Exhibit 10.5

SECOND AMENDED AND RESTATED

FORTRESS INVESTMENT GROUP LLC

PRINCIPAL COMPENSATION PLAN

 

1. Purposes of the Plan. This Second Amended and Restated Fortress Investment
Group LLC Principal Compensation Plan provides for the payment of annual
incentive compensation to those Principals of the Company designated for
participation in the Plan and is intended to compensate each of such Principals
for his services, contributions, and leadership provided to Fortress and to
further align his interests with the interests of the Company’s stockholders.
Capitalized terms used but not defined herein have the meanings given to such
terms in Annex A hereto.

 

2. Plan Administration.

 

  (a) Compensation Committee. The Plan shall be administered by the Compensation
Committee. The Compensation Committee shall have the power and authority,
without limitation:

 

  (i) to construe and interpret the terms and provisions of the Plan and any
Award issued under the Plan (and any Award Agreement relating thereto) and to
otherwise supervise the administration of the Plan and to exercise all powers
and authorities specifically granted under the Plan or necessary or advisable in
the administration of the Plan;

 

  (ii) to delegate its authority and responsibilities under the Plan to the
Principals Committee and/or members of management, subject to the requirements
of applicable law;

 

  (iii) to review and approve all material recommendations, decisions, and
determinations under the Plan, including those made by the Principals Committee;
provided, that all calculations of any amounts to which the Participants are
entitled pursuant to the Plan that are performed by or at the direction of the
Company’s Chief Financial Officer shall be approved by the Compensation
Committee absent manifest error in such calculations;

 

  (iv) to determine the terms and conditions, not inconsistent with the terms of
the Plan, which shall govern all Awards under the Plan (including the amount,
manner, and time of Payments, but excluding any vesting or similar terms or
restrictions);

 

  (v) to determine the total amount and payment of all Awards under the Plan in
respect of a particular Fiscal Year;

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  (vi) to determine the eligibility for participation in the Plan in accordance
with Section 3 below;

 

  (vii) to prescribe forms and procedures for purposes of Plan participation and
distribution of Awards; and

 

  (viii) to adopt rules, regulations, and bylaws and to take such actions as it
deems necessary or desirable for the proper administration of the Plan.

The powers and authority of the Compensation Committee hereunder shall in all
events be subject to the terms of the Plan and the applicable Award Agreement,
and the Compensation Committee shall in all events honor such terms to the
extent permitted by applicable law.

 

  (b) Principals Committee. The Principals Committee shall make recommendations
to the Compensation Committee with respect to the administration of the Plan. In
particular, the Principals Committee shall recommend (i) whether a Participant
shall be treated as the CIO or Sponsor for a newly raised fund or assets (which
recommendation shall be made at the time a fund or product is launched) and
(ii) interpretations of ambiguous or disputed material terms of the Plan.

 

  (c) Any dispute, controversy or claim arising out of or relating to the Plan,
including a dispute with respect to any interpretation of the Plan, the terms of
any Award or any other decisions made by the Compensation Committee, shall be
resolved in binding arbitration in accordance with Section 10.6 of the Founders
Agreement. Such dispute, controversy or claim with respect to the Compensation
Committee’s interpretations of the Plan shall be resolved pursuant to a
determination made on a “de novo” basis, without regard to any determination
made by the Compensation Committee or any person or entity entitled to make
determinations hereunder. All other decisions made by the Compensation Committee
with respect to the Plan may not be reversed, in whole or in part, except upon
clear and convincing evidence that such decision is an abuse of discretion. No
member of the Board, the Compensation Committee, or the Principals Committee,
nor any officer or employee of any member of the Fortress Group acting on behalf
of the Board, the Compensation Committee, or the Principals Committee, shall be
personally liable for any action, omission, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board, the Compensation Committee, or the Principals Committee and each and any
officer or employee of each member of the Fortress Group acting on their behalf
shall, to the maximum extent permitted by law, be fully indemnified and
protected by the Company in respect of any such action, omission, determination,
or interpretation.

 

  (d)

All calculations under the Plan and allocations of any amounts to which the
Participants are entitled pursuant to the Plan with respect to existing types or
forms of compensation shall be consistent with its calculation or allocation as
of

 

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  immediately prior to the Founders Closing; provided, that the Principals
Committee may recommend changes to such calculations and allocations from time
to time, which shall be effective upon approval of the Compensation Committee.

 

3. Eligibility. The Participants in the Plan as of the Founders Closing are set
forth in Schedule 1. Additional persons eligible to participate in the Plan
shall be determined by the unanimous agreement of the Principals Committee,
subject to the approval of the Compensation Committee. With respect to each
Fiscal Year, the persons who shall participate in the Plan for such Fiscal Year
shall be determined prior to the end of the immediately preceding Fiscal Year;
provided, that, each Participant set forth on Schedule 1 shall be a Participant
in the Plan during each such Fiscal Year (and receive an Award in respect of
such Fiscal Year in accordance with the terms of this Plan), as long as
Participant is employed by any member of the Fortress Group on the first day of
such Fiscal Year. Schedule 1 sets forth the list of eligible Participants for
the 2017 Fiscal Year.

