EFTA00608391.pdf

EMPIRE VALUATION CONSULTANTS, ac PRIVATE & CONFIDENTIAL October 18, 2007 Carlyn McCaffrey, Esq. Weil Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153-0119 Dear Ms. McCaffrey: You have requested Empire Valuation Consultants, LLC ("Empire") to render its opinion as to: 1) the fair market value of each of limited partnership interests in the fund management entities, as defined below (the "Management Interests" and the "Advisor Interests") contributed by LBF Holdings' ("LBFH," a Delaware limited liability company) to Apollo Management Holdings, LP ("AMHLP" or the "Partnership") as a percentage of the combined fair market value of all the Management Interests contributed by LBFH to AMHLP; and 2) the fair market value of the limited partnership interest in AMHLP received in exchange for the contribution of the Management Interests (the "AMHLP LP Interest"). These valuations are as of April 16, 2007 (the "Valuation Date"). The Management Interests include limited partnership interests in: 1) Apollo Management III, L.P. ("AMIIILP"); 2) Apollo Management IV, L.P. ("AMIVLP"); 3) Apollo Management V, L.P. ("AMVLP"); 4) Apollo Management VI, L.P. ("AMVILP"); 5) Apollo Management VII, L.P. ("AMVIILP"); 6) Apollo Investment Management, L.P. ("AIMLP"); 7) Apollo Value Management, L.P. ("VIFMLP"); 8) Apollo SVF Management, L.P. ("ASVFMLP"); 9) Apollo Asia Management, L.P. ("AAMLP"); 10) Apollo Europe Management, L.P. ("AEMLP"); 11) Apollo Alternative Assets, L.P. ("AAALP"), 12) to be formed Apollo EPF Management, L.P. ("EPFMLP"), and 13) to be formed New Funds Management, L.P. ("NFMLP") collectively the "Management Companies"). The Advisor Interests include limited partnership interests in: Apollo Fund VII Advisor ("Fund VII Advisor"), Apollo EPF Advisors ("EPF Advisors"), and Apollo New Fund Advisors ("New Fund Advisors"), collectively the "Advisor Companies". 350 Fifth Avenue Suite 5513 New York, NY 10118 New York Rochester West Hanford EFTA00608391 Carlyn McCaffrey, Esq. October 18, 2007 Page 2 This report references analysis and methodologies discussed in Management Companies valuation reports as of December 21, 2006 (the "December 2006 Reports"). This report has been prepared as a Restricted Use Appraisal Report as defined in Standards Rule 10 of The Appraisal Foundation's Uniform Standards of Professional Appraisal Practice ("USPAP"), which specifically applies to the preparation of valuation reports of business interests. This report is for your use and should be considered only in conjunction with the December 2006 Reports. This report should only be shared with those persons who have read the December 2006 Reports and have the requisite knowledge to understand the risks, opportunities, and the valuation theories and analyses discussed and applied in this situation, since this report may not be understood properly by readers who have not read the December 2006 Reports. Methodology AMHLP, the Management Companies, and the Advisor Companies have been valued on a going concern basis. Since all are closely-held, and thus without a public market for their ownership interests, this appraisal was conducted according to guidelines established by the Internal Revenue Service ("IRS") and USPAP, and in conformity with the American Society of Appraisers' Principles of Appraisal Practice and Code of Ethics, together with other standards that were deemed relevant to this engagement. This appraisal considered all pertinent factors outlined in USPAP Standards Rule 9 and IRS Revenue Ruling 59-60, including, but not limited to, the following: • the nature and history of AMHLP, the Management Companies, and the Advisor Companies; • the financial and economic conditions affecting the general economy, the Partnership, the Management Companies, the Advisor Companies, and their industry; • the past results, current operations, and future prospects of AMHLP, the Management Companies, and the Advisor Companies; • the earning capacity and dividend-paying capacity of the Partnership, the Management Companies, and the Advisor Companies; • the economic benefit to the Partnership, Management Companies, and the Advisor Companies of both their tangible and intangible assets; EFTA00608392 Carlyn McCaffrey, Esq. October 18, 2007 Page 3 • the market price of actively traded interests in public entities engaged in the same or similar lines of business as AMHLP, the Management Companies, and the Advisor Companies as well as sales of ownership interests in entities similar to the Partnership, the Management Companies, and the Advisor Companies; • the prices, terms, and conditions of past sales of ownership interests in AMHLP, the Management Companies, and the Advisor Companies; and • the impact on the value of ownership interests in AMHLP, the Management Companies, and the Advisor Companies, resulting from the existence of buy-sell and option agreements, investment letter stock restrictions, restrictive shareholders agreements, or other such agreements. In defining "fair market value," IRS Revenue Ruling 59-60 refers to Section 25.2512-1 of the Gift Tax Regulations. Fair market value is described therein as the price at which ownership interests would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. Executive Summary As will be detailed in this report, Empire has determined that Leon Black holds a 33.57% limited partnership interest in AMHLP that is reasonably stated as $860,100,000, as of April 16, 2007. Sources of Information Information used in determining the fair market value of a limited partnership interest in AMHLP was provided by the documents and sources listed below: • A copy of the Amended and Restated Limited Partnership Agreement of AMHLP, dated April 19, 2007 (the "AMHLP Partnership Agreement"); • A copy of the AMIIILP, AMIVLP, AMVLP, AMVILP, AMVIILP, AIMLP, VIFMLP, ASVFMLP, AAMLP, AEMLP, AAMLP, and AAALP valuation reports as of December 21, 2006, referenced earlier as the December 2006 Reports; • A copy of the Amended and Restated Limited Partnership Agreement of AMIIILP, dated March 17, 1995 (the "AMIIILP Partnership Agreement"); EFTA00608393 Carlyn McCaffrey, Esq. October 18, 2007 Page 4 • Copies of Amended and Restated Limited Partnership Agreements of Apollo Investment Fund III, L.P. ("Fund III"), dated March 31, 1995; Apollo Overseas Partners III, L.P. ("Overseas"), dated March 31, 1995; and Apollo UK Partners III, L.P. ("UKIII"), dated March 31, 1995; • Copies of AMIIILP's federal income tax returns, Form 1065, for the years ended December 31, 2002 through 2005 and preliminary for 2006; • A copy of the Amended and Restated Limited Partnership Agreement of AMIVLP, dated April 18, 1998 (the "AMIVLP Partnership Agreement"); • Copies of Amended and Restated Limited Partnership Agreements of Apollo Investment Fund IV, L.P. ("Fund IV"), dated April 21, 1998; and Apollo Overseas Partners IV, L.P. ("Overseas IV"), dated April 21, 1998; • Copies of AMIVLP's federal income tax returns, Form 1065, for the years ended December 31, 2002 through 2006; • A copy of the Amended and Restated Limited Partnership Agreement of AMVLP, dated October 26, 2000 (the "AMVLP Partnership Agreement"); • Copies of Amended and Restated Limited Partnership Agreements of Apollo Investment Fund V, L.P. ("Fund V"), dated April 19, 2002 ("Fund V Partnership Agreement"); Apollo Overseas Partners V, L.P. ("Overseas V"), dated April 30, 2002; Apollo Netherlands Partners V(A), L.P. ("NPVA"), dated July 31, 2001; Apollo Netherlands Partners V(B), L.P. ("NPVB"), dated July 31, 2001; and Apollo German Partners V GMBH & Co. KG ("AGV"), dated July 13, 2001; • Copies of AMVLP's federal income tax returns, Form 1065, for the years ended December 31, 2003 through 2005 and preliminary for 2006; • A copy of the Amended and Restated Limited Partnership Agreement of AMVILP, effective as of September 21, 2006 (the "AMVILP Partnership Agreement"); • Copy of the Amended and Restated Limited Partnership Agreement of Apollo Investment Fund VI, L.P. ("Fund VI"), dated August 26, 2005 ("Fund VI Partnership Agreement"); EFTA00608394 Carlyn McCaffrey, Esq. October 18, 2007 Page 5 • Copies of Amended and Restated Limited Partnership Agreements of Apollo Overseas Partners VI, L.P.; Apollo Overseas Partners (Delaware) VI, L.P.; Apollo Overseas Partners (Delaware 892) VI, L.P.; and Apollo Overseas Partners (Germany) VI, L.P., all dated August 26, 2005; • Copy of AMVILP's preliminary federal income tax return, Form 1065, for the year ended December 31, 2006; • Copy of Apollo Investment Fund VII, L.P.'s ("Fund VII") Private Placement Memorandum; • Copy of AIMLP's Agreement of Limited Partnership, effective as of February 3, 2004 (the "AIMLP Partnership Agreement"); • Copy of an Investment Advisory Management Agreement between AMHLP and Apollo Investment Corporation ("AINV" or the "Company") including a supplement that clarifies the capital gains fee calculation, dated March 25, 2004; • Copies of AIMLP's federal income tax returns, Form 1065, for the years ended December 31, 2004 through 2005 and preliminary for 2006; • Copy of AINV's Prospectus, dated September 20, 2006; • Copy of AINV's annual report, or 10-K, filed with the Securities and Exchange Commission ("SEC"), for the Company's fiscal year ended March 31, 2006; • Copy of AINV's quarterly report, or 10-Q, for the Company's fiscal quarter ended December 31, 2006; • Copy of a management presentation of AINV as of the end of 2006; • Agreement of Limited Partnership of Apollo DIF Management. L.P. ("DIF"), dated May 8, 2003; • Amended and Restated Agreement of Limited Partnership of Apollo Value Investment, L.P., dated June 1, 2007; EFTA00608395 Carlyn McCaffrey, Esq. October 18, 2007 Page 6 • First Amended and Restated Limited Partnership Agreement of Apollo Value Investment Master Fund, L.P., ("VIF Master Fund") dated January 1, 2007; • Amended and Restated Investment Management Agreement between Apollo Value Investment Offshore Fund, Ltd. and VIFMLP, dated January 1, 2007 ("VIFMLP Management Agreement"); • Copies of VIFMLP's federal income tax returns, Form 1065, for the years ended December 31, 2003 through 2005 and preliminary for 2006; • Copy of ASVFMLP's Agreement of Limited Partnership, dated May 17, 2006 (the "ASVFMLP Partnership Agreement"); • Copies of private placement memorandums for Apollo Strategic Value Fund Offshore Fund, Ltd. ("Offshore") and Apollo Strategic Value Fund, L.P. ("SVF Master Fund"), both as of January 2007; • Copy of the Second Amended and Restated Limited Partnership Agreement of the Master Fund, dated February 1, 2007 (the "Master Fund LP Agreement"); • Copy of the Master Fund's financial statements for the period from June 14, 2006 (commencement of operations) to December 31, 2006; • Copy of ASVFMLP's preliminary federal income tax return, Form 1065, for the year ended December 31, 2006; • A copy of the Limited Partnership Agreement of AAMLP, dated December 14, 2006 (the "AAMLP Partnership Agreement"); • Copies of the Limited Partnership Agreements of Apollo Asia Opportunity Fund, L.P. ("AAO Master Fund"), dated December 11, 2006 ("AAO Partnership Agreement"); • A copy of the Amended and Restated Limited Partnership Agreement of AAALP, dated May 19, 2006 (the "AAALP Partnership Agreement"); EFTA00608396 Carlyn McCaffrey, Esq. October 18, 2007 Page 7 • Copies of the Limited Partnership Agreements of AP Alternative Investments, L.P. ("AAA"), dated May 31, 2006 ("AAA Partnership Agreement"); • Copy of AAALP's preliminary federal income tax return, Form 1065, for the year ended December 31, 2006; • Copy of an Agreement of Limited Partnership for Apollo International Management, L.P.' as of April 4, 2006 (the "AEMLP Partnership Agreement"); • Copy of AEMLP's preliminary federal income tax return, Form 1065, for the year ended December 31, 2006; • Apollo AP Investment Europe Investor Presentation as of March 31, 2007, containing some information as of December 31, 2006 (the "AEM Investor Report"); • Projections provided by management as of April 2007; • Ownership schedule of Mr. Black's interests provided by Apollo, as of the Valuation Date; • Conversations and correspondence with John Suydam, Apollo Group's ("Apollo") Chief Legal Officer; Barry Giarraputo, Chief Financial Officer for AP Alternative Investments; and Michael Gullace, Director of Special Projects and others at Apollo; as well as attorneys from the firm of Weil Gotshal & Manges, LLP and Akin Gump Strauss Hauer & Felp LLP; and • Other reviews, analyses, and research as were deemed necessary. Apollo, Management Companies & Advisor Companies Overview Founded in 1990 by a group of four experienced investment management individuals from Drexel Burnham Lambert, the Apollo umbrella covers a variety of mainly private investment vehicles. It is considered a leading global alternative asset manager. Alongside its traditional private equity funds, Apollo also oversees distressed debt and mezzanine investing. Typically, Apollo has concentrated its Apollo International Management, M.'s name was changed to AEMLP prior to the Valuation Date. EFTA00608397 Carlyn McCaffrey, Esq. October 18, 2007 Page 8 investments in middle-market companies. Apollo's managing partners are Leon Black, Joshua Harris, and Marc Rowan, who have worked together for more than 20 years and, as of December 2006, led a team of over 70 investment specialists. Apollo has offices in New York, London, Los Angeles, Singapore, Frankfurt, and Paris. As of the Valuation Date, Apollo had invested some $24.5 billion since inception in over 150 companies. Over time, the firm hopes to assemble a balance between its private equity and capital market funds, but as of December 2006, over $20 billion was concentrated in private equity. In the context of the Apollo funds, private equity funds raise pools of capital from institutional investors and high net worth individuals. These funds typically seek to acquire significant controlling ownership interests in businesses and typically invest in the common equity or preferred stock of private and sometimes public companies. Private equity funds are typically structured as unregistered limited partnership funds with terms of eight to ten years, and can contain provisions to extend the life of the fund under certain circumstances. Investors in private equity funds provide a commitment to the fund that is called by the fund as investments are made and equity capital is required. Private equity fund managers typically earn fees as follows: (i) management fees based on the amount of invested or committed capital; (ii) transaction and advisory fees as capital is invested and portfolio companies are managed; and (iii) a carried interest based on the performance of the fund, which is often subject to a preferred return for investors, or "hurdle." Apollo's capital market funds are essentially "hedge funds."2 Hedge funds are typically structured as limited partnerships, limited liability companies or offshore corporations. Hedge fund managers earn a base management fee typically based on the net asset value ("NAV") of the fund, and incentive fees based on a percentage of the fund's profits. Some hedge funds set a "hurdle rate" under which the fund manager does not earn an incentive fee until the fund's performance exceeds a benchmark rate. Another feature common to hedge funds is the "high water mark" under which a fund manager does not earn incentive fees until the net asset value exceeds the highest historical value on which incentive fees were last paid. Typical investors include high net worth individuals and institutions. These investors can invest and withdraw funds periodically in accordance with the terms of the funds, which may include lock-up periods on withdrawals. Hedge fund 2 Hedge fund is a managed portfolio that has targeted a specific return goal regardless of market conditions and can use a wide variety of different investing strategies to achieve this goal, and generally those strategies are managed and executed by a portfolio manager. EFTA00608398 Carlyn McCaffrey, Esq. October 18, 2007 Page 9 managers often commit a portion of their own capital in the funds they manage to align their interests with those of the investors. Over the last 12 months, the Apollo funds have collectively generated a gross annual return of 22.6%, a net annualized return of 16.4%, and a Sharpe Ratio of 4.4.3 Management was forecasting existing and targeted assets under management ("AUM") for the end of 2007 at $43.7 billion. Over half of that amount was in play at the end of 2006. It should be noted that the return levels achieved by Apollo's funds varied significantly depending on the nature of the funds and the investments made. The Management Companies were established to act as managers for each of the underlying funds and each management company collects a management fee from the fund. In addition, some management companies also receive a carried interest from the underlying fund. The Advisor Companies were established to hold the limited partner interests in the underlying funds and each advisor receives carry income from the investments made by the fund. Fund Profiles & Investment Strategies Profiles and investment strategies of each of the underlying funds is presented below. Funds III, IV, V, VI, and VII are "Private Equity Funds." AIM, VIF, SVF, AAO, AEM, and AAA are "Capital Markets Funds." Europe Principal Finance ("EPF") is a fund to be formed in 2007 and "New Fund" is a new capital markets fund to be formed in 2008. A. Fund Profiles Fund III: Fund III was established in March of 1995 with approximately $1.5 billion in capital. AMIIILP was designated as Fund III's Manager. Fund III's general partner was Apollo Advisors II, L.P. The initial term of Fund III is ten years following the final Closing Date (of March 17, 1995) as defined in the Fund III Partnership Agreement. However, the term of Fund III was extended to liquidate the remaining assets. As of the Valuation Date, the remaining assets were being liquidated and no value is attributed to them. The investment objective of Fund III was to achieve long-term capital appreciation through equity and equity-equivalent investments providing control or influential minority equity positions and through investments in debt or other securities that provided equity-like returns. Fund III generally pursued individual investments 3 A commonly used measure of risk-adjusted performance of an investment asset. EFTA00608399 Carlyn McCaffrey, Esq. ()ember 18, 2007 Page 10 ranging in size from approximately $20 million to $200 million in companies with enterprise values in excess of $100 million. Consistent with the principals' past practice, Fund III aligned itself with the existing management team and, through board representation, sought to develop and implement effective operating plans and appropriate capital structures. Fund III used three approaches to generate value: (1) transition financings; (2) special situation recapitalizations; and (3) middle market leveraged acquisitions. For transition financings, Fund III identified companies that had progressed beyond the early stage venture capital investors but were not yet positioned to access public market capital, or otherwise needed to raise capital more quickly or confidentially than could be done in public markets. Special situation recapitalizations consisted of companies with high quality operating businesses but low quality balance sheets. Fund III purchased distressed securities in the secondary markets or through direct capital infusions. In middle market leveraged acquisitions, Fund III targeted companies or businesses where rates of return could be enhanced through the appropriate use of leverage and where an entrepreneurial management team was comfortable operating in a leveraged environment. Fund III also pursued transactions where it believed a non-core business owned by a large corporation would function more effectively if structured as an independent entity managed by a focused stand-alone team. Fund III did not invest more than 25% of total capital commitments in any portfolio investment or series of portfolio investments made directly or indirectly in a single portfolio company. Fund IV: Fund IV was established in December of 1997 with approximately $3.6 billion in capital. AMIVLP was designated as Fund IV's Manager. Fund IV's general partner was Apollo Advisors III, L.P. The term of Fund IV is ten years following the final Closing Date (of April 21, 1998) as defined in the Fund IV Partnership Agreement. Fund IV is expected to begin liquidation of assets shortly after the Valuation Date; however, it is unknown how long this process will take. The investment objective of Fund IV is to achieve long-term capital appreciation through equity and equity-equivalent investments providing control or influential minority equity positions and through investments in debt or other securities that provided equity-like returns. Fund IV pursued individual investments ranging in size from approximately $50 million to $250 million. Fund IV's investment philosophy is to find companies with strong, enduring business franchises that have attractive risk/reward profiles. Strong business franchises are evidenced by highly respected products, expanding market share, highly efficient production and strong, experienced management teams. Consistent with the principals' past practice, Fund EFTA00608400 Carlyn McCaffrey, Esq. October 18, 2007 Page 11 IV aligned itself with the existing management team and through board representation sought to develop and implement effective operating plans and appropriate capital structures. Fund IV is similar to previously discussed funds in its approach to generate value through: (1) classic buyouts; (2) distressed buyouts; and (3) corporate partner buyouts. Fund V: Fund V was established in April of 2001 with approximately $5 billion in capital. AMVLP was designated as Fund V's Manager. Fund V's general partner was Apollo Advisors V, L.P. The term of Fund V is ten years following the final Closing Date (of April 30, 2002) as defined in the Fund V Partnership Agreement. The investment objective of Fund V is to achieve long-term capital appreciation through equity and equity-equivalent investments providing control or influential minority equity positions and through investments in debt or other securities providing equity-like returns. Fund V is global in nature and seeks investments across a range of industries, markets, and regions and generally pursues individual investments ranging in size from approximately $75 million to $450 million. Fund V is similar to previously discussed funds in its approach to generate value. In terms of geographic orientation, without the consent of its Advisory Board, Fund V may not invest more than 25% of its aggregate commitments in securities of issuers organized and operating primarily outside of North America. Overseas, NPVA, NPVB, and AGV are known as Fund V's Co-Investing Entities and are funded primarily by foreign or tax exempt investors and co-invest with Fund V. Fund VI: Fund VI closed in January of 2006 with approximately $10.1 billion in commitments, of which $1.6 billion had been invested as of the Valuation Date. AMVILP was designated as Fund VI's Manager. Fund VI's general partner was Apollo Advisors VI, L.P. The term of Fund VI is ten years following the final closing (which was in January of 2006) as defined in the Fund VI Partnership Agreement, but may be extended for up to a maximum of three years at the discretion of the General Partner upon notice to the Advisory Board and for further periods with the consent of a majority in interest of limited partners. The investment objective of Fund VI is to achieve long-term capital appreciation by making investments in: control or influential minority equity and equity equivalent positions; and debt or other securities providing equity-like returns. Fund VI seeks investments across a range of industries, markets, and regions and generally pursues EFTA00608401 Carlyn McCaffrey, Esq. October 18, 2007 Page 12 individual investments ranging in size from approximately $150 million to $600 million. Fund VI is similar to previously discussed funds in its approach to generate value. In terms of geographic orientation, without the consent of its Advisory Board, Fund VI may not invest more than 25% of its aggregate commitments in securities of issuers organized and operating primarily outside of North America. The Co- Investing Entities are funded primarily by foreign or tax exempt investors and co- invest with Fund VI. Fund VII: As of the Valuation Date, Fund VII was being established with approximately $15 billion in capital. Fund VII expects to generally pursue investments ranging in size from approximately $200 million to $1.5 billion. Fund VII will seek to make control-oriented investments in undervalued franchise assets at purchase multiples below those of its peers. AINV: AINV, a Maryland corporation, began operations in April of 2004, following its IPO and receipt of some $870 million in total net IPO proceeds. AINV received another $294 million in total net proceeds from its second public offering in March 2006. Since April of 2004, AINV has invested in some 90 companies. In exchange for the management of the day-to-day operations of AINV (subject to AINV's Board of Directors) and investment advisory services, AINV pays a fee to AIMLP. This fee consists of two components: (1) a base management fee; and (2) an incentive fee. AINV invests primarily in middle-market companies in the form of mezzanine and senior secured loans. In general, the Company structures its mezzanine investments primarily as unsecured, subordinated loans that provide for relatively high interest rates that provide current interest income. These loans typically have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loans. In some cases, AINV enters into loans that, by their terms, convert into equity or additional debt securities or defer payments of interest after its investment. Also, in some cases its mezzanine loans may be collateralized by a subordinated lien on some or all of the assets of the borrower. Typically, AINV's mezzanine loans have stated maturities of five to ten years. AINV also invests in portfolio companies in the form of senior secured loans that it expects to have terms of three to ten years and may provide for deferred interest payments over the term of the loan. AINV generally seeks to obtain security interests in the assets of its portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first or EFTA00608402 Carlyn McCaffrey, Esq. October 18, 2007 Page 13 second priority liens on the assets of a portfolio company. In addition, AINV makes some direct equity investments and, from time to time, may also invest in companies that are thinly traded. It was management's expectation that AINV would hold most of its investments to maturity or repayment, but that it may sell certain of its investments earlier, if a liquidity event takes place. As of the Valuation Date, over half of AINV's investments were in the form of subordinated debt/corporate notes. VIF Master Fund: VIF Master Fund was established in July of 2003 with approximately $1 billion in capital. VIFMLP was designated as VIF's Manager. VIF's general partner was Apollo Value Advisors, L.P. As with SVF and AAO, the master fund was organized to receive all of its capital contributions from the feeder funds, which consist of an on-shore and off-shore component. The feeder funds operate by placing substantially all of their assets in, and conducting their investment and trading activities through the master fund. Management and incentive fees are generally paid at the feeder fund level. Senior management believes that distressed debt is an asset class that performs well in a very distinct and limited economic and capital market environment. When such an environment exists, VIF seek to create a diversified portfolio of bank debt, high yield debt and preferred stock. Investments are made in increments of approximately $10 million to $50 million. The intent is to take large, long-term illiquid positions in distressed debt in order to seek significant influence or control of companies and make smaller, shorter-term market-oriented investments based on company fundamentals without seeking control. SVF Master Fund: SVF Master Fund is a Delaware limited partnership and Offshore is a Cayman Islands exempted company, both of which commenced operations in June 2006. SVF was designed to be suitable primarily for investors that are United States ("U.S.") taxpayers while Offshore was designed for investors who are U.S. tax-exempt or non-U.S. based. The Feeder Funds operate by placing substantially all of their assets in, and conducting substantially all of their investment and trading activities through, the Master Fund, which facilitates collective investment by the Feeder Funds. SVF offers two types of limited partnership interests: Class A and Class B. These interests are identical except for exposure to "Special Investments:4 management 4 Special Investments are defined as those categorized by the general partner or the Manager as such. Generally these investments are subject to legal or contractual restrictions on transferability or otherwise not readily marketable without impairing the value of such investments. EFTA00608403 Carlyn McCaffrey, Esq. October 18, 2007 Page 14 fees, and withdrawal rights. Likewise, Offshore offers Class A shares and Class B shares, which have identical rights with the same exceptions as SVF. The rights of the Feeder Funds' two types of interests (where they differ) are described in the following table. Table I Feeder Funds' Class A & Class B Rights Right Class A Class B Initial Lock-up 12 months 5 years Withdrawal Reductions 6% declining to 2% during the second year of investment None Limit on "Special Investments" 20% of the capital account balance (SVF) or 20% of NAV (Offshore) None Management Fees 2.0% 1.75% Offshore uses "Class S Shares" to facilitate accounting for Special Investments. All shares other than Class S Shares are considered "Regular Shares." Whenever Offshore makes a Special Investment (or when ASVFMLP, in its sole discretion, determines that an investment has become a Special Investment), Offshore shall: (i) authorize a new series of Class S Shares with an aggregate net value equal to the cost (or, in the case of an existing investment which is reclassified as a Special Investment, the fair market value) of such Special Investment; and (ii) exchange Regular Shares outstanding at such time with an aggregate NAV equal to that of the new series of Class S Shares, pro rata by class (based on the aggregate NAV of all Regular Shares of each class of shares at such time), according to each shareholder's pro rata share (based on the relative number of Regular Shares of such class held by each shareholder). When a Special Investment is realized or deemed realized, each holder of Class S Shares will have them exchanged back into Regular Shares at the then-current NAV per share. The SVF Master Fund was formed to invest in absolute-value investment opportunities, primarily among the securities of distressed companies in North America and Europe. The SVF Master Fund invests in the securities of leveraged companies using three primary strategies: (1) distressed investments (primarily a long-only strategy focused on the debt securities of companies in the periods before, during, and after bankruptcy); (2) value driven investments (long and short investments that span the capital structure of leveraged companies and seek to profit from identified catalysts that will typically develop within six to nine months from the initial investments); and (3) special opportunities (primarily a long-only strategy focused on control opportunities and illiquid securities). EFTA00608404 Carlyn McCaffrey, Esq. October 18, 2007 Page 15 AAO Master Fund: AAO Master Fund was established in December of 2006 with approximately $200.0 million in capital. AAMLP