or one percent of the aggregate value of the Capital Accounts of all such Partners, theamount of such reserve, increase or decrease shall instead be charged or credited to those parties who were Partners at the time, asdetermined by the General Partner, of the act or omission giving rise to the contingent liability for which the reserve item wasestablished in proportion to their respective Points at that time.(b) If at any time an amount is paid or received by the Partnership and such amount was not accrued or reserved for but wouldnevertheless, in accordance with the Partnership’s accounting practices, be treated as applicable to one or more prior periods, then suchamount may be proportionately charged or credited by the General Partner, as appropriate, to those parties who were Partners duringsuch prior period or periods.(c) If any amount is required by Section 3.6(a) or (b) to be credited to a Person who is no longer a Partner, such amount shallbe paid to such Person in cash, with interest from the date on which the General Partner determines that such credit is required at theReference Rate in effect on that date. Any amount required to be charged pursuant to Section 3.6(a) or (b) shall be debited against thecurrent balance in the Capital Account of the affected Partners. To the extent that the aggregate current Capital Account balances ofsuch affected Partners are insufficient to cover the full amount of the required charge, the deficiency shall be debited against the CapitalAccounts of the other Partners in proportion to their respective Capital Account balances at such time; provided that each such otherPartner shall be entitled to a preferential allocation, in proportion to and to the extent of such other Partner’s share of any suchdeficiency, together with a carrying charge at a rate equal to the Reference Rate, of any Operating Profit that would otherwise havebeen allocable after the date of such charge to the Capital Accounts of the affected Partners whose Capital Accounts were insufficientto cover the full amount of the required charge. In no event shall a current or former Partner be obligated to satisfy any amount requiredto be charged pursuant to Section 3.6(a) or (b) other than by means of a debit against such Partner’s Capital Account.Section 3.7 Finality and Binding Effect of General Partner’s DeterminationsAll matters concerning the determination, valuation and allocation among the Partners with respect to any profit or loss of thePartnership and any associated items of income, gain, deduction, loss and credit, pursuant to any provision of this Article 3, includingany accounting procedures applicable thereto, shall be determined by the General Partner unless specifically and expressly otherwiseprovided for by the provisions of this Agreement, and such determinations and allocations shall be final and binding on all the Partners.Section 3.8 Alternative GP VehiclesIf the General Partner determines that for legal, tax, regulatory or other reasons (a) any investment or other activities of theFund should be conducted through one or more parallel funds or other alternative investment vehicles as contemplated by the Fund LPAgreement, (b) any of such separate entities comprising the Fund should be managed or controlled by one or more separate entitiesserving as a general partner or in a similar capacity (each, an “Alternative GP Vehicle”), and (c) some or all of the Partners shouldparticipate through any such Alternative GP Vehicle, the General Partner may require any or all of the Partners, as determined by theGeneral Partner, to participate directly or indirectly through any such Alternative GP Vehicle and to undertake such related andincidental activities and execute and deliver such related documents necessary or incidental thereto with and/or in lieu of thePartnership, and the General Partner shall have all necessary authority to implement such Alternative GP Vehicle. Each Partner shalltake such actions and execute such documents as the General Partner determines are reasonably needed to accomplish the foregoing.ARTICLE 4 DISTRIBUTIONSSection 4.1 Distributions(c) Any amount of cash or property received as a distribution from any of the Funds by the Partnership in its capacity as a partner, to the extent such amount is determined by reference to the capital commitment of the Partnership in, or the capitalcontributions of the Partnership to, any of the Funds, shall be promptly distributed by the Partnership to APH.(d) The General Partner shall use reasonable efforts to cause the Partnership to distribute, as promptly as practicable afterreceipt by the Partnership, any available cash or property attributable to items included in the determination of Operating Profit, subjectto the provisions of Section 10.3 of the Fund LP Agreements and subject to the retention of such reserves as the General Partnerconsiders appropriate for purposes of the prudent and efficient financial operation of the Partnership’s business including in accordancewith Section 3.6 hereof. Any such distributions shall be made to Partners in proportion to their respective Points, determined:(i) in the case of any amount of cash or property received from any of the Funds that is attributable to the disposition ofa Portfolio Investment by such Fund, as of the date of such disposition by such Fund; and(ii) in any other case, as of the date of receipt of such cash or property by the Partnership.(e) Subject to Section 5.2(d)(ii), any other distributions or payments in respect of the interests of Limited Partners shall bemade at such time, in such manner and to such Limited Partners as the General Partner shall determine.(f) The General Partner may cause the Partnership to pay distributions to the Partners at any time in addition to thosecontemplated by Section 4.1(a), (b) or (c), in cash or in kind; provided that the General Partner shall only make a distribution in kindeither to all Partners ratably or to those Partners who have agreed to accept such a distribution in kind. Distributions of any suchamounts shall be made to the Partners in proportion to their respective Points, determined immediately prior to giving effect to suchdistribution.Section 4.2 Withholding of Certain Amounts(g) If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnership income allocableto any Partner, then the General Partner, without limitation of any other rights of the Partnership, may cause the amount of suchobligation to be debited against the Capital Account of such Partner when the Partnership pays such obligation, and any amounts thenor thereafter distributable to such Partner shall be reduced by the amount of such taxes. If the amount of such taxes is greater than anysuch then distributable amounts, then such Partner and any successor to such Partner’s interest shall indemnify and hold harmless thePartnership and the General Partner against, and shall pay to the Partnership as a contribution to the capital of the Partnership, upondemand of the General Partner, the amount of such excess.(h) The General Partner may withhold from any distribution to any Limited Partner pursuant to this Agreement any otheramounts due from such Limited Partner to the Partnership or to any other Affiliate of AGM to the extent not otherwise paid. Anyamounts so withheld shall be applied by the General Partner to discharge the obligation in respect of which such amounts werewithheld.Section 4.3 Limitation on DistributionsNotwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner on behalfof the Partnership, shall not make a distribution to any Partner on account of his interest in the Partnership if such distribution wouldviolate the Partnership Law or other applicable law.ARTICLE 5 MANAGEMENTSection 5.1 Rights and Powers of the General Partner(i) Subject to the terms and conditions of this Agreement, the General Partner shall have complete and exclusive responsibility(i) for all management decisions to be made on behalf of the Partnership and (ii) for the conduct of the business and affairs of thePartnership, including all such decisions and all such business and affairs to be made or conducted by the Partnership in its capacity asFund General Partner of any of the Funds.(j) Without limiting the generality of the foregoing, the General Partner shall have full power and authority to execute, deliverand perform such contracts, agreements and other undertakings, and to engage in all activities and transactions, as it may deemnecessary or advisable for, or as may be incidental to, the conduct of the business contemplated by this Section 5.1, including, withoutin any manner limiting the generality of the foregoing, contracts, agreements, undertakings and transactions with any Partner or withany other Person having any business, financial or other relationship with any Partner or Partners; provided that the General Partnershall not have authority to cause the Partnership to borrow any funds for its own account on a secured basis without the consent of theRequired Voting Partners. The Partnership, and the General Partner on behalf of the Partnership, may enter into and perform the Fund LP Agreements and any documents contemplated thereby or related thereto and any amendments thereto, without any further act, voteor approval of any Person, including any Partner, notwithstanding any other provision of this Agreement. The General Partner ishereby authorized to enter into the documents described in the preceding sentence on behalf of the Partnership, but such authorizationshall not be deemed a restriction on the power of the General Partner to enter into other documents on behalf of the Partnership. Exceptas otherwise expressly provided herein or as required by law, all powers and authority vested in the General Partner by or pursuant tothis Agreement or the Partnership Law shall be construed as being exercisable by the General Partner in its sole and absolutediscretion.(k) The General Partner, or a Limited Partner designated by the General Partner, shall be the tax matters partner for purposesof Section 6231(a)(7) of the Code. Each Partner agrees not to treat, on his United States federal income tax return or in any claim for arefund, any item of income, gain, loss, deduction or credit in a manner inconsistent with the treatment of such item by the Partnership.The General Partner shall have the exclusive authority to make any elections required or permitted to be made by the Partnership underany provisions of the Code or any other law.Section 5.2 Delegation of Duties(g) Subject to Section 5.1 and Section 5.2(d), the General Partner may delegate to any Person or Persons any of the duties,powers and authority vested in it hereunder on such terms and conditions as it may consider appropriate.(h) Without limiting the generality of Section 5.2(a), but subject to the limitations contained in Section 5.2(d), the GeneralPartner shall have the power and authority to appoint any Person, including any Person who is a Limited Partner, to provide services tothe Partnership and/or to act as an employee of the Partnership or agent of the General Partner, with such titles and duties as may bespecified by the General Partner, including the following:(i) a chief financial officer, to whom the General Partner may delegate its authority to disburse funds for the account ofthe Partnership and the Funds for any proper purpose, to establish deposit accounts with banks or other financial institutions, to makepermitted investments of Partnership assets, and to take any other permitted actions pertaining to the finances of the Partnership and theFunds;(ii) a chief accounting officer, to whom the General Partner may delegate its authority to prepare and maintainfinancial and accounting books, records and statements of the Partnership and the Funds; and(iii) one or more vice presidents, treasurers and controllers, to whom the General Partner may delegate its authority toexecute any of its decisions and to take any other permitted actions on behalf of the Partnership (including in its capacity as a FundGeneral Partner of any of the Funds) subject to the supervision of the chief executive officer, the chief financial officer or the chiefaccounting officer.Any Person appointed by the General Partner to serve as an officer, employee or agent of the Partnership and/or the General Partnershall be subject to removal at any time by the General Partner; and shall report to and consult with the General Partner at such timesand in such manner as the General Partner may direct.(i) Any Person who is a Limited Partner and to whom the General Partner delegates any of its duties pursuant to this Section5.2 or any other provision of this Agreement shall be subject to the same standard of care, and shall be entitled to the same rights ofindemnification and exoneration, applicable to the General Partner under and pursuant to Section 5.7, unless such Person and theGeneral Partner mutually agree to a different standard of care or right to indemnification and exoneration to which such Person shall besubject.(j) Except as otherwise expressly provided herein, action by the General Partner with respect to any of the following mattersshall be taken only in accordance with the directions of the Required Voting Partners:(i) the waiver of any provision of Section 5.6 hereof concerning other activities of Limited Partners;(ii) the amount and timing of any discretionary distribution to Partners pursuant to Section 4.1(c), and any decision topay any distribution to Partners in kind;(iii) the exercise of the authority of the Partnership to (A) cause any of the Funds to pay a distribution in kind and (B)elect to receive any such distribution in kind;(iv) the exercise of the Partnership’s authority to borrow any funds on a secured basis for the account of thePartnership; (v) the determination of whether to conduct a business other than serving as a general partner of the Funds; and(vi) to the fullest extent permitted by law, the voluntary dissolution of the Partnership, and the exercise of the authorityof the Partnership to cause a voluntary dissolution of any of the Funds.The foregoing shall not restrict the General Partner from delegating authority to execute or implement any such determinations madeby the General Partner.(k) The General Partner shall be permitted to designate one or more committees of the Partnership which committees mayinclude Limited Partners as members. Any such committees shall have such powers and authority granted by the General Partner. AnyLimited Partner who has agreed to serve on a committee shall not be deemed to have the power to bind or act for or on behalf of thePartnership in any manner and in no event shall a member of a committee be considered a general partner of the Partnership byagreement, estoppel or otherwise or be deemed to participate in the control and/or conduct of the business of the Partnership as a resultof the performance of his duties hereunder or otherwise.(l) The General Partner shall cause the Partnership to enter into an arrangement with the Management Company whicharrangement shall require the Management Company to pay all costs and expenses of the Partnership.Section 5.3 Transactions with AffiliatesTo the fullest extent permitted by applicable law, the General Partner (or any Affiliate of the General Partner), when acting onbehalf of the Partnership, is hereby authorized to (a) purchase property from, sell property to, lend money to or otherwise deal with anyAffiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of any of the foregoing Persons, and (b) obtainservices from any Affiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of the foregoing Persons.Section 5.4 Expenses(d) Subject to the arrangement contemplated by Section 5.2(f), the Partnership will pay, or will reimburse the General Partnerfor, all costs and expenses arising in connection with the organization and operations of the Partnership.(e) Any withholding taxes payable by the Partnership, to the extent determined by the General Partner to have been paid orwithheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, shall beallocated among and debited against the Capital Accounts of only those Partners on whose behalf such payments are made or whoseparticular circumstances gave rise to such payments in accordance with Section 4.2.Section 5.5 Rights of Limited Partners(a) Limited Partners shall have no right to take part in the management, control or conduct of the Partnership’s business, norshall they have any right or authority to act for the Partnership or to vote on matters other than as set forth in this Agreement or asrequired by applicable law.(b) Without limiting the generality of the foregoing, the General Partner shall have the full and exclusive authority, without theconsent of any Limited Partner, to compromise the obligation of any Limited Partner to make a capital contribution or to return moneyor other property paid or distributed to such Limited Partner in violation of the Partnership Law.(c) Nothing in this Agreement shall entitle any Partner to any compensation for services rendered to or on behalf of thePartnership as an agent or in any other capacity, except for any amounts payable in accordance with this Agreement.Section 5.6 Other Activities of Partners(a) No Limited Partner other than a Retired Partner shall engage in any occupation, profession, employment or other business,as an officer, director, partner, manager, member, employee, agent, consultant or otherwise, without the prior written consent of theGeneral Partner, unless such activity is carried out on behalf of the Partnership or an Affiliate.(b) Subject to the Fund LP Agreements (including, without limitation, Section 6.7 thereof) and to full compliance with thePartnership’s code of ethics and other written policies relating to personal investment transactions, membership in the Partnership shallnot prohibit a Limited Partner from purchasing or selling as a passive investor any interest in any asset.(c) Nothing in this Agreement shall prohibit the General Partner from engaging in any activity other than acting as GeneralPartner hereunder. Section 5.7 Duty of Care; Indemnification(a) The General Partner (including, without limitation, for this purpose each former and present director, officer, manager,member, employee and stockholder of the General Partner) and each Limited Partner (including any former Limited Partner) in hiscapacity as such, and to the extent such Limited Partner participates, directly or indirectly, in the Partnership’s activities, whether or nota Retired Partner (each, a “Covered Person” and collectively, the “Covered Persons”), shall not be liable to the Partnership or to any ofthe other Partners for any loss, claim, damage or liability occasioned by any acts or omissions in the performance of his serviceshereunder, unless it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “FinalAdjudication”) that such loss, claim, damage or liability is due to an act or omission of a Covered Person (i) made in bad faith or withcriminal intent or (ii) that adversely affected any Fund and that failed to satisfy the duty of care owed pursuant to the applicable FundLP Agreement or as otherwise required by law.(b) A Covered Person shall be indemnified to the fullest extent permitted by law by the Partnership against any losses, claims,damages, liabilities and expenses (including attorneys’ fees, judgments, fines, penalties and amounts paid in settlement) incurred by orimposed upon him by reason of or in connection with any action taken or omitted by such Covered Person arising out of the CoveredPerson’s status as a Partner or his activities on behalf of the Partnership, including in connection with any action, suit, investigation orproceeding before any judicial, administrative, regulatory or legislative body or agency to which it may be made a party or otherwiseinvolved or with which it shall be threatened by reason of being or having been the General Partner or a Limited Partner or by reasonof serving or having served, at the request of the Partnership in its capacity as Fund General Partner of the Funds, as a director, officer,consultant, advisor, manager, member or partner of any enterprise in which any of the Funds has or had a financial interest, includingissuers of Portfolio Investments; provided that the Partnership may, but shall not be required to, indemnify a Covered Person withrespect to any matter as to which there has been a Final Adjudication that his acts or his failure to act (i) were in bad faith or withcriminal intent or (ii) were of a nature that makes indemnification by the Funds unavailable. The right to indemnification granted bythis Section 5.7 shall be in addition to any rights to which a Covered Person may otherwise be entitled and shall inure to the benefit ofthe successors by operation of law or valid assigns of such Covered Person. The Partnership shall pay the expenses incurred by aCovered Person in defending a civil or criminal action, suit, investigation or proceeding in advance of the final disposition of suchaction, suit, investigation or proceeding, upon receipt of an undertaking by the Covered Person to repay such payment if there shall bea Final Adjudication that he is not entitled to indemnification as provided herein. In any suit brought by the Covered Person to enforcea right to indemnification hereunder it shall be a defense that the Covered Person has not met the applicable standard of conduct setforth in this Section 5.7, and in any suit in the name of the Partnership to recover expenses advanced pursuant to the terms of anundertaking the Partnership shall be entitled to recover such expenses upon Final Adjudication that the Covered Person has not met theapplicable standard of conduct set forth in this Section 5.7. In any such suit brought to enforce a right to indemnification or to recoveran advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled tobe indemnified, or to an advancement of expenses, shall be on the Partnership (or any Limited Partner acting derivatively or otherwiseon behalf of the Partnership or the Limited Partners). The General Partner may not satisfy any right of indemnity or reimbursementgranted in this Section 5.7 or to which it may be otherwise entitled except out of the assets of the Partnership (including, withoutlimitation, insurance proceeds and rights pursuant to indemnification agreements), and no Partner shall be personally liable with respectto any such claim for indemnity or reimbursement. The General Partner may enter into appropriate indemnification agreements and/orarrangements reflective of the provisions of this Article 5 with any Covered Person, whether or not such Covered Person is themselvesa party to this Agreement, and obtain appropriate insurance coverage on behalf and at the expense of the Partnership to secure thePartnership’s indemnification obligations hereunder without the further consent of any Limited Partner. Subject to applicable law, eachCovered Person shall be deemed a third party beneficiary (to the extent not a direct party hereto) to this Agreement and, in particular,the provisions of this Article 5, and shall be entitled to the benefit of the indemnity granted to the Partnership by each of the Fundspursuant to the terms of the Fund LP Agreements.(c) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relatingthereto to the Partnership or the Partners, the Covered Person shall not be liable to the Partnership or to any Partner for his good faithreliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the dutiesand liabilities of a Covered Person otherwise existing at law or in equity to the Partnership or the Partners, are agreed by the Partners toreplace such other duties and liabilities of each such Covered Person, save that the General Partner shall act at all times in good faith inaccordance with the requirements of the Partnership Law.(d) Notwithstanding any of the foregoing provisions of this Section 5.7, the Partnership may but shall not be required toindemnify (i) a Retired Partner (or any other former Limited Partner) with respect to any claim for indemnification or advancement ofexpenses arising from any conduct occurring more than six months after the date of such Person’s retirement (or other withdrawal ordeparture), or (ii) a Limited Partner with respect to any claim for indemnification or advancement of expenses as a director, officer oragent of the issuer of any Portfolio Investment to the extent arising from conduct in such capacity occurring more than six months afterthe complete disposition of such Portfolio Investment by the Fund.ARTICLE 6 ADMISSIONS, TRANSFERS AND WITHDRAWALSSection 6.1 Admission of Additional Limited Partners; Effect on Points(m) The General Partner may at any time admit as an additional Limited Partner any Person who has agreed to be become alimited partner of the Partnership and to adhere to and be bound by the provisions of this Agreement and assign Points to such Personand/or increase the Points of any existing Limited Partner. Once assigned, such Points shall not be subject to forfeiture except ascontemplated pursuant to Section 7.3 in connection with a Partner’s retirement.(n) Each additional Limited Partner shall execute a deed of adherence, in a form satisfactory to the General Partner, to thisAgreement pursuant to which such Limited Partner undertakes and agrees to become a Limited Partner of the Partnership and toadhere to and be bound by the provisions of this Agreement on admission as a Limited Partner.(o) No Team Member shall experience a Points Percentage reduction as a consequence of an award of Points to any othernew or existing Partner unless, after giving effect to all Points adjustments in connection with any such award:(i) Team Members (together with all of the partners of the Carry Plan Entities who would be considered TeamMembers if such persons were Partners) will hold at least … Points;(ii) such Team Member’s Points Percentage will not be less than … percent; and(iii) x/y will not be less than a/b, where:x = such Team Member’s new Points Percentagey = such Team Member’s previous Points Percentagea = APH’s new Points Percentageb = APH’s previous Points PercentageFor purposes of the foregoing, the term “Team Member” means (x) a natural person who is actively involved, directly or indirectly, inthe Fund’s investment program, (y) a Retired Partner who was so involved prior to his Retirement Date, or (z) a Related Party of theforegoing.Section 6.2 Admission of Additional General PartnerThe General Partner may admit one or more additional general partners at any time without the consent of any LimitedPartner other than the Required Voting Partners. No reduction in the Points Percentage of any Limited Partner shall be made as a resultof the admission of an additional general partner or the increase in the Points of any general partner without the consent of suchLimited Partner. Any additional general partner shall, for the purposes of this Agreement, be deemed admitted as a general partner ofthe Partnership upon its execution of a deed of adherence, in a form satisfactory to the General Partner, to this Agreement pursuant towhich such person undertakes and agrees to become a General Partner of the Partnership and to adhere to and be bound by theprovisions of this Agreement on admission as a General Partner. The incumbent General Partner shall make such filings with theRegistrar as are necessary pursuant to the Partnership Law to effect the legal admission of any additional general partner of thePartnership.Section 6.3 Transfer of Interests of Limited Partners(f) No Transfer of any Limited Partner’s interest in the Partnership, whether voluntary or involuntary, shall be valid oreffective, and no transferee shall become a substituted Limited Partner, unless the prior written consent of the General Partner has beenobtained, which consent may be given or withheld by the General Partner. In the event of any Transfer, all of the conditions of theremainder of this Section 6.3 must also be satisfied.(g) A Limited Partner or his legal representative shall give the General Partner notice before the proposed effective date of anyvoluntary Transfer and within 30 days after any involuntary Transfer, and shall provide sufficient information to allow legal counselacting for the Partnership to make the determination that the proposed Transfer will not result in any of the following consequences:(i) require registration of the Partnership or any interest therein under any securities or commodities laws of anyjurisdiction;(ii) result in a termination of the Partnership under Section 708(b)(1)(B) of the Code or jeopardize the status of the Partnership as a partnership for United States federal income tax purposes; or(iii) violate, or cause the Partnership, the General Partner or any Limited Partner to violate, any applicable law, rule orregulation of any jurisdiction.Such notice must be supported by proof of legal authority and a valid instrument of assignment acceptable to the General Partner.(h) In the event any Transfer permitted by this Section 6.3 shall result in the multiple beneficial ownership of any LimitedPartner’s interest in the Partnership, the General Partner may require one or more trustees or nominees, whose names will be entered onthe Register of Partnership Interests, to be designated to hold the legal title to the interest and to represent the entire interest transferredfor the purpose of receiving all notices which may be given and all payments which may be made under this Agreement, and for thepurpose of exercising the rights which the transferees have pursuant to the provisions of this Agreement. The Partnership shall nototherwise be required to recognize any trust or other beneficial ownership of any interest.(i) A permitted transferee shall be entitled to the allocations and distributions attributable to the interest in the Partnershiptransferred to such transferee and to Transfer such interest in accordance with the terms of this Agreement; provided that suchtransferee shall not be entitled to the other rights of a Limited Partner as a result of such transfer until he becomes a substituted LimitedPartner. No transferee may become a substituted Limited Partner except with the prior written consent of the General Partner (whichconsent may be given or withheld by the General Partner). Such transferee shall be admitted to the Partnership as a substituted LimitedPartner upon execution of a deed of adherence, in a form satisfactory to the General Partner, to this Agreement pursuant to which suchtransferee undertakes and agrees to become a Limited Partner of the Partnership and to adhere to and be bound by the provisions ofthis Agreement on admission as a Limited Partner. Notwithstanding the above, the Partnership and the General Partner shall incur noliability for allocations and distributions made in good faith to the transferring Limited Partner until a written instrument of Transfer hasbeen received and accepted by the Partnership and recorded on its books and the effective date of the Transfer has passed.(j) Any other provision of this Agreement to the contrary notwithstanding, to the fullest extent permitted by law, any successoror transferee of any Limited Partner’s interest in the Partnership shall be bound by the provisions hereof. Prior to recognizing anyTransfer in accordance with this Section 6.3, the General Partner may require the transferee to make certain representations andwarranties to the Partnership and Partners and to accept, adopt and approve in writing all of the terms and provisions of thisAgreement.(k) In the event of a Transfer or in the event of a distribution of assets of the Partnership to any Partner, the Partnership, at thedirection of the General Partner, may, but shall not be required to, file an election under Section 754 of the Code and in accordancewith the applicable Treasury Regulations, to cause the basis of the Partnership’s assets to be adjusted as provided by Section 734 or743 of the Code.(l) No transfer of a partnership interest shall be effective until the transfer of the partnership interest is registered by theGeneral Partner on the Register of Partnership Interests.Section 6.4 Withdrawal of PartnersA Partner in the Partnership may not withdraw from the Partnership prior to its dissolution. For the avoidance of doubt, anyLimited Partner who transfers to a Related Party such Limited Partner’s entire remaining entitlement to allocations and distributionsshall remain a Limited Partner, notwithstanding the admission of the transferee Related Party as a Limited Partner, for as long as thetransferee Related Party remains a Limited Partner.Section 6.5 Pledges(d) A Limited Partner shall not pledge or grant a security interest in such Limited Partner’s interest in the Partnership unlessthe prior written consent of the General Partner has been obtained (which consent may be given or withheld by the General Partner).(e) Any partnership interest in the Partnership may be evidenced by a certificate issued by the Partnership in such form as theGeneral Partner may approve.(f) Each certificate representing a partnership interest in the Partnership shall be executed by manual or facsimile signatureof the General Partner on behalf of the Partnership.ARTICLE 7 ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERSSection 7.1 Allocation of Points(c) Except as otherwise provided herein, the General Partner shall be responsible for the allocation of Points from time to timeto the Limited Partners. The allocation of Points to any Limited Partner who is invited to become a member of Co-Investors (A) shallnot become effective until the effective date of the acceptance by Co-Investors (A) of a capital commitment from such Limited Partner(or his Related Party, as applicable) in a mutually agreed amount. Points allocated to a Limited Partner, and the Points Percentagerepresented by such Points, may not be reduced except as set forth in Section 6.1 and Section 7.3.(d) The General Partner shall maintain on the books and records of the Partnership a record of the number of Points allocatedto each Partner and shall give notice to each Limited Partner of the number of such Limited Partner’s Points upon admission to thePartnership of such Limited Partner and promptly upon any change in such Limited Partner’s Points pursuant to this Article 7 orotherwise.(e) The General Partner shall ensure that at all times: (i) the total number of Points held by each Carry Plan Entity is equal tothe total number of outstanding Carry Plan Entity Points held by the limited partners of such Carry Plan Entity and (ii) theproportionate entitlement of each outstanding Point to share in amounts attributable to “carried interest” distributions derived by thePartnership from the Funds corresponds with the proportionate entitlement of each outstanding Carry Plan Entity Point to share indistributions by such Carry Plan Entity attributable to such amounts that have been distributed by the Partnership to such Carry PlanEntity. Without limiting the generality of the foregoing, if the total number of outstanding Carry Plan Entity Points held by the limitedpartners of a Carry Plan Entity changes for any reason (including the admission of any new partner to, or the retirement of any partnerfrom, such Carry Plan Entity), a corresponding adjustment shall be made in the number of Points held by such Carry Plan Entity.Section 7.2 Retirement of Partner(m) A Limited Partner shall become a Retired Partner upon:(iv) delivery to such Limited Partner of a notice by the General Partner declaring such Limited Partner to be a RetiredPartner (which shall be deemed to have been given upon delivery of a notice terminating such Limited Partner’s employment byAGM, unless otherwise determined by the General Partner);(v) a date specified in a notice delivered by such Limited Partner to the General Partner stating that such LimitedPartner elects to resign from or otherwise terminate his or her employment by AGM; or(vi) the death of the Limited Partner, whereupon the estate of the deceased Limited Partner shall be treated as a RetiredPartner in the place of the deceased Limited Partner, or the Permanent Disability of the Limited Partner.(n) Nothing in this Agreement shall obligate the General Partner to treat Retired Partners alike, and the exercise of any poweror discretion by the General Partner in the case of any one such Retired Partner shall not create any obligation on the part of theGeneral Partner to take any similar action in the case of any other such Retired Partner, it being understood that any power ordiscretion conferred upon the General Partner shall be treated as having been so conferred as to each such Retired Partner separately.Section 7.3 Effect of Retirement on Points(d) The Points of any Limited Partner who becomes a Retired Partner shall be reduced automatically to an amount equal tosuch Limited Partner’s Vested Points calculated as of the Retirement Date. Any such reduction shall be effective on the RetirementDate or such subsequent date as may be determined by the General Partner; provided that the General Partner may agree to a lesserreduction (or to no reduction) of the Points of any such Limited Partner who becomes a Retired Partner.(e) The General Partner shall determine the manner of apportioning and/or cancelling any Points that become available forreallocation or cancellation pursuant to Section 7.3(a) as a result of any Partner becoming a Retired Partner; provided, however, that ifthe Points Percentage of APH is proposed to be increased as a result of any such reallocation or cancellation, then x/y shall not be lessthan a/b after giving effect to the reallocation or cancellation of all such Points, where:x =the new Points Percentage of each Team Member other than a Retired Partnery =such Team Member’s Points Percentage before giving effect to all previous Points Percentage reductionspursuant to Section 6.1(c) a =APH’s new Points Percentageb =APH’s Points Percentage before giving effect to all previous Points Percentage reductions pursuant to Section6.1(c)(f) Except as contemplated by Section 6.1(c) and Section 7.3(a), the General Partner shall have no authority under theprovisions of this Agreement to reduce the Points of any Limited Partner.ARTICLE 8 DISSOLUTION AND LIQUIDATIONSection 8.1 Liquidation and Dissolution of Partnership(o) The General Partner, except where, the General Partner is unable to perform this function, a liquidator elected by amajority in interest (determined by Points) of Limited Partners, shall commence the winding-up of the Partnership pursuant to Section15(1) of the Partnership Law upon occurrence of any Winding-Up Event. The General Partner or appointed liquidator shall terminatethe business and administrative affairs of the Partnership and commence the liquidation of the Partnership's assets.(p) Capital Profit and Capital Loss, Operating Profit and Operating Loss during the Fiscal Years that include the period ofliquidation shall be allocated pursuant to Section 3.4. The proceeds from liquidation shall be distributed in the following manner:(i) first, the debts, liabilities and obligations of the Partnership including the expenses of liquidation (including legaland accounting expenses incurred in connection therewith), up to and including the date that distribution of the Partnership’s assets tothe Partners has been completed, shall be satisfied (whether by payment or by making reasonable provision for payment thereof); and(ii) thereafter, the Partners shall be paid amounts pro rata in accordance with and up to the positive balances of theirrespective Capital Accounts, as adjusted pursuant to Article 3.(q) Anything in this Section 8.1 to the contrary notwithstanding, the General Partner or liquidator may distribute ratably inkind rather than in cash, upon the winding-up of the Partnership, any assets of the Partnership in accordance with the priorities set forthin Section 8.1(a), provided that if any in kind distribution is to be made the assets distributed in kind shall be valued as of the actualdate of their distribution and charged as so valued and distributed against amounts to be paid under Section 8.1(a).(r) Upon completion of the winding-up of the Partnership in accordance with the terms hereof the Partnership shall bedissolved by the filing of a notice of dissolution in accordance with the provisions of the Partnership law. ARTICLE 9 GENERAL PROVISIONSSection 9.1 Amendment of Partnership Agreement(g) The General Partner may amend this Agreement at any time, in whole or in part, without the consent of any LimitedPartner by giving notice of such amendment to any Limited Partner whose rights or obligations as a Limited Partner pursuant to thisAgreement are changed thereby; provided that any amendment that would effect a material adverse change in the contractual rights ofa Partner may only be made if the written consent of such Partner is obtained prior to the effectiveness thereof. Notwithstanding theforegoing, the General Partner may amend this Agreement at any time, in whole or in part, without the consent of any Limited Partner(other than a Limited Partner whose rights to allocations and distributions would suffer a material adverse change as a result of suchamendment), to enable the Partnership to comply with the requirements of the “Safe Harbor” Election within the meaning of theProposed Revenue Procedure of Notice 2005-43, 2005-24 IRB 1, Proposed Treasury Regulation Section 1.83-3(e)(1) or ProposedTreasury Regulation Section 1.704-1(b)(4)(xii) at such time as such proposed Procedure and Regulations are effective and to make anysuch other related changes as may be required by pronouncements or Treasury Regulations issued by the Internal Revenue Service orTreasury Department after the date of this Agreement. An adjustment of Points shall not be considered an amendment to the extenteffected in compliance with the provisions of Section 6.1 or 7.3 as in effect on the date hereof or as hereafter amended in compliancewith the requirements of this Section 9.1(a). The General Partner’s approval of or consent to any transaction resulting in thesubstitution of another Person in place of the Partnership as the managing or general partner of any of the Funds or any change to thescheme of distribution under any of the Fund LP Agreements that would have the effect of reducing the Partnership’s allocable shareof the Net Income of any Fund shall require the consent of any Limited Partner adversely affected thereby.(h) Notwithstanding the provisions of this Agreement, including Section 9.1(a), it is hereby acknowledged and agreed that theGeneral Partner on its own behalf or on behalf of the Partnership without the approval of any Limited Partner or any other Person mayenter into one or more side letters or similar agreements with one or more Limited Partners which have the effect of establishing rights under, or altering or supplementing the terms of this Agreement. The parties hereto agree that any terms contained in a side letter orsimilar agreement with one or more Limited Partners shall govern with respect to such Limited Partner or Limited Partnersnotwithstanding the provisions of this Agreement. Any such side letters or similar agreements shall be binding upon the Partnership orthe General Partner, as applicable, and the signatories thereto as if the terms were contained in this Agreement, but no such side letteror similar agreement between the General Partner and any Limited Partner or Limited Partners and the Partnership shall adverselyamend the contractual rights of any other Limited Partner without such other Limited Partner’s prior consent.Section 9.2 Special Power-of-Attorney(g) Each Partner hereby irrevocably makes, constitutes and appoints the General Partner with full power of substitution, thetrue and lawful representative and attorney-in-fact, and in the name, place and stead of such Partner, with the power from time to timeto make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:(i) any amendment to this Agreement which complies with the provisions of this Agreement (including the provisionsof Section 9.1);(ii) all such other instruments, documents and certificates which, in the opinion of legal counsel to the Partnership, mayfrom time to time be required by the laws of the Cayman Islands or any other jurisdiction, or which such legal counsel may deemnecessary or appropriate to effectuate, implement and continue the valid and subsisting existence and business of the Partnership as anexempted limited partnership or partnership in which the limited partners thereof enjoy limited liability;(iii) all such instruments, certificates, agreements and other documents relating to the conduct of the investmentprogram of any of the Funds which, in the opinion of such attorney-in-fact and the legal counsel to the Funds, are reasonably necessaryto accomplish the legal, regulatory and fiscal objectives of the Funds in connection with its or their acquisition, ownership anddisposition of investments, including, without limitation:(A)the governing documents of any management entity formed as a part of the tax planning for any of theFunds and any amendments thereto; and(B)documents relating to any restructuring transaction with respect to any of the Funds’ investments,provided that such documents referred to in clauses (A) and (B) above, viewed individually or in the aggregate, provide substantiallyequivalent financial and economic rights with respect to such Limited Partner and otherwise do not:(1)increase the Limited Partner’s overall financial obligation to make capital contributions withrespect to the relevant Fund (directly or through any associated vehicle in which the LimitedPartner holds an interest);(2)diminish the Limited Partner’s overall entitlement to share in profits and distributions withrespect to the relevant Fund (directly or through any associated vehicle in which the LimitedPartner holds an interest);(3)cause the Limited Partner to become subject to increased personal liability for any debts orobligations of the Partnership; or(4)otherwise result in an adverse change in the overall rights or obligations of the Limited Partner inrelation to the conduct of the investment program of any of the Funds;(iv) any instrument or document necessary or advisable to implement the provisions of Section 3.8 of this Agreement;(v) any written notice or letter of resignation from any board seat or office of any Person (other than a company thathas a class of equity securities registered under the United States Securities Exchange Act of 1934, as amended, or that is registeredunder the United States Investment Company Act of 1940, as amended), which board seat or office was occupied or held at the requestof the Partnership or any of its Affiliates; and(vi) all such proxies, consents, assignments and other documents as the General Partner determines to be necessary oradvisable in connection with any merger or other reorganization, restructuring or other similar transaction entered into in accordancewith this Agreement (including the provisions of Section 9.5(c)).