 

4. Awards. Unless otherwise determined by the unanimous recommendation of the
Principals Committee and approved by the Compensation Committee, an award under
this Plan (an “Award”) shall be in the form of equity interests in the Company,
Fortress Operating Entity I LP, FOE II (New) LP, or Principal Holdings I LP (or,
if approved by the Compensation Committee, in one or more other members of the
Fortress Group) that are structured as a “profits interest” for federal income
tax purposes (“Equity Interests”), and any amounts payable to a Participant
hereunder shall be in the form of cash distributions in respect of such Equity
Interests. Without limiting the foregoing, following the Founders Closing, each
Participant shall continue to own the Equity Interests held by such Participant
immediately prior to the Founders Closing. An Award may apply to a single Fiscal
Year or multiple Fiscal Years. An Award shall also indicate for which Hedge
Fund(s), PE Fund(s) and/or PCV(s) a Participant will be a CIO or Sponsor. Each
Participant who is granted an Award shall enter into one or more Award
Agreements with Fortress, containing such terms and conditions as are not
inconsistent with the Plan, as the Compensation Committee shall require. The
provisions of each Award need not be the same with respect to each Participant.
The Company may cause applicable partnership agreements of any member of the
Fortress Group to be amended to the extent required or desirable to effectuate
the terms of the Plan.

 

5. Determination of Annual Amount. Subject to the other terms and conditions of
the Plan and any Award Agreement, an Award will entitle the applicable
Participant to a Payment equal to the Annual Amount (as defined below), if
positive, in respect of the Fiscal Year to which the Award relates.

 

  (a) Annual Amount. The “Annual Amount” for a Participant for a particular
Fiscal Year shall be equal to the sum of the following:

 

  (i) Existing Hedge Fund AUM: for each Hedge Fund for which the applicable
Participant has served as CIO during the applicable Fiscal Year, an amount equal
to the product of (A) 0.20 times (B) the Net Promote for the applicable Hedge
Fund that is attributable to Existing Hedge Fund AUM for the applicable Fiscal
Year; plus

 

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  (ii) New Hedge Fund AUM: the sum of:

 

  (A) For each Hedge Fund for which the applicable Participant has served as CIO
during the applicable Fiscal Year, an amount equal to the product of (1) 0.20
times (2) the NOR for the applicable Hedge Fund that is attributable to New
Hedge Fund AUM for the applicable Fiscal Year; plus

 

  (B) For each Hedge Fund that was sponsored by the applicable Participant, an
amount equal to the product of (1) 0.20 times (2) the NOR for the applicable
Hedge Fund that is attributable to New Hedge Fund AUM for the applicable Fiscal
Year; plus

 

  (iii) New PE Funds: the sum of:

 

  (A) For each New PE Fund for which the applicable Participant has served as
CIO during the applicable Fiscal Year, an amount equal to the product of (1)
0.20 times (2) the NOR for the applicable New PE Fund for the applicable Fiscal
Year; plus

 

  (B) For each New PE Fund that was sponsored by the applicable Participant, an
amount equal to the product of (1) 0.20 times (2) the NOR for the applicable New
PE Fund for the applicable Fiscal Year; plus

 

  (iv) PCVs: the sum of:

 

  (A) For each PCV that had raised capital on or prior to January 1, 2012, that
was sponsored by the applicable Participant, an amount equal to the product of
(1) 0.20 times (2) the excess, if any, of (x) the NOR for the applicable PCV for
the applicable Fiscal Year over (y) the NOR for the applicable PCV for the 2011
Fiscal Year; plus

 

  (B) For each PCV that had first raised capital after January 1, 2012, for
which the applicable Participant has served as CIO during the applicable Fiscal
Year, an amount equal to the product of (1) 0.20 times (2) the NOR for the
applicable PCV for the applicable Fiscal Year; plus

 

  (C) For each PCV that had first raised capital after January 1, 2012, that was
sponsored by the applicable Participant, an amount equal to the product of (1)
0.20 times (2) the NOR for the applicable PCV for the applicable Fiscal Year.

 

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Any reference to a “sum” or “amount” in this Section 5 may be a positive or
negative number.

 

  (b) Shortfall. In the event that the Annual Amount in respect of a Fiscal Year
for a Participant is a negative amount (such amount, a “Shortfall Amount”), any
future Annual Amount shall be reduced by the Shortfall Amount (and any prior
Shortfall Amount that has not been previously recovered pursuant to this Section
5(b)).