was designated as AAO's Manager. AAO's general partner was Apollo Asia Advisors L.P. At the Valuation Date, $65.0 million had been invested. AAO will invest primarily in strategic and event-driven opportunities through investments in debt and equity securities principally of middle market and large companies, with a primary investment focus on China, Indonesia, India, Malaysia, and Singapore and a secondary focus on Australia, South Korea, Taiwan, Thailand, and other Southeast Asian countries. AEM: AEM is a limited liability Guernsey incorporated investment company that commenced operations in July 2006 with $250 million in invested capital from AP Alternative Assets ("APA"). AEMLP was designated as AEM's Investment Manager. AEM closed a private placement shortly before the Valuation Date (the "First Private Placement and Closing"). During the period from incorporation to the Valuation Date, APA had invested some $250 million in redeemable preference shares issued by the company. APA's investment in AEM will be converted into "A" Ordinary Shares, prior to closing of the First Private Placement and Closing. In addition, AEM has one majority voting share in issue which carries the right to vote but not to receive any participation in the economic performance of the Company and, prior to the First Private Placement and Closing, will be redesignated as 100 "B" Ordinary Shares. AEM's investment objectives are to generate current income and capital appreciation through mezzanine, debt, and equity investments primarily in European companies. AEM intends to invest approximately 70% of its gross assets in secured and unsecured subordinated loans (also referred to as mezzanine loans), senior secured loans, high-yield debt and preference equity (together the "Target Credit Instruments"). AEM also intends that approximately 70% of its gross assets will be invested in securities issued by, or loans made to, companies established or operating in Europe. AEM has a current focus on western European companies. While AEM's primary focus is on Target Credit Instruments and on investments in companies established or operating in Europe, it also expects to invest up to 30% of its gross assets in other opportunistic investments, such as distressed debt and private or public equity investments worldwide. AEM currently intends to seek a listing on a recognized European exchange of the "A" Ordinary Shares following full investment of the proceeds of the First Private EFTA00608405 Carlyn McCaffrey, Esq. October 18, 2007 Page 16 Placement and Closing. In the event that AEM has not applied for such listing within 18 months of closing, the base management fee will be suspended and, in the event that such listing has not been achieved within 24 months of the closing, the Board is required to seek the approval of the shareholders to the continuation of the Company in its current form. AAA: AAA was established in May of 2006 with approximately $1.8 billion in capital. AAALP was designated as AAA's Manager. AAA's general partner was AAA Guernsey Limited. Over time, AAA expects to invest 50% or more of its capital in private equity investments. The remaining capital will be co-invested with Apollo's capital markets funds. AAA's private equity investments will consist of: (1) commitments to private equity funds sponsored by Apollo; (2) co-investments alongside such funds; and (3) purchases of secondary interests in such funds. In addition to investments in private equity, AAA will deploy capital through investments in, or co-investment arrangements with, Apollo's capital markets-focused funds, in SVF Master Fund (one of Apollo's debt and equity investment funds focused on value-oriented and distressed securities), AEM (Apollo's European mezzanine and leveraged debt investment vehicle), and Apollo Investment Corporation (Apollo's U.S. mezzanine and leveraged debt investment vehicle). EFP is tentatively marketed as a Germany fund. No concrete plans have been made for New Fund at the Valuation Date. B. Economic Structure The economic structure of each Fund is outlined below, based on the terms set forth in the respective partnership agreements. Any capitalized terms below that have not been specifically defined elsewhere in this report shall have the meanings set forth in the respective partnership agreements. Table II Fund Economic Structure Fund Name Management Fees Allocation of Profits & Lasses Distributions Clawback Operating Expenses Fund III 1.5% of committed capital. Management Pro Rata First, return of capital to all GP will be required to Fund Ill shall bear EFTA00608406 Carlyn McCaffrey, Esq. October 18, 2007 Page 17 Fund Name Management Fees Allocation of Profits & Lasses Distributions Clawback Operating Expenses fees reduced by 50% of operating expenses. partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. restore funds if it has received more than 20% of proceeds. all normal operating expenses. Fund IV Before 6th Anniversary: 1.5% up to $2.5 billion, 1.0% in excess of $2.5 billion, 0.25% in excess of $3.0 billion. After 6th Anniversary: 0.75% up to $3.0 billion, 0.25% in excess of $3.0 billion. Management fees reduced by 65% of operating expenses. Pro Rata First, return of capital to all partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. GP will be required to restore funds if it has received more than 20% of proceeds. Fund IV shall bear all normal operating expenses. Fund V Before 6th Anniversary: 1.5% up to $3.1 billion, 1.0% in excess of $4.6 billion, 0.25% in excess of $4.6 billion. After 6th Anniversary: 0.75% up to $2.3 billion, 0.25% in excess of $2.3 billion. Management fees reduced by 65% of operating expenses. Pro Rata First, return of capital to all partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. GP will be required to restore funds if it has received more than 20% of proceeds. Fund V shall bear all normal operating expenses. Fund VI Before 6th Anniversary: 1.5% up to $5.0 billion and 1.0% in excess of $5.0 billion. After 6th Anniversary: 0.75% up to $2.3 billion, 0.25% in excess of $2.3 billion. Pro Rata First, return of capital to all partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP will be required to restore funds if it has received more than 20% of proceeds. Fund VI shall bear all normal operating expenses. EFTA00608407 Carlyn McCaffrey, Esq. October 18, 2007 Page 18 Fund Name Management Fees Allocation of Profits & Losses Distributions Clawback Operating Expenses Management fees reduced by 65% of operating expenses. GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. Fund VII 1.5% up to $7.0 billion and 1.0% in excess of $7.0 billion. Management fees reduced by 68% of operating expenses. Pro Rata First, return of capital to all partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. N/A Fund VII shall bear all normal operating expenses. AINV 2% of capital. N/A First, return of capital to all partners. Then, to LPs until LPs receive 7% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. N/A N .\ VIE 1.5% of LP net asset value. Pro rata. First, return of capital to all partners. Then, to LPs until LPs receive 8% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. N/A VIF shall bear all normal operating expenses. SVF 2% of Class A net N/A N/A N/A N/A EFTA00608408 Carlyn McCaffrey, Esq. October 18, 2007 Page 19 Fund Name Management Fees Allocation of Profits & Lasses Distributions Clawback Operating Expenses asset value and 1.75% of Class B net asset value. AAO 2% on the net asset value of the LP interest. Pro rata. Pro rata as determined by the GP. N, A AAO shall bear all normal operating expenses. AEM 2% of capital. N/A First, return of capital to all partners. Then, to LPs until LPs receive 7% internal rate of return. Finally, 80% to the GP until the GP earns a 20% return. Thereafter, 20% to GP and 80% to all partners. N/A AEM shall bear all normal operating expenses. AAA 1.25% up to $3.0 billion and 1.0% in excess of $3.0 billion. Pro rata. Pro rata as determined by the GP. N/A AAA shall bear all normal operating expenses. EFP Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. New Fund Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. Expected to be similar to AAO. For additional information regarding the Funds' financial histories, management, and other information, please refer to the December 2006 Reports. Partnership Profile AMHLP is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act (the "Act"). The Partnership was originally formed in January of 2007 and, as of the Valuation Date, acted as a holding company for the EFTA00608409 Carlyn McCaffrey, Esq. October 18, 2007 Page 20 Management Companies and Advisor Companies. Since the Partnership was recently formed, no financial statements were available. A. Partnership Ownership The Partnership's general partner is Apollo Management Holdings GP, LLC (the "GP"). In addition, there are three limited partners, including LBFH, which holds the limited partnership interest being analyzed and valued. B. AMHLP Partnership Agreement Provisions The following provisions of the AMHLP Partnership Agreement were considered relevant to the valuation of a limited partnership interest in AMHLP. Any capitalized terms below that have not been specifically defined elsewhere in this report shall have the meanings set forth in the AMHLP Partnership Agreement. • Subject to the AMHLP Partnership Agreement, the GP has 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 the Partnership. • The Partnership will pay or reimburse the GP for all costs and expenses arising in connection with the organization and operations of the Partnership. • The limited partners ("LPs") have no right to take part in the management or control of the Partnership's business, nor any right or authority to act for the Partnership, or to vote on matters other than those specifically set forth in the AMHLP Partnership Agreement or as required by law. • From time to time, the GP shall cause the Partnership to make distributions to the LPs, pro ram. • Allocations of profit and loss shall be made pro ram among the partners' capital accounts. • No LP may transfer his interest in the Partnership and no transferee shall become a substituted LP, unless the prior written consent of the GP has been obtained, which consent may be withheld at the absolute discretion of the GP. • The GP may admit one or more additional GPs at any time without the consent of any LP. EFTA00608410 Carlyn McCaffrey, Esq. October 18, 2007 Page 21 • A partner may not withdraw from the Partnership prior to its dissolution without the prior approval (i) of the LPs (if the withdrawing partner is the GP) or (ii) of the GP (if the withdrawing partner is an LP). • The term of the Partnership is until the GP shall elect to dissolve it or at any time that there are no LPs. Economic, Industry & Company Outlook In the appraisal of any company, the general economic factors prevailing at the valuation date, as well as those foreseen then, must be considered. Assimilation of these facts and forecasts provides insight into the economic climate in which investors are dealing. Although individual factors may or may not have a direct impact upon a particular industry, the overall economy and its outlook have a strong influence on how investors perceive investment opportunities. A. General Economy For this analysis, the general economic climate that prevailed through the first quarter of 2007 was considered, as was the outlook for the domestic economy. This section of the report contains an overview of selected economic factors, such as gross domestic product ("GDP"), inflation, and U.S. monetary and fiscal policy. The Value Line forecast closest to the Valuation Date was utilized, as it was considered to be most reasonable. In its Quarterly Economic Review, dated February 23, 2007, Value Line expected economic growth to average 2.5% to 3% in 2007. That pace was thought to be moderate enough to contain inflation. Value Line also expected the Federal Reserve (the "Fed") to hold steady on interest rates, with the possibility of a reduction later in 2007 or early in 2008. In 2008, GDP growth was forecast to average 3%, with benign inflation and steady to slightly lower interest rates. By the end of the year, the possibility existed for consumer growth to slow, but this could be offset by recoveries in the housing and domestic auto sectors. One potential disruption, however, would be a terrorist attack or a military conflict that could negatively affect the energy markets. Other possibilities included a disease pandemic, a widespread drought or other catastrophic weather event, or a move by the Fed that might disrupt the markets. Any one, or a combination of these events, could result in a serious recession. According to Value Line, inflation would remain relatively constant, and could moderate further in 2007. In 2005, producer prices rose by 4.9% versus a gain of 3.6% in 2004, while consumer prices rose 3.4%, up from 2.7% in 2004. EFTA00608411 Carlyn McCaffrey, Esq. October 18, 2007 Page 22 Producer prices were expected to increase by 2.9% in 2006, and consumer prices were expected to increase 3.2%. The change in industrial production was estimated to be 4.1% in 2006, and was expected to average 2.4% from 2007 through 2011. Value Line expected short-term borrowing costs to remain stable through the first half of 2007, before potentially declining by the first part of 2008. Long-term rates, meanwhile, were forecast to remain in a relatively narrow range in 2007 and 2008. The three-month Treasury bill rate was 5.0% at the publication date and was expected to remain at that level in the first quarter of 2007. The Prime Lending Rate was 8.25% at the publication date and was forecast to fluctuate between 8.0% and 8.3% through 2011. Value Line believed that the Fed would maintain a stable monetary policy. The outlook for corporate earnings remained bright for the next several quarters, although some moderation was expected as a result of a slight deceleration in GDP growth over this time frame. It should be noted, however, that productivity had strengthened and unit labor costs rose more slowly than expected. In addition, energy and commodities prices became less of a problem than they were in 2006. As such, corporate earnings, while tempered by modest economic growth, were forecast to improve steadily in 2007 at a rate of between 5% and 10%. In sum, Value Line was forecasting real, inflation-adjusted GDP to rise at a rate of 3.4% for all of 2006. Longer-term projections called for real GDP growth to increase from 2.8% in 2007 to 3.3% in 2011, based on assumptions that oil prices would decline from nearly $56 to $50 a barrel, that the Fed would maintain short- term interest rates at relatively constant levels through 2011, and that there would be no marked change for the worse on the global front. B. Industry Outlook for Private Equity Investing According to the April 9, 2007 Dow Jones Financial Information Services article titled - Private-Equity Fund Raising Continues At Rapid Pace, following a year that US private-equity firms raised a record amount of money, the record trend continued through the first quarter of 2007 with firms raising $44.3 billion among 68 funds. This was up 67% from the 46 funds that raised $26.6 billion in the first quarter of 2006. The private equity industry broke all previous records in 2006, raising $246.3 billion in 359 funds. So far in 2007, in addition to the $44.3 billion raised in the first quarter, some 400 other funds were known to be raising at least another $130 billion at present, according to the monthly newsletter's database of funds. Private EFTA00608412 Carlyn McCaffrey, Esq. October 18, 2007 Page 23 equity includes buyout and corporate finance funds, venture capital, mezzanine funds and funds of funds. The buyout side of the private equity industry continued to be the primary focus, representing $35.2 billion of the total raised in the first quarter. In addition to the buyout funds, 22 venture capital funds raised $3.8 billion in the first quarter of 2007, down from the $4.4 billion raised by venture capital firms in the first quarter of 2006. Other private equity, funds of funds, and mezzanine funds were responsible for the balance of $5.3 billion in the first quarter. According to the November 23, 2006 Standard & Poor's - Industry Surveys: Investment Services, the private equity industry, which comprised venture capital and leveraged buyout funds ("LBO"), raised record amounts of money in 2005 and 2006. LBOs were particularly strong, generating a multitude of M&A advisory activity for investment banks. Generally, institutional investors were attracted to private equity investment since returns were often higher than traditional investments such as stocks and bonds. Buyout funds for instance, realized annual returns of more than 24% in 2004 and 2005 according to Thompson Financial. This contrasted to a return of only 3% for the S&P Composite Stock Index in 2005. Given the robust investment performance, increased fundraising activity ensued. The Blackstone Group Inc., for example, closed a record $15.6 billion fund in 2006, while the Texas Pacific Group raised a $15 billion fund. As a whole, LBOs raised approximately $160 billion in capital from investors during the first nine months of 2006 according to data provided by Private Equity Intelligence. The industry, overall, was on track to raise $400 billion in new capital for the full year. As noted, one factor contributing to the growth of LBOs was relatively low interest rates in the U.S. and around the world, making debt financing cheaper than in years past. As presented in the March 2007 Private Equity Intelligence's (referenced from CNN) - Big Buyouts Go Global news article, private equity investors were searching globally for deals, but the U.S. market was also expected to remain strong. Many of the factors contributing to the global boom included: massive amounts of cheap capital, and a desire for more significant returns on the part of investors. More specifically, buyout funds raised $204 billion worldwide in 2006, up 40% from $146 billion in 2005. Many characterized the private equity industry as becoming more global today than it had ever been before. In fact, buyout deals accounted for 61% of the deals in the U.S. last year, up from 56% in 2004. Much of this was attributed to the growing competition within the U.S. market, and EFTA00608413 Carlyn McCaffrey, Esq. October 18, 2007 Page 24 the possibilities for greater investment opportunities abroad. Activity in regions such as Britain, Germany, Italy and Spain were representative examples. Nevertheless, the international market was becoming more and more crowded, even in the once emerging regions such as Asia. As a result, buyout firms sought opportunities in rapidly growing economies such as Brazil and Eastern Europe, where prices were not bid up significantly. Meanwhile, as deal activity was accelerating overseas, U.S. activity was still resilient. Some characterized the U.S. market as mature, but there were opportunities in the market for multi-billion dollar deals where only the largest players could compete. C. Industry Outlook for Hedge Funds The investment management industry includes mutual funds, closed-end funds, unit investment trusts, hedge funds, and other organizations that manage the pooled savings of individuals and organizations. By pooling investors' savings, investment managers provide a number of benefits to investors, such as diversification, reduced risk, lower transaction costs, and professional advice. According to the HFA,5 most hedge funds are highly specialized, relying on the specific expertise of the manager or management team. Due to historically limited regulatory controls, hedge fund managers have considerable flexibility with respect to their investment strategies — the short selling of securities, as well as the use of leverage and derivatives — are all viable alternatives. As a result, a wide variety of techniques are employed across the hedge fund universe, with investment returns, volatility and risk varying enormously across different strategies. Therefore, while some strategies, uncorrelated with the equity markets, may be able to deliver consistent returns with low risk of loss, others may be as or more volatile than mutual fund investments. Current Outlook: According to the December 2006 Milken Institute's - Hedge Funds: Risks and Returns in Global Capital Markets analysis, unlike hedge funds, mutual funds were widely available to the public and had to be registered with the Securities and Exchange Commission ("SEC"). Consequently, mutual funds were limited in the type of investment strategies employed. While mutual funds were highly constrained, hedge funds were typically set up as limited partnerships and were not inhibited by regulatory limitations on their investment strategies. More recently, however, with the ongoing dialogue about the impact of hedge funds on global financial stability, and with broader debate on the need for industry regulation, studies trying to ascertain the effects of hedge funds on the broader S Hedge Fund Association, www.thehfa.org. EFTA00608414 Carlyn McCaffrey, Esq. October 18, 2007 Page 25 financial markets (i.e. systematic or market risk), have quite often been less than successful. More broadly, from 1981 to June 2006, the hedge fund industry recorded continuous and rapid growth, with the recent exception being over the first half of 2006. In addition, over this period, the number of new funds grew at an average annual rate of 30%, while total assets advanced at an average annual rate of 47%. In terms of sheer size, the average size of a hedge fund in 2005 was $129 million. By June 2006, this figure stood at $150 million. Nevertheless, as noted, in spite of the strong historical long-term growth figures, during the first six months of 2006, the net change in the number of funds declined quite sharply. As such, with 381 new funds entering the market, as 462 were exiting, this resulted in a net decline of 81 funds as of June 2006. The list of strategies which hedge funds utilized was quite extensive. A brief synopsis of each is provided below: • Fund of funds (multistrategies) - Invested in a wide range of hedge funds and mutual funds, leading to broader diversification; • Long/short Equity - Acquired certain stocks long and sold others short, so that net positions were supported by relative value rather than the absolute value of the security; • Fund of funds - Invested in hedge funds and mutual funds with a specific strategy rather than multiple strategies; • Event-driven - Undertook significant positions in a limited number of companies with special situations, such as distressed stocks, mergers and takeovers; • Market-neutral - Sought to take advantage of differences in stock prices by being long and short in stocks within the same sector, industry, market capitalization, etc. In effect, this created a hedge against broader market factors; • Commodity trading advisor - acquired or sold commodity futures or option contracts; • Multistrategy - utilized several strategies to produce returns; EFTA00608415 Carlyn McCaffrey, Esq. October 18, 2007 Page 26 • Global - Based investment strategies on overall economic and political views of various countries, including emerging markets, Asian countries, and Eastern European countries to name but a few; • Macro - Utilized investment strategies based on macroeconomic principles, such as relative performance of country, interest rate trends, changes in general flow of funds, etc.; • Sector — Formed investment strategies on specific sectors, such as bio-tech, technology, and defense for instance; • Directional - Focused on investment strategies on long or short positions only. According to the April 2007 Market Watch report, Hedge Funds Raise Record $60 Bln in First Quarter, hedge funds took in a record $60 billion in new money during the first quarter of 2007 as institutions and rich individuals continued to be attracted to the industry. Inflows were almost four times greater than in the fourth quarter of 2006, as the collapse of Amaranth Advisors briefly dented interest in hedge funds. The previous record was set in the third quarter of last year, when funds pulled in $44.5 billion in new money. At the end of the first quarter industry assets stood at $1.568 trillion. Equity hedge funds, which invest in and bet against stocks, raised $20.3 billion in new money during the first quarter. That's the largest quarterly inflow ever recorded for a single strategy. Relative-value arbitrage hedge funds took in $10.3 billion in new assets in the quarter, making that strategy the second-most popular. Every other major strategy recorded a positive flow for the quarter. Funds of funds, which allocate money to a range of underlying managers, saw net new flows of $8 billion in the quarter, marking the fifth straight quarter of positive inflows for the category. Recent Public Offerings by Hedge Managers: According to the February 9, 2007 CNNMonney.com article, Fortress Execs Hit $10 Billion Jackpot, Fortress Investment made history becoming the first hedge fund in the country to go public on February 9, 2007 delivering nearly $10 billion in value to its five principals. Shares of Fortress spiked in their first day of trading, giving the firm the best first- day pop for an IPO in 2007 at a market capitalization of about $12.4 billion. Fortress raised $634 million in its stock debut. EFTA00608416 Carlyn McCaffrey, Esq. October 18, 2007 Page 27 According to the April 2, 2007 Fortune article, Predicting the Next Big Hedge Fund IPO, six weeks after Fortress made history as becoming the first hedge fund to trade on the New York Stock Exchange, Blackstone Group followed suit by announcing their plans to raise $4 billion in an upcoming IPO. Along with Black Stone other leading contenders among hedge funds expected by Wall Street to announce plans for an IPO were Avenue Capital, Perry Capital and the Citadel Investment Group. Each of these firms control more than $10 billion in assets and Avenue Capital and Perry Capital have recently diversified into private equity and real estate, providing the growth profile prized by public investors. Avenue Capital's founder Marc Lasry has been open about his intentions to take the company public. A distressed-investment specialist, Lasry is best known for making a killing in Asian markets following the debt crisis of the late 1990s. Last year the $12 billion hedge fund sold a 20 percent stake to Morgan Stanley, a move the banker described as the "first step before going to an IPO". Perry Capital, which runs $11 billion in assets, was another likely candidate, according to investment banking and hedge fund sources. While the fund once played its cards close to the vest, founder Richard Perry has recently been involved in several high-profile deals - backing Hollywood moguls Harvey and Bob Weinstein in their new movie studio and helping finance the takeover of English soccer club Manchester United by Tampa Bay Buccaneers owner Malcolm Glazer. Citadel, the $13 billion Chicago-based hedge fund led by 38-year-old Ken Griffin. Last year Citadel became the first hedge fund to issue publicly traded bonds, proving its ability to withstand investor scrutiny. D. Outlook for Management Companies, Advisor Companies, & Partnership The outlook for the Management Companies was dependent upon the performance of the underlying funds and their respective management companies. Fund III was in dissolution at the Valuation Date and Fund IV was preparing to liquidate its remaining assets. The remaining funds are in the investment process and therefore, the capital under management is projected to increase going forward. The Partnership's outlook was dependent on that of that Management Companies' and thus mirrors that of the underlying funds. At the Valuation Date, AMHLP was close to securing a $1.0 billion credit facility. The proceeds of the loan, which will be denominated in Euros or dollars, would be used primarily to pay dividends to the partners of AMHLP and would be secured by the assets of the Management Companies. The interest rate of the Eurodollar loans will be the daily Eurodollar rate plus the applicable margin rate of 1.5%. The interest rate on the EFTA00608417 Carlyn McCaffrey, Esq. October 18, 2007 Page 28 ABR term loans, for any day, will be the greater of (a) the prime rate in effect on such day or (b) the federal funds effective rate in effect on such day plus one-half of 1% and the applicable margin rate of 0.5%. Valuation of Management Companies, Advisor Companies, & AMHLP The purpose of the valuation section is to incorporate the information considered and/or presented previously into a quantitative representation, thus assigning a value to the ownership privileges of the closely-held entity. The valuation methodology reflects the analyst's expectation of how free and open capital markets would assign value to the economic activities of the business asset under analysis. A. Valuation Methodologies There are a number of generally accepted methods in use for valuing a closely-held business asset, none of which is necessarily superior to the others. It is more a question as to which of the methods or combination of methods is best suited to the business, industry, and economic circumstances of the particular company being appraised at a specific valuation date. The purpose of the engagement and the percentage of equity being valued are additional factors to be considered when selecting a valuation method. The following discussion summarizes the most generally accepted valuation methods. Capitalization of Income Method: The capitalization of income method utilizes historical results to determine the value of a company's owners' capital. An income base is first derived, and then divided (i.e., capitalized) by a separately computed required rate of return, or capitalization ("cap") rate. The income base can be defined variously as a company's adjusted earnings, cash flows, or dividends. For the cap rate to be appropriate, it must correspond to the specific inputs used in developing the income base. Generally, this method is considered a reasonable one to use in valuing a going concern. However, its application weakens when a company's historical income, even when adjusted, is not considered to be a good proxy for that expected in the future. Since many of the Management Companies' and Advisor Companies' historical cash flows are not a good proxy for future cash flows, and several of them are very new or just being formed, this methodology was not employed in valuing the Management Companies and Advisor Companies. Further, AMHLP itself was only EFTA00608418 Carlyn McCaffrey, Esq. October 18, 2007 Page 29 recently formed and did not have a long history. Therefore, this methodology was not employed in valuing a limited partnership interest in AMHLP. Guideline Company Method: The objective of the guideline company valuation technique is to identify business entities that have publicly traded securities, and business and financial risks which are comparable to those of the entity being valued. The pricing multiples of the selected public companies are then used to derive a market value for the company under analysis. This methodology was not applied in valuing the Management Companies for a number of reasons including the facts that certain entities did not receive carried interest profits from their funds (an important income source), and many of these entities were significantly different in expected life and size relative to the publicly- traded companies identified. However, betas for companies in similar lines of business were used to derive the required rate of return for limited partnership interests in the Management Companies and Advisor Companies and this methodology was used as a reasonableness test for some of the Management Companies where sufficiently similar companies were identified. This methodology