(h) Each Limited Partner is aware that the terms of this Agreement permit certain amendments to this Agreement to beeffected and certain other actions to be taken or omitted by or with respect to the Partnership without his consent. If an amendment to this Agreement or any action by or with respect to the Partnership is taken by the General Partner in the manner contemplated by thisAgreement, each Limited Partner agrees that, notwithstanding any objection which such Limited Partner may assert with respect tosuch action, the General Partner is authorized and empowered, with full power of substitution, to exercise the authority granted abovein any manner which may be necessary or appropriate to permit such amendment to be made or action lawfully taken or omitted. EachPartner is fully aware that each other Partner will rely on the effectiveness of this power-of-attorney with a view to the orderlyadministration of the affairs of the Partnership. Each Limited Partner agrees that the power-of-attorney granted hereby is intended tosecure an interest in property and, in addition, the obligations of each such Limited Partner under this Agreement and as such:(i) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of anyparty granting this power-of-attorney, regardless of whether the Partnership or the General Partner shall have had notice thereof; and(ii) shall survive any Transfer by a Limited Partner of the whole or any portion of its interest in the Partnership, exceptthat, where the transferee thereof has been approved by the General Partner for admission to the Partnership as a substituted LimitedPartner, this power of attorney given by the transferor shall survive such Transfer for the sole purpose of enabling the General Partnerto execute, acknowledge and file any instrument necessary to effect such substitution.Section 9.3NoticesAny notice required or permitted to be given under this Agreement shall be in writing. A notice to the General Partner shall bedirected to the attention of Leon D. Black with a copy to the general counsel of the Partnership. A notice to a Limited Partner shall bedirected to such Limited Partner’s last known residence as set forth in the books and records of the Partnership or its Affiliates (aLimited Partner’s “Home Address”). A notice shall be considered given when delivered to the addressee either by hand at hisPartnership office or electronically to the primary e-mail account supplied by the Partnership for Partnership business communications,except that a notice to a Retired Partner shall be considered given when delivered by hand by a recognized overnight courier togetherwith mailing through the United States Postal System by regular mail to such Retired Partner’s Home Address.Section 9.4 Agreement Binding Upon Successors and AssignsThis Agreement shall be binding upon and inure to the benefit of the parties and their respective successors by operation oflaw, but the rights and obligations of the Partners hereunder shall not be assignable, transferable or delegable except as expresslyprovided herein, and any attempted assignment, transfer or delegation thereof that is not made in accordance with such expressprovisions shall be void and unenforceable.Section 9.5 Merger, Consolidation, etc.(a) Subject to Sections 9.5(b) and 9.5(c), the Partnership may merge or consolidate with or into one or more limitedpartnerships formed under any applicable law or other business entities under applicable law pursuant to an agreement of merger orconsolidation which has been approved by the General Partner.(b) Subject to Section 9.1(a) but notwithstanding any other provision to the contrary contained elsewhere in this Agreement,an agreement of merger or consolidation approved in accordance with Section 9.5(a) may, to the extent permitted by Section 9.5(a), (i)effect any amendment to this Agreement, (ii) effect the adoption of a new partnership agreement for the Partnership if it is the survivingor resulting limited partnership in the merger or consolidation, or (iii) provide that the partnership agreement of any other constituentlimited partnership to the merger or consolidation (including a limited partnership formed for the purpose of consummating the mergeror consolidation) shall be the partnership agreement of the surviving or resulting limited partnership.(c) The General Partner shall have the power and authority to approve and implement any merger, consolidation or otherreorganization, restructuring or similar transaction without the consent of any Limited Partner, other than any Limited Partner withrespect to which the General Partner has determined that such transaction will, or is more likely than not to, result in any materialadverse change in the financial and other material rights of such Limited Partner conferred by this Agreement and any side letter orsimilar agreement entered into pursuant to Section 9.1(b) or the imposition of any material new financial obligation on such LimitedPartner. Subject to the foregoing, the General Partner may require one or more of the Limited Partners to sell, exchange, transfer orotherwise dispose of their interests in the Partnership in connection with any such transaction, and each Limited Partner shall take suchaction as may be directed by the General Partner to effect any such transaction.Section 9.6 Governing LawThis Agreement, and the rights of each and all of the Partners hereunder, shall be governed by and construed in accordancewith the laws of the Cayman Islands, without regard to conflict of laws rules thereof. The parties hereby consent to the exclusivejurisdiction and venue for any action arising out of this Agreement (to the extent not subject to arbitration pursuant to this Section 9.6)in any appropriate court in any of the Cayman Islands, or Delaware or New York. In addition to any other means available at law for service of process, each Limited Partner hereby agrees, to the fullest extent permitted by law, that service of process will be dulyeffectuated when delivered to a Limited Partner’s Home Address by hand or by a recognized overnight carrier together with mailingthrough the United States Postal System by regular mail.Section 9.7 Termination of Right of ActionEvery right of action arising out of or in connection with this Agreement by or on behalf of any past, present or future Partneror the Partnership against any past, present or future Partner shall, to the fullest extent permitted by applicable law, irrespective of theplace where the action may be brought and irrespective of the residence of any such Partner, cease and be barred by the expiration ofthree years from the date of the act or omission in respect of which such right of action arises.Section 9.8 Confidentiality(a) Each Limited Partner acknowledges and agrees that the information contained in the books and records of the Partnershipconcerning the Points assigned with respect to any other Limited Partner (including any Retired Partner) is confidential, and, to thefullest extent permitted by applicable law, each Limited Partner waives, and covenants not to assert, any claim or entitlementwhatsoever to gain access to any such information. The Limited Partners agree that the restrictions set forth in this Section 9.8(a) shallconstitute reasonable standards under the Partnership Law regarding access to information.(b) Each Limited Partner acknowledges and agrees not to, at any time, either during the term of such Limited Partner’sparticipation in the Partnership or thereafter, disclose, use, publish or in any manner reveal, directly or indirectly, to any Person (otherthan on a confidential basis to such Limited Partner’s legal and tax advisors who have a need to know such information) the contentsof this Agreement or any Confidential Information, except (i) as may be necessary to the performance of the Limited Partner’s dutieshereunder, (ii) with the prior written consent of the General Partner, (iii) to the extent that any such information is in the public domainother than as a result of the Limited Partner’s breach of any of his obligations, or (iv) where required to be disclosed by court order,subpoena or other government process; provided that, to the fullest extent permitted by law, the Limited Partner shall promptly notifythe General Partner upon becoming aware of any such disclosure requirement and shall cooperate with any effort by the GeneralPartner to prevent or limit such disclosure.(c) Notwithstanding any of the provisions of this Section 9.8, each Limited Partner may disclose to any and all Persons,without limitation of any kind, the tax treatment and tax structure of an investment in the Partnership and all materials of any kind(including tax opinions or other tax analyses) that are provided to the Limited Partner relating to such tax treatment. For this purpose,“tax treatment” is the purported or claimed United States federal income tax treatment of a transaction and “tax structure” is limited toany fact that may be relevant to understanding the purported or claimed United States federal income tax treatment of a transaction. Forthis purpose, the names of the Partnership, the Partners, their affiliates, the names of their partners, members or equity holders and therepresentatives, agents and tax advisors of any of the foregoing are not items of tax structure.Section 9.9 Not for Benefit of CreditorsThe provisions of this Agreement are intended only for the regulation of relations among Partners and between Partners andformer or prospective Partners and the Partnership. This Agreement is not intended for the benefit of any Person who is not a Partner,and no rights are intended to be granted to any other Person who is not a Partner under this Agreement.Section 9.10 ReportsAs soon as practicable after the end of each taxable year, the General Partner shall furnish to each Limited Partner (a) suchinformation as may be required to enable each Limited Partner to properly report for United States federal and state income taxpurposes his distributive share of each Partnership item of income, gain, loss, deduction or credit for such year, and (b) a statement ofthe total amount of Operating Profit or Operating Loss for such year and a reconciliation of any difference between (i) such OperatingProfit or Operating Loss and (ii) the aggregate net profits or net losses allocated by the Funds to the Partnership for such year (otherthan any difference attributable to the aggregate Capital Profit or Capital Loss allocated by the Funds to the Partnership for such year).Section 9.11 FilingsThe Partners hereby agree to take any measures necessary (or, if applicable, refrain from any action) to ensure that thePartnership is treated as a partnership for United States federal, state and local income tax purposes.Section 9.12Headings, Gender, Etc.The section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect themeaning or interpretation of any provisions hereof. As used herein, masculine pronouns shall include the feminine and neuter, and the singular shall be deemed to include the plural.Signature Page FollowsIN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as a deed on the day and year firstabove written.General Partner:APOLLO EPF CAPITAL MANAGEMENT, LIMITEDBy: /s/ Wendy F. Dulman Name: Wendy F. DulmanTitle: Vice Presidentin the presence of: /s/ Patricia A. McCabe Name: Patricia A. McCabeLimited Partners:APH HOLDINGS (DC), L.P.By: Apollo Principal Holdings IV GP, Ltd.,its general partnerBy: /s/ Wendy F. Dulman Name: Wendy F. DulmanTitle: Vice Presidentin the presence of: /s/ Patricia A. McCabe Name: Patricia A. McCabeEPF II TEAM CARRY PLAN, L.P.By: Apollo EPF II Capital Management, LLC,its general partnerBy: Apollo Principal Holdings IV, L.P.,its sole memberBy: Apollo Principal Holdings IV GP, Ltd.,its general partnerBy: /s/ Wendy F. Dulman Name: Wendy F. DulmanTitle: Vice Presidentin the presence of: /s/ Patricia A. McCabe Name: Patricia A. McCabeLAPITHUS EPF II TEAM CARRY PLAN, L.P.By: Apollo EPF II Capital Management, LLC,its general partner By: Apollo Principal Holdings IV, L.P.,its sole memberBy: Apollo Principal Holdings IV GP, Ltd.,its general partnerBy: /s/ Wendy F. Dulman Name: Wendy F. DulmanTitle: Vice Presidentin the presence of: /s/ Patricia A. McCabe Name: Patricia A. McCabe CONFIDENTIAL & PROPRIETARY This limited partnership is a limited partner of certain entities that earn “carried interest” on profits from various Credit funds. APOLLO CIP PARTNER POOL, L.P. Amended and RestatedAgreement of Exempted Limited Partnership Dated as of December 18, 2014 TABLE OF CONTENTSPageARTICLE1DEFINITIONS 1Section 1.1Definitions; Interpretation 1ARTICLE2FORMATION AND ORGANIZATION 8Section 2.1Continuation 8Section 2.2Name 8Section 2.3Organizational Certificates and Other Filings 9Section 2.4Offices 9Section 2.5Term of Partnership 9Section 2.6Purpose of the Partnership 10Section 2.7Actions by Partnership 10Section 2.8Admission of Limited Partners 10Section 2.9Withdrawal of Initial Limited Partner 10ARTICLE3CAPITAL 11Section 3.1Contributions to Capital 11Section 3.2Rights of Partners in Capital 12Section 3.3Capital Accounts 12Section 3.4Allocation of Profit and Loss 13Section 3.5Tax Allocations 15Section 3.6Tax Treatment of Points 15-i- Section 3.7FATCA 16Section 3.8Reserves; Adjustments for Certain Future Events 17Section 3.9Finality and Binding Effect of General Partner’s Determinations 18ARTICLE4DISTRIBUTIONS 18Section 4.1Distributions 18Section 4.2Withholding of Certain Amounts 20Section 4.3Limitation on Distributions 20Section 4.4Distributions in Excess of Basis 21ARTICLE5MANAGEMENT 21Section 5.1Rights and Powers of the General Partner 21Section 5.2Delegation of Duties 22Section 5.3Transactions with Affiliates 22Section 5.4Expenses 23Section 5.5Rights of Limited Partners 23Section 5.6Other Activities of General Partner 23Section 5.7Duty of Care; Indemnification 23ARTICLE6ADMISSIONS, TRANSFERS AND WITHDRAWALS 25Section 6.1Admission of Additional Limited Partners; Effect on Points 25Section 6.2Admission of Additional General Partner 26Section 6.3Transfer of Interests of Limited Partners 26Section 6.4Withdrawal of Partners 27-ii- Section 6.5Pledges 28ARTICLE7ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERS 28Section 7.1Allocation of Points 28Section 7.2Retirement of Partner 30Section 7.3Effect of Retirement on Points 31ARTICLE8DISSOLUTION AND LIQUIDATION 31Section 8.1Dissolution and Liquidation of Partnership 31ARTICLE9GENERAL PROVISIONS 32Section 9.1Consistent Economic Treatment 32Section 9.2Amendment of Partnership Agreement and Co-Investors (A) PartnershipAgreements 32Section 9.3Special Power-of-Attorney 34Section 9.4Notices 35Section 9.5Agreement Binding Upon Successors and Assigns 35Section 9.6Merger, Consolidation, etc. 35Section 9.7Governing Law; Dispute Resolution 36Section 9.8Termination of Right of Action 37Section 9.9Not for Benefit of Creditors 37Section 9.10Reports 37Section 9.11Filings 38Section 9.12Counterparts 38-iii- Schedule I Initial List of Fund General Partners -iv- APOLLO CIP PARTNER POOL, L.P.AMENDED AND RESTATED AGREEMENT OF EXEMPTED LIMITED PARTNERSHIPAMENDED AND RESTATED AGREEMENT OF EXEMPTED LIMITED PARTNERSHIP of APOLLO CIPPARTNER POOL, L.P., a Cayman Islands exempted limited partnership (the “Partnership”), dated as of December __, 2014, by andamong Apollo CIP GenPar, Ltd., a Cayman Islands exempted company, as the sole general partner (in such capacity, the “GeneralPartner”), the Initial Limited Partner (as defined below), and the other Persons (as defined below) whose names are recorded from timeto time as limited partners of the Partnership in the Register of Partners (as defined below).R E C I T A L S :A. The Partnership was registered by the General Partner as an exempted limited partnership in the Cayman Islandspursuant to the Partnership Law on October 30, 2014, by the filing of a Section 9 Statement (as defined below) with the Registrar (asdefined below) pursuant to the Partnership Law (as defined below), and since its formation has been governed by the OriginalAgreement (as defined below).B. The General Partner and the Initial Limited Partner entered into an Initial Exempted Limited PartnershipAgreement of the Partnership, dated October 29, 2014 (the “Original Agreement”).C. The parties hereto desire to amend and restate the Original Agreement in its entirety to: (i) reflect the admission tothe Partnership of those Persons (as defined below) who are listed on the Register of Partners as limited partners of the Partnership;(ii) effect the withdrawal of the Initial Limited Partner; and (iii) reflect the modifications set forth herein.NOW, THEREFORE, the parties hereby agree to amend and restate the Original Agreement in its entirety to read asfollows: Article 1 DEFINITIONSSection 1.1 Definitions; Interpretation(a) Capitalized terms used but not otherwise defined herein have the following meanings:“Affiliate” means with respect to any Person any other Person directly or indirectly controlling, controlled by or undercommon control with such Person. Except as the context otherwise requires, the term “Affiliate” in relation to AGM includes eachcollective investment fund and other client account sponsored or managed by AGM or its affiliated asset management entities, but, ineach case, does not include Portfolio Companies (except with respect to Bad Acts).“AGM” means Apollo Global Management, LLC, a Delaware limited liability company.“Agreement” means this Amended and Restated Agreement of Exempted Limited Partnership, as amended orsupplemented from time to time.“APH” means, as the context requires, any or all of (i) APH Holdings (DC), L.P., (ii) APH Holdings (FC), L.P.,and/or (iii) APH Holdings, L.P., each a Cayman Islands exempted limited partnership.“Award Letter” means, with respect to any Limited Partner, the letter agreement between the Partnership and suchLimited Partner setting forth (i) such Limited Partner’s Points, (ii) the formula applied to calculate the Holdback Amount with respectto such Limited Partner, (iii) any restrictive covenants with respect to such Limited Partner, (iv) the definition of “Bad Act,” (v) thedefinition of “Designated Act,” and (vi) any other terms applicable to such Limited Partner.“Bad Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Book-Tax Difference” means the difference between the Carrying Value of a Partnership asset and its adjusted taxbasis for United States federal income tax purposes, as determined at the time of any of the events described in the definition ofCarrying Value, which for purposes of this Agreement shall include any accrued income in respect of securities contributed to or held(directly or indirectly) by the Partnership as of the date of any such event. The General Partner shall maintain an account in the name ofeach Limited Partner that reflects such Limited Partner’s share of any Book-Tax Difference.“Capital Account” means with respect to each Partner the capital account established and maintained on behalf of suchPartner as described in Section 3.3.“Carried Interest Revenues” means any carried interest, incentive allocations, performance allocations or similarperformance-based compensation earned by the Fund General Partners from the applicable Funds.“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for United States federalincome tax purposes, except that the Carrying Values of all Partnership2 assets shall be adjusted to equal their respective fair market values (as determined by the General Partner), in accordance with the rulesset forth in Treasury Regulations section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, immediately prior to: (i) the date ofthe acquisition of any interests in the Partnership by any new Partner or of any additional interests by any existing Partner in exchangefor more than a de minimis capital contribution; (ii) the date of the distribution of more than a de minimis amount of any Partnershipasset to a Partner, including cash as consideration for an interest in the Partnership; (iii) the date of the grant of more than a de minimisprofits interest in the Partnership as consideration for the provision of services to or for the benefit of the Partnership by an existingPartner, or by a new Partner acting in his capacity as a Partner or in anticipation of becoming a Partner; or (iv) the liquidation of thePartnership within the meaning of Treasury Regulations section 1.704-l(b)(2)(ii)(g); provided, that any adjustment pursuant to clauses(i), (ii) and (iii) above shall be made only if the General Partner reasonably determines that such adjustments are necessary orappropriate to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to anyPartner shall be adjusted immediately prior to such distribution to equal its fair market value (as determined by the General Partner).The Carrying Value of any asset contributed by a Partner to the Partnership shall be the fair market value (as determined by theGeneral Partner) of the asset at the date of its contribution.“Catch Up Amount” means the product derived by multiplying (i) the amount of any Book-Tax Difference arising onthe admission to the Partnership of a Newly-Admitted Limited Partner or a reallocation of Points described in Section 4.1(f)(ii) by(ii) the percentage derived by dividing the number of Points issued to the Newly-Admitted Limited Partner or reallocated to theapplicable Limited Partner as described in Section 4.1(f)(ii), by the aggregate number of Points on the date the Newly-AdmittedLimited Partner is admitted to the Partnership or the date of the applicable reallocation of Points pursuant to this Agreement. TheGeneral Partner shall maintain an account in the name of each Newly-Admitted Limited Partner (and any Limited Partner receiving areallocation of Points in respect of which Section 4.1(f)(ii) applies) that reflects such Limited Partner’s Catch Up Amount, which shallbe adjusted as necessary to reflect any subsequent reduction in such Book-Tax Difference corresponding to any subsequent negativeadjustments to the Carrying Value of the Partnership’s assets that relate to such Book-Tax Difference, and which may be furtheradjusted to the extent the General Partner determines in its sole discretion is necessary to cause the Catch Up Amount to be equal to theamount necessary to provide such Limited Partner with a requisite share of Partnership capital based on such Limited Partner’s Pointsin accordance with the terms of this Agreement and such Limited Partner’s Award Letter.“Clawback Payment” means any payment required to be made by the Partnership to any Fund General Partner inrespect of any “general partner giveback” or similar obligation of such Fund General Partner pursuant to the Fund LP Agreement ofthe applicable Fund, but shall not include any Partner Giveback Payment.“Code” means the United States Internal Revenue Code of 1986, as amended and as hereafter amended, or anysuccessor law.3 “Co-Investors (A) Entity” means an investment vehicle formed by AGM or any of its Affiliates to facilitate theinvestment in any Fund by employees of AGM or its Affiliates and their Related Parties.“Co-Investors (A) Partnership Agreement” means the limited partnership agreement of any of Co-Investors (A) Entity,as in effect from time to time.“Covered Person” has the meaning set forth in Section 5.7(a).“Credit Business” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Designated Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Disability” has the meaning ascribed to that term in the Apollo Global Management LLC 2007 Omnibus EquityIncentive Plan.“FATCA” means: (i) Sections 1471 to 1474 of the Code, and any associated legislation, regulations or guidance, orsimilar legislation, regulations or guidance enacted in any jurisdiction which seeks to implement similar tax reporting and/orwithholding tax regimes; (ii) any intergovernmental agreement, treaty, regulation, guidance or any other agreement between theCayman Islands (or any Cayman Islands Governmental Authority) and the U.S., the U.K. or any other jurisdiction (including anyGovernment Authorities in such jurisdiction), entered into in order to comply with, facilitate, supplement or implement the legislation,regulations or guidance described in clause (i); and (iii) any legislation, regulations or guidance in the Cayman Islands that give effectto the matters outlined in the preceding clauses.“Final Adjudication” has the meaning set forth in Section 5.7(a).“Fiscal Year” means, with respect to a year, the period commencing on January 1 of such year and ending onDecember 31 of such year (or on the date of a final distribution pursuant to Section 8.1(a)), unless the General Partner shall electanother fiscal year for the Partnership which is a permissible taxable year under the Code.“Founding Partners” means Leon Black, Joshua Harris and Marc Rowan.“Fund” means any pooled investment vehicle or managed account advised or managed by Affiliates of the GeneralPartner in the AGM credit business and each “Parallel Fund” of such Fund within the meaning of the Fund LP Agreement of suchFund. Such term also includes each alternative investment vehicle created by a Fund and/or any such Parallel Fund, to the extent thecontext so requires.“Fund General Partner” means the Affiliate of AGM that acts in the capacity of the general partner, managingmember, manager or similar Person of any Fund pursuant to the Fund LP Agreement of such Fund.4 “Fund GP Agreement” means the constituent agreement, certificate or other document governing a Fund GeneralPartner, as in effect from time to time.“Fund LP Agreement” means the limited partnership agreement of any Fund, as in effect from time to time, and, to theextent the context so requires, the corresponding constituent agreement, certificate or other document governing each such Fund.“General Partner” has the meaning set forth in the preamble and includes any successor to the business of the GeneralPartner in its capacity as general partner of the Partnership.“Giveback/Clawback Share” means, as of the time of determination, with respect to any Limited Partner and anyPartner Giveback Payment or Clawback Payment, as the case may be, a percentage of such Partner Giveback Payment or ClawbackPayment, as the case may be, equal to the quotient (expressed as a percentage) of (a) the cumulative amount of Operating Profitattributable to the Fund in respect of which the Partner Giveback Payment or Clawback Payment is required to be made that has beendistributed to such Limited Partner, divided by (b) the cumulative amount so distributed to all Limited Partners with respect to suchOperating Profit attributable to such Fund.“Governmental Authority” means: (i) any government or political subdivision thereof, whether non‑U.S. or U.S.,national, state, county, municipal or regional; (ii) any agency or instrumentality of any such government, political subdivision or othergovernment entity (including any central bank or comparable agency); and (iii) any court.“Holdback Amount” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Home Address” has the meaning set forth in Section 9.4.“Initial Limited Partner” means Joseph D. Glatt, solely in his capacity as the Initial Limited Partner.“Intermediate Pooling Vehicles” means Apollo CIP Hedge Funds, L.P., Apollo CIP Structured Credit, L.P., ApolloCIP European SMAs & CLOs, L.P., Apollo CIP Global SMAs, L.P. and Apollo CIP US SMAs, L.P., each a Cayman Islandsexempted limited partnership.“JAMS” has the meaning set forth in Section 9.7(b).“Limited Partner” means any Person admitted as a limited partner to the Partnership in accordance with thisAgreement, including any Retired Partner, until such Person withdraws entirely as a limited partner of the Partnership, in his or hercapacity as a limited partner of the Partnership. All references herein to a Limited Partner shall be construed as referring collectively tosuch Limited Partner and to each Related Party of such Limited Partner (and to each Person of which such Limited Partner is a RelatedParty) that also is or that previously was a Limited Partner, except to the extent that the General Partner determines that the contextdoes not require such interpretation as between such Limited Partner and his Related Parties. For purposes of the5 Partnership Law, all Limited Partners shall be considered a single class or group and only those Partners who are recorded from time totime on the Register of Partners shall be deemed to be a Limited Partner of the Partnership.“Losses” has the meaning set forth in Section 5.7(a).“Newly-Admitted Limited Partner” has the meaning set forth in Section 4.1(f)(i).“Operating Loss” means, with respect to any Fiscal Year, any net loss of the Partnership. To the extent derived fromany Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with the same accounting policies,principles and procedures applicable to the determination by the relevant Fund, and any items not derived from a Fund shall bedetermined in accordance with the accounting policies, principles and procedures used by the Partnership for U.S. federal income taxpurposes. Operating Loss shall not include any loss attributable to a Book-Tax Difference.“Operating Profit” means, with respect to any Fiscal Year, any net income of the Partnership. To the extent derivedfrom any Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with the same accountingpolicies, principles and procedures applicable to the determination by the relevant Fund, and any items not derived from a Fund shallbe determined in accordance with the accounting policies, principles and procedures used by the Partnership for U.S. federal incometax purposes. Operating Profit shall not include any income or gain attributable to a Book-Tax Difference.“Original Agreement” has the meaning set forth in Recital B.“Other Agreements” has the meaning set forth in Section 9.2(b).“Partner” means the General Partner or any of the Limited Partners, and “Partners” means the General Partner and allof the Limited Partners.“Partner Giveback Payment” means any payment required to be made by the Partnership to any Fund General Partnerin respect of any “partner giveback” or similar obligation of such Fund General Partner pursuant to the Fund LP Agreement of theapplicable Fund, but shall not include any Clawback Payment.“Partnership” has the meaning set forth in the preamble.“Partnership Law” means the Cayman Islands Exempted Limited Partnership Law (as amended), as amended fromtime to time and any successor law thereto or re-enactment thereof.“Person” means any individual, partnership (whether or not having separate legal personality), corporation, limitedliability company, joint venture, joint stock company, unincorporated organization or association, trust (including the trustees thereof,in their capacity as such), government, governmental agency, political subdivision of any government, or other entity.6 “Point” means a share of Operating Profit or Operating Loss. The aggregate number of Points available for assignmentto all Partners shall be set forth in the books and records of the Partnership.“Portfolio Investment” or “Investment” or any similar term has the meaning ascribed to that term in each of the FundLP Agreements.“Public Vehicles” means (i) Apollo Investment Corporation (NASDAQ: AINV); (ii) Apollo Commercial Real EstateFinance, Inc. (NYSE: ARI); (iii) Apollo Residential Mortgage, Inc. (NYSE: AMTG); and (iv) Apollo Tactical Income Fund Inc.(NYSE: AIF).“Reference Rate” means the interest rate announced publicly from time to time by JPMorgan Chase Bank inNew York, New York as such bank’s prime rate.“Register of Partners” means a register of partners to be maintained by the General Partner showing the followinginformation with respect to each Partner: name, address, date of admission and retirement and required capital contribution (if any).“Registrar” means the Cayman Islands Registrar of Exempted Limited Partnerships appointed pursuant to Section 8 ofthe Partnership Law.“Related Party” means, with respect to any Limited Partner:(a) any spouse, child, parent or other lineal descendant of such Limited Partner or such Limited Partner’sparent, or any natural Person who occupies the same principal residence as such Limited Partner;(b) any trust or estate in which such Limited Partner and any Related Party or Related Parties (other than suchtrust or estate) collectively have more than 80% of the beneficial interests (excluding contingent and charitable interests);(c) any entity of which such Limited Partner and any Related Party or Related Parties (other than such entity)collectively are beneficial owners of more than 80% of the equity interest; and(d) any Person with respect to whom such Limited Partner is a Related Party.“Required Commitment” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Retired Partner” means any Limited Partner who has become a retired partner in accordance with or pursuant toSection 7.2.“Retirement Date” means, with respect to any Limited Partner, the date as of which such Person becomes a RetiredPartner.7 “Retirement Withdrawal Proceeds” has the meaning set forth in Section 7.3(b).“Safe Harbor” means the election described in the Safe Harbor Regulation, pursuant to which a partnership and all ofits partners may elect to treat the fair market value of a partnership interest that is transferred in connection with the performance ofservices as being equal to the liquidation value of that interest.“Safe Harbor Election” means the election by a partnership and its partners to apply the Safe Harbor, as described inthe Safe Harbor Regulation and IRS Notice 2005-43, issued on May 20, 2005.“Safe Harbor Regulation” means Proposed Regulations Section 1.83-3(l) issued on May 24, 2005.“Section 9 Statement” means the statement prepared under Section 9 of the Partnership Law filed with the Registrar inaccordance with the Partnership Law.“Section 10 Statement” means the statement prepared under Section 10 of the Partnership Law filed with the Registrarin accordance with the Partnership Law.“Team Member” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Transfer” means any direct or indirect sale, exchange, transfer, assignment or other disposition by a Partner of any orall of his or her interest in the Partnership or an economic benefit thereof (whether with respect to, for example, economic rights only orall the rights associated with the interest) to another Person, whether voluntary or involuntary.“Winding-Up Event” has the meaning set forth in Section 2.5(a).(b) The headings in this Agreement are inserted for convenience of reference only and shall not affect the interpretation ofthis Agreement. As used herein, masculine pronouns shall include the feminine and neuter, neuter pronouns shall include the masculineand the feminine, and the singular shall be deemed to include the plural. The use of the word “including” herein shall not be consideredto limit the provision which it modifies but instead shall mean “including, without limitation.”(a) As used in this Agreement, the phrases “any provision of this Agreement,” “the provisions of thisAgreement” and derivative or similar phrases, and the terms “hereof,” “herein,” “hereby” and derivative or similar words, shall meanor refer only to any express provision actually written in this Agreement and not to any provision of the Partnership Law that may haveapplication to the Partnership.ARTICLE 2 FORMATION AND ORGANIZATIONSection 2.1 Continuation8 The parties hereto agree to continue the Partnership as an exempted limited partnership pursuant to the Partnership Lawon the terms of this Agreement.Section 2.2 NameThe name of the Partnership continued hereby shall be “Apollo CIP Partner Pool, L.P.” The General Partner isauthorized to make any variations in the Partnership’s name which the General Partner may deem necessary or advisable to complywith the laws of any jurisdiction in which the Partnership may operate (other than any variation which references the name of anyLimited Partner without the prior consent of such Limited Partner); provided that such name shall contain the words “LimitedPartnership”, the abbreviation “L.P.” or the designation “LP” as required by the Partnership Law. The General Partner shall file aSection 10 Statement in accordance with the Partnership Law with the Registrar and provide written notice to each Limited Partner ofany change in the name of the Partnership.Section 2.3 Organizational Certificates and Other FilingsIf requested by the General Partner, the Limited Partners shall immediately execute all certificates and other documents,and any amendments or renewals of such certificates and other documents as thereafter required, consistent with the terms of thisAgreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate tocomply with all requirements for (a) the continuation and operation of the Partnership as an exempted limited partnership under thelaws of the Cayman Islands, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, orpartnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) allother filings required to be made by the Partnership.Section 2.4 Offices(a) The Partnership shall maintain its principal office, and may maintain one or more additional offices, at suchplace or places as the General Partner may from time to time determine.(b) The General Partner shall arrange for the Partnership to have and maintain in the Cayman Islands, at theexpense of the Partnership, a registered office and registered agent for service of process on the Partnership as required by thePartnership Law.Section 2.5 Term of Partnership(a) The term of the Partnership commenced at the time of its registration as an exempted limited partnershipunder the Partnership Law and shall continue until the first to occur of any of the following events (each a “Winding-Up Event”):(i) the dissolution (without continuation) of all of the Funds; or(ii) at any time there are no Limited Partners; or9 (iii) upon any event that results in the General Partner ceasing to be a general partner of the Partnershippursuant to the Partnership Law, provided that the Partnership shall not be dissolved and required to be wound up inconnection with any such event if (A) at the time of the occurrence of such event there is at least one remaining qualifyinggeneral partner of the Partnership who is hereby authorized to and does carry on the business of the Partnership, or (B) within90 days after notice of the occurrence of such event, a majority of the Limited Partners agree in writing or vote to continue thebusiness of the Partnership and to the appointment, effective from the date of such event, if required, of one or more additionalgeneral partners of the Partnership; or(iv) an order of any court of the Cayman Islands, pursuant to the Partnership Law, for the winding upand dissolution of the Partnership.(b) The parties agree that irreparable damage would be done to the Partnership and reputation of the Partners ifany Limited Partner should bring an action for the winding up of the Partnership. Care has been taken in this Agreement to provide forfair and just payment in liquidation of the interests of all Partners. Accordingly, to the fullest extent permitted by law, each LimitedPartner hereby waives and renounces his right to seek a decree of dissolution or to seek the appointment of a liquidator for thePartnership, except as expressly provided herein.Section 2.6 Purpose of the PartnershipThe principal purpose of the Partnership is to hold a direct or indirect interest in certain Fund General Partners in orderto derive cash or other revenues therefrom that are attributable to Carried Interest Revenues received by such Fund General Partnersfrom Funds and to undertake such related and incidental activities and execute and deliver such related documents necessary orincidental thereto. As of the date hereof, the Partnership holds interests, directly or indirectly, in the Fund General Partners set forth onSchedule I attached hereto.Section 2.7 Actions by PartnershipThe Partnership may execute, deliver and perform, and the General Partner may execute and deliver, all contracts,agreements and other undertakings, and engage in all activities and transactions as may in the opinion of the General Partner benecessary or advisable to carry out the objects and purposes of the Partnership, without the approval or vote of any Limited Partner.Section 2.8 Admission of Limited PartnersOn the date hereof, the Persons whose names are set forth in the Register of Partners under the caption “LimitedPartners” shall be admitted to the Partnership or shall continue, as the case may be, as Limited Partners of the Partnership upon theirexecution of this Agreement or a deed of adherence to this Agreement, or such other instrument evidencing, to the satisfaction of theGeneral Partner, such Limited Partner’s intent to become a Limited Partner of the Partnership and adhere to and be bound by theprovisions of this Agreement. The General Partner agrees to continue as the General Partner of the Partnership upon its execution ofthis Agreement. Additional Limited Partners may be admitted to the Partnership in accordance with Section 6.1.10 Section 2.9 Withdrawal of Initial Limited PartnerImmediately following the admission of the Limited Partners to the Partnership pursuant to Section 2.8, the InitialLimited Partner shall (i) receive a return of its original capital contribution, if any, (ii) withdraw as a partner of the Partnership, and(iii) have no further right, interest or obligation of any kind whatsoever as a partner in the Partnership.ARTICLE 3 CAPITALSection 3.1 Contributions to Capital(a) No Partner shall be obligated, nor shall any Partner have any right, to make any contribution to the capitalof the Partnership, except as may be agreed from time to time between such Partner and the General Partner (including in an AwardLetter) and other than as specified in this Section 3.1. No Limited Partner shall be obligated to restore any deficit balance in his CapitalAccount.(b) To the extent, if any, that at the time of the Final Distribution (as defined in each of the Fund LPAgreements) or at any time prior thereto (whether pursuant to the provisions of the applicable Fund LP Agreement, upon thedetermination of the applicable Fund General Partner or otherwise), it is determined that the Partnership, as a holder, directly orindirectly, of equity interests in a Fund General Partner, is required to make any Clawback Payment with respect to any of the Funds,each Limited Partner shall be required to participate in such payment and contribute to the Partnership, for ultimate distribution to thelimited partners of the relevant Fund, an amount equal to such Limited Partner’s Giveback/Clawback Share of any Clawback Payment,but not in any event, together with any Partner Giveback Payments made by such Limited Partner with respect to such Fund, in excessof the cumulative amount theretofore distributed to such Limited Partner with respect to the Operating Profit attributable to such Fund.For purposes of determining each Limited Partner’s required contribution, each Limited Partner’s allocable share of any EscrowAccount (as defined in the Fund LP Agreements), to the extent applied to satisfy any portion of a Clawback Payment, shall be treatedas if it had been distributed to such Limited Partner and re-contributed by such Limited Partner pursuant to this Section 3.1(b) at thetime of such application.(c) To the extent, if any, that it is determined that the Partnership, as a holder, directly or indirectly, of equityinterests in a Fund General Partner, is required to make any Partner Giveback Payment with respect to any of the Funds, each LimitedPartner shall be required to participate in such payment and contribute to the Partnership, for ultimate contribution to the relevant Fund,an amount equal to such Limited Partner’s Giveback/Clawback Share of any Partner Giveback Payment, but not in any event, togetherwith any Clawback Payments made by such Limited Partner with respect to such Fund, in excess of the cumulative amount theretoforedistributed to such Limited Partner with respect to the Operating Profit attributable to such Fund.(d) For the avoidance of doubt, the aggregate Clawback Payments and Partner Giveback Payments required tobe made by the Limited Partners hereunder with respect to11 any Fund shall not exceed the aggregate amount of distributions actually received by the Partnership from the applicable Fund GeneralPartner that: (i) in the case of Clawback Payments, are attributable to Carried Interest Revenues; and (ii) in the case of PartnerGiveback Payments, are attributable to Carried Interest Revenues and any other distributions that the Partnership receives from suchFund General Partner.Section 3.2 Rights of Partners in Capital(a) No Partner shall be entitled to interest on his capital contributions to the Partnership.(b) No Partner shall have the right to distributions or the return of any contribution to the capital of thePartnership except (i) for distributions in accordance with Section 4.1 or (ii) upon dissolution of the Partnership. The entitlement to anysuch return at such time shall be limited to the value of the Capital Account of the Partner. The General Partner shall not be liable forthe return of any such amounts.Section 3.3 Capital Accounts(c) The Partnership shall maintain for each Partner a separate Capital Account in accordance with theprovisions of Treas. Reg. Section 1.704-1(b)(2)(iv) and, to the extent consistent with such provisions, the terms of this Agreement.(d) Each Partner’s Capital Account shall have an initial balance of zero.(e) Each Partner’s Capital Account shall be increased by the sum of:(i) the amount of cash and the net value of any securities or other property constituting additionalcontributions by such Partner to the capital of the Partnership permitted pursuant to Section 3.1; plus(ii) the portion of any Operating Profit allocated to such Partner’s Capital Account pursuant to Section3.4; plus(iii) such Partner’s allocable share of any decreases in any reserves recorded by the Partnershippursuant to Section 3.8 and any receipts determined to be applicable to a prior period pursuant to Section 3.8(b), to the extentthe General Partner determines that, pursuant to any provision of this Agreement, such item is to be credited to such Partner’sCapital Account on a basis which is not in accordance with the current respective Points of all Partners; plus(iv) such Partner’s allocable share of any increase in Book-Tax Difference.(f) Each Partner’s Capital Account shall be reduced by the sum of (without duplication):12 (i) the portion of any Operating Loss allocated to such Partner’s Capital Account pursuant to Section3.4; plus(ii) the amount of any cash and the net value of any property distributed to such Partner pursuant toSection 4.1 or Section 8.1, including any amount deducted pursuant to Section 4.2 or Section 5.4 from any such amountdistributed; plus(iii) any withholding taxes or other items payable by the Partnership and allocated to such Partnerpursuant to Section 5.4(b), any increases in any reserves recorded by the Partnership pursuant to Section 3.8 and any paymentsdetermined to be applicable to a prior period pursuant to Section 3.8(b), to the extent the General Partner determines that,pursuant to any provision of this Agreement, such item is to be charged to such Partner’s Capital Account on a basis which isnot in accordance with the current respective Points of all Partners; plus(iv) such Partner’s allocable share of any decrease in Book-Tax Difference.(g) If securities and/or other property are to be distributed in kind to the Partners or Retired Partners, includingin connection with a liquidation pursuant to Section 8.1, they shall first be written up or down to their fair market value as of the date ofsuch distribution, thus creating gain or loss for the Partnership, and the value of the securities and/or other property received by eachPartner and each Retired Partner as so determined shall be debited against such Person’s Capital Account at the time of distribution.Section 3.4 Allocation of Profit and Loss(c) Operating Profit or Operating Loss for any Fiscal Year shall be allocated to the Partners so as to produceCapital Accounts for the Partners (such Capital Accounts computed after taking into account any other Operating Profit or OperatingLoss for the Fiscal Year in which such event occurred and all distributions pursuant to Article 4 with respect to such Fiscal Year andafter adding back each Partner’s share, if any, of Partner Nonrecourse Debt Minimum Gain, as defined in Treasury RegulationsSections 1.704 - 2(b)(2) and 1.704 - 2(i), or Partnership Minimum Gain, as defined in Treasury Regulations Sections 1.704 - 2(b)(2)and 1.704 - 2(d)) such that a distribution of an amount of cash equal to such Capital Account balances in accordance with such CapitalAccount balances would be in the amounts, sequence and priority set forth in Article 4; provided, however, that the General Partnermay allocate Operating Profit and Operating Loss and items thereof in such other manner as it determines in its sole discretion to beappropriate to reflect the Partners’ interests in the Partnership. Income, gains and loss associated with a Book-Tax Difference shall beallocated to the Limited Partners that are entitled to a share of such Book-Tax Difference consistent with the account maintained by theGeneral Partner pursuant to the definition of “Book-Tax Difference” and in the manner in which cash or property associated with suchBook-Tax Difference is required to be distributed pursuant to the proviso of Section 4.1(a).