 

  (c) Adjustments. In the event that a Participant serves as CIO for less than
all of a Fiscal Year (other than in circumstances governed by Section 9 of this
Plan), appropriate adjustments shall be made to this Section 5 to equitably
adjust the amount of such Participant’s Annual Amount for the applicable Fiscal
Year.

 

  (d) Allocations. The Principals Committee shall determine the principles and
methodology for expense and revenue allocations required to determine any Annual
Amount (or component thereof) or other allocation described in the immediately
following sentence; provided, that any such principles and methodologies that
are not consistent with the corresponding principles and methodologies used as
of immediately prior to the Founders Closing shall be subject to approval of the
Compensation Committee. For all purposes of this Plan and any Award Agreement,
(i) any allocation of any revenues or expenses of Fortress and/or (ii) any
allocation of any Net Promote or NOR in respect of any Hedge Fund that is
comprised of Existing Hedge Fund AUM and New Hedge Fund AUM shall, in each case,
be initially determined by a committee comprised of two representatives (not
including a Participant) from each business unit and the Chief Financial Officer
and Controller of the Company, with such determination based on the principles
and methodology that have been established by the Principals Committee. The
Principals Committee shall review and, subject to approval of the Compensation
Committee, approve each such determination.

 

  (e) Aggregation of Income Streams. For the avoidance of doubt, and consistent
with the method of calculating the Annual Amount as of immediately prior to the
Founders Closing, the calculation of each amount under Section 5(a)(i), (ii),
(iii), and (iv) shall be made on an aggregate basis, such that the amount to
which all Participants are entitled in the aggregate in respect of any one Hedge
Fund, New PE Fund, or PCV pursuant to such section shall not exceed 20% of NOR
or Net Promote (as applicable) for each such Hedge Fund, New PE Fund, or PCV,
unless otherwise specifically agreed by the Company and one or more
Participants.

 

  (f)

Future Management Roles. If the Company or any member of the Fortress Group
requests that a Participant manage, sponsor, or advise any investment fund,

 

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  “feeder” fund, co-investment vehicle, alternative investment vehicle, managed
or separate account, or any other investment entity or vehicle that, in each
case, is not a Hedge Fund, PE Fund, or PCV that would otherwise be subject to
this Section 5 (each, a “Non-Plan Investment”), then the Company and such
Participant shall negotiate in good faith regarding the amendment, modification,
or adjustment of the provisions of the Plan (including this Section 5) such that
the Annual Amount for such Participant includes payment of an amount with
respect to the NOR, Net Promote, or term of similar meaning for such Non-Plan
Investment.

 

6. Determination of Payments. For each Fiscal Year, the Principals Committee
shall recommend to the Compensation Committee the Annual Amount in respect of
each Participant (including any allocations among individual Participants within
a business unit) on or prior to January 31st of the Fiscal Year immediately
following the Fiscal Year to which the applicable Awards relate. Mr. Edens shall
be responsible for the provision to the Principals Committee of the allocation
of amounts among the Participants within the Private Equity business unit, and
shall make such provision on or prior to January 15th of the Fiscal Year
immediately following the Fiscal Year to which the applicable Awards relate. The
Compensation Committee shall act to make a final determination of amount and
form of each Participant’s Payment, on the recommendations of the Principals
Committee, by no later than February 10th of such Fiscal Year.

 

7. Form of Payment. Unless otherwise determined by the unanimous recommendation
of the Principals Committee and approved by the Compensation Committee, a
Payment to a Participant shall be made in the form of cash distributions to a
Participant in respect of the Equity Interests held by the Participant.

 

8. Timing of Payments. Subject to Sections 9 and 10, each Payment to a
Participant shall generally be made at the same time as payments of other
formula-based or profit-sharing compensation payments in respect of the Fiscal
Year to which the applicable Payment relates are made to employees of Fortress,
but in no event earlier than January 31st or later than March 15th of the Fiscal
Year immediately following the Fiscal Year to which the applicable Payment
relates.

 

9. Termination of Employment.

 

  (a) Payment in Respect of Hedge Funds. Except as provided for in Section 9(c),
a Participant will not be entitled to any Payment in respect of any portion of
an Annual Amount determined with reference to Section 5(a)(i) or (ii) unless the
Participant is an employee of Fortress on the date on which any Annual Amount is
actually paid to a Participant.