was not applied directly in valuing the Partnership in aggregate for the reasons above. Further, this method was used as a reasonableness test for some of the Management Companies. Guideline Transaction Method: Similar to the guideline company method, the objective of the guideline transaction valuation technique is to identify firms that have been acquired, and that have business and financial risks that are comparable to those of the subject company. The pricing multiples implied by the selected transactions are then used to derive a market value for the capital of the company under analysis. Using several transaction databases, a search was conducted for acquisitions of companies similar to the Management Companies, the Advisor Companies, and the Partnership; however, none were found that were appropriate to use in a guideline transaction approach. Also, it should be noted that the interests in question are minority, limited partnership interests that do not have the ability to sell either the Management Companies, Advisor Companies, the Partnership, or their assets in aggregate, while the multiples derived from the databases are on a controlling interest basis and often incorporate synergies expected by the buyer. Therefore, this methodology was not applied in valuing limited partnership interests in the Management Companies, Advisor Companies, or AMHLP. Discounted Future Income Method: The discounted future income method can use cash flows or earnings ("DFE") as a basis to forecast the income which the EFTA00608419 Carlyn McCaffrey, Esq. October 18, 2007 Page 30 business will generate. Thereafter, an aggregate present value is calculated for the future cash flows using a required rate of return known as the discount rate. The strength of this method is that it facilitates the analysis of operational practices and their impact upon the business' value. Its weakness, however, is that it relies heavily upon projections of cash flows or net income which, for some firms, are difficult to make with any accuracy. Management provided earnings projections for each of the underlying fund companies and advisors. As such, the DFE methodology was used to value limited partnership interests in the underlying management companies and advisors as of the Valuation Date. However, the DFE method was not used to value the Partnership since it was primarily a holding entity, the value of which is reflected in the value of its underlying assets. Net Asset Value Method: NAV is a method that focuses primarily on the balance sheet. It requires restatement of the company's assets and liabilities in order to reflect their market values. Application of this method is most useful in determining a fully marketable controlling interest (i.e., enterprise) value. However, the method's relevance generally weakens when valuing a minority or other ownership interest in a going concern which lacks the right to liquidate assets or sell the business. Exceptions are when liquidation of the business is considered highly probable, when the realizable value of its assets equals, or exceeds, the value of its distributions to its owners, or when the company's value is tied directly to the value of its underlying investments. Adjusted book value ("ABV") is a variant of NAV. It is usually used in the valuation of holding companies whose main assets are publicly traded securities or other investment assets such as real estate, notes receivable, partnership interests, or equity investments in other business enterprises. ABV is distinguished from the traditional NAV method in that it does not consider the transaction or liquidation costs necessary to realize the cash value of the holding company's underlying assets. This methodology was not applied in valuing the Management Companies and Advisor Companies because the values of the Management Companies and Advisors were derived from their earnings rather than their underlying assets. AMHLP's value, however, its value is derived from the operations and income from the underlying operating entities. Those Management Companies and Advisors were valued, as discussed above. Therefore, the ABV methodology was used to value a limited partnership interest in AMHLP. EFTA00608420 Carlyn McCaffrey, Esq. October 18, 2007 Page 31 B. Outline of Valuation Process A DFE analysis was conducted for each of the Management Companies and Advisor Companies using projections provided by management and rates of return calculated by Empire. The guideline company methodology provided some benchmarks for aiding in the establishment of a rate of return, as well as a reasonableness test for the Capital Markets Funds. A pass-through premium was considered due to the fact that there are no income taxes at the Management Companies' and Advisor Companies' level and a lack of marketability discount was applied. LBFH's economic interest in AMHLP was then calculated. The economic interest in AMHLP received by LBFH was then valued using an ABV analysis. Thereafter, an incremental discount for lack of control and lack of marketability were applied to arrive at the fair market value of LBFH's limited partnership interest in AMHLP. C. Discounted Future Earnings Analysis Modern financial theory holds the value of any asset to be a function of several interrelated factors: • The stream of benefits the owner of the asset expects to receive; • The timing of the receipt of these benefits; and • The risk borne by the owner. Thus, appraisal methodologies rely on the premise that the value of a business enterprise is equal to the present value of the income that it can expect to generate going forward. From an investor's standpoint, these future income streams represent the dividend-paying (i.e., distribution-paying) capacity of the company or, in the case of a leveraged company, monies available for all invested capital (i.e., interest-bearing debt plus owners' capital). In order to complete a DFE analysis, it is necessary to develop an explicit forecast for each Management Companies' and Advisor Companies' earnings together with a required rate of return by which they can be discounted back to their present value. Projected Future Earnings: Exhibits A-1 through A-13 shows the projections for each of the Management Companies as they were provided to Empire by management. Exhibits A-14 through A-16 shows the projections for each of the Advisor Companies as they were provided to Empire by management. The key assumptions for the inputs were: EFTA00608421 Carlyn McCaffrey, Esq. October 18, 2007 Page 32 Existing Funds • Fund III was in dissolution and it was not forecast to collect any management fees in 2007 or thereafter. • Fund IV's adjusted invested capital was forecast to slowly decline until termination of Fund IV in 2010. • Fund V's adjusted invested capital was forecast to increase and reach a peak of $1.7 billion in 2007 and then decline to zero by 2011. • Fund VI's adjusted invested capital was forecast to reach a peak of $9.1 billion in 2009, then decline through 2011. • AIM's adjusted invested capital was forecast to increase to $6.0 billion in 2011, then grow in line with its long-term growth rate. • VIF's adjusted invested capital was forecast to increase to $894.5 million in 2011, then grow in line with its long-term growth rate. • SVF's adjusted invested capital was forecast to increase to $3.6 billion in 2011, then grow in line with its long-term growth rate. SVFMLP collects management fees from both SVF and SOMA. The SOMA Fund is a managed account that invests in the same investments as SVF, but pays a lower carried interest. • SVF Advisors' carried interest and direct investment profit were calculated as previously discussed. • AAO's adjusted invested capital was forecast to increase to $622.1 million in 2011, then grow in line with its long-term growth rate. • Asia Advisors' carried interest and direct investment profit were calculated as previously discussed. • AEM's adjusted invested capital was forecast to increase to $2.7 billion in 2011, then grow in line with its long-term growth rate. • AAA's adjusted invested capital was forecast to increase to $4.0 billion in 2011, then grow in line with its long-term growth rate. EFTA00608422 Carlyn McCaffrey, Esq. October 18, 2007 Page 33 • The management fee was based upon the formulas outlined previously in this report. • Operating expenses were projected by management based upon historical and current performance and expected winding down of the various funds in the next few years. A 45% operating expense ratio is applied against carried interest income as well because this expense represents a compensation expense against fee income that is paid to approximately ten partners who do not have a direct ownership interest in AMHLP. Since these amounts have been historically paid before profits flow to AMHLP, the historical financial statements of AMHLP do not show this specific compensation expense. Given that the carry income in management's projections is before this compensation expense, Empire has included it as operating expenses, to more closely align with the economic reality of the cash flows. Goodwill When individual operating entities are combined into a single larger entity that is expected to grow based on various factors including the knowledge and experience of key people, their overall reputations, and their ability to develop new businesses within the larger entity, a form of "going-concern" value is created. This is frequently referred to as "goodwill" where this going-concern value has existed for some period of time. As the individual entities related to the management companies are combined into AMHLP, this newly created going-concern/goodwill value needs to be accounted for. This value, in effect, is a result of the key partners' experiences and abilities to drive the growth of the business via their creative and business efforts. In essence, these partners, by committing to remain with, run and develop the business over time, are contributing this going-concern/goodwill component to AMHLP. Without them, this value would likely be significantly diminished. Included in the projections provided by management were various future/to-be- created funds on both the private equity and capital markets sides of the business. It was concluded that the more near-term future fund projections reasonably represented the bulk of the likely going-concern/goodwill values attributable to AMHLP as a consolidated entity. The private equity funds slated for startup in 2011 and later were, however, concluded to be too speculative given the state of the structure of the company currently, the market risks related to such fund projections, and other factors to be included in this analysis. EFTA00608423 Carlyn McCaffrey, Esq. October 18, 2007 Page 34 It was also concluded that the value of this going-concern/goodwill value was primarily the result of the contribution of the services of the three primary partners to the entity. Therefore, the analysis reflects both the valuation of these future earnings and the allocation of those values to Mr. Black in amounts considered reasonably consistent with his interests in similar underlying existing funds. Several funds valued fall into this category: Fund VII, EPF, and New Funds and its respective Advisors were not formed at the Valuation Date. However, LB and the other partners expected to form them in the near future and, therefore, they were considered contributed goodwill by them. With regards to each of these goodwill entities: • Fund VII's adjusted invested capital was forecast to reach a peak of $15.2 million in 2011, then decline through 2016. • Fund VII Advisors' carried interest and direct investment profit were calculated as previously discussed. • EPF was projected to start up in 2007 and invested capital was forecast to increase to $3.7 billion in 2011, then grow in line with its long-term growth rate. • EPF Advisors' carried interest and direct investment profit were calculated as previously discussed. • New Fund was projected to start up in 2008 and invested capital was forecast to increase to $3.1 billion in 2011, then grow in line with its long-term growth rate. • New Fund Advisors' carried interest and direct investment profit were calculated as previously discussed. • The management fee was based upon the formulas outlined previously in this report. • Operating expenses were projected by management based upon historical and current performance and expected winding down of the various funds in the next few years. A 45% operating expense ratio is applied against carried interest income as well because this expense represents a compensation EFTA00608424 Carlyn McCaffrey, Esq. October 18, 2007 Page 35 expense against fee income that is paid to approximately ten partners who do not have a direct ownership interest in AMHLP. Since these amounts have been historically paid before profits flow to AMHLP, the historical financial statements of AMHLP do not show this specific compensation expense. Given that the carry income in management's projections is before this compensation expense, Empire has included it as an operating expense, to more closely align with the economic reality of the cash flows. After subtracting operating expenses, pre-tax income for the various Management Companies and Advisor Companies was then tax-affected at a 42% rate. A discussion of the income tax variable is presented in the Valuation section of this report, in conjunction with an argument for a pass-through premium. Derivation of the Required Rate of Return: The discount rate selected represents the required rate of return that an investor would demand at a point in time in order to invest in each of the Management Companies. The selected rates would need to account for the inherent risks associated with the Management Companies and Advisor Companies. Weighted Average Cost of Capital: The discount rate, or the rate of return that investors require, incorporates the following elements: • A "risk-free rate," which generally is the rate available on instruments considered to have no default risk, such as U.S. Treasuries. The risk-free rate compensates the investor for renting out their money and for the expected loss of purchasing power (inflation) during the holding period. • A premium for risk, which incorporates the degree of uncertainty as to the realization of the expected return. The risk premium includes: (1) systematic risk related to the movements in returns on the investment market in general; and (2) unsystematic risk, which is risk specific to the subject investment. • A company's cost of debt. • A company's capital structure, i.e. the percentage of total invested capital that is debt and equity. This discount rate, or weighted average cost of capital ("WACC"), reflects current rates of return seen in the public capital markets plus a number of company- and industry-specific factors. Two benchmarks have been developed to assist in selection of the discount rate for the Management Companies and Advisor EFTA00608425 Carlyn McCaffrey, Esq. October 18, 2007 Page 36 Companies. These benchmarks are the build-up and Capital Asset Pricing Model ("CAPM") methods. In order to determine an appropriate required rate of return, i.e. discount rate, for the Management Companies and the Advisor Companies, return information from Ibbotson and general market rates of return were considered. Cost of Equity: The two benchmark methods were reviewed separately in order to derive the Partnership's cost of equity. Build-Up Method: The expected equity discount rate to be derived for an entity represents the required rate of return that an investor would demand at a point in time in order to hold its equity. This expected equity discount rate incorporates an expected equity risk premium, which can be defined as the additional return an investor expects to receive to compensate for the additional risk associated with investing in equities as opposed to investing in riskless assets. The expected equity risk premium is an essential component of most cost of equity estimation models, including the CAPM and build-up approach. It is important to note that the expected equity risk premium, as used in standard valuation models, is a forward looking concept, i.e., it should reflect the best estimate of what investors think the equity risk premium will be going forward. Unfortunately, the expected equity risk premium is not directly observable in the market, but must be estimated by analyzing and adjusting historical equity return data. [See Stocks, Bonds, Bills and Inflation, Chapter Five, Ibbotson Associates] Ibbotson Associates ("Ibbotson") analyzes and presents historical annual equity rate of return data.' Ibbotson considers historical equity returns and long term trends in price/earnings ("PIE") ratios. The expected equity risk premium should also consider the impact of investment horizon on realized equity premiums; specifically the arithmetic mean of multi-year holding periods differs from and is lower than the arithmetic mean of one-year holding periods based upon historical equity returns. According to Ibbotson's studies, the expected return of the market (specifically the S&P 500) in excess of the risk-free rate (the equity risk premium) based on a study of actual returns of one-year holding periods from January 1926 to December 2005, is 6.36%s. Given the aforementioned data and other analysis, Empire has selected a 6.0% expected equity risk premium as appropriate as of the Valuation Date. 6 Stocks, Bonds, Bills and Inflation: Valuation Edition 2006 Yearbook, Ibbotson Associates, 2006, Chicago, Illinois. 7 !bid. 8 !bid, Supply Side Equity Risk Premium, Table 5-6, page 98. EFTA00608426 Carlyn McCaffrey, Esq. October 18, 2007 Page 37 Ibbotson also identifies a mid-company premium based on a market value-weighted index of mid-capitalization stocks (non-beta adjusted) which trade on the NYSE, the AMEX and the NASDAQ. This latter 1.03% premium recognizes that equity holders demand higher returns from companies that are riskier by virtue of their smaller revenue base and capitalization. As of December 2005, Ibbotson identified mid-capitalization stocks as stocks of companies with market capitalizations of up to $4.1 billion (decile 4 of a size-weighted portfolio of NYSE, AMEX and NASDAQ publicly traded companies)°. A mid-capitalization premium was used because we are valuing AMHLP as a whole. Since the risk-free rate (using twenty-year Treasuries as a proxy) was 4.98% at the Valuation Date, the total required return for mid-capitalization companies was 12.01%. Please see Exhibit B-1. CAPM: As noted, the Management Companies and Advisor Companies' cost of equity estimate has also been developed with the CAPM. The CAPM is a model that is commonly used to obtain discount rates for valuation purposes. The basic logic of the CAPM model is that a project's risk premium is determined by the sensitivity of its cash flows to changes in aggregate wealth ("systematic risk," measured by Beta). This model has been one of the primary underpinnings of applied work in finance due to its simple, intuitive logic and ease of application. The model used to develop our estimates of cost of equity is as follows: Ke = Rp ((seta) + Ru. Where: Re Rf Rp = (seta Cost of Equity Risk free rate of return Market Risk Premium Mid-Sized Company Risk Premium Sensitivity of the security to changes in the market The cost of equity, Kg was identified based upon publicly available information. Betas of a group of selected U.S.-traded guideline companies were obtained from the Bloomberg Network. These firms are in similar lines of business to those of the Management Companies. Since we are measuring the management fee income portion of the business, we selected companies that earn much of their fees from management rather than management and carry income. Brief descriptions of these companies are provided in Exhibit B-2. The betas were first unlevered based upon 9 HAW, Chapter Seven, Table 7-3, page 133. EFTA00608427 Carlyn McCaffrey, Esq. October 18, 2007 Page 38 the respective firms' capital structures, then relevered based upon the Management Companies and Advisor Companies' expected long-term debt-to-equity ratio. The debt-to-equity ratio utilized for the Management Companies and Advisor Companies was 20% debt to 80% equity and was based upon the range of debt-to-equity ratios of the public companies. Please see Exhibits B-3 and B-4. The resulting cost of equity of 11.51% is based upon a (unlevered) selected beta factor of 0.80 and capital structure of 20% debt and 80% equity for the Management Companies and 10.81% for the Advisor Companies is based upon an unlevered selected beta factor of 0.80 and a capital structure of 0% debt and 100% equity. Please see Exhibits B-5 and B-6. The 15% debt and 85% equity capital structure was selected despite the Management Companies efforts to secure additional financing for reasons which include, but are not limited to the following factors: (1) the additional debt is related to specific dividends that will be paid and therefore does not have a major impact on the business; (2) debt will likely be repaid within several years and is not a long-term change to capital structure; and (3) the sample of companies used to calculate the beta had low leverage levels, indicating there was not a lot of room in the market for additional leverage. The Advisor Companies 0% debt and 100% equity capital structure was selected because the Advisor Companies are not obligated to repay the debt that will be borrowed. Derived Base Cost of Equity: Taking all of these factors into account, the base cost of equity selected for the Management Companies is as follows. Table III Management Companies Equity Discount Rate Method Equity Rat71 Build-Up 12.01% CAPM 11.51% Selected Base Equity Rate 11.80% Derived Base Cost of Equity: Taking all of these factors into account, the base cost of equity selected for the Advisor Companies is as follows. Table IV Advisor Companies Equity Discount Rate r Method Equity Rate Build-Up 12.01% EFTA00608428 Carlyn McCaffrey, Esq. October 18, 2007 Page 39 CAPM 10.81% Selected Base Equity Rate 12.00% The difference in the concluded base equity rate for Advisor Companies is attributed to a debt to equity structure of 0% debt and 100% equity. Market Indices and Benchmarks: Rates of return observed in the broader market were reviewed and considered. These rates are shown in Table V below. Table V Summary of Required Rates of Return Source Required Rate of Return 20-year U.S. Treasury Rate (risk-free rate)10 4.98% Prime Rate" 8.25% Large Cap Stocks'2 10.98% Small Cap Stocks" 17.34% Company/Industry Specific Risk Adjustments: In order to reflect each Management Company's specific industry and partnership risks, an additional risk adjustment must be considered for application to the equity discount rate of 11.80% as discussed above. This adjustment considers, among other factors: 10 Federal Reserve Statistical Release H.15. " Ibid. 12 Stocks, Bonds, Bills and Inflation: Valuation Edition 2006 Yearbook, Ibbotson Associates, 2006, Chicago, Illinois. For large capitalization stocks the calculation is a sum of the risk-free rate and the expected returns of 6.0% realized on large capitalization stocks over the risk-free rate. Small capitalization stocks, which are riskier by virtue of their smaller revenue and income base and capitalization, have returned an additional 6.36% above the return witnessed for large capitalization stocks. II Ibid. EFTA00608429 Carlyn McCaffrey, Esq. October 18, 2007 Page 40 Table VI Management Companies' Adjustment Factors Attribute• AMU! AMIV AMV AMV1 AMV11 AIM VIE ASVE AAM AEM AAA EYE NE Fund is in liquidation X Ability to exit investments X X x X X X X X X X X X X Reliance on key personnel N N N X X X X x X x x X N Restrictions on liquidation N N x X X x X X X x x x N Timing of liquidations N X N X X N x x X x x x x Smaller Capitalization X X N N X X X x X X X Currency Risk N x x N x X X x N Concentration in Middle Markets N N N N N High Projected Growth Rate of AUM x x x x x Net Risk Adjustment t.0% 0.0% -2.0% -2.0% -1.0% -0.2% -1.0% -1.0% 0.0% 2.8% 3.0% 3.0% 5.0% Concluded Equity Risk Rate 12.8% 11.8% 9.8% 9.8% 10.8% 11.6% 10.8% 10.8% 11.8% 14.6% t4.8% t4.8% 16.8% *for presen ation purposes, "LP" has been omitted from the Management Conymn'es' name. Company/Industry Specific Risk Adjustments: In order to reflect each Advisor Company's specific industry and partnership risks, an additional risk adjustment must be considered for application to the equity discount rate of 12.00% as discussed above. This adjustment considers, among other factors: EFTA00608430 Carlyn McCaffrey, Esq. October 18, 2007 Page 41 Table VII Advisor Companies' Adjustment Factors Attribute" Asia SVF Fund VII EPF NF Fund is in liquidation Ability to exit investments x x X X X Reliance on key personnel x x X x X Restrictions on liquidation x x x x x Timing of liquidations X X X X X Smaller Capitalization Currency Risk x x x x Concentration in Middle Markets High Projected Growth Rate of AUM x x Net Risk Adjustment 5 W."; 5.0% 6.0% 7.0% 10.0% Concluded Equity Risk Rate, Rounded 17.0% 17.0% t8.0% t9.0% 22.0% *for presentation purposes, "Advisor" has been omitted from the Advisor Companies' name. Cost of Debt: Table VIII presents market-based yields by credit rating as of the Valuation Date. EFTA00608431 Carlyn McCaffrey, Esq. October 18, 2007 Page 42 Table VIII Market Ratings and Yields As of April 16, 2007 Rating" Yield AAA 5.47% AA 5.57% A 5.75% BBB 6.39% BB 6.77% B 7.50% CCC 9.38% CC 23.51% Based on a number of factors including but not limited to: (1) a survey of market yields; (2) the nature and history of the Management Companies and Advisor Companies; (3) the expected near-term cost of debt related to the upcoming loan; and (4) the Management Companies and Advisor Companies' asset base upon which to borrow against, a pre-tax cost of debt of 8.0% was selected as reasonable for the Management Companies and Advisor Companies as of the Valuation Date. Therefore, based on a tax rate of 42%, the after tax cost of debt was 4.6% (0.08 x [1 - 0.42]). Concluded Discount Rate: Additionally, market participants were reviewed in order to develop a WACC-based discount rate for the Management Companies and Advisor Companies. Development of a WACC requires that the cost of debt and the cost of equity for the company be derived separately. These costs are then weighted in proportion to the market value of each component of the entity's capital structure. The WACC, i.e. discount rate, for the management companies was calculated by using the required rates of return derived for the management companies cost of equity, as derived above, and (after-tax) debt, of 4.6%, weighted by its capital structure. Again, the selected capital structure for the Management Companies and was 15% debt to 85% equity and 0% debt and 100% equity for the Advisor Companies. As shown in Exhibits B-7 through B-24, the Management Companies and Advisors Companies' WACC calculated to be as shown in Table IX on the following page. 14 Standard & Poor's credit rating scale. EFTA00608432 Carlyn McCaffrey, Esq. October 18, 2007 Page 43 Table IX WACC Management / Advisor Companies A W CC, Rounded AMIIILP 11.0% AMIVLP 10.0% AMVLP 9.0% AMVILP 9.0% AMVIILP 10.0% AIM 10.0% VIFMLP 10.0% ASVFMLP 10.0% AAMLP 10.0% AEMLP 13.0% AAALP 13.0% EPFLP 13.0% NFMLP 14.0% Asia Advisor 17.0% SVF Advisor 17.0% Fund VII Advisor 18.0% EPF Advisor 19.0% New Fund Advisor 22.0% Summary: The earnings derived from the detailed projections were discounted to their present value as of the Valuation Date for each of the Management Companies and Advisor Companies as detailed on the following page. EFTA00608433 Carlyn McCaffrey, Esq. October 18, 2007 Page 44 Man gement companies aim Aavisor tom Management Companies Aggregate Value AMIIILP $0 AMIVLP $2,668,522 AMVLP $10,449,679 AMVILP $165,964,329 AIM $847,787,711 VIFMLP $53,743,677 ASVFMLP $242,317,463 SVF Advisor $108,464,023 AAMLP $38,299,877 Asia Advisor $27,449,507 AEMLP $404,538,079 AAALP $285,367,304 Subtotal Existing Funds $2,187,050,171 AMVIILP $332,858,210 AEPFLP $26,792,516 NFMLP $108,415,526 Fund VII Advisor $439,504,477 EPF Advisor $24,176,288 New Fund Advisor $83,103,280 Subtotal Goodwill $1.014.850,297 See Exhibits A-1 through A-18 for more details. D. Pass-Through Premium Table X Aggregate Sum of Present Values for anies As previously stated, each of the Management Companies is a limited partnership for federal, state, and local income tax purposes. As such, the absence of taxes at the Partnership level is a consideration in the valuation of its capital. Thus far in this report, a fully marketable, minority interest, "C" corporation ("C-Corp") equivalent value has been derived. In this section of the report a specific pass- through adjustment is calculated for each Management Company and Advisor Company. Based on the analysis of each Management Company and Advisor Company, as outlined in this report, a pass-through adjustment was deemed appropriate. EFTA00608434 Carlyn McCaffrey, Esq. October 18, 2007 Page 45 Calculation of Pass-Through Adjustment: It is Empire's opinion that the appropriate way to account for a partnership's lack of tax at the partnership level is to, first, value it as a C-Corp and then make a separate, quantifiable pass- through adjustment to derive fair market value. This method starts with the tax affecting of the partnership's earnings at a C-Corp equivalent rate, which allows the value derived from the income approach to be consistent with the required rate of return derived from publicly traded companies (i.e., both on an after-tax basis). The maximum pass-through adjustment can be represented by the equation 1 + (1 - tax rate) - 1, where the tax rate represents the dividend tax rate. It should be noted that the Management Companies' income is comprised primarily of management fee income which is taxed as regular income. The highest personal federal tax rate was 35% as of the Valuation Date. According to management, partners in this Partnership were generally paying personal taxes on this income at an approximate rate at full federal, state and local blended rate of 42%. This implies a 7% premium over the maximum 35% federal rate for the blended state and local taxes. Relative to a C-Corp, partnership distributions would not be subject to the dividend distribution taxes that a C-Corp shareholder would pay. Therefore, the resulting savings can be calculated as shown. Under the tax code applicable as of the Valuation Date, the dividend tax rate was 15% at the federal level. In New York State the highest individual tax rate is 6.85%. However, because there is a credit on federal income taxes for any state income tax paid, the effective state rate becomes 4.45% (6.85% x [1 - 35%]). Similarly, in New York City the highest individual tax rate is 3.65%. However, because there is a credit on federal income taxes for any local income tax paid, the effective local rate becomes 2.37% (3.65% x [1 - 35%]). Adding the federal rate of 15.0% to the effective state and local rates of 4.45% and 2.37% results in a maximum pass-through adjustment of 22%, rounded. This calculation contains certain simplifying assumptions. As such, certain characteristics may not be captured by this formula alone due to these simplifying assumptions. To the extent that any characteristics have not been accounted for directly in the formula they have been accounted for in the pass-through adjustment selected. Finally, it is important to note that all of the variables used in this valuation process are interdependent (i.e., if one variable is changed, then each of the other variables may need to be modified to reach a reasonable valuation conclusion). For a further discussion of this formula and its underlying assumptions, please see Addendum 4. EFTA00608435 Carlyn McCaffrey, Esq. October 18, 2007 Page 46 Pass-Through Entity Factors: When concluding an applicable pass-through adjustment, there are several specific factors that must be considered. These factors include, but are not limited to: (1) the level of value (control or minority); (2) limitations imposed by a limited partnership agreement concerning the ability of its partners to dissolve or withdraw from the partnership; and (3) the level of distributions compared to the partners' tax liability. The background on each of these factors is discussed in detail in Addendum 4. Table XI Pass-Through Premium Factors Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment .AMIIILP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. Fund III is liquidating and could not be expected to continue historical dividend policy. Further, AMH was expected to take on SI billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. N/A ANIIVLP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. Fund IV is close to liquidating and could not be expected to continue historical dividend policy. Further, AMH was expected to take on $I billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may 15 ir, EFTA00608436 Carlyn McCaffrey, Esq. October 18, 2007 Page 47 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. Fund V has paid dividends in the past. Further, AMH was expected to take on $I billion in debt service responsibilities. This will require a reduction in distributions to the Partners, p whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. 