(d) To the extent that the allocations of Operating Loss contemplated by Section 3.4(a) would cause theCapital Account of any Limited Partner to be less than zero, such Operating Loss shall to that extent instead be allocated to and debitedagainst the Capital Account of the General Partner (or, at the direction of the General Partner, to those Limited Partners who are limitedpartners of the General Partner in proportion to their limited partnership interests in the General Partner). Following any suchadjustment pursuant to this Section 3.4(b) with respect to any Limited Partner, any Operating Profit for any subsequent Fiscal Yearwhich would otherwise be credited to the Capital Account of such Limited Partner pursuant to Section 3.4(a) shall instead be creditedto the Capital Account of the General Partner (or relevant Limited Partners) until the cumulative amounts so credited to the CapitalAccount of the General Partner (or relevant Limited Partners) with respect to such Limited Partner pursuant to Section 3.4(b) is equalto the cumulative amount debited against the Capital Account of the General Partner (or relevant Limited Partners) with respect to suchLimited Partner pursuant to Section 3.4(b).(e) Each Limited Partner’s rights and entitlements as a Limited Partner are limited to the rights to receiveallocations and distributions of Operating Profit expressly conferred by this Agreement and any Other Agreement entered into pursuantto Section 9.2(b) and the other rights expressly conferred by this Agreement and any such Other Agreement or required by thePartnership Law, and a Limited Partner shall not be entitled to any other allocations, distributions or payments in respect of his interest,or to have or exercise any other rights, privileges or powers.(f) For purposes of Section 3.4(a), the General Partner may determine, in its sole discretion, to allocate anyincrease in value of the Partnership’s assets pursuant to the definition of “Carrying Value” solely to the Limited Partners that areentitled to a Catch Up Amount (pro rata based on any method the General Partner determines is reasonable), or to specially allocateOperating Profit to such Limited Partners, or a combination thereof, until such Limited Partners have received an allocation equal to theCatch Up Amount. (g) Operating Profit and Operating Loss shall be determined on a daily, monthly or other basis, as reasonablyapproved by the General Partner using any permissible method under Section 706 and the Treasury Regulations thereunder. If anyLimited Partner shall be admitted to the Partnership, retire from the Partnership or assigned additional Points at different times duringthe Partnership’s Fiscal Year, Operating Profit or Operating Loss shall be allocated among the Limited Partners on such proper basis asthe General Partner shall determine consistent with the applicable requirements under Section 706 of the Code.(h) In the event that forfeited Points held by Mr. Zelter pursuant to Section 7.1(e) have not been reallocatedprior to the end of the Fiscal Year in which the forfeiture of such Points occurs, and such Points are reallocated in a subsequent FiscalYear to a Limited Partner other than Mr. Zelter, the General Partner in its sole discretion may determine (i) to specially allocateOperating Profit for such subsequent Fiscal Year (or Years) to such transferee Limited Partner (in lieu of a Catch Up Amount) in suchamount as the General Partner reasonably determines would have been allocable on such forfeited Points if such Points had been heldby such transferee Limited Partner in the Fiscal Year in which the forfeiture occurred (from the date of such forfeiture), and (ii)correspondingly to reduce by a similar amount the Operating Profit (or increase the Operating Loss) otherwise allocable to Mr. Zelter,or otherwise allocable to Mr. Zelter and any of the other Limited Partners as the General Partner may determine in its sole discretion,pursuant to this Section 3.4 for any such subsequent Fiscal Years.(i) If points have been forfeited to the Partnership by an Intermediate Pooling Vehicle pursuant to the terms ofthe agreement of limited partnership of such Intermediate Pooling Vehicle (for example, pursuant to Section 7.1(e) of the LimitedPartnership Agreement of Apollo CIP Hedge Funds, L.P.), and such points have not been reallocated to a limited partner in suchIntermediate Pooling Vehicle prior to the end of the Fiscal Year in which such forfeiture occurs, the General Partner in its solediscretion may determine to specially allocate to Mr. Zelter (or his successor as head of the Credit Business) any Operating Profit orOperating Loss that the General Partner determines is associated with such forfeited points held by the Partnership. Following any suchspecial allocation to Mr. Zelter pursuant to this Section 3.4(g), any reduction in the allocation of Operating Profit (or increase inOperating Loss) to the Partnership from the Intermediate Pooling Vehicle in one or more subsequent Fiscal Years that the GeneralPartner determines is attributable to the reallocation of the forfeited points in such subsequent Fiscal Year(s) may correspondinglyreduce the allocation of Operating Profit (or increase the allocation of Operating Loss) to Mr. Zelter until the General Partnerdetermines that the effects of any special allocation to Mr. Zelter pursuant to this Section 3.4(g) have been eliminated.Section 3.5 Tax Allocations(a) For United States federal, state and local income tax purposes, Partnership income, gain, loss, deduction orcredit (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations ofOperating Profit and Operating Loss pursuant to the provisions of Section 3.4 for such Fiscal Year; provided that any taxable incomeor loss associated with any Book-Tax Difference shall be allocated for tax purposes in accordance with the principles of Section 704(c)of the Code in any such manner (as is permitted under that Code Section and the Treasury Regulations promulgated thereunder) asdetermined by the General Partner in its sole discretion.(b) If any Partner or Partners are treated for United States federal income tax purposes as realizing ordinaryincome because of receiving interests in the Partnership (whether under Section 83 of the Code or under any similar provision of anylaw, rule or regulation) and the Partnership is entitled to any offsetting deduction (net of any income realized by the Partnership as aresult of such receipt), the Partnership’s net deduction shall be allocated to and among the Partners in such manner as to offset, asnearly as possible, the ordinary income realized by such Partner or Partners.Section 3.6 Tax Treatment of Points(a) The Partnership and each Partner agree to treat the Points as a “Profits Interest” with respect to thePartnership within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343. In accordance with Rev. Proc. 2001-43, 2001-2 C.B. 191, thePartnership shall treat a Partner holding Points as the owner of such Points from the date such Points are issued, and shall file its IRSform 1065, and issue appropriate Schedule K-1s to such Partner, allocating to such Partner its distributive share of all items of income,gain, loss, deduction and credit associated with such Points as if they were fully vested. Each such Partner agrees to take into accountsuch distributive share in computing its United States federal income tax liability for the entire period during which it holds the Points.Except as required pursuant to a “Determination” as defined in Section 1313(a) of the Code, none of the Partnership or any Partnershall claim a deduction (as wages, compensation or otherwise) for the fair market value of such Points issued to a Partner in respect ofthe Partnership, either at the time of grant of the Points, or at the time the Points become substantially vested. The undertakingscontained in this Section 3.6 shall be construed in accordance with Section 4 of Rev. Proc. 2001-43. The provisions of this Section 3.6shall apply regardless of whether or not the holder of Points files an election pursuant to Section 83(b) of the Code. This Section 3.6shall only apply to Points granted while Rev. Proc. 93-27, 1993-2 C.B. 343 and Rev. Proc. 2001-43, 2001-2 C.B. 191, remain ineffect.(b) The Partners agree that, in the event the Safe Harbor Regulation is finalized, the Partnership shall be authorized and directed to make the Safe Harbor Election, and the Partnership and each Partner (including any Person to whom aninterest in the Partnership is transferred in connection with the performance of services) agrees to comply with all requirements of theSafe Harbor with respect to all interests in the Partnership transferred in connection with the performance of services while the SafeHarbor Election remains effective. The General Partner shall be authorized to (and shall) prepare, execute, and file the Safe HarborElection. The General Partner shall cause the Partnership to make any allocations of items of income, gain, loss, deduction or expense(including forfeiture allocations) necessary or appropriate to effectuate and maintain the Safe Harbor Election.Section 3.7 FATCA(a) Each Limited Partner:(v) shall provide, in a timely manner, such information regarding the Limited Partner and its beneficialowners and such forms or documentation as may be requested from time to time by the General Partner or the Partnership toenable the Partnership to comply with the requirements and obligations imposed on it pursuant to FATCA;(vi) acknowledges that any such forms or documentation requested by the Partnership or its agentspursuant to clause (i), or any financial or account information with respect to the Limited Partner’s investment in thePartnership, may be disclosed to the Cayman Islands Tax Information Authority (or any other Cayman Islands GovernmentalAuthority which collects information in accordance with FATCA) and to any withholding agent where the provision of thatinformation is required by such agent to avoid the application of any withholding tax on any payments to the Partnership;(vii) shall waive, and/or shall cooperate with the Partnership to obtain a waiver of, the provisions ofany law which prohibits the disclosure by the Partnership, or by any of its agents, of the information or documentationrequested from the Limited Partner pursuant to clause (i), prohibits the reporting of financial or account information by thePartnership or its agents required pursuant to FATCA or otherwise prevents compliance by the Partnership with its obligationsunder FATCA;(viii) acknowledges that, if it provides information and documentation that is in anyway misleading, orit fails to provide the Partnership or its agents with the requested information and documentation necessary, in either case, tosatisfy the Partnership’s obligations under FATCA, the Partnership may (whether or not such action or inaction leads tocompliance failures by the Partnership, or a risk of the Partnership or its investors being subject to withholding tax or otherpenalties under FATCA) take any action and/or pursue all remedies at its disposal, including compulsory withdrawal of theLimited Partner, and may hold back from any withdrawal proceeds, or deduct from the Limited Partner’s Capital Account, anyliabilities, costs, expenses or taxes caused (directly or indirectly) by the Limited Partner’s action or inaction; and(ix) shall have no claim against the Partnership, or its agents, for any form of damages or liability as aresult of actions taken or remedies pursued by or on behalf of the Partnership in order to comply with FATCA.(b) The Limited Partner hereby indemnifies the General Partner and the Partnership and each of theirrespective partners, members, managers, officers, directors, employees and agents and holds them harmless from and against anyFATCA-related liability, action, proceeding, claim, demand, costs, damages, expenses (including legal expenses), penalties or taxeswhatsoever which such Person may incur as a result of any action or inaction (directly or indirectly) of such Limited Partner (or anyRelated Party) described in Section 3.7(a)(i) through (iv). This indemnification shall survive the Limited Partner’s death or dispositionof its interests in the Partnership.Section 3.8 Reserves; Adjustments for Certain Future Events(a) Appropriate reserves may be created, accrued and charged against the Operating Profit or Operating Lossfor contingent liabilities, if any, as of the date any such contingent liability becomes known to the General Partner or as of each otherdate as the General Partner deems appropriate, such reserves to be in the amounts which the General Partner deems necessary orappropriate. The General Partner may increase or reduce any such reserve from time to time by such amounts as the General Partnerdeems necessary or appropriate. The amount of any such reserve, or any increase or decrease therein, shall be proportionately chargedor credited, as appropriate, to the Capital Accounts of those Persons who are Partners at the time when such reserve is created,increased or decreased, as the case may be, in proportion to their respective Points at such time; provided that, if any individual reserveitem, as adjusted by any increase therein, exceeds the lesser of $500,000 or 1% of the aggregate Capital Account balances of all suchPartners, the amount of such reserve, increase or decrease shall instead be charged or credited to those Persons who were Partners atthe time, as determined by the General Partner, of the act or omission giving rise to the contingent liability for which the reserve itemwas established in proportion to their respective Points at that time. The amount of any such reserve charged against the CapitalAccount of a Partner shall reduce the distributions such Partner would otherwise be entitled to under Section 4.1 or Section 8.1 hereof;and the amount of any such reserve credited to the Capital Account of a Partner shall increase the distributions such Partner would otherwise be entitled to under Section 4.1 or Section 8.1 hereof(b) If at any time an amount is paid or received by the Partnership and such amount exceeds the lesser of$500,000 or 1% of the aggregate Capital Account balances of all Partners at the time of payment or receipt, and such amount was notaccrued or reserved for but would nevertheless, in accordance with the Partnership’s accounting practices, be treated as applicable toone or more prior periods, then such amount may be proportionately charged or credited by the General Partner, as appropriate, tothose Persons who were Partners during such prior period or periods, based on each such Partner’s Points for such applicable period.(c) If any amount is required by Section 3.8(a) or (b) to be credited to a Person who is no longer a Partner,such amount shall be paid to such Person in cash, with interest from the date on which the General Partner determines that such creditis required at the Reference Rate in effect on that date. Any amount required to be charged pursuant to Section 3.8(a) or (b) shall bedebited against the current balance in the Capital Account of the affected Partners. To the extent that the aggregate current CapitalAccount balances of such affected Partners are insufficient to cover the full amount of the required charge, the deficiency shall bedebited against the Capital Accounts of the other Partners in proportion to their respective Capital Account balances at such time;provided that each such other Partner shall be entitled to a preferential allocation, in proportion to and to the extent of such otherPartner’s share of any such deficiency, together with a carrying charge at a rate equal to the Reference Rate, of any Operating Profitthat would otherwise have been allocable after the date of such charge to the Capital Accounts of the affected Partners whose CapitalAccounts were insufficient to cover the full amount of the required charge. In no event shall a current or former Partner be obligated tosatisfy any amount required to be charged pursuant to Section 3.8(a) or (b) other than by means of a debit against such Partner’sCapital Account.Section 3.9 Finality and Binding Effect of General Partner’s DeterminationsAll matters concerning the determination, valuation and allocation among the Partners with respect to any profit or lossof the Partnership and any associated items of income, gain, deduction, loss and credit, pursuant to any provision of this Article 3,including any accounting procedures applicable thereto, shall be determined by the General Partner unless specifically and expresslyotherwise provided for by the provisions of this Agreement, and such determinations and allocations shall be final and binding on allthe Partners.ARTICLE 4 DISTRIBUTIONSSection 4.1 Distributions(c) The General Partner shall use reasonable efforts to cause the Partnership to distribute, on a quarterly basis,any available cash or property attributable to items included in the determination of Operating Profit and Book-Tax Difference, subjectto the provisions of the Fund LP Agreements relating to Final Distributions on the dissolution or termination of a Fund and subject tothe retention of such reserves as the General Partner considers appropriate for purposes of the prudent and efficient financial operationof the Partnership’s business including in accordance with Section 3.8. Any such distributions (before adjustment for HoldbackAmounts) shall be made to the Limited Partners: (i) in the case of closed-end Funds, in proportion to the respective Points of theLimited Partners, determined (1) in the case of any amount of cash or property received from any of the applicable Fund GeneralPartners that is attributable to the disposition of a Portfolio Investment by the applicable Fund, as the date of such disposition by suchFund, and (2) in any other case, as of the date of receipt of such cash or property by the Partnership, and (ii) in the case of open-endFunds, in proportion to the respective Points of the Limited Partners, determined as of the date the applicable open-end Fund hasallocated net income to the Partnership in respect of Carried Interest Revenues; provided, however, that any cash or other property thatthe General Partner determines is attributable to a Book-Tax Difference shall be distributed to the Limited Partners that are entitled to ashare of such Book-Tax Difference pursuant to the definition of “Book-Tax Difference,” with any such distribution to be in theproportion that each such Limited Partner’s allocated share of the applicable Book-Tax Difference bears to the total Book-TaxDifference of the asset giving rise to the cash or property.(d) Notwithstanding the foregoing, the General Partner shall retain from the distribution amount apportioned toeach Limited Partner any Holdback Amount with respect to such Limited Partner, determined in accordance with such LimitedPartner’s Award Letter. Any Holdback Amount retained by the General Partner pursuant to this Section 4.1(b) shall be considered tohave been distributed to the Limited Partners for all purposes of this Agreement.(e) Distributions of amounts attributable to Operating Profit and Book-Tax Difference shall be made in cash;provided, however, that if the Partnership receives a distribution from a Fund General Partner in the form of property other than cash,the General Partner may distribute such property in kind to Partners in proportion to their respective Points.(f) Any distributions or payments in respect of the interests of Limited Partners unrelated to Operating Profit or Book-Tax Difference shall be made at such time, in such manner and to such Limited Partners as the General Partner shall determine.(g) Except as otherwise set forth in a Limited Partner’s Award Letter, a Retired Partner shall receive his shareof any distribution made pursuant to Section 4.1(a) with respect to which such Retired Partner received an allocation prior to hisbecoming a Retired Partner in accordance with Section 3.4, which distribution shall be made as if such Retired Partner had remained aLimited Partner, at the same time and in the same form as such distribution is made to the Limited Partners; provided that in no eventshall such Retired Partner be entitled to receive an amount in excess of his Retirement Withdrawal Proceeds as determined underSection 7.3(b).(h) (i) Except as the General Partner otherwise may determine pursuant to the terms of an Award Letter, anyLimited Partner whose admission to the Partnership causes an adjustment to Carrying Values pursuant to the definition of“Carrying Value” (a “Newly-Admitted Limited Partner”) shall have the right to receive a special distribution of the Catch UpAmount (before adjustment for Holdback Amounts). Any such special distribution of the Catch Up Amount shall be inaddition to the distributions to which the Newly-Admitted Limited Partner is entitled pursuant to Section 4.1(a) and shall bemade to the Newly-Admitted Limited Partner (or, if there is more than one such Newly-Admitted Limited Partner, pro rata toall such Newly-Admitted Limited Partners based on the aggregate amount of such distributions each such Newly-AdmittedLimited Partner has not yet received), after the distribution of any amounts attributable to Book-Tax Differences pursuant to theproviso of Section 4.1(a), from amounts otherwise distributable to the other Limited Partners pursuant to Section 4.1(a), andshall reduce the amounts distributable to such other Limited Partners pursuant to Section 4.1(a), until each applicable Newly-Admitted Limited Partner has received an amount equal to the applicable Catch Up Amount (before adjustment for HoldbackAmounts).(ii) The General Partner may determine to provide for a special distribution of a Catch Up Amount inconnection with a reallocation of Points pursuant to Article 7 other than in connection with the admission to the Partnership of aNewly-Admitted Limited Partner if the General Partner reasonably believes such an adjustment to Carrying Values is requiredin order for the reallocated Points to be treated as profits interests for U.S. federal income tax purposes.(iii) Any reallocation of Points pursuant to Article 7 shall include the right to receive any Catch UpAmount associated with such Points.(i) Cash or property that the General Partner determines is associated with Operating Profit that has beenspecially allocated to a Limited Partner pursuant to Section 3.4(f)(i) or Section 3.4(g) shall be distributed to such Limited Partner. TheGeneral Partner shall make such determinations regarding distributions of cash and property that it determines are associated with suchspecial allocations as are necessary to ensure that the manner in which distributions are made is consistent with the purpose, andbenefits and burdens, of such special allocations.Section 4.2 Withholding of Certain Amounts(h) If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnershipincome allocable to any Partner, then the General Partner, without limitation of any other rights of the Partnership, may cause theamount of such obligation to be debited against the Capital Account of such Partner when the Partnership pays such obligation, andany amounts then or thereafter distributable to such Partner shall be reduced by the amount of such taxes. If the amount of such taxes isgreater than any such then distributable amounts, then such Partner and any successor to such Partner’s interest shall indemnify andhold harmless the Partnership and the General Partner against, and shall pay to the Partnership as a contribution to the capital of thePartnership, upon demand of the General Partner, the amount of such excess.(i) The General Partner may (i) withhold from any distribution to any Limited Partner pursuant to thisAgreement and (ii) arrange the withholding from any distribution from any Co-Investors (A) Entity to such Limited Partner any otheramounts due from such Limited Partner or a Related Party (without duplication) to the Partnership, any Co-Investors (A) Entity or toany other Affiliate of AGM pursuant to any binding agreement or published policy to the extent not otherwise paid. Any amounts sowithheld shall be applied by the General Partner to discharge the obligation in respect of which such amounts were withheld.Section 4.3 Limitation on DistributionsNotwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner onbehalf of the Partnership, shall not make a distribution to any Partner on account of his interest in the Partnership if such distributionwould violate the Partnership Law or other applicable law.Section 4.4 Distributions in Excess of BasisNotwithstanding anything in this Agreement to the contrary, the General Partner may refrain from making, at any time prior to the dissolution of the Partnership, all or any portion of any cash distribution that otherwise would be made to a Partner orRetired Partner, if such distribution would exceed such Person’s U.S. federal income tax basis in the Partnership. Any amount that isnot distributed to a Partner or Retired Partner due to the preceding sentence, as determined by the General Partner, either shall beretained by the Partnership on such Person’s behalf or loaned to such Person. Subject to the first sentence of this Section 4.4, 100% ofany or all subsequent cash distributions shall be distributed to such Person (or, if there is more than one such Person, pro rata to allsuch Persons based on the aggregate amount of distributions each such Person has not yet received) until each such Person hasreceived the same aggregate amount of distributions such Person would have received had distributions to such Person not beendeferred pursuant to this Section 4.4. If any amount is loaned to a Partner or Retired Partner pursuant to this Section 4.4, any such loanshall be on arm’s length terms as determined by the General Partner and shall be fully recourse to the Partner or Retired Partner and(i) any amount thereafter distributed to such Person shall be applied to repay the principal amount of such loan and (ii) interest, if any,accrued or received by the Partnership on such loan shall be allocated and distributed to such Person. Any such loan shall be repaid nolater than immediately prior to the liquidation of the Partnership. Until such repayment, for purposes of any determination hereunderbased on amounts distributed to a Person, the principal amount of such loan shall be treated as having been distributed to such Person.ARTICLE 5 MANAGEMENTSection 5.1 Rights and Powers of the General Partner(j) Subject to the terms and conditions of this Agreement, the General Partner shall have complete andexclusive responsibility (i) for all management decisions to be made on behalf of the Partnership and (ii) for the conduct of the businessand affairs of the Partnership.(k) Without limiting the generality of the foregoing, the General Partner shall have full power and authority toexecute, deliver and perform such contracts, agreements and other undertakings, and to engage in all activities and transactions, as itmay deem necessary or advisable for, or as may be incidental to, the conduct of the business contemplated by this Section 5.1,including, without in any manner limiting the generality of the foregoing, contracts, agreements, undertakings and transactions withany Partner or with any other Person having any business, financial or other relationship with any Partner or Partners; provided that theGeneral Partner shall not have authority to cause the Partnership to borrow any funds for its own account on a secured basis. ThePartnership, and the General Partner on behalf of the Partnership, may enter into and perform the Fund GP Agreements and anydocuments contemplated thereby or related thereto and any amendments thereto, without any further act, vote or approval of anyPerson, including any Partner, notwithstanding any other provision of this Agreement; provided that, absent the consent of JamesZelter (or his successor as head of the Credit Business), any such agreements, documents or amendments do not have a materialadverse effect on the Partnership relative to Apollo CIP Professionals, L.P. or AGM. The General Partner is hereby authorized to enterinto the documents described in the preceding sentence on behalf of the Partnership, but such authorization shall not be deemed arestriction on the power of the General Partner to enter into other documents on behalf of the Partnership. Except as otherwiseexpressly provided herein or as required by law, all powers and authority vested in the General Partner by or pursuant to thisAgreement or the Act shall be construed as being exercisable by the General Partner in its sole and absolute discretion.(l) The General Partner shall be the tax matters partner for purposes of Section 6231(a)(7) of the Code. EachPartner agrees not to treat, on his United States federal income tax return or in any claim for a refund, any item of income, gain, loss,deduction or credit in a manner inconsistent with the treatment of such item by the Partnership. The General Partner shall have theexclusive authority to make any elections required or permitted to be made by the Partnership under any provisions of the Code or anyother laws.Section 5.2 Delegation of Duties(j) Subject to Section 5.1, the General Partner may delegate to any Person or Persons any of the duties, powersand authority vested in it hereunder on such terms and conditions as it may consider appropriate.(k) Without limiting the generality of Section 5.2(a), the General Partner shall have the power and authority toappoint any Person, including any Person who is a Limited Partner, to provide services to and act as an employee or agent of thePartnership and/or General Partner, with such titles and duties as may be specified by the General Partner. Any Person appointed bythe General Partner to serve as an employee or agent of the Partnership shall be subject to removal at any time by the General Partner;and shall report to and consult with the General Partner at such times and in such manner as the General Partner may direct.(l) Any Person who is a Limited Partner and to whom the General Partner delegates any of its duties pursuantto this Section 5.2 or any other provision of this Agreement shall be subject to the same standard of care, and shall be entitled to thesame rights of indemnification and exoneration, applicable to the General Partner under and pursuant to Section 5.7, unless suchPerson and the General Partner mutually agree to a different standard of care or right to indemnification and exoneration to which such Person shall be subject.Section 5.3 Transactions with AffiliatesTo the fullest extent permitted by applicable law, the General Partner (or any Affiliate of the General Partner), whenacting on behalf of the Partnership, is hereby authorized to (a) purchase property from, sell property to, lend money to or otherwisedeal with any Affiliates, any Limited Partner, the Partnership, any of the Fund General Partners or Funds or any Affiliate of any of theforegoing Persons, and (b) obtain services from any Affiliates, any Limited Partner, the Partnership, any of the Fund General Partnersor Funds or any Affiliate of the foregoing Persons.Section 5.4 Expenses(c) The General Partner shall bear all ordinary course costs and expenses arising in connection with theorganization and operations of the Partnership. All such costs and expenses shall be treated by AGM as costs and expenses of theCredit Business.(d) Any withholding taxes payable by the Partnership, to the extent determined by the General Partner to havebeen paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of thePartners, shall be allocated among and debited against the Capital Accounts of only those Partners on whose behalf such payments aremade or whose particular circumstances gave rise to such payments in accordance with Section 4.2.Section 5.5 Rights of Limited Partners(c) Limited Partners shall have no right to take part in the management, control or conduct of the Partnership’sbusiness, nor shall they have any right or authority to act for the Partnership or to vote on matters other than as set forth in thisAgreement or as required by applicable law.(d) Without limiting the generality of the foregoing, the General Partner shall have the full and exclusiveauthority, without the consent of any Limited Partner, to compromise the obligation of any Limited Partner to make a capitalcontribution or to return money or other property paid or distributed to such Limited Partner in violation of the Partnership Law.(e) Nothing in this Agreement shall entitle any Partner to any compensation for services rendered to or onbehalf of the Partnership as an agent or in any other capacity, except for any amounts payable in accordance with this Agreement.(f) Subject to the Fund LP Agreements and to full compliance with AGM’s code of ethics and other writtenpolicies relating to personal investment transactions, admission into the Partnership as a Limited Partner of the Partnership shall notprohibit a Limited Partner from purchasing or selling as a passive investor any interest in any asset.Section 5.6 Other Activities of General PartnerNothing in this Agreement shall prohibit the General Partner from engaging in any activity other than acting as GeneralPartner hereunder.Section 5.7 Duty of Care; Indemnification(a) The General Partner (including for this purpose each former and present director, officer, stockholder,partner, member, manager or employee of the General Partner) and each Limited Partner (including any former Limited Partner) in hiscapacity as such, and to the extent such Limited Partner participates, directly or indirectly, in the Partnership’s activities, whether or nota Retired Partner (each, a “Covered Person” and collectively, the “Covered Persons”), shall not be liable to the Partnership or to any ofthe other Partners for any loss, claim, damage, liability or expenses (including attorneys’ fees, judgments, fines, penalties and amountspaid in settlement (collectively, “Losses”) occasioned by any acts or omissions in the performance of his services hereunder, unless itshall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that suchLosses are due to an act or omission of a Covered Person (i) made in bad faith or with criminal intent or (ii) that adversely affected anyFund and that failed to satisfy the duty of care owed pursuant to the applicable Fund LP Agreement or as otherwise required by law.(b) A Covered Person shall be indemnified to the fullest extent permitted by law by the Partnership against anyLosses incurred by or imposed upon him by reason of or in connection with any action taken or omitted by such Covered Personarising out of the Covered Person’s status as a Partner or his activities on behalf of the Partnership, including in connection with anyaction, suit, investigation or proceeding before any Governmental Authority to which it may be made a party or otherwise involved orwith which it shall be threatened by reason of being or having been the General Partner or a Limited Partner or by reason of serving orhaving served, at the request of any Fund General Partner, as a director, officer, consultant, advisor, manager, stockholder, member or partner of any enterprise in which any of the Funds has or had a financial interest, including issuers of Portfolio Investments; providedthat the Partnership may, but shall not be required to, indemnify a Covered Person with respect to any matter as to which there hasbeen a Final Adjudication that his acts or his failure to act (i) were in bad faith or with criminal intent or (ii) were of a nature that makesindemnification by the Funds unavailable. The right to indemnification granted by this Section 5.7 shall be in addition to any rights towhich a Covered Person may otherwise be entitled and shall inure to the benefit of the successors by operation of law or valid assignsof such Covered Person. The Partnership shall pay the expenses incurred by a Covered Person in defending a civil or criminal action,suit, investigation or proceeding in advance of the Final Adjudication of such action, suit, investigation or proceeding, upon receipt ofan undertaking by the Covered Person to repay such payment if there shall be a Final Adjudication that he is not entitled toindemnification as provided herein. In any suit brought by the Covered Person to enforce a right to indemnification hereunder it shallbe a defense that the Covered Person has not met the applicable standard of conduct set forth in this Section 5.7, and in any suit in thename of the Partnership to recover expenses advanced pursuant to the terms of an undertaking the Partnership shall be entitled torecover such expenses upon Final Adjudication that the Covered Person has not met the applicable standard of conduct set forth in thisSection 5.7. In any such suit brought to enforce a right to indemnification or to recover an advancement of expenses pursuant to theterms of an undertaking, the burden of proving that the Covered Person is not entitled to be indemnified, or to an advancement ofexpenses, shall be on the Partnership (or any Limited Partner acting derivatively or otherwise on behalf of the Partnership or theLimited Partners). The General Partner may not satisfy any right of indemnity or reimbursement granted in this Section 5.7 or to whichit may be otherwise entitled except out of the assets of the Partnership (including insurance proceeds and rights pursuant toindemnification agreements), and no Partner shall be personally liable with respect to any such claim for indemnity or reimbursement.The General Partner may enter into appropriate indemnification agreements and/or arrangements reflective of the provisions of thisArticle 5 and obtain appropriate insurance coverage on behalf and at the expense of the Partnership to secure the Partnership’sindemnification obligations hereunder. Each Covered Person shall be deemed a third party beneficiary (to the extent not a direct partyhereto) to this Agreement and, in particular, the provisions of this Article 5, may enforce any rights granted to it pursuant to thisAgreement in its own right as if it were a party to this Agreement, and shall be entitled to the benefit of the indemnity granted to thePartnership by each of the Funds pursuant to the terms of the Fund LP Agreements.(c) To the maximum extent permitted by law, as among any portfolio company of a Fund, a Fund, the FundGeneral Partner of such Fund and the Partnership, this Section 5.7(c) shall be interpreted to reflect an ordering of liability forpotentially overlapping or duplicative indemnification payments, in the following order: first, such portfolio company; second, suchFund; third, such Fund General Partner; and fourth, the Partnership (in each case, including any applicable insurance coverage that anysuch indemnitor maintains with respect to any such liability).(d) To the fullest extent permitted by law, to the extent that, at law or in equity, a Covered Person has duties(including fiduciary duties) and liabilities relating thereto to the Partnership or the Partners, the Covered Person shall not be liable to thePartnership or to any Partner for his good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to theextent that they restrict or eliminate the duties and liabilities of a Covered Person otherwise existing at law or in equity to thePartnership or the Partners, are agreed by the Partners to replace such other duties and liabilities of each such Covered Person, save thatthe General Partner shall act at all times in good faith in accordance with the requirements of the Partnership Law.(e) To the fullest extent permitted by law, notwithstanding any of the foregoing provisions of this Section 5.7,the Partnership may but shall not be required to indemnify (i) a Retired Partner (or any other former Limited Partner) with respect toany claim for indemnification or advancement of expenses arising from any conduct occurring more than six months after the date ofsuch Person’s retirement (or other withdrawal or departure), or (ii) a Limited Partner with respect to any claim for indemnification oradvancement of expenses as a director, officer or agent of the issuer of any Portfolio Investment to the extent arising from conduct insuch capacity occurring more than six months after the complete disposition of such Portfolio Investment by the applicable Fund.ARTICLE 6 ADMISSIONS, TRANSFERS AND WITHDRAWALSSection 6.1 Admission of Additional Limited Partners; Effect on Points(m) The General Partner may at any time admit as an additional Limited Partner any Person who has agreed tobe bound by this Agreement and may assign Points to such Person and/or increase the Points of any existing Limited Partner, in eachcase, subject to and in accordance with Section 7.1.(n) Each additional Limited Partner shall execute (i) either a counterpart to this Agreement or a separateinstrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partner and (ii) thedocuments contemplated by Section 7.1(b), and shall be admitted as a Limited Partner upon such execution.Section 6.2 Admission of Additional General Partner The General Partner may admit one or more additional general partners at any time without the consent of any LimitedPartner. No reduction in the Points of any Limited Partner shall be made as a result of the admission of an additional general partner orthe increase in the Points of any general partner without the consent of such Limited Partner. Any additional general partner shall beadmitted as a general partner upon its execution of a deed of adherence, in a form satisfactory to the General Partner, to this Agreementpursuant to which such Person undertakes and agrees to become a General Partner of the Partnership and to adhere to and be bound bythe provisions of this Agreement on admission as a General Partner. The incumbent General Partner shall make such filings with theRegistrar as are necessary pursuant to the Partnership Law to effect the legal admission of any additional general partner of thePartnership.Section 6.3 Transfer of Interests of Limited Partners(e) No Transfer of any Limited Partner’s interest in the Partnership, whether voluntary or involuntary, shall bevalid or effective, and no transferee shall become a substituted Limited Partner, unless the prior written consent of the General Partnerhas been obtained, which consent may be given or withheld by the General Partner. Notwithstanding the foregoing, any LimitedPartner may Transfer to any Related Party of such Limited Partner all or part of such Limited Partner’s interest in the Partnership(including his or its right to receive distributions of Operating Profit); provided that the Transfer has been previously approved inwriting by the General Partner, such approval not to be unreasonably withheld. In the event of any Transfer, all of the conditions of theremainder of this Section 6.3 must also be satisfied.(f) A Limited Partner or his legal representative shall give the General Partner notice before the proposedeffective date of any voluntary Transfer and within 30 days after any involuntary Transfer, and shall provide sufficient information toallow legal counsel acting for the Partnership to make the determination that the proposed Transfer will not result in any of thefollowing consequences:(i) require registration of the Partnership or any interest therein under any securities or commoditieslaws of any jurisdiction;(ii) result in a termination of the Partnership under Section 708(b)(1)(B) of the Code or jeopardize thestatus of the Partnership as a partnership for United States federal income tax purposes; or(iii) violate, or cause the Partnership, the General Partner or any Limited Partner to violate, anyapplicable law, rule or regulation of any jurisdiction.Such notice must be supported by proof of legal authority and a valid instrument of assignment acceptable to the General Partner.(g) If any Transfer permitted by this Section 6.3 shall result in multiple ownership of any Limited Partner’sinterest in the Partnership, the General Partner may require one or more trustees or nominees whose names will be entered in theRegister of Partners, to be designated to hold the legal title to the interest and to represent the entire interest transferred for the purposeof receiving all notices which may be given and all payments which may be made under this Agreement, and for the purpose ofexercising the rights which the transferees have pursuant to the provisions of this Agreement. The Partnership shall not otherwise berequired to recognize any trust or other beneficial ownership of any interest.(h) A permitted transferee shall be entitled to the allocations and distributions attributable to the economicinterest in the Partnership transferred to such transferee (and any such payment shall constitute a good and valid discharge of suchobligation on the part of the General Partner); provided that such transferee shall not be entitled to the other rights of a Limited Partneras a result of such transfer until he becomes a substituted Limited Partner. No transferee may become a substituted Limited Partnerexcept with the prior written consent of the General Partner (which consent may be given or withheld by the General Partner). Suchtransferee shall be admitted to the Partnership as a substituted Limited Partner upon execution of a deed of adherence, in a formsatisfactory to the General Partner, to this Agreement pursuant to which such transferee undertakes and agrees to become a LimitedPartner of the Partnership and to adhere to and be bound by the provisions of this Agreement on admission as a Limited Partner.Notwithstanding the above, the Partnership and the General Partner shall incur no liability for allocations and distributions made ingood faith to the transferring Limited Partner until a written instrument of Transfer has been received and accepted by the Partnershipand recorded on its books and the effective date of the Transfer has passed.(i) Any other provision of this Agreement to the contrary notwithstanding, to the fullest extent permitted bylaw, any successor or transferee of any Limited Partner’s interest in the Partnership shall be bound by the provisions hereof. Prior torecognizing any Transfer in accordance with this Section 6.3, the General Partner may require the transferee to make certainrepresentations and warranties to the Partnership and Partners and to accept, adopt and approve in writing all of the terms andprovisions of this Agreement. (j) In the event of a Transfer or in the event of a distribution of assets of the Partnership to any Partner, thePartnership, at the direction of the General Partner, may, but shall not be required to, file an election under Section 754 of the Code andin accordance with the applicable Treasury Regulations, to cause the basis of the Partnership’s assets to be adjusted as provided bySection 734 or 743 of the Code.(k) The Partnership shall maintain books for the purpose of registering the Transfer of partnership interests inthe Partnership. No Transfer of a partnership interest shall be effective until the Transfer of the partnership interest is registered by theGeneral Partner on the Register of Partners.Section 6.4 Withdrawal of PartnersA Partner in the Partnership may not withdraw from the Partnership prior to its dissolution. For the avoidance of doubt,any Limited Partner who transfers to a Related Party such Limited Partner’s entire remaining entitlement to allocations and distributionsshall remain a Limited Partner, notwithstanding the admission of the transferee Related Party as a Limited Partner, for as long as thetransferee Related Party remains a Limited Partner.Section 6.5 Pledges(d) A Limited Partner shall not pledge or grant a security interest in such Limited Partner’s interest in thePartnership unless the prior written consent of the General Partner has been obtained (which consent may be given or withheld by theGeneral Partner).