 

  (b)

Private Equity and PCVs. Except as provided for in this Section 9(b) and Section
9(c), a Participant will not be entitled to any Payment in respect of any
portion of an Annual Amount determined with reference to Section 5(a)(iii) or
Section 5(a)(iv) unless the Participant is an employee of Fortress on the date
on which any

 

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  Annual Amount is actually paid to a Participant. Subject to Sections 9(c),
(d), and (e), the right of a Participant set forth on Schedule 1 to receive any
Payment in respect of any portion of Net Promote granted pursuant to Section
5(a)(iii) or Section 5(a)(iv) (whether granted prior to, on, or after the
Founders Closing) shall be fully vested as of the date of the initial closing of
the applicable PE Fund(s) or PCV(s) and shall be subject to the other terms and
conditions as are applicable to Fortress employees generally who are granted
Promote interests in the PE Fund(s) or PCV(s) to which any such portion relates
(other than, subject to Section 10(c), terms and conditions relating to holdback
of distributions and the cash collateralization of clawback obligations;
provided, that no such vested Net Promote interest shall be subject to
repurchase or termination under the “duty of loyalty” contained in any of the
governing documents applicable to any entity or vehicle through which any
Participant holds (directly or indirectly) any such Net Promote interest).

 

  (c) Termination without Cause or Due to Death or Disability; Resignation with
Good Reason. In the event of a termination of the Participant’s employment by
Fortress without Cause or due to death or Disability, or the Participant’s
resignation with Good Reason, provided that the Participant (or his estate, if
applicable) executes a general release of claims in the form customarily used by
Fortress within forty-five (45) days following such termination and such release
becomes irrevocable, (i) a Participant who serves as a CIO or Sponsor of an
Existing Hedge Fund, a New Hedge Fund or a PCV shall be entitled to a Payment
under the Plan equal to, and payable in the same manner as, the Payment that
would have otherwise been made to such Participant in respect of the amounts
determined with reference to Sections 5(a)(i), (ii), and (iv) and 5(b) for the
Fiscal Year in which the Participant was terminated had the Participant’s
employment not terminated (and thereafter such Participant shall not be entitled
to any further Payments with respect to such Existing Hedge Fund, New Hedge
Fund, or PCV under the Plan or any Award Agreement) and (ii) a Participant who
serves as CIO or Sponsor of a New PE Fund or a PCV shall be entitled to Payments
with respect to the Net Promote portion of any Award and that is vested pursuant
to Section 9(b) (with such Payments payable at the same times as they are made
to Participants generally under the Plan), provided that this Section 9(c)(ii)
shall apply only with respect to Awards (or portions thereof) that do not
constitute deferred compensation under Code Section 409A.

 

  (d) Termination for Cause. Notwithstanding any other provision of the Plan or
an Award Agreement to the contrary, in the event of a termination of a
Participant’s employment by Fortress for Cause, the Participant’s rights to all
Awards (whether vested or unvested) and Annual Amounts shall be forfeited
without compensation as of the date of such termination, and such Participant
shall have no further rights under the Plan or any Award, without limiting any
rights to any Net Promote interest that is vested pursuant to Section 9(b).

 

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  (e) Voluntary Resignation without Good Reason. Notwithstanding any other
provision of the Plan or an Award Agreement to the contrary, in the event that a
Participant voluntarily resigns from his or her service to Fortress without Good
Reason, the Participant’s rights to all Awards and unpaid Annual Amounts shall
be forfeited without compensation as of the date of resignation, and such
Participant shall have no further rights under the Plan or any Award, without
limiting any rights to any Net Promote interest that is vested pursuant to
Section 9(b).

 

  (f) Separation of Net Promote Interest after Termination. After the
termination of a Participant’s employment for any reason, the Company shall use
commercially reasonable efforts to transfer to such Participant all interests
underlying the Equity Interests representing the vested Net Promote interest (as
described in Section 9(b)) that has previously been included in the calculation
of NOR for such Participant under the Plan; provided, that, if such transfer
does not occur (and/or prior to such transfer), the Participant shall
nevertheless continue to receive (in the form of cash distributions in respect
of Equity Interests or such other form as agreed by Participant and the
Compensation Committee) all amounts to which Participant would be entitled, and
continue to be bound by all obligations to which Participant would be bound
(except, for the avoidance of doubt, any provisions regarding repurchase or
termination under the “duty of loyalty” contained in any of the governing
documents applicable to such interests), if Participant held such interests
directly. Such interests are expected to be in the form that such Equity
Interests in Promote vehicles are otherwise issued or granted to employees of
the Fortress Group, subject to the other limitations set forth in this Plan.

 

10. Certain Clawback and Repayment Obligations.

 

  (a) Clawback Obligation in Respect of PE Funds. Any Participant who receives a
Payment that is comprised, in whole or in part, of an amount described under
Section 5(a)(iii) shall be responsible for his or her pro rata share of any
clawback or similar requirement applicable to any Promote paid to Fortress as
the general partner of the applicable New PE Fund (or Fortress in respect
thereof) (with respect to any New PE Fund (or Fortress), a “PE Clawback
Obligation”). The terms and conditions of a PE Clawback Obligation are intended
to be substantially similar, in all material respects (other than, subject to
Section 10(c), with respect to the holdback and cash collateralization of the
obligation), to the terms and conditions applicable to Fortress employees who
are granted or otherwise receive an interest in the Promote or carry of the New
PE Fund to which the PE Clawback Obligation relates, subject to approval by the
Compensation Committee. Any PE Clawback Obligation of a Participant shall not be
reduced or otherwise limited by the termination of the employment of such
Participant with Fortress (and any related forfeiture resulting therefrom).