150',( AMVILP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. Fund VI paid dividends which were not sufficient to cover tax liabilities. Further, AMH was expected to take on $I billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. 15.0% AMVIILP Minority - There is limited Fund VII was recently 15.0% EFTA00608437 Carlyn McCaffrey, Esq. October 18, 2007 Page 48 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment Adjustment is warranted likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. \ IN1LP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. AINV has a history of making distributions that were more than sufficient for tax liabilities. However, AMH was expected to take on $I billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Given the history of distributions, a higher adjustment is warranted. 20.0% Minority - Adjustment is warranted - There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. VIF has a history of making distributions that were more than sufficient for tax liabilities. However, AMH was expected to take on $I billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even , i) Jr, EFTA00608438 Carlyn McCaffrey, Esq. October 18, 2007 Page 49 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment when it has such income, resulting in the same issue described above. Given the history of distributions, a higher adjustment is warranted. ASVFMLP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. SVF paid dividends which were not sufficient to cover tax liabilities. Further, AMH was expected to take on $1 billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. 15.0% ,, \ 1: Advisor Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. SVF paid dividends which were not sufficient to cover tax liabilities. Lower adjustment is warranted. 15.0% AANILP Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which AAO did not pay distributions in 2006 and it is not known when it will have cash available for distribution. Further, AMH was expected to take on $1 billion in debt service responsibilities. This 15.0% EFTA00608439 Carlyn McCaffrey, Esq. October 18, 2007 Page 50 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment is unlikely. Lower adjustment is warranted. will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. .\,,, Advisors Minority - Adjustment is warranted There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. AAO did not pay distributions in 2006 and it is not known when it will have cash available for distribution. Further, AMH was expected to take on $1 billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. 15.1)'; . \ FAILP Minority - Adjustment is warranted _ There is limited likelihood that the entity would lose its pass- through status unless it was sold to a publicly traded C-corporation or the tax laws were changed regarding these types of entities, which is unlikely. Lower adjustment is warranted. AEM paid dividends which were not sufficient to cover tax liabilities. Further, AMH was expected to take on SI billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to 15 ir, EFTA00608440 Carlyn McCaffrey, Esq. October 18, 2007 Page 51 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. .\ AALP Minority - Adjustment is warranted LP can transfer without consent from other partners. Higher adjustment is warranted. AAA did not pay distributions in 2006 and it is not known when it will have cash available for distribution. Further, AMH was expected to take on $1 billion in debt service responsibilities. This will require a reduction in distributions to the partners, whether there is profit or not. The partnership's GP may also elect not to distribute income even when it has such income, resulting in the same issue described above. Lower adjustment is warranted. 20.0% Akti'l,P Minority - Adjustment is warranted Restrictions on transfer unknown as of the Valuation Date, but it is likely it will be similar to other Apollo funds. EPF has not yet been formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. 15 0'; NFMLP Minority - Adjustment is warranted Restrictions on transfer unknown as of the Valuation Date, but it is likely it will be similar to other Apollo funds. New Fund has not yet been formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. 15.0% Fund VII Advisor Minority - Adjustment is warranted Restrictions on transfer unknown as of the Valuation Date, but it is likely it will be similar to other Apollo funds. Fund VII was recently formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. 15.0% EFTA00608441 Carlyn McCaffrey, Esq. October 18, 2007 Page 52 Management Company Level of Value Agreement Distributions Concluded Pass- Through Premium Adjustment EPF Advisor Minority - Adjustment is warranted Restrictions on transfer unknown as of the Valuation Date, but it is likely it will be similar to other Apollo funds. EPF has not yet been formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. 15 ir; New Fund Advisor Minority - Adjustment is warranted Restrictions on transfer unknown as of the Valuation Date, but it is likely it will be similar to other Apollo funds. New Fund has not yet been formed and it was unknown when it will have cash flow available for distribution. Lower adjustment is warranted. 15.0% Conclusion of Pass-Through Adjustment: Taking all of the factors above into consideration, it was determined that an adjustment below the maximum is warranted. Therefore, a reduction in the pass-through adjustment to the concluded rates above was deemed appropriate. Applying a pass-through adjustment to the previously derived fully marketable minority interest C-Corp equivalent value results in fully marketable minority interest values for the Management Companies and Advisor Companies as shown in Table XII below. Table XII Aggregate Fully Marketable Minority Interest Value Management / Advisor Company Aggregate Fully Marketable Minority Interest Value AMIIILP SO AMIVLP $3,068,801 AMVLP $12,017,131 AMVILP $190,858,978 AIM $1,017,345,253 VIFMLP $64,492,412 ASVFMLP $278,665,082 SVF Advisors $124,733,627 AAMLP $44,044,859 Asia Advisors $31,566,933 AEMLP $465,218,791 EFTA00608442 Carlyn McCaffrey, Esq. October 18, 2007 Page 53 AAALP $342,440,764 Subtotal Eristing Funds $2,574,452,630 AMVIILP $382,786,941 Fund VII Advisor $439,504,477 AEPFLP $30,811,394 EPF Advisor $27,802,732 NFMLP $124,677,855 New Fund Advisor $95,568,772 Subtotal Goodwill $1,101,152,171 Total $3,675,604,801 Again, please see Exhibits A-1 through A-18. E. Lack of Marketability ("LOM") By defmition, equity interests in closely-held business entities cannot be considered as marketable as the equity interests of publicly traded companies. A number of studies have compared private stock transactions (at the minority interest level) for companies which subsequently went public as well as the discounts applicable to the restricted stocks of public companies. These studies are crucial to valuation theory because: (1) they present empirical proof that a lack of marketability discount exists and is factored into determinations of value in the public markets; and (2) they establish historic ranges for such discounts. The results from the studies, which are summarized in Addendum 5 as an attachment to this report, are consistent, i.e., mean or median lack of marketability discounts typically fall between 25% and 45%. It follows reasonably that, if such lack of marketability discounts can be demonstrated for privately held stock, then lack of marketability discounts should apply equally to all types of closely-held business forms. In sum, investors reward liquidity. An investor owning equity in a public company can, with relative assurance, sell quickly if he desires to do so and/or situations develop which are not to his liking, and this capability substantially improves value. An investor with ownership in a private company rarely enjoys such liquidity. In assessing the discount for lack of marketability applicable to a limited partnership interest in the Management Companies and Advisor Companies, a number of specific factors were considered, including the following: (1) the impact of distributions; (2) information access and reliability; (3) the potential of near-term liquidation; and (4) any restrictions on transfer and withdrawal. In addition, a EFTA00608443 Carlyn McCaffrey, Esq. October 18, 2007 Page 54 closer look at the Restricted Stock Studies as they influence Management Companies and Advisor Companies was also made. Table XIII Attributes to Determine LOM Discount a decision for the Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM AMIIILP Fund III was in dissolution as of the Valuation Date. Therefore, it was likely that AMIIILP will be dissolved shortly after Fund III is dissolved. As discussed, the AMIIILP GP approval is necessary before an LP may withdraw unless AMIIILP is in dissolution. GP approval is also necessary for transfers of LP interests. At the Valuation Date, Fund III was in dissolution. Supports a discount for LOM toward the lower-to-middle end of the range. As discussed, the AMIVLP GP approval is necessary before an LP may withdraw unless AMIVLP is in dissolution. GP approval is also necessary for transfers of LP interests. At the Valuation Date, Fund IV was preparing for dissolution. Supports a discount for LOKI toward the lower-to-middle end of the range. Approval of the GP is necessary before an LP may withdraw unless AMVLP is in dissolution. GP approval is also necessary for transfers of LP interests. These restrictions support a discount for lack of marketability toward the middle-to-upper end of the range. According to projections this fund has no further value. AMIVLP AMVLP Fund IV was expected to be in dissolution by 2010. Therefore, it was likely that AMIVLP will be dissolved shortly after Fund IV is dissolved. However, at the Valuation Date, it was likely that AMIVLP would receive distributions from a loan. These factors argue for a discount for LOM below the established range. The probability that AMVLP would be sold prior to its projection period would be considered moderate to low. Fund V was expected to be in dissolution by 2011. Therefore, it was likely that AMVLP will be dissolved only after Fund V is dissolved. Further, at the Valuation Date, it was likely that AMVLP would receive distributions from a loan. These factors would argue for N/A N/A 10'; EFTA00608444 Carlyn McCaffrey, Esq. October 18, 2007 Page 55 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM a discount for LOM below the established range, but higher than that applied to AMIVLP. AMVILP That AMVILP would be sold prior to its projection period would be considered moderate to low. However, at the Valuation Date, it was likely that AMVLP would receive distributions from a loan. These factors would argue for a discount for LOM below the established range, but higher than that applied to AMIVLP. Approval of the GP is necessary before an LP may withdraw unless AMVILP is in dissolution. GP approval is also necessary for transfers of LP interests. These restrictions support a discount for lack of marketability toward the middle-to-upper end of the range. 15' AMVIILP The probability that AMVIILP would be sold prior to its projection period would be considered moderate to low. However, at the Valuation Date, it was likely that AMVIILP would receive distributions from a loan. This argues for a discount for LOM below the established range, but higher than that for AMVILP. At the Valuation Date, the fund documents had not been completed. In valuing this interest, management indicated that the documents should be similar to Fund VI. Therefore, based on Fund VI restrictions, a discount for marketability toward the middle-to-upper end of the range appeared reasonable. Fund VII has not been launched. The possibility existed that Fund VII might not achieve targets if the market worsens significantly. 20', Fund VII Advisor The probability that Fund VII would be sold prior to its projection period would be considered moderate to low. This argues for a discount for LOM below the established range, but higher than that for AMVIILP. At the Valuation Date, the fund documents had not been completed. In valuing this interest, management indicated that the documents should be similar to Fund VI. Therefore, based on Fund VI restrictions, a discount for marketability toward the middle-to-upper end of the range appeared reasonable. Fund VII has not been launched. The possibility existed that Fund VII might not achieve targets if the market worsens significantly. Further, Fund VII 25' EFTA00608445 Carlyn McCaffrey, Esq. October 18, 2007 Page 56 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM requires a payment of a preferred return before any payments are made to the carried interest, increasing the risk of the cash flows. AIMLP The chance of an LP recouping his investment through liquidation was not considered to be high during the next several years. AIMLP can only liquidate upon the occurrence of events specified in the Act. Generally, AIMLP was determined to have a perpetual life unless certain actions occur. However, at the Valuation Date, it was likely that AIMLP would receive distributions from a loan. Taking all of these factors into account, the likelihood of AIMLP's near- term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for AMVILP. The AIMLP Partnership Agreement is silent on withdrawal. As such, the Act specifies that withdrawal prior to dissolution is forbidden. Events causing dissolution under the Act were deemed remote. Further, all transfers of partnership interests require the consent of the GP. These restrictions support a discount for lack of marketability toward the middle of the range. The timing of the cash flows is uncertain since a large portion of the cash flows AIMLP receives will be from incentive fees, which are dependent on the performance of the underlying investments. 15'; VIFMLP The chance of an LP recouping his investment through liquidation was not considered to be high during the next fifteen years or so. VIFMLP can only be liquidated upon the occurrence of events specified The VIFMLP Partnership Agreement is silent on withdrawal. As such, the Act specifies that withdrawal prior to dissolution is forbidden. Events causing dissolution under the Act were deemed remote. The timing of the cash flows is uncertain since a large portion of the cash flows 15- EFTA00608446 Carlyn McCaffrey, Esq. October 18, 2007 Page 57 Management / Advisor Company Potential of Near-Tenn Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM in the Act. Generally, VIFMLP was determined to have a perpetual life unless certain actions occur. However, at the Valuation Date, it was likely that VIFMLP would receive a one-time distribution from a loan. Taking all of these factors into account, the likelihood of VIFMLP's near- term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for AMVILP. Further, all transfers of partnership interests require the consent of the GP. These restrictions support a discount for lack of marketability toward the middle of the range. VIFMLP receives will be from incentive fees, which are dependent on the performance of the underlying investments. ASVFMLP The chance of an LP recouping his investment through liquidation was not considered to be high during the next fifteen years or so. ASVFMLP can only liquidate upon the occurrence of events specified in the Act. Generally, ASVFMLP was determined to have a perpetual life unless certain actions occur. However, at the Valuation Date, it was likely that ASVFMLP would receive distributions from a loan. Taking all of these factors into account, the likelihood of ASVMLP's near-term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for AMVILP. The ASVFMLP Partnership Agreement is silent on withdrawal. As such, the Act specifies that withdrawal prior to dissolution is forbidden. Events causing dissolution under the Act were deemed remote. Further, all transfers of Partnership interests require the consent of the GP. These restrictions support a discount for lack of marketability toward the middle of the established range. The timing of the cash flows is uncertain since a large portion of the cash flows ASVFMLP receives will be from management fees, which are dependent on the underlying investment environment. 15', SVF Advisors The chance of an LP recouping his investment through liquidation was not considered to be high during There was no agreement in place, but it is believed to be similar to ASVFMLP. Therefore, these restrictions The timing of the cash Flows is uncertain 20% EFTA00608447 Carlyn McCaffrey, Esq. October 18, 2007 Page 58 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM the next fifteen years or so. SVF can only liquidate upon the occurrence of events specified in the Act. Taking all of these factors into account, the likelihood of SVF Advisors' near-term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for ASVFMLP. support a discount for lack of marketability toward the middle of the established range. since a large portion of the cash flows SVF Advisors receives will be from incentive fees, which are dependent on the performance of the underlying investments. AAMLP The chance of a limited partner recouping his investment through liquidation was considered to be low during the next five years or so. AAO was expected to continue indefinitely. AAMLP was created to act as the manager of AAO. Therefore, it was likely that AAMLP will be dissolved only after AAO is dissolved. However, at the Valuation Date, it was likely that AAMLP would receive distributions from a loan. Taking all of these factors into account, the likelihood of AAMLP's near-term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for ASVFMLP. The AAMLP Partnership Agreement states GP approval is necessary for transfers of limited partnership interests. These restrictions support a discount for lack of marketability toward the upper-to-middle of the established range. At the Valuation Date, AAO was in the process of being formed. Empire believed there was additional risk due to the area where AAO planned to invest and market conditions. 20' Asia Advisors The chance of a limited partner recouping his investment through liquidation was considered to be low There was no agreement in place, but it is believed to be similar to AAMLP. Therefore, these restrictions At the Valuation Date, AAO was in the 20% EFTA00608448 Carlyn McCaffrey, Esq. October 18, 2007 Page 59 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM during the next five years or so. AAO was expected to continue indefinitely. Asia Advisors was created to receive the incentive fees from AAO. Therefore, it was likely that Asia Advisors will be dissolved only after AAO is dissolved. Taking all of these factors into account, the likelihood of Asia Adviors' near-term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for ASVFMLP. support a discount for lack of marketability toward the middle of the established range. process of being formed. Empire believed there was additional risk due to the area where AAO planned to invest and market conditions. AEMLP The chance of a LP recouping his investment through liquidation was not considered to be high during the next several years. Further, AEMLP can only be liquidated upon the occurrence of events specified in the Act. Generally, AEMLP was determined to have a perpetual life unless certain actions occur. At the Valuation Date, it was likely that AEMLP would receive distributions from a loan. Taking all of these factors into account, the likelihood of AEMLP's near-term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for ASVFMLP. The AEMLP Partnership Agreement is silent on withdrawal. As such, the Act specifies that withdrawal prior to dissolution is forbidden. Events causing dissolution under the Act were deemed remote. Further, all transfers of partnership interests require the consent of the GP. These restrictions support a discount for lack of marketability toward the middle of the established range. At the Valuation Date, AEM had only recently been formed. Empire believed there was additional risk due to the area where AEM planned to invest and market conditions. 20' AAALP The chance of a limited partner recouping his investment through liquidation The AAALP Partnership Agreement is silent on withdrawal. As such, the At the Valuation Date, AAA 20' EFTA00608449 Carlyn McCaffrey, Esq. October 18, 2007 Page 60 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM was considered to be low during the next five years or so. AAA was expected to continue indefinitely and AAALP was created to manage AAA. However, at the Valuation Date, it was likely that AAALP would receive distributions from a loan. Taking all of these factors into account, the likelihood of AAALP's near- term liquidation was not considered to be great, thereby arguing for a discount for LOM below the established range, but higher than that for ASVFMLP. Act specifies that withdrawal prior to dissolution is forbidden. Events causing dissolution under the Act were deemed remote. Further, all transfers of partnership interests require the consent of the GP. These restrictions support a discount for lack of marketability toward the middle of the established range. had only recently been formed. Empire believed there was additional risk due to the areas where AAA planned to invest and market conditions. AEPFMLP At the Valuation Date, no agreements for AEPFMLP were available, but it is believed the restrictions will be similar to other Apollo funds. At the Valuation Date, no agreements for AEPFMLP were available, but it is believed the restrictions will be similar to other Apollo funds. EPF has not been launched. The possibility existed that EPF might not achieve targets if the market worsens significantly. 20' EPF Advisor At the Valuation Date, no agreements for EPF Advisor were available, but it is believed the restrictions will be similar to other Apollo funds. At the Valuation Date, no agreements for EPF Advisor were available, but it is believed the restrictions will be similar to other Apollo funds. EPF has not been launched. The possibility existed that EPF might not achieve targets if the market worsens significantly. 20' NFMLP At the Valuation Date, no agreements for NFMLP were At the Valuation Date, no agreements for NFMLP were New Fund has not been 20% EFTA00608450 Carlyn McCaffrey, Esq. October 18, 2007 Page 61 Management / Advisor Company Potential of Near-Term Liquidation Restrictions on Transfer & Withdrawal Other Factors Selected Discount for LOM available, but it is believed the restrictions will be similar to other Apollo funds. available, but it is believed the restrictions will be similar to other Apollo funds. launched. The possibility existed that New Fund might not achieve targets if the market worsens significantly. New Fund Advisor At the Valuation Date, no agreements for New Fund Advisor were available, but it is believed the restrictions will be similar to other Apollo funds. At the Valuation Date, no agreements for New Fund Advisor were available, but it is believed the restrictions will be similar to other Apollo funds. New Fund has not been launched. The possibility existed that New Fund might not achieve targets if the market worsens significantly. 20' In addition, the following discussion impacts all Management Companies, Advisor Companies, and the determination of the LOM discount. • Impact of Distributions: Distributions are very important to an investor in any closely-held company because they provide a means for him to receive a return on investment without having to sell it. As of the Valuation Date, the AMHLP was in the process of securing a loan, whose proceeds would be paid out to the partners of the Management Companies and Advisor Companies. Given this fact set, a lack of marketability discount in the lower end of the range was considered appropriate. • Information Access & Reliability: With regard to ownership rights, clearly the GP has complete access to all pertinent information about the Partnership's investments and prospects. A purchaser of a limited partnership interest in the Management Companies and Advisor Companies EFTA00608451 Carlyn McCaffrey, Esq. October 18, 2007 Page 62 has the right to receive the financial information necessary to file his personal income tax return and, by state law, review its financial records; however, the owners do not have a right to challenge the information provided or obtained. These issues argue for a discount for lack of marketability toward the lower to middle end of the established range. • Restricted Stock Studies: Addendum 5 includes fmdings from restricted stock studies. Keeping in mind that limited partners may not withdraw from the Partnership, it is useful to consider the impact of holding periods on the appropriate discount for lack of marketability. The inability to monetize an investment generally increases with holding period. Addendum 6 discusses the data in more detail. Overall, the restricted stock studies demonstrate that discounts do exist to compensate investors for their relative inability to liquidate an investment over the course of a given holding period. This factor is offset to some extent by the fact that distributions have historically been paid. Nevertheless, there is no guarantee that limited partners will continue to receive them, and the inability to withdraw and receive fair market value for one's interest is a detriment. The pending Fortress and Blackstone IPOs imply that liquidity for firms like Apollo may be increasing, and Apollo is certainly a well-recognized name in the investment community. All in all, the discount for lack of marketability based on the restricted stock studies would be toward the low end of the range. In conclusion, some discount must be allocated against the pro rata freely tradeable value derived above in order to quantify the fair market value of a limited partnership interest. After assessing all factors, it was determined that the selected lack of marketability discounts should be applied to the freely tradeable value of a limited partnership interest in the Management Companies and Advisor Companies. This is consistent with the pass-thru adjustment considered earlier, as well as the fact that such an interest lacks most voting rights and other elements of control, and its holder may find it difficult, if not impossible, to transfer his interest in, or withdraw from, the Management Companies and Advisor Companies if such a course should become desirable. Table XIV on the following page details the fair market values of the Management Companies and Advisor Companies. Again, please see Exhibits A-1 through A-18. EFTA00608452 Carlyn McCaffrey, Esq. October 18, 2007 Page 63 Table XIV Aggregate Fair Market Value of Management Companies and Advisor Companies Management Company Aggregate Minority Value of Management Companies Selected LOM Discount Aggregate Fair Market Value LBFH's Pro Rata Interest in Management Company Fair Market Value of LBFH's Interest AMIIILP $0 10% $0 30.35% $0 AMIVLP $3,068,801 10% $2,761,920 30.35% $838,243 AMVLP $12,017,131 15% $10,214,562 30.35% $3,100,119 AMVILP $190,858,978 15% $162,230,131 30.35% $49,236,845 AIM $1,017,345,253 15% $864,743,465 23.90% $206,673,688 VIFMLP $64,492,412 15% $54 818 550 26.90% $14,746,190 ASVFMLP $278,665,082 15% $236,865,320 44.00% $104,220,741 SVF Advisors $124,733,627 20% $99,786,902 44.00% $43,906,237 AAMLP $44,044,859 20% $35,235,887 44.00% $15,503,790 Asia Advisors $31,566,933 20% $25,253,546 44.00% $11,111,560 AEMLP $465,218,791 20% $372,175,033 44.00% $163,757,015 AAALP $342,440,764 20% $273,952,611 44.00% $120,539,149 Subtotal Existing Funds $Z574,452,630 $2,138,037,927 $733,633,577 AMVIILP $382,786,941 20% $306,229,553 30.35% $92,940,669 Fund VII Advisor $439,504,477 25% $329,628,358 24.64% $81,220,427 AEPFLP $30,811,394 20% $24,649,115 44.00% $10,845,611 EPF Advisor $27,802,732 20% $22,242,185 44.00% $9,786,562 NFMLP $124,677,855 20% $99,742,284 44.00% $43,886,605 New Fund Advisor $95,568,772 20% $76,455,018 44.00% $33,640,208 Subtotal Goodwill $1,101,152,171 $858,946,513 $272,320,082 Total $3,675,604,801 $2,996,984,440 $1,005,953,658 F. Reasonableness Test - Guideline Company Assessment To test the reasonableness of the values derived above for the Capital Markets Management Companies, we considered multiples for publicly traded companies and compared them to the implied multiples for the Capital Markets Management Companies (calculated before application of the marketability discount above). Three multiples which are typically used to compare entities similar to the EFTA00608453 Carlyn McCaffrey, Esq. October 18, 2007 Page 64 Partnership were used: MVIC's/AUM; MVIC/TTM76 Revenues; and MVIC/TTM Adjusted EBITDA." The details are presented in Exhibit D, and the ranges, means and medians are repeated in Table XV below. Table XV Guideline Company Multiples MVIC/AUM siviCrrrm Revenues siviarrM Adjusted EBITDA Upper Limit 201.9% 15.7 22.7 Lower Limit 1.5% 3.4 5.6 Median 51.3% 8.5 12.1 Mean 19.5% 7.3 14.1 Implied for AIMLP 39.1% 10.4 20.5 Implied for VIFMLP 10.7% 3.2 9.7 Implied for ASVFMLP 15.5% 15.8 9.9 Implied for AAMLP 14.7% 3.8 8.9 Implied for AEMLP 93.0% 21.1 21.8 Implied for AAALP 148.2% 11.3 17.8 Implied for EPFMLP 10.3% 4.4 0.0 Implied for NFMLP N/A 8.1 0.0 The capi al markets companies' multiples generally fall with'n the ranges. This evidence helps to corroborate the values derived for the Management Companies using the DFE methodology. G. Valuation of AMHLP As discussed above, a willing buyer would typically assess the value of AMHLP based on the market values of its underlying assets. Thus, it is reasonable to utilize ABV as a method to value the Partnership. By definition, this methodology should be based on going concern value, not on the assumption of business liquidation. In reality, though, holders of non-controlling ownership interests can only receive their pro ram share of the entity's assets if it is liquidated. Adjusted Book Value: Book value, unadjusted, is another name for the partners' capital account as it appears on the balance sheet. Again, ABV as a willing buyer IS Market Value of Invested Capital IS Trailing Twelve Months IS Earnings Before Interest, Taxes, Depreciation, and Amortization EFTA00608454 Carlyn McCaffrey, Esq. October 18, 2007 Page 65 would assess it involves determining the value of a company's bundle of assets, less its liabilities, but before transaction costs. The aggregate fair market value of LBFH's interest totaled $1,005,954,000, rounded, as