(e) Notwithstanding Section 6.5(a), any Limited Partner may grant to a bank or other financial institution asecurity interest in such part of such Limited Partner’s interest in the Partnership as relates solely to the right to receive distributions ofOperating Profit in the ordinary course of obtaining bona fide loan financing to fund his contributions to the capital of any Fund, anyapplicable Co-Investors (A) Entity, any of the Public Vehicles and/or any other investment fund or vehicle that forms part of the CreditBusiness. If the interest of the Limited Partner in an open-ended Fund or Co-Investors (A) Entity or any portion thereof in respect ofwhich a Limited Partner has granted a security interest ceases to be owned by such Limited Partner in connection with the exercise bythe secured party of remedies resulting from a default by such Limited Partner with respect to such Limited Partner’s interest in suchFund or Co-Investors (A) Entity, such interest of the Limited Partner in the Partnership or portion thereof shall thereupon become anon-voting interest and the holder thereof shall not be entitled to vote on any matter pursuant to this Agreement.(f) Any partnership interest in the Partnership may be evidenced by a certificate issued by the Partnership insuch form as the General Partner may approve.(g) Each certificate representing a partnership interest in the Partnership shall be executed by manual orfacsimile signature of the General Partner on behalf of the Partnership.ARTICLE 7 ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERSSection 7.1 Allocation of Points(c) Except as otherwise provided herein, the General Partner shall be responsible for the allocation of Pointsfrom time to time to the Limited Partners. The General Partner may allocate Points to a new Limited Partner and/or increase or reducethe Points of any existing Limited Partner at any time; provided that (i) except as expressly set forth in a Limited Partner’s AwardLetter, the General Partner may reduce such Limited Partner’s Points only in December 2016 and thereafter in December of eachsubsequent even-numbered year, (ii) except as expressly set forth in this Agreement, in no event will any Points be allocated to AGMor any of the Founding Partners or their respective Affiliates, and (iii) the allocation or reallocation of Points will be on such terms asare consistent with the treatment of the Points as profits interests for U.S. federal income tax purposes. For the avoidance of doubt,notwithstanding anything to the contrary contained herein, the Points constitute a “single” pool and entitle the holders hereof to share inall of the Operating Profit and Operating Loss of the Partnership, howsoever derived, on the terms and conditions set forth herein.Notwithstanding anything to the contrary herein, there shall be a maximum of 1,000 Points available for issuance.(d) Unless otherwise agreed by the General Partner, as a condition to the continued holding by a LimitedPartner of any Points, concurrently with the Partnership’s becoming a partner or member of any Fund General Partner after the datehereof:(v) with respect to any closed-end Fund, each such Limited Partner shall execute and deliver to theGeneral Partner the following documents, in form and substance reasonably satisfactory to the General Partner: (A) a customary and standard guarantee or guarantees, for the benefit of such Fund’s investors, of such Limited Partner’sGiveback/Clawback Share of the Partnership’s obligation to make Clawback Payments, and/or (B) a customary and standardundertaking to reimburse any Affiliate of AGM for any payment made by it that is attributable to such Limited Partner’sGiveback/Clawback Share of any Clawback Payment;(vi) with respect to any Fund, each such Limited Partner shall execute and deliver the Co-Investors(A) Partnership Agreement of the applicable Co-Investors (A) Entity and each Co-Investors (A) Entity shall have accepted thecapital commitment or investments, as the case may be, from such Limited Partner (or his Related Party, as applicable) in anamount equal to such Limited Partner’s Required Commitment for such Fund (or, in the case of an open-end Fund, in anamount at least equal to the installment of such Limited Partner’s then Required Commitment for such Fund that is due andpayable); and(vii) with respect to any open-end or publicly traded Fund that does not have a corresponding Co-Investors (A) Entity, such Limited Partner shall complete, execute and deliver the applicable subscription agreement for suchFund and tender an amount at least equal to the installment of such Limited Partner’s then Required Commitment for suchFund that is due and payable), and such Fund’s Fund General Partner shall have accepted such subscription from such LimitedPartner (or his Related Party, as applicable).(e) Any change to a Limited Partner’s Points pursuant to this Agreement or such Limited Partner’s AwardLetter shall apply on a prospective basis only, from and after the effective date of such change; it being understood that such LimitedPartner shall not be required to refund to the Partnership any distributions received by such Limited Partner in respect of his Pointsprior to such change, solely as a result of any such change.(f) The General Partner shall maintain on the books and records of the Partnership a record of the number ofPoints allocated to each Partner and shall give notice to each Limited Partner of the number of such Limited Partner’s Points uponadmission to the Partnership of such Limited Partner and promptly upon any change in such Limited Partner’s Points pursuant to thisArticle 7 and such notice shall include the calculations used by the General Partner to determine the amount of any such reduction.(g) Subject to the limitations imposed under Section 7.1(a)(ii) and (iii) regarding the allocation of Points, anyPoints that are forfeited under this Agreement or a Limited Partner’s Award Letter may be reallocated by the General Partner, in itssole discretion, following consultation with AGM Credit Senior Management, to any Person or Persons. Until any such reallocation bythe General Partner, forfeited Points shall be deemed reallocated to James Zelter (or his successor as head of the Credit Business),except that, unless otherwise determined by the General Partner (including as regards any distribution to pay taxes incurred byMr. Zelter, net of any tax benefit conferred upon him, in respect of the reallocation of such forfeited Points to Mr. Zelter), Mr. Zeltershall not be entitled to any allocations or distributions on such forfeited Points and shall instead hold them for the benefit and on behalfof the Person or Persons to whom they are reallocated, which reallocation(s), unless otherwise determined by the General Partner, shalloccur not later than the fourth quarter of the Fiscal Year in which the Points were forfeited.(h) If the Partnership is granted additional points at the Fund General Partner-level in connection with causingdilution in the sharing of Carried Interest Revenues to be borne by APH and by the then existing Limited Partners of the Partnership,then the economic benefit attaching to such additional points shall inure to the benefit of the Limited Partners. If thereafter any Pointsare forfeited, then the points at the Fund General Partner-level that are held by the Partnership and APH will be adjusted so as torestore them to the number thereof prior to the adjustment described in the preceding sentence, and only after such restoration iscomplete, shall the Partnership have the right to reallocate such remaining forfeited Points. The determinations of the General Partner toimplement the foregoing shall be final and binding on the Partnership and the Limited Partners.Section 7.2 Retirement of Partner(l) A Limited Partner shall become a Retired Partner upon:(i) delivery to such Limited Partner of a notice by the General Partner terminating such LimitedPartner’s employment by AGM or an Affiliate thereof, unless otherwise determined by the General Partner;(ii) delivery by such Limited Partner of at least 90 days’ prior written notice to the General Partner,AGM or an Affiliate thereof stating that such Limited Partner elects to resign from or otherwise terminate his or heremployment by or service to AGM or an Affiliate thereof; or(iii) the death of the Limited Partner, whereupon the estate of the deceased Limited Partner shall betreated as a Retired Partner in the place of the deceased Limited Partner, or the Disability of the Limited Partner.(m) Nothing in this Agreement shall obligate the General Partner to treat Retired Partners alike, and the exercise of any power or discretion by the General Partner in the case of any one such Retired Partner shall not create any obligationon the part of the General Partner to take any similar action in the case of any other such Retired Partner; it being understood that anypower or discretion conferred upon the General Partner shall be treated as having been so conferred as to each such Retired Partnerseparately.Section 7.3 Effect of Retirement on Points(g) The consequences of a Limited Partner’s retirement on his Points shall be set forth in such LimitedPartner’s Award Letter.(h) Except as otherwise set forth in a Limited Partner’s Award Letter, upon a Limited Partner’s becoming aRetired Partner, as of his Retirement Date, he shall automatically cease to be a Limited Partner and shall be entitled to a payment in anamount equal to the balance of his Capital Account as of his Retirement Date (other than the portion of such Capital Account as isattributable to a Book-Tax Difference as of such date), as adjusted for any Operating Loss allocable to such Retired Partner pursuant toSection 3.4 (his “Retirement Withdrawal Proceeds”); provided that any such Book-Tax Difference that was recognized by suchRetired Partner as taxable income or gain prior to his Retirement Date shall be included in his Retirement Withdrawal Proceeds. SuchRetirement Withdrawal Proceeds will generally be paid at the same time as such amounts would otherwise have been distributed tosuch Retired Partner under Section 4.1 had such Retired Partner remained a Limited Partner; provided that the General Partner may(i) delay such payment if such delay is reasonably necessary to prevent such withdrawal from having a material adverse impact on thePartnership, any Fund or the remaining Partners, and (ii) hold back from any payments such reserves as the General Partner determinesto be necessary or appropriate, including as provided in Section 3.8 and Section 7.3(c). Amounts paid to a Retired Partner will not beadjusted as a result of audit adjustments made after the final payment date relating to the Retirement Withdrawal Proceeds and will notearn interest for the period from such Retired Partner’s Retirement Date through the settlement date. The General Partner may deductfrom any Retirement Withdrawal Proceeds due to any Retired Partner an amount representing the actual or estimated expenses of thePartnership associated with processing such withdrawal and any other amounts owed by the Retired Partner to the General Partner orits Affiliates whether under this Agreement or otherwise.(i) The right of any Retired Partner to receive distributions pursuant to Section 7.3(b) shall be subject to theprovision by the General Partner for all liabilities of the Partnership and for reserves for contingencies as provided in Section 3.8.ARTICLE 8 DISSOLUTION AND LIQUIDATIONSection 8.1 Dissolution and Liquidation of Partnership(n) The General Partner, except where, the General Partner is unable to perform this function, a liquidatorelected by a majority in interest (determined by Points) of Limited Partners, shall commence the winding-up of the Partnership pursuantto the Partnership Law upon the occurrence of any Winding-Up Event. The General Partner or appointed liquidator shall terminate thebusiness and administrative affairs of the Partnership and commence the liquidation of the Partnership’s assets.(o) Operating Profit and Operating Loss during the Fiscal Years that include the period of liquidation shall beallocated pursuant to Section 3.4. The proceeds from liquidation shall be distributed in the following manner:(i) first, the debts, liabilities and obligations of the Partnership, including the expenses of liquidation(including legal and accounting expenses incurred in connection therewith), up to and including the date that distribution of thePartnership’s assets to the Partners has been completed, shall be satisfied (whether by payment or by making reasonableprovision for payment thereof); and(ii) thereafter, the Partners shall be paid amounts in accordance with Article 4.(p) Anything in this Section 8.1 to the contrary notwithstanding, the General Partner or liquidator maydistribute ratably in kind rather than in cash, upon the winding-up of the Partnership, any assets of the Partnership in accordance withthe priorities set forth in Section 8.1(b); provided that if any in kind distribution is to be made, the assets distributed in kind shall bevalued as of the actual date of their distribution and charged as so valued and distributed against amounts to be paid under Section8.1(b).(q) Upon completion of the winding-up of the Partnership in accordance with the terms hereof, the Partnershipshall be dissolved by the filing of a notice of dissolution in accordance with the provisions of the Partnership Law.ARTICLE 9 GENERAL PROVISIONS Section 9.1 Consistent Economic TreatmentExcept as otherwise specifically provided herein or in any Limited Partner’s Award Letter, the General Partner shall not treatany Limited Partner in a manner that is adverse in comparison with the treatment of APH or its Affiliates in respect of their directinterests in the applicable Fund General Partners with respect to allocations of Operating Profit, distributions (including liquidatingdistributions) of Operating Profit (including form, timing and amount of such distributions), Point dilution and funding ofGiveback/Clawback Shares (and the corresponding concepts in the applicable Fund GP Agreements). For the avoidance of doubt, theforegoing is not intended to limit the General Partner’s authority (i) relating to forfeiture of Points due to retirement or Bad Acts inaccordance with the terms and conditions set forth herein, (ii) to enter into any Award Letter or Other Agreement with a Team Memberin connection with an award of Points to such Team Member providing for special allocations of income or a reapportionment ofdistributions attributable to such Points for the purpose of eliminating or reducing a current recognition of taxable income by suchTeam Member as a result of such Point award, or (iii) to implement any of the special allocation or special distribution provisions ofthis Agreement.Section 9.2 Amendment of Partnership Agreement and Co-Investors (A) Partnership Agreements(h) The General Partner may amend this Agreement at any time, in whole or in part, without the consent ofany Limited Partner by giving notice of such amendment to any Limited Partner whose rights or obligations as a Limited Partnerpursuant to this Agreement are changed thereby; provided that: (i) any amendment that would disproportionately effect a materialadverse change in the contractual rights or obligations of a Limited Partner vis-à-vis all other Limited Partners (such rights orobligations determined without regard to the amendment power reserved herein) may only be made if the written consent of suchLimited Partner is obtained prior to the effectiveness thereof; and (ii) any amendment that (x) increases a Limited Partner’s obligation tocontribute to the capital of the Partnership, or (y) increases such Limited Partner’s Giveback/Clawback Share shall not be effectivewith respect to such Limited Partner, unless such Limited Partner consents thereto in advance in writing. Notwithstanding theforegoing, the General Partner may amend this Agreement at any time, in whole or in part, without the consent of any Limited Partnerto enable the Partnership to (i) comply with the requirements of the “Safe Harbor” Election within the meaning of the ProposedRevenue Procedure of Notice 2005-43, 2005-24 IRB 1, Proposed Treasury Regulation Section 1.83-3(e)(1) or Proposed TreasuryRegulation Section 1.704-1(b)(4)(xii) at such time as such proposed Procedure and Regulations are effective and to make any suchother related changes as may be required by pronouncements or Treasury Regulations issued by the Internal Revenue Service orTreasury Department after the date of this Agreement and (ii) comply with applicable law; provided that any amendment pursuant toclause (i) that would cause a Limited Partner’s rights to allocations and distributions to suffer a material adverse change only may bemade if the written consent of such Limited Partner is obtained prior to the effectiveness thereof. An adjustment of Points shall not beconsidered an amendment to the extent effected in compliance with the provisions of Section 7.1 or Section 7.3 as in effect on the datehereof or as hereafter amended in compliance with the requirements of this Section 9.2(a).(i) Notwithstanding the provisions of this Agreement, including Section 9.2(a), it is hereby acknowledged andagreed that the General Partner on its own behalf or on behalf of the Partnership without the approval of any Limited Partner or anyother Person may enter into one or more side letters or similar agreements (“Other Agreements”) with one or more Limited Partnerswhich have the effect of establishing rights under, or altering or supplementing the terms of this Agreement. The parties hereto agreethat any terms contained in an Other Agreement with one or more Limited Partners shall govern with respect to such Limited Partneror Limited Partners notwithstanding the provisions of this Agreement. Any Other Agreements shall be binding upon the Partnership orthe General Partner, as applicable, and the signatories thereto as if the terms were contained in this Agreement, but no such OtherAgreement between the General Partner and any Limited Partner or Limited Partners and the Partnership shall adversely amend thecontractual rights or obligations of any other Limited Partner without such other Limited Partner’s prior consent.(j) The provisions of this Agreement that affect the terms of any Co-Investors (A) Partnership Agreementapplicable to Limited Partners constitute a “side letter or similar agreement” between each Limited Partner and the general partner ofthe applicable Co-Investors (A) Entity, which has executed this Agreement exclusively for purposes of confirming the foregoing.(k) Notwithstanding any term of this Agreement, the consent of or notice to any Person who is not a party tothis Agreement shall not be required for any termination, rescission or agreement to any variation, waiver, assignment, novation,release or settlement under this Agreement at any time.Section 9.3 Special Power-of-Attorney(f) Each Partner hereby irrevocably makes, constitutes and appoints the General Partner with full power ofsubstitution, the true and lawful representative and attorney-in-fact, and in the name, place and stead of such Partner, with the powerfrom time to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish: (i) any amendment to this Agreement which complies with the provisions of this Agreement (includingthe provisions of Section 9.2);(ii) all such other instruments, documents and certificates which, in the opinion of legal counsel to thePartnership, may from time to time be required by the laws of the Cayman Islands, the United States of America, or any otherjurisdiction, or any political subdivision or agency thereof, or which such legal counsel may deem necessary or appropriate toeffectuate, implement and continue the valid and subsisting existence and business of the Partnership as an exempted limitedpartnership or partnership in which the limited partners thereof enjoy limited liability;(iii) any written notice or letter of resignation from any board seat or office of any Person (other than acompany that has a class of equity securities registered under the United States Securities Exchange Act of 1934, as amended,or that is registered under the United States Investment Company Act of 1940, as amended), which board seat or office wasoccupied or held at the request of the Partnership or any of its Affiliates; and(iv) all such proxies, consents, assignments and other documents as the General Partner determines tobe necessary or advisable in connection with any merger or other reorganization, restructuring or other similar transactionentered into in accordance with this Agreement (including the provisions of Section 9.6(c)).(g) Each Limited Partner is aware that the terms of this Agreement permit certain amendments to thisAgreement to be effected and certain other actions to be taken or omitted by or with respect to the Partnership without his consent. Ifan amendment to this Agreement or any action by or with respect to the Partnership is taken by the General Partner in the mannercontemplated by this Agreement, each Limited Partner agrees that, notwithstanding any objection which such Limited Partner mayassert with respect to such action, the General Partner is authorized and empowered, with full power of substitution, to exercise theauthority granted above in any manner which may be necessary or appropriate to permit such amendment to be made or actionlawfully taken or omitted. Each Partner is fully aware that each other Partner will rely on the effectiveness of this special power-of-attorney with a view to the orderly administration of the affairs of the Partnership. This power-of-attorney is intended to secure aninterest in property and, in addition, the obligations of each Limited Partner under this Agreement, and as such:(i) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death orincapacity of any party granting this power-of-attorney, regardless of whether the Partnership or the General Partner shall havehad notice thereof; and(ii) shall survive any Transfer by a Limited Partner of the whole or any portion of its interest in thePartnership, except that, where the transferee thereof has been approved by the General Partner for admission to the Partnershipas a substituted Limited Partner, this power- of-attorney given by the transferor shall survive such Transfer for the sole purposeof enabling the General Partner to execute, acknowledge and file any instrument necessary to effect such substitution.Section 9.4 NoticesAny notice required or permitted to be given under this Agreement shall be in writing. A notice to the General Partnershall be directed to the attention of Leon D. Black with a copy to the general counsel of the Partnership. A notice to a Limited Partnershall be directed to such Limited Partner’s last known residence as set forth in the books and records of the Partnership or its Affiliates(a Limited Partner’s “Home Address”). A notice shall be considered given when delivered to the addressee either by hand at hisPartnership office or electronically to the primary e-mail account supplied by the Partnership for Partnership business communications,except that a notice to a Retired Partner or a notice demanding cure of a Bad Act shall be considered given only when delivered byhand or by a recognized overnight courier or delivered by mailing through the United States Postal System by regular mail to suchRetired Partner’s Home Address.Section 9.5 Agreement Binding Upon Successors and AssignsThis Agreement shall be binding upon and inure to the benefit of the parties and their respective successors byoperation of law, but the rights and obligations of the Partners hereunder shall not be assignable, transferable or delegable except asexpressly provided herein, and any attempted assignment, transfer or delegation thereof that is not made in accordance with suchexpress provisions shall be void and unenforceable.Section 9.6 Merger, Consolidation, etc.(a) Subject to Section 9.6(b) and Section 9.6(c), the Partnership may merge or consolidate with or into one ormore limited partnerships formed under any applicable law or other business entities under any applicable law pursuant to anagreement of merger or consolidation which has been approved by the General Partner. (b) Subject to Section 9.6(c), but notwithstanding any other provision to the contrary contained elsewhere inthis Agreement, an agreement of merger or consolidation approved in accordance with Section 9.6(a) may, to the extent permitted bySection 9.6(a), (i) effect any amendment to this Agreement, (ii) effect the adoption of a new partnership agreement for the Partnershipif it is the surviving or resulting limited partnership in the merger or consolidation, or (iii) provide that the partnership agreement of anyother constituent limited partnership to the merger or consolidation (including a limited partnership formed for the purpose ofconsummating the merger or consolidation) shall be the partnership agreement of the surviving or resulting limited partnership.(c) The General Partner shall have the power and authority to approve and implement any merger,consolidation or other reorganization, restructuring or similar transaction without the consent of any Limited Partner, other than anyLimited Partner with respect to which the General Partner has determined that such transaction will, or will reasonably be likely to,result in any material adverse change in the financial and other material rights of such Limited Partner conferred by this Agreement andany Other Agreement entered into pursuant to Section 9.2(b) or the imposition of any material new financial or other obligation onsuch Limited Partner. Subject to the foregoing, the General Partner may require one or more of the Limited Partners to sell, exchange,transfer or otherwise dispose of their interests in the Partnership in connection with any such transaction, and each Limited Partner shalltake such action as may be directed by the General Partner to effect any such transaction.Section 9.7 Governing Law; Dispute Resolution(a) This Agreement, and the rights and obligations of each and all of the Partners hereunder, shall be governedby and construed in accordance with the laws of the Cayman Islands.(b) Subject to Section 9.7(c), any dispute, controversy, suit, action or proceeding arising out of or relating tothis Agreement, other than injunctive relief, will be settled exclusively by arbitration, conducted before a single arbitrator in New YorkCounty, New York (applying Cayman Islands law) in accordance with, and pursuant to, the applicable rules of JAMS (“JAMS”). Thearbitration shall be conducted on a strictly confidential basis, and none of the parties shall disclose the existence of a claim, the natureof a claim, any documents, exhibits, or information exchanged or presented in connection with such a claim, or the result of any action,to any third party, except as required by law, with the sole exception of their legal counsel and parties engaged by that counsel to assistin the arbitration process, who also shall be bound by these confidentiality terms. The decision of the arbitrator will be final andbinding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Anyparty hereto may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm orvacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The party that isdetermined by the arbitrator not to be the prevailing party will pay all of the JAMS’s administrative fees and the arbitrator’s fee andexpenses. If neither party is so determined, such fees shall be shared. Each party shall be responsible for such party’s own attorneys’fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOTPROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTNER AND THE PARTNERSHIPWAIVE AND COVENANT THAT THE PARTNER AND THE PARTNERSHIP WILL NOT ASSERT (WHETHER ASPLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLEOR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW OR HEREAFTER ARISING,AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT THE PARTNERSHIP ORANY OF ITS AFFILIATES OR ANY PARTNER MAY FILE A COPY OF THIS SECTION WITH ANY COURT ASWRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THEPARTNERSHIP AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTNER, ON THE OTHER HAND,IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEENSUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDINGPROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OFCOMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.(c) Nothing in this Section 9.7 will prevent the General Partner or a Limited Partner from applying to a courtfor preliminary or interim relief or permanent injunction in a judicial proceeding (e.g., injunction or restraining order), in addition to andnot in lieu of any other remedy to which it may be entitled at law or in equity, if such relief from a court is necessary to preserve thestatus quo pending resolution or to prevent serious and irreparable injury in connection with any breach or anticipated breach ofcovenants applicable pursuant to a Limited Partner’s Award Letter; provided, however, that all parties explicitly waive all rights to seekpreliminary, interim, injunctive or other relief in a judicial proceeding and all parties submit to the exclusive jurisdiction of the forumdescribed in Section 9.7(b) hereto for any dispute or claim concerning continuing entitlement to distributions or other payments, even ifsuch dispute or claim involves or relates to any restrictive covenants set forth in a Limited Partner’s Award Letter. For the purposes ofthis Section 9.7(c), each party hereto consents to the exclusive jurisdiction and venue of the courts of the state and federal courts withinthe County of New York in the State of New York.Section 9.8 Termination of Right of Action Every right of action arising out of or in connection with this Agreement by or on behalf of any past, present or futurePartner or the Partnership against any past, present or future Partner shall, to the fullest extent permitted by applicable law, irrespectiveof the place where the action may be brought and irrespective of the residence of any such Partner, cease and be barred by theexpiration of three years from the date of the act or omission in respect of which such right of action arises.Section 9.9 Not for Benefit of CreditorsThe provisions of this Agreement are intended only for the regulation of relations among Partners and between Partnersand former or prospective Partners and the Partnership. Except with respect to the rights of Covered Persons hereunder, each of whomshall be an intended beneficiary and shall be entitled to enforce the provisions of Section 5.7, this Agreement is not intended for thebenefit of any Person who is not a Partner, and no rights are intended to be granted to any other Person who is not a Partner under thisAgreement.13 Section 9.10 ReportsAs soon as practicable after the end of each taxable year, the General Partner shall furnish to each Limited Partner(a) such information as may be required to enable each Limited Partner to properly report for United States federal and state income taxpurposes his distributive share of each Partnership item of income, gain, loss, deduction or credit for such year, and (b) a statement ofthe total amount of Operating Profit or Operating Loss for such year, including a copy of the United States Internal Revenue ServiceSchedule “K-1” issued by the Partnership to such Limited Partner, and a reconciliation of any difference between (i) such OperatingProfit or Operating Loss and (ii) the aggregate net profits or net losses allocated by the Fund General Partners to the Partnership forsuch year.Section 9.11 FilingsThe Partners hereby agree to take any measures necessary (or, if applicable, refrain from any action) to ensure that thePartnership is treated as a partnership for U.S. federal, state and local income tax purposes.Section 9.12 CounterpartsThis Agreement may be executed in one or more counterparts, including by facsimile or other electronic signature. Allsuch counterparts so executed shall constitute an original agreement binding on all the parties, but together shall constitute but oneinstrument.[Signature Page Follows]IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as a deed, on the date first set forthabove.GENERAL PARTNER:APOLLO CIP GENPAR, LTD.By: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice PresidentIn the presence of: /s/ Adam Augusiak-Boro____________ Name of Witness: Adam Augusiak-Boro14 INITIAL LIMITED PARTNER: (solely for the purpose of Section 2.9) __/s/ Joseph D. Glatt___________ Joseph D. GlattIn the presence of: /s/ Adam Augusiak-Boro Name of Witness: Adam Augusiak-BoroApollo CIP Partner Pool, L.P.Amended and Restated Limited PartnershipAgreement Signature Page For the purposes of Section 9.2(c) only: APOLLO CO-INVESTORS MANAGER, LLC By: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice PresidentIn the presence of: /s/ Adam Augusiak-Boro Name of Witness: Adam Augusiak-BoroApollo CIP Partner Pool, L.P.Amended and Restated Limited PartnershipAgreement Signature Page CONFIDENTIAL & PROPRIETARY [FORM OF AWARD LETTER]APOLLO CIP PARTNER POOL, L.P.[Name][Address]Dear [Name]:Reference is made to the Amended and Restated Agreement of Exempted Limited Partnership of Apollo CIP Partner Pool, L.P. (the“Partnership”), as in effect from time to time (the “Partnership Agreement”). This Award Letter confirms the number of Points you arebeing awarded in the Partnership and certain terms in relation to the Partnership Agreement. Capitalized terms used but not definedherein shall have the meanings set forth in the Partnership Agreement.I.Your Initial Point AwardYou are being granted [˜] Points on the terms set forth in this Award Letter and the Partnership Agreement.II.No VestingYour Points are not subject to vesting.III.Dilution1. Your Points may be subject to pro rata dilution if the General Partner subsequently allocates Points to existing or new LimitedPartners of the Partnership who are senior business leaders from AGM’s Credit Business. The first [˜]% of dilution in respect of allPoints in the Partnership that would otherwise be borne by all then existing Limited Partners of the Partnership shall instead dilute onlythe Points in the Partnership initially allocated to [˜]. Thereafter, for new issuances of Points agreed to between AGM Credit SeniorManagement and the Executive Committee of AGM, it is intended that the dilution in the sharing of the Carried Interest Revenue willbe borne by all then existing Limited Partners and APH on a pro rata basis (determined as of the effective date of the dilution).Accordingly, in order to implement this dilution: (i) if the Partnership is a direct limited partner of the applicable Fund General Partners,then the underlying points of the Partnership and APH, in each case, in respect of their interests in each of the applicable Fund GeneralPartners will be adjusted so that the Partnership’s points attributable to each such Fund General Partner will be appropriately increasedand APH’s points attributable to each such Fund General Partner will be appropriately decreased; (ii) if the Partnership is an indirectlimited partner of the applicable Fund General Partners, holding its interests in such Fund General Partners through an intermediatepooling vehicle that has been formed to facilitate the sharing of Carried Interest Revenues by the Partnership and others (each, an“Intermediate Pooling Vehicle”), then the underlying points of each such Intermediate Pooling Vehicle and APH, in each case, inrespect of their interests in each of the applicable Fund General Partners will be adjusted so that the points held by the IntermediatePooling Vehicle attributable to each such Fund General Partner will be appropriately increased and APH’s points attributable to eachsuch Fund General Partner will be appropriately decreased, with the economic benefit attaching to the additional points granted to theIntermediate Pooling Vehicle inuring solely to the benefit of the Partnership, in its capacity as a limited partner, member or otherequityholder of such Intermediate Pooling Vehicle, and not to any other limited partner, member or other equityholder of suchIntermediate Pooling Vehicle; and (iii) the Points in the Partnership of the then existing Limited Partners will be appropriately reduced.If thereafter any Points are forfeited, (A) (i) the points attributable to each Fund General Partner held by the Partnership and APH or(ii) if the Partnership is an indirect limited partner of the applicable Fund General Partner, holding its interests through an IntermediatePooling Vehicle, then the points attributable to each such Intermediate Pooling Vehicle and APH, in each case, will be adjusted so asto restore them to the number thereof prior to the adjustment described in the preceding sentence, and (B) only after such restoration iscomplete, shall the Partnership have the right to reallocate such remaining forfeited Points. In each case, the determinations of theGeneral Partner to implement the foregoing shall be final and binding on the Partnership and the Limited Partners (and the applicableFund General Partners and Intermediate Pooling Vehicles).2. For purposes of this Award Letter, “Credit Business” means all segments of the credit business of AGM, which, for the avoidanceof doubt, includes, without limitation, Opportunistic Credit, European Credit, U.S. Performing Credit, Structured Credit, Non-Performing Loans, Strategic Accounts, CMBS/CRE, CPI Europe, Principal Structured Finance and RMBS, as well as credit businesses under development, including, but not limited to, Energy Credit and Finco, but excluding assets of Athene Holding Ltd.(and related revenues) that the credit business of AGM does not manage; it being understood that the General Partner, in consultationwith AGM Credit Senior Management, shall determine whether business segments acquired or created after the date of this Agreementshall be included in the Credit Business.IV. Mandatory Purchases and Repurchases of AGM Shares1. A portion of all distributions to be made to you (whether directly from the Partnership or any Fund General Partner), including inconnection with Sections 4.1(e) and 7.3(b) of the Partnership Agreement and the Tail Rate (as defined below), together with any FeePayments (as defined below) paid to you (the “Holdback Amount”), in each case, in a given fiscal quarter will be required to be usedby you to purchase Class A shares of AGM (“AGM Shares”) in accordance with the terms and conditions set forth in the RestrictedShare Award Agreement under the AGM 2007 Equity Incentive Plan (as defined below) and related grant notice attached hereto asAnnex A-1 (the “Restricted Share Award Agreement”) or, to the extent you become a Retired Partner, in accordance with the termsand conditions set forth in the Share Award Agreement under the AGM 2007 Equity Incentive Plan and related grant notice attachedhereto as Annex A-2 (the “Retired Partner Share Award Agreement”). You will be required to make an election under Section 83(b)of the Code with respect to each such purchase of AGM Shares with the Holdback Amount. The Holdback Amount will be in anamount not exceeding the applicable amounts determined under the following formula, except to the extent reduced by the ExecutiveCommittee of AGM: [˜]2. The Holdback Amount for a particular quarter, if any, will be distributed to you on the first business day on which a “tradingwindow” for AGM Shares occurs during the calendar quarter following the quarter end to which the distribution relates, or, if earlier,10 days before the end of such succeeding quarter or, if such date falls on a weekend or holiday, the next preceding business day (the“Grant Date”).3. An Affiliate of AGM shall serve as agent in effecting the acquisition by you of the AGM Shares on the date such amounts aredistributed, and no cash distribution will actually be made to you, but rather, the Holdback Amount will be paid directly to AGM onyour behalf to acquire AGM Shares. In the case of AGM Shares that are subject to vesting pursuant to the terms of the RestrictedShare Award Agreement, the vesting commencement date shall be the midpoint of the calendar quarter in which the HoldbackAmount was reserved, without regard to the actual date in a subsequent calendar quarter on which such AGM Shares are purchasedwith such Holdback Amount; except that the vesting commencement date for the initial AGM Shares to be acquired by you with aHoldback Amount shall be [˜] (the “Applicable Date”).4. The amount of AGM Shares to be acquired on any such distribution date shall be equal to the fair market value of the AGMShares (calculated based on the volume weighted average price of the AGM Shares on the date such AGM Shares are scheduled to bepurchased), rounded down to the nearest whole AGM Share and reduced to reflect any sales commissions or associated costs. Onlywhole AGM Shares will be acquired, and cash shall be distributed to you in lieu of fractional AGM Shares.5. Delivery of AGM Shares to you shall be subject to your execution of the applicable grant notice (substantially in the form attachedas Annex A-1 or Annex A-2, as applicable).6. If you are entitled to a Tail Rate (as described below) after you become a Retired Partner, a Holdback Amount shall still apply, butany AGM Shares acquired will not be subject to vesting and may be granted outside of the Apollo Global Management LLC 2007Equity Incentive Plan (as the same may be amended, supplemented, modified or replaced from time to time, the “AGM 2007 EquityIncentive Plan”). However, such AGM Shares shall be subject solely to the transfer restrictions and other terms set forth in the RetiredPartner Share Award Agreement. Notwithstanding anything to the contrary herein, if (i) following the distribution of a HoldbackAmount to you and (ii) prior to the time of the acquisition of the applicable AGM Shares with respect to such Holdback Amount foryou, you become a Retired Partner, then the AGM Shares (that would have otherwise been acquired with the Holdback Amount), or aportion thereof, as applicable, shall be forfeited to the same extent as AGM Shares would have been forfeited if purchased on thedistribution date.7. In the case of any AGM Shares that are subject to mandatory repurchase by AGM from you pursuant to the provisions of theRestricted Share Award Agreement or the Retired Partner Share Award Agreement, as the case may be, the cash proceeds of suchmandatory repurchase shall be contributed by AGM, as agent for you, to the Partnership for distribution to APH and, for all purposesof this Award Letter, such cash contribution shall be treated as contributed by you to the Partnership and will increase your CapitalAccount, but you shall not have any right to receive any distributions with respect to any such increase in your Capital Account.8. For purposes of calculating your Giveback/Clawback Share, AGM Shares (including, for the avoidance of doubt, any AGMShares that have previously vested, but excluding any such AGM Shares that have previously been mandatorily repurchased by AGM)shall be valued, without regard to any restrictions thereon and/or whether or not you still retain such AGM Shares, based on thepurchase price of such AGM Shares as of the Grant Date. 9. You will be required to open and maintain a transfer agent account with American Stock Transfer and a brokerage account withMorgan Stanley Smith Barney and/or any replacement transfer agent or brokerage firm selected by AGM (such brokerage firm, the“Designated Broker”) for the purpose of purchasing, holding and disposing of AGM Shares as described hereunder. For the purposesof purchasing any AGM Shares as required hereunder, you hereby designate AGM as your authorized agent to instruct the DesignatedBroker to purchase AGM Shares on your behalf (it being understood that AGM will have the right, but not the obligation, to do so).You hereby (i) agree to execute and deliver such additional documents, certificates and instruments, and perform such additional acts,as may be reasonably requested by AGM as may, in AGM’s determination, be necessary or advisable to carry out the provisions ofthis paragraph 9, and (ii) authorize AGM or its designee to open any of the foregoing accounts on your behalf.V. Required Commitment1. In consideration for the grant of Points to you pursuant to this Award Letter, you will be required to make capital commitments orinvestments (the “Required Commitments”) to certain funds managed by AGM’s Credit Group (the “Credit Funds”) as determined byAGM’s Credit Senior Management. To the extent consistent with applicable law, upon your request, the Partnership, the GeneralPartner and AGM shall use their reasonable efforts to assist you in obtaining a credit facility to fund all or a portion of your RequiredCommitments.2. In advance of a fiscal year, AGM’s Credit Senior Management will propose the allocation of your Required Commitments to befunded in the upcoming year among the applicable Credit Funds (the “Required Commitment Allocation”). Your RequiredCommitments (including the Scheduled Installments (as defined below) of previously designated Required Commitments) that, in eachcase, have not been made may be subject to reallocation annually. Your Required Commitments and Required Commitment Allocationfor the 2014 fiscal year, and the funding schedule with respect thereto, is set forth on Annex D hereto (it being understood that thePartnership has no obligation to update Annex D after the date hereof, but that all current information with respect to the matters setforth on Annex D shall be recorded in the books and records of the Partnership and shall be available to you following your writtenrequest therefor).3. Your Required Commitment levels will be reviewed for upward revision every two years as agreed by the AGM ExecutiveCommittee and AGM Credit Senior Management. Your Required Commitments may be increased only in connection with an increasein your Points, which increase shall be proportionate thereto relative to what your Points had been prior to the adjustment in yourRequired Commitment.4. Your Required Commitments will be reduced by any capital commitments made by you since January 1, 2012 to Credit Funds.5. In the case of closed-end Credit Funds, your Required Commitments will be funded in accordance with capital calls made by suchCredit Funds (or the applicable Co-Investors (A) Entity through which you will make your Required Commitment to any such CreditFund).6. In the case of open-end and publicly traded Credit Funds, your Required Commitments for such Credit Funds will be funded overfour years, beginning on the first day of the first full calendar quarter following the Applicable Date, as follows: [˜] (each suchinstallment, a “Scheduled Installment”); provided that you may, in your sole discretion, satisfy your Required Commitment to anyCredit Fund, in whole or in part, prior to any Scheduled Installment.7. Notwithstanding the redemption or withdrawal provisions of any Credit Fund, you must maintain your investments: (i) in closed-end Credit Funds until your Termination Date (or, if different, according to the term of such Credit Funds); or (ii) in open-end orpublicly traded Credit Funds, for five years after the date of any such investment (or until your Termination Date, if earlier).8. So long as you are not a Retired Partner, you will not be charged any fees or any incentive allocations or carry on your RequiredCommitments, except where AGM does not have any discretion, such as in the case of the Public Vehicles. Upon your becoming aRetired Partner, AGM reserves the right to charge fees and/or incentive allocations or carry on your interests in any Credit Fundsacquired through your capital contributions in respect of your Required Commitments, effective at any time from and after the date youbecome a Retired Partner and so long as the level of fees and/or incentive allocation or carry charged on such interests in any CreditFunds shall be no greater than the fees and/or incentive allocation or carry charged generally to investors in such Credit Fund.9. Except as set forth in paragraph 10 below, any interests in any Credit Funds acquired through your capital contributions in respectof your Required Commitments with respect thereto will be owned by you, and shall not be subject to forfeiture (but only toperformance risk).10. If (a) you fail to fund your Required Commitment to a Credit Fund pursuant to the terms of the applicable Co-Investors (A)Partnership Agreement or the applicable Fund LP Agreement, after the cure periods (if any) set forth therein, or (b) in the case of anopen-end or publicly traded Credit Fund, you fail to make a Scheduled Installment within 30 days after notice of failure to fund by thequarterly due date for payment by AGM