Exhibit 10.5

[Oaktree Letterhead]
[            ], 2016
[Name]
c/o Oaktree Capital Management, L.P.
333 South Grand Avenue, 28th floor
Los Angeles, CA 90071
 
 
Re:
Profit Sharing Arrangement 

Dear [Name]:
This letter agreement (this “Agreement”) memorializes certain compensation
payable to you in connection with your employment by Oaktree Capital Management,
L.P., a Delaware limited partnership (along with its affiliates, “Oaktree”).
This Agreement is based on your providing, and continuing to provide, ongoing
services satisfactory to Oaktree on a full-time basis. In exchange, Oaktree will
provide you with the compensation as set forth below, subject to the terms and
conditions of this Agreement.
 
 
1.
Certain Compensation Arrangements. You will be entitled to receive:

 
 
(a)
Incentive Payments. Certain payments (“Incentive Payments”) from Oaktree Fund GP
I, L.P., Oaktree Fund GP II, L.P. and Oaktree Fund GP III, L.P. (collectively,
the “PoolCos”) equal to [•]% of the Net Incentive Income (as defined below)
received by the PoolCos from the investment funds and accounts managed or
controlled by Oaktree and its affiliates as set forth on Exhibit A (such
investment funds and accounts, collectively, the “Funds”);

 
 
(b)
Investment Payments. Certain payments (“Investment Payments”) equal to [•]% of
Net Investment Income (as defined below); and

 
 
(c)
Profit Payments. Certain payments (each such payment, a “Profit Payment”) equal
to [•]% of the Net Operating Profit (as defined below) of the Oaktree Operating
Group (as defined below) with respect to each fiscal year of Oaktree.

 
 
(d)
Amounts Netted. In calculating your entitlement to Incentive Payments,
Investment Payments, and Profit Payments, any negative amounts with respect to
one or more shall be netted against positive amounts, if any. Amounts due
hereunder shall be determined by Oaktree in good faith, consistent with past
practice.

For the avoidance of doubt, the foregoing does not grant you any management,
control or other rights with respect to the applicable Funds. You and the
interests granted hereunder shall be subject to the provisions of each PoolCo
limited partnership agreement and any other document or arrangement which
governs the terms of the PoolCos or any other Oaktree entity in which you hold
an interest. You shall be entitled to your Incentive Payments reasonably
promptly after Oaktree receives the associated incentive distributions from the
applicable Fund. Oaktree shall periodically make reasonable estimates of your
expected Investment Payments and Profit Payments and shall make quarterly
payments to you based on such estimates. Within thirty days following delivery
of the audited financial statements of

--------------------------------------------------------------------------------

Oaktree in respect of a given fiscal year, a determination shall be made as to
whether the estimated payments were greater than or less than your actual
Investment Payments and Profit Payments for such year. You shall receive a
true-up payment on such date to make up for any shortfall. Each Incentive
Payment, Investment Payment and Profit Payment will only be made if you are
actively employed by or providing services to Oaktree at the time at which such
payment is otherwise to be made. Your entitlement to Incentive Payments,
Investment Payments and Profit Payments shall cease immediately upon the
termination of your employment with Oaktree, whether by voluntary resignation,
involuntary termination (with or without cause), death, disability or otherwise
for any reason.
2. Withholding; Repayments; Tax Treatment.
(a) Oaktree is authorized to deduct and withhold from any amounts otherwise
payable or distributable to you any and all amounts required to be deducted or
withheld under any applicable law or otherwise, including all taxes required to
be withheld by applicable law. Oaktree makes no representation (and shall not be
liable to you) as to the tax treatment of payments made hereunder under
applicable tax laws.
(b) Notwithstanding anything herein to the contrary, you agree to repay to
Oaktree any amount paid to you in excess of what you should have received under
the terms of this Agreement for any reason (including without limitation by
reason of (i) a mistake in calculation or (ii) other administrative error).
(c) Notwithstanding anything herein to the contrary, if as a result of your
separation from service, you would receive any payment that, absent the
application of this paragraph, would be subject to interest and additional tax
imposed pursuant to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), as a result of the application of Section 409A(a)(2)(B)(i)
of the Code, then no such payment shall be payable prior to the date that is the
earliest of (i) six (6) months after the date of your separation from service,
(ii) your death, or (iii) such other date as will cause such payment not to be
subject to such interest and additional tax. It is the intention of the parties
that payments or benefits payable hereunder not be subject to the additional tax
imposed pursuant to Section 409A of the Code. To the extent such potential
payments or benefits could become subject to Section 409A of the Code, you and
Oaktree shall cooperate to amend your compensation, with the goal of giving you
the economic benefits described herein in a manner that does not result in such
tax being imposed. If a termination of your employment does not result in a
“separation from service” within the meaning of Section 409A of the Code, then
for purposes of determining the timing of any payment provided for by this
letter agreement, termination shall not be considered to occur until you have
incurred such a separation from service. The preceding sentence shall not affect
the determination of your entitlement to any payment or benefit, but only the
timing thereof.
3. At-Will Employment. You acknowledge and agree that your employment rights
shall not be enlarged or guaranteed by reason of any of the provisions of this
Agreement. You further acknowledge and agree that you are and will continue to
be an “at will” employee of Oaktree, which means that your employment with
Oaktree may be terminated at any time by Oaktree with or without cause or notice
and for any lawful reason or no reason.
4. Assignment; Designation of Beneficiaries: Except as set forth in this
Section 4, the rights and benefits hereunder shall not be assignable or
transferable, and any purported transfer, sale, assignment, pledge or other
encumbrance or disposition or attachment of any payments or benefits hereunder
other than by operation of law, shall not be permitted or recognized. Oaktree
Capital Management, L.P. may assign this agreement to its affiliates; provided
that no such assignment shall affect in any way the benefits to you or Oaktree
contemplated by this Agreement. You agree to take any such actions and to
execute any such documents as Oaktree may reasonably request in order to further
implement and evidence any such assignment. You may, with the consent of
Oaktree, designate in writing, on forms prescribed by and filed with Oaktree,
one or more beneficiaries to receive any payments payable after your death and
may at any time amend or revoke any such designation; provided that if you
designate a person other than your spouse as a beneficiary, your spouse must
sign a statement specifically approving such designation. Any payments to which
you would be entitled by virtue of this Agreement while alive will be paid,
following your death, to the designated beneficiary. If no beneficiary
designation is in effect at the