derived above. The aggregate fair market value of AMHLP's assets is $2,996,984,000, rounded. Therefore, the economic value of LBFH's limited partnership interest in AMHLP is equal to 33.57% ($1,005,954,000 + $2,996,984,000). Again, see Exhibit C. Investment Company Discount ("ICD"): The ICD is an adjustment that is typically appropriate because a fractional equity owner has no ability to affect the investment decisions of his holding company. The discount takes into consideration the portfolio risk of the holding company. The ICD tends to be lower for a company with a diversified portfolio of marketable securities. Higher discounts are generally found as diversification decreases. The highest level of ICDs are associated with companies which have portfolios comprised of non-diversified, high- risk, closely-held securities. Again, the application of the ICD places AMHLP's owners on a footing similar to that of minority shareholders who own the voting shares of fully marketable closed-end funds. Therefore, to derive an ICD for AMHLP, on a fully marketable basis, a market approach (i.e., the guideline company method) was utilized whereby a reasonably comparable group of publicly traded closed-end investment funds was selected and the public pricing of these funds was used to determine an ICD appropriate for a non-controlling interest in the Partnership. AMHLP's net investment assets primarily were: (1) privately held investments in private equity and capital markets funds. As a result, the following samples were developed in order to assess an ICD appropriate to AMHLP's assets: (1) non- diversified closed end funds invested in securities for capital appreciation; (2) closed end funds invested in world equity securities; and (3) closed end funds invested in venture capital securities. The sample statistics are summarized in Table XVI and detailed in Exhibits E-1 through E-3. Table XVI Closed-End Fund Sample Sample LCD Low High Median Mean Capital Appreciation Closed-End Funds (2.0%) 12.8% 9.1% 7.1% Venture Capital Closed-End Funds 0.7% 18.6% 9.6% 9.6% EFTA00608455 Carlyn McCaffrey, Esq. October 18, 2007 Page 66 World Equity Closed-End Funds (8.8%) 18.1% 7.1% 4.9% It was considered that the sample of closed-end funds invested in capital appreciation, venture capital, and world equities was appropriate for AMHLP's securities. Table XVII below presents a qualitative comparison of these investment companies with AMHLP. Table XVII Attributes of Closed-End Funds Attributes of Closed-End Funds Adjustment to AMHLP Positive Negative Neutral Portfolio Size X Portfolio Diversification X Liquidity of Underlying Investments X Professionally Managed X Yield X Marketable Minority Interest Value of AMHLP's Equity: A number of factors were considered in estimating an appropriate ICD for AMHLP including, but not limited to, the following: (1) the ICDs of the closed end funds sampled; (2) the ABV of each class of assets relative to the aggregate ABV of AMHLP; and (3) the qualitative comparison in the foregoing table. AMHLP's portfolio is less diversified and is less liquid than demonstrated by the sample of closed-end funds. Consequently, it was considered that an ICD of 5% would be appropriate. Using a 5% ICD, the aggregate marketable minority interest value of AMHLP's equity, is reasonably stated at $955,655,975 [$1,005,953,658x (1 - 0.05)]. See Exhibit C. H. Incremental Lack of Marketability As discussed previously, in assessing the discount for lack of marketability applicable to a limited partnership interest in AMHLP, a number of specific factors were considered, including the following: (1) the impact of distributions; (2) information access and reliability; (3) the potential of near-term liquidation; and (4) any restrictions on transfer and withdrawal. In addition, a closer look at the Restricted Stock Studies as they influence a decision for AMHLP was also made. EFTA00608456 Carlyn McCaffrey, Esq. October 18, 2007 Page 67 • Impact of Distributions: Distributions are very important to an investor in any closely-held company because they provide a means for him to receive a return on investment without having to sell it. Since the Partnership was in the process of securing a loan whose proceeds would be used to make distributions to the partners, AMHLP was expected to pay at least a substantial one-time distribution in the near-term. Further, as the Management Companies collect management and incentive fees, more cash would be available for distribution, once the debt related to the one-time distribution was paid down. This argues for a discount below the lower end of the established range. • Potential of Near-Term Liquidation: The Partnership was created to act as the holding company for the Management Companies. The Management Companies and Advisor Companies were not expected to dissolve until the underlying Funds dissolve. Therefore, it was unlikely that the Partnership will be dissolved in the near-term. Further, discussions as to whether a loan might be taken out and a more "near-term" distribution possibly being made were under way. This would argue for a discount for lack of marketability at the lower end of the established range. • Restrictions on Transfer & Withdrawal: As discussed, the AMHLP Partnership Agreement states that approval of the GP is necessary before a limited partner may withdraw unless the Partnership is in dissolution. Also, GP approval is necessary for transfers of limited partnership interests. These restrictions support a discount for lack of marketability toward the middle-to-upper end of the established range. Discount Summary: Regarding AMHLP, the following points bear reiteration: • The AMHLP Partnership Agreement governing the Partnership specifies that it is a limited partnership; the GP has full, complete, and exclusive discretion to manage and control its business. • As invested at the Valuation Date, it was likely that the Partnership will have cash flow available for distribution. However, distributions are at the discretion of the GP. There are, however, plans to make a larger one-time loan-related distribution shortly after the Valuation Date. • The AMHLP Partnership Agreement places restrictions on a LP's ability to withdraw or transfer its/his interest in the Partnership, whereas, shareholders EFTA00608457 Carlyn McCaffrey, Esq. October 18, 2007 Page 68 of the publicly traded companies have no limitation or restriction on their right to sell their units. • It was unlikely that AMHLP will be terminated within the next several years. In conclusion, some discount must be allocated against the pro rata freely tradeable value derived above in order to quantify the fair market value of a limited partnership interest. After assessing all factors, it was determined that a 10% discount should be applied to the freely tradeable value of a limited partnership interest in AMHLP. This is consistent with the pass-thru adjustment considered earlier, as well as the fact that such an interest lacks most voting rights and other elements of control, and its holder may find it difficult, if not impossible, to transfer his interest in, or withdraw from, the Partnership if such a course should become desirable. Therefore, in our opinion the freely tradeable value of $955,655,975 should be reduced by 10% to account for the interest's lack of marketability under the terms of the AMHLP Partnership Agreement. This calculation results in a fair market value of $860,100,000 ($955,655,975 x [1.00 - 0.10]), rounded, for a 33.57% limited partnership interest in AMHLP as of the Valuation Date. Again, please see Exhibit C. Valuation Summary Given the foregoing review and analysis, and subject to the attached Statement of Limiting Conditions, it is our opinion that the: 1) fair market value of the Management Interests contributed by LBFH to AMHLP, is reasonably stated, in aggregate, at $860,100,000, rounded, with the aggregate value of all of the Management Interests being reasonably stated, on a comparable basis, at $2,996,984,000, rounded. Therefore, the economic interest contributed by LBFH in Apollo Management Holdings, M. is calculated to represent 33.57% of the value of AMHLP. The fair market value of a 33.05% interest received by LBFH, assuming incremental lack of control and marketability discounts, is reasonably stated as $605,600,000. The above analyses and conclusions are as of April 16, 2007. Again, this report has been prepared as a Restricted Use Appraisal Report as defined in Standards Rule 10 of The Appraisal Foundation's Uniform Standards of Professional Appraisal Practice ("USPAP"), which specifically applies to the preparation of valuation reports of business interests. This report is for your use EFTA00608458 Carlyn McCaffrey, Esq. October 18, 2007 Page 69 and should be considered only in conjunction with the December 2006 Reports. This report should only be shared with those persons who have read the December 2006 Reports and have the requisite knowledge to understand the risks, opportunities, and the valuation theories and analyses discussed and applied in this situation, since this report may not be understood properly by readers who have not read December Report. Respectfully submitted, Empire Valuation Consultants, LLC P. Wan-Belt jar Valuation Associate bc coe Na Thiba lt, ASA Senior Valuation Associate e Andrea Hock, ASA Managing Director Scott A. Nammacher, ASA, CFA Managing Director EFTA00608459 Addendum 1-1 STATEMENT OF LIMITING CONDITIONS Confidentiality/Advertising: This report and supporting documentation are confidential. Neither all nor any part of the contents of this appraisal shall be copied or disclosed to any party or conveyed to the public orally or in writing through advertising, public relations, news, sales, or in any other manner without the prior written consent and approval of both Empire Valuation Consultants, LLC and its client. Litigation Support: Depositions, expert testimony, attendance in court, and all preparations/support for same, arising from this appraisal shall not be required unless arrangements for such services have been previously made. Management: The opinion of value expressed herein assumes the continuation of prudent management policies over whatever period of time is deemed reasonable and necessary to maintain the character and integrity of the appraised business entity as a going concern. Information and Data: Information supplied by others that was considered in this valuation is from sources believed to be reliable, and no further responsibility is assumed for its accuracy. Information used was limited to that available on or before the Valuation Date, or which could be reasonably ascertained as of that date. We reserve the right to make such adjustments to the valuation herein reported as may be required by consideration of additional or more reliable data that may become available subsequent to the issuance of this report. Purpose: All opinions of market value are presented as Empire Valuation Consultants, LLC's considered opinion based on the facts and data obtained during the course of the appraisal investigation. We assume no responsibility for changes in market conditions which might require a change in appraised value. The value conclusion derived in this appraisal was for the specific purpose and date set forth in this appraisal and may not be used for any other purpose. Fee: The fee established for the formulation and reporting of these conclusions is not contingent upon the value or other opinions presented. Interest: Neither the appraiser nor any officer or employee of Empire Valuation Consultants, LLC has any interest in the property appraised. Unexpected Conditions: We assume that there are no hidden or unexpected conditions of the assets valued that would adversely affect value. EFTA00608460 Addendum 1-2 Non Appraisal Expertise: No opinion is intended for matters which require legal or specialized expertise, investigation or knowledge, beyond that customarily employed by appraisers. Hazardous Substances: Hazardous substances, if present within the facilities of a business, can introduce an actual or potential liability that will adversely affect the marketability and value of the business or its underlying assets. In the development of our opinion of value, no consideration has been given to such liability or its impact on value unless otherwise indicated in the report. EFTA00608461 Addendum 2 CERTIFICATION OF APPRAISERS We the appraisers certify that, to the best of our knowledge and belief: 1. Our analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 2. All statements of fact contained in this report are true and correct. 3. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, unbiased professional analyses, opinions, and conclusions. 4. Neither Empire nor any of its employees has, to the best of our knowledge, either a present or intended financial interest in the entity that is the subject of this report, in any affiliates that may exist, or with respect to the parties involved. 5. We have no bias with respect to the entity that is the subject of this report or to the parties involved with this assignment. 6. Empire's engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. The professional fee paid to Empire for the preparation of this report is not contingent upon its conclusion, including: developing or reporting a predetermined value or direction of value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. No one provided significant business appraisal assistance to the persons signing this certification, unless specifically stated herein. The American Society of Appraisers has a mandatory recertification program for all of its Accredited Senior Appraisers. The senior members signing below, designated by the "ASA," are in compliance with that program. 7‘ 14 I P. Wan-Be jar Valuation Associate gas ib It, ASA cfie Senior Valuation Associate cond.,e 3/O-d. Andrea E. Hock, ASA M. in Dir A Nammacher, ASA, CFA Managing Director October 18, 2007 EFTA00608462 Addendum 3-1 EMPIRE VALUATION CONSULTANTS, LLC 777 Canal View Blvd., Suite 200 Rochester, New York 14623 Tel: (585) 475-9260 Fax: (585) 475-9380 61 South Main Street, Suite 201 West Hartford, CT 06107 Tel: (860) 233-6552 Fax: (860) 521-7575 Valuation Services 350 5th Avenue, Suite 5513 New York, New York 10118-5513 Tel: (212) 714-0122 Fax: (212) 714-0124 Empire Valuation Consultants, LLC provides valuations to business owners, attorneys, accountants, commercial bankers, investment bankers, trust departments, insurance agents, and financial planners, among others. Empire's consultants have prepared or managed the preparation of over 7,500 appraisals for the following reasons: • Buy/Sell Agreements • Redemptions • Gifting Programs • Recapitalizations • Estate Taxes • Going Private Transactions • Mergers & Acquisitions • Stock Option Plans • Blocks of Publicly • Dissenting Shareholder Suits Traded Securities • Fairness Opinions • Employee Stock Ownership • Intellectual Property Plans (ESOPs) • Purchase Price Allocation Other Financial Services Litigation Support & Expert Testimony Empire can assist you with research and litigation support and its professionals are available to provide expert testimony in matters involving questions of valuation. ESOP Feasibility Studies & Preliminary Valuations Empire is available to work with our client's team of financial advisors or participate in independent feasibility studies and preliminary valuation reviews in connection with ESOP formation planning. EFTA00608463 Addendum 3-2 IVY P. WAN-BELTEJAR Academic Degrees University of Rochester, William E. Simon School of Business, Finance and Corporate Accounting, 2004 B.A. University of California, Berkeley, Interdisciplinary Studies, 2000 Employment Valuation Associate, Empire Valuation Consultants, Rochester, New York, 2004-Present Senior Financial Analyst, Federal Home Loan Bank of San Francisco, San Francisco, CA, 2001-2002 Financial Analyst, Atherton Capital, Inc., San Bruno, CA, 2000-2001 Experience Ivy brings to Empire her strong analytical and fmancial skills. While employed at the Federal Home Loan Bank of San Francisco, she was involved in analyzing and approving unsecured credit lines to financial institutions, as well as managing the portfolio of exposures. Her responsibilities included performing financial analysis and researching and monitoring industry trends. As a financial analyst at Atherton Capital, she was responsible for underwriting loans to franchises in the restaurant, gas station, and retail store sectors. Ivy is currently a Level II candidate for the Chartered Financial Analyst designation. EFTA00608464 Addendum 3-3 NATASHA THIBAULT, ASA Academic Degrees Rochester Institute of Technology, 1998 B.S. Rochester Institute of Technology, Accounting, 1992 Employment Senior Valuation Associate, Empire Valuation Consultants, Rochester, New York, 1998-present Controller, The Salvation Army, Rochester, New York, 1996-1998 Assistant Controller, The Salvation Army, Rochester, New York, 1994-1996 Experience Ms. Thibault has earned the designation Accredited Senior Appraiser (ASA), designated in Business Valuation, from the American Society of Appraisers by meeting its testing and experience requirements. Ms. Thibault brings to Empire her strong analytical, financial, and accounting skills. While employed at The Salvation Army, she was responsible for a variety of accounting and forecasting duties. Ms. Thibault's strengths include financial statement analysis, as well as a comprehensive knowledge of not-for-profit organizations. Since joining Empire, Ms. Thibault has been involved in the valuation of various equity interests in corporations, partnerships, and limited liability companies, operating in a variety of industry sectors. These valuations have been performed for estate tax and gift tax planning, issuance of fairness opinions, employee stock ownership plans, potential sale or buyout, and other corporate planning and reporting purposes. EFTA00608465 Addendum 3-4 ANDREA E. HOCK, ASA Academic Degrees M.B.A. M.A. B.A. Employment Rochester Institute of Technology, Finance, 1985 University of Florida, French Literature, 1974 Mercer University, summa cum laude, French, 1972 Managing Director, Empire Valuation Consultants, Rochester, New York, 2000- present Senior Valuation Associate, Empire Valuation Consultants, Rochester, New York, 1993-2000 Valuation Analyst, Empire Valuation Consultants, Rochester, New York, 1989-1993 Financial Manager, Joan Hantz Graphic Design, Rochester, New York, 1987-1988 Claims Representative, Social Security Administration, Rochester, New York, 1978- 1989 Experience Ms. Hock is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers, Business Valuations. She is currently a Vice President, and former Chapter President and Secretary, for the Western New York Chapter of the ASA. Ms. Hock has over fourteen years of business valuation experience. She has been involved in the valuation of a wide variety of corporations, partnerships, and business assets for employee stock ownership plans, fairness opinions, solvency opinions, recapitalizations, estate and gift taxes, and other purposes. As financial manager of a graphics design firm, Ms. Hock became familiar with proposal writing, financial planning, bookkeeping and tax accounting. Her experience with the government provided her with a background in a wide variety of federal and state services and regulations. EFTA00608466 Addendum 3-5 SCOTT A. NAMMACHER, ASA, CFA Academic Degrees M.B.A. New York University Graduate School of Business, Finance, 1985 B.S. University of Minnesota, Business, 1977 Employment Principal and Managing Director, Empire Valuation Consultants, LW, New York, New York, 1992-Present Manager, Financial Valuations, Arthur Andersen & Co., New York, 1990-1991 V.P., Marigold Capital Development, Investment Banking Div. of Marigold Enterprises, Greenwich, Connecticut, 1989-1990 Manager - Domestic Finance, PepsiCo, Inc. Purchase, New York, 1985-1989 Experience Mr. Nammacher is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers and is a Chartered Financial Analyst (CFA). He has over 20 years of experience in financial consulting and business valuations. He has valued the equity, debt, warrants, NOLs, etc. of publicly and privately held businesses for acquisitions, divestitures, stock repurchases, estate and gift tax reporting, buy/sell agreements, recapitalizations, and general corporate planning purposes. Mr. Nammacher has also developed business plans and financing packages, and has been involved in completed transactions totaling over $1.5 billion. In addition, he played key roles in the successful launch of a new business publication. Mr. Nammacher has testified as an expert witness in U.S. Tax Court, U.S. Bankruptcy Court, Delaware Chancery Court and other courts and arbitration settings around the country, and published a book and several articles on "junk bonds." He also received the prestigious "Graham & Dodd Scroll Award" from the Financial Analysts Journal for outstanding financial writing relating to a cover story he co-authored. He is currently an elected member of the American Society of Appraisers' Business Valuation Committee, the oversight entity for the business valuation arm of the ASA. He has spoken on valuation issues around the country, chaired an annual valuation conference in New York City for over 12 years. He is co-chair of the first joint AICPA/ASA valuation conference ever presented. EFTA00608467 Addendum 4-1 Valuation of Pass-Through Entities A pass-through entity can have positive and negative impacts on the valuation of a minority interest in a closely-held company or partnership depending on the specific facts pertinent to the entity. In the majority of cases, the pass-through status has a net positive economic impact to the fair market value of a minority interest, but the net effect can vary materially between owners of the same company, and between potential buyers of a minority interest in the company. Therefore, the net economic impact cannot be modeled precisely. However, an average net benefit or detriment can be reasonably estimated. It is recognized that a pass-through entity can have a positive economic impact on value at the minority interest level. The issue becomes how to accurately quantify the impact. There are numerous articles and studies that have attempted to quantify this impact for an S-Corp by applying various simplifying assumptions. These articles and studies concluded maximum S-Corp economic benefits to a minority shareholder in the 15% to 30% range, depending on the assumed tax rate. It stands to reason that a similar economic benefit would accrue to owners of pass-through entities as well as S-Corps. Quantifying the Pass-Through Adjustment: When assessing the impact of the pass-through status on the fair market value of a company's equity, the appraiser must first review and consider all relevant factors. Then based on these factors, the appraiser must decide if the pass-through status provides a net benefit to fair market value. If there is a net benefit, the benefit must be quantified. However, there are circumstances when the pass-through status does not provide a net benefit and a pass-through adjustment is not applicable. Economically, the two primary benefits of the pass-through status are: (1) the elimination of double taxation on distributions; and (2) the reduction in personal capital gains taxes when the interest is sold due to the step-up in tax basis associated with retained earnings. Therefore, because of these benefits, the pass- through adjustment becomes a function of the savings associated with the net reduction of dividend and capital gains taxes. One of the benefits of the pass-through status is to avoid the double taxation of a company's earnings when it pays a distribution. Under a standard C-Corp, the company's earnings are taxed at the corporate level and then the shareholder is taxed again when those earnings are paid out as a dividend. For a pass-through entity, the investor pays personal income taxes on his pro rata share of the company's earnings, but does not pay additional taxes on any distributions. Therefore, if a pass-through entity makes a distribution equal to the investor's personal tax liability then the net cash retained by the company is the same as EFTA00608468 Addendum 4-2 that of a C-Corp that does not pay a dividend. This assumes that the individual tax rate and C-Corp tax rates are essentially equivalent. Currently, the top marginal federal tax rate was 35% for individuals and 34% for corporations. Therefore, the economic benefit to the minority S-Corp shareholders is when the company pays a distribution greater than the amount needed to pay taxes (i.e., greater than the marginal C-Corp tax rate). Another prospective benefit is that the investor's tax basis increases for any earnings that have not been distributed. This benefit effectively lowers the investor's capital gains tax liability when the interest is sold. Currently, capital gains are taxed at a 15% rate for federal taxes and as ordinary income for state taxes. However, this economic benefit is only realized if and when the investor sells his interest. Therefore, because of the loss of double taxation and the step- up in tax basis, the pass-through adjustment becomes a function of the savings associated with not paying dividend and capital gains taxes, as well as any differences between the corporate and individual tax rates. Assuming that corporate and individual income tax rates are the same, the maximum pass-through adjustment can be represented by the equation 1 + (1 - tax rate) - 1, where the tax rate represents the weighted average of the dividend and capital gains tax rates applicable at the valuation date. Underlying Assumptions: Inherent in this calculation are several underlying assumptions that are important in understanding the pass-through adjustment. They include: • This formula assumes that the economic benefit on dividends and capital gains tax avoidance are realized in current dollars. However, the capital gains benefit may not be realized until many years in the future and it is possible that it may never be realized at all. Accordingly this simplifying formula tends to bias upward the economic benefit of the step-up in basis. • The calculation assumes that capital appreciation is correlated dollar-for- dollar to the increase in retained earnings. However, most company's fair market value appreciation is dependent on factors other than just retained earnings. Further, over time, the fair market value of a minority interest may go down even if an investor's equity account increases. This assumption generally indicates that the pass-through adjustment is biased upward. • The calculation assumes that an investor is indifferent between receiving a company's earnings through distributions or capital appreciation (i.e., retained earnings). Again, because the capital gains benefit is recognized on an ongoing basis, the actual timing of the benefit is not taken into EFTA00608469 Addendum 4-3 account. In reality, because of this timing difference, a minority investor in a pass-through entity only realizes the full benefit of the calculated pass-through adjustment when the company pays out 100% of its taxable earnings as a distribution. If a company distributes less than 100% of its taxable earnings, the economic benefit of the pass-through status is reduced. • Corporate and personal tax rates are equal. Under current applicable federal tax brackets the highest personal tax rate was 35% which is roughly equivalent to the highest federal corporate tax rate (i.e., 34%). Since the concept of a hypothetical willing buyer prevents the selection of a specific buyer and their tax status, it is assumed that the highest personal tax bracket is appropriate. To the extent that an individual's tax rate is higher than the corporate tax rate, the pass-through adjustment will be lower and vice versa. As discussed, the pass-through adjustment formula contains certain simplifying assumptions. It is important to understand these assumptions and their impact on the pass-through adjustment calculation. Based on the specific facts and circumstances surrounding the company being valued, the calculated pass-through adjustment should be modified. The pass-through adjustment formula outlined above provides a maximum potential adjustment. However, the adjustment that is applicable to an interest being valued is generally less than the maximum implied by the calculation. When concluding an applicable pass-through adjustment, the following factors must be considered: • Level of Value: One factor that complicates the determination of the fair market value of an interest in a closely-held business is the issue of control. On a 100% control basis, there is no market evidence that suggests that an arms length-willing buyer will pay a premium in the acquisition of a closely-held company simply because of the pass-through status. If that were true then all C-Corp owners would convert to pass- through entities before they sold their company. The efficient market theory can be cited to argue against the existence of an pass-through adjustment on a 100% control basis. If such an adjustment existed and was automatically realized, then arbitragers would buy C-Corps, convert to pass-through entities, and sell the company at a profit. Proponents of the efficient market theory note that a competitive, efficient market would not allow such arbitrage opportunities to exist. The competitive market for the acquisition of C-Corps would be priced up to the point where no premium remained. EFTA00608470 Addendum 4-4 It is also arguable that the application of a pass-through premium is in effect a partial reduction of a lack of control discount. This is because a controlling investor controls the distribution policy of a company as well as other factors. These control rights can be restricted through the Operating Agreement. However, this is only done if the controlling investor were willing to relinquish part of their control. Therefore, a pass-through adjustment is generally applicable when valuing a minority interest. However, when valuing a controlling interest (especially a controlling interest that owns less than 100%) the methodology used to derive the control value should be considered when deciding if an adjustment is appropriate. Since the adjustment is arguably a partial reduction in the lack of control discount, any applicable control premium, either directly applied or inherent in the methodology, should incorporate an adjustment when and if appropriate. Nevertheless, the application of an adjustment should not be made such that the value of an pass-through entity (on a 100% controlling interest basis) is greater than an equivalent C-Corp. • Distributions: The amount of distributions paid to investors of pass- through entities compared to their tax liability is a significant factor in determining the appropriateness of a pass-through adjustment. In general, if all other factors are equal, distributions in excess of the amount required for the tax liability would support the application of a positive adjustment. This is because shareholders would be subject to one level of taxation, instead of two. This is the principal component of a positive pass-through adjustment because the economic benefit is realized as the excess distributions are made. However, if a company does not make sufficient distributions to cover the investor's tax liability then a lower or possibly no adjustment would be appropriate. In some cases where minimal or no distributions are made and the investors have "phantom income", it could be argued that the pass-through status has a negative impact on fair market value. The maximum adjustment would be applicable in those instances where a company is making distributions equal to 100% of taxable income. When distributions are less than 100% of taxable income, a reduction in the maximum pass-through adjustment should be applied. • Owners' Compensation: In some valuations, when deriving a company's cash flow base, an adjustment is made to owners' compensation to a level deemed appropriate for a C-Corp. This adjustment results in derivation of a cash flow base that represents the cash flow available for potential distributions. In these cases, it can be argued that the company's historical owners' compensation policy has consisted of two components: market based salary and discretionary EFTA00608471 Addendum 45 compensation. The discretionary compensation, which was adjusted for in deriving the company's cash flow base, represents funds available for potential distributions. As a pass-through entity, the issues regarding potential excess compensation challenges that applied to C-Corps are eliminated. Accordingly, the company and its investors have elected to distribute cash flow through the payment of owners' compensation rather than through distributions. As such, the company has distributed substantially all of its taxable earnings through discretionary compensation. In so doing, the Company has paid out a significant portion of its taxable earnings, which could not have been done as a C- Corp without some level of double taxation. In this type of situation an argument can be made for a reduction to the maximum potential pass- through adjustment. • Step-up in Tax Basis: Again, the maximum economic value of the pass-through status exists when a company pays out 100% of earnings annually in distributions. If the company pays out less than 100% of earnings, then a investor receives a step-up in their tax basis equal to the increase in their equity account. The economic value of this step-up in tax basis is only realized when the investor sells his stock and the sale price is more than his equity account. Accordingly, the net present value of the economic value of the step-up in tax basis is speculative. If the sale of stock is five to ten years in the future then the current economic value of the tax basis step-up will be significantly reduced. Accordingly, the economic value attributed to distributions more than the pass-through taxes is realized immediately in today dollars; whereas the economic value of the remaining undistributed earnings is speculative in timing and amount. To the extent that a company distributes less than 100% of its taxable income an argument can be made to reduce the pass-through adjustment below the calculated maximum. After assessing all factors pertaining to the company being valued, a modification to the maximum calculated pass-through adjustment may be supported. It is important to consider all the factors outlined above before selecting an appropriate adjustment. Without properly taking these factors into account, the value of the pass-through entity will be misstated. EFTA00608472 J Addendum 5-1 Studies of Lack of Marketability Discounts Summary of Restricted Stock Studies & Initial Public Offering Studies Years Covered Median Study in Study Discount SEC, Overall Average ' 1966-1969 25.8 b SEC, Non-reporting OTC Companies ° 1966-1969 32.6 b Gelman ° 1968-1970 33 b Trout d 1968-1972 33.5 Moroney ' Unknown f 35.6 b Maher 8 1969-1973 35.4 b Standard Research Consultants " 1978-1982 45.0 FMV Opinions, Inc. (2 Year Holding Period) i 1979-1997 23 Willamette Management Associates J 1981-1984 31.2 Silber k 1981-1988 33.8 b Management Planning, Inc. 1980-1985 30-35 b Management Planning, Inc. 1980-1996 27.1 b Empire Valuation Consultants, LLC ' 1983-1993 29.1 b Emory n' 1980-1981 66 Emory '" 1985-1986 43 Emory '" 1987-1989 45 Emory '" 1989-1990 40 Emory '2' 1990-1992 40 Bruce Johnson a 1991-1995 20.2 Emory r° 1992-1993 44 Emory 's 1994-1995 45 Emory °' 1995-1997 42 Columbia Financial Advisors ° 1996-1997 21 Columbia Financial Advisors °(1-Year Period) 1997-1998 13 Emory °1 1997-2000 52 Emory m 1998-2000 47 FMV Opinions, Inc. (1 Year Holding Period) I' 1997-2000 25.9 a 'Discounts Involved in Purchases of Common Stock (1966-1969): Institutional Investor Study Report of the Securities and Exchange Commission, H.R. Doc. No. 64, Pan 5, 92d Congress., 1st Session. 