or the applicable Fund General Partner, or (c) you breach any of your obligations under the Partnership Agreement, and fail to cure such breach within 30 days after notice of breach from the General Partner, the General Partnermay elect to forfeit all or a portion of any of the following: (i) your Required Commitments to the applicable Credit Fund(s); (ii) any ofyour Points; (iii) any points that you have been awarded directly in the applicable Fund General Partner of such Credit Fund(s)(whether vested or unvested); and/or (iv) any of your unvested AGM Shares.VI. Recoupment PolicyTo the extent mandated by applicable law, stock exchange or accounting rule and as set forth in a written recoupment policy (e.g., withrespect to compensation paid based on financial statements that are later found to have been materially misstated) adopted by AGM,AGM Shares awarded hereunder and amounts distributed in respect of Points shall be subject to such law or policy.VII. Fee PaymentsSo long as you remain a Limited Partner of the Partnership, you will be entitled to receive payments of compensation (“FeePayments”) from Apollo Management Holdings, L.P. or its subsidiaries or successors (the “Management Company Entities”) inrespect of all pooled investments vehicles managed by the Credit Business that pay incentive fees to the Management CompanyEntities (the “Incentive Fee Vehicles”). An aggregate percentage of the incentive fees paid by the Incentive Fee Vehicles to theManagement Company Entities in respect of a Fiscal Year (the amount determined by applying such aggregate percentage, the “CIPIncentive Fees”) will be paid to CIP Participants (as defined below), which percentage, except as otherwise agreed by the GeneralPartner and AGM Credit Senior Management, shall correspond to the aggregate percentage of the Carried Interest Revenues allocatedby CIP Vehicles (as defined below) for the benefit of CIP Participants in respect of such Fiscal Year. Unless otherwise determined bythe General Partner in consultation with AGM Credit Senior Management, for each Fiscal Year you will receive as a Fee Payment thatportion of the CIP Incentive Fees allocable to Limited Partners of the Partnership represented by your Points in the Partnership. SuchFee Payment shall be made in (or by March 15th of the Fiscal Year that follows) the Fiscal Year in respect of which the CIP IncentiveFees were earned. All Fee Payments shall be treated as compensation for all U.S. federal income tax purposes and shall be subject toapplicable withholding in accordance with the usual payroll practices of the Management Company Entities. Your rights to FeePayments pursuant to this Section VII shall not constitute a profits interest, or any other equity interest, in the Management CompanyEntities. “CIP Participants” means Limited Partners in the Partnership, limited partners in Professionals LP and Team Members whohold points in CIP Vehicles. “CIP Vehicles” means Fund General Partners that, directly or indirectly, make allocations of CarriedInterest Revenues to the Partnership. “Team Member” means (i) a natural person whose services to AGM or its Affiliates aresubstantially dedicated to AGM’s or its Affiliates’ Credit Business, (ii) a natural person who, following the date hereof, becomes aRetired Partner and who, on or following the date hereof, held Points in his capacity as a Team Member, or (iii) a Related Party of anyof the foregoing.VIII. Bad Act and Designated ActEach of the terms “Bad Act” and “Designated Act” shall have the meanings set forth in Annex B hereto.IX. Restrictive Covenants1. You acknowledge and agree that your willingness to be bound by, and to abide by, the restrictions in favor of AGM regardingconfidentiality, non-solicitation, non-interference, non-disparagement and non-competition set forth in Annex C hereto (collectively,the “Restrictive Covenants”), was a material factor in the decision to grant Points to you, and that such grant, any bonus you mayreceive in respect of Credit Business management company income (a “Management Bonus”), and any Fee Payments would not haveoccurred in the absence of such binding Restrictive Covenants. You hereby agree to the acknowledgements and covenants set forth onAnnex C.2. If you materially breach any of your Restrictive Covenants in a jurisdiction where such Restrictive Covenant is invalid orunenforceable, the General Partner may elect to forfeit all or a portion of (i) your Points, (ii) any points that you have been awardeddirectly in any Fund General Partner of any Credit Fund (whether vested or unvested), and/or (iii) any of your unvested AGM Shares.3. AGM will be subject to restrictions in favor of you regarding non-disparagement set forth in paragraph (f) of Annex C.4. The confidentiality and non-disparagement restrictions set forth in Annex C hereto shall survive indefinitely following yourTermination.X. Effect of RetirementRetirements Generally:Upon becoming a Retired Partner for any reason, all of your Points and your unvested AGM Shares shall automatically be forfeited, except as provided in the next paragraph, and Sections 4.1(e), 7.3(b) and 7.3(c) of the Partnership Agreement shall apply, unless youbecome a Retired Partner by reason of a Bad Act.Retirement Without Cause or Bad Act that gives rise to a Tail Period:Upon your becoming a Retired Partner without Cause (as defined in the AGM 2007 Equity Incentive Plan) and other than by reasonof a Bad Act, and subject to your not having breached any of the Restrictive Covenants and executed (not later than 60 days after yourseparation from service), and not revoked, a customary general release of claims in favor of AGM (which shall include customarycarveouts for indemnity and vested compensatory payments), you will retain the Points you held as of your Retirement Date (it beingunderstood that if the Points have been reduced in accordance with the terms and conditions set forth herein during the 365 dayspreceding your Retirement Date, then you will retain for such purposes that number of Points equal to the weighted average number ofPoints awarded to you during such period) (the “Tail Rate”) for the duration of the period following your Retirement Date thatcorresponds to your post-Termination non-compete period (it being understood, for the avoidance of doubt, that such duration shall notbe longer than the period during which such post-Termination non-competition covenant applies after your Termination Date (aftergiving effect to any applicable notice period) and that, provided you have not breached any of the Restrictive Covenants, any waiverby AGM of any portion of the post-Termination non-compete period shall be ignored in determining the duration of your Tail Rate)(any such period during which you have not breached any of your Restrictive Covenants is referred to herein as the “Tail Period”). Allof your Points will be automatically forfeited upon the expiration of the Tail Period, and Sections 4.1(e), 7.3(b) and 7.3(c) of thePartnership Agreement shall apply mutatis mutandis to you.The Tail Rate will be applicable only if you become a Retired Partner after a varying period of time following the Applicable Date,depending on your initial employment date with AGM: [˜]Any payments made to you with respect to the Tail Period shall be made in accordance with the regular payment schedule in effect forLimited Partners who are not Retired Partners from time to time, subject to the foregoing and the requirements of Section 409A of theCode, and shall only be made to the extent of any income previously allocated to you.XI. Forfeited PointsSubject to Section III, any forfeited Points shall be available to be reallocated; it being understood that the Points of a Partner entitled toa Tail Rate shall not be forfeited until the expiration of such Partner’s Tail Period and any distributions arising therefrom shall be madeto such Partner to the extent of any income previously allocated to such Partner (notwithstanding that such distribution may occur afterthe expiration of such Partner’s Tail Rate).XII. [Reserved]XIII. Miscellaneous1. The Partnership Agreement, this Award Letter, any Management Bonus or Fee Payment and related documentation and rights areintended to be exempt from Code Section 409A or, if and to the extent subject to Code Section 409A, to comply therewith.Accordingly, to the maximum extent permitted, such documents shall be interpreted and be administered to be in compliance withCode Section 409A. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid acceleratedtaxation and/or tax penalties under Code Section 409A, no distributions owing by reason of termination of employment or servicehereunder shall be due until you would be considered to have incurred a “separation from service” from AGM and/or its Affiliateswithin the meaning of Code Section 409A. Any distributions that are due within the “short-term deferral period” or fall within the“separation pay exemption” within the meaning of Code Section 409A shall not be treated as deferred compensation unless applicablelaw requires otherwise. Each amount to be paid or benefit to be provided to a you from AGM and its Affiliates, whether pursuant tothe Partnership Agreement or otherwise that constitutes deferred compensation subject to Code Section 409A shall be construed as aseparate payment for purposes of Code Section 409A. Notwithstanding anything to the contrary in the Partnership Agreement orrelated documentation, to the extent that any distributions to be made upon your separation from service would result in the impositionof any individual penalty tax imposed under Code Section 409A on account of your being a “specified employee” within the meaningof Code Section 409A, the distributions shall instead be made on the first business day after the earlier of (i) the date that is six monthsfollowing such separation from service and (ii) your death. In no event shall AGM or any of its Affiliates (or any agent thereof) haveany liability to you or any other Person due to any failure of the Partnership, any Management Bonus, any Fee Payment or anyassociated documentation to satisfy the requirements of Code Section 409A.2. No officer, director, employee or agent of AGM or any of its Affiliates shall be personally liable for any action, omission,determination, or interpretation taken or made with respect to the Partnership, any Fee Payment, Management Bonus or any associateddocumentation.3. AGM may, in its sole discretion, decide to deliver any documents related to the Partnership Agreement, Fee Payments, any Management Bonus and any associated documentation by electronic means or to request your consent to participate in any of theforegoing by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, to agree toparticipate therein through an online or electronic system established and maintained by AGM, an Affiliate or a third party designatedthereby.4. Any Management Bonus or Fee Payment shall be subject to applicable withholding.5. By your acceptance of, and as a condition of the payment to you of, the initial distributions or other payments on or after the datehereof of any amounts hereunder and under the Partnership Agreement, and in accordance with the Credit Incentive Plan CommitmentLetter previously executed by you, you acknowledge and agree that you are subject to this Award Letter, the Partnership Agreementand any other agreements referred to herein or therein and are bound by, and shall be treated as a party to, all of the foregoingagreements (including as the same may be amended or modified from time to time in accordance with their terms).6. This Award Letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to theprinciples of conflicts of laws that would cause the laws of another jurisdiction to apply. Any dispute or controversy involving thePartnership Agreement and this Award Letter and/or any other documents to which you are a party relating to the Credit Businessincentive plan of which this Award Letter and the Partnership Agreement form a part shall be governed by and construed inaccordance with the laws of the State of Delaware. Any dispute or controversy arising out of or relating to the Partnership, other thaninjunctive relief in the event of a breach or threatened breach of the Restrictive Covenants, will be settled exclusively by arbitration asprovided in the Partnership Agreement, such that the provisions of Section 9.7(b) and 9.7(c) of the Partnership Agreement shall applymutatis mutandis to this Award Letter. This Award Letter is binding on and enforceable against the General Partner, the Partnershipand you. This Award Letter may be amended only with the consent of each party hereto. The Partnership or the General Partner mayprovide copies of this Award Letter to other Persons. This Award Letter may be executed by facsimile and in one or morecounterparts, all of which shall constitute one and the same instrument.[remainder of page intentionally left blank]You have confirmed that the above correctly reflects our understanding and agreement with respect to the foregoing matters.Very truly yours,APOLLO CIP PARTNER POOL, L.P.By: Apollo CIP GenPar, Ltd.,its General PartnerBy: Name: Title: APOLLO CIP GENPAR, LTD. in its capacity as the General Partner of Apollo CIP Partner Pool, L.P.By: Name: Title: Restricted AGM Share Award Grant Notice and Restricted AGM Share Award AgreementShare Award Grant Notice Share Award Agreement (for Retired Partners)Definitions“Bad Act” means your:(i) commission of an intentional violation of a material law or regulation in connection with any transaction involving thepurchase, sale, loan, pledge or other disposition of, or the rendering of investment advice with respect to, any security, asset, futures orforward contract, insurance contract, debt instrument or currency, in each case, that has a significant adverse effect on your ability toperform your services to AGM or any of its Affiliates;(ii) commission of an intentional and material breach of a material provision of a written Apollo Code of Conduct (other thanany Apollo Code of Conduct adopted after the date of your admission to Apollo CIP Partner Pool, L.P. with the primary purpose ofcreating or finding “Bad Acts”);(iii) commission of intentional misconduct in connection with your performance of services for AGM or any of its Affiliates;(iv) commission of any misconduct that, individually or in the aggregate, has caused or substantially contributed to, or isreasonably likely to cause or substantially contribute to, material economic or reputational harm to AGM or any of its Affiliates(excluding any mistake of judgment made in good faith with respect to a portfolio investment or account managed by AGM or itsAffiliates, or a communication made to the principals or other partners, in a professional manner, of a good faith disagreement with aproposed action by AGM or any of its Affiliates);(v) conviction of a felony or plea of no contest to a felony charge, in each case, if such felony relates to AGM or any of itsAffiliates;(vi) fraud in connection with your performance of services for AGM or any of its Affiliates; or(vii) embezzlement from AGM or any of its Affiliates or interest holders;provided, however, that:(a) you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure, the itemsset forth in clauses (ii) and (iv); and(b) during the pendency of any felony charge under clause (v), AGM and its Affiliates may suspend payment of anydistributions in respect of your Points, and if (I) you are later acquitted or otherwise exonerated from such charge, or (II) youremployment or service with AGM or its applicable Affiliate does not terminate, then (A) AGM or its applicable affiliate shall pay toyou all such accrued but unpaid distributions with respect to vested Points, with interest calculated from the date such distributionswere suspended at the prime lending rate in effect on the date of such suspension, and (B) throughout the period of suspension (or untilthe date of termination of your employment or service, if earlier), distributions with respect to unvested Points shall continue to accrue,and Points shall continue to vest, in accordance with the terms and conditions set forth herein.“Designated Act” means your: (i) intentional breach of any material provision of an award agreement or any other agreements of AGM or any of itsAffiliates;(ii) failure to devote a significant portion of your time to performing services as an agent of AGM without the prior writtenconsent of AGM, other than by reason of death or Disability; or(iii) suspension or other disciplinary action against you by an applicable regulatory authority;provided, however, that you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure,the item set forth in clause (i).For purposes of this Annex B, the term “Affiliate” includes Portfolio Companies.Restrictive Covenants[˜]2014 Fiscal Year Required Commitments and Required Commitment Allocation1. Required Commitment: $______________.2. Required Commitment Allocation: [˜]3. Funding Schedule: [˜]. CONFIDENTIAL & PROPRIETARY This limited partnership is the general partner of Apollo Credit Opportunity Fund III LP and Apollo Credit OpportunityFund III (Offshore) LP and earns “carried interest” on COF III profits. APOLLO CREDIT OPPORTUNITY ADVISORS III (APO FC) LPSecond Amended and RestatedAgreement of Limited Partnership Dated as of December 18, 2014 TABLE OF CONTENTSPageARTICLE 1DEFINITIONS 2Section1.1Definitions; Interpretation 2ARTICLE 2FORMATION AND ORGANIZATION 9Section2.1Formation 9Section2.2Name 10Section 2.3PrincipalOffices; Registered Office and Agent 10Section 2.4Term ofPartnership 10Section 2.5Purposeof the Partnership 11Section 2.6Actionsby Partnership 11Section2.7Admission of Limited Partners 11ARTICLE 3CAPITAL 11Section3.1Contributions to Capital 11Section 3.2Rights ofPartners in Capital 12Section 3.3CapitalAccounts 13Section3.4Allocation of Profit and Loss 14Section 3.5TaxAllocations 16Section 3.6TaxTreatment of Points 16Section3.7FATCA 17Section3.8Reserves; Adjustments for Certain Future Events 18Section 3.9Finalityand Binding Effect of General Partner’s Determinations 19Section 3.10Alternative GP Vehicles 19ARTICLE 4DISTRIBUTIONS 20Section4.1Distributions 20Section4.2Withholding of Certain Amounts 22Section4.3Limitation on Distributions 23Section4.4Distributions in Excess of Basis 23 ARTICLE 5MANAGEMENT 23Section 5.1Rightsand Powers of the General Partner 23Section5.2Delegation of Duties 24Section5.3Transactions with Affiliates 25Section5.4Expenses 25Section 5.5Rights ofLimited Partners 25Section 5.6OtherActivities of General Partner 26Section 5.7Duty ofCare; Indemnification 26ARTICLE 6ADMISSIONS, TRANSFERS AND WITHDRAWALS 28Section6.1Admission of Additional Limited Partners; Effect on Points 28Section6.2Admission of Additional General Partner 28Section 6.3Transferof Interests of Limited Partners 28Section6.4Withdrawal of Partners 30Section6.5Pledges 30ARTICLE 7ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERS 31Section7.1Allocation of Points 31Section7.2Retirement of Partner 33Section 7.3Effect ofRetirement on Points 33ARTICLE 8DISSOLUTION AND LIQUIDATION 33Section8.1Dissolution and Liquidation of Partnership 33ARTICLE 9GENERAL PROVISIONS 34Section9.1Consistent Economic Treatment 34Section 9.2CarriedInterest Related to the Fund 35Section9.3Amendment of Partnership Agreement and Co-Investors (A) Partnership Agreement 35Section 9.4SpecialPower-of-Attorney 36Section9.5Notices 38Section9.6Agreement Binding Upon Successors and Assigns 38Section 9.7Merger, Consolidation, etc. 39Section9.8Governing Law; Dispute Resolution 39Section9.9Termination of Right of Action 40Section 9.10Not for Benefit of Creditors 41Section 9.11Reports 41Section 9.12Filings 41Section 9.13Counterparts 41APOLLO CREDIT OPPORTUNITY ADVISORS III (APO FC) LPSECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIPSECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of APOLLO CREDITOPPORTUNITY ADVISORS III (APO FC) LP, a Delaware limited partnership (the “Partnership”), dated as of December __, 2014,by and among Apollo Credit Opportunity Advisors III (APO FC) GP LLC, a Delaware limited liability company, as the sole generalpartner (the “General Partner”), APH Holdings (FC), L.P., a Cayman Islands exempted limited partnership (“APH”), Apollo CIPPartner Pool, L.P., a Cayman Islands exempted limited partnership (“Partner Pool LP”), Apollo CIP Professionals, L.P., a Delawarelimited partnership (“Professionals LP”) (with effect from and after January 1, 2015), and the other Persons (as defined below) whoshall execute this Agreement, whether in counterpart, by separate instrument, or otherwise, and hereafter shall be admitted to thePartnership as limited partners in accordance with the provisions hereof and whose names and addresses shall, upon such admission,be reflected in the Register of Partners (as defined below) as limited partners of the Partnership (together with APH, Partner Pool LPand Professionals LP, the “Limited Partners,” and each, a “Limited Partner”).R E C I T A L S :A. The Partnership was formed as a limited partnership under the Delaware Act (as defined below) upon the filing ofa Certificate of Limited Partnership of the Partnership (the “Certificate”) with the Office of the Secretary of State of the State ofDelaware on October 22, 2014.B. The General Partner and APH have entered into an Amended and Restated Agreement of Limited Partnership ofthe Partnership, dated as of October 24, 2014 (the “Amended Agreement”).C. On October 27, 2014, Apollo Credit Opportunity Advisors III LP transferred, conveyed, assigned and delivered tothe Partnership all of its right, title and interest in and to all of the general partner interests in COF III (as defined below).D. On October 27, 2014, APH Holdings (DC), L.P. transferred, conveyed, assigned and delivered to APH all of itsright, title and interest into all of the limited partnership interests in the Partnership.E. The parties hereto acknowledge and agree that Professionals LP will be admitted to the Partnership effectiveJanuary 1, 2015, and that the provisions hereof (including rights to allocations and distributions) with respect to Professionals LP willnot take effect until such date.F. The parties hereto desire to amend and restate the Amended Agreement to reflect: (i) the admission of thosePersons party hereto who are listed on the Register of Partners as Limited Partners of the Partnership on the date hereof (but subject toRecital E with respect to Professionals LP); and (ii) the modifications set forth herein.NOW, THEREFORE, the parties hereby agree to amend and restate the Amended Agreement in its entirety to read asfollows:Article 1 DEFINITIONSSection 1.1 Definitions; Interpretation. (a) Capitalized terms used but not otherwise defined herein have the following meanings:“Affiliate” means with respect to any Person any other Person directly or indirectly controlling, controlled by or undercommon control with such Person. Except as the context otherwise requires, the term “Affiliate” in relation to AGM includes eachcollective investment fund and other client account sponsored or managed by AGM or its affiliated asset management entities, but, ineach case, does not include Portfolio Companies (except with respect to Bad Acts), Partner Pool LP or Professionals LP or any of thelimited partners of Partner Pool LP or Professionals LP.“AGM” means Apollo Global Management, LLC, a Delaware limited liability company.“Agreement” means this Second Amended and Restated Agreement of Limited Partnership, as amended orsupplemented from time to time.“Alternative GP Vehicle” has the meaning set forth in Section 3.10.“Amended Agreement” has the meaning set forth in Recital B.“APH” has the meaning set forth in the preamble.“APH Percentage” has the meaning agreed by the General Partner and AGM Credit Senior Management prior to thedate hereof.“Award Letter” means, with respect to any Limited Partner, the letter agreement between the Partnership and suchLimited Partner setting forth (i) such Limited Partner’s Points, (ii) such Limited Partner’s vesting schedule, (iii) the formula applied tocalculate the Holdback Amount with respect to such Limited Partner, (iv) any restrictive covenants with respect to such LimitedPartner, (v) the definition of “Bad Act,” (vi) the definition of “Designated Act,” and (vii) any other terms applicable to such LimitedPartner.“Bad Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Book-Tax Difference” means the difference between the Carrying Value of a Partnership asset and its adjusted taxbasis for United States federal income tax purposes, as determined at the time of any of the events described in the definition ofCarrying Value, which for purposes of this Agreement shall include any accrued income in respect of securities contributed to or held(directly or indirectly) by the Partnership as of the date of any such event. The General Partner shall maintain an account in the name ofeach Limited Partner that reflects such Limited Partner’s share of any Book-Tax Difference.“Capital Account” means with respect to each Partner the capital account established and maintained on behalf of suchPartner as described in Section 3.3.“Capital Loss” means, for each Fund with respect to any Fiscal Year, the portion of any Net Loss allocable to thePartnership, but only to the extent such allocation is made by such Fund to the Partnership in proportion to the Partnership’s capitalcontribution to such Fund, as determined pursuant to the applicable Fund LP Agreement.“Capital Profit” means, for each Fund with respect to any Fiscal Year, the portion of any Net Income allocable to thePartnership, but only to the extent such allocation is made by such Fund to the Partnership in proportion to the Partnership’s capitalcontribution to such Fund, as determined pursuant to the applicable Fund LP Agreement.“Carried Interest Revenues” means distributions received by the Partnership pursuant to Sections 4.2(a)(iv)(A) and4.2(a)(v)(A) (or the corresponding provisions) of the applicable Fund LP Agreement.“Carrying Value” means, with respect to any Partnership asset, the asset’s adjusted basis for United States federalincome tax purposes, except that the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair marketvalues (as determined by the General Partner), in accordance with the rules set forth in Treasury Regulations section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, immediately prior to: (i) the date of the acquisition of any interests in the Partnership by anynew Partner or any additional interests by an existing Partner in exchange for more than a de minimis capital contribution; (ii) the dateof the distribution of more than a de minimis amount of any Partnership asset to a Partner, including cash as consideration for aninterest in the Partnership; (iii) the date of the grant of more than a de minimis profits interest in the Partnership as consideration for theprovision of services to or for the benefit of the Partnership by an existing Partner, or by a new Partner acting in his capacity as aPartner or in anticipation of becoming a Partner, including the issuance of Points to Partner Pool LP pursuant to the terms hereof; or(iv) the liquidation of the Partnership within the meaning of Treasury Regulations section 1.704-l(b)(2)(ii)(g); provided, that anyadjustment pursuant to clauses (i), (ii) and (iii) above shall be made only if the General Partner reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners. The Carrying Value of anyPartnership asset distributed to any Partner shall be adjusted immediately prior to such distribution to equal its fair market value (asdetermined by the General Partner). The Carrying Value of any asset contributed by a Partner to the Partnership shall be the fair marketvalue (as determined by the General Partner) of the asset at the date of its contribution. The General Partner may treat any of theenumerated events in clauses (i) through (iv) hereof that actually occur at Partner Pool LP (or that may be deemed to occur at PartnerPool LP under the terms of the limited partnership agreement of Partner Pool LP, as in effect from time to time) as occurring at thePartnership for purposes of determining the Carrying Value of the Partnership’s assets.“Catch Up Amount” means the product derived by multiplying (i) the amount of any Book-Tax Difference arising onthe admission to the Partnership of a Newly-Admitted Limited Partner or a reallocation of Points described in Section 4.1(f)(ii) by (ii)the percentage derived by dividing the number of Points issued to the Newly-Admitted Limited Partner or reallocated to the applicableLimited Partner as described in Section 4.1(f)(ii), by the aggregate number of Points on the date the Newly-Admitted Limited Partner isadmitted to the Partnership or the date of the applicable reallocation of Points pursuant to this Agreement. The General Partner shallmaintain an account in the name of each Newly-Admitted Limited Partner (and any Limited Partner receiving a reallocation of Pointsin respect of which Section 4.1(f)(ii) applies) that reflects such Limited Partner’s Catch Up Amount, which shall be adjusted asnecessary to reflect any subsequent reduction in such Book-Tax Difference corresponding to any subsequent negative adjustments toCarrying Value of the Partnership’s assets that relate to such Book-Tax Difference, and which may be further adjusted to the extent theGeneral Partner determines in its sole discretion is necessary to cause the Catch Up Amount to be equal to the amount necessary toprovide the applicable Limited Partner with a requisite share of Partnership capital based on such Limited Partner’s Points inaccordance with the terms of this Agreement and such Limited Partner’s Award Letter.“Certificate” has the meaning set forth in Recital A.“Clawback Payment” means any payment required to be made by the Partnership to any Fund pursuant to Section10.3(c) (or the corresponding provision) of the Fund LP Agreement of such Fund.“Clawback Share” means, as of the time of determination, with respect to any Limited Partner and any ClawbackPayment a percentage of such Clawback Payment equal to the quotient (expressed as a percentage) of (a) the cumulative amount ofOperating Profit attributable to the Fund in respect of which the Clawback Payment is required to be made that has been distributed tosuch Limited Partner, divided by (b) the cumulative amount so distributed to all Limited Partners with respect to such Operating Profitattributable to such Fund.“Code” means the United States Internal Revenue Code of 1986, as amended and as hereafter amended, or anysuccessor law.“COF III” means (i) Apollo Credit Opportunity Fund III LP, a Delaware limited partnership, and/or (ii) Apollo CreditOpportunity Fund III (Offshore) LP, a Delaware limited partnership, as the context requires.“Co-Investors (A)” means Apollo Credit Opportunity Co-Investors III (A), L.P., a Delaware limited partnership.“Co-Investors (A) Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership ofCo-Investors (A), as in effect from time to time.“Covered Person” has the meaning set forth in Section 5.7(a).“Credit Business” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“DEUCC” has the meaning set forth in Section 6.5(c).“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §§ 17-101 et seq.), asamended and in effect from time to time, or any successor law.“Designated Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Discretionary Share” has the meaning set forth in Section 4.1(b).“Disability” has the meaning ascribed to that term in the Apollo Global Management LLC 2007 Omnibus EquityIncentive Plan.“FATCA” means: (i) Sections 1471 to 1474 of the Code, and any associated legislation, regulations or guidance, orsimilar legislation, regulations or guidance enacted in any jurisdiction which seeks to implement similar tax reporting and/orwithholding tax regimes; (ii) any intergovernmental agreement, treaty, regulation, guidance or any other agreement entered into in order to comply with, facilitate, supplement or implement the legislation, regulations or guidance described in clause (i); and (iii) anylegislation, regulations or guidance in an applicable non-U.S. jurisdiction that give effect to the matters outlined in the precedingclauses.“Final Adjudication” has the meaning set forth in Section 5.7(a).“Fiscal Year” means, with respect to a year, the period commencing on January 1 of such year and ending onDecember 31 of such year (or on the date of a final distribution pursuant to Section 8.1(a)), unless the General Partner shall electanother fiscal year for the Partnership which is a permissible taxable year under the Code.“Fund” means COF III. Such term also includes each alternative investment vehicle created by COF III, to the extentthe context so requires.“Fund LP Agreement” means the limited partnership agreement of any Fund, as amended from time to time, and, to theextent the context so requires, the corresponding constituent agreement, certificate or other document governing each such Fund.“General Partner” has the meaning set forth in the preamble, and includes any successor to the business of the GeneralPartner in its capacity as general partner of the Partnership.“Giveback Share” means, as of the time of determination, with respect to any Limited Partner and any PartnerGiveback Payment, a percentage of such Partner Giveback Payment equal to the quotient (expressed as a percentage) of (a) thecumulative amount of Capital Profit and Operating Profit attributable to the Fund in respect of which the Partner Giveback Payment isrequired to be made that has been distributed to such Limited Partner, divided by (b) the cumulative amount so distributed to allLimited Partners with respect to such Capital Profit and Operating Profit attributable to such Fund.“Governmental Authority” means: (i) any government or political subdivision thereof, whether non‑U.S. or U.S.,national, state, county, municipal or regional; (ii) any agency or instrumentality of any such government, political subdivision or othergovernment entity (including any central bank or comparable agency); and (iii) any court.“Holdback Amount” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Home Address” has the meaning set forth in Section 9.5.“JAMS” has the meaning set forth in Section 9.8(b).“Intermediate Pooling Vehicles” means Apollo CIP Hedge Funds, L.P., Apollo CIP Structured Credit, L.P., ApolloCIP European SMAs & CLOs, L.P., Apollo CIP Global SMAs, L.P. and Apollo CIP US SMAs, L.P., each a Cayman Islandsexempted limited partnership.“Limited Partner” means any Person admitted as a limited partner to the Partnership in accordance with thisAgreement, including any Retired Partner, until such Person withdraws entirely as a limited partner of the Partnership, in his or hercapacity as a limited partner of the Partnership. All references herein to a Limited Partner shall be construed as referring collectively tosuch Limited Partner and to each Related Party of such Limited Partner (and to each Person of which such Limited Partner is a RelatedParty) that also is or that previously was a Limited Partner, except to the extent that the General Partner determines that the contextdoes not require such interpretation as between such Limited Partner and his Related Parties.“Losses” has the meaning set forth in Section 5.7(a).“Manager” or “Investment Manager” has the meaning ascribed to that term in each of the Fund LP Agreements.“Net Income” has the meaning ascribed to that term in each of the Fund LP Agreements.“Net Loss” has the meaning ascribed to that term in each of the Fund LP Agreements.“Newly-Admitted Limited Partner” has the meaning set forth in Section 4.1(f)(i).“Operating Loss” means, with respect to any Fiscal Year, any Net Loss, adjusted to exclude (a) any Capital Profit orCapital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by the Partnership. Tothe extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with thesame accounting policies, principles and procedures applicable to the determination by the relevant Fund, and any items not derivedfrom a Fund shall be determined in accordance with the accounting policies, principles and procedures used by the Partnership for U.S.federal income tax purposes. Operating Loss shall not include any loss attributable to a Book-Tax Difference. “Operating Profit” means, with respect to any Fiscal Year, any Net Income, adjusted to exclude (a) any Capital Profitor Capital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by the Partnership.To the extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with thesame accounting policies, principles and procedures applicable to the determination by the relevant Fund, and any items not derivedfrom a Fund shall be determined in accordance with the accounting policies, principles and procedures used by the Partnership for U.S.federal income tax purposes. Operating Profit shall not include any income or gain attributable to a Book-Tax Difference.“Other Agreements” has the meaning set forth in Section 9.3(b).“Other Phantom Operating Profit” has the meaning set forth in Section 3.4(a).“Partner” means the General Partner or any of the Limited Partners, and “Partners” means the General Partner and allof the Limited Partners.“Partner Giveback Payment” means any payment required to be made by the Partnership to any Fund pursuant toSection 6.5(c) (or the corresponding provision) of the Fund LP Agreement of such Fund.“Partner Pool LP” has the meaning set forth in the preamble.“Partnership” has the meaning set forth in the preamble.“Person” means any individual, partnership (whether or not having separate legal personality), corporation, limitedliability company, joint venture, joint stock company, unincorporated organization or association, trust (including the trustees thereof,in their capacity as such), government, governmental agency, political subdivision of any government, or other entity.“Phantom Operating Profit Limitation” has the meaning set forth in Section 3.4(a).“Point” means a share of Operating Profit or Operating Loss. The aggregate number of Points available for assignmentto all Partners shall be 2,000.“Portfolio Company” has the meaning ascribed to that term in each of the Fund LP Agreements.“Portfolio Investment” has the meaning ascribed to that term in each of the Fund LP Agreements.“Professionals LP” has the meaning set forth in the preamble.“Public Vehicles” means (i) Apollo Investment Corporation (NASDAQ: AINV); (ii) Apollo Commercial Real EstateFinance, Inc. (NYSE: ARI); (iii) Apollo Residential Mortgage, Inc. (NYSE: AMTG); and (iv) Apollo Tactical Income Fund Inc.(NYSE: AIF).“Reference Rate” means the interest rate announced publicly from time to time by JPMorgan Chase Bank in NewYork, New York as such bank’s prime rate.“Register of Partners” means a register of partners to be maintained by the General Partner showing the followinginformation with respect to each Partner: name, address, date of admission and retirement and required capital contribution (if any).“Related Party” means, with respect to any Limited Partner:(a) any spouse, child, parent or other lineal descendant of such Limited Partner or such Limited Partner’sparent, or any natural Person who occupies the same principal residence as such Limited Partner;(b) any trust or estate in which such Limited Partner and any Related Party or Related Parties (other than suchtrust or estate) collectively have more than 80% of the beneficial interests (excluding contingent and charitable interests);(c) any entity of which such Limited Partner and any Related Party or Related Parties (other than such entity)collectively are beneficial owners of more than 80% of the equity interest; and(d) any Person with respect to whom such Limited Partner is a Related Party.“Required Commitment” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Retired Partner” means any Limited Partner who has become a retired partner in accordance with or pursuant to Section 7.2.“Retirement Date” means, with respect to any Limited Partner, the date as of which such Person becomes a RetiredPartner.“Safe Harbor” means the election described in the Safe Harbor Regulation, pursuant to which a partnership and all ofits partners may elect to treat the fair market value of a partnership interest that is transferred in connection with the performance ofservices as being equal to the liquidation value of that interest.“Safe Harbor Election” means the election by a partnership and its partners to apply the Safe Harbor, as described inthe Safe Harbor Regulation and IRS Notice 2005-43, issued on May 20, 2005.“Safe Harbor Regulation” means Proposed Regulations Section 1.83-3(l) issued on May 24, 2005.“Team Member” has the meaning ascribed to that term in a Limited Partner’s Award Letter.“Transfer” means any direct or indirect sale, exchange, transfer, assignment or other disposition by a Partner of any orall of his or her interest in the Partnership or an economic benefit thereof (whether with respect to, for example, economic rights only orall the rights associated with the interest) to another Person, whether voluntary or involuntary.“Vested Points” means, with respect to any Limited Partner (other than Partner Pool LP and Professionals LP), as ofthe date of determination, such Limited Partner’s Points that have vested, as calculated in accordance with the provisions set forth insuch Limited Partner’s Award Letter.(b) The headings in this Agreement are inserted for convenience of reference only and shall not affect theinterpretation of this Agreement. As used herein, masculine pronouns shall include the feminine and neuter, neuter pronouns shallinclude the masculine and the feminine, and the singular shall be deemed to include the plural. The use of the word “including” hereinshall not be considered to limit the provision which it modifies but instead shall mean “including, without limitation.”(c) As used in this Agreement, the phrases “any provision of this Agreement,” “the provisions of this Agreement” andderivative or similar phrases, and the terms “hereof,” “herein,” “hereby” and derivative or similar words, shall mean or refer only toany express provision actually written in this Agreement and not to any provision of the Delaware Act that may have application to thePartnership.ARTICLE 2 FORMATION AND ORGANIZATIONSection 2.1 FormationThe Partnership was formed and is hereby continued as a limited partnership under and pursuant to the Delaware Act.The General Partner shall execute, acknowledge and file any amendments to the Certificate as may be required by the Delaware Act,and any other instruments, documents and certificates which, in the opinion of the Partnership’s legal counsel, may from time to timebe required by the laws of the State of Delaware, the United States of America or any other jurisdiction in which the Partnership shalldetermine to do business, or any political subdivision or agency thereof, or which such legal counsel may deem necessary orappropriate to effectuate, implement and continue the valid and subsisting existence and business of the Partnership.Section 2.2 NameThe name of the Partnership shall be “Apollo Credit Opportunity Advisors III (APO FC) LP” or such other name as theGeneral Partner hereafter may adopt upon causing an appropriate amendment to be made to this Agreement and to the Certificate to befiled in accordance with the Delaware Act. The General Partner shall give notice of any name change to each Limited Partner.Section 2.3 Principal Offices; Registered Office and Agent(a) The Partnership shall maintain its principal office, and may maintain one or more additional offices, at suchplace or places as the General Partner may from time to time determine.(b) The General Partner shall arrange for the Partnership to have and maintain in the State of Delaware, at theexpense of the Partnership, a registered office and registered agent for service of process on the Partnership as required by theDelaware Act.Section 2.4 Term of Partnership (a) The term of the Partnership shall continue until the dissolution (without continuation) of all of the Funds orthe earliest of:(i) at any time there are no Limited Partners, unless the business of the Partnership is continued inaccordance with the Delaware Act;(ii) the occurrence of any event that results in the General Partner’s ceasing to be a general partner ofthe Partnership under the Delaware Act; provided that the Partnership shall not be dissolved or required to be wound up inconnection with any such event if (A) at the time of the occurrence of such event there is at least one remaining general partnerof the Partnership who is hereby authorized to and does carry on the business of the Partnership, or (B) within 90 days afternotice of the occurrence of such event, a majority of the Limited Partners agree in writing or vote to continue the business ofthe Partnership and to the appointment, effective from the date of such event, if required, of one or more additional generalpartners of the Partnership; or(iii) the entry of a decree of judicial dissolution under Section 17-802 of the Delaware Act.(b) The parties agree that irreparable damage would be done to the Partnership and reputation of the Partners ifany Limited Partner should bring an action to dissolve the Partnership. Care has been taken in this Agreement to provide for fair andjust payment in liquidation of the interests of all Partners. Accordingly, to the fullest extent permitted by law, each Limited Partnerhereby waives and renounces his right to seek a decree of dissolution or to seek the appointment of a liquidator for the Partnership,except as expressly provided herein.Section 2.5 Purpose of the PartnershipThe principal purpose of the Partnership is to act as the sole general partner of each of the Funds pursuant to theirrespective Fund LP Agreements and to undertake such related and incidental activities and execute and deliver such related documentsnecessary or incidental thereto.Section 2.6 Actions by PartnershipThe Partnership may execute, deliver and perform, and the General Partner may execute and deliver, all contracts,agreements and other undertakings, and engage in all activities and transactions as may in the opinion of the General Partner benecessary or advisable to carry out the objects and purposes of the Partnership, without the approval or vote of any Limited Partner.Section 2.7 Admission of Limited PartnersOn the date hereof, the Persons whose names are set forth in the Register of Partners under the caption “LimitedPartners” shall be admitted to the Partnership or shall continue, as the case may be, as Limited Partners of the Partnership upon theirexecution of a counterpart of this Agreement or such other instrument evidencing, to the satisfaction of the General Partner, suchLimited Partner’s intent to become a Limited Partner. Additional Limited Partners may be admitted to the Partnership in accordancewith Section 6.1.ARTICLE 3 CAPITALSection 3.1 Contributions to Capital(a) Subject to the remaining provisions of this Section 3.1, (i) any required contribution of a Limited Partner tothe capital of the Partnership shall be as set forth in the Register of Partners, and (ii) any such contributions to the capital of thePartnership shall be made as of the date of admission of such Limited Partner as a limited partner of the Partnership and as of each suchother date as may be specified by the General Partner. Except as otherwise permitted by the General Partner, all contributions to thecapital of the Partnership by each Limited Partner shall be payable exclusively in cash.(b) APH shall make capital contributions from time to time to the extent necessary to ensure that thePartnership meets its obligations to make contributions of capital to each of the Funds.