 

  (b) Funding. A PE Clawback Obligation shall be payable in cash.

 

  (c) Override. Notwithstanding any other provision of this Plan or an Award
Agreement to the contrary, in the event that applicable law or the governing
documents of any Hedge Fund or New PE Fund require (i) a more stringent or
burdensome clawback, repayment or similar obligation or (ii) the use of a
deferral, escrow, holdback and/or collateral obligation, this Plan and the terms
of any Award Agreement shall reflect such obligations and each of them shall be
amended to the extent necessary to reflect such obligations.

 

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11. Set-Off. Notwithstanding any other provision of this Plan or any Award
Agreement to the contrary, to the extent permitted by Code Section 409A,
Fortress shall have the right to offset against any amount owed to a Participant
under this Plan any amounts that are owed by a Participant to Fortress
(including amounts owed under this Plan) at the time of any Payment hereunder.

 

12. Amendment and Termination of the Plan. The Plan became effective as of
January 1, 2012, was amended and restated on November 3, 2016, and was further
amended and restated effective as of and subject to the Founders Closing. The
Plan (or Awards thereunder) may not be amended, modified, suspended, or
terminated, in whole or in part, at any time, without the consent of each
Participant that would be affected by such amendment, modification, suspension,
or termination; provided, that the Board may adopt amendments deemed necessary
or desirable to correct any defect or to supply omitted data or to reconcile any
inconsistency in the Plan or in any Award granted hereunder; provided, further,
that prior to the Founders Closing, the amended and restated terms of the Plan
to be effective at the Founders Closing may not be amended without the express
written consent of the Special Committee (as defined in the Agreement and Plan
of Merger, by and among SB Foundation Holdings LP, a Cayman Islands exempted
limited partnership, Foundation Acquisition LLC, a Delaware limited liability
company and the Company, dated as of February 14, 2017). At no time before the
actual distribution of amounts to Participants under the Plan shall any
Participant accrue any vested interest or right whatsoever under the Plan except
as otherwise explicitly stated in this Plan. The Company and the Principals
Committee shall from time to time re-examine, and consult in good faith
regarding, the provisions of this Plan (and any potential amendments or
modifications thereto) to determine whether the Plan continues to be aligned
with the business needs and goals of the Fortress Group.

 

13. Implementation of the Plan. This Plan sets forth the material terms and
conditions of the subject matter hereof. Such terms and conditions will be more
fully set forth in (i) such principles and policies as may be promulgated by the
Compensation Committee and/or Principals Committee from time to time pursuant to
Section 2, (ii) each Award Agreement and/or (iii) such other agreements and
documents (whether or not referenced in this Plan) as may be necessary or
appropriate to give effect to the terms and conditions set forth herein.

 

14. Withholding. Distributions pursuant to this Plan shall be subject to any
applicable tax withholding requirements (federal, state, local, and foreign).

 

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15. No Guarantee of Employment. No statement in this Plan should be construed to
grant any employee an employment contract of fixed duration or any other
contractual rights, nor should this Plan be interpreted as creating an implied
or an expressed contract of employment or any other contractual rights between
the Company and its employees.

 

16. Successors. All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business or assets of the Company.

 

17. Nonassignment. Except as may be determined by the Compensation Committee or
set forth in the applicable Award Agreement, the rights of a Participant under
this Plan shall not be assignable or transferable by the Participant except by
will or the laws of intestacy; provided, that, a Participant shall be permitted
to allocate, on such terms and conditions as such Participant shall determine,
any portion of an Award granted to such Participant hereunder to any employees
of the Company or Fortress in order to encourage retention of such employees;
provided, further, that no such employees to whom a Participant allocates a
portion of an Award shall be deemed a Participant under the Plan due to such
allocation.

 

18. Right to Receive Payment. Nothing in this Plan shall be construed to create
a trust or to establish or evidence any Participant’s claim of any right to
Payment of an Award other than as an unsecured general creditor with respect to
any Payment to which he or she may be entitled.

 

19. Governing Law. The Plan shall be governed by the laws of the State of
Delaware.

 

20.