1971, pp. 2444-2456. b Mean discounts. c Milton Gelman, An Economist-Financial Analyses Approach to Valuing Stock of a Closely Held Company? Journal of Taxation. June 1972, pp. 353-354. d Robert R. Trout, 'Estimation of the Discount Associated with the Transfer of Restricted Securities: Taxes. June 1977. pp. 381-385. e Robert E. Moroney, Most Courts Overvalue Closely Held Stocks," Taxes, March 1973, pp. 144-154. f Although the years covered in this study are likely to be 1969-1972, no specific years were given in the published account. g J. Michael Maher, 'Discounts for Lack of Marketability for Closely-Held Business Interests: Taxes. September 1976. pp. 562- 571. h "Revenue Ruling 77-287 Revisited: SRC Quarterly Reports. Spring 1983, pp. 1-3. i Lance Hall and Timothy Pobeet 'Strategies for Obtaining the Largest Valuation Discounts," Estate Planning (Jan./Feb. 1994); pp. 38-44 Willamette Management Associates study (unpublished). EFTA00608473 Addendum 5-2 k Silber, William L.. "Discounts on Restricted Stock: The Impact of Illiquidity on Stock Prices,' Financial Analysts Journal. July-August 1991, pp. 60-64. I Empire Valuation Consultants, LLC study (unpublished). m Emory. John D.. Business Valuation Review, ten marketability studies by the same author from September 1980 to October 2002. the latest entitled "Discounts for Lack of Marketability Emory Pre-IPO Discount Studies 1980-2000. As Adjusted October 10. 2002." (Medians) n "Restricted Stock Discounts: 1991-1995," Shannon Pratt's Business Valuation Update (March 1999): 1-3, "Quantitative Support for Discounts for lack of Marketability," Business Valuation Review (Dec. 1999): 152-155 o Shannon Pratt's Business Valuation Update (May 2000): 1-5 P Lance Hall, 'Why are restricted stock discounts actually larger for one-year holding periods?". Shannon Pratt's Business Valuation Update (September 2003): 1-4 Numerous empirical studies on lack of marketability discounts have been conducted during the past twenty years. The following discussion summarizes the results of the most commonly referenced studies. I. Institutional Investors Study: The Securities and Exchange Commission ("SEC") published study # 77-287 in 1971, called the "Institutional Investors Study." The Institutional Investors Study examined the amount of discount at which transactions in restricted stock, or letter stock, took place compared to the prices of identical but unrestricted stock on the open market from 1966 through 1969. The table below segments the data observed by the SEC according to the size of the discount. Discount (Premium) Number of Transactions Percent of Study Total -15.0% to 0.0% 26 6.5% 0.1% to 10.0% 67 16.8% 10.1% to 20.0% 78 19.6% 20.1% to 30.0% 77 19.3% 30.1% to 40.0% 67 16.8% 40.1% to 50.0% 35 8.8% 50.1% to 80.0% 48 12.1% -15.0% to 80.0% 398 100.0% The study shows that the discounts on the letter stocks were the least for New York Stock Exchange ("NYSE") listed stocks, but increased, in order, for American Stock Exchange ("ASE") listed stocks, Over-the-counter ("OTC") reporting companies and OTC non-reporting companies. For OTC non-reporting companies, the largest number of restricted stock transactions fell in the 30% to 40% discount range. Slightly over 56% of the OTC non-reporting companies experienced discounts greater than 30% on the sale of their restricted stock. A little over 30% of the OTC reporting companies experienced discounts over 30%, and over 52% experienced discounts over 20%. The magnitude of the discount for restricted securities from the trading price of the unrestricted securities was generally related to the following factors: EFTA00608474 Addendum 5-3 Earnings Earnings played the most significant role in determining the discounts at which these stocks were sold from the current market price. The degree of risk of an investment is determined more by earnings patterns, rather than sales patterns. Sales Companies with the largest sales volumes received the smallest discounts and the companies with the smallest sales volumes received the largest discounts. Trading Market Discount rates were greatest on restricted stocks with unrestricted counterparts traded over-the-counter, followed by those with unrestricted counterparts listed on the ASE, while the discount rates for those stocks with unrestricted counterparts listed on the NYSE were the smallest. 2. Gelman Study: Milton Gelman conducted a study analyzing the prices paid by four closed-end investment companies specializing in restricted securities investments. Based on an analysis of 89 transactions between 1968 and 1970, Gelman found both the mean and median discounts to be 33%. Almost 60% of the transactions were at discounts of 30% or more, and over one-third were at discounts of 40% or more. 3. Trout Study: Robert Trout studied 60 transactions involving the purchase of restricted stock by mutual funds between 1968 and 1972. He observed a mean discount of 34%. 4. Moroney Study: In an article published in 1973, Robert Moroney presented the results of his study of the prices paid in 146 transactions for restricted securities by 10 registered investment companies. The mean discount in these transactions was 35.6%, and the median discount was 33%. 5. Maher Study: In 1976, Michael Maher published the results of a study of restricted stock discounts in transactions taking place from 1969 to 1973. He found that the mean discount was 35.4%. 6. FMV Restricted Stock Study: FMV Opinions gathered 248 transactions and a median discount of 23% was observed. After May 1997, the holding period under SEC Rule 144 changed from two years to one. FMV Opinions gathered 182 restricted stock transactions occurring between 1997 and 2000 and surprisingly the median discount increased, although the holding period decreased, to 25.9%. 7. Standard Research Consultants Study: In 1983, Standard Research Consultants conducted a study of 28 private placements of common stock from October 1978 through June 1982. A median discount of 45% was observed. 8. Willamette Management Associates Study: Willamette Management Associates has performed several studies on the prices of private stock transactions relative to their prices observed in a subsequent public offering of the same securities. The median discount of its studies was 31.2%. EFTA00608475 Addendum 5-4 9. Silber Study: In 1991, William Silber published the results of a study of restricted stock discounts in 69 transactions taking place between 1981 and 1988. He found that the mean discount was 33.8%. This study found larger discounts when the size of the restricted stock block was large in proportion to the total shares outstanding. Additionally, the study indicated that firms with higher revenues, earnings and market capitalizations are associated with lower discounts. 10. Management Planning, Inc. Study: Management Planning, Inc. ("MPI") conducted an analysis of 115 private transactions involving actively traded industrial corporations. The vast majority of the transactions occurred at discounts to the public market prices. The discounts ranged from 1% to 86%, with the normal distribution centered in the 30% to 35% range. MPI found that many of the relatively high discounts observed involved the common stocks of companies that were not profitable or had very low revenues, which is consistent with the findings of the SEC Study. MPI eliminated all transactions involving companies with revenues less than $3,000,000, thereby reducing the test population to 31 transactions. Of these 31 transactions, 29 occurred at a discount, some of which were nearly 60%. As in the SEC Study, MPI analyzed the pricing data in relation to several variables believed to impact the magnitude of the discounts. MPI concluded the following: • Private transactions of larger companies (as measured by either revenue or earnings) have lower discounts than smaller companies, on average. • Private transactions of companies with stronger growth (as measured by either revenues or earnings) have lower discounts than companies with slower growth, on average. • Private transactions of companies with better revenue or earnings stability have smaller discounts than those of companies with less stability, on average. • Private transactions that involve blocks that are relatively small, compared to trading volume or the number of shares outstanding, have lower discounts than blocks of stock that are large relative to trading volume and shares outstanding, on average. • Private transactions that occurred in a strong market have lower discounts than transactions that took place in declining or weaker markets, on average. • Private transactions occur at lower discounts in cases where the publicly traded counter-part showed more price stability than in cases where there was less price stability, on average. II. Empire Valuation Consultants, LLC ("Empire") Study: Empire conducted an analysis of 106 private placements between February 1983 and June 1993 involving restricted shares of publicly-traded common stocks. Its unpublished study concluded that the price differentials between the price of the restricted shares and the market price of the publicly-traded equivalent securities ranged from a 29.8% premium to a 80.0% discount, with a mean discount of 29.1%. EFTA00608476 Addendum 5-5 12. Emory Studies: John D. Emory, previously of Robert W. Baird & Co. Inc., and now of Emory Business Valuation, LLC, conducted several studies over the past 20 years which relate the prices at which private transactions take place before the initial public offering ("IPO") to the price at which the stock was offered subsequently to the public. About 2,300 IPO prospectuses were reviewed from 1980 through 2000, and a total of 543 qualifying transactions were identified. These transactions involved the sale of restricted stock that was sold five months or less before the IPO transaction. Although the median discounts varied during this period, the most recent data indicated a median discount of 47% for both options and shares sold. Taken as a whole, the studies regarding the marketability of restricted equity interests conclude a broad range of mean and median discounts that generally falls between 26% and 45%. While the publicly-traded counterpart of a restricted stock has a known price, the companies who later underwent IPOs had no established benchmarks at the time of their private transactions. Therefore, the IPO studies generally produce a higher discount for lack of marketability due to the greater uncertainty regarding, if and when, the stock will ever be public. 13. Bruce Johnson Study: Mr. Johnson conducted a restricted stock study in which he examined 72 transactions that occurred between 1991 and 1995 resulting in a 20.2% median discount. 14. Columbia Financial Advisors Study: CFAI conducted a study of the sale of restricted securities in the U.S. in which they examined only private common equity placements over the period Jan. 1, 1996 through April 30, 1997. The resulting median discount was 23%. A similar study was repeated over the period May 1997 through December 1998 and the median discount was 13%. EFTA00608477 Addendum 6-1 RESTRICTED STOCK STUDIES Given a lack of withdrawal rights, it was determined that limited partners' investments in the Partnership were similar to restricted stocks. Restricted stocks are those that have been issued, but not registered under the United States Securities Act of 1933, as amended (the "Securities Act"). Following the date of issue, these stocks are subject to a lock-up period before they can be freely traded. Accordingly, restricted stock studies were sought for use in determining the discounts appropriate for application to each of these investments. A number of restricted stock studies are summarized in the table below and are more fully described in Addendum 5 to this report. Data from these studies was used to estimate reasonable holding period discounts applicable to the Partnership. Table I Summary of Restricted Stock Study Data Study Years Covered N of Transactions Mean Discount Median Discount Two-Year Holding Period SEC, Overall Average 1966-1969 398 24.0% 25.85E SEC, Non-Reporting OTC Companies 1966-1969 112 N/A 32.6% Gelman 1968.1970 89 33.0% 33.0% Trout 1968.1972 60 315% N/A Moroney Unknown 146 35.6% 33.0% Maher 1969-1973 34 35.4% 33.3% Standard Research Consultants 1978.1982 28 N/A 45.0% Wi!Barnette Management Assoc. 1981.1984 33 N/A 31.2% Silber 1981.1988 69 33.8% 35.0% FMV Opinions, Inc. 1979-1992 100+ 23.0% N/A Management Planning, Inc. 1980-1996 49 27.7% 28.8% Bruce Johnson 1991.1995 72 N/A 20.2% Columbia Financial Advisors 1996-1997 23 21.0% 14.0% Low 21.0% 14.0% High 35.6% 45.0% Median 33.0% 32.6% Average 29.7% 30.25E One-Year Holding Period Columbia Financial Advisors 1997-1998 15 13.0% 9.0% FMV Opinions, Inc. 1997-2000 182 N/A 25.9% Average 17.55E EFTA00608478 Addendum 6-2 The restricted stock studies demonstrate that discounts do exist to compensate investors for their relative inability to liquidate an investment over the course of a given holding period. The statistics associated with the studies fell within a reasonably close range, although variation of implied discounts was noted within each of the studies. Variations in observed discounts were generally attributed to company-specific (i.e., investment specific) factors. The information above also supports the notion that discounts declined when holding periods were reduced, which can be anticipated based on accepted financial theory. Based on these studies, it was determined that the discounts appropriate for lock-up periods of two years could be as high as 33%. While datapoints underlying the specific studies suggested that discounts could range much higher, it was considered that such high levels of discounts were frequently observed with investments that were subject to high levels of stock price volatility or business risk. As a result, the overall median restricted stock discount of approximately 33% for a two-year holding period was considered a reasonable upper boundary for use in this analysis. Against the backdrop of the restricted stock studies, together with the experience of Empire's principals, a range of discounts was estimated that could be considered reasonably appropriate for various lock-up periods up to two years, as detailed in Table II. Table II Estimated Lock-up Period Discounts Lock-up Period Estimated Discount Range 0-1 Months 1-5% 1-6 Months 5-7% 6-12 Months 7-10% 13-18 Months 11-25% 19-24 Months 26-33% The estimated breakdown is further supported by the restricted stock discounts associated with a one-year holding period, as summarized by two studies in the table on the preceding page. In particular, the Columbia Financial Advisors' 1997- 1998 study suggests a median discount over a one-year holding period of approximately 10%. While the FMV Opinions, Inc. 1997-2000 study suggests a higher level of discount for a one-year holding period, the authors of that study indicated that high levels of volatility were observed, contributing to the higher-than- expected level of discount. It should be recognized that these estimated ranges are EFTA00608479 Addendum 6-3 likely to overlap; i.e., the holding period discount ultimately appropriate to a specific investment is dependent on the attributes of that particular investment. The level of holding period discount will generally be impacted by the length of the expected holding period, the asset price volatility, and other investment-specific factors. In the context of this analysis, investment-specific factors could include: (1) the Funds' investment strategy; (2) the speed and ease with which management can harvest the investments made; (3) the marketplace for IPOs and mergers and acquisitions; (4) the level of focus management maintains of this particular Fund, given new funds being initiated; and (5) other timing and market specific factors. EFTA00608480 EXHIBIT A-1 APOLLO MANAGEMENT, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 Adjusted Invested Capital $341,800,000 $119,600,000 $0 Management Fees $6,034,471 $0 $0 Operating Expense Ratio Estimate 68.6% 0.0% 0.0% Operating Expenses ($4,137.805) $0 $0 Operating Income $1.896,666 $0 $0 Margin: Adjustment Adjusted Pre-Tax Income $1.896,666 $0 $0 Tax Rate 42% 42% 42% Tax $796,600 $0 $0 Net Income $1,100,066 $0 $0 Days 259 624 Present Value Factors 11% 1.0000 0.9286 0.8366 Present Value $0 $0 Sum of Present Values $0 Pass-through premium 15% $0 Aggregate Marketable Value of Invested Capital $0 Less: Outstanding Debt $0 Aggregate Marketable Value of Partners' Capital $0 Partner's Pro Rata Percentage 30.35% $0 Discount for Lack of Marketability 10% $0 Pro Rata. Fair Market Value of Partners Capital $0 Pro Rata, Fair Market Value of Partners Capital, rounded $0 EFTA00608481 EXHIBIT A-2 APOLLO MANAGEMENT IV, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT PROJECT 2009 2010 Adjusted Invested Capital' $1.043.700.000 $649.128.201 50 $0 $0 Management Fees' $6.142.871 $3.164,500 $0 $0 Operating Expense Ratio Estimate 51.7% 32.0% 0.0% 0.0% Operating Expenses* (53.176.672) (51.012.209) $0 $0 Pre-Tax Income $2.966.199 $2,152291 $0 $0 Adjustments $0 50 $0 $0 Adjusted Pre-Tax Income $2.966.199 52.152.291 $0 $0 Tax Rate 42% 42% 42% 42% Tax $1.245.804 $903,962 $0 $0 Net Income $1720.395 $1.248,329 $0 $0 Horizon Value (Gordon Growth Model)* Days Present Value Factors Present Value 259 624 989 1.354 0.9346 0.8496 0.7724 0.7022 $1.607.891 $1.060.632 $0 $0 Discount Rate: 10% Sum of Present Values 52.668.522 Pass-through premium 15% $400.278 Aggregate Marketable Value of Invested Capital 53.068.801 Less: Outstanding Debt $0 Aggregate Marketable Value of Partners' Capital 53.068.801 Partners Pro Rata Percentage 30.35% $931.381 Discount for Lack of Marketability 10% ($93.138) Pro Rata. Fair Market Value of Partners Capital $838.243 Pro Rata, Fair Market Value of Partner's Capital, rounded $840,000 'Based on projections wooded by management EFTA00608482 EXHIBIT A-3 APOLLO MANAGEMENT V, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 Adjusted Invested Capital' $1,808.400.000 $1.694.200.000 $984.976.667 $593,497.619 $150.000.000 $0 Management Fees' $13.348.875 $11.376.706 $6.653,302 $3.619.674 $843,750 Operating Expense Ratio Estimate 51.7% 32.0% 36.1% 41.9% 32.3% Operating Expenses' ($6.903.123) ($3,638.995) ($2.400,520) ($1.516.158) ($272,830) Pre-Tax Income $6.445.752 $7.737.711 $4.252.782 $2.103.516 $570,920 Adjustments $0 $0 $0 $0 $0 Adjusted Pre-Tax Income $6.445.752 $7,737.711 $4,252,782 $2.103.516 $570,920 Tax Rate 42% 42% 42% 42% 42% Tax $2.707,216 $3,249.839 $1.786,168 $883.477 $239,787 Net Income $3.738.536 $4,487.872 $2.466,614 $1.220.040 $331,134 Days 259 624 989 1.354 1.719 Present Value Factors 0.9407 0.8630 0.7918 0.7264 0.6664 Present Value $3.516.771 $3.873.081 $1,952.948 $886,211 $220.668 Discount Rate: 9% Sum of Present Values $10.449.679 Pass-through premium 15% $1.567.452 Aggregate Marketable Value of Invested Capital $12,017,131 Less: Outstanding Debt $0 Aggregate Marketable Value of Partners' Capital $12.017.131 Partner's Pro Rata Percentage 30.35% $3.647.199 Discount for Lack of Marketability 15% ($547.080) Pro Rata. Fair Market Value of Partner's Capital $3.100.119 Pro Rata, Fair Market Value of Partner's Capital, rounded $3,100,000 'Based on projectans provided by management EFTA00608483 EXHIBIT A-4 APOLLO MANAGEMENT VI. LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 Adjusted Invested Capital' 51.601.000.000 $6.802.600.000 $9.051.250.000 $8.479.508.333 $5.951.797.917 $1.200.000.000 Management Fees' 5120.175.978 $62.470.081 $61.660.872 $50.332.530 522.943.613 Transaction And Monitoring Fees' 5357.282.000 5144.000.000 $0 $0 $0 Broken Deal Fees' ($34.534.581) ($17.481.288) $0 $0 $0 LP Rebate' (S219.468.245) ($86.032.724) $0 $0 $0 Net Transaction and Monitoring Fees 5103.279.174 $40.485.988 $0 $0 $0 Total Management Fees and Net Transaction and Monitoring Fees $223.455.152 $102.956.069 $61.660.872 550.332.530 522.943.613 Operating Expense Ratio Estimate 27.8% 32.0% 36.1% 41.9% 32.3% Operating Expenses' ($62.146.780) ($19.981.910) ($22.247.321) ($21,082.575) ($7.418.900) Pre-Tax Income 5161.308.372 $82.974.158 $39.413.552 $29.249.955 515.524.713 Adjustments Adjusted Pre-Tax Income Tax Rate Less: Tax Net Income Horizon Value (Gordon Growth Model)' Days Present Value Factors Present Value 1.0000 so $0 $0 $0 $0 5161.308.372 $82.974.158 $39.413.552 $29.249.955 515.524.713 42% 42% 42% 42% 42% $67.749516 $34.849.147 $16.553.692 $12.284.981 $6.520.380 $93.558.856 $48.125.012 $22.859.860 $16.964.974 $9.004.334 259 624 989 1.354 1.719 0.9407 0.8630 0.7918 0.7264 0.6664 $88.009.078 $41.532.390 $18.099.357 $12.322.995 $6.000.510 Discount Rate: 9% Sum of Present Values $165.964.329 Pass-through premium 15% $24.894.649 Aggregate Marketable Value of Invested Capital $190,858,978 Less: Outstanding Debt 50 Aggregate Marketable Value of Partners' Capital $190.858.978 Partners Pro Rata Percentage 30.35% $57.925.700 Discount for Lack of Marketability 15% ($8.688.855) Pro Rata. Fair Market Value of Partners Capital $49.236.845 Pro Rata, Fair Market Value of Partner's Capital $49,200,000 'Based 0° P'Abbb0b$ 0,o✓V?d by bytibabeentrn! EFTA00608484 EXHIBIT A-5 APOLLO INVESTMENT MANAGEMENT. LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16. 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON Assets Under Management (June 30) $2.600.000.000 $3.450.000.000 $4.300.000.000 $5.150.000.000 $6.000.000.000 Assets Under Management (December 31) 52.175.000.000 $3.025.000.000 $3.875.000.000 $4.725.000.000 $5.575.000.000 56.425.000.000 Leverage 33.0% Unleveraged Assets Under Management (June 30) 51.954.1387218 52.596.984.962 $3.233.082.707 $3.872.180.451 54.511.278.195 Management Fees 2.0% $52.000.000 569.000.000 $136.000.000 5103.000.000 5120.000.000 Yield on assets 12.0% 5312.000.000 5414.000.000 $516.000.000 5618.000.000 5720.000.000 Other expense G8A ($1.000.000) ($2.000.000) (53.000.000) (54.000.000) ($5.000.000) Cost of debt 6.4% (541287218) (554.784.962) (568.282,707) (581.780.451) (595.278.195) Gross carry 20.0% 543.542.556 $57.643.008 571.743.459 585.843.910 $99.944,361 599.944.361 Management Fees 552.000.000 569.000.000 586.000.000 5103.000.000 5120.000.000 5120.000.000 Total Fees 595.542.556 $126.643.008 $157.743.459 5188.843.910 $219.944,361 5219.944.361 45% 45% 45% 45% 45% 45% Less: Operating Expenses 1542,994.1501 ($56,989,353) (570.984.556) ($84,979,759) (598,974.962) (598.974,9621 Pre-Tax Income $52.548.406 569.653.654 586.758.902 $103.864.150 5120.969.398 5120.969.398 Adjustment Adjusted Pre-Tax Income 552.548.406 569.653.654 $86.758.902 $103,864,150 $120,969,398 5120.969.398 Tax Rate 42% 42% 42% 42% 42% 42% Tax (22.070.331) (29.254.535) (36.438.739) (43.622.943) (50.807.147) (50.807.147) Net Income $30,478,075 540.399.119 $50.320.163 $60,241,207 $70,162,251 $70.162,251 Horizon Value (Gordon Growth Model)' $1.032.387.409 Discount Rate: 10.0% Long-Term Growth Rate: 3.0% Days 259 624 989 1,354 1.719 1,719 Present Value Factors 0.9346 0.8496 0.7724 0.7022 0.6383 0.6383 Present Value $28.484.969 534.324.753 538.867.345 542.300,336 $44,787,929 5659.022380 Sum of Present Values 2007 Multiples Aggregate Fully Marketable Minority Interest 5847.787.711 % of AUM MVIC/Rev MVIC/Op Inc Pass-through premium 20.0% 5169.557.542 52.600.000.000 $95.542.556 552.548.406 Aggregate Marketable Value of Invested Capital $1,017,345,253 39.13% 10.6 19.4 Less: Outstanding Debt 50 Aggregate Marketable Value of Partners' Capital $1.017.345253 Partners Pro Rata Percentage 23.90% 5243.145.515 Discount for Lack of Marketability 15% (536.471.827) Pro Rata. Fair Markel Value of Partners Capital $206.673.688 Pro Rata. Fair Market Value of Partner's Capital 5206.700.000 • Gordon Growth Model (Horizon Net Income x +growth rale) (capitalization rate + extra risk)] EFTA00608485 EXHIBIT A-6 APOLLO VIF MANAGEMENT, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON Gass A Assets (VIF) $456.000.000 $600.000.000 3663.000.000 3732.615.000 $809.539.575 $894.541,230 Management Fees t.5% $9.030.000 $9.945.000 310.989225 $12.143,094 $13.418.118 $13,418.118 Operating Expense Ratio Estimate 45% 45% 45% 45% 45% 45% Operating Expenses (84.050.000) ($4.475.250) ($4.945,151) ($5.464,392) ($6.038.153) (56,038.153) Pm-Tax Income $4.950.000 $5.469.750 $6.044,074 $6.678,701 $7.379.965 37,379.965 Adjustments Adjusted Pre-Tax Income Tax Rate Tax Net Income Horizon Value (Gordon Growth Mode0' Days Present Value Factors Present Value $0 $0 $0 $0 $0 $0 $4.950.000 $5.469.750 42% 42% ($2.079.000) ($2,297.295) $6.044,074 42% ($2.538,511) $6.678,70t $7.379.965 37,379.965 42% 42% 42% ($2.805,055) ($3.099.585) ($3,099.585) $2.871.000 $3.172.455 259 624 0.9346 0.8496 $2.683.252 $2.695.448 $3.505,563 989 0.7724 $2.707,700 $3.873,647 $4.280.380 34,280.380 $62.982.731 1.354 1.719 1.719 0.7022 0.6383 0.6383 $2.720,008 $2.732.372 $40204.897 Discount Rate: 10% Long-term growth rate: 3% Sum of Present Values 353.743.677 2007 Multiples Pass-thru Premium 20% $10.748.735 %ol AUM MVIC+Rev MVICIOp Inc Aggregate Marketable Value of Invested Capital $64,492,412 $600.000.000 $9.000.000 $4.950.000 Less: Outstanding Debt SO 0.75% 7.2 13.0 Aggregate Marketable Value of Partners' Capital $64.492.412 Penner's Pro Rata Percentage 26.90% 317.348.459 Discount for Lack ol Marketability 15% (52.602.269) Pro Rata. Fair Market Value ol Partner's Capital 514.746.190 Pro Rata, Fair Market Value of Partner's Capital, rounded $14,700,000 Based on managemccePtcfatans EFTA00608486 EXHIBIT A-7 APOLLO SVF MANAGEMENT. LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON Assets Under Management SVF' $600,000.000 $1.000.000.000 $1,537.000.000 $1.797.385,000 $2.090860.425 32.451.383.770 Assets Under Management SOMA' $400000.000 $400.000.000 $600.000.000 5800.000.000 $1.000.003.000 $1.205.000.000 Management Fees-SVF" 2.0% $19.625.000 529.640.000 $34.682,700 $40,544.459 $47,354.713 547.354.713 Management Fees SOMA 1.6% $3.400.000 $7.600.000 $10.805.000 513,300.000 515.800.000 $15,800.000 Total Management Fees $23.025.000 $37.240.000 $45.482.700 $53,844.459 $63.154.713 $63.154.713 Operating Expense Ratio Estimate 45% 45% 45% 45% 45% 45% Operating Expenses 410361.2SO) (M57584031 ($20.467215) (324.230.006) ($28.419.621) ($28A19.621) Pre-Tax Income $12.663.750 $20.482.000 $25.015.485 $29,614.452 $34.735.092 $34.735.092 Adjustment 30 $o $0 $0 $0 $0 Adjusted Pre-Tax Income $12.663.750 $20.482.00) $25.015.485 $29,614.452 $34.735.092 $34.735.092 Tax Rate 42% 42% 42% 42% 42% 42% Tax (35.318.775) ($8.602.440) (310.506.504) (312.438.070) ($14.588.739) ($14,588.739) Net Income $7344.975 $11.879560 $14.508.981 317.176.382 320.146.353 $20,146.353 Horizon Value (Gordon Growth Model' $296.439.200 Days 0 259 624 989 1354 1.719 1.719 Present Value Factors 1.0000 0.9346 0.8496 0.7724 0.7022 0.6383 0.6383 Present Value $6.864.652 $10.093.363 311.206.752 $12,060.959 $12.860.383 $189231.354 Discount Rate: 10% Long-Term Growth 3% Sum of Present Values $242,317.463 2007 Multiples Pass.tivu Premium 15% 336.347.619 % of AUM MVIC1Rev MVICOp Inc Aggregate Marketable Value of Invested Capital 3278.665.082 51 .000.000.000 $23.025.000 312.663.750 Less: Outstanding Debt $0 27.9% 12.1 22.0 Aggregate Marketable Value of Partners' Capoal 3278.665.082 Penner's Pro Rata Percentage 44% $122,612.636 Discount for Lack of Marketability 15% ($18.391.895) Pro Rata. Fair Market Value of Partners Capital $104220.741 Pro Rata. Fair Market Value of Partner's Capital. rounded 3104.200.000 t$Sed On Aingemeni Pr 01,00m. mom,' soma "IilorrAng m 2008 Manapomon lavocts assets *0 aka be domed/tom Lass Bassets. whth hat* a maw.,...