--------------------------------------------------------------------------------

time of death, or in the absence of a spouse’s approval as herein above
provided, payments to which you are entitled hereunder shall be made to your
personal representative.
5. Definitions.
“Net Investment Income” means, with respect to a given fiscal year, all income
(net of any associated compensation expense and excluding incentive income)
earned by Oaktree, including by the PoolCos and the Oaktree Operating Group,
from their respective direct and indirect investments in Funds (including
through the general partner of any such Fund) and third-party managed funds and
companies, as determined in a manner consistent with the investment income
component of adjusted net income on the financial statements of Oaktree Capital
Group, LLC (“OCG”).
“Net Operating Profit” means, with respect to a given fiscal year, the adjusted
net income of any and all of the members of the Oaktree Operating Group,
determined in a manner consistent with adjusted net income on the financial
statements of OCG, as further adjusted by (i) subtracting compensation expense
with respect to the vesting of units granted after May 25, 2007 but before OCG
Class A units were listed on the New York Stock Exchange, (ii) subtracting
Oaktree Operating Group income taxes, (iii) adding back 50% of the compensation
expense recognized with respect to the vesting of units granted after May 25,
2007 under OCG’s equity incentive plans, and (iv) excluding incentive income
(net of incentive income compensation expense) and phantom equity expense,
(v) excluding Net Investment Income and (vi) excluding compensation expense
relating to individuals entitled to payments in respect of Net Operating Profit
and Net Investment Income.
“Net Incentive Income” means, with respect to a given fiscal year, (i) all
incentive income earned by the PoolCos that is derived from such Funds as set
forth on Exhibit A, as determined in a manner consistent with the incentive
income component of adjusted net income on the financial statements of OCG, net
of (ii) all participation in such income granted to any party by Oaktree (other
than participation through “Common Series Interests” in the PoolCos and the
payments in respect of Net Incentive Income granted hereunder), including any
such participation through “Points Series Interests” and “Net Carry Series
Interests” in the PoolCos, and (iii) as adjusted to take into account payments
in respect of Net Incentive Income granted hereunder and other participations in
such incentive income as determined by Oaktree consistent with past practice.
Additionally, the term “Net Incentive Income” shall not include any tax
distributions from any Fund, provided, however, that the amounts that would have
otherwise been paid to you as a share of such foregone tax distribution shall be
paid to you at the time such Fund reaches the stage of its cash distribution
waterfall where the respective Poolco is receiving payments of incentive income
from such Fund.
“Oaktree Operating Group” means, collectively, the entities in which OCG has a
minority economic interest and indirect control that either (i) act as or
control the general partners and investment advisers of Oaktree’s funds or (ii)
hold interests in other entities or investments generating income for Oaktree.
Net Incentive Income, Net Investment Income, Net Operating Profits and the
amount of any management fee offsets for any applicable Fund will be determined
in accordance with the partnership agreement, separate account agreement,
advisory agreement, side letter or other relevant document(s) governing or
binding upon the applicable Fund.
6. Governing Law. This Agreement shall be construed and enforced, along with any
rights, remedies, or obligations provided for hereunder, in accordance with the
laws of the State of California applicable to contracts made and to be performed
entirely within the State of California.
7. Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 

--------------------------------------------------------------------------------

 
 
 
Sincerely,
 
OAKTREE CAPITAL MANAGEMENT, L.P.
 
 
By:
 
 
 
 
Name:
 
 
Title:
 
 
By:
 
 
 
 
Name:
 
 
Title:

 
 
ACKNOWLEDGED AND CONFIRMED:
 
 [Name]