(c) No Partner shall be obligated, nor shall any Partner have any right, to make any contribution to the capitalof the Partnership, except as may be agreed from time to time between such Partner and the General Partner (including in an AwardLetter) and other than as specified in this Section 3.1. No Limited Partner shall be obligated to restore any deficit balance in his CapitalAccount. (d) To the extent, if any, that at the time of the Final Distribution (as defined in each of the Fund LPAgreements) or at any time prior thereto (whether pursuant to the provisions of the applicable Fund LP Agreement, upon thedetermination of the Partnership or otherwise), it is determined that the Partnership, as a general partner of each of the Funds, isrequired to make any Clawback Payment with respect to any of the Funds, each Limited Partner shall be required to participate in suchpayment and contribute to the Partnership, for ultimate distribution to the limited partners of the relevant Fund, an amount equal to suchLimited Partner’s Clawback Share of any Clawback Payment, but not in any event, together with any Partner Giveback Paymentsmade by such Limited Partner from the return of distributions of Operating Profit attributable to such Fund, in excess of the cumulativeamount theretofore distributed to such Limited Partner with respect to the Operating Profit attributable to such Fund. For purposes ofdetermining each Limited Partner’s required contribution, each Limited Partner’s allocable share of any Escrow Account (as defined inthe Fund LP Agreements), to the extent applied to satisfy any portion of a Clawback Payment, shall be treated as if it had beendistributed to such Limited Partner and re-contributed by such Limited Partner pursuant to this Section 3.1(d) at the time of suchapplication. The Partners acknowledge that the Clawback Payment is calculated under the applicable Fund LP Agreement on an after-tax basis, and that accordingly each Limited Partner’s Clawback Share will be of an amount that has already taken into accounthypothetical taxes that an individual residing in New York City would have owed in respect of the excess carry received by thePartnership under the applicable Fund LP Agreement that gives rise to the Clawback Payment.(e) To the extent, if any, that it is determined that the Partnership is required to make any Partner GivebackPayment with respect to any of the Funds, each Limited Partner shall be required to participate in such payment and contribute to thePartnership, for ultimate contribution to the relevant Fund, an amount equal to such Limited Partner’s Giveback Share of any PartnerGiveback Payment, but not in any event, together with any Clawback Payments made by such Limited Partner with respect to suchFund, in excess of the cumulative amount theretofore distributed to such Limited Partner with respect to the Capital Profit andOperating Profit attributable to such Fund.(f) For the avoidance of doubt, the aggregate Clawback Payments and Partner Giveback Payments required tobe made by the Limited Partners hereunder with respect to any Fund shall not exceed the aggregate amount of distributions actuallyreceived by the Partnership that: (i) in the case of Clawback Payments, are attributable to Carried Interest Revenues; and (ii) in the caseof Partner Giveback Payments, are attributable to Carried Interest Revenues and any other distributions that the Partnership receivesfrom such Fund.Section 3.2 Rights of Partners in Capital(c) No Partner shall be entitled to interest on his capital contributions to the Partnership.(d) No Partner shall have the right to distributions or the return of any contribution to the capital of thePartnership except (i) for distributions in accordance with Section 4.1, or (ii) upon dissolution of the Partnership. The entitlement to anysuch return at such time shall be limited to the value of the Capital Account of the Partner. The General Partner shall not be liable forthe return of any such amounts.Section 3.3 Capital Accounts(c) The Partnership shall maintain for each Partner a separate Capital Account in accordance with theprovisions of Treas. Reg. Section 1.704-1(b)(2)(iv) and, to the extent consistent with such provisions, the terms of this Agreement.(d) Each Partner’s Capital Account shall have an initial balance equal to the amount of cash and the net valueof any securities or other property constituting such Partner’s initial contribution to the capital of the Partnership.(e) Each Partner’s Capital Account shall be increased by the sum of:(i) the amount of cash and the net value of any securities or other property constituting additionalcontributions by such Partner to the capital of the Partnership permitted pursuant to Section 3.1; plus(ii) in the case of APH, any Capital Profit allocated to such Partner’s Capital Account pursuant toSection 3.4; plus(iii) the portion of any Operating Profit allocated to such Partner’s Capital Account pursuant to Section3.4; plus(iv) such Partner’s allocable share of any decreases in any reserves recorded by the Partnershippursuant to Section 3.8 and any receipts determined to be applicable to a prior period pursuant to Section 3.8(b), to the extentthe General Partner determines that, pursuant to any provision of this Agreement, such item is to be credited to such Partner’s Capital Account on a basis which is not in accordance with the current respective Points of all Partners; plus(v) such Partner’s allocable share of any increase in Book-Tax Difference.(f) Each Partner’s Capital Account shall be reduced by the sum of (without duplication):(i) in the case of APH, any Capital Loss allocated to such Partner’s Capital Account pursuant toSection 3.4; plus(ii) the portion of any Operating Loss allocated to such Partner’s Capital Account pursuant to Section3.4; plus(iii) the amount of any cash and the net value of any property distributed to such Partner pursuant toSection 4.1 or Section 8.1, including any amount deducted pursuant to Section 4.2 or Section 5.4 from any such amountdistributed; plus(iv) any withholding taxes or other items payable by the Partnership and allocated to such Partnerpursuant to Section 5.4(b), any increases in any reserves recorded by the Partnership pursuant to Section 3.8 and any paymentsdetermined to be applicable to a prior period pursuant to Section 3.8(b), to the extent the General Partner determines that,pursuant to any provision of this Agreement, such item is to be charged to such Partner’s Capital Account on a basis which isnot in accordance with the current respective Points of all Partners; plus(v) such Partner’s allocable share of any decrease in Book-Tax Difference.(g) If securities and/or other property are to be distributed in kind to the Partners or Retired Partners, includingin connection with a liquidation pursuant to Section 8.1, they shall first be written up or down to their fair market value as of the date ofsuch distribution, thus creating gain or loss for the Partnership, and the value of the securities and/or other property received by eachPartner and each Retired Partner as so determined shall be debited against such Person’s Capital Account at the time of distribution.Section 3.4 Allocation of Profit and Loss(a) Capital Profit and Operating Profit or Capital Loss and Operating Loss for any Fiscal Year shall beallocated to the Partners so as to produce Capital Accounts for the Partners (such Capital Accounts computed after taking into accountany other Capital Profit and Operating Profit or Capital Loss and Operating Loss for the Fiscal Year in which such event occurred andall distributions pursuant to Article 4 with respect to such Fiscal Year and after adding back each Partner’s share, if any, of PartnerNonrecourse Debt Minimum Gain, as defined in Treasury Regulations Sections 1.704 - 2(b)(2) and 1.704 - 2(i), or PartnershipMinimum Gain, as defined in Treasury Regulations Sections 1.704 - 2(b)(2) and 1.704 - 2(d)) such that a distribution of an amount ofcash and value of property equal to such Capital Account balances in accordance with such Capital Account balances would be in theamounts, sequence and priority set forth in Article 4; provided, however, that, (i) except as the General Partner in its sole discretionmay otherwise determine, allocations of Operating Profit to Professionals LP shall not exceed the amount of cash (or value of property)distributed to Professionals LP for the Fiscal Year (the “Phantom Operating Profit Limitation”) and any Operating Profit in excess ofthe Phantom Operating Profit Limitation that would have been allocable to Professionals LP but for the Phantom Operating ProfitLimitation instead shall be allocated pro rata to the other Limited Partners (other than APH); (ii) the General Partner may, in its solediscretion, determine to specially allocate solely to APH such excess Operating Profit and any additional amounts of Operating Profitthat the General Partner determines are in excess of the cash and value of property received by the Partnership for the Fiscal Year(“Other Phantom Operating Profit”); and (iii) the General Partner may allocate Operating Profit and Operating Loss and items thereofin such other manner as it determines in its sole discretion to be appropriate to reflect the Partners’ interests in the Partnership. Income,gains and loss associated with a Book-Tax Difference shall be allocated to the Limited Partners that are entitled to a share of suchBook-Tax Difference consistent with the account maintained by the General Partner pursuant to the definition of “Book-TaxDifference” and in the manner in which cash or property associated with such Book-Tax Difference is required to be distributedpursuant to the proviso of Section 4.1(b).(b) Following a special allocation of Operating Profit to the Limited Partners pursuant to the provisos ofSection 3.4(a), appropriate adjustments shall be made to the allocation of Operating Profit and Operating Loss to the Limited Partners(including Professionals LP) in one or more subsequent Fiscal Years as the General Partner may determine, in its sole discretion, maybe necessary to ensure that the Limited Partners are allocated aggregate Operating Profit (in excess of aggregate Operating Loss) for allFiscal Years in proportion to their respective Points and (in the case of Professionals LP) Discretionary Share for all such Fiscal Years.(c) To the extent that the allocations of Capital Loss or Operating Loss contemplated by Section 3.4(a) wouldcause the Capital Account of any Limited Partner to be less than zero, such Capital Loss or Operating Loss shall to that extent instead be allocated to and debited against the Capital Account of the General Partner (or, at the direction of the General Partner, to thoseLimited Partners who are members of the General Partner in proportion to their limited liability company interests in the GeneralPartner). Following any such adjustment pursuant to this Section 3.4(c) with respect to any Limited Partner, any Capital Profit orOperating Profit for any subsequent Fiscal Year which would otherwise be credited to the Capital Account of such Limited Partnerpursuant to Section 3.4(a) shall instead be credited to the Capital Account of the General Partner (or relevant Limited Partners) until thecumulative amounts so credited to the Capital Account of the General Partner (or relevant Limited Partners) with respect to suchLimited Partner pursuant to this Section 3.4(c) is equal to the cumulative amount debited against the Capital Account of the GeneralPartner (or relevant Limited Partners) with respect to such Limited Partner pursuant to this Section 3.4(c).(d) Each Limited Partner’s rights and entitlements as a Limited Partner are limited to the rights to receiveallocations and distributions of Capital Profit and Operating Profit expressly conferred by this Agreement and any Other Agreemententered into pursuant to Section 9.3(b) and the other rights expressly conferred by this Agreement and any such Other Agreement orrequired by the Delaware Act, and a Limited Partner shall not be entitled to any other allocations, distributions or payments in respectof his interest, or to have or exercise any other rights, privileges or powers.(e) For purposes of Section 3.4(a), the General Partner may determine in its sole discretion to allocate anyincrease in value of the Partnership’s assets pursuant to the definition of “Carrying Value” solely to the Limited Partners that areentitled to a Catch Up Amount (pro rata based on any method the General Partner determines is reasonable), or to specially allocateOperating Profit to such Limited Partners, or a combination thereof, until such Limited Partners have received an allocation equal to theCatch Up Amount.(f) Operating Profit and Operating Loss shall be determined on a daily, monthly or other basis, as reasonablyapproved by the General Partner using any permissible method under Section 706 and the Treasury Regulations thereunder. If anyLimited Partner shall be admitted to the Partnership, retire from the Partnership or assigned additional Points at different times duringthe Partnership’s Fiscal Year, Operating Profit or Operating Loss shall be allocated among the Limited Partners on such proper basis asthe General Partner shall determine consistent with the applicable requirements under Section 706 of the Code.Section 3.5 Tax Allocations(a) For United States federal, state and local income tax purposes, Partnership income, gain, loss, deduction orcredit (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations ofCapital Profit, Capital Loss, Operating Profit and Operating Loss pursuant to the provisions of Section 3.4 for such Fiscal Year;provided that any taxable income or loss associated with any Book-Tax Difference shall be allocated for tax purposes in accordancewith the principles of Section 704(c) of the Code in any such manner (as is permitted under that Code Section and the TreasuryRegulations promulgated thereunder) as determined by the General Partner in its sole discretion.(b) If any Partner or Partners are treated for United States federal income tax purposes as realizing ordinaryincome because of receiving interests in the Partnership (whether under Section 83 of the Code or under any similar provision of anylaw, rule or regulation) and the Partnership is entitled to any offsetting deduction (net of any income realized by the Partnership as aresult of such receipt), the Partnership’s net deduction shall be allocated to and among the Partners in such manner as to offset, asnearly as possible, the ordinary income realized by such Partner or Partners.Section 3.6 Tax Treatment of Points(a) The Partnership and each Partner agree to treat the Points and (in the case of Professionals LP)Discretionary Share issued to the Limited Partners other than APH as a “Profits Interest” with respect to the Partnership within themeaning of Rev. Proc. 93-27, 1993-2 C.B. 343. In accordance with Rev. Proc. 2001-43, 2001-2 C.B. 191, the Partnership shall treatsuch a Limited Partner holding Points or Discretionary Share as the owner of such Points and Discretionary Share from the date suchPoints or Discretionary Share are issued, and shall file its IRS form 1065, and issue appropriate Schedule K-1s to such Limited Partner,allocating to such Limited Partner its distributive share of all items of income, gain, loss, deduction and credit associated with suchPoints or Discretionary Share as if they were fully vested. Each such Limited Partner agrees to take into account such distributive sharein computing its United States federal income tax liability for the entire period during which it holds the Points or Discretionary Share.Except as required pursuant to a “Determination” as defined in Section 1313(a) of the Code, none of the Partnership or any Partnershall claim a deduction (as wages, compensation or otherwise) for the fair market value of such Points or (in the case of ProfessionalsLP) Discretionary Share issued to a Limited Partner in respect of the Partnership, either at the time of grant of the Points orDiscretionary Share, or at the time the Points or Discretionary Share become substantially vested. The undertakings contained in thisSection 3.6 shall be construed in accordance with Section 4 of Rev. Proc. 2001-43. The provisions of this Section 3.6 shall applyregardless of whether or not the holder of Points or Discretionary Share files an election pursuant to Section 83(b) of the Code. ThisSection 3.6 shall only apply to Points and Discretionary Share granted while Rev. Proc. 93-27, 1993-2 C.B. 343 and Rev. Proc. 2001-43, 2001-2 C.B. 191, remain in effect. (b) The Partners agree that, in the event the Safe Harbor Regulation is finalized, the Partnership shall beauthorized and directed to make the Safe Harbor Election, and the Partnership and each Partner (including any Person to whom aninterest in the Partnership is transferred in connection with the performance of services) agrees to comply with all requirements of theSafe Harbor with respect to all interests in the Partnership transferred in connection with the performance of services while the SafeHarbor Election remains effective. The General Partner shall be authorized to (and shall) prepare, execute, and file the Safe HarborElection. The General Partner shall cause the Partnership to make any allocations of items of income, gain, loss, deduction or expense(including forfeiture allocations) necessary or appropriate to effectuate and maintain the Safe Harbor Election.Section 3.7 FATCA(a) Each Limited Partner:(vi) shall provide, in a timely manner, such information regarding the Limited Partner and its beneficialowners and such forms or documentation as may be requested from time to time by the General Partner or the Partnership toenable the Partnership to comply with the requirements and obligations imposed on it pursuant to FATCA;(vii) acknowledges that any such forms or documentation requested by the Partnership or its agentspursuant to clause (i), or any financial or account information with respect to the Limited Partner’s investment in thePartnership, may be disclosed to any Governmental Authority which collects information in accordance with FATCA and toany withholding agent where the provision of that information is required by such agent to avoid the application of anywithholding tax on any payments to the Partnership;(viii) shall waive, and/or shall cooperate with the Partnership to obtain a waiver of, the provisions ofany law which prohibits the disclosure by the Partnership, or by any of its agents, of the information or documentationrequested from the Limited Partner pursuant to clause (i), prohibits the reporting of financial or account information by thePartnership or its agents required pursuant to FATCA or otherwise prevents compliance by the Partnership with its obligationsunder FATCA;(ix) acknowledges that, if it provides information and documentation that is in anyway misleading, or itfails to provide the Partnership or its agents with the requested information and documentation necessary, in either case, tosatisfy the Partnership’s obligations under FATCA, the Partnership may (whether or not such action or inaction leads tocompliance failures by the Partnership, or a risk of the Partnership or its investors being subject to withholding tax or otherpenalties under FATCA) take any action and/or pursue all remedies at its disposal, including compulsory withdrawal of theLimited Partner, and may hold back from any withdrawal proceeds, or deduct from the Limited Partner’s Capital Account, anyliabilities, costs, expenses or taxes caused (directly or indirectly) by the Limited Partner’s action or inaction; and(x) shall have no claim against the Partnership, or its agents, for any form of damages or liability as aresult of actions taken or remedies pursued by or on behalf of the Partnership in order to comply with FATCA.(b) Each Limited Partner hereby indemnifies the General Partner and the Partnership and each of theirrespective partners, members, managers, officers, directors, employees and agents and holds them harmless from and against anyFATCA-related liability, action, proceeding, claim, demand, costs, damages, expenses (including legal expenses), penalties or taxeswhatsoever which such Person may incur as a result of any action or inaction (directly or indirectly) of such Limited Partner (or anyRelated Party) described in Sections 3.7(a)(i) through (iv). This indemnification shall survive the Limited Partner’s death or dispositionof its interests in the Partnership.Section 3.8 Reserves; Adjustments for Certain Future Events(a) Appropriate reserves may be created, accrued and charged against the Operating Profit or Operating Lossfor contingent liabilities, if any, as of the date any such contingent liability becomes known to the General Partner or as of each otherdate as the General Partner deems appropriate, such reserves to be in the amounts which the General Partner deems necessary orappropriate. The General Partner may increase or reduce any such reserve from time to time by such amounts as the General Partnerdeems necessary or appropriate. The amount of any such reserve, or any increase or decrease therein, shall be proportionately chargedor credited, as appropriate, to the Capital Accounts of those Persons who are Partners at the time when such reserve is created,increased or decreased, as the case may be, in proportion to their respective Points at such time; provided that, if any individual reserveitem, as adjusted by any increase therein, exceeds the lesser of $500,000 or 1% of the aggregate Capital Account balances of all suchPartners, the amount of such reserve, increase or decrease shall instead be charged or credited to those Persons who were Partners atthe time, as determined by the General Partner, of the act or omission giving rise to the contingent liability for which the reserve itemwas established in proportion to their respective Points at that time. The amount of any such reserve charged against the CapitalAccount of a Partner shall reduce the distributions such Partner would otherwise be entitled to under Section 4.1 or Section 8.1 hereof; and the amount of any such reserve credited to the Capital Account of a Partner shall increase the distributions such Partner wouldotherwise be entitled to under Section 4.1 or Section 8.1 hereof.(b) If at any time an amount is paid or received by the Partnership and such amount exceeds the lesser of$500,000 or 1% of the aggregate Capital Account balances of all Partners at the time of payment or receipt, and such amount was notaccrued or reserved for but would nevertheless, in accordance with the Partnership’s accounting practices, be treated as applicable toone or more prior periods, then such amount may be proportionately charged or credited by the General Partner, as appropriate, tothose Persons who were Partners during such prior period or periods, based on each such Partner’s Points for such applicable period.(c) If any amount is required by Section 3.8(a) or (b) to be credited to a Person who is no longer a Partner,such amount shall be paid to such Person in cash, with interest from the date on which the General Partner determines that such creditis required at the Reference Rate in effect on that date. Any amount required to be charged pursuant to Section 3.8(a) or (b) shall bedebited against the current balance in the Capital Account of the affected Partners. To the extent that the aggregate current CapitalAccount balances of such affected Partners are insufficient to cover the full amount of the required charge, the deficiency shall bedebited against the Capital Accounts of the other Partners in proportion to their respective Capital Account balances at such time;provided that each such other Partner shall be entitled to a preferential allocation, in proportion to and to the extent of such otherPartner’s share of any such deficiency, together with a carrying charge at a rate equal to the Reference Rate, of any Operating Profitthat would otherwise have been allocable after the date of such charge to the Capital Accounts of the affected Partners whose CapitalAccounts were insufficient to cover the full amount of the required charge. In no event shall a current or former Partner be obligated tosatisfy any amount required to be charged pursuant to Section 3.8(a) or (b) other than by means of a debit against such Partner’sCapital Account.Section 3.9 Finality and Binding Effect of General Partner’s DeterminationsAll matters concerning the determination, valuation and allocation among the Partners with respect to any profit or lossof the Partnership and any associated items of income, gain, deduction, loss and credit, pursuant to any provision of this Article 3,including any accounting procedures applicable thereto, shall be determined by the General Partner unless specifically and expresslyotherwise provided for by the provisions of this Agreement, and such determinations and allocations shall be final and binding on allthe Partners.Section 3.10 Alternative GP VehiclesIf the General Partner determines that for legal, tax, regulatory or other reasons (a) any investment or other activities of aFund should be conducted through one or more parallel funds or other alternative investment vehicles as contemplated by theapplicable Fund LP Agreement, (b) any of such separate entities comprising the Fund should be managed or controlled by one or moreseparate entities serving as a general partner or in a similar capacity (each, an “Alternative GP Vehicle”), and (c) some or all of thePartners should participate through any such Alternative GP Vehicle, the General Partner may require any or all of the Partners, asdetermined by the General Partner, to participate directly or indirectly through any such Alternative GP Vehicle and to undertake suchrelated and incidental activities and execute and deliver such related documents necessary or incidental thereto with and/or in lieu of thePartnership, and the General Partner shall have all necessary authority to implement such Alternative GP Vehicle; provided that to themaximum extent practicable and subject to applicable legal, tax, regulatory or similar technical reasons, each Partner shall have thesame economic interest in all material respects in an Alternative GP Vehicle formed pursuant to this Section 3.10 as such Partnerwould have had if it had participated in all Portfolio Investments through the Partnership, and the terms of such Alternative GP Vehicleshall be substantially the same in all material respects to those of the Partnership and this Agreement. Each Partner shall take suchactions and execute such documents as the General Partner determines are reasonably needed to accomplish the foregoing.ARTICLE 4 DISTRIBUTIONSSection 4.1 Distributions(e) Any amount of cash or property received as a distribution from any of the Funds by the Partnership in itscapacity as a partner, to the extent such amount is determined by reference to the capital commitment of the Partnership in, or thecapital contributions of the Partnership to, any of the Funds, shall be promptly distributed by the Partnership to APH.(f) The General Partner shall use reasonable efforts to cause the Partnership to distribute, on a quarterly basis,any available cash or property attributable to items included in the determination of Operating Profit and Book-Tax Difference, subjectto the provisions of the Fund LP Agreements relating to Final Distributions on the dissolution or termination of a Fund and subject tothe retention of such reserves as the General Partner considers appropriate for purposes of the prudent and efficient financial operationof the Partnership’s business including in accordance with Section 3.8. The General Partner shall determine in its sole discretion for each Fiscal Year the proportion (expressed as a percentage) of the cash and value of property available for distribution to the LimitedPartners that shall be distributable to Professionals LP for the Fiscal Year (the “Discretionary Share”) in addition to any amountsdistributable on the Points held by Professionals LP pursuant to this Article 4. Distributions when made shall be made to the LimitedPartners as follows (before adjustment for Holdback Amounts):(xi) the APH Percentage to APH;(xii) to Professionals LP, until it has received an amount equal to the Discretionary Share; and(xiii) the balance to the Limited Partners (other than APH) pro rata in accordance with their Points,determined:(A) in the case of any amount of cash or property received from any of the Funds that isattributable to the disposition of a Portfolio Investment by such Fund, as of the date of such disposition by such Fund;and(B) in any other case, as of the date of receipt of such cash or property by the Partnership;provided, however, that any cash or other property that the General Partner determines is attributable to a Book-Tax Difference in thePartnership assets shall be distributed to the Limited Partners that are entitled to a share of such Book-Tax Difference pursuant to thedefinition of “Book-Tax Difference,” with any such distribution to be in the proportion that each such Limited Partner’s allocated shareof the applicable Book-Tax Difference bears to the total Book-Tax Difference of the asset giving rise to the cash or property.Notwithstanding the foregoing, the General Partner shall retain from the distribution amount apportioned to each Limited Partner (otherthan APH, Partner Pool LP and Professionals LP) pursuant to this Section 4.1(b) any Holdback Amount with respect to such LimitedPartner, determined in accordance with such Limited Partner’s Award Letter. Any Holdback Amount retained by the General Partnerpursuant to this Section 4.1(b) shall be considered to have been distributed to the Limited Partners for all purposes of this Agreement.(g) Distributions of amounts attributable to Operating Profit and Book-Tax Difference shall be made in cash;provided, however, that if the Partnership receives a distribution from a Fund in the form of property other than cash, the GeneralPartner may distribute such property in kind to Partners in proportion to their respective Points.(h) Any distributions or payments in respect of the interests of Limited Partners unrelated to Capital Profit,Operating Profit or Book-Tax Difference shall be made at such time, in such manner and to such Limited Partners as the GeneralPartner shall determine.(i) Except as otherwise set forth in a Limited Partner’s Award Letter, a Retired Partner shall receive his shareof any distribution made pursuant to Section 4.1(b) with respect to which such Retired Partner received an allocation prior to hisbecoming a Retired Partner in accordance with Section 3.4, which distribution shall be made at the same time and in the same form assuch distribution is made to the Limited Partners.(j) (%4) Except as the General Partner otherwise may determine pursuant to the terms of an Award Letter, anyLimited Partner whose admission to the Partnership causes an adjustment to Carrying Values pursuant to the definition of“Carrying Value” (a “Newly-Admitted Limited Partner”) shall have the right to receive a special distribution of the Catch UpAmount (before adjustment for Holdback Amounts). Any such special distribution of the Catch Up Amount shall be inaddition to the distributions to which the Newly-Admitted Limited Partner is entitled pursuant to Section 4.1(b), and shall bemade to the Newly-Admitted Limited Partner (or, if there is more than one such Newly-Admitted Limited Partner, pro rata toall such Newly-Admitted Limited Partners based on the aggregate amount of such distributions each such Newly-AdmittedLimited Partner has not yet received), after distribution of any amounts attributable to any Book-Tax Difference pursuant to theproviso of Section 4.1(b), from amounts otherwise distributable pursuant to Section 4.1(b) to APH (or other Limited Partners,as the case may be), and shall reduce the amounts distributable pursuant to Section 4.1(b) to APH (or such other LimitedPartners), until each applicable Newly-Admitted Limited Partner has received an amount equal to the applicable Catch UpAmount (before adjustment for Holdback Amounts).(i) The General Partner may determine to provide for a special distribution of a Catch Up Amount inconnection with a reallocation of Points pursuant to Article 7 other than in connection with the admission to the Partnership of aNewly-Admitted Limited Partner if the General Partner reasonably believes such an adjustment to Carrying Values is requiredin order for the reallocated Points to be treated as profits interests for U.S. federal income tax purposes.(ii) Any reallocation of Points pursuant to Article 7 shall include the right to receive any Catch UpAmount associated with such Points. (k) The General Partner may reduce (but not below zero) the amounts distributable to the Limited Partners(other than APH) pursuant to Section 4.1(b) by the aggregate amount of any payment (or commitment to make such payment) by anyAffiliate of the Partnership to an employee of such Affiliate, if the General Partner determines that such payments (or commitments) arein respect of services provided by the employee to such Affiliate in connection with the Credit Business; provided that no suchreduction shall occur by reason of the payment of the Fee Payments (as defined in and) provided for in any award letter issued to adirect or indirect limited partner of Partner Pool LP or any of the Intermediate Pooling Vehicles or of the payment of other similarcompensation, salary or bonus amounts that any such employee receives without regard to his interests in, treatment similar to that of amember or limited partner of, or admission to, the Partnership, Partner Pool LP or any general partner, managing member, manager orsimilar Person of any pooled investment vehicle or managed account that, directly or indirectly, makes allocations of incentiveallocations to Partner Pool LP. The amount of any such reduction instead shall be distributed solely to APH.(l) Any cash or property that the General Partner determines is attributable to the allocation of Operating Profitto the Limited Partners (other than Professionals LP) due to the Phantom Operating Profit Limitation or to the allocation of OtherPhantom Operating Profit pursuant to the provisos of Section 3.4(a) shall be distributed to the Limited Partners in accordance with themanner in which such Operating Profit was specially allocated.(m) Any cash or property that the General Partner determines is attributable to a special allocation of OperatingProfit to Professionals LP or the other Limited Partners (other than APH) pursuant to Section 3.4(b) shall be distributed solely toProfessionals LP or to the Limited Partners (other than APH), as the case may be, until Professionals LP and such other LimitedPartners (other than APH) have received an amount equal to such special allocation.Section 4.2 Withholding of Certain Amounts(h) If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnershipincome allocable to any Partner (including withholding under Sections 1471 through 1474 of the Code), then the General Partner,without limitation of any other rights of the Partnership, may cause the amount of such obligation to be debited against the CapitalAccount of such Partner when the Partnership pays such obligation, and any amounts then or thereafter distributable to such Partnershall be reduced by the amount of such taxes. If the amount of such taxes is greater than any such then distributable amounts, then suchPartner and any successor to such Partner’s interest shall indemnify and hold harmless the Partnership and the General Partner against,and shall pay to the Partnership as a contribution to the capital of the Partnership, upon demand of the General Partner, the amount ofsuch excess.(i) The General Partner may (i) withhold from any distribution to any Limited Partner pursuant to thisAgreement and (ii) arrange the withholding from any distribution from Co-Investors (A) to such Limited Partner any other amountsdue from such Limited Partner or a Related Party (without duplication) to the Partnership, Co-Investors (A) or to any other Affiliate ofAGM pursuant to any binding agreement or published policy to the extent not otherwise paid. Any amounts so withheld shall beapplied by the General Partner to discharge the obligation in respect of which such amounts were withheld.Section 4.3 Limitation on DistributionsNotwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner onbehalf of the Partnership, shall not make a distribution to any Partner on account of his interest in the Partnership if such distributionwould violate the Delaware Act or other applicable law.Section 4.4 Distributions in Excess of BasisNotwithstanding anything in this Agreement to the contrary, the General Partner may refrain from making, at any timeprior to the dissolution of the Partnership, all or any portion of any cash distribution that otherwise would be made to a Partner orRetired Partner, if such distribution would exceed such Person’s U.S. federal income tax basis in the Partnership. Any amount that isnot distributed to a Partner or Retired Partner due to the preceding sentence, as determined by the General Partner, either shall beretained by the Partnership on such Person’s behalf or loaned to such Person. Subject to the first sentence of this Section 4.4, 100% ofany or all subsequent cash distributions shall be distributed to such Person (or, if there is more than one such Person, pro rata to allsuch Persons based on the aggregate amount of distributions each such Person has not yet received) until each such Person hasreceived the same aggregate amount of distributions such Person would have received had distributions to such Person not beendeferred pursuant to this Section 4.4. If any amount is loaned to a Partner or Retired Partner pursuant to this Section 4.4, any such loanshall be on arm’s length terms as determined by the General Partner and shall be fully recourse to the Partner or Retired Partner and (i)any amount thereafter distributed to such Person shall be applied to repay the principal amount of such loan and (ii) interest, if any,accrued or received by the Partnership on such loan shall be allocated and distributed to such Person. Any such loan shall be repaid nolater than immediately prior to the liquidation of the Partnership. Until such repayment, for purposes of any determination hereunderbased on amounts distributed to a Person, the principal amount of such loan shall be treated as having been distributed to such Person. ARTICLE 5 MANAGEMENTSection 5.1 Rights and Powers of the General Partner(j) Subject to the terms and conditions of this Agreement, the General Partner shall have complete andexclusive responsibility (i) for all management decisions to be made on behalf of the Partnership and (ii) for the conduct of the businessand affairs of the Partnership, including all such decisions and all such business and affairs to be made or conducted by the Partnershipin its capacity as general partner of any of the Funds.(k) Without limiting the generality of the foregoing, the General Partner shall have full power and authority toexecute, deliver and perform such contracts, agreements and other undertakings, and to engage in all activities and transactions, as itmay deem necessary or advisable for, or as may be incidental to, the conduct of the business contemplated by this Section 5.1,including, without in any manner limiting the generality of the foregoing, contracts, agreements, undertakings and transactions withany Partner or with any other Person having any business, financial or other relationship with any Partner or Partners. The Partnership,and the General Partner on behalf of the Partnership, may enter into and perform the Fund LP Agreements and any documentscontemplated thereby or related thereto and any amendments thereto, without any further act, vote or approval of any Person, includingany Partner, notwithstanding any other provision of this Agreement. The General Partner is hereby authorized to enter into thedocuments described in the preceding sentence on behalf of the Partnership, but such authorization shall not be deemed a restriction onthe power of the General Partner to enter into other documents on behalf of the Partnership. Except as otherwise expressly providedherein or as required by law, all powers and authority vested in the General Partner by or pursuant to this Agreement or the Act shallbe construed as being exercisable by the General Partner in its sole and absolute discretion.(l) The General Partner shall be the tax matters partner for purposes of Section 6231(a)(7) of the Code. EachPartner agrees not to treat, on his United States federal income tax return or in any claim for a refund, any item of income, gain, loss,deduction or credit in a manner inconsistent with the treatment of such item by the Partnership. The General Partner shall have theexclusive authority to make any elections required or permitted to be made by the Partnership under any provisions of the Code or anyother laws.Section 5.2 Delegation of Duties(g) Subject to Section 5.1, the General Partner may delegate to any Person or Persons any of the duties,powers and authority vested in it hereunder on such terms and conditions as it may consider appropriate.(h) Without limiting the generality of Section 5.2(a), the General Partner shall have the power and authority toappoint any Person, including any Person who is a Limited Partner, to provide services to and act as an employee or agent of thePartnership and/or General Partner, with such titles and duties as may be specified by the General Partner. Any Person appointed bythe General Partner to serve as an employee or agent of the Partnership shall be subject to removal at any time by the General Partner;and shall report to and consult with the General Partner at such times and in such manner as the General Partner may direct.(i) Any Person who is a Limited Partner and to whom the General Partner delegates any of its duties pursuantto this Section 5.2 or any other provision of this Agreement shall be subject to the same standard of care, and shall be entitled to thesame rights of indemnification and exoneration, applicable to the General Partner under and pursuant to Section 5.7, unless suchPerson and the General Partner mutually agree to a different standard of care or right to indemnification and exoneration to which suchPerson shall be subject.(j) The General Partner shall be permitted to designate one or more committees of the Partnership, whichcommittees may include Limited Partners as members. Any such committees shall have such powers and authority granted by theGeneral Partner. Any Limited Partner who has agreed to serve on a committee shall not be deemed to have the power to bind or act foror on behalf of the Partnership in any manner and in no event shall a member of a committee be considered a general partner of thePartnership by agreement, estoppel or otherwise or be deemed to participate in the control of the business of the Partnership as a resultof the performance of his duties hereunder or otherwise.(k) The General Partner shall cause the Partnership to enter into an arrangement with the Manager, whicharrangement shall require the Manager to pay all costs and expenses of the Partnership.Section 5.3 Transactions with AffiliatesTo the fullest extent permitted by applicable law, the General Partner (or any Affiliate of the General Partner), whenacting on behalf of the Partnership, is hereby authorized to (a) purchase property from, sell property to, lend money to or otherwise deal with any Affiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of any of the foregoing Persons, and(b) obtain services from any Affiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of the foregoing Persons.Section 5.4 Expenses(c) Subject to the arrangement contemplated by Section 5.2(e), the Partnership will pay, or reimburse theGeneral Partner for, all costs and expenses arising in connection with the organization and operations of the Partnership.(d) Any withholding taxes payable by the Partnership, to the extent determined by the General Partner to havebeen paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of thePartners, shall be allocated among and debited against the Capital Accounts of only those Partners on whose behalf such payments aremade or whose particular circumstances gave rise to such payments in accordance with Section 4.2.Section 5.5 Rights of Limited Partners(c) Limited Partners shall have no right to take part in the management or control of the Partnership’s business,nor shall they have any right or authority to act for the Partnership or to vote on matters other than as set forth in this Agreement or asrequired by applicable law.(d) Without limiting the generality of the foregoing, the General Partner shall have the full and exclusiveauthority, without the consent of any Limited Partner, to compromise the obligation of any Limited Partner to make a capitalcontribution or to return money or other property paid or distributed to such Limited Partner in violation of the Delaware Act.(e) Nothing in this Agreement shall entitle any Partner to any compensation for services rendered to or onbehalf of the Partnership as an agent or in any other capacity, except for any amounts payable in accordance with this Agreement.(f) Subject to the Fund LP Agreements and to full compliance with AGM’s code of ethics and other writtenpolicies relating to personal investment transactions, admission into the Partnership as a Limited Partner of the Partnership shall notprohibit a Limited Partner from purchasing or selling as a passive investor any interest in any asset.Section 5.6 Other Activities of General PartnerNothing in this Agreement shall prohibit the General Partner from engaging in any activity other than acting as GeneralPartner hereunder.Section 5.7 Duty of Care; Indemnification(a) The General Partner (including for this purpose each former and present director, officer, stockholder,partner, member, manager or employee of the General Partner) and each Limited Partner (including any former Limited Partner) in hiscapacity as such, and to the extent such Limited Partner participates, directly or indirectly, in the Partnership’s activities, whether or nota Retired Partner (each, a “Covered Person” and collectively, the “Covered Persons”), shall not be liable to the Partnership or to any ofthe other Partners for any loss, claim, damage, liability or expenses (including attorneys’ fees, judgments, fines, penalties and amountspaid in settlement (collectively, “Losses”) occasioned by any acts or omissions in the performance of his services hereunder, unless itshall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that suchLosses are due to an act or omission of a Covered Person (i) made in bad faith or with criminal intent or (ii) that adversely affected anyFund and that failed to satisfy the duty of care owed pursuant to the applicable Fund LP Agreement or as otherwise required by law.