% leo of 1.75% EFTA00608487 EXHIBIT A-8 APOLLO SVF ADVISORS, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management (June 30) Growth in Assets History 2006 Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON $600.000.000 $1.000,000.000 66.7% $1.537,000.000 53.7% $1.797.385.000 16.9% $2.099.960.425 16.8% $2.451.383.770 16.7% Management fees (Dec. 31. for calculation of gross carry) 2.00% (a) $19.625.000 $29.640.000 $34.682.700 540.544.459 $47.354,713 Yield on assets 15.00% (b) $142.968.750 5189,051.000 $244.522.507 $360.236.500 $344.846,049 Fund Expenses 0.30% (c) ($2.482.759) ($4.136.250) ($4.644.806) (55.217.898) (55.863.973) Nel Fund Profits (d.-a+b+c) $120.860.991 $155274.750 $205.195.001 $314.474.143 $291.627.363 Gross carry (i.e. Revenue) 20.00% $24.172.198 $31,054.950 $41.039.000 562.894.829 $58.325,473 558.325.473 Operating Expense Ratio 45% 45% 45% 45% 45% 45% Operating Expenses ($10.877.489) (513.974.728) ($18.467.550) ($28.302.673) (526.246.463) (526.246.463) $13.294.709 $17.080.223 $22.571.450 534.592.156 532.079.010 $32.079.010 Adjustment Adjusted Pre-Tax Income $13.294.709 $17.080.223 $22.571.450 534.592.156 532.079,010 532.079.010 Tax Rate 42% 42% 42% 42% 42% 42% Tax ($5.583.778) (57.173.693) (59.480.009) (514.528.705) (613.473.184) ($13.473.184) Nel Income 57.710.931 59.906.529 $13.091.441 520.063.450 518.605.826 $18.605.826 Horizon Value (Gordon Growth Model)' 5136.885.718 Discount Rate: 17% Long-term growth rate: 3% Days 259 624 989 1.354 1,719 1.719 Present Value Factors 1.0000 0.8946 0.7646 0.6535 0.5585 0.4774 0.4774 Present Value 6,6.897.995 57.574.461 $8.555.232 511.206.348 $8.882221 565.347.767 Sum of Present Values Aggregate Value B/Adjustments 5108.464.023 2007 Multiples Pass-through premium 15% $16.269.604 %of AUM MVICiRev MVIC1Op Inc Aggregate Marketable Value of Invested Capital $124,733,627 $1.000.000,000 $24.172,198 513,294.709 Less: Outstanding Debt $0 12.5% 5.2 9.4 Aggregate Marketable Value of Partners' Capital $124.733.627 Partners Pro Rata Percentage 44% $54.882.796 Discount for Lack of Markelability 20% ($10.976.559) Pro Rata. Fair Market Value of Partner's Capital 543.906.237 Pro Rata, Fair Market Value of Partner's Capital, rounded $43,900,000 Note. ApaYo SVF Athasoes. LP clef not recwre carried micros! zncome from the SVF prig &I June I. 2007. Cam& intros, income was prelioupy meowed by Ape& SVF Management. LP Yield on assets is for Class A. Class 8 assets will begin in 2008 and anticipate 20% yield. Projections provided by Management EFTA00608488 EXHIBIT A-9 APOLLO ASIA MANAGEMENT, . DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 History 2006 Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON Assets Under Management (June 307 $200,000.000 $300.000.000 $360,000,000 $432,000.000 $518.400.000 $622.080.o® Growth in Assets 50.0% 20.0% 20.0% 20.0% 20.0% Assets Under Management (December 317 $330.000.000 $396,000,000 $475.200.000 $570.240.000 $684,288.000 Leverage 33% Unleveraged Assets Under Management (June 30) $225.563.910 $270,676,692 $324,812.030 $389.774.436 $467.729.323 Management fees 1.50% $4.500.000 $5.400.000 $6.480.000 $7,776.000 $9.331.200 $9.331.200 Operating Expense Ratio' 45% 45% 45% 45% 45% 45% Operating Expenses ($2,025,000) ($2.430.000) ($2.916.000) ($3.499.200) ($4.199.040) ($4.199.040) $2.475.000 $2,970,000 $3,564,000 $4,276,800 $5.132.160 $5,132,160 Adjustment Adjusted Pre-Tax Income $2.475.000 $2.970.000 $3,564,000 $4,276,800 $5.132.160 $5.132.160 Tax Rate 42% 42% 42% 42% 42% 42% Tax ($1,039,500) ($1.247.400) ($1496.880) ($1.796.256) ($2.155.507) ($2.155.507) Net Income $1.435.500 $1.722.600 $2.067.120 $2,480.544 $2.976.653 $2.976.653 Horizon Value (Gordon Growth Modell 47,397.472 Discount Rate: 10% Long-term growth rale: 3.5% Days 259 624 989 1.354 1.719 1,719 Present Value Factors 0.9346 0.8496 0.7724 0.7022 0.6383 0.6383 Present Value 1,341,626 1,463.592 1.596.646 1.741.795 1.900.140 30.256.078 Sum of Present Values $38,299,877 2007 Multiples Pass-through premium 15% $5.744.982 of AUM MVIORev MVIC?Op Inc Aggregate Marketable Value of Invested Capital $44,044,859 $300.000.000 $4.500.000 $2.475.000 Less: Outstanding Debt $0 14.7% 9.8 17.8 Aggregate Marketable Value of Partners' Capital $44,044,859 Par1ner's Pro Rata Percentage 44% $19,379,738 Discount for Lack of Marketability 20% ($3,875,948) Pro Rata, Fair Market Value of Partners Capital $15,503,790 Pro Rata, Fair Market Value of Partner's Capital, rounded $15,500,000 •Based on managemeni prcmcconz prime* to &neve - Got Growth Model: Horizon Value-(horizon net income • ry . leng•tmm woe*, rele))/ (discount rate- tong-term growth late) EFTA00608489 EXHIBIT A-10 APOLLO ASIA ADVISORS, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management (June 30) Growth in Assets Assets Under Management (Dec. 31) History 2006 Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON $203.000.000 5300.000.000 50.0% 5330.000.000 8360.000.000 20.0% 5396,000.000 5432.000.000 20.0% $475,200.000 $518.400.000 20.0% $570,240,000 $622.080.000 20.0% $684.288.000 Leverage 33% Unleveraged Assets Undermanagemeni 5150.375.940 5225.563.910 $270.676.692 $324.812.030 $389.774.436 $467.729323 Management fees (Dec. 31, for calculation of Gross Carry) 1.50% (a) $4.500.000 $5.400.000 $6.480.000 57.776.000 59.331.200 Yield on assets 15.00% (b) 545.000.000 $54.000.000 564.800.000 $77.760.000 $93.312,000 Fund Expenses 0.25% (c) ($750.000) (5900.000) (51.080.000) (51.296.000) (51.555200) Cost of Debt 6.40% (d) ($4.763.910) ($5.716.692) ($6.860.030) (58.232.036) (59.878.443) Net Fund Profits (e a= -a .b+c+o $34.986.090 $41.983.308 $50.379.970 $60.455.964 $72.547.157 Gross carry (i.e. Revenue) 20.00% $6.997.218 58.396.662 $10.075.994 $12.091.193 $14.509.431 514.509.431 Operating Expense Ratio 45% 45% 45% 45% 45% 45% Operating Expenses ($3.148.748) ($3.778.498) ($4.534.197) (55.441.037) (S6.529.244) ($6.529.244) $3.848.470 $4.618.164 $5,541.797 56.650.156 57.980.187 $7.980.187 Adjustment Adjusted Pre-Tax Income $3.848.470 $4.618.164 $5,541.797 56.650.156 57.980.187 87.980.187 Tax Rate 42% 42% 42% 42% 42% 42% Tax ($1.616.357) ($1.939.629) ($2.327.555) (52.793.066) (S3.351.679) ($3.351.679) Net Income $2232.113 $2.678.535 $3.214242 33.857.090 54.628.509 $4.628.509 Horizon Value (Gordon Growth Model)' S35.485.233 Discount Rate: 17% Long-term growth rate: 4% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 1.0000 0.8946 0.7646 0.6535 0.5585 0.4774 0.4774 Present Value $1.996.789 $2.047.989 $2.100.501 52.154.360 52.209.600 S16.940.268 Sum of Present Values Aggregate Value BtAdjustments $27.449.507 2007 Multiples Pass-through premium 15% $4.117.426 % of AUM MVICIRev MVICfOp Inc Aggregate Marketable Value of Invested Capital 531.586,933 $300.000.000 $6.997.218 33.848.470 Less: Outstanding Debt ao 10.5% 4.5 8.2 Aggregate Marketable Value of Partners Capital $31.566.933 Partner's Pro Rata Percentage 44% $13.889.450 Discount for Lack of Marketability 20% ($2.777.890) Pro Rata. Fair Markel Value of Partner's Capital $11.111.560 Pro Rata, Fair Market Value of Partner's Capital. rounded $11.100,000 Note Aock,SVFA:Msols. LP MeV WO** caned inOweslotrime rfcvn the SVF pm, to M'* f. 2007 Gamed .orefeal louvrewas pienOtO rOCO 0/A0000 SW MINdfltVrOnt LP Yield on assets is for Class A. Class B assets will begin in 2008 and anticipate 20% yield. Projections provided by Management EFTA00608490 EXHIBIT A-11 APOLLO EUROPE MANAGEMENT, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON Assets Under Management (June 30)' 5250.000.000 $500.000.000 $1.000.000.000 $1.500.000.000 $2.000.000.000 $2.500.000.000 Assets Under Management (December sly $750.000.000 31250.000.000 31,750,000.000 $2.250.000.000 $2.750.000.000 Leverage 50.0% Unleveraged Assets Under Management (June 30) $333.333333 $666.666.667 $1,000.000.000 $1.333.333.333 $1.666.666.667 Management Fee 2.0% 310.000.000 320.000.000 330.000.000 $40.000.000 $50.000.000 $50,000.000 Yield on assets' 12.0% $312.000.000 $414.000.000 $516.000.000 $618.000.000 $720.000.000 Other expense G8A ($1.000.000) ($2.000.000) (33.000.000) ($4.000.000) ($5.000.000) Cost of debt 6.4% ($41.287.218) (354.784.962) (368.282.707) ($81.780.451) (395.278.195) Gross carry' 20.0% 343.542.556 357.643.008 $71.743.459 $85.843.910 $99$44.361 $99.944.361 Total Revenues $53.542.556 377.643.008 $101.743.459 $125.843.910 $149$44.361 $149.944.361 Operating Expenses 45.0% (324.094.150) (334.939.353) (345.784.556) (356.629.759) (367.474.962) ($67,474.962) Adjustments Adjusted Pre-Tax Income $29.448.406 342.703.654 355.958.902 $69.214.150 382.469.398 $82,469.398 Tax Rate 42% 42% 42% 42% 42% 42% Tax (312.368.331) (317.935.535) (323.502.739) (329.069.943) ($34.637.t47) (S34,637.147) Net Income 317.080.075 $24.768.t19 $32.456.t63 340.144.207 347.832.251 $47,832.251 Horizon Value (Gordon Growth Model)" $521,119.789 Days 259 624 989 1.354 1.719 t.719 Present Value Factors t.0000 0.9169 0.8114 0.7t81 0.6355 0.5624 0.5624 Present Value 315.661.231 320.097.901 323.306.465 325.510.776 326.899.435 $293,062.270 Discount Rate: 13% Long-term growth rate: 4% Sum of Present Values Aggregate Value 8/Adjustments $404.538.079 2007 Multiples Pass-thru Premium 15% 360.680.712 % of AUM MVICRev MVICCip Inc Aggregate Marketable Value of Invested Capital 3465,218.791 3500.000.000 $53,542.556 $29,448.406 Less:Outstanding Debt so 93.0% 8.7 15.8 Aggregate Marketable Value of Partners' Captal $465.2t8.791 Partners Pro Rata Percentage 44% 3204.696.268 Discount for Ladc of Marketability 20% (340.939.254) Pro Rata. Fair Market Value of Partners Capital 3163.757.015 Pro Rata, Fair Market Value of Partner's Capital, rounded 3163,800.000 'eased an pvioczons suppOed by man-waxy " Cordon G'cwt Model ['Ammo Nc( income x (r.growtn Mscount ,wm waste, rang EFTA00608491 EXHIBIT A-12 APOLLO ALTERNATIVE ASSETS, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON New invested capital 3231.000,000 3770.368,571 3564.465,714 3580.360,000 $580.360.000 $609,645,714 New leverage $80.302,857 3141.116,429 3145.090,000 $145.090.000 $152.41 1.429 New invested capital with leverage $0 $0 $0 30 $0 Total invested capital 3893.782,857 31.445.731,298 31.962.480,778 $2,341.103.529 $2,507.378.436 Total invested capital with leverage 3974.085,714 $1.664.576,228 32.313.333295 32.795.555.893 33,023,056.680 Assets Under Management (June 30) 3231.000.000 $601.020,465 31.594.323,126 $2,678.781.562 $3,679.792.173 Assets Under Management (December 31) 8259.733.769 31.113.316,803 32.151.410265 33267.252.327 $3,967.234.268 Management Fees 1.25% $6.648,045 $21.897,253 336.093,321 349.684.206 357.093.006 $57,093.006 Transactions Fees $46.106,774 $37.332,471 338,422,108 338.293284 340.447.050 $40,447.050 Total Fees 52.754,819 59.229,723 74.515,429 87.977.491 97.540.056 97,540.056 Operating Expense Ratio Estimate 45% 45% 45% 45% 45% 45% Operating Expenses ($23.739.668) (926.653,375) (333.531.943) 1339.589.871) 1343.893.025) ($43.893.025) Pre-Tax Income $29.015.150 $32.576.348 $40,983,486 $48.387.620 $53.647.031 $53,647,031 Adjustment Adjusted Pre-Tax Income Tax Rate Tax Net Income Horizon Value (Gordon Growth Model)* 30 30 30 30 30 $0 $29.015.150 $32.576,348 42% 42% ($12.186.363) (313.682.066) $40.983,486 42% (317.213.064) $48.387.620 $53.647.031 42% 42% (320.322.800) 1322.531.753) $53,647.031 42% ($22.531.753) $16.828,787 $18.894,282 $23.770,422 $28.064.820 $31.115.278 $31,115.278 $359,554,321 Discount Rate: 13% Long-Term Growth 4.0% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 0.9169 0.8114 0.718t 0.6355 0.5624 0.5624 Present Value $75.430,818 $15.331,621 317,069,316 317.834.586 317.498.307 $202.202.656 Sum of Present Values 3285.367.304 2007 Multiples Pass.thru Premium 20% $57.073.461 %of AUM MVICalev MVIC/Op Inc Aggregate Marketable Value of Invested Capital $342,440,764 $231.000 $6.648,045 329.015.150 Less: Outstanding Debt 148.24% 51.5 11.8 3342.440.764 Partner's Pro Rata Percentage 44% 3150.673.936 Discount for Lack of Marketabiity 20% ($30.134.787) Pro Rata. Fair Market Parther's Capital 3120.539.149 Pro Rata. Fair Market Partner's Capital, rounded 3120.500,000 • Gordon Growth Model (Horizon Net Income x (li.growth rate) /(capitalization rate extra risk)] EFTA00608492 ECHIBIT A•13 APOLLO MANAGEMENT VII. LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16. 2007 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 PROJECT 2012 PROJECT 2013 PROJECT 2014 Arhusled Invested Capital' 30 $2.539.075.000 $7.817.225.000 512.695.375.000 515.234.450.000 $12.695.375.000 37.617225.000 32.539.075.000 IAanagemenl Fees' 30 $175240.000 $175.000.000 1175.000.030 3111.186298 3104.237.154 $69491 436 $32.429.337 Transaceon And Mongering Fees' 30 $152344.500 1304.689.000 1304.689.000 3152.344.500 SO SO $0 Broken Deal Fees' 30 (3175 355 17) (335.734.243) ($364136.009) rg1t6,83250 $0 SO $0 LP Rebate' $0 y391569,8361 ($m3,889.235) ($182,276,0041 (390,9032461 $0 $0 $0 Net Transaceon and Mongering Fees 30 343.138.747 $88.065522 $85.776.957 142.777.998 $0 $0 $0 Total Management Fees and Nel Transaction and Mongering Fees 30 5218,138,747 $261.065.522 $260.776.957 3153.964.296 5104.237.154 $69.491.438 $32.429.337 °gaming Expense Rao Eslimale 0.0% 32.0% 38.1% 41.9% 32.3% 32.3% 32.3% 32.3% Operaing Expenses' Pre-Tax Income SO ($55.976.144) r 63 197.925 140.22 301) (63 1703:Th 535'11Z (122.470207) (910.486,143) $0 1162.162.602 LS73 187.43°751.542 $53 1158.0951Z1.480905) $47,021,129 $21.943.184 Adruslments SO $0 $0 SO SO SO SO S0 Adrusled Pre Tax Income 30 1162.162.602 1197.925.301 1187.475.445 5118.011.805 $70.531.694 $47,021,129 $21.943.104 Tax Rate 42% 42% 42% 42% 42% 42% 42% 42% Less: Tax SO 368,108.293 $03.128.627 $78.739.687 149.584.958 $29,623.312 119.748.874 $9218.141 Net Income SO 594,054,309 1114,796.675 1108.735.758 588.446.847 $40.908.383 $27272255 312.727.052 Horizon Value (Gordon Growlh Model)' Days 259 624 989 1.354 1.719 2.084 2.449 2.814 Present Value Factors 1.0000 0.9346 0.8496 0.7724 0.7022 0.8383 0.5803 0.5278 0.4796 Present Value 30 379,912,408 $48.669.088 376.352.372 143.692.904 f23.739.802 514.387.759 36.103.898 Discount Rate: 10% Sum of Present Values $332,858,210 Pass-through premium 15% 549.928,731 Aggregate Marketable Value of Invested Capital $382.788.941 Lees Out:rand ng Debi 30 Aggregate Marketable Value of Pawners' Capital 9382.788.941 Pawners Pro Rata Percentage 30.35% 5116.175.837 Dscount lot Lack of Markelabilty 20% 1323235.16 Pro Rata, Fair Market Value of Partner's Capital $92.940.669 Pro Rata. Fait Markel Value of Partner's Capital 392.900,000 mh^AZ4,,,e EFTA00608493 EXHIBIT A-10 SUMMARY OF DISCOUNTED FUTURE CASH FLOWS AS OF APRIL 16. 2007 2007 2008 2009 PROJECTED CASH FLOWS 2010 2011 2012 2013 2014 2015 Anlidpated carried interest Iron, AIF VII .." 30 30 $0 SO SO $725.895.845 51,446,838.344 $1.440.764.646 $718.923.033 Pro Fiala Share of MV VII Direct kUerest Profit $0 30 $0 SO $0 $90.738.981 5180.854.793 $180.095.581 $89.845.375 Aggregate Tax&le Cash Flaws $0 30 SO 30 $0 5816.632.826 51.827.693.137 51.620.860.227 5808.788.378 Less. Operating Expenses 45% $0 30 $0 EO 50 (£367A84.772) ($732.461.912) (5729.387.102) (S36%954.770) Operating Income $0 30 SO EO 50 $449.108,050 3895231.226 5891.173.125 5444.833.608 Less. Tax 42% $0 30 SO EO 50 (5188.642.183) (5375.997.115) (5374.418.712) ($186,830,115) Met-Tax Cash Flows SO 30 SO 30 50 $260.505.871 $519234.111 5517.054.412 5258.003.493 Discount Rale 18% Days 259 624 989 1.354 1.719 2.084 2.449 2.814 3.179 Present Value Factors 04 0.8892 0.7535 0.6386 0.5412 0.4586 0.3887 0.3294 0.2791 0.2366 Present Value of Alter-Tax Cash Flows re ••• $0 30 50 30 50 $101.251.344 3171.026.925 5144.329.635 361.032.736 Sum of Present Value of After-Tax Cash Flows td • nAa $477.640340 Pass-through premium 15% pl 171.646096 Aggregate Marketable Carried Interest and Investment Return Value =s.0) 3509286,736 Pro Fiala Share of MV VII Deployment and Return of Caput] "•' Cal $0 ($53.076,875) (5128.953.750) ($126.953.750) ($83.476%75) $53476875 $126.953.750 5/28.953.750 $63.478,875 Present Value of Return of Capital the a xb) 30 (347.832.315) ($81.072.737) ($68.703 702) (3:29.112.589) 624.671.685 $41.816.416 535.437.640 $15.015.949 Aggregate Marketable Value of Return of Capital 0= sum MI6 (5109.7,32.259) Aggregate Marketable Value of Invested Capital g.I • 0 $439.504.477 Less. Debt Outslandng SO Aggregate Marketable Value of Equity $439.504.477 Pro Rata. Partner interest 24.64% 5108.293.903 0660unl for Lath of Marketability 25% ($27.073,476) Pro Rala. Fair Markel Value $81.220.427 Pro Rata, Fair Market Value, rounded $81.200,000 'AIF VII Apollo Investment Fund VII. LP "See Page 2 "'See Page 3 ""See Page 0 EFTA00608494 EXHIBIT A-15 APOLLO EPF MANAGEMENT, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management (June 30)' Growth in Assets Assets Under Management (December 31)' HISTORY 2006 PROJECT 2007 PROJECT 2008 PROJECT 2009 PROJECT 2010 PROJECT 2011 HORIZON 50 5300.000,000 NA 5330.000,000 $360.000.000 20.0% $39$000300 $432.000.000 20.0% $475.200.000 $518.400.000 20.0% $570.240.000 5622,080.000 20.0% $684.288.000 Leverage 33% Unleveraged Assets Under Management (June 30) $225.563.910 $270,67$692 $324312030 5389,774.436 $467.729.323 Management fees 1.50% 54.500,000 $5.400300 $6.480.000 $7.776.000 59.331.200 $9,331.200 Operating Expense Ratio' 45% 45% 45% 45% 45% 45% Operating Expenses (52.025,000) ($2.430300) (52.916.000) (53.499.200) ($4,199.040) ($4.199.040) 52.475.000 $2.970.000 $3.564.030 $4.276.800 $5.132.160 $5.132.160 Adjustment Adjusted Pre-Tax Income $2.475.000 $2.970.000 $3.564.000 $4.27$803 $5.132.160 $5.132.160 Tax Rate 42% 42% 42% 42% 42% 42% Tax ($1.039.500) ($1.247.400) ($1.496.880) ($1.796.256) ($2.15$507) ($2.155.507) Nel Income $1.435.500 $1.722.600 $2.067.120 $2.480.544 $2.976.653 52.976.653 Horizon Value (Gordon Growth Model)' 34.396.877 Discount Rale: 13% Long-term growth rate: 4% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 1.0000 0.9169 0.8114 0.7181 0.6355 0.5624 0.5624 Present Value 1.316,253 1.397.791 1,484.379 1.576.332 1.673.981 19.343.780 Sum of Present Values $2$792.516 2007 Multiples Pass•through premium 15% 54.018.877 % of AUM MVID-Rev MVIC;Op Inc Aggregate Marketable Value $30,811,394 $300.000.000 54.500.000 52.475.000 10.3% 6.8 12.4 Discount for Lack of Marketability 20% ($6.162.279) Aggregate Fair Market Value $24,649,115 Partner's Pro Rata Percentage 44% Pro Rata Fair Market Value $10,845,611 'Based on MaAVOTCYllprojeciiens provide to Empire -.Gordon &oath Model: Horizon View - (hate nel income ' (7 , ong.:e m growth rate) / (discount tale bog-term growth owe) EFTA00608495 EXHIBIT A-16 APOLLO EPF ADVISORS, LP DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management (June 30) Growth in Assets Assets Under Management (Dec. 31) History 2006 Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON $0 $300.000.000 NA $330.000.000 $360.000.000 20.0% 5396.000.000 5432.000.000 20.0% 5475.200.000 3518.400.000 20.0% 3570.240.000 5622.080.000 20.0% 5684.288.000 Leverage 33% Unleveraged Assets Undermanagement $225.563.910 3270.676.692 3324.812.030 5389.774.436 5467.729.323 Management fees (Dec. 31. for calculation of Gross Carry) 1.50% (a) 54.500.000 55.400.000 36.480.000 57.776.000 59.331.200 Vial on assets 15.00% (b) $45.000.000 354.000.000 564.800.000 577.760.000 593.312.000 Fund Expenses 0.25% (c) (5750.000) (5900.000) (51.080.000) (51.296.000) ($1.555200) Cost of Debt 6.40% (d) ($4.763.910) (55.716.692) (36.860.030) ($8.232.036) ($9.878.443) Net Fund Profits (e .. -a + b + c + d $34.986.090 $41.983308 550.379.970 560.455.964 572.547.157 Gross carry (i.e. Revenue) 20.00% 36.997.218 58.396.662 510.075.994 512.091.193 314.509.431 314.509.431 Operating Expense Ratio 45% 45% 45% 45% 45% 45% Operating Expenses (53.148.748) (53.778.498) (54.534.197) ($5.441.037) ($6.529244) (56.529.244) $3.848.470 54.618.164 $5.541.797 $6.650.156 $7.980.187 $7.980.187 Adjustment Adjusted Pre-Tax Income 53.848.470 54.618.164 $5.541.797 $6.650.156 $7.980.187 $7.980.187 Tax Rate 42% 42% 42% 42% 42% 42% Tax ($1.616.357) (51.939.629) ($2.327.555) ($2.793.066) ($3.351879) ($3.351.679) Net Income 52.232.113 52.678.535 $3.214.242 $3.857.090 54.628.509 $4.628.509 Horizon Value (Gordon Growth Model)• $32.090.993 Discount Rate: 19% Long-term growth rate: 4% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 1.0000 0.8839 0.7428 0.6242 0.5245 0.4408 0.4408 Present Value $1.972.917 51.989.496 $2.006.214 $2.023.073 $2.040.074 $14.144.513 Sum of Present Values 524.176.288 2007 Multiples Pass-through premium 15% 53.626.443 % of AUM MVIC:Flev MVIO'Op Inc Aggregate Marketable Value of Invested Capital 527,802.732 $300.000.000 56.997218 33.848,470 Less: Outstanding Debt SO 9.3% 4.0 7.2 Aggregate Marketable Value of Partners' Capital 527.802.732 Partners Pro Rata Percentage 44.00% 512.233.202 Discount for Lack of Marketability 20% (52.446.640) Pro Rata. Fair Market Value of Partner's Capital 59.786.562 Pro Rata. Fair Market Value of Partner's Capital. rounded $9,800,000 Projections provided by Management EFTA00608496 EXHIBIT A-17 APOLLO NEW FUND MANAGEMENT LP'S DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON Assets Under Management (June 30)* $0 $1.030.000.000 $1.673.500.000 $2.515.700.000 $3,107.652,500 Growth in Assets NA NA 62.5% 50.3% 23.5% Assets Under Management (December 31 )- $515.000.000 $1.351.750.000 $2.094.600.000 $2,811.676.250 $3.418.417.750 Leverage 33% Unleveraged Assets Under Management (June 30) $0 $774.436.090 $1.258.270.677 $1.891.503.759 $2.336.580.827 Management fees 1.50% $0 $15.450.000 $25.102.500 $37.735.500 $46.614,788 $46.614.788 Operating Expense Ratio' 45% 45% 45% 45% 45% 45% Operating Expenses $0 ($6.95Z500) ($1 1,296.125) (516,980.975) ($20,976.654) ($20.976.654) $0 $8.497.500 $11806375 $20.754.525 $25.638.133 $25.638,133 Adjustment Adjusted Pre•Tax Income $0 $8.497.500 $11806375 $20.754.525 $25.638.133 $25.638.133 Tax Rate 42% 42% 42% 42% 42% 42% Tax $0 ($3.568.950) ($5.798.678) (S8.716.901) ($10.768.016) ($10.768.016) Net Income $0 $4.928.550 $8.007.698 $12.037.625 $14.870.117 $14.870.117 Horizon Value (Gordon Growth Model)- 154.649.219 Discount Rate: 14% Longterm growth rate: 4% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 0.9112 0.7993 0.7012 0.6150 0.5395 0.5395 Present Value 0 3.939.447 5.614.601 7.403.672 8.022.615 83.435.191 Sum of Present Values $108.415,526 2008 Multiples Pass•through premium 15% $16.262,329 % of AUM MVIC/Rev MVIC/Op Inc Aggregate Marketable Value $124,677,855 $1.030.000.000 $15.450.000 $8.497.500 12.1% 8.1 14.7 Discount for Lath of Marketability 20% ($24/35,571) Aggregate Fair Market Value $91742284 Partner's Pro Rata Percentage 44% Pro Rata Falr Market Value $43.886.605 Based on management projections pow* to Error& - Gordon Growth Model. Horizon Vahie - (horizon net income • (1 • long•renn pawl) rate)) /(Scowl rate long-term growth rate) EFTA00608497 EXHIBIT A-18 APOLLO NEW FUNDS ADVISORS LP'S DISCOUNTED FUTURE EARNINGS AS OF APRIL 16, 2007 Assets Under Management (June 30) Growth in Assets Assets Under Management (Dec. 31) Projected 2007 Projected 2008 Projected 2009 Projected 2010 Projected 2011 HORIZON SO NA $515,000,000 $1,030,000,000 NA $1,351,750,000 51,673,500.000 62.5% 52,094,600.000 $2.515,700.000 50.3% 52,811,676.250 $3.107,652.500 23.5% $3.418,417.750 Leverage 33% Unleveraged Assets Undermanagement $0 5774.436.090 51,258270.677 31.891.503.759 $2.336,580,827 Management fees (Dec. 31. for calculation of Gross Carry) 1.50% (a) SO 515.450,000 $25.102,500 $37.735.500 $46,614.788 Vial on assets 15.00% (b) $0 3154.500,000 5251.025.000 5377,355.000 $466,147.875 Fund Expenses 0.25% (c) $0 (32.575.000) ($4.183.750) ($6.289,250) (37,769.131) Cost ol Debt 6.40% (d) 30 (316.356.090) ($26.574.677) ($39.948.559) ($49,348.587) Net Fund Profits (e.-a.b+c+d) $0 $120,118,910 5195.164.073 5293,381.691 $362,415.369 Gross carry (i.e. Revenue) 20.00% SO 524.023.782 $39.032,815 $58.676.338 372,483.074 $72.483.074 Operating Expense Ratio 45% 45% 45% 45% 45% 45% Operating Expenses SO (310.810.702) (317.564.767) (326.404.352) ($32,617.383) ($32.617.383) SO 513.213.080 321.468.048 $32.271.986 $39,865.691 $39.865.691 Adjustment Adjusted Pre-Tax Income SO 313.213.080 $21.468.048 $32.271.986 $39,865.691 $39.865.691 Tax Rate 42% 42% 42% 42% 42% 42% Tax 30 ($5.549.494) (39.016.580) (313.554.234) (316,743.590) (316.743.590) Net Income 30 $7.663.586 312.451.468 $18.717.752 $23.122.101 $23.122.101 Horizon Value (Gordon Growth Model)' $133.594.359 Discount Rate: 22% Long-term growth rate: 4% Days 259 624 989 1.354 1.719 1.719 Present Value Factors 1.0000 0.8684 0.7118 0.5834 0.4782 0.3920 0.3920 Present Value SO $5.454.968 $7264.754 $8.951,467 $9,063.751 $52.368.340 Sum ol Present Values $83,103,280 2008 Multiples Pass-through premium 15% 312.465.492 % of AUM MVIC/Rev MVIC/Cp Inc Aggregate Marketable Value of Invested Capital $95,368.772 51,030,000.000 $24,023.782 $13,213,080 Less: Outstanding Debt SO 9.3% 4.0 7.2 Aggregate Marketable Value of Partners' Capital $95.568.772 Partners Pro Rata Percentage 44.00% 342.050.260 Discount for Lack of Marketability 20% (38.410,052) Pro Rata. Fair Market Value of Partners Capaal 333.640,208 Pro Rata, Fair Market Value of Partner's Capital, rounded $33,600,000 EFTA00608498 EXHIBIT B-1 APOLLO MANAGEMENT COMPANIES BUILD APPROACH EOUITY RATE MANAGEMENT FEE CASH FLOWS AS OF APRIL 16, 2007 Risk•free Rate (20 years) Equity Risk Premium Size Premium (Beta Adjusted) 4.98% 6.00% 1.03% Build-up Equity Rate of Return 12.01% Defile 4 EFTA00608499 EXHIBIT B-2 GUIDELINE COMPANY VALUATION - DESCRIPTIONS AS OF APRIL 16. 2007 COMPANY DESCRIPTION B4Ckrock. Inc. EllaCkROCk IOC. operates a4 an inveeTient management sun in the linked Slates with S1.125 lake d aeSels under management as Of December 31. 2006. Its investment management senreec pnrnanty consist al the active management ea fixed income. cash management and cepty diem accounts the management of open.end and dosed.end mutual fundfannies. and alter non.Unted Stales coin-gent retail preduCts serving me instftuMnal and reel manals. and the managenient Of eternalke fundSdeveroPed to Serve vairouS Wagoner needs. It also eters rek management. inrostment Tatervi OASOurdng and Margie eiditegy Sr/APT to inututiOnal investors tater the BlackFtock Sokilens bard name. Eaton Vance Corp. is PrnOPTY engaged in the tueneaS 01 inanarang Treadmill Fund and providing inveStMent management and COwle9Ing SennCeS to rolgh-net.wOrth Individuate and 'ARNOW The COMperWS products and Services bade COMpany.SpOrvIOred open-end and dosed end funds, pnvale funds br high. net.vorth and ristartional investors. retail managed accomls and separately managed accounts la inslitubonal and h.gh-net.vorth investors. As of October 31.2006. Eaton Vance managed Slag bitten in assets. The CCMPfiny conducts IN investment management butineSS through ItS (Nee whdly owned SuOtidianeS. Eaton Vance Management (EWA/. SCOT Managernell and RetrolliCh (BUM and ES/On VanCe Investment Counsel (ETC). and CS three ;redly caned sutatcliams: Manta Capital Management. LLO (Atlanta Capital]. Fox Asset Management LLC (Fox Awn Managomert i and Parametric Rankin Resources. IOC. IS an investment management company. Through M wroly Owned01*d and attired sutildaaaa. Franklin Resources. Inc provides ilveStment management and lund admInierzeilen services to open•nd and ClOtiedend Investment Companies. inslaubonal acooune. hohnet.morM latrines. indoduals and separate accounts in the tinted States and intanatonally. Frartdin Resources. Inc. also provides investment management servo*: and other related services. including shareholder services. Pander agency. twideMrang. delrbuten. Pa t00181. truStee and other SCIPWy SerViCes In IN COmPaniS Secondly business and 00eraling Segnient. baladnglinanCe. k provides Cleats Wit SSW (Mall banNng and consumer lending Services (rough tS bank StbSdadee. Eaton Vance Corp. Franklin RIMOuribett, Int. Huveen Investments. Inc. Pitmen Investments. Inc is pnrnanty engaged n asset management and related research, as well as thedevelopment. markebng and disInbution of investment products and services lot the affluent. hgh.nel.wcelh and irabtutenal market segments. Tureen Investment• distritulee its Investment products and Services. Including ndMdualer managed SOCOunte Closed-end exchangebaded ItwidS and Open. end mutual MUM to filbuent and highnet.vroolli mane segments trough unalnlated nterMedery lams. Tea/ding broker-dealers. commercial banks. &float*: of insurance providers. financial planners. accountants. coradtants and investment adman. The company also provides managed accounts and partnershps to several instilubonal market segments. T. Rowe Pdce Group. Inc. T. Rowe Pace Group. Inc to a tnancial HMOS NAN COMM), Tat provide:, irriegMent advieby services to irdrAdtal and instatenal Investors in to sponsored T. Rowe Pnce mutual kinds and other investment portfolios. The Company operates as nvestrnera advisory bushes: through es subsidiary companies. pnmanly T. Rome Pnce Associates. Inc.. T. Rowe Price Internale...al Fume. Inc. and T. Rowe Pnce Global Ineestmere Samoa: Limited Legg Mason Inc. ABNO Caput COW Legg Maten. Inc. IS a Geed asset managernent COvrgany. Acing trough alleubeldarieS. the Company prOrdes Investment management and related Stmeeti 10 inablittnal and TOP/dual Cleats, cormany.sponsoed mutual haps end ether awe:pent vehicles The Company oilers these products and services drectly aid Through various linanoa/ intermedianas. II dvides its besiness tea three airmen:: Mutual Fundstdaroged &arose:. Instortional and Wealth Management. Wthn each of its camera. To Company prondas se•ites TrOugh a number c4 asset managers. which are 'mimeo& businesses, each of ntoch is housed in One Or Mere Oaten sdpioi area. Myth typicaty market Their PeduCts and ServiCeS under Tea cnn brand name. Curing me Mail year ended March 31. 2006. to Company scoured Parma, Group Ltd, a global funds.of.hodoe lunch manager. It MO exted from the nonasset management Ailed Capital Corporation is a bosom'sday:MB/Mena COMPany (BCC) engaged n the private Moly busness. The COOPany provide:, long-term debt and froUb 03Pral Cdiranir IO private melee mango oompanies In a variety 01 00.40106 These imesanws are long-term in nature and are privately negotiated. From bale to time, fl may rived in companies that aromatic tut lack access to addiscpal pubic capital. It prmarly invests in the Arrencan entrepterounal economy. The Company does not provide seed or early.slage capital. Harris & Karns Group Inc. Karns & Nana Group. Inc a venturocaptal company specialuang in tiny technology Tat operates as a beano= development [orrery (BCC). The Companys amassment focuses to where capital appreomen by making vamp, caplal investments in early stage companies. As a venue capital company, the Company invests in and melbas managerial assetance to is portion:, companies opal have wend& for gawp Hanna & Harris Group makes initial oenttieCapItal Investments exClutirvellf in tiny teennelOPY. vetch t deunes as nanotochnciagy.microsystenis and micrtelectromechancal systems (MEUS). Ammeter, Investment StrikeoutsAlternative InveSIMent Strategies Ud s a ClOstodend Mesmer,' company. The tomPantfe OWN, b tO aChieva fomms with le* volallIiy. II intends 10 aCtiktve INS by imeieng or: arty In a ?Owenby' portion:, olnalop tunas. Pose Fund Services Limited acts as the manager of the sampan'. American Capital Strategies LTC American Capital Strategies. Lia ('American Caplan invests n and sponsces management and employee buyouts. invests in private ettutwacasofed buyouts. provides °dotal 0IreC5y to early page and maitre private and SM8IIINVIC companies. invest in COMMerCial mortgaget0CM0 SeCurneS ('CTEIS'l and Collateralized deb delgallon MCOO) ST LOWS. and meta in Investment funds managedby the company. American Capital provides scone debl. mezzanine debt and truly to fund growth. acquutiora and nxoptalyabons. The company. through t asset management business. is also a manager al debt and eouty imestmeres in pnvato companies. Amman Capital provides captat dkedly to private and eM0/1 pubic companies tor growth. amulet:3ns o tecaptallzabons. Cinema, Investments plc Canciooer Investments pc is a Unted Innylom.basea independent trust that organizes and invests pAncpany in large European buyouts. It is engaged in me dentacalon. impiementation and monitorOp CO large buyouts and twInS. Candover Investments. pIC makes an investrrent other under a coowestmert agreemercenth eh/dsmay hods or as own accost. The third.party managed kinds are moaned by C.irrhver Pwiners I united 31 Group pit 31 Group PIC a art InvefilMeril Will engaged In private entity and venture capital activnies It focuses on bayous. 