Section 409A. This Plan and all Awards are intended to comply with Code Section
409A, to the extent subject thereto, and, accordingly, to the maximum extent
permitted, this Plan and all Awards hereunder shall be interpreted and be
administered to be in compliance therewith. Notwithstanding anything contained
herein to the contrary, to the extent required in order to avoid accelerated
taxation and/or tax penalties under Code Section 409A, a Participant shall not
be considered to have terminated employment with the Company for purposes of
this Plan, and no Payment shall be due to a Participant under this Plan, until
such Participant would be considered to have incurred a “separation from
service” from the Company within the meaning of Code Section 409A. Any Payments
described in this Plan that are due within the “short-term deferral period” as
defined in Code Section 409A shall not be treated as deferred compensation
unless applicable law requires otherwise. Each amount to be paid or benefit to
be provided to a Participant pursuant to this Plan that constitutes deferred
compensation subject to Code Section 409A shall be construed as a separate
identified payment for purposes of Code Section 409A. Notwithstanding anything
to the contrary in this Plan, to the extent that any Payments to be made upon a
Participant’s separation from service would result in the

 

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  imposition of any individual penalty tax imposed under Code Section 409A, the
Payment shall instead be made on the first business day after the earlier of
(i) the date that is six (6) months following such separation from service and
(ii) such Participant’s death.

 

21. Books and Records. For purposes of resolving accounting and record-keeping
questions under the Plan, the books and records of the Company will govern in
the event of a conflict between those records and those of any Hedge Fund, PE
Fund or PCV (as applicable). Adjustments from one Fiscal Year to the next
necessitated by audit-related or other adjustments to the books and records of
any Hedge Fund, PE Fund or PCV (as applicable) after the Payment of any Annual
Amount for a particular Fiscal Year will be made and paid or deducted at the
time Payments are made under the Plan with respect to the Fiscal Year following
the Fiscal Year of the adjustment.

 

22. Non-Contravention. The Company shall not (and shall cause other members of
the Fortress Group not to) by any action or inaction, including, without
limitation, amending its certificate of incorporation (or similar constituent
document) or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or other interests or any other
action or inaction, directly or indirectly, avoid or seek to avoid the
observance or performance of any of the terms of the Plan or any Award or Award
Agreement issued hereunder.

 

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Annex A

Defined Terms

 

(a) “AUM” means, without duplication for indirect interests, the “Management Fee
Paying Assets Under Management” or “AUM” as defined in a manner consistent with
the most recent Form 10-K filed by the Company with the SEC as of immediately
prior to the Founders Closing.

 

(b) “Award” shall have the meaning set forth in Section 4 hereof.

 

(c) “Award Agreement” means any written agreement, contract, instrument, and/or
document evidencing any Award (or portion thereof) and providing the terms and
conditions of such Award.

 

(d) “Board” means the Board of Directors of the Company.

 

(e) “Cause” shall have the meaning set forth in the Founders Agreement.

 

(f) “CIO” means, with respect to a particular Hedge Fund or PE Fund, the chief
investment officer (or person serving in a comparable capacity) of such fund.
For any Hedge Fund, PE Fund or PCV, the CIO, if any, thereof is noted on
Schedule 2 hereto. A fund may have more than one person acting as the CIO, and
the determination that a Participant functions as the CIO (or one of the CIO’s)
of a fund may be made based upon such factors as the Compensation Committee
deems appropriate, including but not limited to the degree of involvement of a
Participant in the fund’s investment process and the allocation of investments
across the fund and other funds for which the Participant serves as the CIO.

 

(g) “Code” means the Internal Revenue Code of 1986, as amended.

 

(h) “Company” means Fortress Investment Group LLC, a Delaware limited liability
company.

 

(i) “Compensation Committee” means the Compensation Committee of the Board.

 

(j) “Disability” shall have the meaning set forth in the applicable
Participant’s Employment Agreement; provided, however, that, to the extent
required in order to avoid accelerated taxation and/or tax penalties under Code
Section 409A, a Participant shall not be considered to have become “disabled”
for purposes of this Plan until such Participant would be considered to be
“disabled” within the meaning of Code Section 409A.

 

(k) “Distributable Earnings” means, with respect to a Fiscal Year, the Company’s
pre-tax fund management distributable earnings, as calculated in a manner
consistent with the most recent Form 10-K filed by the Company with the SEC as
of immediately prior to the Founders Closing, which shall be subject to review
and approval by the Compensation Committee.

 

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(l) “Employment Agreement” means, for a particular Participant, that certain
Employment, Non-Competition and Non-Solicitation Agreement between the
applicable Participant and the Company dated as of November 3, 2016, as amended
on the Founders Closing and as may be further amended from time to time, or any
successor agreement.

 

(m) “Excluded Assets” means (i), any fund or account managed by Logan Circle
Partners, (ii) Fortress Partners Funds and (iii) any balance sheet investments
of Fortress, including, in each case, the funds, accounts and investments noted
as an “Excluded Fund / Account” on Schedule 2 hereto.

 

(n) “Existing Hedge Fund” means a Hedge Fund noted as an “Existing Hedge Fund”
on Schedule 2 hereto.