(b) A Covered Person shall be indemnified to the fullest extent permitted by law by the Partnership against anyLosses incurred by or imposed upon him by reason of or in connection with any action taken or omitted by such Covered Personarising out of the Covered Person’s status as a Partner or his activities on behalf of the Partnership, including in connection with anyaction, suit, investigation or proceeding before any Governmental Authority to which it may be made a party or otherwise involved orwith which it shall be threatened by reason of being or having been the General Partner or a Limited Partner or by reason of serving orhaving served, at the request of the Partnership in its capacity as the general partner of any Fund, as a director, officer, consultant,advisor, manager, stockholder, member or partner of any enterprise in which any of the Funds has or had a financial interest, includingissuers of Portfolio Investments; provided that the Partnership may, but shall not be required to, indemnify a Covered Person withrespect to any matter as to which there has been a Final Adjudication that his acts or his failure to act (i) were in bad faith or withcriminal intent or (ii) were of a nature that makes indemnification by the Funds unavailable. The right to indemnification granted bythis Section 5.7 shall be in addition to any rights to which a Covered Person may otherwise be entitled and shall inure to the benefit ofthe successors by operation of law or valid assigns of such Covered Person. The Partnership shall pay the expenses incurred by aCovered Person in defending a civil or criminal action, suit, investigation or proceeding in advance of the Final Adjudication of suchaction, suit, investigation or proceeding, upon receipt of an undertaking by the Covered Person to repay such payment if there shall be a Final Adjudication that he is not entitled to indemnification as provided herein. In any suit brought by the Covered Person to enforcea right to indemnification hereunder it shall be a defense that the Covered Person has not met the applicable standard of conduct setforth in this Section 5.7, and in any suit in the name of the Partnership to recover expenses advanced pursuant to the terms of anundertaking the Partnership shall be entitled to recover such expenses upon Final Adjudication that the Covered Person has not met theapplicable standard of conduct set forth in this Section 5.7. In any such suit brought to enforce a right to indemnification or to recoveran advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled tobe indemnified, or to an advancement of expenses, shall be on the Partnership (or any Limited Partner acting derivatively or otherwiseon behalf of the Partnership or the Limited Partners). The General Partner may not satisfy any right of indemnity or reimbursementgranted in this Section 5.7 or to which it may be otherwise entitled except out of the assets of the Partnership (including insuranceproceeds and rights pursuant to indemnification agreements), and no Partner shall be personally liable with respect to any such claimfor indemnity or reimbursement. The General Partner may enter into appropriate indemnification agreements and/or arrangementsreflective of the provisions of this Article 5 and obtain appropriate insurance coverage on behalf and at the expense of the Partnershipto secure the Partnership’s indemnification obligations hereunder. Each Covered Person shall be deemed a third party beneficiary (tothe extent not a direct party hereto) to this Agreement and, in particular, the provisions of this Article 5, may enforce any rights grantedto it pursuant to this Agreement in its own right as if it were a party to this Agreement, and shall be entitled to the benefit of theindemnity granted to the Partnership by each of the Funds pursuant to the terms of the Fund LP Agreements.(c) To the maximum extent permitted by law, as among any Portfolio Company of a Fund, a Fund and thePartnership, this Section 5.7(c) shall be interpreted to reflect an ordering of liability for potentially overlapping or duplicativeindemnification payments, in the following order: first, such Portfolio Company; second, such Fund; and third, the Partnership (in eachcase, including any applicable insurance coverage that any such indemnitor maintains with respect to any such liability).(d) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) andliabilities relating thereto to the Partnership or the Partners, the Covered Person shall not be liable to the Partnership or to any Partnerfor his good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict oreliminate the duties and liabilities of a Covered Person otherwise existing at law or in equity to the Partnership or the Partners, areagreed by the Partners to replace such other duties and liabilities of each such Covered Person.(e) Notwithstanding any of the foregoing provisions of this Section 5.7, the Partnership may but shall not berequired to indemnify (i) a Retired Partner (or any other former Limited Partner) with respect to any claim for indemnification oradvancement of expenses arising from any conduct occurring more than six months after the date of such Person’s retirement (or otherwithdrawal or departure), or (ii) a Limited Partner with respect to any claim for indemnification or advancement of expenses as adirector, officer or agent of the issuer of any Portfolio Investment to the extent arising from conduct in such capacity occurring morethan six months after the complete disposition of such Portfolio Investment by the applicable Fund.ARTICLE 6 ADMISSIONS, TRANSFERS AND WITHDRAWALSSection 6.1 Admission of Additional Limited Partners; Effect on Points(l) The General Partner may at any time admit as an additional Limited Partner any Person who has agreed tobe bound by this Agreement and may assign Points to such Person and/or increase the Points of any existing Limited Partner, in eachcase, subject to and in accordance with Section 7.1.(m) Each additional Limited Partner shall execute (i) either a counterpart to this Agreement or a separateinstrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partner and (ii) thedocuments contemplated by Section 7.1(b), and shall be admitted as a Limited Partner upon such execution.Section 6.2 Admission of Additional General PartnerThe General Partner may admit one or more additional general partners at any time without the consent of any LimitedPartner. No reduction in the Points of any Limited Partner shall be made as a result of the admission of an additional general partner orthe increase in the Points of any general partner without the consent of such Limited Partner. Any additional general partner shall beadmitted as a general partner upon its execution of a counterpart signature page to this Agreement.Section 6.3 Transfer of Interests of Limited Partners(e) No Transfer of any Limited Partner’s interest in the Partnership, whether voluntary or involuntary, shall bevalid or effective, and no transferee shall become a substituted Limited Partner, unless the prior written consent of the General Partnerhas been obtained, which consent may be given or withheld by the General Partner. Notwithstanding the foregoing, any Limited Partner may Transfer to any Related Party of such Limited Partner all or part of such Limited Partner’s interest in the Partnership(including his or its right to receive distributions of Operating Profit); provided that the Transfer has been previously approved inwriting by the General Partner, such approval not to be unreasonably withheld. In the event of any Transfer, all of the conditions of theremainder of this Section 6.3 must also be satisfied.(f) A Limited Partner or his legal representative shall give the General Partner notice before the proposedeffective date of any voluntary Transfer and within 30 days after any involuntary Transfer, and shall provide sufficient information toallow legal counsel acting for the Partnership to make the determination that the proposed Transfer will not result in any of thefollowing consequences:(iii) require registration of the Partnership or any interest therein under any securities or commoditieslaws of any jurisdiction;(iv) result in a termination of the Partnership under Section 708(b)(1)(B) of the Code or jeopardize thestatus of the Partnership as a partnership for United States federal income tax purposes; or(v) violate, or cause the Partnership, the General Partner or any Limited Partner to violate, anyapplicable law, rule or regulation of any jurisdiction.Such notice must be supported by proof of legal authority and a valid instrument of assignment acceptable to the General Partner.(g) If any Transfer permitted by this Section 6.3 shall result in multiple ownership of any Limited Partner’sinterest in the Partnership, the General Partner may require one or more trustees or nominees whose names will be entered in theRegister of Partners, to be designated to hold the legal title to the interest and to represent the entire interest transferred for the purposeof receiving all notices which may be given and all payments which may be made under this Agreement, and for the purpose ofexercising the rights which the transferees have pursuant to the provisions of this Agreement. The Partnership shall not otherwise berequired to recognize any trust or other beneficial ownership of any interest.(h) A permitted transferee shall be entitled to the allocations and distributions attributable to the economicinterest in the Partnership transferred to such transferee (and any such payment shall constitute a good and valid discharge of suchobligation on the part of the General Partner); provided that such transferee shall not be entitled to the other rights of a Limited Partneras a result of such transfer until he becomes a substituted Limited Partner. No transferee may become a substituted Limited Partnerexcept with the prior written consent of the General Partner (which consent may be given or withheld by the General Partner). Suchtransferee shall be admitted to the Partnership as a substituted Limited Partner upon execution of a counterpart of this Agreement orsuch other instrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partnerof the Partnership and to adhere to and be bound by the provisions of this Agreement on admission as a Limited Partner.Notwithstanding the above, the Partnership and the General Partner shall incur no liability for allocations and distributions made ingood faith to the transferring Limited Partner until a written instrument of Transfer has been received and accepted by the Partnershipand recorded on its books and the effective date of the Transfer has passed.(i) Any other provision of this Agreement to the contrary notwithstanding, to the fullest extent permitted bylaw, any successor or transferee of any Limited Partner’s interest in the Partnership shall be bound by the provisions hereof. Prior torecognizing any Transfer in accordance with this Section 6.3, the General Partner may require the transferee to make certainrepresentations and warranties to the Partnership and Partners and to accept, adopt and approve in writing all of the terms andprovisions of this Agreement.(j) In the event of a Transfer or in the event of a distribution of assets of the Partnership to any Partner, thePartnership, at the direction of the General Partner, may, but shall not be required to, file an election under Section 754 of the Code andin accordance with the applicable Treasury Regulations, to cause the basis of the Partnership’s assets to be adjusted as provided bySection 734 or 743 of the Code.(k) The Partnership shall maintain books for the purpose of registering the Transfer of partnership interests inthe Partnership. No Transfer of a partnership interest shall be effective until the Transfer of the partnership interest is registered by theGeneral Partner on the Register of Partners.Section 6.4 Withdrawal of PartnersA Partner in the Partnership may not withdraw from the Partnership prior to its dissolution. For the avoidance of doubt,any Limited Partner who transfers to a Related Party such Limited Partner’s entire remaining entitlement to allocations and distributionsshall remain a Limited Partner, notwithstanding the admission of the transferee Related Party as a Limited Partner, for as long as thetransferee Related Party remains a Limited Partner. Section 6.5 Pledges(d) A Limited Partner shall not pledge or grant a security interest in such Limited Partner’s interest in thePartnership unless the prior written consent of the General Partner has been obtained (which consent may be given or withheld by theGeneral Partner).(e) Notwithstanding Section 6.5(a), any Limited Partner may grant to a bank or other financial institution asecurity interest in such part of such Limited Partner’s interest in the Partnership as relates solely to the right to receive distributions ofOperating Profit in the ordinary course of obtaining bona fide loan financing to fund his contributions to the capital of the Partnership,Co-Investors (A), any of the Public Vehicles and/or any other investment fund or vehicle that forms part of the Credit Business. If theinterest of the Limited Partner in the Partnership or Co-Investors (A) or any portion thereof in respect of which a Limited Partner hasgranted a security interest ceases to be owned by such Limited Partner in connection with the exercise by the secured party of remediesresulting from a default by such Limited Partner or upon the occurrence of such similar events with respect to such Limited Partner’sinterest in Co-Investors (A), such interest of the Limited Partner in the Partnership or portion thereof shall thereupon become a non-voting interest and the holder thereof shall not be entitled to vote on any matter pursuant to this Agreement.(f) For purposes of the grant, pledge, attachment or perfection of a security interest in a partnership interest inthe Partnership or otherwise, each such partnership interest shall constitute a “security” within the meaning of, and governed by, (i)Article 8 of the Uniform Commercial Code (including Section 8‑102(a)(15) thereof) as in effect from time to time in the State ofDelaware (the “DEUCC”), and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now orhereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the NationalConference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.(g) Any partnership interest in the Partnership may be evidenced by a certificate issued by the Partnership insuch form as the General Partner may approve. Every certificate representing an interest in the Partnership shall bear a legendsubstantially in the following form:“Each partnership interest constitutes a “security” within the meaning of, and governed by, (i) Article 8 of the UniformCommercial Code (including Section 8‑102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii)Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissionerson Uniform State Laws and approved by the American Bar Association on February 14, 1995.THE TRANSFER OF THIS CERTIFICATE AND THE PARTNERSHIP INTERESTS REPRESENTED HEREBY ISRESTRICTED AS DESCRIBED IN THE SECOND AMENDED AND RESTATED AGREEMENT OF LIMITEDPARTNERSHIP OF THE PARTNERSHIP, AS THE SAME MAY BE AMENDED OR RESTATED FROM TIME TOTIME.”(h) Each certificate representing a partnership interest in the Partnership shall be executed by manual orfacsimile signature of the General Partner on behalf of the Partnership.(i) Notwithstanding any provision of this Agreement to the contrary, to the extent that any provision of thisAgreement is inconsistent with any non-waivable provision of Article 8 of the DEUCC, such provision of Article 8 of the DEUCCshall control.ARTICLE 7 ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERSSection 7.1 Allocation of Points(c) Except as otherwise provided herein, the General Partner shall be responsible for the allocation of Pointsfrom time to time to the Limited Partners. The General Partner may allocate Points to a new Limited Partner and/or increase or reducethe Points of any existing Limited Partner at any time; provided that: (1) except as expressly set forth in a Limited Partner’s AwardLetter, (i) the General Partner may reduce such Limited Partner’s Points only in December of each year following the date of the initialallocation of Points to such Limited Partner, (ii) the General Partner may not reduce a Retired Partner’s Vested Points, and (iii) theallocation and reallocation of Points will be on such terms as are consistent with the treatment of the Points as profits interests for U.S.federal income tax purposes; (2) Professionals LP shall at all times have at least 0.4% of all Points; and (3) APH and its Affiliates shallin no event have more than the APH Percentage of all Points. Notwithstanding anything to the contrary herein, there shall be amaximum of 2,000 Points available for issuance. (d) Unless otherwise agreed by the General Partner, the initial allocation of Points to any Limited Partner(other than Partner Pool LP and Professionals LP) shall not become effective until:(vi) the receipt of the following documents, in form and substance reasonably satisfactory to theGeneral Partner, executed by such Limited Partner: (A) a customary and standard guarantee or guarantees, for the benefit ofFund investors, of the Limited Partner’s Clawback Share of the Partnership’s obligation to make Clawback Payments, and (B)a customary and standard undertaking to reimburse Apollo Principal Holdings II, L.P. for any payment made by it (or byanother AGM Affiliate) that is attributable to such Limited Partner’s Clawback Share of any Clawback Payment; and(vii) the effective date of the acceptance by Co-Investors (A) of a capital commitment from suchLimited Partner (or his Related Party, as applicable) in an amount equal to such Limited Partner’s Required Commitment as setforth in such Limited Partner’s Award Letter.(e) Any change to a Limited Partner’s Points pursuant to this Agreement or such Limited Partner’s AwardLetter shall apply on a prospective basis only from and after the effective date of such change; it being understood that such LimitedPartner shall not be required to refund to the Partnership any distributions received by such Limited Partner in respect of his Pointsprior to such change, solely as a result of any such change.(f) The General Partner shall maintain on the books and records of the Partnership a record of the number ofPoints allocated to each Partner and shall give notice to each Limited Partner of the number of such Limited Partner’s Points uponadmission to the Partnership of such Limited Partner and promptly upon any change in such Limited Partner’s Points pursuant to thisArticle 7 and such notice shall include the calculations used by the General Partner to determine the amount of any such reduction.(g) Subject to the limitations imposed under Section 7.1(a)(1)(ii) and (iii) regarding the allocation of Points andSection 7.1(f), any Points that are forfeited under this Agreement or a Limited Partner’s Award Letter may be reallocated by theGeneral Partner, in its sole discretion, following consultation with AGM Credit Senior Management, to any Person or Persons. Untilany such reallocation by the General Partner, forfeited Points shall be deemed reallocated to James Zelter (or his successor as head ofthe Credit Business), except that, unless otherwise determined by the General Partner (including as regards any distribution to paytaxes incurred by Mr. Zelter, net of any tax benefit conferred upon him, in respect of the reallocation of such forfeited Points to Mr.Zelter), Mr. Zelter shall not be entitled to any allocations or distributions on such forfeited Points and shall instead hold them for thebenefit and on behalf of the Person or Persons to whom they are reallocated, which reallocation(s), unless otherwise determined by theGeneral Partner, shall occur not later than the fourth quarter of the Fiscal Year in which the Points were forfeited.(h) The Points awarded to APH may be reduced from time to time, as determined by the General Partner, toincrease the Points to be allocated to any of the other Limited Partners (other than Professionals LP) or to issue Points to any Newly-Admitted Limited Partner with the intention that the dilution resulting therefrom is borne by APH and by the then existing LimitedPartners on a pro rata basis. Thereafter, if Points become available for reallocation for any reason, then any reduction theretofore madein the Points allocated to APH as described in the preceding sentence shall first be restored, before any further reallocation of suchPoints. The determinations of the General Partner to implement the foregoing shall be final and binding on the Partnership and theLimited Partners.Section 7.2 Retirement of Partner(l) A Limited Partner shall become a Retired Partner upon:(i) delivery to such Limited Partner of a notice by the General Partner terminating such LimitedPartner’s employment by AGM or an Affiliate thereof, unless otherwise determined by the General Partner;(ii) delivery by such Limited Partner of at least 90 days’ prior written notice to the General Partner,AGM or an Affiliate thereof stating that such Limited Partner elects to resign from or otherwise terminate his or heremployment by or service to AGM or an Affiliate thereof; or(iii) the death of the Limited Partner, whereupon the estate of the deceased Limited Partner shall betreated as a Retired Partner in the place of the deceased Limited Partner, or the Disability of the Limited Partner.(m) Nothing in this Agreement shall obligate the General Partner to treat Retired Partners alike, and theexercise of any power or discretion by the General Partner in the case of any one such Retired Partner shall not create any obligationon the part of the General Partner to take any similar action in the case of any other such Retired Partner; it being understood that anypower or discretion conferred upon the General Partner shall be treated as having been so conferred as to each such Retired Partnerseparately. Section 7.3 Effect of Retirement on Points(g) The consequences of a Limited Partner’s retirement on his Points shall be set forth in such LimitedPartner’s Award Letter.(h) Upon a Limited Partner’s becoming a Retired Partner by reason of his Bad Act, as of his Retirement Date,he shall automatically cease to be a Limited Partner and shall forfeit the balance of his Capital Account as of his Retirement Date.Notwithstanding the foregoing, each Retired Partner shall be entitled to a payment in an amount equal to any Book-Tax Difference thatwas recognized by such Retired Partner as taxable income or gain prior to his Retirement Date.ARTICLE 8 DISSOLUTION AND LIQUIDATIONSection 8.1 Dissolution and Liquidation of Partnership(n) Upon dissolution of the Partnership in accordance with the Delaware Act, the General Partner shallliquidate the business and administrative affairs of the Partnership, except that, if the General Partner is unable to perform this function,a liquidator may be elected by a majority in interest (determined by Points) of Limited Partners and upon such election such liquidatorshall liquidate the Partnership.(o) Capital Profit, Capital Loss, Operating Profit and Operating Loss during the Fiscal Years that include theperiod of liquidation shall be allocated pursuant to Section 3.4. The proceeds from liquidation shall be distributed in the followingmanner:(i) first, the debts, liabilities and obligations of the Partnership, including the expenses of liquidation(including legal and accounting expenses incurred in connection therewith), up to and including the date that distribution of thePartnership’s assets to the Partners has been completed, shall be satisfied (whether by payment or by making reasonableprovision for payment thereof); and(ii) thereafter, the Partners shall be paid amounts in accordance with Article 4.(p) Anything in this Section 8.1 to the contrary notwithstanding, the General Partner or liquidator maydistribute ratably in kind rather than in cash, upon dissolution, any assets of the Partnership in accordance with the priorities set forth inSection 8.1(b); provided that if any in kind distribution is to be made, the assets distributed in kind shall be valued as of the actual dateof their distribution and charged as so valued and distributed against amounts to be paid under Section 8.1(b).(q) Upon completion of the winding-up of the Partnership in accordance with the terms hereof, the GeneralPartner shall file a certificate of cancellation of certificate of limited partnership of the Partnership with the Office of the Secretary ofState of the State of Delaware pursuant to the Delaware Act.ARTICLE 9 GENERAL PROVISIONSSection 9.1 Consistent Economic TreatmentExcept as otherwise specifically provided herein or in any Limited Partner’s Award Letter, the General Partner shall nottreat any Team Member who is a Limited Partner in a manner that is adverse in comparison with the treatment of APH with respect toallocations of Operating Profit, distributions (including liquidating distributions) of Operating Profit (including form, timing andamount of such distributions), Point dilution and funding of Clawback Shares or Giveback Shares. For the avoidance of doubt, theforegoing is not intended to limit the General Partner’s authority (i) relating to forfeiture of Points due to retirement or Bad Acts andallocation of Points to APH to the extent not required to be allocated to Team Members, in each case, in accordance with the terms andconditions set forth herein, (ii) to enter into any Award Letter or Other Agreement with a Team Member or APH in connection with anaward of Points to such Team Member or APH providing for special allocations of income or a reapportionment of distributionsattributable to such Points for the purpose of eliminating or reducing a current recognition of taxable income by such Team Member orAPH as a result of such Point award, or (iii) to implement any of the special allocation or special distribution provisions of thisAgreement.Section 9.2 Carried Interest Related to the FundTo the extent that (a) any strategic partnership or managed account of the Credit Business invests in or co-invests with the Fund, either directly or through a special purpose vehicle of such strategic partnership or managed account, and (b) its generalpartner or any other AGM entity derives any carried interest distributions attributable to such investment or co-investments, AGM andthe General Partner shall cause such carried interest distributions (as adjusted, as necessary, taking into account the arrangementsdescribed in the next sentence of this Section 9.2) to be allocated and distributed among holders of Points at the same time and in thesame manner as such amounts would be allocated and distributed if received as Operating Profit by the Partnership, but withoutduplication, either by causing the Partnership to hold an equity or tracking interest in the entity deriving such carried interest or in someother manner reasonably calculated to accomplish the intent of this provision. The Partners hereby acknowledge and understand thatnothing contained herein shall restrict the right of AGM or any of its Affiliates to apply any netting arrangements with respect to anyfees or charges, including management fees, carried interest or incentive allocations, in respect of any such strategic partnership ormanaged account across all or any portion of the investments or co-investments made by such strategic partnership or managedaccount.Section 9.3 Amendment of Partnership Agreement and Co-Investors (A) Partnership Agreement(f) The General Partner may amend this Agreement at any time, in whole or in part, without the consent of anyLimited Partner by giving notice of such amendment to any Limited Partner whose rights or obligations as a Limited Partner pursuantto this Agreement are changed thereby; provided that: (i) any amendment that would disproportionately effect a material adversechange in the contractual rights or obligations of a Limited Partner vis-à-vis all other Limited Partners (such rights or obligationsdetermined without regard to the amendment power reserved herein) may only be made if the written consent of such Limited Partneris obtained prior to the effectiveness thereof; and (ii) any amendment that (x) increases a Partner’s obligation to contribute to the capitalof the Partnership, or (y) increases such Limited Partner’s Clawback Share shall not be effective with respect to such Limited Partner,unless such Limited Partner consents thereto in advance in writing. Notwithstanding the foregoing, the General Partner may amend thisAgreement at any time, in whole or in part, without the consent of any Limited Partner to enable the Partnership to (i) comply with therequirements of the “Safe Harbor” Election within the meaning of the Proposed Revenue Procedure of Notice 2005-43, 2005-24 IRB1, Proposed Treasury Regulation Section 1.83-3(e)(1) or Proposed Treasury Regulation Section 1.704-1(b)(4)(xii) at such time as suchproposed Procedure and Regulations are effective and to make any such other related changes as may be required by pronouncementsor Treasury Regulations issued by the Internal Revenue Service or Treasury Department after the date of this Agreement and (ii)comply with applicable law; provided that any amendment pursuant to clause (i) that would cause a Limited Partner’s rights toallocations and distributions to suffer a material adverse change only may be made if the written consent of such Limited Partner isobtained prior to the effectiveness thereof. An adjustment of Points shall not be considered an amendment to the extent effected incompliance with the provisions of Section 7.1 or Section 7.3 as in effect on the date hereof or as hereafter amended in compliance withthe requirements of this Section 9.3(a). The General Partner’s approval of or consent to (x) any transaction resulting in the substitutionof another Person in place of the Partnership as the general partner of any of the Funds or (y) any change to the scheme of distributionunder any of the Fund LP Agreements (but, for the avoidance of doubt, not including any arrangements with investors in any Fundthat reduce the Carried Interest Revenues chargeable to or payable by such investors), that, in either case, would have the effect ofreducing the Partnership’s allocable share of the Net Income of any Fund shall require the consent of any Limited Partner adverselyaffected thereby.(g) Notwithstanding the provisions of this Agreement, including Section 9.3(a), it is hereby acknowledged andagreed that the General Partner on its own behalf or on behalf of the Partnership without the approval of any Limited Partner or anyother Person may enter into one or more side letters or similar agreements (“Other Agreements”) with one or more Limited Partnerswhich have the effect of establishing rights under, or altering or supplementing the terms of this Agreement. The parties hereto agreethat any terms contained in an Other Agreement with one or more Limited Partners shall govern with respect to such Limited Partneror Limited Partners notwithstanding the provisions of this Agreement. Any Other Agreements shall be binding upon the Partnership orthe General Partner, as applicable, and the signatories thereto as if the terms were contained in this Agreement, but no such OtherAgreement between the General Partner and any Limited Partner or Limited Partners and the Partnership shall adversely amend thecontractual rights or obligations of any other Limited Partner without such other Limited Partner’s prior consent.(h) The provisions of this Agreement that affect the terms of the Co-Investors (A) Partnership Agreementapplicable to Limited Partners constitute a “side letter or similar agreement” between each Limited Partner and the general partner ofCo-Investors (A), which has executed this Agreement exclusively for purposes of confirming the foregoing.Section 9.4 Special Power-of-Attorney(a) Each Partner hereby irrevocably makes, constitutes and appoints the General Partner with full power ofsubstitution, the true and lawful representative and attorney-in-fact, and in the name, place and stead of such Partner, with the powerfrom time to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:(i) any amendment to this Agreement which complies with the provisions of this Agreement (includingthe provisions of Section 9.3); (ii) all such other instruments, documents and certificates which, in the opinion of legal counsel to thePartnership, may from time to time be required by the laws of the State of Delaware, the United States of America, or any otherjurisdiction, or any political subdivision or agency thereof, or which such legal counsel may deem necessary or appropriate toeffectuate, implement and continue the valid and subsisting existence and business of the Partnership as a limited partnership;(iii) all such instruments, certificates, agreements and other documents relating to the conduct of theinvestment program of any of the Funds which, in the opinion of such attorney-in-fact and the legal counsel to the Funds, arereasonably necessary to accomplish the legal, regulatory and fiscal objectives of the Funds in connection with its or theiracquisition, ownership and disposition of investments, including:(A) the governing documents of any management entity formed as a part of the tax planning forany of the Funds and any amendments thereto; and(B) documents relating to any restructuring transaction with respect to any of the Funds’investments;provided that such documents referred to in clauses (A) and (B) above, viewed individually or in the aggregate, provide substantiallyequivalent financial and economic rights and obligations with respect to such Limited Partner and otherwise do not:(1) increase the Limited Partner’s overall financial obligation to make capital contributions with respect to therelevant Fund (directly or through any associated vehicle in which the Limited Partner holds an interest);(2) diminish the Limited Partner’s overall entitlement to share in profits and distributions with respect to therelevant Fund (directly or through any associated vehicle in which the Limited Partner holds an interest);(3) cause the Limited Partner to become subject to increased personal liability for any debts or obligations ofthe Partnership or other Partners; or(4) otherwise result in an adverse change in the overall rights or obligations of the Limited Partner in relationto the conduct of the investment program of any of the Funds;(iv) any instrument or document necessary or advisable to implement the provisions of Section 3.10;(v) any written notice or letter of resignation from any board seat or office of any Person (other than acompany that has a class of equity securities registered under the United States Securities Exchange Act of 1934, as amended,or that is registered under the United States Investment Company Act of 1940, as amended), which board seat or office wasoccupied or held at the request of the Partnership or any of its Affiliates; and(vi) all such proxies, consents, assignments and other documents as the General Partner determines tobe necessary or advisable in connection with any merger or other reorganization, restructuring or other similar transactionentered into in accordance with this Agreement (including the provisions of Section 9.7(c)).(b) Each Limited Partner is aware that the terms of this Agreement permit certain amendments to thisAgreement to be effected and certain other actions to be taken or omitted by or with respect to the Partnership without his consent. Ifan amendment of the Certificate or this Agreement or any action by or with respect to the Partnership is taken by the General Partner inthe manner contemplated by this Agreement, each Limited Partner agrees that, notwithstanding any objection which such LimitedPartner may assert with respect to such action, the General Partner is authorized and empowered, with full power of substitution, toexercise the authority granted above in any manner which may be necessary or appropriate to permit such amendment to be made oraction lawfully taken or omitted. Each Partner is fully aware that each other Partner will rely on the effectiveness of this special power-of-attorney with a view to the orderly administration of the affairs of the Partnership. This power-of-attorney is a special power-of-attorney and is coupled with an interest in favor of the General Partner and as such:(vi) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death orincapacity of any party granting this power-of-attorney, regardless of whether the Partnership or the General Partner shall havehad notice thereof; and(vii) shall survive any Transfer by a Limited Partner of the whole or any portion of its interest in thePartnership, except that, where the transferee thereof has been approved by the General Partner for admission to the Partnershipas a substituted Limited Partner, this power- of-attorney given by the transferor shall survive such Transfer for the sole purposeof enabling the General Partner to execute, acknowledge and file any instrument necessary to effect such substitution. Section 9.5 NoticesAny notice required or permitted to be given under this Agreement shall be in writing. A notice to the General Partnershall be directed to the attention of Leon D. Black with a copy to the general counsel of the Partnership. A notice to a Limited Partnershall be directed to such Limited Partner’s last known residence as set forth in the books and records of the Partnership or its Affiliates(a Limited Partner’s “Home Address”). A notice shall be considered given when delivered to the addressee either by hand at hisPartnership office or electronically to the primary e-mail account supplied by the Partnership for Partnership business communications,except that a notice to a Retired Partner or a notice demanding cure of a Bad Act shall be considered given only when delivered byhand or by a recognized overnight courier or delivered by mailing through the United States Postal System by regular mail to suchRetired Partner’s Home Address.Section 9.6 Agreement Binding Upon Successors and AssignsThis Agreement shall be binding upon and inure to the benefit of the parties and their respective successors byoperation of law, but the rights and obligations of the Partners hereunder shall not be assignable, transferable or delegable except asexpressly provided herein, and any attempted assignment, transfer or delegation thereof that is not made in accordance with suchexpress provisions shall be void and unenforceable.Section 9.7 Merger, Consolidation, etc.(a) Subject to Section 9.7(b) and Section 9.7(c), the Partnership may merge or consolidate with or into one ormore limited partnerships formed under the Delaware Act or other business entities (as defined in Section 17-211 of the Delaware Act)pursuant to an agreement of merger or consolidation which has been approved by the General Partner.(b) Subject to Section 9.7(c), but notwithstanding any other provision to the contrary contained elsewhere inthis Agreement, an agreement of merger or consolidation approved in accordance with Section 9.7(a) may, to the extent permitted bySection 17-211(g) of the Delaware Act and Section 9.7(a), (i) effect any amendment to this Agreement, (ii) effect the adoption of anew partnership agreement for the Partnership if it is the surviving or resulting limited partnership in the merger or consolidation, or (iii)provide that the partnership agreement of any other constituent limited partnership to the merger or consolidation (including a limitedpartnership formed for the purpose of consummating the merger or consolidation) shall be the partnership agreement of the surviving orresulting limited partnership.(c) The General Partner shall have the power and authority to approve and implement any merger,consolidation or other reorganization, restructuring or similar transaction without the consent of any Limited Partner, other than anyLimited Partner with respect to which the General Partner has determined that such transaction will, or will reasonably be likely to,result in any material adverse change in the financial and other material rights of such Limited Partner conferred by this Agreement andany Other Agreement entered into pursuant to Section 9.3(b) or the imposition of any material new financial or other obligation onsuch Limited Partner. Subject to the foregoing, the General Partner may require one or more of the Limited Partners to sell, exchange,transfer or otherwise dispose of their interests in the Partnership in connection with any such transaction, and each Limited Partner shalltake such action as may be directed by the General Partner to effect any such transaction.Section 9.8 Governing Law; Dispute Resolution(a) This Agreement, and the rights and obligations of each and all of the Partners hereunder, shall be governedby and construed in accordance with the laws of the State of Delaware.(b) Subject to Section 9.8(c), any dispute, controversy, suit, action or proceeding arising out of or relating tothis Agreement, other than injunctive relief, will be settled exclusively by arbitration, conducted before a single arbitrator in New YorkCounty, New York (applying Delaware law) in accordance with, and pursuant to, the applicable rules of JAMS (“JAMS”). Thearbitration shall be conducted on a strictly confidential basis, and none of the parties shall disclose the existence of a claim, the natureof a claim, any documents, exhibits, or information exchanged or presented in connection with such a claim, or the result of any action,to any third party, except as required by law, with the sole exception of their legal counsel and parties engaged by that counsel to assistin the arbitration process, who also shall be bound by these confidentiality terms. The decision of the arbitrator will be final andbinding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Anyparty hereto may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm orvacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The party that isdetermined by the arbitrator not to be the prevailing party will pay all of the JAMS’s administrative fees and the arbitrator’s fee andexpenses. If neither party is so determined, such fees shall be shared. Each party shall be responsible for such party’s own attorneys’fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOTPROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTNER AND THE PARTNERSHIP WAIVE AND COVENANT THAT THE PARTNER AND THE PARTNERSHIP WILL NOT ASSERT (WHETHER ASPLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLEOR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW OR HEREAFTER ARISING,AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT THE PARTNERSHIP ORANY OF ITS AFFILIATES OR ANY PARTNER MAY FILE A COPY OF THIS SECTION WITH ANY COURT ASWRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THEPARTNERSHIP AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTNER, ON THE OTHER HAND,IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEENSUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDINGPROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OFCOMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.(c) Nothing in this Section 9.8 will prevent the General Partner or a Limited Partner from applying to a courtfor preliminary or interim relief or permanent injunction in a judicial proceeding (e.g., injunction or restraining order), in addition to andnot in lieu of any other remedy to which it may be entitled at law or in equity, if such relief from a court is necessary to preserve thestatus quo pending resolution or to prevent serious and irreparable injury in connection with any breach or anticipated breach ofcovenants applicable pursuant to a Limited Partner’s Award Letter; provided, however, that all parties explicitly waive all rights to seekpreliminary, interim, injunctive or other relief in a judicial proceeding and all parties submit to the exclusive jurisdiction of the forumdescribed in Section 9.8(b) hereto for any dispute or claim concerning continuing entitlement to distributions or other payments, even ifsuch dispute or claim involves or relates to any restrictive covenants set forth in a Limited Partner’s Award Letter. For the purposes ofthis Section 9.8(c), each party hereto consents to the exclusive jurisdiction and venue of the courts of the state and federal courts withinthe County of New York in the State of New York.Section 9.9 Termination of Right of ActionEvery right of action arising out of or in connection with this Agreement by or on behalf of any past, present or futurePartner or the Partnership against any past, present or future Partner shall, to the fullest extent permitted by applicable law, irrespectiveof the place where the action may be brought and irrespective of the residence of any such Partner, cease and be barred by theexpiration of three years from the date of the act or omission in respect of which such right of action arises.Section 9.10 Not for Benefit of CreditorsThe provisions of this Agreement are intended only for the regulation of relations among Partners and between Partnersand former or prospective Partners and the Partnership. Except with respect to the rights of Covered Persons hereunder, each of whomshall be an intended beneficiary and shall be entitled to enforce the provisions of Section 5.7, this Agreement is not intended for thebenefit of any Person who is not a Partner, and no rights are intended to be granted to any other Person who is not a Partner under thisAgreement.Section 9.11 ReportsAs soon as practicable after the end of each taxable year, the General Partner shall furnish to each Limited Partner (a)such information as may be required to enable each Limited Partner to properly report for United States federal and state income taxpurposes his distributive share of each Partnership item of income, gain, loss, deduction or credit for such year, and (b) a statement ofthe total amount of Operating Profit or Operating Loss for such year, including a copy of the United States Internal Revenue ServiceSchedule “K-1” issued by the Partnership to such Limited Partner, and a reconciliation of any difference between (i) such OperatingProfit or Operating Loss and (ii) the aggregate net profits or net losses allocated by the Funds to the Partnership for such year (otherthan any difference attributable to the aggregate Capital Profit or Capital Loss allocated by the Funds to the Partnership for such year).Section 9.12 FilingsThe Partners hereby agree to take any measures necessary (or, if applicable, refrain from any action) to ensure that thePartnership is treated as a partnership for U.S. federal, state and local income tax purposes.Section 9.13 CounterpartsThis Agreement may be executed in one or more counterparts, including by facsimile or other electronic signature. Allsuch counterparts so executed shall constitute an original agreement binding on all the parties, but together shall constitute but oneinstrument. [Signature Page Follows] IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.GENERAL PARTNER:APOLLO CREDIT OPPORTUNITYADVISORS III (APO FC) GP LLCBy: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice PresidentLIMITED PARTNERS:APH HOLDINGS (FC), L.P.By: Apollo Principal Holdings VII GP, Ltd.,its General PartnerBy: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice PresidentAPOLLO CIP PARTNER POOL, L.P.By: Apollo CIP GenPar, Ltd.,its General PartnerBy: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice President[Signature Page of COF III GP Partnership Agreement] APOLLO CIP PROFESSIONALS, L.P.By: Apollo CIP GenPar, Ltd.,its General PartnerBy: /s/ Joseph D. Glatt Name: Joseph D. Glatt Title: Vice PresidentFor purposes of Section 9.3(c) only:APOLLO CO-INVESTORS MANAGER, LLCBy: /s/ Joseph D. Glatt Name: Joseph D. GlattTitle: Vice President[Signature Page of COF III GP Partnership Agreement] CONFIDENTIAL & PROPRIETARY [FORM OF AWARD LETTER]APOLLO CREDIT OPPORTUNITY ADVISORS III (APO FC) LP[Name][Address]Dear [Name]:Reference is made to the Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III(APO FC) LP (the “Partnership”), as in effect from time to time (the “Partnership Agreement”). This Award Letter confirms thenumber of Points you are being awarded in the Partnership and certain terms in relation to the Partnership Agreement. Capitalizedterms used but not defined herein shall have the meanings set forth in the Partnership Agreement.I.Your Initial Point AwardYou are being granted [˜] Points on the terms set forth in this Award Letter and the Partnership Agreement.II. Vesting Percentage and Vesting Commencement DateThe term “Vesting Percentage” as applied to you shall have the meaning set forth below:“Vesting Percentage” means, with respect to you upon your becoming a Retired Partner: [˜]Your “Vesting Commencement Date” is [˜] for the initial Points awarded to you by the Partnership.If additional Points are awarded to you by the Partnership after the date hereof, the Vesting Commencement Date for such additionalPoints will commence on dates to be agreed by AGM Credit Senior Management and the Executive Committee of AGM.As long as you remain an employee of or active partner of AGM, you will share in distributions made by the Partnership to its Partnerswith respect to all your Points granted by the Partnership (vested and unvested).III. Dilution1. The General Partner may increase or reduce your Points at any time; provided that, except as expressly set forth below inparagraphs 2, 3 and 4, (i) the General Partner may reduce your Points in the Partnership only in December 2016, and thereafter inDecember of each subsequent even-numbered year, and (ii) the General Partner may not reduce your Vested Points when you becomea Retired Partner.2. The General Partner may reduce or eliminate your Points (including your Vested Points when you become a Retired Partner), uponthe occurrence of your default, after the expiration of the applicable cure period set forth in the Co-Investors (A) PartnershipAgreement, in your obligation to contribute capital to Co-Investors (A) in accordance with the Co‑Investors (A) PartnershipAgreement.3. 