040Mh capital anti rectum capital. and invests across Eimpo. the tinted States and Asia. Its Buyouts business *no invests in Eimpean niiimarkot buyout transacbons with a value el up to CI blIon arid lasget around 15 investments per year, Its Groat Capital business makes moony investments WOGS a range 04 sectors, busineSs sizes anti luoan0 reeds, and bagels moments el between £10 mitten and E150 Men Group Man Group PIC is a /Witting CremPTY ThroUghile StbSClaneS, me Company Operates as a inoyclet ol ahetnecne Westmont pieaucts and solubons as wet as acts a Mures broker. Man Investments. tie Asset Management division al the Company. provides access Ice private and inslitubonal investors woktrado to badee lend and other alternative investment stratagem through a range al products and SOlutiOne designed IO delrer abealule return vent alto CdreTiOn be egity and bond man', benchmarks. Man Financial. doe Brokerage ONISICA. acts as a broker 01 futures. owes and Other equity derivatives tom both InelltudOnal and Private OentS. and ads as at intermediary in the metals, energy arid foreign exchange markets. Man Financial provides a-termed:my arid crotched pnnopal bolting and other related services to a worMirado dent bwo which ranges from I nancial instrubora. asset managers and industnal groups to Partners Group Hotting IS a SwizerlancSbase0 nnancei company It is a global eiternertme anel management km. It invests et Oaare) equey. hedge funds and prime debt The Group manages a range of funds. structured products and customized pordoloos la an International denude of nsttulenal investors. private banks and ddrbuten partners. Partners Group Told% a headquartered in Zug. Swttorlard and has offices in New York. London. Singapore and Guornsay. Partffilla Group Wading SVG Capital SVG Captal plc is a pnvate wilily investor and fund management banes:, SVG Caplal invests in a porlfdio et prnaso CCF.ItY funds. the mealy ot which are advised by Penn in &Whoa. me Company Invests In pavane equity bade that Inveel in Japan. NOM MOMS. Aga end the Ice fidenCe6 SOCIOM. OM n unquOted end grated buSIMISSOS through specialist hods and CO-nverAMentS alongside thee, kinds. SVG Captafs Itrid management bigness. SVG Advisers. stn-ctures. markets, manages arid advises products for meestrnera in private and public equity using private any techniques. Fortress Inveetment Group U.0 Fortress Investment Group LIG tForifess) Is a global ti/leMative aria manager with appnoxinately S25 Waco in assets Wider management as at September 30. 2006. The Company raises, masts and manages pnvato eq-ity funds, hedge funds and publicly traded alternative investment vehicles. Fortress earns management foes based en the size of as funds, incentive income based en the performance at the Company. hat. and investment income from Faints( princpal investments in those funds. EFTA00608500 Exhibit B-3 AS OF APRIL 16. 2007 BETA CALCULATION Company Name Symbol (Stocks Waded on U.S. Mock &Menges) Blackrock. Inc BLK Eaton Vance Corp EV Franklin Resources. Inc BEN Nuveen Investments. Inc JNC T. Rowe Price TROW Legg Mason LM Allied Caporal Corp ALD Harris and Harris Group. Inc TINY American Capital Strategies LTD ACAS (Stocks Waded on Me London Stock Exchange) Candover Investments plc CDI 31Group plc III Man Group plc. BAG SVG Capital SVt lAveracie Beta Share Price Shares Gael/mean* MV of Equity LT Debt Preferred MVIC Tax Rate DebtEqulty 0.90 160.60 116.41 18.695.4 253.2 0.1 18,948.7 33.2% 1.4% 1.09 37.56 126.38 4.746.8 4.7468 37.5% 0.0% 1.24 129.47 253.55 32627.1 899.7 33.726.8 35.9% 2.7% 0.98 49.94 78.81 3.935.8 644.5 4.5803 39.8% 16.4% 1.37 50.16 264.96 13290.4 13290.4 37.7% 0.0% 1.16 98.32 131.41 12.920.2 1.162.7 14.082.9 38.5% 9.0% 0.82 29.38 148.57 4.365.0 1.893.1 8284.1 35.0% 43.5% 1.57 14.32 21.02 301.0 301.0 35.0% 0.87 48.73 147.60 6.897.3 3,928.0 10.823.3 41.3% 0.52 41.96 21.86 917.1 - 917.1 NA 1.28 23.43 396.24 9.2820 3.674.3 12.958.3 0.4% 39.6% 0.81 11.32 1.907.48 21.599.7 1.548.0 23.145.7 19.1% 722 0.87 18.31 138.81 2.541.5 2.541.5 NA 1.02 10.178.4 1.0773 0.0 11255.8 326% 13.6% Unlevered Beta Calculation Bu - But(1.((14)(D.E))) Using Beta. tax rate and the inclistry's debt to equity ratio. the reported betas are last unlevered betcro and then reteveres in the calculation to the right. Blaclunck. Inc 0.89 Eaton Vance Corp 1.09 Franklin Resources. Inc 1.22 Nuveen Investments. Inc 0.89 T. Rowe Price 1.37 Legg Mason 1.10 Allied Capeal Corp 0.64 Harris and Harris Group. Inc 1.57 American Capital Strategies LTD 0.65 Candover Investments plc 0.52 Maroon plc 0.92 Man Group plc. 0.77 SVG Caplet 0.67 Average s 0.95 Median a 0.89 p.t Source. Bloomberg Network Fortress Investment Group LLC Insunident iradng data 10 caicLiate Beta Partners Gran Insutlioent inxing data to calculate Beta Relevered Beta Calculation B - Bu(1.111-tilD,E))) Bu - 0.80 DIE - 25.0% I - 42.0% B - 0.92 industry Debt Total Capital Calculations DebtrIotal Inv. Capital 20.0% &NW/Total Inv. Carnal 80.0% Tax Rate Calculation C.orrtmed Tax Rate 42.00% EFTA00608501 Exhibit B4 AS OF APRIL 16. 2007 BETA CALCULATION Company Name Symbol (Socks Waded on U.S. Mock &Menges) Blackrock. Inc BLK Eaton Vance Corp EV Franklin Resources. Inc BEN Nuveen Investments. Inc JNC T. Rowe Price TROW Legg Mason LM Allied Caporal Corp ALD Harris and Harris Group. Inc TINY Amerkan Capital Strategies LTD ACAS (Stocks Waded on Me Londan Stock Exchange) Candover Investments plc CDI 31Group plc III Man Group plc. BAG SVG Capital SVt lAveracie Beta Share Price Shares Outslandlno MV of Equity LT Debt Preferred MVIC Tax Rate DebtiEgulty 0.90 160.60 11641 18.695.4 253.2 0.1 18948.7 33.2% 1.4% 1.09 37.56 126.38 4.746.8 4746.8 37.5% 0.0% 1.24 129.47 253.55 32027.1 899.7 33.726.8 35.9% 2.7% 0.98 49.94 78.81 3.935.8 644.5 4.5803 39.8% 16.4% 1.37 50.16 264.96 13290.4 13290.4 37.7% 0.0% 1.16 98.32 131.41 12.920.2 1.162.7 01.082.9 38.5% 9.0% 0.82 29.38 148.57 4.365.0 1682.1 6264.1 35.0% 43.5% 1.57 14.32 21.02 301.0 301.0 35.0% 0.87 46.73 147.60 6.897.3 3.926.0 10.823.3 41.3% 0.52 41.95 21.86 917.1 - 917.1 NA 1.28 23.43 396.24 9.2823 3.674.3 12.956.3 0.4% 39.6% 0.81 11.32 1.907.48 21.599.7 1.548.0 23.145.7 19.1% Tr. 0.67 18.31 138.81 2.541.5 2.541.5 NA 1.02 10.178A 1.0773 0.0 11255.8 326% 13.6% Unlevered Beta Calculation Bu - Bur(1.((1-0(DE))) Using Beta. tax rate and the inclistry's debt to equity ratio. the reported betas are last unlestred betoo and then rete vete:: in the calculation to the right. Blaclunck. Inc 0.89 Eaton Vance Corp 1.09 Franklin Resources. Inc 1.22 Nuveen Investments. Inc 0.89 T. Rowe Pfice 1.37 Legg Mason 1.10 Allied Capeal Corp 0.64 Harris and Herds Group. Inc 1.57 American Capital Strategies LTD 0.65 Candover Investments plc 0.52 Maroon plc 0.92 Man Group plc. 0.77 SVG Capital 0.67 Average s 0.95 p.t Source. Bloomberg Network Fortress Investment Group LLC Insunident iriktng data 10 oil:Wale Beta Partners Gran Insutlioent inking data to calculate Beta Relevered Beta Calculation B - Bu(1.((1.00),E1/1 Bu - 0.80 DIE - o.cr,,,, I - 42.0':; B - 0 SO industry DebtiTotal Capital Calculations DebtrIotal Inv. Capital 0.0% Equity/Total Inv. Carnal loam Tax Rate Calculation Combined Tax Rate 42.00% EFTA00608502 Exhibit B-5 APOLLO MANAGEMENT COMPANIES DISCOUNT RATE CALCULATION AS OF APRIL 16, 2007 CAPM SUMMARY The cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows: Re = Rf + Bx Rm - Rf + Rsm Where: Rf Return on a risk-free asset B Beta - a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio Rm - Rf The market risk premium defined as the expected return required for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf) Rsm Small stock premium Rcs Company and industry specific risk We then calculated the WACC as follows: Variable Value Source Rd = 8.00% Company's marginal cost of debt t = 42.00% Company's Marginal Tax Rate Rf = 4.98% 20-yr treasury strip bond rate Rm - Rf = 6.00% Equity Risk Premium B = 0.92 Computed Beta. see Page 3 D % = 20.0% Comparables Debt/Capital Ratio E % = 80.0% Comparables Equity/Capital Ratio Rsm 1.03% Ibbotsons Low-Cap Company Stock Premium (Decile 4) Re = Rf + fa x ( Rm - Rf )) + Rstn + Rcs = 4.98% + 6.00% * 0.92 J + 1.03% Re = 11.51% EFTA00608503 Exhibit B-6 APOLLO ADVISOR COMPANIES DISCOUNT RATE CALCULATION AS OF APRIL 16, 2007 CAPM SUMMARY The cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows: Re = Rf + Bx Rm - Rf + Rsm Where: Rf Return on a risk-free asset B Beta - a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio Rm - Rf The market risk premium defined as the expected return required for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf) Rsm Small stock premium Rcs Company and industry specific risk We then calculated the WACC as follows: Variable Value Source Rd = 8.00% Company's marginal cost of debt t = 42.00% Company's Marginal Tax Rate Rf = 4.98% 20-yr treasury strip bond rate Rm - Rf = 6.00% Equity Risk Premium B = 0.80 Computed Beta. see Page 3 D % = 0.0% Comparables Debt/Capital Ratio E % = 100.0% Comparables Equity/Capital Ratio Rsm 1.03% Ibbotsons Low-Cap Company Stock Premium (Decile 10a) Re = Rf + fa x ( Rm - Rf )) + Rstn + Rcs = 4.98% + 6.00% * 0.80 J + 1.03% Re = 10.81% EFTA00608504 EXHIBIT B-7 APOLLO MANAGEMENT, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Where: Rd ( 1 - 1 ) D% + ( Ft, • E%) Ra = Coal of interest bearing debt capital t = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%- Percentage of equity included :I capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Pricing Model Build-Up Approach Selected Base Equity Rate Company/Industry Specific Risk Company Specific Coal of Equity Equity Rate 11.51% 12.01% 11.80% 1.00% 12.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected Debt/Real Capital Ratio: Selected Tax Rate: 12.8% (see above) 8.0% 20.0% 42.0% WACC [ 8.0% • (1- 0.42)J 0.20+ 12.8% • 0.80) . [4.6% • 0.20 I +(12.8% • 0.80) . 0.8%+ 10.2% . 11.2% Selected WACC: 11.0% EFTA00608505 EXHIBIT B-8 APOLLO MANAGEMENT IV, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC= Rd ( 1 - t ) D% + ( Ft. • E% ) Where: R4 = Cost of interest bearing debt capital t = Margral tax rate D%= Percentage of debt included in capital structure R. = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Pricing Model (see Exhibit F and G) Build-Up Approach (see Exhibit E) Selected Base Equity Rate Company/Industry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% 0.00% 11.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected Debt/Total Capital Ratio: Selected Tax Rate: 11.8% (see above) 8.0% 20.0% 42.0% WACC = [ 8.0% • (1- 0.02)]' 0.20 +111.8% ' 0.80) = [ 4.6% • 0.20] + [11.8% • 0.80] = 0.9% + 9.0% = 10.4% Selected WACC: 10.0% EFTA00608506 EXHIBIT 8-9 APOLLO MANAGEMENT V. . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC = Rd ( 1 - t ) D% + ( Ft. • E% ) Where: Cosl of interest bearing debt capital t = Margral tax rate D%= Percentage of debt included in capital structure R. = Cosl of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Pricing Model Build-Up Approach Selected Base Equity Rate Company/Industry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% -2.00% 9.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected Debt/Total Capital Ratio: Selected Tax Rate: 9.8% (see above) 8.0% 20.0% 42.0% WACC [ 8.0% • Cl- 0.02)1' 0.20 + 9.8% 0.801 [4.6% • 0.201+ I 9.8%• 0.80] 0.9% + 7.8% a 8.8% Selected WACC: 9.0% EFTA00608507 EXHIBIT 8.10 APOLLO MANAGEMENT VI, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC= Rd ( 1 - t ) D% + ( Fte • E% ) Where: Cost of interest bearing debt capital t = Margral tax rate D%= Percentage of debt included in capital structure R„ = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Pricing Model Build-Up Approach Selected Base Equity Rate Company/Industry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% -2.00% 9.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected Debt/Total Capital Ratio: Selected Tax Rate: 9.8% (see above) 8.0% 20.0% 42.0% WACC [ 8.0% • Cl- 0.02) I 0.20 + 9.8% 0.80] [4.6% • 0.201+ I 9.8%• 0.80I = 0.9% + 7.8% a 8.8% Selected WACC: 9.0% EFTA00608508 EXHIBIT B-11 WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model Build.Up Approach Selected Base &pity Rate Company/Industry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 70% -2.00% 30% 4.00% -1.40% 1.20% -0.20% 11.6% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebtITotal Capital Ratio: Selected Tax Rate: 11.6% (see above) 8.0% 20.0% 42.0% WACC = [8.0% • (1- 0.42)1' 0.20 +111.6% • 0.80) [ 4.6% • 0.201 +111.6% • 0.801 0.9% + 9.3% 10.2% Selected WACC: 10.0% EFTA00608509 EXHIBIT 8.12 APOLLO VIF MANAGEMENT, LP WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model Build-Up Approach Selected Base &pity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% -1.00% 0% 5.00% -1.00% 0.00% -1.00% 10.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebtrTotal Capital Ratio: Selected Tax Rate: 10.8% (see above) 8.0% 20.0% 42.0% WACC [8.0% • (1- 0.42) I ' 0.20 + I 10.8% • 0.80) [4.6% • 0.20) +110.8% • 0.80) 0.9% + 8.6% 9.5% Selected WACC: 10.0% EFTA00608510 EXHIBIT B-13 APOLLO SVF MANAGEMENT. . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Ft. • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and G) Build-Up Approach (see Exhthit E) Selected Base Eqiity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% -1.00% 0% 0.00% -1.00% 0.00% -1.00% 10.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 10.8% (see above) 8.0% 20.0% 42.0% WACC [8.0% • (1- 0.42)1' 0.20 + I 10.8% • 0.801 [4.6% • 0.20 1+110.8% • 0.801 0.9% + 8.6% 9.6% Selected WACC: 10.0% 'Market data is as of close of business June 6. 2007 EFTA00608511 EXHIBIT B-14 APOLLO SVF ADVISORS, . WACC SUMMARY CONCLUSION AS OF APRIL 16.2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC = Rd 1 - t ) D% + ( R. • E% ) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and GI Build-Up Approach (see Exhthit E) Selected Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 10.81% 12.01% 12.00% Risk Weighting Adjustment Contribution 0% 0.00% 100% 5.00% 0.00% 5.00% 5.00% 17.0% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 17.0% (see above) 8.0% 0.0% 42.0% WACC [8.0% • (1- 0A2)1• 0.00 +117.0% • 1.00) [ 4.6% • 0.00 1 + [ 17.0% • 1.001 0.0%+ 17.0% 17.0% Selected WACC: 17.0% EFTA00608512 EXHIBIT B-15 APOLLO ASIA MANAGEMENT, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizi-ig Model (see Exhibit F and G) Build-Up Approach (see Exhibit E) Weighted Average Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% 0.00% 0% 5.00% 0.00% 0.00% 0.00% 11.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 11.8% (see above) 8.0% 20.0% 42.0% WACC = [8.0% • (1- 0A2)1• 0.20 +111.8% • 0.80) [4.6%* 0.201+111.8%* 0.80) 0.9% + 9.4% 10.4% Selected WACC: 10.0% 'Market data is as of close of business June 6. 2007 EFTA00608513 EXHIBIT B-16 APOLLO ASIA ADVISORS. . WACC SUMMARY CONCLUSION AS OF APRIL 16.2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC = Rd 1 - t ) D% + ( Re • E% ) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and G) Build-Up Approach (see Exhthit E) Selected Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 10.81% 12.01% 12.00% Risk Weighting Adjustment Contribution 0% 0.00% 100% 5.00% 0.00% 5.00% 5.00% 17.0% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 17.0% (see above) 8.0% 0.0% 42.0% WACC = [8.0% • (1- 0A2)1• 0.00 +117.0% • 1.00) [ 4.6% • 0.00 1 + [ 17.0% • 1.001 0.0%+ 17.0% 17.0% Selected WACC: 17.0% EFTA00608514 EXHIBIT B-17 APOLLO EUROPE MANAGEMENT, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Fto • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and G) Build-Up Approach (see Exhthit E) Selected Base Ecrity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 70% 1.00% 30% 7.00% 0.70% 2.10% 2.80% 14.6% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 14.6% (see above) 8.0% 20.0% 42.0% WACC [8.0% • (1- 0.42) ] • 0.20 +[14.6% • 0.80] [4.6% • 0.20] +[14.6% • 0.80] 0.9%+ 11.7% 12.6% Selected WACC: 13.0% EFTA00608515 EXHIBIT 8.18 APOLLO ALTERNATIVE ASSETS, . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model Build-Up Approach Selected Base &pity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% 3.00% 0% 0.00% 3.00% 0.00% 3.00% 14.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebtrTotal Capital Ratio: Selected Tax Rate: 14.8% (see above) 8.0% 20.0% 42.0% WACC = [8.0% • (1- 0.42)] ' 0.20 +114.8% • 0.80) [4.6% ' 0.20] +[ 14.8% ' 0.80) 0.4%+ 11.8% 12.8% Selected WACC: 13.0% EFTA00608516 EXHIBIT B-19 APOLLO MANAGEMENT VII. . WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC= Rd ( 1 - t ) D% + ( Ft. • E% ) Where: R4 = Cost of interest bearing debt capital t = Margral tax rate D%= Percentage of debt included in capital structure R. = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Pricing Model Build-Up Approach Selected Base Equity Rate Company/Industry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% -1.00% 10.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DeN/Total Capital Ratio: Selected Tax Rate: 10.8::. (see above) 8.0% 20.0% 42.0% WACC [ 8.0% • Cl- 0.02)]• 0.20 +110.8% ' 0.80) [ 4.6% • 0.20]+[10.8% • 0.80] = 0.9% + 8.6% a 9.6% Selected WACC: 10.0% EFTA00608517 EXHIBIT 8.20 APOLLO ADVISORS VII. LP WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Ft. • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and G) Build-Up Approach (see Exhthit E) Selected Base Eqiity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 10.81% 12.01% 12.00% Risk Weighting Adjustment Contribution 0% 0.00% 100% 6.00% 0.00% 6.00% 6.00% 18.00% WACC Calculation Selected Equity Rate: 18.0% (see above) Selected Debt Rate: 8.0% Selected DebttTotal Capital Ratio: 0.0% Selected Tax Rate: 42.0% WACC = [ 8.0% • (1- 0.42)1' 0.00 +118.0% • 1.00) [4.6% • 0.00 1+118.0% • 1.00) 0.0%+ 18.0% 18.0% Selected WACC: 18.0% EFTA00608518 EXHIBIT 8-21 APOLLO EPF MANAGEMENT, LP WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizi-ig Model (see Exhibit F and G) Build-Up Approach (see Exhibit E) Weighted Average Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% 3.00% 0% 0.00% 3.00% 0.00% 3.00% 14.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 14.8% (see above) 8.0% 20.0% 42.0% WACC = [ 8.0% • (1- 0.42) ] ' 0.20 +114.8% • 0.80) = [4.6% ' 0.20] +[ 14.8% ' 0.80) = 0.8%+ 11.8% = 12.8% Selected WACC: 13.0% EFTA00608519 EXHIBIT 8.22 APOLLO EPF ADVISORS. LP WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Fto • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizing Model (see Exhibit F and G) Build-Up Approach (see Exhthit E) Selected Base Eqiity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 10.81% 12.01% 12.00% Risk Weighting Adjustment Contribution 0% 0.00% 100% 7.00% 0.00% 7.00% 7.00% 19.00% WACC Calculation Selected Equity Rate: 19.0% (see above) Selected Debt Rate: 8.0% Selected DebttTotal Capital Ratio: 0.0% Selected Tax Rate: 42.0% WACC = [ 8.0% • (1- 0.42)1' 0.00 + 119.0% • 1.00] [4.6% • 0.00 ] + [ 19.0% • 1.00] 0.0%+ 19.0% 19.0% Selected WACC: 19.0% EFTA00608520 EXHIBIT 8-23 APOLLO NEW FUND MANAGEMENT LP'S WACC SUMMARY CONCLUSION AS OF APRIL 16.2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Fto • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizi-ig Model (see Exhibit F and G) Build-Up Approach (see Exhibit E) Weighted Average Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 11.51% 12.01% 11.80% Risk Weighting Adjustment Contribution 100% 5.00% 0% 0.00% 5.00% 0.00% 5.00% 16.8% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebtrTotal Capital Ratio: Selected Tax Rate: 16.8% (see above) 8.0% 20.0% 42.0% WACC [ 8.0% • (1- 0.42) I ' 0.20 + I 16.8% • 0.80) [4.6% • 0.20) +116.8% • 0.80) 0.9% + 13.4% 14.4% Selected WACC: 14.0% EFTA00608521 EXHIBIT B-24 APOLLO NEW FUNDS ADVISORS LP'S WACC SUMMARY CONCLUSION AS OF APRIL 16. 2007 The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC Rd (1 - ) D% + ( Re • E%) Where: Ro = Cost of interest bearing debt capital I = Marginal tax rate D%= Percentage of debt included in capital structure R, = Cost of equity capital E%= Percentage of equity included in capital structure The cost of equity capital was estimated using the methods described in the following pages. Equity Rate Method Capital Asset Prizi-ig Model (see Exhibit F and G) Build-Up Approach (see Exhibit E) Weighted Average Base Equity Rate Companyilndustry Specific Risk -Management Fee Cash Flows -Carried Interest Cash Flows Weighted Average Companyilndustry Specific Risk Company Specific Cost of Equity Equity Rate 10.81% 12.01% 12.00% Risk Weighting Adjustment Contribution 0% 0.00% 100% 10.00% 0.00% 10.00% 10.00% 22.0% WACC Calculation Selected Equity Rate: Selected Debt Rate: Selected DebttTotal Capital Ratio: Selected Tax Rate: 22.0% (see above) 8.0% 0.0% 42.0% WACC [ 8.0% • (1- 0.42) ] ' 0.00 [ 4.6% • 0.00 ] + [ 22.0% = 0.0% + 22.0% = 22.0% +[22.0% • 1.00] • 1.00] Selected WACC: 22.0% EFTA00608522 Exhibit C APOLLO MANAGEMENT HOLDINGS. LP CONCLUSION OF EQUITY INTEREST AS OF APRIL 16. 2007 Assets Aggregate Marketable Value of Equity Applicable Lack of Marketability Discount Aggregate Fah Market Value Partners Pro Rata Interest Pro Rata Fair Market Value % Exisiling Asset Contribution Apollo Management. L.P. 50 10% 50 30.35% $O 0.0% Apollo Management IV. L.P. 13.068.801 10% 52.761.920 30.35% 5838.243 0.1% Apollo Management V. L.P. $12.017.131 15% $10210.562 30.35% $3.100.119 0.3% Apollo Management VI. L.P. $190.858.978 15% $162236131 30.35% 549.236.845 4.9% Apollo investment Management L.P. 11.017.345253 15% $864.703.455 23.90% 52[6.673.688 20.5% Apollo Value Management L.P. $64.492.012 15% $50.818.550 26.90% 514.746.190 1.5% Apollo SVF Management• L.P. 1278.665.082 15% 1236.865.320 44.00% 5104220.741 10.4% Apple SVF Advisors. LP' $120.733.627 20% $99.786.902 44.00% 543.906.237 4.4% Apollo Asia Management, L.P. $44940.859 20% 135.235.887 44.00% 515.503.790 1.5% Apoao Asia Advisors. L.P.' 131.566.933 20% $25.253.548 44.00% 511.111.560 1.1% Apollo Europe Management. L.P. $465.218.791 20% $372.175.033 44.00% 5163.757.015 16.3% Apollo Ahernative Assets, LP. $342,440,764 20% $273,952,611 44.00% 5120,539,109 12.0% Subtotal $2.574.452.630 $2.138.037.927 3733.633.577 72.9% Pfaoned Funds,G000161: Apollo Management VII. L.P. $382.786.901 20% $306.229.553 30.35% 592.940.669 92% Apollo Advisors VII. LP. $439.500477 25% $329.628.358 24.64% 581220.427 8.1% Apollo EPF Management. L.P. 130.811.394 20% $20.609.115 44.00% 510.845.611 1.1% Apollo EPF Advisors. L.P. 1,27.802.732 20% $22.202.185 44.00% $9.786.582 1.0% New Fund Management LPs 5120.677.855 20% $99.702284 44.00% 543.886.605 4.4% New Fund Advisors. L.Fes $95.568.772 20% $76.45$018 44.00% 533.640.208 3.3% Sublets) 11.101.152.171 1858946.513 5272.320.082 27.1% Total Assets $3.875.604.801 $2.996.984.440 51.005.953.658 100.0% Liabilities di Equity Total Liabilities SO SO $O Total Equity $3.675.604801 $2.996.984.440 $1.005.953.658 Total Liabilities and Equity 33.676,604,801 $2,996,984,440 51,006,953,658 Aggregate Far Market Value 52.996.981.440 Pro Rata. Fair Market Value of Partners Interest 51.005.953.658 Pro Rata. Fair Market Value 01 Partners Interest 11.005,953,658 Concluded Equity Interest of Partner In AMHLP 33.57% Less: investment Company Discount 5.0% (550.297.6831 Minority Marketable Value 5955.655.975 Less: Lack of Marketability Discount 10.0% (595.565.5981 Fret Markel Value ol 33.05% 'Merest in AMILP 5860.090.378 Fair Market Value ol 33.57% interest m AMILP. Rounded 5860.100.000 was anticipated that the carry tee income eunenlly pact to tne respective Apollo Management company woad beg:n to be pad to the Apollo Aitnsor misty. EFTA00608523 t000mr o Apollo Foods ~Mr Co. ' paii Vaholice , Rea As of Aril 36, 2/8/7 Tess /Pat AL/31 /MV (00.1 4•014•1 TIM 114s INEZ C4010 TIM REVENUE AS A % OP ALOUNAV TIM OPEL 1CKP. A% Of REV TIM AIM. ERICA A% OF REV TIM PIZTAX A% OF REV limatd ~Ma MAIM DIVIO AIM NAP MIC/111/1 Reefer 1/491C/ITM MI ®RDA B.01~1.. 818.935.141 $1.124.427.0)0 12.097.974 01% 77.3% A.8% 211% 1.7% 90 11.1 Fs. Vs Corp. 14.74.917 5128.900.030 5662.194 07% 69.14 39.9% 30.5% 3.7% 5.5 13.8 hallo Rococo. ht. $33.443.441 5552.900.030 54.354461 01% 6654 O.K 342% 6.1% 7.3 ILO Nuron Imenunts. 14.60.307 5161.609.030 57•9421 0.4% 54.84 56.2% 474% 1.91 6.5 11.6 New Price C40p. $13.307.771 $331.7(0.030 51.813404 QS% SAM 49.5% 47.3% 4.0% 7.3 14.8 140 Mum In:. $14.277.411 14.2.54/137 QS% 74.1% 18.1% 24.1% 1.5% 3.4 I1.8 Alba Capita Cs. 14.516.735 54,496.100 51.2.54 ICU% 54.81 60.1% 573% 139.4% 13.8 17.3 Abenuac lirmiturnI 59./egia 1.14. HAV 5452.1155 5428.861 $35.80 44% 3161 19.4% 79.4% 105,5% 11.6 15.9 Amiga C1,401 51n4qiet LTD $11.093101 M.799.m9 3864.401 13% 49.31 1174% 105.31 113.1% 11.9 10.1 $11."119 $571.477119 $1.71&110 Id% 38.8% MI% 102% 41.0% 67 13.1 $11.0.71.10.1 3101.109.070 1671194 0.7% 37.6% 49.3% 41.1% 70% 13 178 end.WCI ilMlan•Li. PL 5932.484 56.964.300 5124.328 31% 40.4% 46.7% 461% 14.1% 4.4 94 31 Oros!, ft.; 516.767.40 11.303.423 13173.02 26.2% 19.3% 90.1% 82.1% 201.9% 7.7 8.0 Ma OP‘O Pk 111843.973 71.494.160 7.OA 66.9% 45.6% 314% 45.8% 6..5 14.3 Panthen Gam 1.1714.5.% 114.244.8.» 1117.115 12% 27.2% 72.4% 752% 19.5% IS.? 33.1 WO (taped $2.664.311 56466.140 $479.341 UR 801 91.0% 89.3% 40.5% 5.6 54 bilge* 6Veinal GM. 1.1.C. 112.541418 519.900.000 11.07117 44% 92.11 60.7% 58.7% 42.0% 10.4 •A• • IMP, 39.763.411 $19.11A481 11.291411 82% 42.1% 610% 60.6% 40.6% RI 11.6 1400 37.0611~ $11.131.121 $317119 3.3% 31.8% 06.8% 67.1% 41.1% 11 9.4 Total S.mple Iliph 113.451.441 11124.627,030 54.556.461 292% 92.1% 1274% 105.31 191.9% 15.7 217 Leg 5.432333 1418.862 $35.841 02% 80% 28.1% 24.1% 1.5% 34 96 Mew 310.835.43.1 1197193.1W 11.513.161 S8% 505% 64.1% 574% 51.3% 45 13.3 Mohr 111.031102 539,900.0 5862.194 12% 54.8% 56.2% 474% 19.5% 7.3 14.1 • Pm Re. - AurmlIted 9 amp 2001 Pa • Oikr Want RI« =30150 p e Yoe ITO 1111C1607 X1111'2407 6p16 runt 2117 Retinue. 14 I/1'1R il‘C AND> AINOCILOP. L.P. 10 $341.11/0 10 0.0% 00% NIA WA 011% VA AND, 114•0:ann IV, L.P. 13.069 51.043.700 56.143 0.6% 51.7% 48.3% 48.3% 03% 05 NJA AND) LLIN,V11(171 V. LP. 112.017 $11106.030 133.340 07% 51.7% 48.3% 481% 0.7% 09 NIA Al.01•• MJN,V41071 PI L.P. 5190499 11.401.030 5223300 14.0% 27.8% 72.2% /21% 11.9% 09 WA AND, 11•••wata VII. LP. 5332.787 521:00.030 50 Ma 25.64 174% 744% 147% WA NIA Areli.• 11••••Inal LLIII3/4X/MIT. L.V. 11.017.345 11.6(0.030 50100 3.8% 0.0% 55.0% 510% 39.1% 10.4 205 AND, VAL, Mamma. L.P. 564.492 5603.000 520.4:61 3.3% 45.0% 55.0% 550% 101% 3.1 9.7 ANIL, Mi nuworae. LP 5278.443 $1000.030 117.617 1.011 0.0% 55.0% 510% 15.1% 15.8 9.9 moll> Ask Matoommi. LP 144.00 5310.0)0 111.410 3.8% 43.0% 33.0% 510% 14.7% 3.8 8.9 AND> Ea", Manprement. L.P. 506.119 1529.010 522.100 4.4% 45.0% 55.0% 55.0% 93.0% 21.1 21.8 Mull> Akentow MAO. LP. 5;342.441 5231.0)0 130.200 13.1% 43.0% 35.0% 510% 1412% 11.3 17.8 Atoll./ EPF 344444sett. LP 5111.811 5303.000 56.975 1.3% 45.0% 55.0% 55.0% 10.3% 4.4 00 Na Pool Slameam. LP. 5124474 111 ul P411kAtt AUM trainair4. $15.430 WA 00% 1000% 1010% NIA 41 00 Ibl R4inaL Im60n ram/ mow mh cows 5Rm11 LyM tmem•. in Legg Mimi wAttnIcs CRUM taTtå 40•1181IIMS. lell 365107 •1101.12/.1•1• Irvm ptelhatt• 31. 20» Prosmomo Avid UOOocatO.51keimuy 2017 EFTA00608524 EXHIBIT E-1 APOLLO MANAGEMENT HOLDINGS, PRICE/NAV & DIVIDEND YIELDS FOR PUBLICLY-TRADED CLOSED-END INVESTMENT COMPANIES INVESTING IN LOW YIELD CAPITAL APPRECIATION SECURITIES AS OF APRIL 16, 2007 # COMPANY TICKER PRICE 4/13/2007* NAV PER SHARE* (DISCOUNT FROM)/ PREMIUM OVER NAV INDICATED DIVIDENDS** DIVIDEND YIELD 1 Adams Express Company ADX 14.34 16.44 -12.8% 0.16 1.1% 2 Central Securities CET 27.17 31.15 -12.8% 0.40 1.5% 3 First Trust Value Line 100 FVL 16.94 17.13 -1.1% 0.00 0.0% 4 Gabelli Equity Trust GAB 9.97 9.77 2.0% 0.21 2.1% 5 General American Investors GAM 38.04 42.57 -10.6% 0.36 1.0% 3 Tri-Continental Corporation TY 24.45 26.43 -7.5% 0.28 1.1% MEDIAN -9.1% 1.1% MEAN -7.1% 1.1% ' Barron's 4/16/07 "4 www.ettconnect.com EFTA00608525 EXHIBIT E-2 APOLLO MANAGEMENT HOLDINGS, . PRICE/NAV & DIVIDEND YIELDS FOR PUBLICLY-TRADED CLOSED-END INVESTMENT COMPANIES INVESTING IN VENTURE CAPITAL SECURITIES AS OF APRIL 16. 2007 # COMPANY TICKER PRICE 4 13x2007" NAV PER SHARE* (DISCOUNT FROM): PREMIUM OVER NAV INDICATED DIVIDENDS" DIVIDEND YIELD 1 Engex EGX 9.09 9.15 -0.7% 0.00 0.0`0 2 Equus II EQS 9.18 11.28 -18.6% 0.00 0.0`0 MEDIAN -9.6% 0.0% MEAN -9.6% 0.0% • Barron's 4/16/07 www.etfoonneacom EFTA00608526 EXHIBIT E-3 PRICE/NAV & DIVIDEND YIELDS FOR PUBLICLY-TRADED CLOSED-END INVESTMENT COMPANIES INVESTING IN WORLD EQUITY SECURITIES AS OF APRIL 16, 2007 N COMPANY TICKER PRICE 413200T NAV PER SHARE' (DISCOUNT FROM): PREMUM OVER NAV INDICATED DIVIDENDS** DIVIDEND YIELD 1 Naerdoen Animal Equily Fund IAF 18.31 15.37 6.1% 1.26 7.8% 2 Ada Pacific Fund 628 2238 2527 .15% 0.12 0.5% 3 Aga Tigers Fund MB 21.26 .5.4% 0.00 0.0% 4 Bwi4044 Global °pommies Equity Trusl BGE 28.63 2652 2 1 0.4% 2.26 7.9% 5 Etiddlk SIP Duality Rariergs Global Equty Managed Trust Bay 26 20.09 -11% 0.90 4.9% 6 EfiaCN0Ck Wrin ine08tM0114 Trust BYS 118.. 3 72 0.5% 1.37 7.9% 7 Crianne Gh0W Trial Return Fund GOD 17.42 ,17.14 06 -25% 1.17 6.7% 8 Camden General Uwe:Inane T.CGI 27.92 34.10 1 790% 1% 0.24 0.9% 9 Canaden World Fund Limited 1MtifE 6.76 623 0.00 0.0% 10 Central Europe 8 Rune& Fund ScEE 53.96 -9.6% 59.67 19.74 0.58 1.1% 11 Chile Fuld 12 Clime Fund Qd CM 1810 34.70 0.30 39.13 -11.3% -5.3 0.06 0.3% 0.9% 13 Clough Gebel rilcarian Fund GLY 20.80 2280 -98% 1.44 6.9% 14 Clough Gobal Equity Fund g-W 20.32 22.40 .95% 1.36 6.7% 15 Clough Gobal Cpprilunny GLI2 17.44 19.42 -10.2% 1.20 6.9% 16 Eaton Vance Tax Advantage Octal 17160end income EEG 27.05 29.36 -7.9% 1,50 5.5% 17 Eaten Vance Tax Advantage Gcbal °Mcleod Onaorlurries aQ' 32.74 33.83 -26% 110 5.5% 18 Eaten Vance Tax Managed Global Buy Wrile Opparturilies ElYL 20.01 19.74 1.4% 110 9.0% 19 Emoting Markets Telecommuricalone Rad EIE 19.99 211 0141 -5.4% 0.00 0.0% 20 European Equly Fund donne* Germany Fun) EEA 12.77 .99% 0.38 3.0% 21 First Israel MI. 1810 20.19 .7.4% 0.17 0.9% 22 Greater CnIne Fund seal 25.50 27.77 -82% 0.45 1.8% 23 MG Ohba/ Advanage and Premium Orporturtly Fund IGA 22.11 21.41 3.3% 1.66 8.4% 24 MG Global Equity Oridend Premum LCIL! 21.04 20.41 3.1% 137 8.9% 25 WM Fund al 40.90 43.10 -5.1% 3.46 8.5% 28 hdonesia Fund tF 10.79 9.76 10.6% 0.06 0.5% 27 Japan Ecriiri JO 8.72 1. 84 -1.4% 0.15 1.7% 28 Japan Smaller Cep Fund ME 12.21 1126 0.41 3.4% 29 Jardne Fleming Grins Re544.1 Fund a 20.57 0.15 2128.017 -11.2% 8. 0.7% 30 Korea Ego* 31 Korea Fund ME ASE 11.03 34.97 3759 -16% -7.0% 0.00 0.45 0.0% 1.3% 32 Lailn American ECIU4Y la 47.04 51.70 -9.2% 0.53 1.1% 33 Lan American Dscovery WE an 3033 -7.3% 0.77 2.7% 34 Lazard Global TC4al Rahn, & Income Fund LQI 22.37 24.04 -6.9% 1.25 5.6% 35 Lazard ViceM Omdend 8 Income MB 23.43 21031 07 -1.8% 1.40 6.0% 36 Malaysia Fund ME 9.37 0.08 0.9% 37 Mexico Eqully 8 Income Fund MAE 33.61 : 12776% 0; 0.13 0.4% 38 AleHC0 Fund yiE 40.86 43922 .75 0.34 0.8% 39 Morgan Stanley Assa.PacAc Fund APF 19.94 22.35 -103% 0.46 2.3% 40 Morgan &-snley Eastern Europa Find BEIE 3913 41.40 -7.9% 0.00 0.0% 41 Morgan Stanley En144902 Markele Fund Morgan Stanley1mM M.0 OF 41 45.60 27. 47.50 3024 -9.4% -4.0% 0.24 0.00 0.9% 0.0% 43 New Germany GE 17.47 18.92 -7.7% 0.21 12% 44 New Ireland 181. 36.92 36.19 2.0% 0.24 0.7% 45 Nicnolm.Applegari rill Premium & Strategy Fund NM 30.20 29.22 3.4% 2.15 7.1% 48 Sngapore Find &GE 17.90 1833 .4.4% 0.66 3.7% 47 Wes Helvetia €Z 20.43 2230 -14% 0.00 0.1% 48 Taiwan Fund TWN 1829 2031 -11% 0.06 0.3% 49 Taiwan Greater Chan Find TEC 6.49 7.00 -7.3% 0.00 0.0% 50 Temps:ion Dragon Fund 112E 24.54 26.62 -7.8% 0.37 1.5% 51 Temririon Emargng Markets Fuld EMF 17.94 1956 .13% 0.64 3.5% 52 Ternricton Russia & Easl European Fund IRE 74.68 70.95 52% 0.94 1.3% 53 Thal Canal I.E 11.63 10.69 la% 0.26 2.4% 54 Thal Fund DE 10.17 956 6.2% 0.26 2.5% 55 Third Camden General Inveriment Trust LIM 50.48 5835 -14.1% 0.30 0.6% 56 Turkish Investment Fund ME 18.32 17.50 4.7% 023 1.3% ISOM -7.1% 1.4% MEAN -49% SA% * Etarrais 414597 wwwedccemnot corn EFTA00608527