 

(o) “Existing Hedge Fund AUM” means the AUM of an Existing Hedge Fund up to the
amount of such AUM reported in the December 31, 2011 Report on Form 10-K of
Fortress (the “10-K”), adjusted for redemptions from such fund payable on or
before December 31, 2010. To the extent that the AUM of such a Hedge Fund
increases beyond the amount reported in the 10-K (as adjusted), such incremental
increased amount shall be treated as New Hedge Fund AUM. The measurement of New
Hedge Fund AUM (if any) in an Existing Hedge Fund shall occur each time that
Promote is clipped in such fund.

 

(p) “Existing PE Fund” means a PE Fund noted as an “Existing PE Fund” on
Schedule 2 hereto.

 

(q) “Fiscal Year” means a fiscal year of the Company.

 

(r) “Fortress Group” means, collectively, the Company and its controlled
subsidiaries.

 

(s) “Founders Agreement” means that certain Founders Agreement, by and among SB
Foundation Holdings LP, a Cayman Islands exempted limited partnership, the
Company, FIG Corp., a Delaware corporation, FIG Asset Co. LLC, a Delaware
limited liability company, and the parties designated as Sellers therein, dated
as of February 14, 2017, as may be amended from time to time.

 

(t) “Founders Closing” shall have the meaning set forth in the Founders
Agreement.

 

(u) “Good Reason” shall have the meaning set forth in the Founders Agreement.

 

(v)

“Hedge Fund” means, without duplication, (a) any open-ended investment vehicle
that provides for periodic, discretionary redemption or other similar liquidity
rights to any investor, together with any “feeder” funds, co-investment
vehicles, alternative investment vehicles, other investment vehicles or the
respective successor vehicles (if any) of any of the foregoing, in each case,
through which such open-ended investment vehicle’s investment programs are
effectuated or pursued, or any fund or investment vehicle to which the portfolio
investments

 

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  now or hereafter held, directly or indirectly, by any of the foregoing are
transferred other than pursuant to a bona fide sale to a third party on
arms-length terms, in each case which is managed, sponsored, or advised by any
member of the Fortress Group, and (b) any open-ended managed account or separate
account that provides for periodic, discretionary redemption or other similar
liquidity rights to any client and which is managed, sponsored, or advised by
any member of the Fortress Group, in a manner similar to a fund described in the
immediately preceding clause (a), including, in each case, the funds and
accounts noted as “Existing Hedge Funds” and “Hedge Funds Currently in Formation
Subject to the Plan” on Schedule 2 hereto. Notwithstanding the foregoing, a
Hedge Fund shall not include any Excluded Assets or PCVs.

 

(w) “Net Promote” means, (i) with respect to Existing Hedge Fund AUM for the
applicable Fiscal Year, the gross Promote that is paid to Fortress with respect
to such Existing Hedge Fund AUM in respect of such Fiscal Year less any payments
to third parties and employees under profit-sharing arrangements (i.e., EWYK or
DCP deals) and (ii) with respect to a particular PE Fund or PCV for the
applicable Fiscal Year, the gross Promote or similar amount (such as an equity
interest) that is paid to Fortress by the applicable PE Fund or PCV in respect
of such Fiscal Year less any payments of such Promote or similar amount that is
calculated by reference to such Promote or similar amount to third parties,
employees and partners.

 

(x) “New Hedge Fund AUM” means the AUM of any Hedge Fund other than Existing
Hedge Fund AUM and Excluded Assets.

 

(y) “New PE Fund” means a PE Fund that holds a final closing after January 1,
2012. For the avoidance of doubt, no Existing PE Fund shall be a New PE Fund.

 

(z)

“NOR” means, in all cases applying the principles used for determining “fund
management distributable earnings” of Fortress with respect to a particular
Hedge Fund, PE Fund or PCV (as applicable) for the applicable Fiscal Year,
(a) the amount of the net management fees plus the amount of net incentive fees
earned by Fortress (which fees, for the avoidance of doubt, may not actually be
received by Fortress until after the end of the Fiscal Year in which such fees
are treated as earned for purposes of calculating NOR and/or “clipping” a
Promote) as reflected on Fortress internal management accounts in respect of the
applicable Hedge Fund, PE Fund or PCV with respect to the applicable Fiscal Year
(in each case, net of rebates thereof, if any, with respect to investments by
any member of the Fortress Group and revenue sharing arrangements), minus
(b) the sum of (i) the applicable Hedge Fund’s, PE Fund’s or PCV’s allocable
share of the costs and expenses of Fortress related to, or incurred for the
benefit of, the applicable Hedge Fund, PE Fund or PCV, including, but not
limited to, (A) payroll costs (including salary, benefits and discretionary
bonuses), (B) direct expenses (including travel and entertainment expenses and
marketing), (C) overhead expenses (including rent), (D) other operating expenses
(including reserves), (E)

 

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  corporate overhead (including corporate functions and the “capital formation
group”), (F) fixed asset depreciation and (G) payments to employees of the
members of the Fortress Group and third parties under profit-sharing
arrangements and (ii) any taxes (including payroll and employment taxes, but for
the avoidance of doubt, excluding any income taxes payable by Fortress) payable
in respect of the amounts set forth in clause (a) or clause (b) above with
respect to the applicable Fiscal Year. For the avoidance of doubt, (i) the NOR
may be negative for a Fiscal Year and (ii) clawback obligations on funds other
than New PE AUM shall not be included within the NOR calculation.