1.%2.%3.%4. Your Points may be reduced as a consequence of an allocation of Points to another Team Member (as definedbelow) if all of the following conditions are satisfied: [˜](a) For new issuance of Points agreed to between AGM Credit Senior Management and the Executive Committee of AGM, itis intended that the dilution in the sharing of the Carried Interest Revenues will be borne by all then existing Limited Partners on a prorata basis (determined as of the effective date of the dilution). Accordingly, the Points of the then existing Limited Partners will beappropriately reduced on a pro rata basis based on the Points then held by them; provided, however, that if your Points would bereduced to below 40, your Points shall be reduced to 40 and the balance of the Points that would otherwise have reduced your Pointsshall instead reduce the Points of the other Limited Partners whose Points are to be reduced in accordance with this paragraph 3(b). Inall cases, the determinations of the General Partner to implement the foregoing shall be final and binding on the Partnership and the Limited Partners.(b) The Executive Committee of AGM shall apply the reduction of your Points against the Points held by you in thePartnership or indirectly in Partner Pool LP as determined by the Executive Committee of AGM in its sole discretion.(c) For purposes of this Award Letter:“Credit Business” means all segments of the credit business of AGM, which, for the avoidance of doubt, includes,without limitation, Opportunistic Credit, European Credit, U.S. Performing Credit, Structured Credit, Non-Performing Loans, StrategicAccounts, CMBS/CRE, CPI Europe, Principal Structured Finance and RMBS, as well as credit businesses under development,including, but not limited to, Energy Credit and Finco, but excluding assets of Athene Holding Ltd. (and related revenues) that thecredit business of AGM does not manage; it being understood that the General Partner, in consultation with AGM Credit SeniorManagement, shall determine whether business segments acquired or created after the date of this Agreement shall be included in theCredit Business.“Team Member” means (i) a natural person whose services to AGM or its Affiliates are substantially dedicated toAGM’s or its Affiliates’ Credit Business, (ii) a natural person who, following the date hereof, becomes a Retired Partner and who, onor following the date hereof, held Points in his capacity as a Team Member, or (iii) a Related Party of any of the foregoing.4. If you become a Retired Partner, your Points shall be reduced automatically to (i) zero if your retirement is the consequence of aBad Act and (ii) otherwise, an amount equal to your Vested Points calculated as of your Retirement Date. Any such reduction shall beeffective as of your Retirement Date or such subsequent date as may be determined by the General Partner; provided that the GeneralPartner may agree to a lesser reduction (or to no reduction) of your Points when you become a Retired Partner.5. 2.%2.%3.%4. If any Points become available for reallocation as a result of a reduction pursuant to paragraph 4 or any similarprovision in the Award Letter of any other Limited Partner (i) the Points of the Limited Partners shall be adjusted so as to restore themto the number thereof prior to any adjustment described in paragraph 3(b) and (ii) only after such restoration is complete, shall thePartnership have the right to reallocate such remaining forfeited Points. In each case, the determinations of the General Partner toimplement the foregoing shall be final and binding on the Partnership and the Limited Partners.(a) If a reduction occurred prior to your Retirement and was applied against your Points and you, as a Retired Partner, haveunrestored Points at the time of your Retirement, the quantity of such unrestored Points shall be adjusted at that time by multiplyingsuch amount by the Vesting Percentage applicable to you, as a Retired Partner.(b) After restoration of all previously reduced Points, the General Partner shall determine the manner of reallocating anyPoints that become available as a result of a reduction pursuant to paragraph 4(a) or any similar provision in the Award Letter or OtherAgreement of any other Limited Partner.(c) Unless otherwise determined by the General Partner in its good faith discretion, the aggregate amount of forfeited Pointsreallocated to non-Retired Team Members who hold Points shall be apportioned among them in accordance with the Points held bysuch Team Members at the time the relevant Points were forfeited.IV. Mandatory Purchases and Repurchases of AGM Shares1. A portion of all distributions to be made to you (whether directly from the Partnership or any other Fund General Partner (asdefined in the limited partnership agreement of Partner Pool LP) or indirectly through Partner Pool LP (the “Holdback Amount”) in agiven fiscal quarter will be required to be used by you to purchase Class A shares of AGM (“AGM Shares”) in accordance with theterms and conditions set forth in the Restricted Share Award Agreement under the AGM 2007 Equity Incentive Plan (as definedbelow) and related grant notice attached hereto as Annex A-1 (the “Restricted Share Award Agreement”) or, to the extent you becomea Retired Partner, in accordance with the terms and conditions set forth in the Share Award Agreement under the AGM 2007 EquityIncentive Plan and related grant notice attached hereto as Annex A-2 (the “Retired Partner Share Award Agreement”). You will berequired to make an election under Section 83(b) of the Code with respect to each such purchase of AGM Shares with the HoldbackAmount. The Holdback Amount will be in an amount not exceeding the applicable amounts determined under the following formula,except to the extent reduced by the Executive Committee of AGM: [˜]2. The Holdback Amount for a particular quarter, if any, will be distributed to you on the first business day on which a “tradingwindow” for AGM Shares occurs during the calendar quarter following the quarter end to which the distribution relates, or, if earlier,10 days before the end of such succeeding quarter or, if such date falls on a weekend or holiday, the next preceding business day (the“Grant Date”).3. An Affiliate of AGM shall serve as agent in effecting the acquisition by you of the AGM Shares on the date such amounts are distributed, and no cash distribution will actually be made to you, but rather, the Holdback Amount will be paid directly to AGM onyour behalf to acquire AGM Shares. In the case of AGM Shares that are subject to vesting pursuant to the terms of the RestrictedShare Award Agreement, the vesting commencement date shall be the midpoint of the calendar quarter in which the HoldbackAmount was reserved, without regard to the actual date in a subsequent calendar quarter on which such AGM Shares are purchasedwith such Holdback Amount, except that the vesting commencement date for the initial AGM Shares to be acquired by you with aHoldback Amount shall be [˜] (the “Applicable Date”).4. The amount of AGM Shares to be acquired on any such distribution date shall be equal to the fair market value of the AGM Shares(calculated based on the volume weighted average price of the AGM Shares on the date such AGM Shares are scheduled to bepurchased), rounded down to the nearest whole AGM Share and reduced to reflect any sales commissions or associated costs. Onlywhole AGM Shares will be acquired, and cash shall be distributed to you in lieu of fractional AGM Shares.5. Delivery of AGM Shares to you shall be subject to your execution of the applicable grant notice (substantially in the form attachedas Annex A-1 or Annex A-2, as applicable).6. If you have vested Points after you become a Retired Partner, a Holdback Amount shall still apply, but any AGM Shares acquiredwill not be subject to vesting and may be granted outside of the Apollo Global Management LLC 2007 Equity Incentive Plan (as thesame may be amended, supplemented, modified or replaced from time to time, the “AGM 2007 Equity Incentive Plan”). However,such AGM Shares shall be subject solely to the transfer restrictions and other terms set forth in the Retired Partner Share AwardAgreement. Notwithstanding anything to the contrary herein, if (i) following the distribution of a Holdback Amount to you and (ii)prior to the time of the acquisition of the applicable AGM Shares with respect to such Holdback Amount for you, you become aRetired Partner, then the AGM Shares (that would have otherwise been acquired with the Holdback Amount), or a portion thereof, asapplicable, shall be forfeited to the same extent as AGM Shares would have been forfeited if purchased on the distribution date.7. In the case of any AGM Shares that are subject to mandatory repurchase by AGM from you pursuant to the provisions of theRestricted Share Award Agreement or the Retired Partner Share Award Agreement, as the case may be, the cash proceeds of suchmandatory repurchase shall be contributed by AGM, as agent for you, to the Partnership for distribution to APH and, for all purposesof this Award Letter, such cash contribution shall be treated as contributed by you to the Partnership and will increase your CapitalAccount, but you shall not have any right to receive any distributions with respect to any such increase in your Capital Account.8. For purposes of calculating your Clawback Share and/or Partner Giveback Share, AGM Shares (including, for the avoidance ofdoubt, any AGM Shares that have previously vested, but excluding any such AGM Shares that have previously been mandatorilyrepurchased by AGM) shall be valued, without regard to any restrictions thereon and/or whether or not you still retain such AGMShares, based on the purchase price of such AGM Shares as of the Grant Date.9. You will be required to open and maintain a transfer agent account with American Stock Transfer and a brokerage account withMorgan Stanley Smith Barney and/or any replacement transfer agent or brokerage firm selected by AGM (such brokerage firm, the“Designated Broker”) for the purpose of purchasing, holding and disposing of AGM Shares as described hereunder. For the purposesof purchasing any AGM Shares as required hereunder, you hereby designate AGM as your authorized agent to instruct the DesignatedBroker to purchase AGM Shares on your behalf (it being understood that AGM will have the right, but not the obligation, to do so).You hereby (i) agree to execute and deliver such additional documents, certificates and instruments, and perform such additional acts,as may be reasonably requested by AGM as may, in AGM’s determination, be necessary or advisable to carry out the provisions ofthis paragraph 9, and (ii) authorize AGM or its designee to open any of the foregoing accounts on your behalf.V. COF III Required CommitmentYou acknowledge and agree that you are subject to the obligations set forth in the “Required Commitment” section of the AwardLetter issued to you under the limited partnership agreement of Partner Pool LP and, as provided therein with respect to thePartnership, that breach of such obligations could lead to the forfeiture of your Points, your Required Commitment to Co-Investors (A)and the Fund, and your unvested AGM Shares.VI. Recoupment PolicyTo the extent mandated by applicable law, stock exchange or accounting rule and as set forth in a written recoupment policy (e.g., withrespect to compensation paid based on financial statements that are later found to have been materially misstated) adopted by AGM,AGM Shares awarded hereunder and amounts distributed in respect of Points shall be subject to such law or policy.VII. Bad Act and Designated ActEach of the terms “Bad Act” and “Designated Act” shall have the meanings set forth in Annex B hereto. VIII. Restrictive Covenants1. You acknowledge and agree that your willingness to be bound by, and to abide by, the restrictions in favor of AGM regardingconfidentiality, non-solicitation, non-interference, non-disparagement and non-competition set forth in Annex C hereto (collectively,the “Restrictive Covenants”), was a material factor in the decision to grant Points to you, and that such grant would not have occurredin the absence of such binding Restrictive Covenants. You hereby agree to the acknowledgements and covenants set forth on AnnexC.2. If you materially breach any of your Restrictive Covenants in a jurisdiction where such Restrictive Covenant is invalid orunenforceable, the General Partner may elect to forfeit all or a portion of (i) your Points (whether vested or unvested), and/or (ii) any ofyour unvested AGM Shares.3. AGM will be subject to restrictions in favor of you regarding non-disparagement set forth in paragraph (f) of Annex C.4. The confidentiality and non-disparagement restrictions set forth in Annex C hereto shall survive indefinitely following yourTermination.IX. Effect of RetirementRequired Commitment:Upon your becoming a Retired Partner without Cause (as defined in the AGM 2007 Equity Incentive Plan) and other than by reasonof a Bad Act, you shall, in your sole discretion, have the option as to whether to continue to fund the outstanding portion of yourRequired Commitment. Such option shall be exercised within 90 days following your Retirement Date, by notice in writing to thePartnership and the general partner of Co-Investors (A).Retirement with Bad Acts:Upon your becoming a Retired Partner by reason of a Bad Act, all of your Points (whether vested or unvested) and your unvestedAGM Shares shall automatically be forfeited in full as of your Termination Date (as defined in Annex C), and Section 4.1(e) of thePartnership Agreement shall not apply to you, but Section 7.3(b) of the Partnership Agreement shall apply to you.Other Termination:Upon your Termination (other than due to your Bad Acts), you shall retain such number of Points as is equal to the product of (i) yourVesting Percentage and (ii) all of your Points. All of your Points that have not theretofore vested (taking into account any Points thatvest upon your Termination) shall be forfeited.X. Forfeited PointsUpon your Termination, any unvested Points shall be forfeited. Subject to Section III, any forfeited Points shall be available to bereallocated.XI. [Reserved]XII. Miscellaneous1. No officer, director, employee or agent of AGM or any of its Affiliates shall be personally liable for any action, omission,determination, or interpretation taken or made with respect to the Partnership or any associated documentation.2. AGM may, in its sole discretion, decide to deliver any documents related to the Partnership Agreement and any associateddocumentation by electronic means or to request your consent to participate in any of the foregoing by electronic means. You herebyconsent to receive such documents by electronic delivery and, if requested, to agree to participate therein through an online orelectronic system established and maintained by AGM, an Affiliate or a third party designated thereby.3. By your acceptance of, and as a condition of the payment to you of, the initial distributions or other payments on or after the datehereof of any amounts hereunder and under the Partnership Agreement, and in accordance with the Credit Incentive Plan CommitmentLetter previously executed by you, you acknowledge and agree that you are subject to this Award Letter, the Partnership Agreementand any other agreements referred to herein or therein and are bound by, and shall be treated as a party to, all of the foregoingagreements (including as the same may be amended or modified from time to time in accordance with their terms).4. This Award Letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of laws that would cause the laws of another jurisdiction to apply. Any dispute or controversy arising out of orrelating to the Partnership, other than injunctive relief in the event of a breach or threatened breach of the Restrictive Covenants, will besettled exclusively by arbitration as provided in the Partnership Agreement, such that the provisions of Section 9.8(b) and 9.8(c) of thePartnership Agreement shall apply mutatis mutandis to this Award Letter. This Award Letter is binding on and enforceable against theGeneral Partner, the Partnership and you. This Award Letter may be amended only with the consent of each party hereto. ThePartnership or the General Partner may provide copies of this Award Letter to other Persons. This Award Letter may be executed byfacsimile and in one or more counterparts, all of which shall constitute one and the same instrument.[remainder of page intentionally left blank]You have confirmed that the above correctly reflects our understanding and agreement with respect to the foregoing matters.Very truly yours,APOLLO CREDIT OPPORTUNITY ADVISORS III (APO FC) LPBy: Apollo Credit Opportunity Advisors III (APO FC) GP LLC,its General PartnerBy: Name: Title: APOLLO CREDIT OPPORTUNITY ADVISORS III (APO FC) GP LLCBy: Name: Title: Restricted AGM Share Award Grant Notice and Restricted AGM Share Award AgreementShare Award Grant Notice Share Award Agreement (for Retired Partners)Definitions“Bad Act” means your:(i) commission of an intentional violation of a material law or regulation in connection with any transaction involving thepurchase, sale, loan, pledge or other disposition of, or the rendering of investment advice with respect to, any security, asset, futures orforward contract, insurance contract, debt instrument or currency, in each case, that has a significant adverse effect on your ability to perform your services to AGM or any of its Affiliates;(ii) commission of an intentional and material breach of a material provision of a written Apollo Code of Conduct (other thanany Apollo Code of Conduct adopted after the date of your admission to the Apollo Credit Opportunity Advisors III (APO FC) LPwith the primary purpose of creating or finding “Bad Acts”);(iii) commission of intentional misconduct in connection with your performance of services for AGM or any of its Affiliates;(iv) commission of any misconduct that, individually or in the aggregate, has caused or substantially contributed to, or isreasonably likely to cause or substantially contribute to, material economic or reputational harm to AGM or any of its Affiliates(excluding any mistake of judgment made in good faith with respect to a portfolio investment or account managed by AGM or itsAffiliates, or a communication made to the principals or other partners, in a professional manner, of a good faith disagreement with aproposed action by AGM or any of its Affiliates);(v) conviction of a felony or plea of no contest to a felony charge, in each case, if such felony relates to AGM or any of itsAffiliates;(vi) fraud in connection with your performance of services for AGM or any of its Affiliates; or(vii) embezzlement from AGM or any of its Affiliates or interest holders;provided, however, that:(a) you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure, the itemsset forth in clauses (ii) and (iv); and(b) during the pendency of any felony charge under clause (v), AGM and its Affiliates may suspend payment of anydistributions in respect of your Points, and if (I) you are later acquitted or otherwise exonerated from such charge, or (II) youremployment or service with AGM or its applicable Affiliate does not terminate, then (A) AGM or its applicable affiliate shall pay toyou all such accrued but unpaid distributions with respect to vested Points, with interest calculated from the date such distributionswere suspended at the prime lending rate in effect on the date of such suspension, and (B) throughout the period of suspension (or untilthe date of termination of your employment or service, if earlier), distributions with respect to unvested Points shall continue to accrue,and Points shall continue to vest, in accordance with the terms and conditions set forth herein.“Designated Act” means your:(i) intentional breach of any material provision of an award agreement or any other agreements of AGM or any of itsAffiliates;(ii) failure to devote a significant portion of your time to performing services as an agent of AGM without the prior writtenconsent of AGM, other than by reason of death or Disability; or(iii) suspension or other disciplinary action against you by an applicable regulatory authority;provided, however, that you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure,the item set forth in clause (i).For purposes of this Annex B, the term “Affiliate” includes Portfolio Companies. Restrictive Covenants[˜] Exhibit 21.1LIST OF SUBSIDIARIESEntity Name Jurisdiction of Organization2012 CMBS-I GP LLC Delaware2012 CMBS-I Management LLC Delaware2012 CMBS-II GP LLC Delaware2012 CMBS-II Management LLC Delaware2012 CMBS-III GP LLC Delaware2012 CMBS-III Management LLC DelawareA/A Capital Management, LLC DelawareA/A Investor I, LLC DelawareA-A Mortgage Opportunities Corp. DelawareAAA Associates (Co-Invest VII GP), Ltd. Cayman IslandsAAA Associates (Co-Invest VII), L.P. Cayman IslandsAAA Associates, L.P. GuernseyAAA Guernsey Limited GuernseyAAA Holdings GP Limited GuernseyAAA Holdings, L.P. GuernseyAAA Life Re Carry, L.P. Cayman IslandsAAA MIP Limited GuernseyAAM GP Ltd. Cayman IslandsACC Advisors A/B, LLC DelawareACC Advisors C, LLC DelawareACC Advisors D, LLC DelawareACC Management, LLC DelawareACREFI Management, LLC DelawareAEM GP, LLC DelawareAES Advisors II GP, LLC DelawareAES Advisors II, L.P. Cayman IslandsAES Co-Investors II, LLC DelawareAGM India Advisors Private Limited IndiaAGRE - CRE Debt Manager, LLC DelawareAGRE - DCB, LLC DelawareAGRE - E Legacy Management, LLC DelawareAGRE - E2 Legacy Management, LLC DelawareAGRE Asia Pacific Legacy Management, LLC DelawareAGRE Asia Pacific Management, LLC DelawareAGRE Asia Pacific Real Estate Advisors GP, Ltd Cayman IslandsAGRE Asia Pacific Real Estate Advisors, L.P. Cayman IslandsAGRE CMBS GP II LLC DelawareAGRE CMBS GP LLC DelawareAGRE CMBS Management II LLC DelawareAGRE CMBS Management LLC DelawareAGRE Debt Fund I GP, Ltd. Cayman IslandsAGRE Europe Co-Invest Advisors GP, LLC Marshall IslandsAGRE Europe Co-Invest Advisors, L.P. Marshall IslandsAGRE Europe Co-Invest Management GP, LLC Marshall IslandsAGRE Europe Co-Invest Management, L.P. Marshall IslandsAGRE Europe Legacy Management, LLC DelawareAGRE Europe Management, LLC DelawareAGRE GP Holdings, LLC DelawareAGRE NA Legacy Management, LLC DelawareAGRE NA Management, LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationAGRE U.S. Real Estate Advisors Cayman, Ltd. Cayman IslandsAGRE U.S. Real Estate Advisors GP, LLC DelawareAGRE U.S. Real Estate Advisors, L.P. DelawareAHL 2014 Investor GP, Ltd. Cayman IslandsAIF III Management, LLC DelawareAIF V Management, LLC DelawareAIF VI Management, LLC DelawareAIF VII Management, LLC DelawareAIF VIII Management, LLC DelawareAION Co-Investors (D) Ltd MauritiusALM IV, Ltd. Cayman IslandsALM Loan Funding 2010-1, LLC DelawareALM Loan Funding 2010-3, LLC DelawareALM V, Ltd. Cayman IslandsALM VI, Ltd. Cayman IslandsALM VII (R), LLC DelawareALM VII (R)-2, LLC DelawareALM VII(R), Ltd. Cayman IslandsALM VII(R)-2, Ltd. Cayman IslandsALM VII, Ltd. Cayman IslandsALM VIII, Ltd. Cayman IslandsALM X, LLC DelawareALM X, Ltd. Cayman IslandsALM XI, LLC DelawareALM XI, Ltd. Cayman IslandsALM XIV, LLC DelawareALM XIV, Ltd. Cayman IslandsALME Loan Funding II Limited IrelandALME Loan Funding III Limited IrelandAMH Holdings (Cayman), L.P. Cayman IslandsAMH Holdings GP, Ltd. Cayman IslandsAMI (Holdings), LLC DelawareAMI (Luxembourg) S.a r.l. LuxembourgANRP EPE GenPar, Ltd. Cayman IslandsANRP PG GenPar, Ltd. Cayman IslandsANRP Talos GenPar, Ltd. Cayman IslandsAP Alternative Assets, L.P. GuernseyAP AOP VII Transfer Holdco, LLC DelawareAP Transport LLC DelawareAP TSL Funding, LLC DelawareAPH HFA Holdings GP, Ltd Cayman IslandsAPH HFA Holdings, L.P. Cayman IslandsAPH Holdings (DC), L.P. Cayman IslandsAPH Holdings (FC), L.P. Cayman IslandsAPH Holdings, L.P. Cayman IslandsAPH I (Sub I), Ltd. Cayman IslandsAPH III (Sub I), Ltd. Cayman IslandsAPO (FC II), LLC AnguillaAPO (FC), LLC AnguillaAPO Asset Co., LLC DelawareAPO Corp. DelawareApollo Achilles Co-Invest GP, LLC Anguilla LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo Administration GP Ltd. Cayman IslandsApollo Advisors (Mauritius) Ltd. MauritiusApollo Advisors (MHE), LLC DelawareApollo Advisors IV, L.P. DelawareApollo Advisors V (EH Cayman), L.P. Cayman IslandsApollo Advisors V (EH), LLC AnguillaApollo Advisors V, L.P. DelawareApollo Advisors VI (APO DC), L.P. DelawareApollo Advisors VI (APO DC-GP), LLC DelawareApollo Advisors VI (APO FC), L.P. Cayman IslandsApollo Advisors VI (APO FC-GP), LLC AnguillaApollo Advisors VI (EH), L.P. Cayman IslandsApollo Advisors VI (EH-GP), Ltd. Cayman IslandsApollo Advisors VI, L.P. DelawareApollo Advisors VII (APO DC), L.P. DelawareApollo Advisors VII (APO DC-GP), LLC DelawareApollo Advisors VII (APO FC), L.P. Cayman IslandsApollo Advisors VII (APO FC-GP), LLC AnguillaApollo Advisors VII (EH), L.P. Cayman IslandsApollo Advisors VII (EH-GP), Ltd. Cayman IslandsApollo Advisors VII, L.P. DelawareApollo Advisors VIII (APO DC), L.P. DelawareApollo Advisors VIII (APO DC-GP), LLC DelawareApollo Advisors VIII (EH), L.P. Cayman IslandsApollo Advisors VIII (EH-GP), Ltd. Cayman IslandsApollo Advisors VIII, L.P. DelawareApollo AGRE APREF Co-Investors (D), L.P. Cayman IslandsApollo AGRE Prime Co-Investors (D), LLC AnguillaApollo AGRE USREF Co-Investors (B), LLC DelawareApollo AIE II Co-Investors (B), L.P. Cayman IslandsApollo AION Capital Partners GP, LLC DelawareApollo AION Capital Partners, L.P. Cayman IslandsApollo ALS Holdings II GP, LLC DelawareApollo ALST GenPar, Ltd. Cayman IslandsApollo ALST Voteco, LLC DelawareApollo Alteri Investments Advisors, L.P. Cayman IslandsApollo Alteri Investments Management, Ltd. Cayman IslandsApollo Alternative Assets GP Limited Cayman IslandsApollo Alternative Assets, L.P. Cayman IslandsApollo Alternative Credit Absolute Return Advisors LLC DelawareApollo Alternative Credit Absolute Return Management LLC DelawareApollo Alternative Credit Long Short Advisors LLC DelawareApollo Alternative Credit Long Short Management LLC DelawareApollo Anguilla B LLC AnguillaApollo ANRP Advisors (APO DC), L.P. DelawareApollo ANRP Advisors (APO DC-GP), LLC DelawareApollo ANRP Advisors (APO FC), L.P. Cayman IslandsApollo ANRP Advisors (APO FC-GP), LLC AnguillaApollo ANRP Advisors (IH), L.P. Cayman IslandsApollo ANRP Advisors (IH-GP), LLC AnguillaApollo ANRP Advisors, L.P. DelawareApollo ANRP Capital Management, LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo ANRP Co-Investors (D), L.P. DelawareApollo ANRP Co-Investors (DC-D), L.P. DelawareApollo ANRP Co-Investors (FC-D), LP AnguillaApollo ANRP Co-Investors (IH-D), LP AnguillaApollo ANRP Fund Administration, LLC DelawareApollo APC Advisors, L.P. Cayman IslandsApollo APC Capital Management, LLC AnguillaApollo APC Management GP, LLC DelawareApollo APC Management, L.P. DelawareApollo Arrowhead Management, LLC DelawareApollo Asia Administration, LLC DelawareApollo Asia Advisors, L.P. DelawareApollo Asia Capital Management, LLC DelawareApollo Asia Management GP, LLC DelawareApollo Asia Management, L.P. DelawareApollo Asian Infrastructure Management, LLC DelawareApollo ASPL Management, LLC DelawareApollo Athlon GenPar, Ltd. Cayman IslandsApollo BSL Management, LLC DelawareApollo Capital Credit Management, LLC DelawareApollo Capital Management GP, LLC DelawareApollo Capital Management IV, Inc. DelawareApollo Capital Management V, Inc. DelawareApollo Capital Management VI, LLC DelawareApollo Capital Management VII, LLC DelawareApollo Capital Management VIII, LLC DelawareApollo Capital Management, L.P. DelawareApollo Capital Spectrum Advisors, LLC DelawareApollo Capital Spectrum Management, LLC DelawareApollo Centre Street Advisors (APO DC), L.P. DelawareApollo Centre Street Advisors (APO DC-GP), LLC DelawareApollo Centre Street Co-Investors (DC-D), L.P. DelawareApollo Centre Street Management, LLC DelawareApollo CIP European SMAs & CLOs, L.P. Cayman IslandsApollo CIP GenPar, Ltd. Cayman IslandsApollo CIP Global SMAs, L.P. Cayman IslandsApollo CIP Hedge Funds, L.P. Cayman IslandsApollo CIP Partner Pool, L.P. Cayman IslandsApollo CIP Professionals, L.P. DelawareApollo CIP Structured Credit, L.P. Cayman IslandsApollo CIP US SMAs, L.P. Cayman IslandsApollo CKE GP, LLC DelawareApollo COF I Capital Management, LLC DelawareApollo COF II Capital Management, LLC DelawareApollo COF Investor, LLC DelawareApollo Co-Investment Capital Management, LLC DelawareApollo Co-Investment Management, LLC DelawareApollo Co-Investors Manager, LLC DelawareApollo Co-Investors VI (D), L.P. DelawareApollo Co-Investors VI (DC-D), L.P. DelawareApollo Co-Investors VI (EH-D), LP AnguillaApollo Co-Investors VI (FC-D), LP Anguilla LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo Co-Investors VII (D), L.P. DelawareApollo Co-Investors VII (DC-D), L.P. DelawareApollo Co-Investors VII (EH-D), LP AnguillaApollo Co-Investors VII (FC-D), L.P. AnguillaApollo Co-Investors VII (NR D), L.P. DelawareApollo Co-Investors VII (NR DC-D), L.P. DelawareApollo Co-Investors VII (NR EH-D), LP AnguillaApollo Co-Investors VII (NR FC-D), LP AnguillaApollo Co-Investors VIII (D), L.P. DelawareApollo Co-Investors VIII (DC-D), L.P. DelawareApollo Co-Investors VIII (EH-D), L.P. Cayman IslandsApollo Commodities Management GP, LLC DelawareApollo Commodities Management, L.P., with respect to Series I DelawareApollo Commodities Partners Fund Administration, LLC DelawareApollo Consumer Credit Advisors, LLC DelawareApollo Consumer Credit Fund, L.P. DelawareApollo Consumer Credit Master Fund, L.P. DelawareApollo Credit Advisors I, LLC DelawareApollo Credit Advisors II, LLC DelawareApollo Credit Advisors III, LLC DelawareApollo Credit Capital Management, LLC DelawareApollo Credit Fund LP DelawareApollo Credit Funding I Ltd. Cayman IslandsApollo Credit Funding III Ltd. Cayman IslandsApollo Credit Income Advisors LLC DelawareApollo Credit Income Co-Investors (D) LLC DelawareApollo Credit Income Management LLC DelawareApollo Credit Liquidity Advisors, L.P. DelawareApollo Credit Liquidity Capital Management, LLC DelawareApollo Credit Liquidity CM Executive Carry, L.P. DelawareApollo Credit Liquidity Investor, LLC DelawareApollo Credit Liquidity Management GP, LLC DelawareApollo Credit Liquidity Management, L.P. DelawareApollo Credit Management (CLO), LLC DelawareApollo Credit Management (European Senior Debt), LLC DelawareApollo Credit Management (Senior Loans) II, LLC DelawareApollo Credit Management (Senior Loans), LLC DelawareApollo Credit Management, LLC DelawareApollo Credit Opportunity Advisors I, L.P. DelawareApollo Credit Opportunity Advisors II, L.P. DelawareApollo Credit Opportunity Advisors III (APO FC) GP LLC DelawareApollo Credit Opportunity Advisors III (APO FC) LP DelawareApollo Credit Opportunity Advisors III GP LLC DelawareApollo Credit Opportunity Advisors III LP DelawareApollo Credit Opportunity CM Executive Carry I, L.P. DelawareApollo Credit Opportunity CM Executive Carry II, L.P. DelawareApollo Credit Opportunity Co-Investors III (D) LLC DelawareApollo Credit Opportunity Management III LLC DelawareApollo Credit Opportunity Management, LLC DelawareApollo Credit Senior Loan Fund, L.P. DelawareApollo Credit Short Opportunities Advisors LLC DelawareApollo Credit Short Opportunities Co-Investors (D), LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo Credit Short Opportunities Management, LLC DelawareApollo Emerging Markets Absolute Return Advisors GP LLC DelawareApollo Emerging Markets Absolute Return Advisors LP Cayman IslandsApollo Emerging Markets Absolute Return Co-Investors (D) GP LLC DelawareApollo Emerging Markets Absolute Return Co-Investors (D) LP DelawareApollo Emerging Markets Absolute Return Management LLC DelawareApollo Emerging Markets Fixed Income Strategies Advisors GP, LLC DelawareApollo Emerging Markets Fixed Income Strategies Advisors, L.P. Cayman IslandsApollo Emerging Markets Fixed Income Strategies Management, LLC DelawareApollo Emerging Markets, LLC DelawareApollo EPF Administration, Limited Cayman IslandsApollo EPF Advisors II, L.P. Cayman IslandsApollo EPF Advisors, L.P. Cayman IslandsApollo EPF Capital Management, Limited Cayman IslandsApollo EPF Co-Investors (B), L.P. Cayman IslandsApollo EPF Co-Investors II (D), L.P. Cayman IslandsApollo EPF Co-Investors II (Euro), L.P. Cayman IslandsApollo EPF II Capital Management, LLC Marshall IslandsApollo EPF Management GP, LLC DelawareApollo EPF Management II GP, LLC DelawareApollo EPF Management II, L.P. DelawareApollo EPF Management, L.P. DelawareApollo Europe Advisors III, L.P. Cayman IslandsApollo Europe Advisors, L.P. Cayman IslandsApollo Europe Capital Management III, LLC DelawareApollo Europe Capital Management, Ltd. Cayman IslandsApollo Europe Co-Investors III (D), LLC DelawareApollo Europe Management III, LLC DelawareApollo Europe Management, L.P. DelawareApollo European Credit Advisors GP, LLC DelawareApollo European Credit Advisors, L.P. Cayman IslandsApollo European Credit Co-Investors, LLC DelawareApollo European Credit Management GP, LLC DelawareApollo European Credit Management, L.P. DelawareApollo European Long Short Advisors GP, LLC DelawareApollo European Long Short Advisors, L.P. Cayman IslandsApollo European Long Short Management, LLC DelawareApollo European Senior Debt Advisors II, LLC DelawareApollo European Senior Debt Advisors, LLC DelawareApollo European Senior Debt Management, LLC DelawareApollo European Strategic Advisors GP, LLC DelawareApollo European Strategic Advisors, L.P. Cayman IslandsApollo European Strategic Co-Investors, LLC DelawareApollo European Strategic Management GP, LLC DelawareApollo European Strategic Management, L.P. DelawareApollo Executive Carry VII (NR APO DC), L.P. DelawareApollo Executive Carry VII (NR APO FC), L.P. Cayman IslandsApollo Executive Carry VII (NR EH), L.P. Cayman IslandsApollo Executive Carry VII (NR), L.P. DelawareApollo Franklin Advisors (APO DC), L.P. DelawareApollo Franklin Advisors (APO DC-GP), LLC DelawareApollo Franklin Co-Investors (DC-D), L.P. Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo Franklin Management, LLC DelawareApollo Fund Administration IV, L.L.C. DelawareApollo Fund Administration V, L.L.C. DelawareApollo Fund Administration VI, LLC DelawareApollo Fund Administration VII, LLC DelawareApollo Fund Administration VIII, LLC DelawareApollo Gaucho GenPar, Ltd Cayman IslandsApollo Global Real Estate Management GP, LLC DelawareApollo Global Real Estate Management, L.P. DelawareApollo Global Securities, LLC DelawareApollo GSS GP Limited GuernseyApollo HK TMS Investment Holdings GP, LLC DelawareApollo HK TMS Investment Holdings Management, LLC DelawareApollo India Credit Opportunity Management, LLC DelawareApollo International Management (Canada) ULC British ColumbiaApollo International Management GP, LLC DelawareApollo International Management, L.P. DelawareApollo Investment Administration, LLC DelawareApollo Investment Consulting LLC DelawareApollo Investment Management, L.P. DelawareApollo Jupiter Resources Co-Invest GP, LLC DelawareApollo Laminates Agent, LLC DelawareApollo Life Asset Ltd. Cayman IslandsApollo Lincoln Fixed Income Advisors (APO DC), L.P. DelawareApollo Lincoln Fixed Income Advisors (APO DC-GP), LLC DelawareApollo Lincoln Fixed Income Management, LLC DelawareApollo Lincoln Private Credit Advisors (APO DC), L.P. DelawareApollo Lincoln Private Credit Advisors (APO DC-GP), LLC DelawareApollo Lincoln Private Credit Co-Investors (DC-D), L.P. DelawareApollo Lincoln Private Credit Management, LLC DelawareApollo Longevity, LLC DelawareApollo Management (AOP) VII, LLC DelawareApollo Management (AOP) VIII, LLC DelawareApollo Management (Germany) VI, LLC DelawareApollo Management (UK) VI, LLC DelawareApollo Management (UK), L.L.C. DelawareApollo Management Advisors Espana, S.L.U. SpainApollo Management Advisors GmbH GermanyApollo Management Asia Pacific Limited Hong KongApollo Management GP, LLC DelawareApollo Management Holdings GP, LLC DelawareApollo Management Holdings, L.P. DelawareApollo Management III, L.P. DelawareApollo Management International LLP United KingdomApollo Management IV, L.P. DelawareApollo Management Singapore Pte Ltd. SingaporeApollo Management V, L.P. DelawareApollo Management VI, L.P. DelawareApollo Management VII, L.P. DelawareApollo Management VIII, L.P. DelawareApollo Management, L.P. DelawareApollo Maritime Management, LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo Master Fund Administration, LLC DelawareApollo Master Fund Feeder Advisors, L.P. DelawareApollo Master Fund Feeder Management, LLC DelawareApollo MidCap Holdings (Cayman) GP, Ltd. Cayman IslandsApollo MidCap Holdings (Cayman), L.P. Cayman IslandsApollo NA Management II, LLC DelawareApollo Offshore Credit Fund Ltd. Cayman IslandsApollo Palmetto Advisors, L.P. DelawareApollo Palmetto Athene Advisors, L.P. DelawareApollo Palmetto Athene Management, LLC DelawareApollo Palmetto HFA Advisors, L.P. DelawareApollo Palmetto Management, LLC DelawareApollo Parallel Partners Administration, LLC DelawareApollo PE VIII Director, LLC AnguillaApollo PG GenPar, Ltd. Cayman IslandsApollo Principal Holdings I GP, LLC DelawareApollo Principal Holdings I, L.P. DelawareApollo Principal Holdings II GP, LLC DelawareApollo Principal Holdings II, L.P. DelawareApollo Principal Holdings III GP, Ltd. Cayman IslandsApollo Principal Holdings III, L.P. Cayman IslandsApollo Principal Holdings IV GP, Ltd. Cayman IslandsApollo Principal Holdings IV, L.P. Cayman IslandsApollo Principal Holdings IX GP, Ltd. Cayman IslandsApollo Principal Holdings IX, L.P. Cayman IslandsApollo Principal Holdings V GP, LLC DelawareApollo Principal Holdings V, L.P. DelawareApollo Principal Holdings VI GP, LLC DelawareApollo Principal Holdings VI, L.P. DelawareApollo Principal Holdings VII GP, Ltd. Cayman IslandsApollo Principal Holdings VII, L.P. Cayman IslandsApollo Principal Holdings VIII GP, Ltd. Cayman IslandsApollo Principal Holdings VIII, L.P. Cayman IslandsApollo Principal Holdings X GP, Ltd. Cayman IslandsApollo Principal Holdings X, L.P. Cayman IslandsApollo Resolution Servicing GP, LLC DelawareApollo Resolution Servicing, L.P. DelawareApollo Rose GP, L.P. Cayman IslandsApollo Royalties Management, LLC DelawareApollo Senior Loan Fund Co-Investors (D), L.P. DelawareApollo SK Strategic Advisors GP, L.P. Cayman IslandsApollo SK Strategic Advisors, LLC AnguillaApollo SK Strategic Co-Investors (DC-D), LLC Marshall IslandsApollo SK Strategic Management, LLC DelawareApollo SOMA Advisors, L.P. DelawareApollo SOMA Capital Management, LLC DelawareApollo SOMA II Advisors, L.P. Cayman IslandsApollo SPN Advisors (APO DC), L.P. Cayman IslandsApollo SPN Advisors (APO FC), L.P. Cayman IslandsApollo SPN Advisors, L.P. Cayman IslandsApollo SPN Capital Management (APO DC-GP), LLC AnguillaApollo SPN Capital Management (APO FC-GP), LLC Anguilla LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationApollo SPN Capital Management, LLC AnguillaApollo SPN Co-Investors (D), L.P. AnguillaApollo SPN Co-Investors (DC-D), L.P. AnguillaApollo SPN Co-Investors (FC-D), L.P. AnguillaApollo SPN Management, LLC DelawareApollo ST Capital LLC DelawareApollo ST CLO Holdings GP, LLC DelawareApollo ST Credit Partners GP LLC DelawareApollo ST Credit Strategies GP LLC DelawareApollo ST Debt Advisors LLC DelawareApollo ST Fund Management LLC DelawareApollo ST Operating LP DelawareApollo ST Structured Credit Recovery Partners II GP LLC DelawareApollo Strategic Advisors, L.P. Cayman IslandsApollo Strategic Capital Management, LLC DelawareApollo Strategic Management GP, LLC DelawareApollo Strategic Management, L.P. DelawareApollo Structured Credit Recovery Advisors III LLC DelawareApollo Structured Credit Recovery Co-Investors III (D), LLC DelawareApollo Structured Credit Recovery Management III LLC DelawareApollo SVF Administration, LLC DelawareApollo SVF Advisors, L.P. DelawareApollo SVF Capital Management, LLC DelawareApollo SVF Management GP, LLC DelawareApollo SVF Management, L.P. DelawareApollo Talos GenPar, Ltd. Cayman IslandsApollo Total Return Advisors GP LLC DelawareApollo Total Return Advisors LP Cayman IslandsApollo Total Return Co-Investors (D) GP LLC DelawareApollo Total Return Co-Investors (D) LP DelawareApollo Total Return Management LLC DelawareApollo U.S. Real Estate Advisors GP II, LLC DelawareApollo U.S. Real Estate Advisors II, L.P DelawareApollo USREF Co-Investors II (D), LLC DelawareApollo Value Administration, LLC DelawareApollo Value Advisors, L.P. DelawareApollo Value Capital Management, LLC DelawareApollo Value Management GP, LLC DelawareApollo Value Management, L.P. DelawareApollo Verwaltungs V GmbH GermanyApollo VII TXU Administration, LLC DelawareApollo VIII GenPar, Ltd. Cayman IslandsApollo Zeus Strategic Advisors, L.P. Cayman IslandsApollo Zeus Strategic Advisors, LLC DelawareApollo Zeus Strategic Co-Investors (DC-D), LLC DelawareApollo Zeus Strategic Management, LLC DelawareApollo Zohar Advisors LLC DelawareApollo/Artus Management, LLC DelawareARM Manager, LLC DelawareAthene Asset Management, L.P. (Delaware-see CYM entity) DelawareAthene Investment Analytics LLC DelawareAthene Mortgage Opportunities GP, LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationAugust Global Management, LLC FloridaBlue Bird GP, Ltd. Cayman IslandsBond3 GP, Ltd. Cayman IslandsCAI Strategic European Real Estate Advisors GP, LLC Marshall IslandsCAI Strategic European Real Estate Advisors, L.P. Marshall IslandsChamp GP, LLC DelawareChamp II Luxembourg Holdings S.a r.l. LuxembourgChamp L.P. Cayman IslandsChamp Luxembourg Holdings S.a r.l. LuxembourgCMP Apollo LLC DelawareCornerstone CLO, Ltd. Cayman IslandsCPI Asia G-Fdr General Partner GmbH GermanyCPI Capital Partners Asia Pacific GP Ltd. Cayman IslandsCPI Capital Partners Asia Pacific MLP II Ltd. Cayman IslandsCPI Capital Partners Europe GP Ltd. Cayman IslandsCPI CCP EU-T Scots GP Ltd. ScotlandCPI European Carried Interest, L.P. DelawareCPI European Fund GP LLC DelawareCPI NA Cayman Fund GP L.P. Cayman IslandsCPI NA Fund GP LP DelawareCPI NA GP LLC DelawareCPI NA WT Fund GP LP DelawareCyclone Royalties, LLC DelawareDelaware Rose GP, L.L.C. DelawareEPE Acquisition Holdings, LLC DelawareEPF II Team Carry Plan, L.P. Marshall IslandsFinancial Credit I Capital Management, LLC DelawareFinancial Credit II Capital Management, LLC DelawareFinancial Credit Investment Advisors I, L.P. Cayman IslandsFinancial Credit Investment Advisors II, L.P. Cayman IslandsFinancial Credit Investment I Manager, LLC DelawareFinancial Credit Investment II Manager, LLC DelawareGranite Ventures II Ltd. Cayman IslandsGranite Ventures III Ltd Cayman IslandsGreen Bird GP, Ltd. Cayman IslandsGreenhouse Holdings, Ltd. Cayman IslandsGSAM Apollo Holdings, LLC DelawareGulf Stream - Compass CLO 2007, Ltd. Cayman IslandsGulf Stream - Rashinban CLO 2006-I, Ltd. Cayman IslandsGulf Stream - Sextant CLO 2006-1, Ltd. Cayman IslandsGulf Stream - Sextant CLO 2007-1, Ltd. Cayman IslandsGulf Stream Asset Management, LLC North CarolinaGulf Stream-Compass CLO 2005-II, Ltd. Cayman IslandsHarvest Holdings, LLC Marshall IslandsInsight Solutions GP, LLC DelawareKarpos Investments, LLC Marshall IslandsLapithus EPF II Team Carry Plan, L.P. Marshall IslandsLeverageSource Management, LLC DelawareLondon Prime Apartments Guernsey Holdings Limited GuernseyLondon Prime Apartments Guernsey Limited GuernseyNeptune Finance CCS, Ltd. Cayman IslandsOhio Haverly Finance Company GP, LLC Delaware LIST OF SUBSIDIARIESEntity Name Jurisdiction of OrganizationOhio Haverly Finance Company, L.P. DelawareRampart CLO 2006-I Ltd. Cayman IslandsRampart CLO 2007 Ltd. Cayman IslandsRed Bird GP, Ltd. Cayman IslandsRWNIH-ALL Advisors, LLC DelawareSmart & Final Holdco LLC DelawareST Holdings GP, LLC DelawareST Management Holdings, LLC DelawareStanhope Life Advisors, L.P. Cayman IslandsStone Tower CLO II Ltd. Cayman IslandsStone Tower CLO III Ltd. Cayman IslandsStone Tower CLO IV Ltd Cayman IslandsStone Tower CLO V Ltd Cayman IslandsStone Tower CLO VI Ltd. Cayman IslandsStone Tower CLO VII Ltd. Cayman IslandsStone Tower Credit Solutions Fund LP DelawareStone Tower Credit Solutions GP LLC DelawareStone Tower Europe Limited IrelandStone Tower Europe LLC DelawareStone Tower Offshore Ltd. Cayman IslandsStone Tower Structured Credit Recovery Partners GP, LLC DelawareVC GP C, LLC DelawareVC GP, LLC DelawareVerso Paper Investments Management LLC Delaware CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the following Registration Statements of our report, dated February 27, 2015, relating to theconsolidated financial statements of Apollo Global Management, LLC and subsidiaries (the “Company”), and the effectiveness of the Company’s internalcontrol over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2014: • Registration Statement No. 333-182844 on Form S-3ASR• Registration Statement No. 333-188415 on Form S-3ASR• Registration Statement No. 333-188416 on Form S-3ASR• Registration Statement No. 333-188417 on Form S-3ASR• Registration Statement No. 333-173161 on Form S-8/s/ Deloitte & Touche LLPNew York, New YorkFebruary 27, 2015 Exhibit 31.1CHIEF EXECUTIVE OFFICER CERTIFICATIONI, Leon Black, certify that:1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2014 of Apollo Global Management, LLC;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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythis report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-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 oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made knownto 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 designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial 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 conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during theRegistrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe 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 whichare reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’sinternal control over financial reporting.Date: February 27, 2015 /s/ Leon BlackLeon BlackChief Executive Officer Exhibit 31.2CHIEF FINANCIAL OFFICER CERTIFICATIONI, Martin Kelly, certify that:1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2014 of Apollo Global Management, LLC2.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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythis report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-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 oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made knownto 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 designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial 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 conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd.Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during theRegistrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe 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 whichare reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information;andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’sinternal control over financial reporting.Date: February 27, 2015 /s/ Martin KellyMartin KellyChief Financial Officer Exhibit 32.1Certification of the Chief Executive OfficerPursuant to 18 U.S.C. Section 1350,As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Apollo Global Management, LLC (the “Company”) on Form 10-K for the year ended December 31,2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leon Black, Chief Executive Officer of the Company,certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to 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 theCompany.Date: February 27, 2015/s/ Leon BlackLeon BlackChief Executive Officer *The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separatedisclosure document. Exhibit 32.2Certification of the Chief Financial OfficerPursuant to 18 U.S.C. Section 1350,As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Apollo Global Management, LLC (the “Company”) on Form 10-K for the year ended December 31,2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martin Kelly, Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to 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 theCompany.Date: February 27, 2015 /s/ Martin KellyMartin KellyChief Financial Officer *The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separatedisclosure document.

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