 

(aa) “Participant” means a Principal of the Company selected by the Principals
Committee and approved by the Compensation Committee in accordance with
Section 3 hereof.

 

(bb) “Payment” means, with respect to a particular Annual Amount, the cash
amount received by a Participant in satisfaction of the applicable Annual
Amount.

 

(cc) “PCV” means any publicly traded alternative investment vehicle that is
managed, sponsored, or advised by any member of the Fortress Group, including
the entities noted as “PCVs” on Schedule 2 hereto.

 

(dd) “PE Fund” means, without duplication, (a) any closed-end investment fund or
account with no discretionary redemption or other similar liquidity rights
(other than in certain limited circumstances) to any investor, together with any
“feeder” funds, co-investment vehicles, alternative investment vehicles, other
investment vehicles or the respective successor vehicles (if any) of any of the
foregoing, in each case, through which such fund’s investment programs are
effectuated or pursued, or any fund or investment or vehicle to which the
portfolio investments now or hereafter held, directly or indirectly, by any of
the foregoing are transferred other than pursuant to a bona fide sale to a third
party on arms-length terms, in each case which is managed, sponsored, or advised
by any member of the Fortress Group and (b) any closed-ended managed account or
separate account with no discretionary redemption or other similar liquidity
rights for any client and which is managed, sponsored, or advised by any member
of the Fortress Group, in a similar manner to a fund described in the
immediately preceding clause (a), including, in each case, the funds and
accounts listed noted as “Existing PE Funds” and “PE Funds Currently in
Formation Subject to the Plan” on Schedule 2 hereto. Notwithstanding the
foregoing, a PE Fund shall not include any Excluded Assets or PCVs.

 

(ee) “Person” means any individual, partnership, limited liability company,
corporation, trust or other association or entity.

 

(ff) “Plan” means this Fortress Investment Group LLC Second Amended and Restated
Principal Compensation Plan, as may be amended or restated from time to time.

 

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(gg) “Principal” means each of Messrs. Wesley R. Edens, Peter L. Briger, Jr.,
and Randal A. Nardone, and any other individual selected as a Participant by the
Principals Committee and approved by the Compensation Committee in accordance
with Section 3 hereof.

 

(hh) “Principals Committee” means the committee that may assist in the
administration of the Plan as described in Section 2 hereof. The Principals
Committee is comprised of Messrs. Wesley R. Edens, Peter L. Briger, Jr. and
Randal A. Nardone as of the Founders Closing. The Compensation Committee shall
be responsible for determining whether the replacement of a member of the
Principals Committee is necessary in the event of the death, Disability,
termination or resignation of any member of the Principals Committee. In
determining a possible replacement, the Compensation Committee shall ensure that
each business unit (i.e., PE and Credit) shall always maintain at least one
representative on the Principals Committee.

 

(ii) “Promote” means, without duplication, direct or indirect distributions,
payments, or allocations in respect of any carried interest, incentive fees,
promoted interest, performance fee or similar rights of participation or
profit-sharing with respect to the earnings, increases in net asset value,
profits, or gains generated in respect of any Hedge Fund, PE Fund, or PCV, as
applicable. For the avoidance of doubt, if any distribution or payment is made
in respect of an allocation that was already included for purposes of
determining Promote, then such distribution or payment shall not be taken into
account in determining Promote (and vice versa).

 

(jj) “SEC” means the U.S. Securities and Exchange Commission.

 

(kk) “Sponsor” means the Participant with respect to any Hedge Fund or PE Fund
that is raised, in whole or in part, by making use of such Participant’s
relationships, investment track record, personal reputation and/or other
individual attributes that, individually or in the aggregate, provide a
substantial and necessary contribution to the success of the capital raise of
the particular Hedge Fund or PE Fund. For any Hedge Fund, PE Fund or PCV in
existence on the date hereof, any Sponsor thereof is noted on Schedule 2 hereto.
Notwithstanding any other provision of this Plan to the contrary, no Hedge Fund
or PE Fund for which a Participant serves as CIO shall also be deemed to be
sponsored by such Participant. Any reference herein to a Participant’s being a
“sponsor,” “sponsoring,” or having “sponsored” shall refer to the act of being a
Sponsor.

 

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Schedule 1

Wesley R. Edens

Peter L. Briger, Jr.

Randal A. Nardone

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Schedule 2

See attached.